NEW YORK – Belgian oncology molecular diagnostics firm Biocartis reported before the opening of the market today that its revenues for the first half of 2019 rose 39 percent year over year, driven by increases in product sales and collaboration revenues.
For the six months ended June 30, Biocartis' revenues rose to €17.1 million ($18.9 million) from €12.3 million in 2018.
Product sales rose 17 percent to €10.0 million from €8.6 million, driven by a 28 percent increase in Idylla instrument sales to €2.5 million from €2.0 million a year earlier. Idylla cartridge sales rose 13 percent to €7.5 million from €6.6 million. Within product sales, commercial revenues rose 20 percent to €9.6 million from €8.0 million a year earlier, while R&D revenues fell 29 percent to €429,000 from €605,000 in 2018.
Collaboration revenues, meanwhile, soared 93 percent to €6.8 million in H1 2019 from €3.5 million last year. Service revenues rose 40 percent to €351,000 from €251,000.
The company installed 156 Idylla instruments during the first half of 2019, bringing its total installed base to 1,129. The firm sold 72,000 commercial cartridges in H1, representing a year-over-year increase of 24 percent. Still, commercial cartridge volume growth was below expectations because of slower-than-expected sales growth in the US.
"During H1 2019, we realized continued commercial growth in Europe and our [rest of world] distributor markets and we maintain a good outlook for full-year installed base growth," Biocartis CEO Herman Verrelst said in a statement. "Despite the number of new high-profile US customers that we attracted in the first half of this year, we encountered a delay in the actual US commercial cartridge volume ramp-up. While we take all actions to address this situation, our total cartridge volume growth for 2019 will be impacted. … Overall, despite the delay incurred in US commercialization, we significantly strengthened our business in H1 2019 and feel confident about continuing our efforts for the remainder of the year."
On a conference call with analysts following the release of the earnings, Verrelst said that while the company has made good progress on many fronts, it hit "a bump in the road" for US commercialization, a problem that Biocartis is addressing.
With the Idylla platform, Biocartis is able to offer customers a broad menu of oncology tests combined with speed and performance, he said. The company has built an "impressive" customer base, some of whom are publishing Idylla-based studies in peer-reviewed journals. The company is also aiming to expand its menu of tests and create partnerships with pharmaceutical and biotech companies, which are also adding to revenues, Verrelst noted.
He also said that growth in Europe exceeded expectations for cartridge consumption and instrument placements, driven by increased usage of Idylla for first-line testing and a strong contribution from collaborations with pharma partners. Markets other than Europe, the US, China, and Japan also grew significantly in H1 2019, mainly driven by customer base expansion and the addition of new markets.
In order to address the slower pace of commercialization in the US, the company has terminated its distribution deal with Thermo Fisher Scientific subsidiary Fisher Healthcare. In September 2017, Biocartis had announced plans to train 150 Thermo Fisher employees to sell its Idylla system, build a pipeline in the US, and support customers. Biocartis said it would also build its own sales team in the US to support and train Thermo Fisher staff, as well as engage directly with end users.
However, Verrelst said, although the number of customers and installed instruments expanded in the US in H1 2019, cartridge consumption didn't ramp as expected. The company has found that US customers need more time to switch from other testing methodologies to Idylla and believes that switching from the Fisher Healthcare distribution deal to a Biocartis US sales team will accelerate the pace of Idylla installments and cartridge orders in the US.
Biocartis' previous plan to use a small US sales team to approach customers directly in order to get direct feedback and to rely mainly on the Fisher Healthcare team for direct sales was "not an optimal set up" to respond to opportunities in the US, Verrelst added. Switching to a dedicated Biocartis sales team will allow the company to put more effort into guiding customers to implement Idylla testing and buy cartridges. He also noted that the company might need to increase its sales force, or reengage with distribution partners, but hasn't decided on its approach yet.
Also in H1 2019, the company CE-marked its Idylla MSI test and initiated two immune-oncology research partnerships aimed at expanding the Idylla menu. In one partnership with Bristol-Myers Squibb, the companies are planning to pursue registration of the Idylla MSI test as a companion diagnostic for immuno-oncology therapies. The second partnership, with Kite Pharma, is aimed at the development of Idylla assays that support Kite's therapies.
Biocartis' loss for the first half of 2019 widened to €29.7 million, or €0.53 per share, from €21.8 million, or €0.42 per share, in H1 2018.
The company's R&D spending in the first half of the year rose 25 percent to €20.0 million from €16.0 million in 2018. Its SG&A costs increased 38 percent to €15.2 million from €11.0 million.
As of June 30, Biocartis had cash and cash equivalents of €209.2 million.
For full year 2019, Biocartis now expects to install 325 to 350 new Idylla instruments, down from its previous guidance of 350. Biocartis also expects commercial cartridge consumption to rise 30 percent to 35 percent year over year — the company had previously anticipated an increase of 60 percent to 70 percent in cartridge consumption.
In expanding its menu for colorectal cancer, Biocartis is preparing to submit a premarket approval (PMA) application to the US Food and Drug Administration for the Idylla MSI Assay and the Idylla RAS tests. Pending feedback from the FDA, Biocartis expects to submit the PMAs in 2020.
The company also finished development of the liquid biopsy version of its Idylla EGFR Mutation test for lung cancer in H1 2019 and plans to launch the test for research-use-only in the fourth quarter. It is also continuing development of the Idylla GeneFusion Panel, which it expects to launch in 2020.
Finally, Biocartis expects to place Idylla instruments at European sites in Q4 for use in breast cancer in preparation for clinical validation studies of the Idylla Oncotype DXi IVD Breast Recurrence Score test.