NEW YORK (GenomeWeb) – T2 Biosystems reported after the close of the market on Tuesday a 10 percent increase in third quarter revenues, as a sharp increase in product revenues were mostly offset by a decline in research revenues.
Separately, the company announced that it has partnered with Allergan to develop a novel diagnostic panel for the detection of Gram-negative bacterial species and antibiotic resistance in patients with severe bacterial infections.
During the quarter, T2 closed six new customer commitments for its T2Candida sepsis panel and T2Dx instrument representing 10 hospitals and hospital systems — five in the US and one in Europe, T2 President and CEO John McDonough said during a conference call to discuss the financial results. These deals, he added, will give the company access to about 43,000 patients considered to be at high-risk for Candida infections.
He noted that going forward, T2 will use the number of hospitals and the estimated annual number of symptomatic high-risk patients in hospitals and hospital systems under contract as its key reporting metric, rather than the number of signed contracts.
"We will continue to report the number of contracts we have secured in a quarter, [but] we are less focused on that number as we have learned that sales cycles within the hospital systems are unpredictable and the number of contracts on its own does not paint the full picture of the health of the business," McDonough said.
T2's net loss in the third quarter increased to $12.8 million, or $.51 per share, from $11.6 million, or $.57 per share, in Q3 2015. Analysts had, on average, expected a loss per share of $.52.
The company's R&D spending dropped to $5.2 million from $6.2 million, while SG&A costs rose to $5.9 million from $5.2 million.
At the end of the third quarter, T2 had cash and cash equivalents totaling $75.1 million.
Looking ahead, T2 said it expects higher product revenues in the fourth quarter, but overall revenues to show flat to nominal growth due to fewer instrument sales expected. Q4 operating costs are expected to be between $11.3 million and $11.8 million, of which roughly $1.7 million will be non-cash expenses.
Additionally, T2 is planning on cutting a third of its sales force on an interim basis as a result of the cooperative marketing aspect of the Allergan arrangement, as well as continued unpredictable sales cycles and associated high customer acquisition costs, McDonough said. At the end of Q2, T2 reported having 23 US sales reps.T2 will reassess the size of its sales force as it nears the expected mid-to-late 2017 launch of its bacterial sepsis test T2Bacteria, which is currently being tested in a clinical study, he said. In the near term, however, the company will focus its sales efforts on "institutions and hospital systems that have demonstrated a commitment to sepsis monitoring … [and will] will drive adoption of T2Candida, T2Bacteria, and our resistance panel."
"We also believe it is Allergan's intent to use the T2Bacteria panel in their development and clinical trial efforts," Rahul Dhanda, T2's senior vice president of corporate developed, noted during the call.