This article has been updated with additional information from Centogene's earnings call.
NEW YORK – Centogene on Wednesday morning reported a 13 percent year-over-year decrease in second quarter revenues, resulting from a drop in sample volumes related to the COVID-19 pandemic that was partially offset by additional revenues from coronavirus diagnostic testing.
However, the Rostock, Germany-based company said its revenues have begun to recover in Q3, driven by a ramp in coronavirus PCR testing, and its core business in clinical diagnostics and pharmaceutical partnerships has started to recover, too. It now expects full-year 2020 revenues to exceed earlier projections.
"During the first half of 2020, we have shown resilience while facing global pandemic headwinds, and we believe we have weathered the worst of this unprecedented situation," CEO Arndt Rolfs said in a statement. "Our core business in the rare disease space regained momentum as we continued to expand our COVID-19 efforts and address the urgent need for reliable testing solutions."
For the three months ended June 30, revenues totaled €9.7 million ($11.3 million) compared to €11.2 million during the same period last year. Analysts, on average, had predicted revenues of €13.4 million.
Diagnostics revenues were €5.8 million in Q2, down 12 percent from €6.6 million a year ago. They included €2.1 million from sales of coronavirus tests and CentoSwab sample collection kits. Pharmaceutical revenues were €3.9 million, down 15 percent from €4.6 million in the year-ago quarter.
During the quarter, the company saw a significant decrease in requests for its primary rare disease tests as a result of the coronavirus pandemic. These include single-gene, CNV, panel sequencing, whole-exome sequencing (WES), whole-genome sequencing (WGS), and noninvasive prenatal tests. Centogene said it expects the proportion of WES and WGS tests of total tests to continue to increase in the future.
In March, Centogene launched coronavirus diagnostic testing, which it is now offering at German airports and train stations, nursing homes, educational institutions, and online. It had received almost 270,000 test requests in total as of the end of August. Its CentoFast-SARS-CoV-2 RT PCR also received Emergency Use Authorization from the US Food and Drug Administration in July.
Also in July, the company raised €24 million in net proceeds in a follow-on equity offering.
During a conference call Wednesday morning to discuss the financial results, Rolfs and CFO Richard Stoffelen provided additional insights into the company's business.
In late June, Centogene started offering coronavirus PCR testing at Frankfurt Airport, where testing volumes ramped up to almost 29,000 tests in July and 129,000 tests in August. Recently, the company opened testing centers at train stations in Munich and Nuremberg and at airports in Hamburg and Düsseldorf, and it is looking to offer testing at additional airports. At the moment, it has a testing capacity of about 25,000 tests per day that can be increased rapidly if needed, Rolfs said.
Stoffelen said the company expects lower coronavirus testing volumes in Q4 than in Q3. The firm is also considering adding new types of rapid SARS-CoV-2 tests, though he said it is difficult to predict how they may impact or replace the current gold-standard PCR test.
Also, in August, Centogene signed six new partnerships with pharmaceutical companies, including three with new firms, he said, though revenues from these projects in 2020 will be limited.
Centogene reported a net loss of €10.4 million for Q2, or €.52 per share, up from €6.3 million, or €.39 per share, during the same quarter in 2019, and missing analysts' average estimate of a €.42 per share net loss.
The firm's R&D expenses in Q2 came to €3.1 million, up 29 percent from €2.4 million a year ago. The increase was primarily related to the expansion of the company's proprietary information platform, as well as the development of new products and solutions.
SG&A expenses amounted to €10.2 million for the quarter, up 28 percent from €8 million last year, mostly due to higher personnel costs and operating expenses related to the expansion of the company's business into coronavirus testing. Part of the increase came from additional costs for operating as a public company and from in-house SARS-CoV-2 testing of employees.
Centogene ended the quarter with €17.4 million in cash and cash equivalents. Together with the proceeds from its follow-on offering, the company expects to be able to fund operating expenses and capital expenditure requirements for more than 12 months.
The company now expects full-year 2020 revenues to be in the range of €60 million to €65 million, exceeding earlier projections. Shortfalls in its core rare genetic disease business will be compensated for by commercial coronavirus testing, Rolfs said.
In morning trading on the Nasdaq, Centogene shares were down almost 3 percent at $10.77.