Skip to main content

T2 Biosystems Q2 Revenues Up 41 Percent, Beat Estimates

NEW YORK – T2 Biosystems reported after the close of the market on Tuesday that its second quarter revenues jumped 41 percent year over year.

For the three months ended June 30, the company posted revenues of $2.6 million compared to $1.8 million in Q2 2019, and beat the analysts' average estimate of $2.4 million. The results are within the preliminary earnings range that T2 issued on July 1.

The firm reported product revenue of $1.0 million, down 18 percent year over year from $1.3 million. Research and contribution revenue was $1.5 million, an increase of 185 percent compared to $459,000 in the prior year period, driven by increased funding under the firm's US government contract.

The company launched the T2SARS-CoV-2 Panel in the US for use with the T2Dx instrument on June 30 and submitted an Emergency Use Authorization application to the US Food and Drug Administration on July 1. The T2SARS-CoV-2 test was developed under a license agreement with Hackensack Meridian Health, as previously reported, and is being commercially distributed after validation.

John Sperzel, president and CEO of T2 Biosystems, noted in a statement that the T2SARS-CoV-2 panel provides results in less than two hours utilizing a nasopharyngeal swab sample and has demonstrated 95 percent sensitivity and 100 percent specificity. The T2Dx instrument can run seven tests simultaneously.

"The strong initial demand from US hospitals for our T2SARS-CoV-2 Panel and T2Dx Instrument, coupled with the susceptibility of critically ill COVID-19 patients to develop bacterial or fungal co-infections and secondary infections that can lead to sepsis, validates our decision to develop the T2SARS-CoV-2 Panel and we believe will provide an opportunity to drive utilization of our sepsis-related portfolio," Sperzel also commented.

On a call with investors to recap the earnings, Sperzel said that although many potential customers delayed technology evaluations due to the pandemic, T2 saw a 51 percent increase in its US test utilization per instrument in Q2 as compared to Q1, which he said was due to increased testing of COVID-19 patients for sepsis.

Going forward, the firm will continue to focus on the US hospital lab space and hopes to capitalize on the fact that it uses an alternate supply chain compared to other diagnostics, Sperzel said.

"Because diagnostic test manufacturers are unable to supply sufficient quantities of tests, many hospitals are requiring multiple testing platforms in an effort to meet COVID-19 testing demand," he said. "What we're seeing from many of our customers is that they buy a system from a competing company, and within one week they are on allocation," Sperzel also said. "We believe our ability to guarantee customers specific quantities of our T2SARS-CoV-2 Panel is a significant competitive advantage."

With an increased demand for T2 tests and instruments, Sperzel said the firm will shift its US commercial model "from the previous practice of leasing or placing T2Dx instruments to selling instruments and service contracts, obtaining large upfront purchase orders, and keeping customers on standing orders for T2SARS-CoV-2 Panels." The firm is also working to convert existing reagent rental customers to capital purchases.

T2 is currently ramping manufacturing of its instruments and COVID-19 panel, securing its supply chain, and hiring new manufacturing and quality assurance personnel.

"Our objective is to significantly increase the installed base of T2Dx instruments in the US market during the COVID-19 pandemic and deliver a high-quality COVID-19 molecular test, and leverage the much larger installed base to revolutionize the sepsis market going forward," Sperzel said.

On the call, Sperzel also said that CSO Tom Lowery will depart the firm on August 21 to start a company focused on cell therapy. Lowery joined T2 in 2007 and has served as CSO since 2013. He will be succeeded by Roger Smith, a six-year T2 veteran who currently serves as the firm's director of assay development.

The firm's net loss shrank to $10.7 million, or $.09 per share, in Q2 2020 compared to a net loss of $15.6 million, or $.35 per share, in Q2 2019, besting the consensus Wall Street estimate for a loss of $.15 per share.

Lexington, Massachusetts-based T2 said its Q2 R&D costs were $4.0 million, flat from the prior-year quarter, and its SG&A expenses were $5.1 million, down 24 percent from $6.7 million in Q2 2019.

In Q2, T2 reduced its real estate footprint by approximately 22 percent, Sperzel said on the call. He noted that the company had also eliminated its entire sales team at the end of the first quarter, but that it has now rehired three regional account managers.

T2 finished Q2 2020 with $35.8 million in cash and cash equivalents, and $9.2 million in marketable securities.

Having previously suspended its guidance due to the ongoing pandemic, T2 on Tuesday said guidance for the full year 2020 has been reissued as a result of "greater clarity around the impacts of COVID-19 on demand for products and the initial experience with the launch of the T2SARS-CoV-2 Panel in the US."

The company expects full year 2020 total revenues of between $18.0 million to $20.0 million, including product revenues between $13.0 million and $14.0 million and research and contribution revenues between $5.0 million and $6.0 million. In the US, 60 T2Dx Instrument sales contracts are expected to be received in 2020.

Shares of T2 were down approximately 8 percent in Wednesday morning trading on the Nasdaq at $1.72.