SQI Diagnostics first quarter net loss increases to $2,255,000

Feb 28 2011

SQI Diagnostics Inc. (TSXV: SQD), a medical systems automation company focused on evolving laboratory-based autoimmune biomarker testing, today announced its financial and operational results for the first quarter ended December 31, 2010.

First Quarter Highlights

• Entered into a collaboration and evaluation agreement with a prominent U.S.-based reference laboratory and technology opinion leader.  SQI believes that the potential conversion of this evaluation agreement to a commercial agreement will result in a positive market reaction and greater demand for the Company's products. SQI expects to deliver the SQiDworks platform to this laboratory in the third quarter of fiscal 2011;
• Continued to develop SQI's commercial relationship with Gamma-Dynacare Medical Labs (GDML) by working closely with GDML to develop its multiplexed rheumatoid arthritis business.  Subsequent to the quarter end, GDML took delivery of investigational use only IgXPLEX Quantitative Celiac product for GDML's internal evaluation. GDML is one of Canada's largest providers of laboratory services and solutions. Subsequent to SQI's quarter end, GDML released its first monthly newsletter. This marketing material featured the benefits of multiplexing rheumatoid arthritis (RA) biomarkers on an automated platform to all of GDML's customers, and is featured on GDML's website. SQI is optimistic that this and similar marketing efforts will drive the continued growth of our sales of the RA product at GDML, and this could result in increased revenue for the Company.
• Focused on the development, verification and validation of additional clinical panels of multiplexed biomarkers including quantitative autoimmune test panels for vasculitis, lupus and inflammatory bowel diseases (Crohn's disease, ulcerative colitis).  The Company continued to complete the development of its second-generation quantitative panels for rheumatoid arthritis and Celiac disease and expects to validate and file these tests for regulatory review by the end of June, 2011.
• SQI's IgXPLEX Vasculitis assay is expected to complete clinical validation in the third quarter of fiscal 2011. Collaborative studies demonstrating the utility of the Company's vasculitis assay are scheduled to be presented at the Fifteenth International Vasculitis & ANCA Workshop in May, 2011.
• During the reporting period, the Company received and responded to questions from the FDA regarding its IgXPLEX Celiac 4-PLEX panel. The questions and responses are described by the Company as those expected in the normal course of the regulatory process.

"SQI made essential clinical, regulatory and commercial advancements in the first quarter, all of which strengthen our position as the forerunner in the global automated, multiplex laboratory diagnostics space," said Andrew Morris, CFO of SQI Diagnostics.

Financial Results

For the quarter ended December 31, 2010, SQI recorded a net loss of $2,255,000 or $0.07 per share, compared to a net loss of $1,620,000 or $0.06 per share per share for the first quarter a year ago.

The increased loss for the quarter ended December 31, 2010 was primarily related to increases in activity and expenses in the discovery efforts for, and development of, several IgXPLEX assays.

Gross research and development expenditures for the three month period ended December 31, 2010 were $1,499,000 compared to the $1,054,000 for the three month period ended December 31, 2009.  The increase in R&D expense for the three month period ended December 31, 2010 compared to the same period the prior year, resulted from increased R&D activity due to more assay panels in development, and to continued regulatory validation efforts related to the IgXPLEX Celiac assays.  In the first quarter of 2010, SQI had two panels in development. In the first quarter of 2011, in addition to the IgXPLEX Celiac assay in regulatory validation, the Company had five panels in development and one additional panel at an earlier stage of development. 

Corporate and general expenses totaled $329,000 for the quarter ended December 31, 2010 compared to $209,000 for the quarter ended December 31, 2009. During the first quarter of fiscal 2011, corporate expenses increased primarily as a result of increased personnel, higher salary costs, and increased occupancy costs. 

At December 31, 2010, cash and cash equivalents were $6,471,000 compared to $9,408,000 at September 30, 2010.