Quotient Limited (NASDAQ:QTNT), a commercial-stage diagnostics
company, today reported progress on performance evaluation studies
for MosaiQ™ and financial results for its fiscal first quarter
ended June 30, 2017.
“We are continuing to make progress towards our
goal of obtaining an initial CE mark for MosaiQ. The key step in
this process, which we are providing an update on today, involves
using market ready MosaiQ instruments as well as blood grouping and
disease screening microarrays manufactured in our validated
manufacturing facility to test for concordance with blood samples
supplied and previously characterized by independent blood
collection agencies. These results represent a major technical
achievement for the project and give us added confidence of being
field trial ready in the near future,” said Paul Cowan, Chairman
and Chief Executive Officer of Quotient. Mr. Cowan added, “The
value that MosaiQ will deliver for our potential customers was
underscored during our recent participation at ISBT’s annual
meeting held in Copenhagen this June. More than 230 ISBT delegates
joined us at a symposium to discuss the benefits associated with
routine comprehensive antigen typing for donated blood products,
which MosaiQ will make possible on a routine basis once it is
available in the market.”
MosaiQ Platform
MosaiQ, Quotient's next-generation platform
delivers fast, comprehensive antigen typing, antibody detection and
disease screening results, using a single low volume sample in a
high throughput automated format. MosaiQ represents a
transformative and highly disruptive unified testing platform for
transfusion diagnostics. Feasibility has also been demonstrated
with respect to the detection of nucleic acids (DNA or RNA) using
the MosaiQ platform. Through MosaiQ, Quotient expects to deliver
substantial value to donor testing laboratories worldwide by
providing affordable, routine comprehensive characterization and
screening of blood products, on a single automated instrument
platform designed to radically reduce labor costs and complexity
associated with existing practice.
Assay Performance
Assay performance in the ongoing performance
evaluation studies for the MosaiQ IH Microarray (the initial blood
grouping microarray) and the MosaiQ SDS Microarray (the initial
disease screening microarray) demonstrate substantial concordance
compared with predicate technologies. The performance evaluation
data were derived using microarrays manufactured in Quotient’s
validated, high-volume manufacturing facility and run on field
trial-ready instruments. The Company has taken the
opportunity over the past two months to further improve the
performance of the antibody detection assay, and that work is now
complete. Final internal verification and validation studies for
the MosaiQ IH Microarray and MosaiQ SDS Microarray are the next
step in preparation for European field trials later this year.
Verification and validation studies are designed to mimic the
subsequent field trials.
MosaiQ IH Microarray - Antigen Typing
A summary of the most recent performance evaluation data derived
in our ongoing study for antigen typing is set out below:
Blood Group Antigen |
A |
B |
D |
C |
c |
E |
e |
Cw |
K |
k |
Concordance |
100 |
% |
100 |
% |
99.2 |
% |
100 |
% |
96.3 |
% |
100 |
% |
99.3 |
% |
100 |
% |
100 |
% |
100 |
% |
In this study 268 donor samples were tested.
Actions to improve concordance for the c antigen are underway,
including modification of the concentration of the detection
reagent formulation for this specificity.
MosaiQ IH Microarray - Antibody Detection
The most recent performance evaluation study for
the antibody detection assay achieved 97% concordance compared with
the predicate technology. In this study, 413 donor samples
and 50 known positive samples were tested.
MosaiQ SDS Microarray
The most recent performance evaluation study for
the MosaiQ SDS Microarray achieved 97% sensitivity and 100%
specificity for CMV and 98% sensitivity and 100% specificity for
syphilis. In this study, 314 donor samples and 88 known
positive samples were tested. Known positive samples were
selected to test the limits of detection for MosaiQ, hence the
achieved sensitivity of 97-98% for both assays. These results
indicate that the performance of the MosaiQ SDS Microarray meets or
exceeds the established performance characteristics of the
predicate technology.
The most recent performance evaluation data for
the MosaiQ IH Microarray and MosaiQ SDS Microarray provide
confidence in the ultimate outcome of the upcoming verification and
validation studies for these products and ultimately the European
field trials that we expect to complete later this year.
Regulatory and Commercial Milestones -
Next Twelve Months
- European Field Trials – Quotient expects to
complete European field trials during CY17
- European Regulatory Approval – Upon the
successful completion of European field trials Quotient expects to
file promptly for European regulatory approval for MosaiQ
- European Commercialization – Quotient has
commenced the commercialization of MosaiQ in Europe, where it has
already received invitations to participate in tenders to be
awarded in the middle of CY18
- U.S. Field Trials and subsequent
Regulatory Filing will follow the successful
completion of European field trials.
Fiscal First Quarter 2018 Financial Results
“The conventional reagent business recognized
record product sales in the first quarter, while also having six
new reagent products licensed for sale in the U.S. by the FDA,”
said Paul Cowan. “Strong top line performance was driven by 17%
growth in sales to OEM customers, while U.S. direct sales which
grew only 2%, were adversely impacted by the expected timing of
shipments. Our continued focus on growing these more profitable
revenue lines has shown positive results, with significant gross
margin improvement in the quarter. Milestone payments earned from
the approval for sale in the U.S. of certain rare antisera reagents
developed for a key OEM customer contributed $600,000 of other
revenues this quarter.”
Key revenue and profit results are summarized
below (expressed in thousands):
|
|
Quarter Ended |
|
|
|
June 30, |
|
|
|
2017 |
|
|
2016 |
|
Revenue: |
|
|
|
|
|
|
|
|
Product sales —OEM
Customers |
|
$ |
4,561 |
|
|
$ |
3,911 |
|
Product sales — direct
customers and distributors |
|
|
1,665 |
|
|
|
1,806 |
|
Other revenues |
|
|
600 |
|
|
|
— |
|
Total
revenue |
|
$ |
6,826 |
|
|
$ |
5,717 |
|
|
|
|
|
|
|
|
|
|
Product sales from
standing orders (%) |
|
|
79 |
% |
|
|
76 |
% |
|
|
|
|
|
|
|
|
|
Gross
profit |
|
$ |
3,994 |
|
|
$ |
2,626 |
|
Gross profit as a % of
total revenue |
|
|
58.5 |
% |
|
|
45.9 |
% |
Gross margin on product
sales (%) |
|
|
54.5 |
% |
|
|
45.9 |
% |
Operating
(loss) |
|
$ |
(16,906 |
) |
|
$ |
(16,378 |
) |
Capital expenditures totaled $5.4 million in
1QFY18, compared with $6.6 million in 1QFY17, largely reflecting
ongoing investment related to the construction of our new
conventional reagent manufacturing facility near Edinburgh,
Scotland.
Quotient ended 1QFY18 with $40.7 million in cash
and other short-term investments and $77.1 million of term debt,
net of $5.0 million in an offsetting long-term cash reserve
account. On April 10, 2017, the Company completed a public offering
of its ordinary shares raising $45.2 million, net of expenses.
Outlook for the Fiscal Year Ending March
31, 2018
- Total revenue is still expected to be in the range of $33 to
$34 million, including other revenue (product development fees) of
approximately $12 million. Forecasted other revenue assumes the
receipt of milestone payments contingent upon achievement of
regulatory approval for certain products under development. The
receipt of these milestone payments involves risks and
uncertainties.
- Product sales are still expected to be in the range of $21 to
$22 million.
- Operating loss is still expected to be in the range of $63 to
$68 million.
- Capital expenditures are still expected to be in the range of
$25 to $30 million
Product sales in the second quarter of fiscal
2018 are expected to be in the range of $5.2 to $5.5 million,
compared with $4.8 million for the second quarter of fiscal
2017.
Quarterly product sales can fluctuate depending
upon the shipment cycles for red blood cell based products, which
account for approximately two-thirds of current product sales.
These products typically experience 13 shipment cycles per year,
equating to three shipments of each product per quarter, except for
one quarter per year when four shipments occur. The timing of
shipment of bulk antisera products to OEM customers may also move
revenues from quarter to quarter. Some seasonality in demand is
also experienced around holiday periods in both Europe and the
United States. As a result of these factors, Quotient expects to
continue to see seasonality and quarter-to-quarter variations in
product sales. The timing of product development fees included in
other revenues is mostly dependent upon the achievement of
pre-negotiated project milestones.
Conference Call
Quotient will host a conference call on Tuesday,
August 8th at 8:30 a.m. Eastern Time to discuss its first quarter
fiscal 2018 financial results. Participants may access the call by
dialing 1-877-407-0784 in the U.S. or 1-201-689-8560 outside the
U.S. The conference call will be webcast live on the Company’s
website at www.quotientbd.com.
A replay of this conference call will be
available through August 30th by dialing 1-844-512-2921 in the U.S.
or 1-412-317-6671 outside the U.S. The replay access code is
13667029.
About Quotient Limited
Quotient is a commercial-stage diagnostics
company committed to reducing healthcare costs and improving
patient care through the provision of innovative tests within
established markets. With an initial focus on blood grouping and
serological disease screening, Quotient is developing its
proprietary MosaiQTM technology platform to offer a breadth of
tests that is unmatched by existing commercially available
transfusion diagnostic instrument platforms. The Company’s
operations are based in Edinburgh, Scotland; Eysins, Switzerland
and Newtown, Pennsylvania.
Forward-Looking Statements
This news release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934 and
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements may include statements regarding our
expectations of continued growth, the development, regulatory
approval, commercialization and impact of MosaiQTM and other new
products, current estimates of second quarter and full year
fiscal 2018 operating results and expectations regarding our
future funding sources. Such statements are based on current
assumptions that involve risks and uncertainties that could cause
actual outcomes and results to differ materially. These risks and
uncertainties, many of which are beyond our control, include delays
or denials of regulatory approvals or clearances for products or
applications; market acceptance of our products; the impact of
competition; the impact of facility expansions and expanded
product development, clinical, sales and marketing activities on
operating expenses; delays or other unforeseen problems with
respect to manufacturing, product development or field trial
studies; adverse results in connection with any ongoing or future
legal proceeding; continued or worsening adverse conditions in the
general domestic and global economic markets; as well as the other
risks set forth in the Company's filings with the Securities and
Exchange Commission. Investors are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date hereof. Quotient disclaims any obligation to update
these forward-looking statements.
The Quotient logo and MosaiQ™ are registered
trademarks or trademarks of Quotient Limited and its subsidiaries
in various jurisdictions.
|
|
Quotient Limited |
|
Condensed Consolidated Statements Of
Comprehensive Loss |
|
(in thousands, except share and per share
amounts) |
|
(unaudited) |
|
|
|
|
|
Quarter Ended |
|
|
|
June 30, |
|
|
|
2017 |
|
|
2016 |
|
Revenue: |
|
|
|
|
|
|
|
|
Product sales |
|
$ |
6,226 |
|
|
$ |
5,717 |
|
Other revenues |
|
|
600 |
|
|
|
— |
|
Total
revenue |
|
|
6,826 |
|
|
|
5,717 |
|
Cost of revenue |
|
|
2,832 |
|
|
|
3,091 |
|
Gross
profit |
|
|
3,994 |
|
|
|
2,626 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
1,682 |
|
|
|
1,257 |
|
Research and
development, net |
|
|
12,673 |
|
|
|
11,801 |
|
General and
administrative expense |
|
|
6,545 |
|
|
|
5,946 |
|
Total operating
expense |
|
|
20,900 |
|
|
|
19,004 |
|
Operating
loss |
|
|
(16,906 |
) |
|
|
(16,378 |
) |
Other income
(expense) |
|
|
|
|
|
|
|
|
Interest expense,
net |
|
|
(4,210 |
) |
|
|
(1,171 |
) |
Other, net |
|
|
880 |
|
|
|
1,314 |
|
Other income
(expense), net |
|
|
(3,330 |
) |
|
|
143 |
|
Loss before
income taxes |
|
|
(20,236 |
) |
|
|
(16,235 |
) |
Provision for income
taxes |
|
|
— |
|
|
|
— |
|
Net
loss |
|
$ |
(20,236 |
) |
|
$ |
(16,235 |
) |
Other
comprehensive income (loss): |
|
|
|
|
|
|
|
|
Change in fair value of
effective portion of foreign currency cash flow hedges |
|
$ |
345 |
|
|
$ |
(263 |
) |
Unrealized gain on
short-term investments |
|
|
38 |
|
|
|
— |
|
Foreign currency gain
(loss) |
|
|
1,815 |
|
|
|
(3,308 |
) |
Provision for pension
benefit obligation |
|
|
43 |
|
|
|
41 |
|
Other
comprehensive income (loss) |
|
|
2,241 |
|
|
|
(3,530 |
) |
Comprehensive
loss |
|
$ |
(17,995 |
) |
|
$ |
(19,765 |
) |
Net loss available to
ordinary shareholders - basic and diluted |
|
$ |
(20,236 |
) |
|
$ |
(16,235 |
) |
Loss per share - basic
and diluted |
|
$ |
(0.55 |
) |
|
$ |
(0.64 |
) |
Weighted-average shares
outstanding - basic and diluted |
|
|
36,767,544 |
|
|
|
25,410,598 |
|
|
|
Quotient Limited |
|
Condensed Consolidated Balance
Sheets |
|
(In Thousands) |
|
(Unaudited) |
|
|
|
|
|
June 30,2017 |
|
|
March 31,2017 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
13,008 |
|
|
$ |
4,754 |
|
Short-term investments |
|
|
27,661 |
|
|
|
16,057 |
|
Trade
accounts receivable, net |
|
|
2,800 |
|
|
|
2,556 |
|
Inventories |
|
|
14,810 |
|
|
|
13,636 |
|
Prepaid
expenses and other current assets |
|
|
4,682 |
|
|
|
3,629 |
|
Total current
assets |
|
|
62,961 |
|
|
|
40,632 |
|
Cash reserve
account |
|
|
5,040 |
|
|
|
5,040 |
|
Property and equipment,
net |
|
|
70,062 |
|
|
|
63,530 |
|
Intangible assets,
net |
|
|
784 |
|
|
|
769 |
|
Total
assets |
|
$ |
138,847 |
|
|
$ |
109,971 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT) |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
10,098 |
|
|
$ |
10,782 |
|
Accrued
compensation and benefits |
|
|
2,846 |
|
|
|
3,641 |
|
Accrued
expenses and other current liabilities |
|
|
13,398 |
|
|
|
13,509 |
|
Current
portion of lease incentive |
|
|
441 |
|
|
|
422 |
|
Capital
lease obligation |
|
|
1,445 |
|
|
|
1,374 |
|
Total current
liabilities |
|
|
28,228 |
|
|
|
29,728 |
|
Long-term debt |
|
|
82,150 |
|
|
|
80,704 |
|
Lease incentive, less
current portion |
|
|
772 |
|
|
|
844 |
|
Capital lease
obligation, less current portion |
|
|
153 |
|
|
|
174 |
|
Defined benefit pension
plan obligation |
|
|
5,535 |
|
|
|
5,337 |
|
7% Cumulative
redeemable preference shares |
|
|
17,538 |
|
|
|
17,275 |
|
Total
liabilities |
|
|
134,376 |
|
|
|
134,062 |
|
Total shareholders'
equity (deficit) |
|
|
4,471 |
|
|
|
(24,091 |
) |
Total
liabilities and shareholders' equity (deficit) |
|
$ |
138,847 |
|
|
$ |
109,971 |
|
|
|
Quotient Limited |
|
Condensed Consolidated Statements of Cash
Flows |
|
(In Thousands) |
|
(Unaudited) |
|
|
|
|
|
Quarter endedJune
30, |
|
|
|
2017 |
|
|
2016 |
|
OPERATING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(20,236 |
) |
|
$ |
(16,235 |
) |
Adjustments to
reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
2,464 |
|
|
|
2,286 |
|
Share-based
compensation |
|
|
1,285 |
|
|
|
898 |
|
Amortization of lease
incentive |
|
|
(109 |
) |
|
|
(109 |
) |
Swiss pension
obligation |
|
|
172 |
|
|
|
185 |
|
Amortization of
deferred debt issue costs |
|
|
1,446 |
|
|
|
228 |
|
Accrued preference
share dividends |
|
|
263 |
|
|
|
263 |
|
Net change in
assets and liabilities: |
|
|
|
|
|
|
|
|
Trade accounts
receivable, net |
|
|
(170 |
) |
|
|
(204 |
) |
Inventories |
|
|
(608 |
) |
|
|
(560 |
) |
Accounts payable and
accrued liabilities |
|
|
(2,005 |
) |
|
|
1,406 |
|
Accrued compensation
and benefits |
|
|
(837 |
) |
|
|
(152 |
) |
Other assets |
|
|
(811 |
) |
|
|
(1,247 |
) |
Net cash used
in operating activities |
|
|
(19,146 |
) |
|
|
(13,241 |
) |
INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Increase in short-term
investments |
|
|
(43,000 |
) |
|
|
— |
|
Realization of
short-term investments |
|
|
31,434 |
|
|
|
— |
|
Purchase of property
and equipment |
|
|
(5,436 |
) |
|
|
(6,579 |
) |
Purchase of intangible
assets |
|
|
(6 |
) |
|
|
— |
|
Net cash used
in investing activities |
|
|
(17,008 |
) |
|
|
(6,579 |
) |
FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Repayment of finance
leases |
|
|
(29 |
) |
|
|
(37 |
) |
Proceeds from issuance
of ordinary shares |
|
|
45,273 |
|
|
|
— |
|
Net cash generated from
financing activities |
|
|
45,244 |
|
|
|
(37 |
) |
Effect of exchange rate
fluctuations on cash and cash equivalents |
|
|
(836 |
) |
|
|
(1,860 |
) |
Change in cash and cash
equivalents |
|
|
8,254 |
|
|
|
(21,717 |
) |
Beginning cash and cash
equivalents |
|
|
4,754 |
|
|
|
44,100 |
|
Ending cash and cash
equivalents |
|
$ |
13,008 |
|
|
$ |
22,383 |
|
Supplemental
cash flow disclosures: |
|
|
|
|
|
|
|
|
Income taxes paid |
|
$ |
— |
|
|
$ |
— |
|
Interest paid |
|
$ |
5,068 |
|
|
$ |
679 |
|
CONTACT: Chris Lindop, Chief Financial Officer – chris.lindop@quotientbd.com; +41 22 545 52 26
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