NEW YORK (360Dx) – Oxford Immunotec reported Tuesday that its third quarter revenues increased 17 percent year over year, driven by continued growth in both its tuberculosis and tick-borne disease testing businesses.
For the three months ended Sept. 30, Oxford Immunotec reported total revenues of $30.4 million, up from $26.1 million a year ago, and beating analysts' average estimate of $30.1 million.
Product revenues rose 24 percent year over year to $12.0 million from $9.7 million while service revenues increased 12 percent to $18.4 million from $16.4 million in the prior-year quarter. The company said that revenues related to its tuberculosis testing business grew 11 percent year over year to $24.4 million from $22.0 million, while tick-borne disease-related revenue rose 45 percent to $6.0 million from $4.1 million in Q3 2016.
"As we move forward through the remainder of the year and into 2018, we will continue to focus on driving revenue growth and progressing the company towards profitability," Peter Wrighton-Smith, CEO of Oxford Immunotec, said in a statement.
During a conference call recapping the company's Q3 earnings, Wrighton-Smith noted that strong year-over-year growth in Asian, and Europe, and the rest of the world helped offset the impact of declining immigration and challenging weather on US-based tuberculosis screening accounts.
US TB screening growth was impacted by a slowdown in test utilization due to the current White House's policies — which led to a decline in immigration to the US — and to a lesser extent the recent hurricanes, he said.
In Q3, overall US revenues rose 16 percent to $18.8 million from $16.2 million in the prior-year quarter while Europe and the rest of the world revenues were up 26 percent to $2.2 million from $1.7 million, and Asia revenues rose 15 percent to $9.4 million from $8.2 million.
In tick-borne disease and other revenues, the firm achieved greater than expected growth resulting from an earlier than expected impact from its sales force, Wrighton-Smith said.
He noted that the company was completing a process to reprioritize its product pipeline. Four focus areas have emerged around which the firm will focus its investments in the near term to enable it to maximize its return-on-investment from R&D spending, he said. The four areas are continued enhancement of its T-spot TB kit and service offerings; building a market leadership position in tick-borne disease testing; babesia blood-donor screening; and its T-Spot CMV assay.
Wrighton-Smith said that during the quarter, the firm decided to discontinue offering a T-spot PRT test used in transplant clinical trials. Additional products in its pipeline that fall outside its four focus areas "will remain under review or will be considered for divestiture in the coming quarters."
He said that during the third quarter, Oxford Immunotec made progress on babesia test submissions to the US Food and Drug Administration, with a final inspection expected to be completed before the end of the year. "We now expect the first [biologic license application] approval in early 2018," he noted.
The firm reported a quarterly net loss of $16.8 million, or $.70 per share, compared to a loss of $4.0 million, or $.18 per share, in the year-ago period. The firm did not provide an adjusted EPS figure for the recently completed quarter. On average, analysts had expected a loss per share of $.24.
R&D expenses in Q3 grew 26 percent to $4.5 million from $3.5 million in the year-ago period, while SG&A expenses rose 16 percent to $17.6 million from $15.3 million a year ago.
The company ended the quarter with $67.7 million in cash and cash equivalents.
Oxford said that it expects to report revenue of between $25.4 million and $26.4 million for Q4. It also noted that it expects to report full-year revenue of between $103.5 million and $104.5 million, representing 20 percent to 21 percent year-over-year growth. That compares to prior revenue guidance of between $103 million and $106 million.
In September, the US District Court for the District of Massachusetts denied the firm's motion for a preliminary injunction prohibiting the sale to new customers in the US of Qiagen's QuantiFERON-TB Gold Plus (QFT Plus), a test used for the detection of latent tuberculosis.
Oxford said that the decision was based on the court's belief that it was not likely to suffer irreparable harm from Qiagen's marketing of QFT-Plus before an upcoming trial in January.
The court also found that Oxford was likely to prevail on the merits of its claims at trial.
"While we were disappointed that the court did not grant a preliminary injunction, we are encouraged by the court's ruling on the issues of validity and obviousness. The case remains on track for trial in January 2018," Wrighton-Smith said during the call with analysts.
Piper Jaffray analyst William Quirk wrote in a research note today that the firm's "pipeline is in a tough spot due to [a] PRT (transplant) trial failure and new molecular competitors in blood screening." However, he noted that the company's core TB and tick-borne disease business "looks poised to accelerate in 2018."
In mid-afternoon trading on the Nasdaq, Oxford Immunotec's stock was down more than 11 percent to $13.90.