NEW YORK - NanoString Technologies reported after the close of the market on Tuesday that its total revenues declined 28 year over year as collaboration revenues shrank more than threefold.
For the three months ended June 30, total revenues came in at $25 million, down from $34.6 million a year ago when revenues were influenced by significant deferred influx from pharma collaborations.
The drop in overall revenues was in line with what the firm reported in a preliminary analysis in July and matched the consensus Wall Street estimate.
Total product and service revenues grew 11 percent year over year to $20.4 million from $18.3 million in the year-ago quarter, exceeding its prior guidance of $18.5 million to $19.5 million. Collaboration revenues slid to $4.6 million in Q2 2018 from $16.3 million in Q2 2017.
Within product and service revenues, consumables revenues were $12.8 million, including $2.5 million from Prosigna IVD kits, representing 16 percent year-over-year growth from $11 million in the same period of 2017. Instrument revenues were $5.5 million, a 9 percent decrease compared to $6 million in the prior-year quarter. Service revenues grew 68 percent to $2.1 million from $1.2 million.
The firm estimated that the installed base for its nCounter systems rose to approximately 670 as of June 30.
NanoString President and CEO Brad Gray said during a call discussing the company's earnings that consumable pull-through during the quarter was especially heartening, as was the growth for its Prosigna breast cancer test.
Gray also cited increasing customer interest in the company's Digital Spatial Profiling, which has been available already to participants of a technology access program, with beta instruments slated to be supplied to the first early access users at the end of this year.
"We've generated a groundswell of interest in [DSP] that we believe positions us for a strong launch," Gray said during the call.
NanoString recently named several Centers of Excellence — including the Broad Institute, the Netherlands Cancer Institute, and Oregon Health & Science University — who have committed to pioneering the utility of the DSP platform and will receive first access to DSP instruments, applications, and content when they are launched.
Gray said that the company received the first beta instruments in July and has been testing them diligently in house. Early access labs are expected to receive instruments beginning in the fourth quarter, and the company continues to expect a full commercial launch during the first half of 2019.
NanoString's R&D expenses grew 32 percent to $14.6 million in Q2 2018 compared to $11 million in the second quarter of 2017. The company said that the rise in spending reflects investments in new products and technologies under development, including the DSP and Hyb & Seq technologies.
SG&A costs increased by 11 percent to $20.6 million from $18.6 million in the same period last year, reflecting expenses related to revenue growth, and increases in administrative costs.
The firm's net loss for the quarter was $20.6 million, or $.80 per share, compared to a net loss of $4.6 million, or $.20 per share, in Q2 2017. Analysts on average, had expected a los of $.71 per share.
According to the company, the wide divergence in net loss between Q2 2018 and Q2 2017 reflects the recognition of significant deferred collaboration revenues during the prior-year period due to the termination of collaboration agreements with Medivation and Astellas.
Apart from the imminent launch of the DSP instrument, Gray said that NanoString is excited by the ongoing growth of its nCounter business in the cancer field where it already has a presence and is continuing to work to expand adoption to other areas like neurology.
Gray said that company's immune-oncology product, the IO 360 panel, remains the fastest growing panel launch in the company's history.
In June, the company announced that it had entered a collaboration with the National Cancer Institute under which NCI is incorporating the IO 360 panel in sponsored trials to characterize immune activity and develop potentially predictive gene signatures.
Other efforts to expand the application and utility of the nCounter platform include continued work to validate a companion diagnostic assay for diffuse large B-cell lymphoma, and new efforts to explore the utility of the system to support research in CAR T-cell therapies.
NanoString updated its guidance for full-year 2018 to product and service revenue of $79 million to $81 million, an increase from previous guidance of $75 million to $80 million.
The company now projects total revenue of $104 million to $106 million for the year, compared to an earlier guidance range of $100 million to $105 million. Net loss is expected in the range of $68 million to $72 million — $2.50 to $2.70 per share — compared to previous guidance of $65 million to $75 million — $2.60 to $2.90 per share.
The company finished the quarter with $24.3 million in cash and cash equivalents, and $26.4 million in short-term investments.
In morning trading today on the Nasdaq, NanoString's shares rose 2 percent to $12.51.