SEATTLE, Nov. 4, 2014 (GLOBE NEWSWIRE) -- NanoString Technologies, Inc. (Nasdaq:NSTG), a provider of life science tools for translational research and molecular diagnostic products, today reported financial results for the third quarter ended September 30, 2014.
Financial Highlights:
- Record total revenue of $12.3 million, 47% year-over-year growth
- Instrument revenue of $4.5 million, 27% year-over-year growth
- Consumables revenue of $6.0 million, 37% year-over-year growth
- Celgene collaboration milestones of $5.0 million achieved during the third quarter, with $1.1 million of revenue recognized
"Third quarter results demonstrated meaningful progress across all aspects of our business. Momentum in our life science research business continues, driven by instrument placements, record consumable revenue, and strong demand for our PanCancer Pathway and Immune Profiling Panels," said President and Chief Executive Officer, Brad Gray. "Our companion diagnostic collaboration with Celgene is progressing ahead of plan, resulting in an accelerated milestone achievement during the quarter. Finally, we made important progress in gaining reimbursement for Prosigna®, including from UnitedHealthcare®, the largest private payer in the US."
Recent Business Highlights:
- Cumulative installed base of over 230 nCounter® Analysis Systems and more than 560 peer reviewed publications
- Introduction of the 770-gene PanCancer Immune Profiling Panel, which enables researchers in the field of immuno-oncology to create profiles of the human immune response in all cancer types
- Collaboration with the Brigham and Women's Hospital in Boston to accelerate translation of genomic discoveries into clinical cancer diagnostics
- Reimbursement coverage for Prosigna testing services to date covering approximately 45 million U.S. lives, representing coverage of approximately 20% of indicated patients
- Met regulatory requirements to market Prosigna in Australia, New Zealand and Hong Kong
Third Quarter Financial Results
Revenue for the three months ended September 30, 2014 rose 47% to $12.3 million, from $8.4 million for the third quarter of 2013. Instrument revenue was $4.5 million, up 27% from the prior year period. Consumables revenue for the quarter was $6.0 million, up 37% from the third quarter of 2013. Prosigna revenue was $0.3 million for the quarter. Revenue associated with the Celgene companion diagnostic collaboration was $1.1 million.
Gross margin on product and service revenues was 53% for the three months ended September 30, 2014 compared to 55% for the prior year period. The decrease was largely due to an increased proportion of sales to distributors in the third quarter of 2014, which have a lower gross margin, as well as several large consumable orders with unusually low per unit manufacturing costs and certain favorable overhead cost variances, which drove a higher gross margin in the third quarter of 2013.
Research and development expense for the third quarter of 2014 increased to $6.0 million compared to $3.8 million in the prior year period. The increase reflects an increased investment in technology, new product development and, to a lesser extent, costs to support the Celgene collaboration.
Selling, general and administrative expense for the quarter was $12.5 million compared to $8.0 million in the prior year period. The increase reflects Prosigna launch costs, including establishment of an oncology sales force; expansion of the laboratory focused commercial organization; and other increased corporate costs.
Net loss attributable to common stockholders for the third quarter of 2014 was $12.1 million, or $(0.67) per diluted share, compared with $7.7 million, or $(0.53) per diluted share, for the third quarter of 2013. Non-GAAP net loss for the quarter was $9.8 million, or $(0.54) per diluted share, compared with non-GAAP net loss of $6.4 million, or $(0.44) per diluted share, for the prior year period (see accompanying table for reconciliation of GAAP and non-GAAP financial measures).
The company had $67.5 million of cash, cash equivalents and short-term investments as of September 30, 2014.
NanoString's 2014 Outlook
The company's updated financial outlook for 2014 includes:
- Total revenue in the range of $46.0 to $48.0 million, representing an approximate increase of 46% to 53% over 2013, versus prior guidance of $45.0 to $50.0 million
- Gross margin in the range of 52% to 54%, versus prior guidance of 52% to 55%
- Operating expenses in the range of $71.0 to $73.0 million, versus prior guidance of $70.0 to $75.0 million
- Net operating loss in the range of $45.0 to $49.0 million, versus prior guidance of $40.0 to $50.0 million
- Year-end cash and investment balance of approximately $70.0 million
Conference Call
Management will host an investment community conference call today beginning at 1:30 pm PT / 4:30 pm ET to discuss these results and answer questions. Individuals interested in listening to the conference call may do so by dialing (888) 793-9492 for domestic callers, or (734) 385-2643 for international callers, or from the webcast link in the investor relations section of the company's website at: www.nanostring.com. A replay of the call will be available beginning November 4, 2014 at 7:30pm ET through midnight on November 5, 2014. To access the replay, dial (855) 859-2056 or (404) 537-3406 and reference Conference ID: 17072966. The webcast will also be available on the company's website for one quarter following the completion of the call.
About NanoString Technologies, Inc.
NanoString Technologies provides life science tools for translational research and molecular diagnostic products. The company's nCounter® Analysis System has been employed in life sciences research since it was first introduced in 2008 and has been cited in hundreds of peer-reviewed publications. The nCounter Analysis System offers a cost-effective way to easily profile the expression of hundreds of genes, miRNAs, or copy number variations, simultaneously with high sensitivity and precision, facilitating a wide variety of basic research and translational medicine applications, including biomarker discovery and validation. The company's technology has now been applied to diagnostic use. The Prosigna® Breast Cancer Prognostic Gene Signature Assay together with the nCounter Dx Analysis System is FDA 510(k) cleared for use as a prognostic indicator for distant recurrence of breast cancer.
For more information, please visit www.nanostring.com.
The NanoString Technologies logo, NanoString, NanoString Technologies, nCounter and Prosigna are registered trademarks or trademarks of NanoString Technologies, Inc. in various jurisdictions.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding continuing growth in our life science research business and our estimated 2014 operating results. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include market acceptance of our products; delays or denials of regulatory approvals or clearances for products or applications; delays or denials of reimbursement for diagnostic products; the impact of competition; the impact of expanded sales, marketing, product development and clinical activities on operating expenses; delays or other unforeseen problems with respect to manufacturing, product development or clinical studies; adverse conditions in the general domestic and global economic markets; as well as the other risks set forth in the company's filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. NanoString Technologies disclaims any obligation to update these forward-looking statements.
Use of Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures in this release. Management of the company believes that these non-GAAP financial measures, considered together with GAAP financial information, provide useful information for investors by excluding certain non-cash and other income and expense that are not indicative of the company's core operating performance. Reconciliations of the non-GAAP financial measures used in this release to the most directly comparable GAAP measures for the respective periods can be found in "Reconciliation of GAAP to Non-GAAP Financial Information" immediately following the financial tables. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.
| NANOSTRING TECHNOLOGIES, INC. | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (in thousands, except per share amounts) | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Revenue: | ||||
| Instruments | $ 4,528 | $ 3,552 | $ 11,741 | $ 7,714 |
| Consumables | 5,978 | 4,376 | 16,621 | 12,380 |
| In vitro diagnostic kits | 270 | 41 | 512 | 41 |
| Services | 488 | 420 | 1,404 | 1,148 |
| Total products and service revenue | 11,264 | 8,389 | 30,278 | 21,283 |
| Collaboration | 1,079 | ― | 1,697 | ― |
| Total revenue | 12,343 | 8,389 | 31,975 | 21,283 |
| Costs and expenses: | ||||
| Cost of product and service revenue | 5,271 | 3,784 | 14,456 | 10,188 |
| Research and development | 5,961 | 3,784 | 15,967 | 10,469 |
| Selling, general and administrative | 12,515 | 7,988 | 36,069 | 20,822 |
| Total costs and expenses | 23,747 | 15,556 | 66,492 | 41,479 |
| Loss from operations | (11,404) | (7,167) | (34,517) | (20,196) |
| Other income (expense): | ||||
| Interest income | 65 | 22 | 204 | 28 |
| Interest expense | (697) | (538) | (3,248) | (1,412) |
| Revaluation of preferred stock warrant liability | ― | ― | ― | 1,156 |
| Other expense | (112) | (17) | (97) | (30) |
| Total other income (expense) | (744) | (533) | (3,141) | (258) |
| Net loss | (12,148) | (7,700) | (37,658) | (20,454) |
| Accretion of mandatorily redeemable convertible preferred stock | ― | ― | ― | (4,653) |
| Net loss attributable to common stockholders | $ (12,148) | $ (7,700) | $ (37,658) | $ (25,107) |
| Net loss per share, basic and diluted | $ (0.67) | $ (0.53) | $ (2.13) | $ (4.74) |
| Shares used in calculating basic and diluted net loss per share | 18,134 | 14,616 | 17,711 | 5,292 |
| NANOSTRING TECHNOLOGIES, INC. | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (in thousands) | ||
| September 30, 2014 | December 31, 2013 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $18,826 | $9,941 |
| Short-term investments | 48,674 | 32,715 |
| Accounts receivable, net | 15,266 | 8,331 |
| Inventory | 5,790 | 6,750 |
| Prepaid expenses and other | 4,353 | 2,999 |
| Total current assets | 92,909 | 60,736 |
| Property and equipment, net | 5,746 | 3,065 |
| Other assets | 878 | 571 |
| Total assets | $99,533 | $64,372 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $2,166 | $3,354 |
| Accrued liabilities | 7,755 | 7,088 |
| Deferred revenue, current portion | 4,425 | 1,462 |
| Long-term debt, current portion | 251 | 6,136 |
| Other | 807 | 590 |
| Total current liabilities | 15,404 | 18,630 |
| Long-term debt, net of current portion | 20,497 | 12,157 |
| Deferred revenue, net of current portion | 7,168 | 803 |
| Other non-current liabilities | 784 | 1,313 |
| Total liabilities | 43,853 | 32,903 |
| Total stockholders' equity | 55,680 | 31,469 |
| Total liabilities and stockholders' equity | $99,533 | $64,372 |
| NANOSTRING TECHNOLOGIES, INC. | ||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION | ||||
| (in thousands, except per share amounts) | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Net loss attributable to common stockholders (GAAP) | $ (12,148) | $ (7,700) | $ (37,658) | $ (25,107) |
| Accretion of mandatorily redeemable convertible preferred stock | ― | ― | ― | 4,653 |
| Change in the fair value of preferred stock warrant liability | ― | ― | ― | (1,156) |
| Stock-based compensation expense | 1,306 | 278 | 3,604 | 766 |
| Depreciation and amortization | 370 | 459 | 1,115 | 1,360 |
| Interest expense | 697 | 538 | 3,248 | 1,412 |
| Net loss (non-GAAP) | $ (9,775) | $ (6,425) | $ (29,691) | $ (18,072) |
| Shares used in calculating basic and diluted net loss per share (GAAP) | 18,134 | 14,616 | 17,711 | 5,292 |
| Shares of common stock issuable upon conversion of mandatorily redeemable convertible preferred stock | ― | ― | ― | 5,723 |
| Shares used in calculating basic and diluted net loss per share (non-GAAP) | 18,134 | 14,616 | 17,711 | 11,015 |
| Net loss per share, basic and diluted (GAAP) | $ (0.67) | $ (0.53) | $ (2.13) | $ (4.74) |
| Net loss per share, basic and diluted (non-GAAP) | $ (0.54) | $ (0.44) | $ (1.68) | $ (1.64) |