today reported its financial and operational results for the three and nine months ended June 30, 2019.
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: “During the last quarter we achieved a significant milestone with our Lung Transplant customer, running real-time cases as part of our development plan, bringing our TOR-Dx LUNG™ product closer to commercialization. And, recurring kit sales grew again this quarter while we continued to build our sales pipeline with promising opportunities in both our diagnostic testing and biopharma markets.”
Commercial and Financial Highlights for the Quarter and Year to Date:
Last year, we reached a major commercial milestone in our business model with recurring kit sales to significant customers whose volume of kit usage is growing. The growth in kits continued to be positive again this quarter.
Achieved a significant milestone with University Health Network (“UHN”) for a novel Lung Transplant test. During this quarter we announced that we have made significant progress with the development of their product and tested the first living donor lung samples taken during transplantation procedures. These donor lung samples were collected at Toronto General Hospital and transported back to SQI labs for sample testing. In the next quarter, we anticipate successfully handing off the SQIDlite system purchased by UHN, and validating the TOR-Dx Lung product for use by UHN.
CLIA Lab Buffalo ready for samples. During the quarter we were notified that the New York State Department of Health has given us the green light to begin patient sample testing using our Celiac test in our direct to consumer customer’s imaware™ tests. Running our SQI tests for our customers in our CLIA facility will deliver incremental revenue and gross margin per test in addition to the kit revenue we were previously generating.
Expanding Sales Pipeline. Our sales funnel continues to expand with many promising new high-value opportunities. These future customers are targeted to add to our recurring revenues and comprise a mix of biopharma customers, contract research organizations, and other diagnostic companies.
As indicated, our recurring revenues have continued to grow at an average of more than 20% each quarter over the last year. These gains were largely driven by kit sales and sales to existing diagnostic customers. We now have three customers that are generating recurring revenue.
Q3 2019 Financial Results Overview
During the three and nine months ended June 30, 2019, the Company recorded revenue from the sale of kits, as well as service revenue to our biopharma and diagnostic customers. Recurring kit sales were $313,000 for the three months ended June 30, 2019 (nine months – $846,000) as compared to $141,000 for the same period last year (nine months – $259,000). Quarter over quarter recurring kit sales are growing, and as mentioned earlier continue to grow. 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.
For the three months ended June 30, 2019 the Company recorded a net loss of $1,888,000 ($0.01 net loss per share) as compared to the net loss of $2,042,000 ($0.02 net loss per share) for the three months ended June 30, 2018. For the nine months ended June 30, 2019 the Company recorded a net loss of $5,214,000 ($0.03 net loss per share) as compared to the net loss of $5,461,000 ($0.04 net loss per share) for the nine months ended June 30, 2018. Per share values are based on the weighted average shares outstanding in the relevant period. For the quarter ended June 30, 2019, there was an average of 186,609,000 shares outstanding.
The net loss was lower for the three and nine months ended June 30, 2019 as compared to the three and nine months ended June 30, 2018. Increases in revenue were partially offset by an increase in general and administrative and sales and marketing expenses.
The Company continues to develop new products and focus on product commercialization and product delivery. R&D expenditures, excluding amortization and stock-based compensation, for the three months ended June 30, 2019 were $1,145,000 consistent with $1,130,000 for the same period last year. R&D expenditures, excluding amortization and stock-based compensation, for the nine months ended June 30, 2019 were $2,717,000 compared to $2,847,000 for the same period last year. The decrease in R&D expenditures for the nine-month periods is a result of reduced laboratory costs. During the nine months ended June 30, 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 nine months ended June 30, 2019, activities were focused on delivery of product to customers with development work continuing on two projects.
Corporate and general expenses, excluding stock-based compensation, totaled $397,000 for the three months ended June 30, 2019. This compares to $341,000 for the three months ended June 30, 2018. For the nine months ended June 30, 2019 these expenses totaled $1,087,000 compared to $1,128,000 for the same nine months in the prior year. The increase in the third quarter was the result of higher rent at the Company`s head office location. However, corporate and general expenses are lower because of lower investor relations 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 $316,000 for the three months ended June 30, 2019 compared to $297,000 for the three months ended June 30, 2018. Sales and marketing expenses totaled $964,000 for the nine months ended June 30, 2019 compared to $845,000 for the nine months ended June 30, 2018. Sales and marketing expenses were higher for the three and nine months ended June 30, 2019 compared to the same periods in the previous year, primarily due to the payment of commissions on product sales and additional travel for customer system installations and training.
Non-cash, stock-based compensation charges, totaled $130,000 for the three months ended June 30, 2019 (nine months - $429,000) compared to $158,000 for the three months ended June 30, 2018 (nine months - $276,000). The related stock option issuances are detailed later in this document.
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: Wednesday August 28, 2019
Time: 10:00 a.m. EDT
Live Call: 416 764 8609 (local) 1-888-390-0605 (Canada and the United States)
Conference ID: 36385550
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/2073314/0A36EF745A92FEB8ADA0FF6CA750203B 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
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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