NEW YORK – NeoGenomics said Tuesday that its revenues for the third quarter of 2024 was up 10 percent compared to the same period last year.
For the three months ending Sept. 30, the company reported $167.8 million in total revenues, compared to $152.0 million in Q3 2023, beating Wall Street's average estimate of $167.0 million.
The firm's clinical services revenue was $145.8 million, up 14 percent from $127.6 million in the year-ago quarter, reflecting a 9 percent year-over year increase in test volume, as well as a 5 percent rise in average revenue per test to $463 from $440 a year ago.
In contrast, NeoGenomics' advanced diagnostics revenue dropped 10 percent to $22.0 million compared to $24.4 million in the third quarter of 2023. The company said the decrease was primarily driven by international site closures, restructuring activities, and lower revenue from its minimal residual disease assay.
In September, the US District Court for the Middle District of North Carolina issued a permanent injunction against NeoGenomics' MRD test in a patent infringement suit brought against the company by Natera. The firms have settled their lawsuit, and NeoGenomics said it is working on a new version of its assay that will not infringe Natera's IP.
During a call with investors, NeoGenomics CEO Chris Smith said that the deal ensured that certain "carve outs" in the preliminary version of the injunction stayed in place, preventing any disruption to patients already being tested with the Radar technology. He added that the new version of the platform has moved through feasibility testing and is expected to be fully validated in the first half of 2025.
"As we stated in the past, we are committed to being in the MRD market and supporting patients throughout their cancer journey from diagnosis to monitoring," Smith said.
The company's R&D costs were $7.7 million in Q3, up 45 percent from $5.3 million in the same period last year. Its SG&A spending was up about 10 percent at $87.4 million, compared to $79.1 million in Q3 2023.
Smith said that NeoGenomics has seen particularly robust growth across its next-generation sequencing tests, which saw their revenue contribution increase 26 percent year over year.
The company's most recent addition to its NGS test portfolio is a rapid targeted sequencing assay to guide the treatment of patients with acute myeloid leukemia.
According to NeoGenomics Chief Operating Officer Warren Stone, early demand for the AML test has been strong. "Based on the value proposition from a health economic perspective — getting results up to two days earlier, and the inpatient cost savings associated with that — the demand is ramping up there very quickly," he said.
Stone also highlighted the company's debut of a new comprehensive liquid biopsy sequencing panel, PanTracer, which was made available for pharmaceutical customers during Q3, with the plan to open that up to the clinic in the first half of next year.
Stone said that the company believes the comprehensive pan-cancer liquid biopsy market is still under penetrated, and it believes it can garner market share through a unique test design. The panel covers more than 500 genes, with algorithmic readouts of both tumor mutational burden and microsatellite instability.
"There has been some recent research that's come out suggests [this market] is larger than what was previously anticipated, and also more underpenetrated … so we see this as a very, very significant opportunity to supplement our current solid tumor portfolio and ultimately address one of the larger gaps that we have within our portfolio strategy," Stone said.
Other future launches include a new interactive system for clinical customers that Smith said NeoGenomics plans to launch in early 2025. Dubbed Neo Helix, the platform is intended to streamline the process of test order and results interpretation.
NeoGenomics' Q3 net loss was $17.7 million, or $.14 per share, compared to $18.5 million, or $.15 per share, in Q3 2023. On an adjusted basis, the company had a loss per share of $.05 for the recently completed quarter, falling short of analysts' average estimate of EPS of $.01.
The firm ended the quarter with $362.0 million in cash and cash equivalents and $25.8 million in marketable securities.
In late morning trading on the Nasdaq, shares of NeoGenomics were up about 2 percent at $14.46.