Mr. Cameron Groome reports
MICROBIX REPORTS RESULTS FOR Q1 FISCAL 2020
Microbix Biosystems Inc. has released results for its first quarter of fiscal 2020, ended Dec. 31, 2019, with positive cash flow from operations (CFO) and seasonally weak sales.
Microbix regularly has its weakest quarterly sales in its fiscal first quarters, due to there seasonally being few shipments of its proficiency-testing-oriented (PT) quality assessment products (QAP). Q1 was no exception, with sales further reduced year over year due to the timing of antigen shipments. However, positive CFO of $237,792 was achieved even in the face of low quarterly sales, for a CFO improvement of $209,067 over the corresponding quarter of fiscal 2019.
For fiscal 2020, further sales growth and continuing improvements to gross and net margins are targeted and expected. Microbix remains committed to improving its operational and financial strength and thereby driving share price appreciation.
First quarter financial results
Total Q1 revenue was $2,046,348, a 17-per-cent decrease from 2019 first quarter revenue of $2,460,812. Included were antigen product revenues of $1,972,578 (Q1 2019 -- $2,366,790), QAP revenues of $26,114 (Q1 2019 -- $6,044) and revenue from royalties of $73,775 (Q1 2019 -- $94,022). Q1 sales were principally to antigen customers in North American and Europe and were across multiple customers and products.
Gross margin for Q1 was 51 per cent, largely flat versus 52 per cent in the first quarter of fiscal 2019. Margin improvements from increasing sales of bioreactor-produced antigen were overshadowed by product mix fluctuations. Seasonally low PT-oriented QAP sales in the first quarter each year also suppressed margins, although non-PT QAPs led to overall Q1 segment sales growth of 432 per cent year over year.
Operating expenses for Q1 increased by $219,154 from 2019, due to further investment in QAP sales, marketing and business development, and foreign exchange losses incurred in the current quarter. Combined with low Q1 sales, a net loss of $585,265 was reported in Q1, versus a prior-year first quarter net loss of $119,296. As stated earlier, CFO improved for Q1 over the prior year, to positive $237,792, and Microbix remains operationally stable. The company's financial position was further improved as a result of the proceeds of the non-brokered private placement financing of $2,355,000 that it completed subsequent to Q1, as announced on Jan. 31, 2020.
For fiscal 2020, Microbix will work to continue improving the percentage gross margins from its critical ingredients (antigens) business and achieve strong growth in sales of its lines of innovative, proprietary and branded quality assessment products (QAP). If Microbix achieves its budget targets, the company will generate meaningful net earnings for fiscal 2020. Additionally, work continues with regards to securing a partnership agreement to advance Microbix's Kinlytic urokinase project.
About Microbix Biosystems Inc.
Microbix develops proprietary biological and technology solutions for human health and well-being, with sales usually exceeding $1-million per month and approximately 80 skilled employees. It makes a wide range of critical biological materials for the global diagnostics industry, notably antigens for immunoassays and its laboratory quality assessment products that support clinical lab proficiency testing, enable assay development and validation, train lab staff, or help ensure quality control of clinical diagnostic tests.
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