NEW YORK – NanoString Technologies reported after the close of the market on Wednesday that its second quarter revenues were up 21 percent year over year, driven by a 10 percent hike in product and service revenues.
For the three months ended June 30, the company's total revenues were $30.3 million compared to $25.0 million a year ago. Analysts, on average, had expected revenues of $29 million.
Product and service revenues were up 10 percent year over year to $22.4 million compared to $20.4 million in the year-ago quarter.
NanoString reported that its consumables revenues, excluding sales of the Prosigna IVD kit, were $11.8 million, up 15 percent from $10.3 million a year ago. Prosigna brought in $2.6 million, 4 percent more than Q2 2018, with "growth in Europe offset by lower sales in North America as compared to the prior year period," the company said.
"The consumable sales channel continues to perform well and drove growth in both our panel and our custom code set business," NanoString President and CEO Brad Gray said during a call discussing the firm's earnings. "Our oncology portfolio continued to account for a majority of this growth led by our pan-cancer and 360 families of panels," he added, though the company's newer CAR T-cell panel was also off to a "strong start," with 50 customers worldwide.
Product offerings outside of oncology are also making important contributions to revenue, Gray added. "Revenue from immunology and neuroscience panels increased by approximately 40 and 80 percent respectively over the prior years and together accounted for about a third of our panel revenue," he said.
Gray said that the firm is continuing to invest in new panel content to try to extend this growth. "In Q2 we introduced metabolic pathways panels that … address large market opportunities with significant NIH funding including diabetes, endocrinology, and hundreds of diseases that involve metabolic dysfunction."
The company's Q2 collaboration revenues rose 74 percent to $8.0 million from $4.6 million in Q2 2018. According to the company, this was derived primarily from collaborations with Lam Research and Celgene Corporation.
A significant proportion of that was due to an accelerated recognition of deferred revenue from NanoString's Celgene partnership, which ended this spring. In April, Celgene announced that the clinical trial evaluating its drug lenalidomide (Revlimid) for a molecular subset of patients with DLBCL did not meet its primary endpoint. As a result, it said it would not be pursuing companion diagnostic approval for the LymphMark assay employed in the trial.
NanoString estimated that the installed base for its nCounter systems rose to approximately 790 as of June 30, from about 670 last year. The firm also increased cumulative orders for its new GeoMx DSP platform to approximately 55 instruments by the end of the month.
"Demand for GeoMx DSP cuts across customer segments and includes a mix that is roughly 60 percent academic and 40 percent biopharma and CROs," Gray said during the company's earnings call. "Today about 75 percent of DSP orders have been placed by existing nCounter users while the other 25 percent ... have been placed by new customers who have pulled through new nCounter instruments," he added.
"During the second quarter we achieved our sixth consecutive quarter of double-digit growth in product and service revenue," President and CEO Brad Gray said in a statement. "We delivered record service revenue under our Technology Access Program for GeoMx DSP, and our customers published high-profile peer-reviewed papers that highlight the unique capabilities of GeoMx DSP for biomarker discovery in immuno-therapy. We continue to generate solid demand for GeoMx and … expect to start shipping instruments and realize our first GeoMx revenue in the third quarter," he added.
NanoString's R&D expenses increased 17 percent to $17.0 million in Q2 2019 from $14.6 million in the Q2 2018. The company said that the rise in spending reflected continuing investments in GeoMx DSP, new nCounter panels, and the firm's Hyb & Seq platform.
SG&A costs rose 9 percent to $22.5 million from $20.6 million in the same period last year, reflecting increased investment in personnel and commercial launch activities.
Gray said the firm continues to make progress on Hyb & Seq, which it plans to launch in 2011. He added that the company is increasingly focused on the application of the platform to infectious disease. "This is an area of high unmet need where a simple fast workflow confers tremendous medical value and competitive advantage," he said.
"Infectious disease testing also provides the first application for a more general mid-plex integrated molecular diagnostic platform, opening the potential for diagnostic commercial partnerships in the future," he added.
The company will provide its next major technical update on Hyb & Seq at the Association for Molecular Pathology conference in November, where it will describe updates to sequencing chemistry and to present "culture-independent pathogen identification and rapid phenotypic antibiotic susceptibility" studies performed in collaboration with the Broad Institute.
The firm's net loss for the quarter was $20.0 million or $.57 per share, compared to $20.6 million, or $.80 per share, in Q2 2018. Analysts on average, had expected a loss of $.52 per share. NanoString used 35,174 shares to calculate net loss in Q2 2019 compared to 25,757 shares in the year-ago period.
NanoString reiterated its previously stated guidance for full-year 2019, but updated projections for certain operating expenses and other items, including SG&A expenses of $85 million to $87 million, and R&D expenses of $64 million to $66 million, to be partially offset by approximately $20 million expected to be received from Lam Research.
The company predicts a yearly net loss of $78 million to $83 million and a net loss per share of $2.20 to $2.40.
NanoString finished the quarter with $33.4 million in cash and cash equivalents, and $112.1 million in short-term investments.