Quotient Limited (QTNT) is breaking out higher due to positive developments in its MosaiQ platform. The company successfully finished a verification/validation phase for its platform and is on its way to commercialization in the large, highly developed reagent market. Its share price has broken a multi-year downtrend on the news and looks to advance further in coming quarters. I am buying stock in this name as its disruptive technology looks to fuel more investor optimism.
Fundamental NarrativeQTNT is attractively positioned in the current market environment as its MosaiQ platform gains traction, revolutionizing the healthcare industry, while its other commercial operations continue to strengthen. The company is a commercial-stage diagnostics firm, developing, manufacturing, and commercializing conventional reagent products used for blood grouping in the transfusion diagnostics market worldwide. It is also developing MosaiQ, a proprietary technology platform, which provides tests for blood grouping and serological disease screening.
Product revenues in its most recent quarter came in at $5.7 million, an increase of 17% from the previous year. The increase in product sales was mainly attributable to growth in revenues from both OEM customers and incremental direct and distributor sales, according to its earnings call. OEM sales of $3.8 million grew 9% year-over-year and represented 68% of product sales. The increase was primarily driven by better pricing, increased sales to existing customers, and the impact of recently launched new products. Direct and distributor sales of $1.8 million increased 36% year-over-year and represented 32% of product sales.
The company's initial blood grouping MosaiQ microarray recently finished a verification/validation phase and has started field trials in Europe, according to Seeking Alpha. Its results of previously disclosed V&V results implied overall concordance of 99.8% for antigen typing on the MosaiQ platform. The MosaiQ IH microarray antibody detection requirement is to be 95% concordant with predicate technology, signaling a success of its current phase.
Having established the need to modify the MosaiQ manufacturing process, the principal area of focus for QTNT has been on performance of the antigen typing array, according to management. In studies to date comparing results generated using MosaiQ following the process modifications with predicate technologies, performance of the antigen typing array has shown broad-based improvement. Specifically, these studies have demonstrated significant and consistent improvement in the performance of the little C assay, with concordance results at levels never seen before in MosaiQ.
When approved for the market, MosaiQ will be uniquely placed to deliver the benefits of high throughput automation with the ease of use and cost efficiency of a single universal testing platform, providing the capability to fully characterize and screen donated blood in a single testing event, according to management. Development efforts for its initial products are essentially complete, with management confident about the ability of MosaiQ to perform in a customer setting.
As MosaiQ progresses towards commercialization, management continues to believe it will transform the field of transfusion diagnostics and will be well placed to disrupt existing and aging testing platforms, according to its earnings call. MosaiQ will also advance patient care at no extra cost to the health care system. It will be the first fully automated testing platform capable of delivering a comprehensive characterization of donor and patient blood, allowing for the better matching of donor blood to patients. It will also eliminate the need for routine and expensive manual testing for blood grouping, while offering a single unified testing platform, simplifying testing processes and consumable requirements, according to management.
MosaiQ has the potential to offer major efficiencies and lower costs for testing laboratories worldwide. The target addressable market for MosaiQ is both highly developed, and at over $3.4 billion reagent spend per annum, it is substantial, according to its earnings call. Near term, management is focused on execution of the remaining steps to bring MosaiQ to market in advance of commercial launch in Europe this year and in the United States thereafter.
As far as financing is concerned, the company recently completed a $40 million equity funding through a private placement mechanism. The combination of these funds, together with the planned sale and leaseback of the BioCampus facility, provides the necessary funding to bring QTNT to future milestones in its near-term funding plan. This includes a further $36 million drawdown on its senior debt facility and the potential inflow of up to $49 million of capital resulting from the exercise of warrants sold in conjunction with its recent equity funding, according to its earnings call. With these elements in place, management anticipates being fully funded through early commercialization as the major development funding and capital requirements of recent years moderate.
The company is making significant progress with MosaiQ, leading investors to bid its share price higher in recent weeks. Further progress in its fundamental operations should fuel further share price gains in coming quarters.
Price ActionQTNT looks to be forming a bottoming pattern after years of decline. Positive developments in its MosaiQ technology could potentially be an industry disruptor, having major commercial success in coming years. Investors have bid its share price higher on this expectation.
The company's share price looks to be forming a bottoming pattern near the $4-6 range. Its breakout last week above the $5 level was significant as this area had acted as strong resistance in recent years.
QTNT is breaking out higher due to positive developments in its MosaiQ platform. The company successfully finished a verification/validation phase for its platform and is on its way to commercialization in the large, highly developed reagent market. Its share price has broken a multi-year downtrend on the news and looks to advance further in coming quarters. I am buying stock in this name as its disruptive technology looks to fuel more investor optimism.
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Disclosure: I am/we are long QTNT.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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