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NanoString Q3 Revenues Rise 7 Percent

NEW YORK (GenomeWeb) – NanoString Technologies reported after the close of the market today that its third quarter revenues were up seven percent year over year.

For the three months ended Sept. 30, NanoString's revenues were $30.6 million compared to $28.6 million in Q3 2018, beating the Wall Street estimate of $28.1 million.

The firm said it took in $26.3 million in product and service revenue in the quarter, a 23 percent increase from $21.5 million in Q3 2018.

Excluding the firm's Prosigna breast cancer in vitro diagnostic, consumables revenue was $12.7 million, a 14 percent increase from $11.1 a year ago. Revenue from Prosigna was flat at $2.5 million for the quarter.

Instrument revenue nearly doubled to $8 million from $5.4 million in the prior year's quarter, with the company's new GeoMx spatial profiler bringing in $2.2 million of that total. The firm said it increased its installed base to 820 nCounter analyzers from about 695 a year ago. Its cumulative orders for GeoMx instruments has reached more than 70, with the first ten of those shipping out during Q3.

In a statement, NanoString CEO and President Brad Gray highlighted "strong instrument placements and an expanded consumable portfolio," as a major contributor to the firm's quarterly growth.

Collaboration revenue in Q3 dropped 40 percent to$4.3 million from $7.2 million, but service revenue rose 31 percent to $3.1 million from $2.3 million.

In a call with investors, he added that oncology applications "motivated about 60 percent of [the company's] new nCounter placements, with most of the balance coming from immunology and neuroscience."

According to Gray, the majority of NanoString's consumable growth came from its portfolio of oncology panels, but he said that offerings outside of oncology are also "making important contributions to growth."

Revenue from the company's immunology and neuroscience panels "increased by approximately 40 and 65 percent respectively over the prior year and together accounted for about one third of our panel revenue," he said during the call.

During Q3, NanoString added two immunology panels to its menu, including a panel designed to detect biomarkers of fibrotic diseases, such as NASH and Cystic Fibrosis, and a human organ transplant panel. "We're getting strong interest from both researchers and commercial entities, and this [transplant] panel generated the third largest initial quarter of sales for any panel that we've ever offered," Gray said.

Gray attributed the firm's flat revenues for its Prosigna IVD to new guidelines on genomic testing in France, which temporarily stalled growth in Europe. Moving forward, he said, "growth in Europe is expected to return in 2020, benefiting from increased traction in the United Kingdom, as well as a recent decision by the government of Norway to make Prosigna its only reimbursed genomic breast cancer test."

According to Gray, shipment of NanoString's first commercial GeoMx DSP instruments during the third quarter also accelerated its instrument revenue growth, with orders for the new system being fueled in turn by the company's priority-site and Technology Access Programs.

The firm said it completed more than 40 GeoMx DSP TAP projects during the third quarter, expanding the total number of projects completed to approximately 170 for 110 unique customers.

"TAP remains an important element of our market development effort and a leading indicator of future instrument orders today. Approximately half of our orders have come from customers who first experience the three DSP through the TAP service," Gray said during the firm's earnings call.

The firm's Q3 net loss was $22.7 million, or $.64 per share, compared to $16.4 million, or $.56 per share, for the third quarter of 2018. Analysts, on average, had anticipated a loss per share of $.54.

NanoString's quarterly R&D expenses rose 2 percent to $17.0 million from $16.6 million. Its SG&A costs were up 31 percent to $23.4 million from $17.8 million.

The firm finished the quarter with $23.4 million in cash and cash equivalents, and $105.4 million in short-term investments.

The company updated its guidance for fiscal year 2019 to anticipate product and service revenue of $100 to $103 million from a previous guidance of $98 to $103 million. The updated guidance includes GeoMx DSP revenue guidance of $8 million,  the top end of its previously guided range for that product. With a slight decrease in projected service revenue for the year, NanoString now predicts $121 million to $124 million in total revenue, compared to previous guidance of $118 million to $123 million.