SQI fourth quarter net loss increases to $2,621,000

Jan 21 2011

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

Highlights

• Announced that the U.S. Food and Drug Administration (FDA) cleared the Company's automated SQiDworks™ Diagnostics Platform and its multiplexed IgXPLEX™ Rheumatoid Arthritis (RA) assay for marketing in the United States; 
• Completed two separate private placements for total gross proceeds of approximately $12.3 million, which strengthened the Company's balance sheet and diversified its institutional shareholder base;        
• Announced that Gamma-Dynacare Medical Laboratories, one of Canada's largest providers of laboratory services, agreed to put into operation SQI's SQiDworks platform, and to purchase SQI's multiplexed Rheumatoid Arthritis consumables to meet its commercial needs; the agreement with Gamma-Dynacare marked the first conversion of an evaluation platform to a revenue-generating platform for SQI;
• Accelerated the development, verification and validation of additional clinical panels of biomarkers to multiplex including the highest-demand autoimmune test panels for celiac disease, vasculitis, lupus and inflammatory bowel diseases (Crohn's disease, ulcerative colitis);
• During and subsequent to the year end, the Company entered into multiple collaboration agreements with leading clinical and research institutes, highlighting the market interest in multiplexing and the Company's achievements to date.  These collaborations significantly improve the Company's ability to progress its products through the development process by obtaining access to patient sera needed for assay development, verification of in-development products and final product clinical validation;
• Applied for FDA regulatory clearance of its IgXPLEX Celiac 4-PLEX panel.  Subsequent to the year end, the Company received and responded to questions from the FDA regarding this panel. The questions and responses are described by the Company as those expected in the normal course of the regulatory process; 
• Announced that Health Canada issued a medical device license for its automated IgXPLEX Celiac microarray test kit that runs on the Company's automated SQiDworks platform. The license allows SQI to market and sell the IgXPLEX Celiac product in Canada.

"Our clinical and commercial accomplishments in 2010 built a strong foundation for SQI that will support our emergence as a global leader in the automated, multiplex laboratory diagnostics space," said Andrew Morris, CFO of SQI Diagnostics. "Our marketing efforts are gaining traction and we are moving closer to launching additional autoimmune multiplexed panels for clinical laboratories to utilize with our diagnostics platform. We are optimistic that in fiscal 2011 and beyond, we will continue our transition towards material revenue generation."

Financial Results
For the year ended September 30, 2010, SQI recorded a net loss of $8,073,000 or $0.27 per share, compared to a net loss of $5,910,000 or $0.23 per share per share for the year ended September 30, 2009.

For the quarter ended September 30, 2010, SQI recorded a net loss of $2,621,000 or $0.08 per share, compared to a net loss of $1,616,000 or $0.06 per share per share for the quarter ended September 30, 2009. The increased loss for the quarter ended September 30, 2010 was primarily related to increases in activity and expenses in the discovery efforts for, and development of, several IgXPLEX assays, including ordinary increases in wage and wage-related expenses owing to an increase in personnel and increased lab expenditures to support the greater number of projects.

Gross research and development (R&D) expenditures were $5,354,000 for the year ending September 30, 2010 compared to $3,449,000 for the year ending September 30, 2009. 

R&D expenditures for the three month period ended September 30, 2010 were $1,621,000 compared to $872,000 for the three month period ended September 30, 2009.  The increase in R&D expense for the three month period ended September 30, 2010 compared to the same period in the prior year resulted from more R&D activity with an increased number of assay panels in development, and due to regulatory validation efforts related to the IgXPLEX Celiac assay. 

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 $299,000 for the quarter ended September 30, 2010 compared to $290,000 for the quarter ended September 30, 2009.  

At September 30, 2010, cash and cash equivalents were $9,408,000 compared to $3,180,000 at September 30, 2009. 

Management believes that cash on hand at September 30, 2010, will be sufficient to fund Company operations for at least 12 months.  A successful commercial launch and generation of anticipated revenue in the 2011 fiscal year would extend this period.