NEW YORK – Veracyte reported after the close of the market on Thursday that its first quarter revenues rose 22 percent year over year.
The South San Francisco, California-based molecular diagnostics firm posted $82.4 million in revenues for the three months ended March 31, up from $67.8 million a year ago and beating analysts' average estimate of $75.8 million.
Veracyte's testing revenues rose 29 percent to $72.4 million from $56.0 million a year ago, driven primarily by sales of its Decipher Prostate and Afirma tests. Its Q1 testing volume grew 24 percent year over year to 28,788 tests.
Product revenues were $3.9 million, up 31 percent from $3.0 million a year ago, while biopharmaceutical and other revenues dropped 30 percent to $6.1 million from $8.8 million a year ago.
Veracyte CEO Marc Stapley said during a call with investors that the firm's biopharma business is facing "significant headwinds" this year, given the impact of a sizable customer pulling back on planned spending, added to a challenging macroenvironment. He did not name the customer.
That said, multiple business areas exceeded the firm's expectations during the quarter. This, coupled with "continued financial discipline," resulted in a meaningfully higher cash balance than the company had projected.
Stapley said that Veracyte delivered an unexpected 12,500 Afirma tests during the quarter. The company also secured four new payor contracts, making the test an in-network benefit for over 4 million additional health plan members. He added that Veracyte recently added TERT promoter mutation testing to its Afirma report, citing recent studies that correlate the presence of the TERT promoter to poorer prognosis in suspected thyroid cancer.
"We believe that product enhancements such as this … will continue to benefit Afirma's performance in the coming quarters," Stapley said.
In the meantime, Veracyte is also dedicated to adding evidence for its Decipher Prostate test. At the American Neurological Association annual meeting last month, the company presented several studies on the assay, including two real-world data sets encompassing more than 100,000 men with prostate cancer.
In the first study, researchers retrospectively analyzed patient outcome data from individuals who had undergone Decipher Prostate testing, concluding that use of the test was independently associated with a twofold increase in conservative management among patients with favorable-risk disease.
In the second study, over 90,000 clinical Decipher Prostate test results were linked to electronic health and claims data to demonstrate that the Decipher score was independently predictive of the risk of metastasis at initial diagnosis. Tests taken after radical prostatectomy were also predictive of both biochemical recurrence and metastasis, according to the company.
Stapley also highlighted recently published studies bolstering clinical utility data for the Decipher test. A study in the International Journal of Radiation Oncology, Biology, Physics suggested that the Decipher Prostate test can help physicians more accurately select appropriate treatment for men with intermediate-risk prostate cancer, a category that is especially heterogeneous and eligible for multiple treatment strategies.
According to Stapley, the study, which followed patients for nearly 13 years, is the first to validate any gene expression biomarker in the intermediate-risk prostate cancer patient population.
Veracyte shaved its Q1 net loss to $8.1 million, or $.11 per share, from $14.5 million, or $.20 per share, in the year-ago quarter, beating the consensus Wall Street estimate of a $.13 loss per share.
The company's R&D expenses rose 39 percent year over year to $12.8 million while its SG&A spending rose about 9 percent to $48.6 million.
Veracyte finished the quarter with $177.9 million in cash and cash equivalents and $749,000 in restricted cash.