NEW YORK (360Dx) – Accelerate Diagnostics reported after the market closed on Thursday that its preliminary third quarter revenues increased sharply, but still fell far short of the consensus Wall Street estimate.
For the three months ended Sept. 30, the company posted revenues of $828,000, up from $24,000 in Q3 2016, driven by further sales of the Accelerate Pheno system and Accelerate PhenoTest BC kit. The preliminary revenues would miss the analysts’ average estimate of $2.6 million.
The company reported signed agreements for 295 instruments year to date. Contracts for customer evaluations have totaled 239 instruments, while revenue-generating placements grew to 56 across the US, European, and Middle East regions.
Accelerate's R&D expenses for the quarter dropped 24 percent to $6.4 million from $7.9 million in Q3 2016. Accelerate's SG & A costs rose 17 percent to $11.6 million from $9.6 million, due to clinical trial and pre-launch inventory costs incurred in the prior- year period which did not repeat, it said.
Accelerate recorded a net loss for the quarter of $17.0 million, or $.31 per share, compared to a net loss of $17.3 million, or $.34 per share in Q3 2016. Analysts had expected a net loss per share of $.32.
The company also noted the completion of the assay development phase for its upcoming kit focusing on severe pneumonia. It plans to start the verification and performance evaluation study to achieve a CE mark by the end of 2017.
Accelerate also announced plans to develop new testing kits aimed at sample types for complicated urinary tract infections and intra-abdominal infections.
Accelerate CEO and President Lawrence Mehren said in a statement that the company is “meeting or exceeding the majority of our expected commercial metrics and funnel assumptions. While we would prefer the rate of conversions to be faster, we believe the number of qualified prospects and evaluation contracts, coversion win rate, pricing, and other measures confirm the value of the company and its products.”
In the conference call, Mehren elaborated on the issues causing delay in product acquisition and placement at multiple sites. A problem in the US sales cycle, the company found that a longer period in negotiating final contract terms after completed validation led to a further three months. In addition, third parties developing unique IT interfaces for each of these locations have also delayed product placement.
In response, Mehren said that Accelerate has implemented mitigations to both of these time increases back to six to seven months, including "simply increasing the number of instruments used in the verification… significantly decreas[ing] time to completion, with little cost to Accelerate."
The company has also finished development for two antibiotics for European customers that will be added to the Accelerate PhenoTest BC kit and submitted for CE mark by the end of the year.
Accelerate finished the quarter with $34.4 million in cash and cash equivalents and $86.9 million in investments.
The firm’s shares were down 4 percent in Thursday after-hours trading on the Nasdaq at $19.30.