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Microbix Reports Results for Q3 Fiscal 2020

MISSISSAUGA, Ontario, Aug. 14, 2020 (GLOBE NEWSWIRE) -- Microbix Biosystems Inc. (TSX: MBX, Microbix), an award-winning life sciences innovator and exporter, reports results for its third quarter and year to date fiscal 2020 (Q3 and YTD) ended June 30, 2020, with an increase of 141% in sales of Quality Assessment products (QAPsa??).
Management DiscussionOverall, Q3 revenues were down from Q3 2019, due in part to negative pressure on antigen demand for non-COVID infectious disease testing. Specifically, lower antigen revenues were achieved from Europe and Asia, from a combination of pandemic-related patient-flow disruption impacting end-user demand, an unforeseen production issue, order periodicity, and contract pricing adjustments. While antigen sales are now being negatively impacted by the pandemic, they are expected to recover across fiscal 2021 as patients more readily return to clinics for non-COVID testing.In contrast, sales of QAPs more than doubled year-over-year for Q3, due to sales of new products and contract development revenues. Although initial shipments to distributors occurred only late in Q3, the novel and innovative PROCEEDxa?? and REDxa?? brand QAPs are now being well-received by commercially-important test makers and labs in multiple countries. Looking beyond COVID, the market potential for the HPV QAPs remains robust, but sales growth of this product line has been delayed by the global pandemic. We anticipate HPV QAP sales to begin to have a more material impact in F2021. Lastly, the manufacturing build-out at our second site is underway to facilitate increased QAPs production and efficiencies.Despite significant progress on the QAPs side of the business, gross margins for Q3 disappointed a?? Beyond normal swings in product mix there were a series of batch contaminations later in this first quarter of full bioreactor usage. All affected batches were written-off in Q3 and a series of corrective and preventative actions (CAPAs) are being implemented to prevent recurrences. Contamination of the bioreactor batches was principally due to supplier quality issues that have now been identified and addressed, so Microbix does not expect any similar impact on sales and margins in future quarters. Such bioreactor batch losses are largely responsible for the net loss recorded for Q3, which was unforeseen.
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