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Press Releases

SQI Diagnostics Reports Fourth Quarter and Annual Financial Results

Toronto, Ontario, December 21, 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 fourth quarter and year ended September 30, 2011.

Highlights for the fiscal year ended September 30, 2011

• 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.
• 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.
• Delivered quantitative celiac test kits to Gamma Dynacare Medical Laboratories (GDML) to support their evaluation for 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.
• 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.
• Launched its Diagnostics Tool and Services business which will enable customers to build panels of existing single biomarker tests into microarrays that they can then offer to their customers. These multiplexed test panels may be sold and used as either Research Use Only or Lab Developed Tests. The Diagnostics Tools and Services offering is intended to bring product and service-based revenue to SQI sooner when compared to its core IVD business.
• Subsequent to year end, announced it had completed a non-brokered private placement of 2,276,000 units of the Company at $2.00 per unit for gross proceeds of $4,552,000.
• Subsequent of year end, the Company announced a realignment of its business and a reduction in operating expenses. The realignment will streamline the product development portfolio and focus on revenue generation from its Diagnostics Tools and Services business.

"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" said Andrew Morris, Chief Financial Officer of SQI Diagnostics.

Financial Results

For the year ended September 30, 2011, SQI recorded a net loss of $10,747,000 or $0.32 per share, compared to a net loss of $8,073,000 or $0.27 per share for the year ended September 30, 2010.

For the quarter ended September 30, 2011, SQI recorded a net loss of $3,927,000 or $0.12 per share, compared to a net loss of $2,621,000 or $0.08 per share for the quarter ended September 30, 2010.

Research and development expenditures for the year ended September 30, 2011 were $5,456,000 compared to $5,059,000 for the year ended September 30, 2010. R&D expenditures for the quarter ended September 30, 2011 were $1,400,000 compared to $1,621,000 for the year ended September 30, 2010. The increase in R&D expense for the year ended September 30, 2011 compared to the year months ending September 30, 2010 resulted from increased R&D personnel cost in fiscal 2011. The decrease for the three months ended September 30, 2011 as compared to September 30, 2010 reflects the reduced validation costs incurred in the current quarter versus significant validation costs in the fourth quarter of 2010, and the Company's focus on accelerating the celiac quantitative assay through the regulatory approval process and reducing efforts on assays that were earlier in the development cycle in an effort to conserve cash balances.

Corporate and general expenses totaled $1,553,000 for the year ended September 30, 2011 compared to $1,027,000 for the year ended September 30, 2010. Corporate and general expenses totaled $497,000 for the three months ended September 30, 2011 compared to $299,000 for the three months ended September 30, 2010. The increase in corporate and general expenses in these periods was primarily a result of higher salary costs, increased personnel and increased occupancy costs. Also included in corporate and general expenses are travel costs and other securities filing costs related to a terminated acquisition, financing and US public offering.

Professional and consulting fees totaled $2,083,000 for the year ended September 30, 2011 (three months - $1,414,000) compared to $659,000 for the year ended September 30, 2010 (three months - $222,000). The increase in professional and consulting fees in these periods was primarily related to legal and consulting costs related to the terminated acquisition as well as professional costs relating to the financing and US initial public offering.

At September 30, 2011, current assets were $1,266,000 compared to $9,902,000 at September 30, 2010. Working capital as at September 30, 2011 was ($1,322,000) compared to $8,930,000 at September 30, 2010. As at September 30, 2011, there were 33,946,000 common shares issued and outstanding.

Detailed financial statements and the MD&A are available at www.sedar.com.

About SQI Diagnostics
SQI Diagnostics is a medical systems company that develops proprietary technology in multiplexing, miniaturization and automation. SQI provides laboratories the ability to simultaneously analyze multiple biomarkers, deliver accurate patient results in less time, significantly reduce labour, and increase profits...All in One Drop. For more information please visit www.sqidiagnostics.com.

For further information please contact:

FORWARD-LOOKING INFORMATION

This press release contains certain forward-looking statements, including, without limitation, statements containing the words "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect", "believe", "in the process", "is subject to" and other similar expressions which constitute "forward-looking information" within the meaning of applicable securities laws. Forward-looking statements reflect the Company's current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, our need for additional capital to sustain our business, the successful realignment of our business to reduce our cost structure, the success of our Diagnostic Tools and Services business and our intent to build near-term revenue streams from this business, the completion of our second-generation SQiDLITE platform, the build-out of our portfolio of quantitative tests, the successful regulatory filing and receipt of regulatory approvals for our later stage quantitative diagnostic kits , the acceleration of our revenue ramp, general economic and market segment conditions, competitor activity, technology changes and regulatory approvals. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks and uncertainties and other risks detailed from time-to-time in the Company's ongoing filings with the securities regulatory authorities, which filings can be found at www.sedar.com. Actual results, events, and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable securities laws.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.