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After Posting Net Loss in Q4, SQI Diagnostics Pins Hopes on Service Business

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By Justin Petrone

The year 2011 was eventful for Toronto-based microarray firm SQI Diagnostics: While the company managed to get several of its assays cleared for clinical use by regulatory authorities in the US and Canada, market conditions also forced it to abandon its bid to go public in the US and terminate its acquisition of German array company Scienion.

Toward the end of the year, the firm restructured, shedding nearly a third of its workforce and refocusing its efforts on its services business, aiming to boost its revenues.

"Our business realignment has focused the company's financial resources on completing regulatory filing for late-stage quantitative multiplexed products in development and converting many of our Diagnostics Tools and Services customer prospects into nearer-term revenue," Andrew Morris, chief financial officer of SQI, said in a statement last month.

In the same statement, the firm reported the results for its fiscal fourth quarter, the three-month period ended Sept. 30, 2011. SQI's net loss climbed 50 percent on higher professional and consulting fees related to the aborted Scienion acquisition and financing activities. While SQI was unable to raise $15.6 million to buy Scienion, it did raise $4.6 million last month to support its own initiatives (BAN 12/6/2011).

SQI reported revenues of C$5,000 (US$4,884) for the quarter compared to C$14,000 for the fourth quarter of 2010. In Q4 its net loss climbed to C$3.9 million from C$2.6 million.

R&D spending for the quarter declined to C$1.4 million from C$1.6 million and its corporate and general expenses increased to C$497,000 from C$299,000. The firm reported professional and consulting fees of C$1.4 million for the quarter versus C$222,000 for such fees in Q4 2010.

The company attributed the rise in SG&A costs to "higher salary costs, increased personnel and increased occupancy costs," and "other securities filing costs related to [the] terminated acquisition, financing, and US public offering."

For full-year 2011, SQI posted revenues of C$36,000, up slightly from C$35,000 for FY 2010. The firm had a net loss of C$10.7 million, compared to a net loss of C$8.1 million.

R&D costs for the year rose to C$5.5 million from C$5.1 million, and corporate and general expenses increased to C$1.6 million from C$1 million. The firm reported professional and consulting fees of C$2.1 million for the year, up from C$659,000.

SQI has had clinical tests on the market since 2009, when it received US Food and Drug Administration 510(k) clearance to sell its IgXplex RA test, which is designed to help physicians diagnose and monitor patients with rheumatoid arthritis. SQI has held a Health Canada license for the test since 2008.

Earlier this year, the company obtained FDA clearance for its IgXPlex celiac qualitative assay, a four-plex microarray-based assay test for anti-tissue transglutaminase IgG and IgA. The assay is already marketed in Canada and Europe. In its statement last month, it named Ottawa-based Gamma Dynacare Medical Laboratories as a prospective customer for the celiac test. Gamma Dynacare already offers SQI's IgXplex RA test to its customers.

The company is currently developing additional tests for vasculitis and lupus, but has not provided a potential launch date for either.

It also recently launched its Diagnostics Tool and Services business, which enables customers to build panels of existing single-biomarker tests into microarrays that they can then offer to their customers.

According to SQI, these multiplexed test panels may be sold and used as either research-use-only or laboratory-developed tests. The Diagnostics Tools and Services offering is "intended to bring product- and service-based revenue to SQI sooner compared to its core IVD business," according to the firm.

BioArray News spoke with Morris about the realignment last month (BAN 12/6/2011).


Have topics you'd like to see covered in BioArray News? Contact the editor at jpetrone [at] genomeweb [.] com.

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