SQI Diagnostics reports net loss of $1,874,000 for second quarter 2011

May 30 2011

SQI Diagnostics Inc. (TSXV: SQD), a life sciences company that develops and commercializes proprietary multiplexing technologies and products for advanced microarray diagnostics, today announced its financial and operational results for the second quarter ended March 31, 2011.

Second Quarter Highlights

• Delivered quantitative celiac test kits to Gamma Dynacare Medical Labs (GDML) to support their evaluation of commercial use of the product.  Successful evaluation of the celiac test kits may lead to GDML purchasing these kits. GDML currently purchases the Company's rheumatoid arthritis test kits;
• Continued the development of the Company's pipeline of autoimmune tests including a quantitative 6-plex celiac DGP test panel, a quantitative 12-plex test panel for lupus and a quantitative 3-plex test panel for vasculitis, among others. These test panels remain on track to be filed with various regulatory agencies including Health Canada and the U.S. Food and Drug Administration (FDA) this year;
• Subsequent to quarter end, announced the Company received a license from Health Canada permitting the Company to market its IgX PLEX™ Celiac Panel, a quantitative 4-plex test kit, which will run on SQI's automated SQiDworks™ Diagnostics Platform. This marks the Company's fourth multiplexed test kit, and its second quantitative test kit, approved by Health Canada; and
• Subsequent to quarter end, announced the Company entered into a clinical validation agreement with University North Carolina Kidney Center, Chapel Hill, to evaluate SQI's new multiplexed, automated approach for biomarker detection in vasculitis. When the validation study is complete, SQI will compile and analyze the data and intends to submit the results to various regulatory authorities including the FDA seeking clearance to market the vasculitis test kits.

"We are steadily building our commercial portfolio of multiplexed, autoimmune biomarker test panels," said Andrew Morris, Chief Financial Officer of SQI Diagnostics. "These assays, along with our automated SQiDworks Diagnostics Platform, provide clinical labs with unique tools to support the diagnoses of autoimmune and other diseases at costs that are significantly more affordable and efficient than industry standards. Going forward, we are excited about the opportunity to further diversify and strengthen our suite of saleable products in a market where there is increasing demand for autoimmune, biomarker testing."

Financial Results

For the quarter ended March 31, 2011, SQI recorded a net loss of $1,874,000 or $0.06 per share, compared to a net loss of $2,020,000 or $0.07 per share for the quarter ended March 31, 2010.

Gross research and development expenditures for the quarter ended March 31, 2011 were $1,114,000 compared to $1,273,000 for the quarter ended March 31, 2010. R&D expenditures for the six month period ended March 31, 2011 were $2,612,000 compared to the $2,327,000 for the six month period ended March 31, 2010. The increase in R&D expense for the six month period ended March 31, 2011 compared to the six months ending March 31, 2010 resulted from increased R&D activity with an increased number of assay panels in development and to continued regulatory validation efforts related to the celiac products

In the second quarter of fiscal 2011, in addition to the celiac assay in regulatory validation, SQI had five panels in development and one additional panel in early discovery and development. In the second quarter of fiscal 2010, the Company had three panels in discovery and development.

Corporate and general expenses totaled $326,000 for the three months ended March 31, 2011 compared to $258,000 for the three months ended March 31, 2010.  The increase from the quarter ended March 31, 2010 compared to the same period in 2011 was primarily a result of higher salary costs, increased personnel and increased occupancy costs.

At March 31, 2011, current assets were $5,855,000 compared to $9,902,000 at September 30, 2010. Working capital as at March 31, 2011 was $5,121,000 compared to $8,930,000 at September 30, 2010. As at March 31, 2011, there were 33,913,000 common shares issued and outstanding.