today reported its financial and operational results for the three months ended December 31, 2018.
SQI is a Toronto-based life sciences and diagnostics company that develops and commercializes proprietary technologies and products for advanced multiplexed diagnostics.
Said Andrew Morris, SQI’s President and CEO: “The financial results and revenue growth we continue to experience, confirms the soundness of our commercialization model. This past quarter, we exceeded a major milestone for kit sales to a major customer; introduced new products into the marketplace; and expanded our pipeline with new customers who can all provide ongoing revenues next year.”
- From the first quarter of 2018 to the current quarter we have achieved a 60% quarter over quarter compounded growth rate in recurring kit sales
- We have launched major customer products.
- We have, subsequent to the quarter end also announced closing two agreements for two new products that address unmet diagnostic needs in transplant medicine that will also result in recurring kit sales
Financial and Business Highlights for the Quarter and Year to Date:
Achieved best quarter ever in terms of kits revenue. Last year, we reached a major commercial milestone in our business model with recurring kits sales to a significant customer whose volume of kits usage is growing steadily. This success continued into the first fiscal quarter of 2019 with increases in kits sales of the Cardiac PULS test and also from our direct to consumer customer. The growth in kits sales has been linear and positive for 5 consecutive quarters since fiscal Q1 2018.
Launched Celiac test with MicroDrop LLC in the direct-to-consumer market. On December 10, 2018, we announced the launch by Microdrop of their imaware™ direct-to-consumer test for celiac disease. The imaware™ at-home test is a partnership between SQI and Microdrop, a health testing company based in California. Run on SQI’s automated systems, the imaware™ at-home test for celiac disease addresses a huge unmet need in the market. Early in calendar 2019 we announced the launch of two additional tests. The first is for rheumatoid arthritis, and the second is a test to monitor already-diagnosed celiac disease patients, a complement to the previously announced celiac screening test.
We signed a term sheet with our lung transplant partner during the quarter. And, on February 4, 2019, a press release announced the signing of definitive agreements, project launch and first revenues. The agreements cover development work for SQI to create and license rapid multiplexed protein assays and a point-of-care (POC) diagnostic device that will help transplant surgeons assess the suitability of lungs and other organs for transplantation. The organ transplant market represents a high-value opportunity for SQI. This joint development program, targets tests to determine if an organ is healthy enough to be harvested and transported to a transplant patient address a huge unmet need. Existing tests and procedures are limited in their ability to accurately predict the viability of donor organs. As a result, they miss many potentially useful organs.
Q1 2019 Financial Results Overview
Revenue for the three months ended December 31, 2018 was $292,000 versus $376,000 for the three months ended December 31, 2017. Recurring kit sales were $246,000 for the three months ended December 31, 2018 as compared to $30,000 for the same period last year. These recurring kit sales are the result of two commercial product launches in fiscal 2018. A third product was validated and delivered to our direct to consumer customer in the first quarter of fiscal 2019. Revenues in the first quarter of fiscal 2018 were concentrated largely with the sale of two platforms to customers, accounting for approximately 70% of the revenue in that quarter. While platform sales establish the foundation for recurring kit sales they also result in quarter-to-quarter variations in overall revenue. The success of our business model is demonstrated through the realization of increasing recurring kit sales.
For this quarter, the Company recorded a net loss of $1,758,000 ($0.01 net loss per share) compared to the net loss of $1,788,000 ($0.02 net loss per share) for the quarter ended December 31, 2017. The net loss was consistent for the three months ended December 31, 2018 compared to the three months ended December 31, 2017.
R&D expenditures, excluding amortization and stock-based compensation, for the three months ended December 31, 2018 were $877,000 compared to $935,000 for the same period last year. The decrease in R&D expenditures for the three-month period is a result of reduced laboratory costs in the first quarter of fiscal 2019 compared to the first quarter of fiscal 2018. In the first quarter of 2018, lab consumables were purchased at higher than normal rates to ensure completion of two critical projects to meet internal deadlines and to deliver finished products to our customers for their validation and commercial kit sales. During the first quarter of fiscal 2019, activities were focused on delivery of product to customers.
Corporate and general expenses, excluding stock-based compensation, totaled $324,000 for the three months ended December 31, 2018 as compared to $405,000 for the three months ended December 31, 2017. Corporate and general expenses are lower for the three months ended December 31, 2018 compared to the same period in the prior year due to lower professional fees for recruiting and legal fees.
Sales and marketing expenses were primarily related to sales and marketing consultant fees and to travel related to selling activities in the quarter. Sales and marketing expenses, excluding stock-based compensation, totaled $325,000 for the three months ended December 31, 2018 compared to $275,000 for the three months ended December 31, 2017. Sales and marketing expenses were higher for the three months ended December 31, 2018 compared to the same period in the previous year. This was mainly due to the payment of commissions on product sales and additional travel for customer system installations and training.
At December 31, 2018, current assets were $2,166,000 compared to $3,758,000 at September 30, 2018. As at December 31, 2018, the Company had a $1,230,000 working capital surplus compared to a surplus of $2,691,000 at September 30, 2018.
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:
Date: Thursday February 28, 2019
Time: 10:00 a.m. ET
Live Call: 416 764 8609 (local) 1-888-390-0605 (Canada and the United States)
Conference ID: 07240178
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 https://event.on24.com/wcc/r/1943543/1D0D8D2F57CA4DDE9F6BC5B3449E1373
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
416.674.9500 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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