NEW YORK – HTG Molecular Diagnostics reported after the close of the market on Tuesday that its third quarter revenues grew 15 percent year over year as product-related revenues more than offset a decline in collaborative revenues.
The company also said that it has terminated a companion diagnostic development deal with Qiagen in the wake of that company's discontinuation of next-generation sequencing instruments, causing HTG to also reduce its full-year 2019 revenue guidance.
For the three months ended Sept. 30, 2019, the Tucson, Arizona-based molecular profiling company reported total revenues of $5.4 million compared to $4.7 million a year ago and just shy of analysts' consensus estimate of $5.5 million.
HTG's Q3 product and product-related services more than tripled to $4.3 million from $1.3 million, while its collaborative development services revenues dropped 68 percent to $1.1 million from $3.4 million a year ago.
The company said that the increase in product-related revenues reflects additional instrument placements in the US and Europe, increased research-use only consumables product sales stemming from the expansion of its menu of RUO assays, and programs with an expanding number of biopharmaceutical company customers.
"Collaborative development services revenue continues to be our most significantly impacted revenue stream, as a result of reduced activity in our two existing [precision diagnostic partnership] development programs, as well as a lack of new programs," CEO John Lubniewski said in a statement.
"While we remain positive about the long-term potential of this line of business and our ability to grow it in the future, our near-term business has unfortunately been impacted by Qiagen's multiple, recent announcements reflecting a rapid and premature shift away from our mutual collaboration, including Qiagen's announcement that it has stopped all development of their clinical sequencer," he added.
As a result, HTG lowered its full-year revenue guidance to a range of $19 million to $20 million from a previous range of $23 million to $26 million. On average, Wall Street had been expecting full-year revenues of $24.0 million.
Elaborating on this in a conference call recapping HTG's earnings, Lubniewski said that "as a result of Qiagen's lack of performance, and what we see as a clear breach of contract by discontinuing GeneReader, we have notified Qiagen that we are terminating our agreement." He added that current contracted work with Qiagen is expected to continue, but that HTG will seek future collaborations directly with biopharma and will leverage its preexisting development agreements with Illumina and Thermo Fisher Scientific.
"We believe regaining direct control of the customer by leveraging HTG's pharma commercial organization will make significant headway to return this business to growth in 2020, which is a focus for us because developing companion diagnostics through our biopharma collaborations remains one of three growth strategies," Lubniewski said.
HTG's Q3 net loss was $4.7 million, or $.15 per share, compared to a net loss of $4.8 million, or $.17 per share a year ago. Analysts, on average, had expected a loss per share of $.16.
HTG's R&D expenses fell 28 percent to $2.6 million from $3.6 million a year ago, while its SG&A expenses dropped 4 percent to $4.5 million from $4.7 million.
The company finished the quarter with $34.8 million in cash and cash equivalents, and $3.0 million in short-term investments.