NEW YORK – NanoString Technologies reported after the close of the market on Monday that its third quarter revenues were up 4 percent year over year.
For the three months ended Sept. 30, NanoString's revenues were $31.8 million, compared to $30.6 million in Q3 2019, beating the Wall Street estimate of $28.7 million.
The Seattle-based firm said it took in $30.1 million in product and service revenue, up 14 percent from $26.3 million in Q3 2019.
On a pro forma basis, reflecting the impact of the December 2019 deal that saw Veractye acquire the Prosigna breast cancer test, product and service revenue grew 22 percent year over year. NanoString's pro forma calculations recognize about one-third of the previous Prosigna revenue over the same units sold.
"We delivered over 20 percent pro forma revenue growth in Q3 and extended our spatial genomics leadership with the launch of NGS readout for GeoMx," NanoString CEO Brad Gray said in a statement. "With our recent successful financing, we have the strongest balance sheet in our company's history, positioning us to fully support our market and technology development initiatives."
Instrument revenue grew 60 percent to $12.9 million from $8 million a year ago, with the company's new GeoMx digital spatial profiler bringing in $7.5 million of that total and nCounter, $5.4 million. The firm said it increased its installed base of nCounter analyzers to 915 from about 820 a year ago and grew its installed base of GeoMx instruments to 100. About 20 percent of nCounter sales were driven by GeoMx bundles.
Consumables revenue fell 11 percent to $13.7 million, including $1.4 million from GeoMx, attributable to lower lab activity resulting from the COVID-19 pandemic. On a pro forma basis, consumables revenue was flat year over year.
Collaboration revenue in Q3 dropped 59 percent to $1.8 million from $4.3 million in Q3 2019, but service revenue rose 16 percent to $3.6 million from $3.1 million in Q3 2019, driven by increasing GeoMx projects.
The firm's Q3 net loss was $21.3 million, or $.56 per share, compared to $22.7 million, or $.64 per share, for the third quarter of 2019. Analysts, on average, had anticipated a loss per share of $.60.
In October, NanoString completed a public offering of shares with net proceeds of $215.8 million. The number of shares used in calculating loss per share was approximately 38.1 million, compared to approximately 35.6 million a year ago.
NanoString's quarterly R&D expenses fell 12 percent to $15.0 million from $17.0 million, driven by reductions related to the Veracyte deal and the conclusion of certain collaboration agreements, partially offset by GeoMx product development efforts. Its SG&A costs fell 12 percent to $20.5 million from $23.4 million, driven by reductions in travel and trade show activities, offset by increased commercial initiatives related to GeoMx.
The firm finished the quarter with $171.5 million in cash and cash equivalents, and $59.6 million in short-term investments. Following the closing of the stock offering, the firm has cash, cash equivalents, and short-term investments of more than $445 million.
NanoString issued Q4 product and service revenue guidance in the range of $31 million to $34 million. This "assumes lab activity levels that are approximately consistent with Q3," NanoString CFO Thomas Bailey said on the investor call. The range includes nCounter revenues of $21 million to $23 million and GeoMx revenues of $10 million to $11 million. It guided for 25 or more new GeoMx instrument orders in Q4.
"Our Q4 guidance range is wider than we typically provide, reflecting current pandemic-related recent uncertainty, with [record] infection rates … in North America and new lockdowns in [Europe, the Middle East, and Africa,]" Bailey said. "While our sales funnel remains strong and October purchasing activity remained at levels similar to those observed in Q3, we are aware of a few specific examples of purchasing processes slowing down in Europe in recent weeks. As has been true throughout the pandemic, revenue in Q4 may be negatively impacted if customers are unable to place orders or receive shipments due to site closures."
In morning trading on the Nasdaq, shares of NanoString were up 2 percent at $39.55.