Quotient Limited (NASDAQ:QTNT), a commercial-stage diagnostics
company (Quotient or the Company), headquartered in Eysins,
Switzerland, today reported its fourth quarter fiscal 2022 key
financial results and provided an update on recent business
developments and key upcoming milestones. “I am deeply proud of the
tremendous progress we have achieved at Quotient during my first
year as CEO,” said
Manuel O. Mendez, Chief Executive
Officer of Quotient. “We received European CE mark
approval of the MosaiQ Extended IH microarray in March, and we are
announcing a financing with key equity and debt restructuring to
strengthen our balance sheet and provide the necessary capital to
improve our liquidity runway and advance our commercial and
clinical execution strategy. We have a talented and experienced
management team to lead us through this period of exciting growth
and shareholder value creation for our company.”
Financial Position:
The Company reported cash, cash equivalents and
investments of $83.2 million at the end of March 2022 that will
allow the Company to continue to drive the expansion of the MosaiQ
menu forward and continue the commercialization efforts following
the receipt of CE Mark for the Expanded Immunohematology
microarray. The recently announced financing strengthens the
Company’s cash position and provides additional financial and
operational flexibility and an improved liquidity runway.
MosaiQ Solution
Commercial Execution:
Extended Immunohematology
(IH) Launch: The Company recently secured $1.4 million of
orders in the first quarter of fiscal year 2023 for its recently CE
marked Extended IH MosaiQ solution.
Tenders: The Company will continue to participate
in upcoming IH tenders in Europe and expanding distribution outside
of the US. There are over 20 IH tenders which have been identified
by the Company and which it intends to pursue across Europe when
available for submission over the next 18 months. Quotient remains
active in preparing for new tenders in the rest of the world where
CE marking is accepted.
Distribution: In addition, the Company is focused
on expanding its distribution footprint across the major
international geographies. The Commercial team has signed nine
international agreements with distributors.
Transfusion Diagnostics:
Immunohematology (IH) Microarray: In March, the
Company received CE Mark for the MosaiQ Extended Immunohematology
(IH) Microarray. The receipt of CE Mark allows the Company to
commercialize the microarray for use with the Company’s MosaiQ
instrument across the European Union and other CE Mark recognizing
geographies.
The Company’s MosaiQ
platform offers an all-in-one, fully automated, high-performance
solution in blood-testing laboratories and other settings. The IH
microarray offers extended phenotyping, Antibody Screening and
Antigen Typing, including ABO forward and reverse grouping.
Laboratories and clinicians may use the platform to generate
comprehensive characterization of blood donor samples through a
single test procedure.
Serological
Disease Screening (SDS) Microarray: The Company has made
advances on the Extended SDS panel and continues to expect to
submit an application in the EU for CE mark in the second half of
calendar year 2022. The Company expects an EU commercial launch and
a US FDA BLA submission in the first half of calendar year
2023.
Clinical Diagnostics:The
recently announced Theradiag partnership serves as a key step to
introduce the multimodal, multiplexed MosaiQ solution to various
clinical diagnostic specialty segments with the aim of enabling
clinical labs to simplify the complexity of diagnostic algorithms
and accelerate standards of care. The first application covered by
their new collaboration will be a solution for Connective Tissue
Diseases (CTD). The autoimmune IVD pathway to market has a tighter
turnaround time due to different regulatory requirements and is at
a lower cost than blood transfusion. The Company estimates that
autoimmune diagnostics would provide an additional $2 billion
addressable market opportunity for Quotient’s MosaiQ solution.
Scientific & Medical
Affairs:The Company hosted a successful key opinion leader
(KOL) webinar (available on the Quotient website) with Dr.
Christophe Martinaud (MD, PhD), on the current landscape and unmet
needs within blood grouping and donor disease screening, providing
expert validation for the MosaiQ solution.
To further strengthen scientific and medical
synergies, a total of eight members are participating in the MosaiQ
Innovator’s Circle initiative. The goal of the initiative is to
create a community of experts at institutions across the world who
focus on transfusion medicine and clinical diagnostics. Members
partner with Quotient to create innovation and evidence generation
to improve patient care and laboratory efficiencies.
In addition, Quotient has established an
Investigator Initiated Research (IIR) program open to all
healthcare professionals who wish to study the clinical and
economic impact of the MosaiQ system.The Company recently announced
an international partnership with Centre Pasteur du Cameroon (CPC)
for the IIR program. This partnership will provide Quotient’s
R&D team with rare HIV samples and will sponsor young
scientists studying infectious diseases in Africa.
Additionally, the Company established a new
Scientific Advisory Board relating to Autoimmunity and Allergy and
has published a white paper focused on how increasing
phenotype-matched blood provided to hospital patients is expected
to make transfusion medicine safer and more effective.
Fiscal Fourth Quarter Financial
Results:The Alba by Quotient reagent business generated
product sales of $9.8 million in the fourth quarter of FY 2022, up
2% from the quarter ended March 31, 2021. OEM sales increased by 3%
and sales to direct customers and distributors were up 9% vs. Q4
FY2021. In the quarter ended March 31, 2022, gross margin on
product sales was at 39% compared to the gross of margin of 46%
reported in the quarter ended March 31, 2021.
Key revenue and profit results are summarized
below (expressed in thousands, except percentages)
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, |
|
|
Year Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in thousands, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Product sales - OEM customers |
|
$ |
6,654 |
|
|
$ |
6,470 |
|
|
$ |
25,653 |
|
|
$ |
23,224 |
|
Product sales - direct
customers and distributors |
|
|
3,132 |
|
|
|
2,870 |
|
|
|
12,539 |
|
|
|
11,287 |
|
Product sales - MosaiQ |
|
|
- |
|
|
|
240 |
|
|
|
91 |
|
|
|
1,276 |
|
Other revenues |
|
|
- |
|
|
|
58 |
|
|
|
231 |
|
|
|
7,592 |
|
Total
revenue |
|
$ |
9,786 |
|
|
$ |
9,638 |
|
|
$ |
38,514 |
|
|
$ |
43,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales from standing
purchase orders (%) |
|
|
69 |
% |
|
|
64 |
% |
|
|
66 |
% |
|
|
67 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
$ |
3,795 |
|
|
$ |
4,447 |
|
$ |
|
14,944 |
|
|
$ |
23,305 |
|
Gross profit as a % of total
revenue |
|
|
39 |
% |
|
|
46 |
% |
|
|
39 |
% |
|
|
54 |
% |
Gross margin on product sales
(%) |
|
|
39 |
% |
|
|
46 |
% |
|
|
38 |
% |
|
|
44 |
% |
Operating
loss |
|
$ |
(26,865 |
) |
|
$ |
(28,458 |
) |
$ |
|
(103,827 |
) |
|
$ |
(82,697 |
) |
Total operating expenses for the quarter
decreased by $2.2 million or 7% compared to the fourth quarter of
the prior fiscal year. This decrease is driven primarily by a
reduction in executive management transition payments compared to
the prior year.
Capital expenditures totaled $0.6 million in the
quarter ended March 31, 2022, compared with $0.6 million in the
quarter ended March 31, 2021.
Interest expense for the quarter increased by
$2.9 million compared to Q4 of FY 2021. The higher interest expense
recognized in the current period is driven by the issuance of our
Convertible Notes in fiscal year 2022 and an increase in our
estimated royalty liability as a result of an increase in
projected sales over the periods subject to the
agreement.
As of March 31, 2022, Quotient had $83.2 million
in cash and investments and $233.3 million of debt and $8.7 million
in restricted cash.
Of the $83.2 million in cash and investments,
$18.1 million relates to investments held in Credit Suisse Supply
Chain funds. In Q4, we determined that a further impairment of $1.0
million was required related to litigation costs incurred by Credit
Suisse which Credit Suisse communicated would be deducted from
investor recoveries. Our holdings in one of the Credit Suisse funds
has been classified as a long-term investment as of March 31,
2022.
Outlook for the Fiscal Year Ending March 31,
2023
- The Company expects total sales in the current fiscal year will
be in the range of $39 million to $42 million compared to $38.5
million in FY 2022.
- Capital expenditures for fiscal year 2023 are expected to be in
the range of $5 million to $10 million.
- The Company estimates that cash used for operations for fiscal
year 2023 will be in the range of $6.5 million to $7.5 million per
month (excluding debt service cost and capital expenditures).
The accompanying consolidated financial
statements have been prepared on a basis which assumes that
Quotient will continue as a going concern. However, the Company has
incurred net losses from operations in each year since it commenced
operations in 2007 and had an accumulated deficit of $725.0 million
as of March 31, 2022. The Company expects to include a disclosure
within its Annual Report on Form 10-K in respect of certain
conditions concerning the Company’s overall liquidity position that
raise substantial doubt about its ability to continue as a going
concern.
Conference Call:Quotient will
host a conference call on June 24th, 2022, at 8:00 a.m. Eastern
Time to provide a business update. Participants may access the call
by dialing 1-877-407-0784 in the U.S. or +1-201-689-8561 outside
the U.S. The access code is 13729874. The conference call will be
webcast live on the Company’s website
at www.quotientbd.com or by using the following
webcast link.
A replay of this conference call will be
available through July 8th, 2022, by dialing 1-877-407-0784 in the
U.S. or +1-201-689-8561 outside the U.S. The access code is
13729874.
About Quotient Limited
Building on over 30 years of experience in
transfusion diagnostics, Quotient is a commercial-stage diagnostics
company committed to delivering solutions that reshape the way
diagnostics is practiced. The MosaiQ solution, Quotient’s
proprietary multiplex microarray technology, offers the world’s
first fully automated, consolidated testing platform, allowing for
multiple tests across different modalities. The MosaiQ solution is
designed to be a game-changing solution, which Quotient believes
will increase efficiencies, improve clinical practice, and deliver
significant workflow improvements and operational cost savings to
laboratories around the world. Quotient’s operations are based in
Switzerland, Scotland, US, and the UAE.
The Quotient logo, Quotient MosaiQ and MosaiQ
are registered trademarks or trademarks of Quotient Limited and its
subsidiaries in various jurisdictions.
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 MosaiQ and other new
products (including the potential for using the Company’s MosaiQ
technology to infectious disease diagnostics), current estimates of
full year fiscal 2023 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 proceedings;
continued or worsening adverse conditions in the general domestic
and global economic markets, including as a result of the global
COVID-19 pandemic; 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, Quotient MosaiQ and MosaiQ are
registered trademarks or trademarks of Quotient Limited and its
subsidiaries in various jurisdictions.
CONTACT: Investor Relations, ir@quotientbd.com;
+41 22 545 52 26
|
Quotient Limited Condensed
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share
amounts) |
|
|
|
Year ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Revenue: |
|
|
|
|
|
|
Product sales |
|
$ |
38,283 |
|
|
$ |
35,787 |
|
Other revenues |
|
|
231 |
|
|
|
7,592 |
|
Total
revenue |
|
|
38,514 |
|
|
|
43,379 |
|
Cost of revenue |
|
|
(23,569 |
) |
|
|
(20,074 |
) |
Gross
profit |
|
|
14,944 |
|
|
|
23,305 |
|
Operating
expenses: |
|
|
|
|
|
|
Sales and marketing |
|
|
(11,023 |
) |
|
|
(9,849 |
) |
Research and development, net
of government grants |
|
|
(58,691 |
) |
|
|
(53,727 |
) |
General and administrative
expense: |
|
|
|
|
|
|
Compensation expense in respect of share options and
management equity incentives |
|
|
(6,951 |
) |
|
|
(4,984 |
) |
Other general and administrative expenses |
|
|
(42,107 |
) |
|
|
(37,442 |
) |
Total general and
administrative expense |
|
|
(49,058 |
) |
|
|
(42,426 |
) |
Total operating
expense |
|
|
(118,771 |
) |
|
|
(106,002 |
) |
Operating
loss |
|
|
(103,827 |
) |
|
|
(82,697 |
) |
Other income
(expense): |
|
|
|
|
|
|
Interest expense,
net |
|
|
(31,954 |
) |
|
|
(29,804 |
) |
Other, net |
|
|
11,612 |
|
|
|
2,723 |
|
Other income
(expense), net |
|
|
(20,342 |
) |
|
|
(27,081 |
) |
Loss before income
taxes |
|
|
(124,169 |
) |
|
|
(109,778 |
) |
Provision for income
taxes |
|
|
(961 |
) |
|
|
(1,254 |
) |
Net
loss |
|
$ |
(125,130 |
) |
|
$ |
(111,032 |
) |
Other comprehensive
income (loss): |
|
|
|
|
|
|
Change in fair value of
effective portion of foreign currency cash flow
hedges |
|
$ |
(355 |
) |
|
$ |
582 |
|
Unrealized loss on short-term
investments |
|
|
(186 |
) |
|
|
(898 |
) |
Foreign currency gain
(loss) |
|
|
6,007 |
|
|
|
(2,057 |
) |
Provision for pension benefit
obligation |
|
|
2,941 |
|
|
|
447 |
|
Other comprehensive
income (loss), net |
|
|
8,407 |
|
|
|
(1,926 |
) |
Comprehensive
loss |
|
$ |
(116,723 |
) |
|
$ |
(112,958 |
) |
Net loss available to ordinary
shareholders - basic and diluted |
|
$ |
(125,130 |
) |
|
$ |
(111,032 |
) |
Loss per share - basic and
diluted |
|
$ |
(1.23 |
) |
|
$ |
(1.21 |
) |
Weighted-average shares
outstanding - basic and diluted |
|
|
101,910,562 |
|
|
|
91,637,966 |
|
|
Quotient Limited Condensed
Consolidated Balance Sheets (In
thousands) |
|
|
|
March 31, 2022 |
|
|
March 31, 2021 |
|
ASSETS |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
65,059 |
|
|
$ |
45,673 |
|
Short-term investments |
|
|
2,626 |
|
|
|
65,999 |
|
Trade accounts receivable, net |
|
|
6,272 |
|
|
|
5,323 |
|
Inventories |
|
|
22,036 |
|
|
|
22,011 |
|
Prepaid expenses and other current assets |
|
|
5,761 |
|
|
|
4,870 |
|
Total current assets |
|
|
101,754 |
|
|
|
143,876 |
|
Restricted cash |
|
|
8,744 |
|
|
|
9,024 |
|
Long-term
investments |
|
|
15,467 |
|
|
|
— |
|
Property and equipment,
net |
|
|
33,242 |
|
|
|
39,071 |
|
Operating lease right-of-use
assets |
|
|
29,411 |
|
|
|
22,011 |
|
Intangible assets,
net |
|
|
520 |
|
|
|
619 |
|
Deferred income
taxes |
|
|
123 |
|
|
|
255 |
|
Other non-current
assets |
|
|
4,728 |
|
|
|
4,956 |
|
Total assets |
|
$ |
193,989 |
|
|
$ |
219,812 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
4,524 |
|
|
$ |
4,659 |
|
Accrued compensation and benefits |
|
|
8,503 |
|
|
|
12,343 |
|
Accrued expenses and other current liabilities |
|
|
15,729 |
|
|
|
14,009 |
|
Current portion of long-term debt |
|
|
— |
|
|
|
24,167 |
|
Current portion of operating lease liability |
|
|
3,535 |
|
|
|
3,446 |
|
Current portion of finance lease obligation |
|
|
537 |
|
|
|
835 |
|
Total current liabilities |
|
|
32,828 |
|
|
|
59,459 |
|
Long-term debt, less current
portion |
|
|
233,313 |
|
|
|
145,059 |
|
Derivative
liabilities |
|
|
13,515 |
|
|
|
— |
|
Operating lease liability,
less current portion |
|
|
28,753 |
|
|
|
20,907 |
|
Finance lease obligation, less
current portion |
|
|
388 |
|
|
|
445 |
|
Deferred income
taxes |
|
|
1,988 |
|
|
|
1,152 |
|
Defined benefit pension plan
obligation |
|
|
4,777 |
|
|
|
6,896 |
|
7% Cumulative redeemable
preference shares |
|
|
22,525 |
|
|
|
21,475 |
|
Total liabilities |
|
|
338,087 |
|
|
|
255,393 |
|
Commitments and
contingencies |
|
|
|
|
|
|
Shareholders' equity
(deficit): |
|
|
|
|
|
|
Ordinary shares (nil par value) 102,611,397 and 101,264,412 issued
and outstanding at March 31, 2022 and March 31, 2021
respectively |
|
|
540,736 |
|
|
|
540,813 |
|
Additional paid in capital |
|
|
46,399 |
|
|
|
38,116 |
|
Accumulated other comprehensive loss |
|
|
(6,191 |
) |
|
|
(14,598 |
) |
Accumulated deficit |
|
|
(725,042 |
) |
|
|
(599,912 |
) |
Total shareholders' equity (deficit) |
|
|
(144,098 |
) |
|
|
(35,581 |
) |
Total liabilities and shareholders' equity
(deficit) |
|
$ |
193,989 |
|
|
$ |
219,812 |
|
|
Quotient Limited Condensed
Consolidated Statements of Cash Flows (In
thousands) |
|
|
|
Year ended March 31, |
|
|
2022 |
|
|
2021 |
OPERATING
ACTIVITIES: |
|
|
|
|
|
Net loss |
|
$ |
(125,130 |
) |
|
|
$ |
(111,032 |
) |
Adjustments to
reconcile net loss to net cash provided by operating
activities operating
activities: |
|
|
|
|
|
|
Depreciation, amortization and
loss on disposal of fixed assets |
|
|
7,417 |
|
|
|
|
8,354 |
|
Share-based
compensation |
|
|
6,156 |
|
|
|
|
4,984 |
|
Increase in deferred lease
rentals |
|
|
659 |
|
|
|
|
726 |
|
Swiss pension
obligation |
|
|
669 |
|
|
|
|
1,054 |
|
Amortization of deferred debt
issue costs and discount |
|
|
11,020 |
|
|
|
|
12,965 |
|
Impairment of
investments |
|
|
970 |
|
|
|
|
2,285 |
|
Change in fair value of
derivative instruments |
|
|
(19,395 |
) |
|
|
|
— |
|
Accrued preference share
dividends |
|
|
1,050 |
|
|
|
|
1,050 |
|
Provision for income
taxes |
|
|
961 |
|
|
|
|
1,254 |
|
Net change in assets
and liabilities: |
|
|
|
|
|
Trade accounts receivable,
net |
|
|
(1,143 |
) |
|
|
|
568 |
|
Inventories |
|
|
(165 |
) |
|
|
|
(475 |
) |
Accounts payable and accrued
liabilities |
|
|
3,418 |
|
|
|
|
(3,410 |
) |
Accrued compensation and
benefits |
|
|
(3,735 |
) |
|
|
|
4,549 |
|
Other assets |
|
|
(1,796 |
) |
|
|
|
(454 |
) |
Net cash used in
operating activities |
|
|
(119,044 |
) |
|
|
|
(77,582 |
) |
INVESTING
ACTIVITIES: |
|
|
|
|
|
Increase in short-term
investments |
|
|
(4,500 |
) |
|
|
|
(87,247 |
) |
Realization of short-term
investments |
|
|
51,425 |
|
|
|
|
134,936 |
|
Purchase of property and
equipment |
|
|
(2,851 |
) |
|
|
|
(4,240 |
) |
Purchase of intangible
assets |
|
|
— |
|
|
|
|
— |
|
Net cash from
investing activities |
|
|
44,074 |
|
|
|
|
43,449 |
|
FINANCING
ACTIVITIES: |
|
|
|
|
|
Repayment of finance
leases |
|
|
(713 |
) |
|
|
|
(633 |
) |
Proceeds from issuance of
long-term debt |
|
|
104,222 |
|
|
|
|
— |
|
Debt issuance costs |
|
|
(3,732 |
) |
|
|
|
— |
|
Repayment of long-term
debt |
|
|
(12,083 |
) |
|
|
|
— |
|
(Cost of) proceeds from
issuance of ordinary shares and warrants |
|
|
(76 |
) |
|
|
|
80,881 |
|
Net cash generated
from financing activities |
|
|
87,618 |
|
|
|
|
80,248 |
|
Effect of exchange rate
fluctuations on cash and cash equivalents |
|
|
6,458 |
|
|
|
|
(4,358 |
) |
Change in cash and cash
equivalents |
|
|
19,106 |
|
|
|
|
41,757 |
|
Beginning cash and cash
equivalents |
|
|
54,697 |
|
|
|
|
12,940 |
|
Ending cash and cash
equivalents |
|
$ |
73,803 |
|
|
|
$ |
54,697 |
|
Supplemental cash flow
disclosures: |
|
|
|
|
|
Income taxes paid |
|
$ |
— |
|
|
|
$ |
— |
|
Interest paid |
|
$ |
19,008 |
|
|
|
$ |
17,529 |
|
Reconciliation of cash, cash
equivalents and restricted cash: |
|
|
|
|
$ |
— |
|
Cash and cash equivalents |
|
$ |
65,059 |
|
|
|
$ |
45,673 |
|
Restricted cash |
|
$ |
8,744 |
|
|
|
$ |
9,024 |
|
Total cash, cash equivalents
and restricted cash |
|
$ |
73,803 |
|
|
|
$ |
54,697 |
|
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