SQI Diagnostics third quarter net loss increases to $2,691,000

Aug 29 2011

SQI Diagnostics Inc. (TSX-V: SQD), a life sciences company that develops and commercializes proprietary technologies and products for advanced microarray diagnostics, today announced its financial and operational results for the third quarter ended June 30, 2011.

Third Quarter Highlights

• Received notice that the United States Food and Drug Administration (FDA) cleared the Company's automated SQiDworks™ Diagnostics Platform and its IgXPLEX™ celiac qualitative assay for marketing in the United States. The qualitative celiac assay, which tests for anti-tissue transglutaminase: IgG and IgA, is the second multiplexed assay cleared by the FDA to run on the Company's automated SQiDworks Diagnostics Platform. The Company's IgXPLEX™ rheumatoid arthritis assay was cleared in October, 2009.
• Received a license from Health Canada permitting the Company to market its IgXPLEX™ Celiac Panel, a quantitative 4-plex panel, which will run on SQI's automated SQiDworks Diagnostics Platform. This marks the Company's fourth multiplexed panel, and its second quantitative panel, approved by Health Canada.
• 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.
• Subsequent to quarter end, announced it entered into an agreement to acquire Scienion AG, a German-based microarray manufacturing equipment and microarray print and development services company for a purchase price of CDN$15 million in cash and the issuance of 735,294 common shares of SQI. The closing of the transaction is subject to a number of customary closing conditions and regulatory approvals, and is subject to financing.

"We made significant clinical and regulatory progress in our third quarter," said Andrew Morris, Chief Financial Officer of SQI Diagnostics.

Financial Results

For the quarter ended June 30, 2011, SQI recorded a net loss of $2,691,000 or $0.08 per share, compared to a net loss of $1,812,000 or $0.06 per share for the quarter ended June 30, 2010.

Research and development expenditures for the quarter ended June 30, 2011 were $1,443,000 compared to $1,111,000 for the quarter ended June 30, 2010. R&D expenditures for the nine month period ended June 30, 2011 were $4,056,000 compared to $3,438,000 for the nine month period ended June 30, 2010. The increase in R&D expense for the nine month period ended June 30, 2011 compared to the nine months ending June 30, 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 third 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 third quarter of fiscal 2010, the Company had five panels in discovery and development.  Research and developments costs in the 3 months ended June 30, 2010 are offset by the SRED investment tax credits of $295,000, the SRED investment tax credit of $300,000 for 2011 was recorded in the quarter ended March 31, 2011.

Corporate and general expenses totaled $400,000 for the three months ended June 30, 2011 compared to $262,000 for the three months ended June 30, 2010.  The increase from the quarter ended June 30, 2010 compared to the same period in 2011 was primarily a result of higher salary costs, increased personnel and increased occupancy costs.

At June 30, 2011, current assets were $3,766,000 compared to $9,902,000 at September 30, 2010. Working capital as at June 30, 2011 was $2,238,000 compared to $8,930,000 at September 30, 2010. As at June 30, 2011, there were 33,946,000 common shares issued and outstanding.