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Nanosphere's Q1 Revenues Double on Verigene Uptake

This article has been updated to include comments from a conference call and a stock quote.
 
NEW YORK (GenomeWeb News) – Nanosphere reported after the close of the market on Tuesday that its first-quarter revenues more than doubled year over year on initial customer adoption of its Verigene system.
 
The Northbrook, Ill.-based molecular diagnostics firm brought in revenues of $576,016 for the three-month period ended March 31, compared to revenues of $269,903 in the first quarter of 2007. Product sales for the quarter were $303,404 compared to $46,645 in the comparable period of 2007, while grant and contract revenue increased to $272,612 from $223,258.
 
Nanosphere received US Food and Drug Administration clearance for its Verigene system and warfarin metabolism assay in September. It was the first time the FDA ever cleared a test to detect gene variants in patients that are sensitive to the anticoagulant. The firm also received FDA clearance for a hyper-coagulation assay the following month.
 
Company officials noted during a conference call that through the end of the first quarter the firm has shipped a total of 25 Verigene systems to customers for validation. Nanosphere placed 12 instruments in the fourth quarter of 2007 and 13 in the first quarter of 2008, Nanosphere President and CEO William Moffitt added.
 
“We anticipate that we will submit applications to the FDA for clearance of tests for cystic fibrosis, herpes, cervical cancer, respiratory illness, recurrent prostate cancer, and cardiovascular disease during the next 36 months, and we anticipate that we will submit two of such tests within 2008,” Nanosphere said in a filing with the US Securities and Exchange Commission today.
 
The firm currently has a cystic fibrosis assay in clinical trials and expects that assay to be the next product launched for the Verigene system.

Nanosphere also is developing a cardiac troponin assay. “We have begun to work with specific sites and investigators to define the protocols and logistics,” said Moffitt during the call. “If we continue to make good progress, this assay could be launched about mid-2009. With that said, we are continuing to do our best to accelerate that time line.

 
Nanosphere posted a net loss of $8.7 million, or $.39 per share, flat with a loss of $8.7 million, or $9.37 per share, in the first quarter of 2007. Nanosphere was privately held at the time of Q1 2007. The firm went public in November, raising net proceeds of $102 million from the sale of 8,050,000 shares of common stock at $14 per share.
 
The company’s R&D expenses increased 18.4 percent year over year to $5.8 million from $4.9 million, while its SG&A costs rose 54.5 percent to $3.4 million from $2.2 million.
 
During the first quarter, Nanosphere recalled several lots of its warfarin test cartridges due to aberrant results. “This was a Nanosphere-initiated recall, which is now completed,” Moffitt said. He noted that the recall was immaterial to Nanosphere’s financials during the quarter.
 

Ultimately, this recall affected only eight customers and eight different lots of warfarin metabolism cartridges, but it was very important to us to react quickly, resolve the issue, and ensure our customers received only high-quality products and that we not continue new customer placements until we've resolved the matter,” he said. “We are confident that this is behind us.

 
Nanosphere finished the quarter with $104.2 million in cash and cash equivalents.
 
Nanosphere said in the SEC filing that it believes its cash holdings are sufficient to meet its needs for “at least the next two to three years.”
 
In early Wednesday trade on the Nasdaq, shares of Nanosphere were up .3 percent at $7.62.

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