This story has been modified to emphasize that Veracyte doesn't intend to abandon all IVD development and has not finalized its decision regarding disbanding from its French subsidiary.
NEW YORK – Veracyte announced after the close of the market on Monday that it has instructed its French subsidiary, Veracyte SAS, to begin the process of looking for a buyer after deciding that continued support of its operations could be inconsistent with its core strategy, which is increasingly focused on its lab-developed testing business in the US.
The company has not decided yet whether it will, in fact, drop the business, and it does plan to continue to pursue development and provision of IVDs.
The company reported that its fourth quarter 2024 revenue grew 21 percent year over year to $118.6 million from $98.2 million in Q4 2023.
This was driven almost entirely by testing revenue, which was $112.2 million, an increase of 24 percent from $90.4 million in the year-ago quarter. Veracyte's Decipher prostate cancer classifier and Afirma thyroid cancer classifier tests led the charge, CEO Marc Stapley said during a call with investors.
"We further strengthened our position as the market leader with outstanding adoption over the course of 2024 as we delivered more than 80,000 tests, representing volume growth of 36 percent," Stapley said. "During the fourth quarter, Decipher volume grew 45 percent year over year to a new record of more than 22,400 tests."
Volume growth was also strong for Afirma in Q4 2024, increasing 8 percent year over year to more than 16,300 tests, driven by deeper penetration into existing accounts and the addition of "some sizable new customers," Stapley said.
In contrast, product revenue in Q4 was just $3.0 million, a decrease of 18 percent from $3.7 million in the fourth quarter of 2023. Biopharmaceutical and other revenue was $3.5 million, a decrease of 17 percent compared to $4.1 million in the year-ago period.
Veracyte SAS had been focused on supporting the firm's immune-oncology biopharma business, contract development and manufacturing, and support for its IVD development and manufacturing. "Given the declines in biopharma [revenue] and our manufacturing supply challenges for Prosigna, we believe that to continue to support such a large operation and infrastructure may be inconsistent with our core strategy and may not be in the best interest of Veracyte," Stapley said.
SAS is now in consultation with its works council, as is required by French law. It is seeking to identify buyers for all or part of the business. Without a buyer or Veracyte's continued funding, it would have to commence bankruptcy proceedings, Stapley said.
"Our first priority is to our patients, and so we will do our utmost to maintain continuity of Prosigna nCounter supplies for the foreseeable future, which will depend in part on finding a buyer for this portion of the business," he said. "In terms of the financial impact this year, this is of course highly dependent on the final outcome and the timing of that."
Veracyte's Q4 net income was $5.1 million, or $.06 per share, compared to a loss of $28.3 million, or $.39 per share, in the same period of 2023. The firm said its adjusted net earnings per common share was $.36.
The company's Q4 R&D costs were up about 3 percent year over year at $19.3 million compared to $18.7 million in the same period of 2023. Its SG&A spending was $51.7 million, up about 5 percent from $49.1 million in the year-ago quarter.
During the company's call, Stapley said that Veracyte is particularly proud of its growth in the prostate cancer test market. Q4 saw 40 percent to 55 percent annual volume growth for Decipher across each national comprehensive cancer network risk category for which the test has been endorsed.
Stapley said that a technical assessment filed with Medicare's MolDx program expanding Decipher into the metastatic setting was approved in late December, and the company secured New York state approval in January. "We are well on our way to finalizing all the necessary commercialization and training activities to launch into this expanded population in the first half with volumes benefiting in the back half of 2025 and beyond," he said.
Looking forward, Stapley said that Veracyte has enrolled more than 85 percent of a planned 2,400 patients into the NIGHTINGALE study of its Percepta nasal swab test, an assay designed to assess risk of lung cancer in individuals with nodules observed in imaging.
Veracyte is also working to commercialize the MRD approach that it brought in with its acquisition of C2i Genomics last year. The method is differentiated from other tumor-informed approaches in its use of whole-genome sequencing both in tumor and serial blood samples.
"As we have shared, we are working on the first indication of our MRD platform for muscle-invasive bladder cancer [and] … are also focused on expanding into other indications where we already have a commercial presence. We have completed setting up the workflow in our lab and have submitted for New York state approval," Stapley said.
The company also expects to submit its technical assessment for the MRD assay to MolDx this quarter.
"As is our strategy across our platform, we are committed to having reimbursement in place and all commercial activities are progressing well so that we can launch our inaugural MRD test in the first half of 2026," said Stapley.
For full-year 2024, Veracyte's revenues totaled $445.8 million, up 23 percent compared to $361.1 million in 2023. Testing revenue was $419.0 million, an increase of 28 percent from $326.5 million in 2023, driven by growth in its Decipher and Afirma tests.
Product revenue was down 12 percent at $13.7 million from $15.6 million in 2023. Biopharmaceutical and other revenue dropped 30 percent to $13.2 million from $18.9 million.
The company's net income for full-year 2024 was $24.1 million, or $.31 per share, compared to a loss of $74.4 million, or $1.02 per share, in 2023.
Its R&D spending was up about 21 percent in 2024 at $69.3 million compared to $57.3 million in 2023. Its SG&A costs were $206.0 million, up about 10 percent from $187.7 million.
Veracyte ended the quarter with $239.1 million in cash and cash equivalents and $50.4 million in short term investments.
The company expects its 2025 testing revenue to be between $470 million and $480 million, representing 12 percent to 15 percent year-over-year growth. Given the number of variables impacting its Marseille, France, operations, the company is not providing total company revenue guidance at this time.