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Consumables Uptick Drives Newly Public NanoString Q2 Revenues up 22 Percent

NEW YORK (GenomeWeb News) – NanoString Technologies said after the close of the market on Tuesday that revenues for its second quarter rose 22 percent year over year.

The Seattle-based company, which went public in late June, raising $47.0 million in net proceeds, reported revenues of $7.2 million for the three months ended June 30, compared to $5.9 million a year ago, and beating the average Wall Street estimate of $6.8 million.

Instrument revenues slipped to $2.5 million from $2.6 million a year ago, but consumables revenues increased to $4.3 million from $3.1 million, and service revenues climbed to $390,000 from $310,000.

Life sciences revenues of $7.0 million were up 18 percent year over year, while diagnostic revenues came in at $200,000, NanoString said.

On a conference call following the release of the results, NanoString President and CEO Brad Gray said that geographically North America drove growth in life sciences with a 35 percent year over year increase in revenues and showed particular strength in the industrial segment.

Cancer research and biopharmaceutical companies also were growth drivers, he added, as cancer research-related accounts comprised an estimated 75 percent of new instrument placements in the second quarter.

The remaining 25 percent of new instrument placements and 35 percent of consumables sales were to biopharmaceutical customers. One biopharma customer that he did not identify ordered $500,000 in consumables in the quarter, he added.

As of the end of the quarter, the installed base of instruments totaled more than 140 placements, CFO James Johnson said on the call, and the average consumable pull-through per instrument in the quarter continued to be greater than $100,000 on an annualized basis.

NanoString's continued development of a third-generation benchtop system remains on track for a 2014 launch and "most major technical risks have been removed from the program at this point, and it's moved really into an engineering phase," Gray said, though he declined to discuss specs around the system for competitive reasons.

On the diagnostics front, he noted that NanoString has had "interactive and constructive" conversations with the US Food and Drug Administration about the company's 510(k) submission for its Prosigna Breast Cancer Assay, and the company remains on track to launch the test in the US in early 2014.

Additionally, NanoString is recruiting its US commercial leadership team and preparing materials for submissions to payors and guideline committees, Gray said.

Prosigna was launched in Europe and Israel in February.

During the second quarter, Gray added, NanoString signed on its first distribution partner, a European lab which will focus on bringing Prosigna to the Middle East.

The firm's net loss for the second quarter was $5.5 million, or $13.69 per share, compared to a net loss of $3.6 million, or $16.02 per share, during the second quarter of 2012. On an adjusted basis, NanoString had a loss of $.65 per share, beating the consensus Wall Street estimate of a loss of $.78 per share.

The company increased its R&D costs 20 percent year over year to $3.6 million from $3.0 million, and more than doubled its SG&A spending to $6.7 million from $3.3 million.

It finished the quarter with $10.8 million in cash and cash equivalents.

For full-year 2013, NanoString said that it expects revenues in the range of $29.5 million to $31.5 million, which would represent an increase of 28 percent to 37 percent over 2012 figures. Life sciences revenues are anticipated to be between $28.5 million and $30.0 million. Diagnostics revenues are anticipated in the $1.0 to $1.5 million range.

The firm said its net loss for the year is estimated to be between $30.0 million and $35.0 million.

In Wednesday morning trade on the Nasdaq, shares of NanoString were up around 1 percent at $8.10.