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NanoString Technologies Q4 Revenues Fall 2 Percent

NEW YORK – NanoString Technologies reported after the close of the market Monday that its revenues for the fourth quarter of 2020 fell 2 percent, as decreased collaboration revenues were offset by higher product and service revenues.

For the three months ended Dec. 31, 2020, revenues fell to $36.3 million from $36.9 million in Q4 2019, beating the average Wall Street estimate of $34.7 million.

Product and service revenue, which makes up the bulk of total revenues, rose 6 percent year over year to $35.7 million from $33.6 million, in line with last month's preliminary estimate. On a pro forma basis, reflecting the impact of licensing the Prosigna breast cancer test to Veracyte, product and service revenue increased by 9 percent. Collaboration revenue fell 83 percent to $548,000 from $3.3 million a year ago.

NanoString's Q4 instrument revenues rose 11 percent to $15.3 million from $13.8 in Q4 2019, with $9.3 million from sales of the firm's GeoMx Digital Spatial Profiler.

Consumables revenues were $16.6 million, down 2 percent. On a pro forma basis, reflecting the impact of the Veracyte transaction, consumables revenue increased by 3 percent. Consumables revenue includes $2.8 million from GeoMx.

NanoString's service revenues were $3.8 million, up 29 percent year over year, driven by GeoMx technology access programs and from servicing a growing installed base.

"During 2020, we successfully achieved all of our strategic objectives against the challenging operating backdrop of the COVID-19 pandemic. We extended our leadership in spatial biology, growing GeoMx DSP instrument orders by 50 percent and opening up a large market opportunity in basic discovery through the introduction of the first next-generation sequencing panels for GeoMx," NanoString President and CEO Brad Gray said in a statement. "We look forward to continuing our momentum in 2021, with key catalysts including the commercial launch of our GeoMx Whole-Transcriptome Atlas."

On Monday at this year's virtual Advances in Genome Biology and Technology conference, NanoString announced the launch of its technology access program for its spatial molecular imager, a high-resolution spatial transcriptomics platform announced in late 2020. Customers can submit tissue samples to NanoString to be analyzed using a 1,000-plex RNA panel and receive a complete data package. On a conference call with investors following the release of results, Gray noted that the company has about 10 prototype instruments on which to conduct early-access program projects. Bringing in 20 projects with the potential to yield 10 peer-reviewed publications "would be great," he said.

NanoString said that its nCounter installed base was 950 instruments as of Dec. 31, 2020. The firm shipped 30 GeoMx instruments in Q4 to bring its installed base to 130 instruments. Gray said that about half of new GeoMx instruments were placed with researchers in fields other than oncology, showing that the firm is diversifying its end markets.

The firm's nCounter business suffered more from lab closures due to COVID than its GeoMx business did, NanoString officials said.

Its net loss for the quarter was $23.0 million, or $.53 per share, compared to a net income of $24.0 million or $.61 per share in Q4 2019. On an adjusted basis, net loss was $15.8 million; NanoString did not provide an adjusted loss per share.

The company's R&D spending fell 19 percent to $14.6 million from $18.0 million a year ago, driven by Veracyte-related savings, offset by investments in spatial biology. Its SG&A spending fell 11 percent to $24.0 million from $26.9 million, driven by Veracyte-related savings and reductions in travel and trade show activities, offset by investment in spatial biology and the firm's service and customer support group.

For full-year 2020, NanoString's total revenues were $117.3 million, down 7 percent from $125.6 million in 2019,  beating the Wall Street consensus estimate of $114.9 million.

Product and service revenues were $111.4 million. On a pro forma basis, product and service revenues grew 14 percent. Collaboration revenues were $5.9 million, down 73 percent from $21.9 million in 2019.

Instrument revenues were $47.8 million, up 54 percent year over year, including $29.6 million in GeoMx instrument revenue. Overall, consumable revenues fell 18 percent for the full year to $50.1 million, including $5.3 million from GeoMx consumables. On a pro forma basis, consumables revenues fell 10 percent.

Service revenues rose 16 percent to $13.5 million from $11.6 million a year ago.

NanoString's 2020 net loss was $110.1 million, or $2.82 per share, compared to a loss of $40.7 million, or $1.18 per share, in 2019. On an adjusted basis, net loss was $82.5 million; NanoString did not provide an adjusted loss per share.

The firm's full-year R&D spending fell 8 percent to $62.9 million from $68.0 million a year ago, and SG&A spending fell 6 percent to $90.1 million from $96.2 million in 2019.

The company ended the year with $411.8 million in cash and cash equivalents, and $28.9 million in short-term investments.

NanoString said it expects total product and service revenue for 2021 in the range of $140 million to $150 million, representing growth of 26 percent to 35 percent compared to 2020. It expects revenues from GeoMx of about $45 million to $50 million with about two-thirds coming from instruments and one-third from consumable and about 40 percent coming in the first half of 2021. For nCounter, NanoString expects revenues in the range of $95 million to $100 million.

Company officials said nCounter activity has improved since bottoming out in Q2 2020, but that total recovery has yet to occur and may not fully normalize until the second half of 2021.

During the Q&A portion of the call, Gray said the firm was "more open and capable today than we have been in the past to think about bringing technologies or companies into NanoString that could bolster our portfolio."

In morning trading on the Nasdaq, shares of NanoString are up just over 2 percent at $76.32.