SQI Diagnostics Reports Second Quarter Financial Results
Significant Interest Generated in Diagnostic Tools and Services Business from Large Pharma
TORONTO--(BUSINESS WIRE)-- SQI Diagnostics Inc. (TSX-V: SQD), a life sciences and diagnostics company that develops and commercializes proprietary technologies and products for advanced microarray diagnostics, today announced its financial and operational results for the second quarter-ended March 31, 2013.
Highlights of Commercial Progress
Sales activities during the quarter focussed on generating Diagnostic Tools and Services sales from large Pharma companies and contract research organization ("CROs"). The Company's sales strategy is to primarily levereage our participation and presentations at a varieity of Pharma conferences, new technology working groups in the Pharma industry and trade shows to generate face-to-face meetings with high probability customers motivated to benefit from multiplexing technology. The targeted customers are primarily involved in drug development clinical research and would use our technology to do anti-drug-antibody ("ADA") or biomarker testing. Management believes that our multiplexing platform is well-suited to this type of testing. Our intial proposals to these early adopters was to offer a proof-of-concept multiplexed test on a collaborative basis where the target customer would share a portion of the development cost through the provision of their proprietary target molecules and other test reagents and SQI would develop the proof-of-concept test to illustrate the benefits of our technology.
During the quarter our sales team completed a series of intial and follow-up sales meetings with large Pharma and CRO target customers. These meetings resulted in expressions of interest to proceed with evaluations of SQI's technology with five global Pharma companies and several major CROs. SQI proceeded to persue a variety of agreements with these target customers.
Subsequent to the quarter-end two master services agreements have been completed with global Pharma companies with whom we have signed non-disclosure agreements to complete the following projects:
Develop a proof-of-concept ADA assay to detect and quantify the immune response to a new class of drugs in three species. Successful completion of this project may result in the sale of a platform(s) and multiplex test kits that would be used in the target customer's clinical testing during drug development.
Develop a proof-of-concept ADA test to illustrate the power of SQI's multiplexing technologies to test the immune response in an in-development biologic drug.
Demonstrate the multiplexing performance of the SQI system for biomarker testing. In this application SQI will provide the customer with our Ig_Plex Cytokine (RUO) test kits to run initially on the SQiD-X bench-top system.
Succesful completion of the projects could result in winning a material portion of the target customer's ADA and biomarker testing as well as the placement of multiple SQiDlite platforms.
Subsequent to the quarter-end we have added additional target customers to our sales funnel. These are best characterized as global Pharma companies with a range of ADA and biomarker testing needs. SQI expects that some or all of the target customers in its pipeline will engage with the Diagnostics Tools and Services business with a mix of full turn-key automated customized solutions and biomarker testing products to some that have expressed a desire to complete a portion of the custom application development work themselves.
Highlighting SQI's capability to effectively deliver Diagnostic Tools and Services projects, in collaboration with Algorithme Pharma during the quarter, the Company completed a multiplex proof-of-concept assay targeted at immunogenicity testing of heparin and the results of the project were presented at the 14th Annual Immunogenicity for Biotherapeutics Conference in Baltimore held 18-20 March. The collaboration was announced on January 24, 2013. Subsequent to the conference, SQI has participated in marketing efforts lead by Algorithme which strategically target commercial opportunities with global pharmaceuticals.
Verification work advanced on the Ig_PLEX Celiac DGP Panel. The Company has made significant progress on issues encountered in its initial verification testing and now expects validation to commence in the third fiscal quarter of 2013 followed shortly by completion and submission of applications for regulatory approval in both Canada and the United States.
The Company previously announced that a special committee was established to review strategic alternatives to maximize growth and shareholder value. At this time the Company's advisers have generated interest from a number of parties that are at various stages of the process. Further information regarding the strategic process can be found in the Company's MD&A available on SEDAR.
"SQI made significant progress in generating customer interest in its Diagnostic Tools and Services offerings during the quarter through a variety of sales and marketing initiatives and that leverages our current IVD technologies," said Andrew Morris, CFO of SQI Diagnostics. "We believe that our large Pharma sales strategy has created a large pipeline of prospects for evaluation of our technology platforms that we believe will subsequently generate sales for the Diagnostic Tools and Services business this year."
For the quarter-ended March 31, 2013, SQI recorded a net loss of $1,351,000 or $0.03 per share, compared to a net loss of $1,350,000 or $0.04 per share for the quarter-ended March 31, 2012. The net loss for the six months ended March 31, 2013 $2,914,000 ($0.07 net loss per share) compared to a net loss of $3,000,000 ($0.08 net loss per share) for the six months ended March 31, 2012.
R&D expenditures, excluding amortization and stock-based compensation, for the quarter-ended March 31, 2013 were $549,000 compared to the $606,000 for the quarter-ended March 31, 2012. R&D expenditures, excluding amortization and stock based compensation, for the six months ended March 31, 2013 were $1,333,000 compared to the $1,565,000 for the quarter-ended March 31, 2012. The R&D costs incurred in the three and six months ended 2013 have been focussed on projects to demonstrate the Company's ability to rapidly develop proof-of-concept assays for our Diagnostic Tools and Services customers in the large Pharma markets as well as the completion of verification and pre-validation work on the Celiac DGP assay.
Corporate and general expenses, excluding stock-based compensation, totalled $391,000 for the three months ended March 31, 2013 compared to $380,000 for the three months ended March 31, 2012. The change in general and administrative expenses is a result of the business realignment in fiscal 2012 when temporary reductions were made to administrative salaries. Salaries returned to normal levels in July of 2012 and through the current period.
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, totalled $102,000 for the three months ended March 31, 2013 compared to $35,000 for the three months ended March 31, 2012. Sales and marketing expenses, excluding stock based compensation, totalled $211,000 for the six months ended March 31, 2013 compared to $124,000 for the six months ended March 31, 2012. The increase in sales and marketing expenses for the three and six months ended March 31, 2013 compared to the three months ended March 31, 2012 was primarily a result of the addition of a senior sales contractor in June of 2012 and increased expenditures on conferences, travelling and marketing materials as the Company focuses on creating and developing sales opportunities for its Diagnostic Tools and Services business.
At March 31, 2013, current assets were $1,155,000 compared to $4,208,000 at September 30, 2012. Working capital as at March 31, 2013 was $646,000 compared to $3,190,000 at September 30, 2012. Subsequent to quarter end the Company completed a non-brokered private placement of 5,126,044 Units at $0.75 per Unit for gross proceeds of $3,845,000. Also subsequent to quarter end, the Company received the $300,000 SR&ED investment tax credit recoverable. Management believes that the cash on hand as at the date of this discussion will support our operations and commercialization plans for at least 12 months.
Detailed financial statements and the MD&A are available at www.sedar.com.
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 forward-looking statements, including, without limitation, statements containing the words "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect", "believe", "in the process", "is subject to" and other similar expressions which constitute "forward-looking information" within the meaning of applicable securities laws. Forward-looking statements reflect the Company's current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, our need for additional capital to sustain our business, statements with respect to sales of our IgX plex™ Celiac product and SQiDworks and other analytical systems, agreements and future agreements to sell our products, the success of our Diagnostic Tools and Services business and our intent to build near-term revenue streams from this business, the completion of our second-generation SQiDlite platform, the build-out of our portfolio of quantitative tests, the successful regulatory filing and receipt of regulatory approvals for our later stage quantitative diagnostic kits , the acceleration of our revenue ramp, general economic and market segment conditions, competitor activity, technology changes and regulatory approvals. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks and uncertainties and other risks detailed from time-to-time in the Company's ongoing filings with the securities regulatory authorities, which filings can be found atwww.sedar.com. Actual results, events, and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements. 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.
This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SQI Diagnostics Inc.
Andrew Morris, 416.674.9500 ext. 229
Chief Financial Officer
KEYWORDS: North America Canada
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