qtnt-8k_20180205.htm

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

—————————

FORM 8‑K

—————————

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 5, 2018 (February 5, 2018)

—————————

QUOTIENT LIMITED
(Exact name of registrant as specified in its charter)

 

Jersey, Channel Islands

001‑36415

Not Applicable

(State or other jurisdiction
of incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

B1, Business Park Terre Bonne,
Route de Crassier 13,

1262 Eysins, Switzerland

Not Applicable

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: 011-41-22-716-9800

n/a
(Former name or former address, if changed since last report.)

—————————

Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a‑12 under the Exchange Act (17 CFR 240.14a‑12)

 

Pre‑commencement communications pursuant to Rule 14d‑2(b) under the Exchange Act (17 CFR 240.14d‑2(b))

 

Pre‑commencement communications pursuant to Rule 13e‑4(c) under the Exchange Act (17 CFR 240.13e‑4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 

 


 

Item 2.02. Results of Operations and Financial Condition.

On February 5, 2018, Quotient Limited issued an earnings release announcing its financial results for the quarter ended December 31, 2017.  A copy of the earnings release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

The information in this Current Report, including the exhibit hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.  The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, unless it is specifically incorporated by reference therein.

 

Item 9.01. Financial Statements and Exhibits.

The following is a list of exhibits filed as part of this Current Report on form 8-K:

 

Exhibit 99.1Earnings Release, dated February 5, 2018.

 

 

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

QUOTIENT LIMITED

 

By:

 

/s/ Paul Cowan

 

Name: Paul Cowan

 

Title: Chief Executive Officer

Date: February 5, 2018

 

 

 

qtnt-ex99_63.htm

Exhibit 99.1

 

 

 

 

Quotient Limited Updates on Status of MosaiQ Performance
and Provides Third Quarter Fiscal 2018 Financial Results

 

Manufacturing process change implemented with improved assay performance

 

Verification and Validation (V&V) studies for blood grouping to resume

 

MosaiQ SDS Microarray preparing to enter into formal V&V studies

 

European Field Trials to commence following completion of V&V studies

 

Conventional reagent business continues strong revenue and profitability growth

JERSEY, Channel Islands, February 5, 2018 (GLOBENEWSWIRE) -- Quotient Limited (NASDAQ:QTNT), a commercial-stage diagnostics company, today reported continued positive progress for the commercial scale-up of MosaiQ™ and its financial results for its fiscal third quarter and nine months ended December 31, 2017.

Paul Cowan, Quotient’s CEO and Chairman commented “I am very pleased to announce the successful completion of the planned modifications to the MosaiQ manufacturing process announced in early January. These modifications were designed to further improve the performance and reliability of MosaiQ, which has been demonstrated with our latest performance evaluation data. In the next several days we expect to resume the V&V study for blood grouping, which is the final step prior to commencing our European field trials”. Mr. Cowan added “the improved manufacturing processes are expected to benefit the performance of the expanded assay menu to be incorporated into the MosaiQ IH II Microarray, which is currently moving from development into manufacturing. MosaiQ will deliver the benefits of high throughput automation with the ease of use and cost efficiency of a single universal testing platform, providing our customers with the capability to fully characterize and screen each unit of donated blood in a single testing event”

MosaiQ IH Microarray - Antigen Typing

A summary of the latest performance evaluation data for antigen typing, following the recent manufacturing process changes, is set out below:

Blood Group Antigen

A

B

D

C

c

E

e

Cw

K

k

Concordance

100.0%

100.0%

99.6%

100.0%

99.9%

100.0%

100.0%

100.0%

100.0%

100.0%

 

In this study 766 donor samples were tested and the results compared with predicate technologies.

 

 


 

MosaiQ IH Microarray - Antibody Detection

The latest performance evaluation data for antibody detection continues to indicate performance at 99.0% concordance compared with the predicate technology.  

MosaiQ SDS Microarray

The latest process validation data for the initial disease screening microarray (to detect CMV and Syphilis) supports the decision to move into a formal V&V study for this product. The most recent performance evaluation data are summarized below:

Pathogen

Sensitivity

Specificity

CMV

100.0%

99.5%

Syphilis

100.0%

99.4%

 

In this study a total of 548 known positive and negative samples were tested.  59% of samples tested for CMV were positive and 35% of samples tested for Syphilis were positive.  

Upcoming Regulatory and Commercial Milestones

Building on these recent achievements Quotient expects a number of key development, regulatory and commercial milestones to be achieved during calendar 2018, which include:

Completion of EU field trials and regulatory approval for the MosaiQ IH Microarray, the MosaiQ IH II Microarray (incorporating the extended antigen typing panel for donor testing) and the MosaiQ SDS Microarray (for CMV and Syphilis)

European Commercialization – Quotient has commenced the commercialization of MosaiQ in Europe, where it has already been invited to participate in tenders by European donor testing agencies

Completion of U.S. Field Trials for the MosaiQ IH II Microarray and the MosaiQ SDS Microarray (for CMV and Syphilis)

Completion of development for the MosaiQ IH III Microarray (for patient testing) and the MosaiQ SDS II Micorarray encompassing the full serological disease screening panel for donor disease screening (for red cells and plasma).

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 designed to radically reduce labor costs and complexity associated with existing practice.

Fiscal Third Quarter 2018 Financial Results

“During the third quarter, strong revenue growth was generated by all key categories of our conventional reagent business.  Both our OEM and U.S. direct businesses had another very strong quarterly performance, which contributed to year over year growth in product sales and gross profit from product sales of 17% and 49% respectively, ” said Paul Cowan.

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

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales —OEM Customers

 

$

3,829

 

 

$

3,502

 

 

$

12,625

 

 

$

10,860

 

Product sales — direct customers and distributors

 

 

1,824

 

 

 

1,339

 

 

 

5,164

 

 

 

4,541

 

Other revenues

 

 

206

 

 

 

 

 

 

806

 

 

 

1,300

 

Total revenue

 

$

5,859

 

 

$

4,841

 

 

$

18,595

 

 

$

16,701

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales from standing orders (%)

 

 

76

%

 

 

75

%

 

 

75

%

 

 

75

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

3,534

 

 

$

2,239

 

 

$

10,652

 

 

$

8,247

 

Gross profit as a % of total revenue

 

 

60.3

%

 

 

46.3

%

 

 

57.3

%

 

 

49.4

%

Gross margin on product sales (%)

 

 

58.9

%

 

 

46.3

%

 

 

55.3

%

 

 

45.1

%

Operating (loss)

 

$

(17,095

)

 

$

(22,430

)

 

$

(52,062

)

 

$

(56,321

)

 

Net cash used in operating activities totaled $20.3 million in the third quarter of fiscal 2018 (“3QFY18”), compared with $13.8 million in the third quarter of fiscal 2017 (“3QFY17”).  Capital expenditures totaled $5.1 million in 3QFY18, compared with $5.8 million in 3QFY17, largely reflecting expenditures in connection with the construction of the Company’s conventional reagent manufacturing facility near Edinburgh, Scotland. Quotient ended 3QFY18 with $34 million in cash and other short-term investments.

During the quarter the Company completed a private placement of 7,864,683 ordinary shares and 550,000 pre-paid warrants, together with warrants for the purchase of a further 8,414,683 ordinary shares at $5.80 per share, prior to July 31, 2018, which were issued at a purchase price of $0.125 per warrant. The initial sale of ordinary shares and warrants generated proceeds of approximately $40 million.

Outlook for the Fiscal Year Ending March 31, 2018

Total revenue for the fiscal year ending March 31, 2018 is now expected to be in the range of $24.1 to $24.6 million. Total revenue expectations now include other revenue of $0.8 which was formerly expected to be $2 million, due to lower than anticipated product development fee resulting from a delay in the regulatory approval of certain liquid reagent products. Total revenue for the fiscal year ended March 31, 2017 was $22.2 million, including product development fees of $2.1 million.

Product sales for the fiscal year ending March 31, 2018 are now expected to be $23.3 to $23.8

 


 

million, compared with Product sales of $20.1 million for the fiscal year ended March 31, 2017.

Operating loss in the range of $70.0 to $75.0 million, including non-cash items of $20.0 to $21.0 million.

Product sales in the fourth quarter of fiscal 2018 are expected to be within the range of $5.5 to $6.0 million, compared with $4.7 million for the fourth 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 our 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, February 6 th at 8:30 a.m. Eastern Time to discuss its third 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 also be webcast live on the Company’s website at www.quotientbd.com.

A replay of this conference call will be available through February 13 th by dialing 1-844-512-2921 in the U.S. or 1-412-317-6671 outside the U.S. The replay access code is 13675659.

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 diagnostics platforms. The Company’s operations are based in Switzerland, Scotland and the U.S.

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, and current estimates of fourth quarter and full year fiscal 2018 operating results. 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)

(unaudited)

 

 

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

$

5,653

 

 

$

4,841

 

 

$

17,789

 

 

$

15,401

 

Other revenues

 

 

206

 

 

 

 

 

 

806

 

 

 

1,300

 

Total revenue

 

 

5,859

 

 

 

4,841

 

 

 

18,595

 

 

 

16,701

 

Cost of revenue

 

 

2,325

 

 

 

2,602

 

 

 

7,943

 

 

 

8,454

 

Gross profit

 

 

3,534

 

 

 

2,239

 

 

 

10,652

 

 

 

8,247

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

1,910

 

 

 

1,836

 

 

 

5,461

 

 

 

4,367

 

Research and development, net

 

 

11,929

 

 

 

17,183

 

 

 

37,944

 

 

 

43,479

 

General and administrative expense

 

 

6,790

 

 

 

5,650

 

 

 

19,309

 

 

 

16,722

 

Total operating expense

 

 

20,629

 

 

 

24,669

 

 

 

62,714

 

 

 

64,568

 

Operating loss

 

 

(17,095

)

 

 

(22,430

)

 

 

(52,062

)

 

 

(56,321

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(3,249

)

 

 

(4,168

)

 

 

(11,656

)

 

 

(6,552

)

Other, net

 

 

33

 

 

 

(4,568

)

 

 

1,478

 

 

 

(1,888

)

Other expense, net

 

 

(3,216

)

 

 

(8,736

)

 

 

(10,178

)

 

 

(8,440

)

Loss before income taxes

 

 

(20,311

)

 

 

(31,166

)

 

 

(62,240

)

 

 

(64,761

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(20,311

)

 

$

(31,166

)

 

$

(62,240

)

 

$

(64,761

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of effective portion of

     foreign currency cash flow hedges

 

$

(64

)

 

$

29

 

 

$

409

 

 

$

(310

)

Unrealized gain on short-term investments

 

 

(7

)

 

 

 

 

 

25

 

 

 

 

Foreign currency gain (loss)

 

 

(168

)

 

 

(594

)

 

 

1,144

 

 

 

(6,326

)

Provision for pension benefit obligation

 

 

45

 

 

 

46

 

 

 

132

 

 

 

129

 

Other comprehensive income (loss)

 

 

(194

)

 

 

(519

)

 

 

1,710

 

 

 

(6,507

)

Comprehensive loss

 

$

(20,505

)

 

$

(31,685

)

 

$

(60,530

)

 

$

(71,268

)

Net loss available to ordinary shareholders

     - basic and diluted

 

$

(20,311

)

 

$

(31,166

)

 

$

(62,240

)

 

$

(64,761

)

Loss per share - basic and diluted

 

$

(0.47

)

 

$

(1.06

)

 

$

(1.58

)

 

$

(2.34

)

Weighted-average shares outstanding - basic and

     diluted

 

 

43,353,506

 

 

 

29,508,330

 

 

 

39,274,570

 

 

 

27,689,009

 


 


 

 

Quotient Limited

Condensed Consolidated Balance Sheets

(In Thousands)

(Unaudited)

 

 

 

 

 

 

December 31,

2017

 

 

March 31, 2017

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,150

 

 

$

4,754

 

Short-term investments

 

 

27,679

 

 

 

16,057

 

Trade accounts receivable, net

 

 

2,021

 

 

 

2,556

 

Inventories

 

 

16,521

 

 

 

13,636

 

Prepaid expenses and other current assets

 

 

3,649

 

 

 

3,629

 

Total current assets

 

 

56,020

 

 

 

40,632

 

Cash reserve account

 

 

5,040

 

 

 

5,040

 

Property and equipment, net

 

 

75,894

 

 

 

63,530

 

Intangible assets, net

 

 

829

 

 

 

769

 

Total assets

 

$

137,783

 

 

$

109,971

 

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

11,316

 

 

$

10,782

 

Accrued compensation and benefits

 

 

2,815

 

 

 

3,641

 

Accrued expenses and other current liabilities

 

 

7,611

 

 

 

13,509

 

Current portion of lease incentive

 

 

433

 

 

 

422

 

Capital lease obligation

 

 

1,764

 

 

 

1,374

 

Total current liabilities

 

 

23,939

 

 

 

29,728

 

Long-term debt

 

 

84,087

 

 

 

80,704

 

Lease incentive, less current portion

 

 

541

 

 

 

844

 

Capital lease obligation, less current portion

 

 

1,496

 

 

 

174

 

Defined benefit pension plan obligation

 

 

5,837

 

 

 

5,337

 

7% Cumulative redeemable preference shares

 

 

18,062

 

 

 

17,275

 

Total liabilities

 

 

133,962

 

 

 

134,062

 

Total shareholders' equity (deficit)

 

 

3,821

 

 

 

(24,091

)

Total liabilities and shareholders' equity (deficit)

 

$

137,783

 

 

$

109,971

 


 


 

 

Quotient Limited

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

 

 

 

 

Nine months ended

December 31,

 

 

 

2017

 

 

2016

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(62,240

)

 

$

(64,761

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,678

 

 

 

7,029

 

Share-based compensation

 

 

3,458

 

 

 

3,089

 

Amortization of lease incentive

 

 

(324

)

 

 

(323

)

Swiss pension obligation

 

 

494

 

 

 

489

 

Amortization of deferred debt issue costs

 

 

3,383

 

 

 

6,096

 

Accrued preference share dividends

 

 

788

 

 

 

788

 

Net change in assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable, net

 

 

681

 

 

 

246

 

Inventories

 

 

(2,347

)

 

 

(1,310

)

Accounts payable and accrued liabilities

 

 

(4,066

)

 

 

6,660

 

Accrued compensation and benefits

 

 

(886

)

 

 

(85

)

Other assets

 

 

456

 

 

 

(700

)

Net cash used in operating activities

 

 

(52,925

)

 

 

(42,782

)

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Increase in short-term investments

 

 

(78,000

)

 

 

(30,009

)

Realization of short-term investments

 

 

66,403

 

 

 

 

Purchase of property and equipment

 

 

(17,343

)

 

 

(15,206

)

Purchase of intangible assets

 

 

(68

)

 

 

(65

)

Net cash used in investing activities

 

 

(29,008

)

 

 

(45,280

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Repayment of finance leases

 

 

(135

)

 

 

(108

)

Proceeds from drawdown of new debt

 

 

 

 

 

84,000

 

Issue costs of new debt

 

 

 

 

 

(5,493

)

Repayment of debt

 

 

 

 

 

(33,450

)

Proceeds from issuance of ordinary shares and warrants

 

 

84,985

 

 

 

16,374

 

Net cash generated from financing activities

 

 

84,850

 

 

 

61,323

 

Effect of exchange rate fluctuations on cash and cash equivalents

 

 

(1,521

)

 

 

(3,033

)

Change in cash and cash equivalents

 

 

1,396

 

 

 

(29,772

)

Beginning cash and cash equivalents

 

 

4,754

 

 

 

44,100

 

Ending cash and cash equivalents

 

$

6,150

 

 

$

14,328

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

 

 

Income taxes paid

 

$

 

 

$

 

Interest paid

 

$

10,108

 

 

$

1,687