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Akoya Biosciences Q1 Revenues Fall 14 Percent, Miss Expectations due to Weak Instrument Sales

NEW YORK – Akoya Biosciences on Monday afternoon reported a 14 percent year-over-year decline in first quarter revenues, primarily due to weakness in instrument placements.

As a result of the revenue shortfall, which missed the consensus Wall Street estimate, the company lowered its revenue guidance for full-year 2024. In morning trading on the Nasdaq, Akoya's shares were down 26 percent at $3.06.

"While we made meaningful progress advancing both our operational and clinical objectives, our first quarter results fell short of expectations," Akoya CEO Brian McKelligon told investors in a conference call recapping the financial results.

For the three months ended March 31, the Marlborough, Massachusetts-based spatial biology firm posted revenues of $18.4 million, compared to $21.4 million during the same quarter a year ago. On average, analysts had expected $24.3 million in revenues.

Product revenue was $12.1 million, representing a 22 percent decrease from $15.5 million in Q1 2023. Of the product revenue, $4.9 million came from instruments, $7.0 million from reagents, and the remainder from software, CFO Johnny Ek said during the call.

Service and other revenue was $6.2 million, a 5 percent increase from $5.9 million in the prior-year quarter. "Services have been a growth segment for us as our instrument warranty and field service revenue have rapidly expanded due to our large installed base," he said.

While the company did not provide a geographic breakdown of revenues, McKelligon said Asia-Pacific accounted for roughly 18 percent of revenues, of which 60 percent to 70 percent came from China.

During Q1, Akoya sold 30 instruments, compared to 58 in Q1 2023. The company grew its installed instrument base to 1,213, including 354 PhenoCyclers and 859 PhenoImagers. This represents a year-over-year increase of 22 percent compared to the installed base of 992 instruments in Q1 2023, which included 273 PhenoCyclers and 719 PhenoImagers.

McKelligon said Akoya experienced longer sales cycles in Q1 as customers reassessed capital purchases and delayed expanding their lab capacities. In addition, he cited NIH budget uncertainty and inflationary pressure as reasons for the weak results. He said the company expects these factors to ease as the year progresses.

In addition, Akoya transitioned from third-party reagent suppliers to a new manufacturing center in Marlborough, Massachusetts, during the quarter, which temporarily impacted reagent fulfillment times and delayed instrument purchases. The new site is manufacturing the firm’s molecular barcodes, antibody catalog, and accompanying reagents, he added.

The impact of delayed reagent orders was "most acutely felt" in core labs and contract research organizations, he said, but delays should resolve as the site is ramping up production, McKelligon noted.

Lab services revenue recognition from certain pharmaceutical partners was also deferred to the second half of 2024, he said, due to a shift in clinical trial milestone timelines, further contributing to the revenue Q1 decline.

During the quarter, Akoya's partner Acrivon Therapeutics presented positive Phase IIb clinical data for the ACR-368 therapeutic in ovarian and endometrial cancer patients positive for the ACR-368 OncoSignature assay. The "statistically significant prospective validation of the patient selection approach via the ACR-368 OncoSignature assay, which deploys the Akoya PhenoImager HT platform and is run in the company’s CLIA lab in Marlborough, demonstrates the ability to effectively identify cancer patients whose tumors are likely to respond to ACR-368 monotherapy treatment," McKelligon said.

"We and our dedicated companion diagnostic team are excited to continue advancing this exclusive partnership with Acrivon to bring a precision diagnostic [test] to the market," he added, but did not provide a timeline.

Akoya's Q1 net loss was $23.5 million, or $.48 per share, compared to a net loss of $18.8 million, or $.49 per share, in Q1 2023. On average, Wall Street analysts were expecting a net loss of $.29 per share.

The firm's R&D expenses were $5.6 million, a 13 percent dip from $6.4 million in the year-ago quarter. SG&A costs dropped 14 percent to $19.9 million from $23.1 million in Q1 2023.

In connection with the new manufacturing center and a consolidation of its facility, Ek said the company recorded an impairment charge of $3.0 million. As previously reported, it also laid off 15 percent of its workforce during the quarter, leading to a $1.4 million restructuring charge.

In light of the Q1 results, Akoya lowered its full-year 2024 revenue guidance. The company now expects revenues to be in the range of $104.0 million to $112.0 million, down from a previous range of $114.0 million to $118.0 million. The company still expects to achieve operating cash flow breakeven by the year's end.

Akoya ended the quarter with $13.0 million in cash and cash equivalents and $48.5 million in marketable securities.