SQI Diagnostics 2010 third quarter net loss increases to $1,613K

Aug 30 2010

SQI Diagnostics Inc. (TSX-V: SQD), a medical systems automation company focused on evolving laboratory-based biomarker testing, today announced its financial and operational results for the third quarter ended June 30, 2010.

Highlights

- Announced that Gamma-Dynacare Medical Laboratories, one of Canada's largest providers of laboratory services, has agreed to put into operation SQI's SQiDworks(TM) platform, and to purchase SQI's multiplexed QuantiSpot(TM) Rheumatoid Arthritis consumables to meet its commercial needs; the agreement with Gamma-Dynacare marks the first conversion of an evaluation platform to a revenue generating platform for SQI; - Subsequent to the quarter end, IgXplex Celiac was filed seeking a Health Canada license and IgXplex Celiac (Investigational Use Only) kits were shipped to our customer in Canada for evaluation. - Made significant progress advancing our product pipeline including IgXplex Celiac, IgXplex Vasculitis and IgXplex SLE (lupus). - Presented clinical and product development data at a European autoimmune conference showing the specificity, sensitivity and utility of SQI's proprietary assays utilized in the diagnostic testing of novel biomarkers associated with rheumatoid arthritis, celiac disease and Crohn's disease; - Subsequent to quarter end, announced the closing of a non-brokered private placement for gross proceeds of $5.7 million. The private placement consists of 2,280,000 units of the Company at a price of $2.50 per Unit. Each unit is comprised of one common share and one-half of one common share purchase warrant. Each whole common share purchase warrant will entitle the holder to purchase one additional common share at a price of $5.00 for a period of two years from date of closing, expiring on August 12, 2012.

"Our second quarter was highly productive from a clinical, commercial and capital markets perspective," said Andrew Morris, CFO of SQI Diagnostics. "We anticipate that the momentum created in the recent reporting period will continue in the coming quarters as we accelerate the development of our emerging pipeline of autoimmune multiplexed panels in order to create more commercial content for our prospective and current customers."

Financial Results

For the quarter ended June 30, 2010, the Company recorded a net loss of $1,613,000 or $0.05 per share compared to a net loss of $1,354,000 or $0.05 per share for the quarter ended June 30, 2009.

The increased loss for the quarter ending June 30, 2010 was primarily related to greater activity and expenses in the discovery efforts for and development of several IgXplex assays and increases in research and development wages and wage-related expenses owing to an increase in personnel supporting our R&D efforts. R&D expenditures for the three month period ended June 30, 2010 were $1,111,000 versus $825,000 for the three month period ended June 30, 2009. The increase year-over-year related primarily to increased R&D salaries and related expenses, laboratory consumable costs and laboratory operating expenses due to the increased R&D activity.

Sales and marketing expenses also increased in the quarter compared to the previous year owing to an increase in the number of sales and marketing personnel and to an increase in sales calls and associated expenses.

Corporate expenses, which include administrative salaries and related expenses, general and administrative expenses, advertising and promotion expenses, travel expenses, interest expenses and professional and consulting fees totaled $123,000 for the quarter ended June 30, 2010 compared to $84,000 for the quarter ended June 30, 2009.

At June 30, 2010, current assets were $6,959,000 compared to $6,879,000 at March 31, 2010. Working capital as at June 30, 2010 was $6,289,000 compared to $6,332,000 at March 31, 2010.

Management believes that cash on hand at June 30, 2010, plus the capital generated from the non-brokered private placement, which closed August 12, 2010, will be sufficient to fund Company operations for at least 12 months. A successful commercial launch of additional products in North America and the generation of revenue in the 2010 and 2011 fiscal years will extend this period.