Quotient Limited Provides Updates on European Hypercare Launch, the CE Mark Submission and U.S. Field Trial for the Initial Serological Disease Screening Microarray, and Reports First Quarter Fiscal 2020 Results
  • First European hypercare launch site initiated following CE mark approval
  • Initial Serological Disease Screening microarray submitted for CE marking
  • U.S. field trial activities for initial Serological Disease Screening commenced
  • 13 blood grouping reagents approved by the FDA for use with OEM automation
  • Record liquid reagent revenues recognized once again in the quarter

JERSEY, Channel Islands, Aug. 05, 2019 (GLOBE NEWSWIRE) -- Quotient Limited (NASDAQ: QTNT) (Quotient or the Company), a commercial-stage diagnostics company, today provided an update on the commencement of its EU hypercare launch during July 2019; on the completion of its initial Serological Disease Screening (SDS) microarray CE mark submission, which occurred in June 2019, and on the commencement of the initial SDS U.S. field trial last month. In addition, the Company reported 13 blood grouping reagents approved by the U.S. Food and Drug Administration (FDA) for use with original equipment manufacturer (OEM) automation and the financial results for its fiscal first quarter ended June 30, 2019 which showed continued organic revenue growth compared to the prior quarter ended March 31, 2019 and the quarter ended June 30, 2018.

“There is a lot to be both pleased about and also to be proud of in this quarter’s achievements. The first hypercare site which was up and running in July marks a real milestone for our Company and the MosaiQ technology, commented Franz Walt, Quotient’s Chief Executive Officer. Mr Walt added, “As I have shared previously our commercial strategy is driven by menu expansion. The CE mark submission in June of the initial SDS microarray and the commencement of our U.S. field trial for this important assay are important steps towards delivering a significant reduction in complexity and meaningful cost savings to Quotient’s customers. In addition, future growth in our liquid reagent business will be underpinned by the products recently approved by the FDA.”

MosaiQ Platform

MosaiQ, Quotient's next-generation platform is designed to deliver 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. MosaiQ is designed to radically reduce labor costs and complexity associated with existing practice.

Regulatory and Commercial Milestones

  • Initial European Regulatory Approval – Quotient filed for European regulatory approval for its initial MosaiQ immunohematology (IH) microarray in late September 2018 and was notified of its approval on April 30, 2019.
  • European Commercialization – Following the CE mark for the initial IH microarray, Quotient commenced a hypercare launch with the first of nine selected customers during July 2019.
  • Ongoing Microarray Menu Development– Quotient continues to plan for the expansion of the IH and SDS testing menus during the second half of calendar 2019.
  • Field Trials – Quotient expects to commence European and U.S. field trials with the expanded IH microarray menu in the second half of calendar 2019.  Quotient has commenced U.S. field trial activity for the initial SDS microarray and expects to commence European and U.S. field trials for the expanded SDS microarray early in calendar 2020.
  • Ongoing Regulatory Approval Process – Quotient completed a CE mark submission for the initial SDS microarray in June 2019.  Quotient expects to file for U.S. and European regulatory approval for the expanded IH microarray early in calendar year 2020 and for the expanded SDS microarray later in the first half of 2020.

Franz Walt commented, “We continue to deliver on the plans that we made over a year ago. This reflects our continued focus and improved executional capabilities.” Mr. Walt added, “Everything we have to do now is linked to developing our value proposition through menu expansion and then delivering an outstanding customer experience. Also, later this year we plan to present data derived from an independent research study to demonstrate the effectiveness of MosaiQ for molecular disease screening (MDS).”                                  

Fiscal First Quarter 2020 Financial Results

“The conventional reagent business continues to deliver top line growth, with record product sales of $8.2 million in the first quarter, up 3.9% from the quarter ended June 30, 2018,” said Franz Walt. Mr Walt added, “This performance was driven by 1.6% growth in sales to OEM customers, while direct product sales grew 9.7%. In the quarter ended June 30, 2019, gross margin on product sales improved sequentially by 60 basis points from the 43.5% product sales gross margin reported in the prior quarter ended March 31, 2019. Year over year, gross margin was adversely impacted by $0.4 million of incremental depreciation and other non-cash costs, related to bringing our new Allen Robb Campus (ARC) online, compared to the equivalent costs in the prior year’s quarter ended June 30, 2018.  

Key revenue and profit results are summarized below (expressed in thousands):

    Quarter Ended  
    June 30,  
    2019     2018  
Product sales —OEM Customers   $ 5,737     $ 5,647  
Product sales — direct customers and distributors     2,432       2,217  
Other revenues           19  
Total revenue   $ 8,169     $ 7,883  
Product sales from standing orders (%)     68 %     65 %
Gross profit   $ 3,606     $ 3,818  
Gross profit as a % of total revenue     44.1 %     48.4 %
Gross margin on product sales (%)     44.1 %     48.3 %
Operating (loss)   $ (18,424 )   $ (18,538 )

Capital expenditures totaled $1.1 million in the quarter ended June 30, 2019, compared with $1.4 million in the quarter ended June 30, 2018.

Quotient ended the quarter with $90.7 million in cash and other short-term investments, $148.1 million of debt, and $8.7 million in an offsetting long-term cash reserve account.

Financing Event

On May 15, 2019, the Company issued an additional $25 million principal amount of its 12% Senior Secured Notes due 2024. The available net proceeds of the offering were approximately $22.6 million after deducting the estimated expenses payable by the Company and amounts held as restricted cash under the terms of the indenture.

Outlook for the Fiscal Year Ending March 31, 2020

  • Total product sales are still expected to be in the range of $30 to $31 million for the full fiscal year. Other revenue (product development fees) of approximately $1.0 million are also expected. 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.
  • Operating loss, reflecting incremental investments in our development priorities, is expected to be in the range of $77 to $82 million including approximately $18.5 million of non-cash expenses such as depreciation, amortization and stock compensation.
  • Capital expenditures are expected to be in the range of $5 to $10 million.

Product sales in the second quarter of fiscal 2020 are expected to be in the range of $6.3 to $6.7 million, compared with $6.2 million for the second quarter of fiscal 2019.

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 Monday, August 5th at 8:00 a.m. Eastern Time to discuss its first quarter fiscal 2020 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 12th by dialing 1-844-512-2921 in the U.S. or 1-412-317-6671 outside the U.S. The replay access code is 13692663.

About Quotient Limited

Building on 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. MosaiQ, Quotient’s proprietary multiplex microarray technology, offers the world’s first fully automated, consolidated testing platform, allowing for multiple tests across different modalities. MosaiQ is designed to be a game-changing solution, which Quotient believes will increase efficiencies, improve clinical practice, deliver significant workflow improvements, and operational cost savings to laboratories around the world. Quotient's operations are based in Eysins, Switzerland, Edinburgh, Scotland 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 MosaiQ and other new products (including the application of MosaiQ to infectious disease diagnostics), current estimates of second quarter and full year fiscal 2020 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.

CONTACT:Chris Lindop, Chief Financial Officer – chris.lindop@quotientbd.com; +41 22 545 52 26

Quotient Limited
Condensed Consolidated Statements Of Comprehensive Loss
(in thousands, except share and per share amounts)
    Quarter Ended  
    June 30,  
    2019     2018  
Product sales   $ 8,169     $ 7,864  
Other revenues           19  
Total revenue     8,169       7,883  
Cost of revenue     4,563       4,065  
Gross profit     3,606       3,818  
Operating expenses:                
Sales and marketing     2,580       2,281  
Research and development, net     11,653       12,570  
General and administrative expense     7,797       7,505  
Total operating expense     22,030       22,356  
Operating loss     (18,424 )     (18,538 )
Other income (expense)                
Interest expense, net     (6,086 )     (3,116 )
Other, net     952       (3,512 )
Other expense, net     (5,134 )     (6,628 )
Loss before income taxes     (23,558 )     (25,166 )
Provision for income taxes     (13 )     (11 )
Net loss   $ (23,571 )   $ (25,177 )
Other comprehensive income (loss):                
Change in fair value of effective portion of foreign currency cash flow hedges   $ (120 )   $ (332 )
Unrealized gain on short-term investments     147       26  
Foreign currency gain (loss)     (1,014 )     357  
Provision for pension benefit obligation     48       36  
Other comprehensive income (loss)     (939 )     87  
Comprehensive loss   $ (24,510 )   $ (25,090 )
Net loss available to ordinary shareholders - basic and diluted   $ (23,571 )   $ (25,177 )
Loss per share - basic and diluted   $ (0.36 )   $ (0.55 )
Weighted-average shares outstanding - basic and diluted     66,078,290       45,796,533  

Quotient Limited
Condensed Consolidated Balance Sheets
(In Thousands)

    June 30, 
    March 31,
Current assets:                
Cash and cash equivalents   $ 6,528     $ 4,096  
Short-term investments     84,151       90,729  
Trade accounts receivable, net     4,724       3,348  
Inventories     16,712       15,551  
Prepaid expenses and other current assets     3,326       3,202  
Total current assets     115,441       116,926  
Restricted cash     9,016       7,507
Property and equipment, net     45,506       47,293  
Operating lease right-of-use assets     17,615        
Intangible assets, net     707       751  
Deferred income taxes     592       605  
Other non-current assets     4,568       4,688  
Total assets   $ 193,445     $ 177,770  
Current liabilities:                
Accounts payable   $ 5,342     $ 5,936  
Accrued compensation and benefits     4,372       6,149  
Accrued expenses and other current liabilities     9,441       12,458  
Current portion of operating lease liability     2,723        
Current portion of deferred lease rental benefit           435  
Capital lease obligation     457       471  
Total current liabilities     22,335       25,449  
Long-term debt     148,088       121,855  
Operating lease liability, less current portion     16,176        
Deferred lease rental benefit, less current portion           1,144  
Capital lease obligation, less current portion     753       865  
Defined benefit pension plan obligation     7,647       7,368  
7% Cumulative redeemable preference shares     19,638       19,375  
Total liabilities     214,637       176,056  
Total shareholders' equity (deficit)     (21,192 )     1,714  
Total liabilities and shareholders' equity (deficit)   $ 193,445     $ 177,770  

Quotient Limited
Condensed Consolidated Statements of Cash Flows
(In Thousands)

    Quarter ended
June 30,
    2019     2018  
Net loss   $ (23,571 )   $ (25,177 )
Adjustments to reconcile net loss to net cash provided by operating activities:                
Depreciation and amortization     3,038       3,333  
Share-based compensation     1,178       1,347  
Amortization of lease incentive     (109 )     (108 )
Swiss pension obligation     183       155  
Amortization of deferred debt issue costs     2,107       291  
Accrued preference share dividends     263       263  
Deferred income taxes     13       11  
Net change in assets and liabilities:                
Trade accounts receivable, net     (1,439 )     (141 )
Inventories     (1,160 )     (28 )
Accounts payable and accrued liabilities     (3,713 )     (5,401 )
Accrued compensation and benefits     (1,699 )     1,057  
Other assets     (145 )     3,280  
Net cash used in operating activities     (25,054 )     (21,118 )
Increase in short-term investments     (15,000 )      
Realization of short-term investments     21,724        
Purchase of property and equipment     (1,138 )     (1,428 )
Net cash generated from (used in) investing activities     5,586       (1,428 )
Repayment of finance leases     (94 )     (116 )
Proceeds from drawdown of new debt     25,000       36,000  
Debt issuance costs and fees paid to noteholders     (874 )     (1,213 )
Proceeds from issuance of ordinary shares and warrants     63       2,195  
Net cash generated from financing activities     24,095       36,866  
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash     (686 )     3,304  
Change in cash, cash equivalents and restricted cash     3,941       17,624  
Beginning cash, cash equivalents and restricted cash     11,603       25,205  
Ending cash, cash equivalents and restricted cash   $ 15,544     $ 42,829  
Supplemental cash flow disclosures:                
Income taxes paid   $     $  
Interest paid   $ 7,221     $ 5,069  
Reconciliation of cash, cash equivalents and restricted cash:                
  Cash and cash equivalents   $ 6,528     $ 35,629  
  Restricted cash     9,016       7,200  
Total cash, cash equivalents and restricted cash   $ 15,544     $ 42,829  

Quotient Limited logo

Source: Quotient Limited