today reported its financial and operational results for the three and six months ended March 31, 2016.
SQI is a Toronto-based life sciences and diagnostics company that develops and commercializes proprietary technologies and products for advanced multiplexed diagnostics.
“The first six months have been pivotal in SQI’s commercial development,” said Andrew Morris, SQI’s President and CEO. “We completed our first commercial sale of test kits to one of our global Pharma customers and received our first order for the purchase of a sqidlite system and we have surpassed an annualized revenue run-rate of $1M.”
SQI’s proprietary technology is used to create custom tests for clients in the drug development market that can now deliver as many as 30 unique results – with the potential for more – from a single SQI test. In doing this, it removes the work needed to develop, run, and purchase materials for 30 separate single tests. Our customers benefit from a significantly reduced cost per result with superior quality data.
Financial and Business Highlights for the Quarter
In the first quarter of F16 we entered into a three year, multiproduct agreement with an existing Global Pharma customer. In the second quarter of F16 we delivered our first substantial commercial order of test kits to this customer, which was run on the sqidlite system in their lab. We believe the success from the completed evaluations and use of commercial products this quarter will result in the imminent sale of this sqidlite and recurring kit sales for three products that are ready now, plus several more that are in the planning phase.
During the quarter we continued the development work with our DNA customer to complete the automation and scale-up of manufacturing for their proprietary infectious disease test panels. This customer’s first test has grown to an approximately 80-plex DNA-based test. As we recently announced, this customer has ordered its first sqidlite–DH platform and we are working with them to meet the project timelines with the first platform delivery to be in June of 2016. Validation and evaluation of the platform is expected to take several months following delivery.
We continue to convert our early-stage customer relationships into ongoing development and product sales revenues. Overall revenues were $477,000 for the six months ended March 31, 2016 (three months - $280,000) as compared to $85,000 for the six months ended March 31, 2015 (three months - $70,000).
We have also completed an additional agreement with another Global Pharma customer to install a sqidlite system for a 60 day evaluation period that follows the development of two custom, multiplexed test kit products. This system is scheduled for delivery to this customer in June, 2016 and will coincide with a new product launch.
In our Animal Health sector we have negotiated the development of a second test with a global veterinary products company that conducted a site visit and audit of our development and manufacturing centre in May, 2016.
We are also expecting to launch and deliver xPlex kits to our two largest Global Pharma customers in the third quarter of fiscal 2016. The xPlex product includes kits and software that will allow our pharmaceutical customers to develop multiplexed tests for themselves using their in-development drugs and our kits to automate these tests on our platforms installed at their facilities, thus eliminating the need to share their proprietary drugs.
On April 18, 2016, we announced that Dr. Swati Gupta, PhD, Director of Immunology for Allergan Inc., will present a case study at the 10th Annual Workshop on Recent Issues in Bioanalysis in Orlando, Florida. The title of the talk was "SQI Ig_plex Dual-Layer Multiplexing Capabilities in Immunogenicity Assays" and it provided novel case studies from products that were developed on SQI's multiplexing platform used in immunogenicity testing. The presentation provided comparison of SQI tests to traditional bridging assays using a competitor's technology. The presentation provided data emphasizing SQI's improved drug tolerance, sensitivity, the ability to run all targets in one test and how to use the technology to profile for safety and efficacy of therapeutics. This added validation speaks to SQI’s position and winning value proposition.
Q2 2016 Financial Results Overview
Revenue for the three months ended March 31, 2016 was $280,000 compared to $70,000 for the same period last year. Revenue for the six months ended March 31, 2016 was $477,000 compared to $85,000 for the same period last year. The Company continued to earn revenue from several development projects in its drug development business and its diagnostic sector. Significantly, revenue in the current quarter included our first sale of commercial kits to one of our global pharma customers.
The net loss for the quarter ended March 31, 2016 was $987,000 ($0.01 net loss per share) as compared to the net loss of $1,613,000 ($0.02 net loss per share) for the quarter-ended March 31, 2015. The loss for the six months ended March 31, 2016 was $2,345,000 as compared to $2,978,000 for the same period last year. The decrease in the loss is attributable to the increases in revenues and decreased in R&D costs over the relevant periods as a result of SR&ED credits booked in the current quarter.
R&D expenditures, excluding amortization, SR&ED investment tax credits recoverable and stock based compensation, for the three months ended March 31, 2016 were $812,000 (six months –$1,525,000) compared to $788,000 for the three months ended March 31, 2015 (six months –$1,472,000). R&D costs remained consistent for the three and six months ended March 31, 2016 compared to the same periods in 2015. During the current quarter the Company engaged consultants to review and file SR&ED claims for fiscal 2014 and 2015 this has resulted in an investment tax credit recoverable of $360,000 being recorded in the current quarter.
Corporate and general expenses, excluding stock-based compensation, totaled $392,000 for the three months ended March 31, 2016 (six months – $787,000) compared to $459,000 for the three months ended March 31, 2015 (six months – $818,000). The decrease in corporate and general expenses over the three and six month periods is attributable to staffing changes and the favorable change in the US dollar exchange rate.
Sales and marketing expenses, excluding stock based compensation, for the three months ended March 31, 2016 totaled $174,000 (six months – $327,000) compared to $198,000 for the three months ended March 31, 2015 (six months – $358,000). Sales and marketing expenses were lower over the three and six month periods due to staffing changes. The Company lost one sales contractor and is currently in the process of filling that position. During the current quarter the Company hired a customer solutions manager.
At March 31, 2016, current assets were $3,412,000 compared to $2,555,000 at September 30, 2015. As at March 31, 2016 the Company has a $2,676,000 working capital surplus compared to a surplus of $1,787,000 at September 30, 2015.
Conference Call Details
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:||Friday, May 13, 2016|
|Time:||10:00 a.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=1182443&s=1&k=862ACE00919C16B7D49700C1635F88B1
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.
Investor Relations Contact:
Chief Executive Officer
Andrew Morris 16.674.9500 ext. 229
Vice President of Finance
416.674.9500 ext. 277
About SQI Diagnostics
SQI Diagnostics is a life sciences and diagnostics company that develops clinical grade multiplexed microarray and molecular assays run on its automated instrumentation for the pharmaceutical research, animal health, and clinical diagnostics markets. SQI develops custom research and diagnostic assays that are multiplexed; meaning the simplification, consolidation and automation of many individual tests into one. This increases sample throughput, reduces time, cost and chance for human error, and provides excellent data quality. For more information, please visit 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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