today reported its financial and operational results for the fourth quarter and fiscal year ended September 30, 2016.
SQI is a Toronto-based life sciences and diagnostics company that develops and commercializes proprietary technologies and products for advanced multiplexed diagnostics.
- Achieved revenues of $1.4 million more than tripling prior years revenue.
- Sold 2 sqidlite™ platforms in 2016 and received an order for a third which was delivered in December 2016.
- Completed an extensive evaluation process with our first Global Pharma customer resulting in the sale of one sqidlite platform and consumable kits.
“The 2016 fiscal year marks a major commercial milestone for the Company. We have surpassed $1 million in revenues with our fourth quarter revenue up 300% compared to the prior quarter”, said Andrew Morris, SQI’s President and CEO. “This is significant in that these revenues include the sale of two sqidlite platforms and the sale of consumable test kits which establish a foundation for the ongoing sales of consumable test kits.”
Fiscal 2016 Financial and Business Highlights
Completing the sale of a sqidlite platform to Global Pharma 1. This platform was critically evaluated by our customer and the ultimate sale in August is a significant endorsement of our technology by them. The sale of platforms is critical to our future revenue growth as it forms the basis for recurring sales of consumable kits. It is notable that in fiscal 2016, we recorded the first sale of our consumable kits. We have sold two different kit products to this customer.
We sold two sqidlite-DH platforms to our major diagnostics customer. During the fiscal year we worked closely with this customer to commercialize their multiplexed infectious disease test. We delivered, installed and validated the first sqidlite-DH system in fiscal 2016. During the fourth quarter we continued to advance the commercial relationship with this customer through the sale of a second sqidlite-DH, as was recently announced, and this system was delivered this December. We also have a first order for consumable test kits for this customer which will be delivered in early fiscal 2017.
We completed a successful proof-of-concept for an allergy panel. With another customer in our diagnostics sector we completed the development of a proof-of- concept allergy panel and are negotiating the terms for the development of a larger scale commercial product for them. SQI management believes that if successful, the commercialization of this product could result in a broader business relationship that could expand to a number of additional products.
We launched our xPlex product in the last quarter of 2016. xPlex is a consumable test kit that allows our customers to develop their own tests on SQI’s automated platforms. The early evaluation of our xPlex product by a large Pharma customer provided us with critical data to assist with the full launch of this product to other global Pharma customers. xPlex is a significant product offering that we believe will increase the number of customers using SQI’s technology. This flexible consumable product gives our customers control over the development process, as well as their highly proprietary drug compounds and development timelines since they are able to develop their tests in-house on SQI’s xPlex consumables. We have received positive feedback from the market regarding xPlex and are excited about its revenue prospects in fiscal 2017 and beyond.
In fiscal 2016, we raised a total of $6.2 million through the completion of both a rights offering and a private placement.
Fiscal 2017 Objectives and Outlook
Looking forward into 2017, the Company’s main objectives are:
- Advancing our current business development agreements with Global Pharma and Diagnostic customers into significant orders and recurring commercial kit revenues.
- Delivering and selling multiple sqidlite platforms. We expect to sell at least 5 systems in 2017.
- Achieving commercial volumes of kit sales for our current pharma customers including custom and xPlex products.
- Reducing the total cost of delivery of our products and technology through manufacturing upgrades.
- Partnering with diagnostic companies who have existing commercial franchises in specific market segments; including cardiac disease diagnosis.
- Further expanding our customer base by adding new pharma, biotech and other diagnostic customers.
In each of SQI’s target markets, our products are designed to reduce labour and costs through multiplexing, simplifying the testing process and reducing errors through automation. Our technology also shortens the time needed to produce more informed results. SQI’s technologies enable our customers to achieve their development goals with a solution that is cheaper, quicker, and more accurate than existed before.
Q4 and Fiscal 2016 Financial Results Overview
Revenue for the year ended September 30, 2016 was $1,421,000 versus $443,000 for the year ended September 30, 2015. Revenue growth represents commercial achievements which included the sale of two sqidlite platforms and consumable test kits. The 2016 revenue also includes service fees from our global pharmaceutical and diagnostic customers for development work of additional custom test kits, which we expect will result in additional platform placements and sale of consumable test kits.
The net loss for the year ended September 30, 2016 was $5,039,000 or $0.07 net loss per share (quarter-ended September 30, 2016 - $1,248,000 or $0.02 net loss per share) as compared to $6,097,000 or $0.11 net loss per share for the year ended September 30, 2015 (quarter-ended September 30, 2015 - $1,548,000 or $0.03 net loss per share). The decrease in net loss for the year and three months ended September 30, 2016 compared with the loss for the same periods in 2015 is a result of the increased revenues and reduced corporate and general expenses.
Research and development (R&D) costs, excluding amortization, stock-based compensation and the SR&ED Investment Tax Credits, were $3,146,000 for FY16. This compares to $2,941,000 for FY15. For the three months ended September 30, 2016 the costs were $775,000 compared to $779,000 for the same period in 2015. In fiscal 2016, R&D efforts were focused on development work for customer projects in our Pharma and diagnostic businesses. R&D costs were higher for fiscal 2016 as compared to fiscal 2015 due to additional specialized scientific professionals hired in 2016 to achieve customer goals. Costs were consistent over the three month periods.
Corporate and general expenses, excluding stock-based compensation, totaled $1,503,000 for FY16 compared to $1,774,000 for FY15. For the three months ended September 30, 2016 the costs were $365,000 compared to $415,000 for the same period in 2015. The decrease in corporate and general expenses year over year is a result of decreased professional fees, travel, stock exchange filing fees and the effects of the US dollar exchange rate.
Sales and marketing expenses, excluding stock-based compensation, totaled $685,000 for FY16 compared to $743,000 for FY15. For the three months ended September 30, 2016 the costs were $200,000 compared to $177,000 for the same period in 2015. The decrease in sales and marketing costs is a result of the departure of a sales contractor in early fiscal 2016. The Company hired a customer service specialist in 2016 and in October of 2016 hired a new sales contractor as well. Sales and marketing expenses were higher for the three months ended September 30, 2016 compared to the same period in the previous year, primarily due to the payment of sales commissions resulting from revenue generated.
Current assets at September 30, 2016 were $4,244,000, as compared to $2,555,000 in the prior year. Working capital at the end of FY16 was $3,420,000 compared to $1,787,000 at the end of FY15.
President and CEO, Andrew Morris, along with Company management, will host a conference call to review financial results and discuss business developments for the period. Details are as below:
|Conference Call Details:|
|Date:||Tuesday December 6, 2016|
|Time:||5:30 p.m. ET|
|Live Call:||1-888-231-8191 (Canada and the United States)|
An archived copy of the conference call will be available for 90 days on the Company website at www.sqidiagnostics.com/about/investors and also at http://event.on24.com/r.htm?e=1321810&s=1&k=123D414F0CD64F976D454FB506CEE6C3 .
Detailed financial statements and the management’s discussion and analysis (MD&A) will also be made available on the Company website at www.sqidiagnostics.com and at www.sedar.com.
For more information, please contact:
Chief Executive Officer
416.674.9500 ext. 229
Vice President of Finance and Administration
Patricia Lie CPA, CA
416.674.9500 ext. 277
About SQI Diagnostics
SQI Diagnostics is a life sciences and diagnostics company that develops and commercializes proprietary technologies and products for advanced microarray diagnostics. The Company’s proprietary microarray tests and fully-automated systems are designed to simplify protein and antibody testing workflow, increase throughput, reduce costs and provide excellent data quality. For more information, please visit www.sqidiagnostics.com.
This press release contains certain statements including, without limitation, the words “may”, “plan”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect”, “believe”, “in the process”, “benefits”, “leading to”, “position” “possible”, “is subject to” and other similar expressions which may constitute “forward-looking statements” within the meaning of applicable securities laws. Forward-looking statements reflect the Company's current expectations and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements involve risks and uncertainties including, but not limited to: our ability to market and sell our products including our novel multiplexing technologies and detection platforms; our ability to maintain any technical or product advantages; the success of our Diagnostic Tools and Services business and our intent to build near-term revenue streams from this business; the successful regulatory filing and receipt of regulatory approvals for our later stage quantitative diagnostic consumable kits; adverse changes in general economic conditions; international risk and currency exchange fluctuations; competitor activity; technology changes; regulatory approvals and the impact of healthcare reform legislation; and, SQI's ability to raise additional funds in the future.
Such statements, risks and uncertainties are detailed in the Company’s ongoing filings with the securities regulatory authorities, and are available to the public at www.sedar.com. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable securities laws.
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