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Foundation Medicine's Q2 Revenues Rise 145 Percent

This article has been updated from a previous version to include commentary from Foundation Medicine's earnings call.

NEW YORK (GenomeWeb) – Foundation Medicine reported after the close of the market on Tuesday that its second quarter revenues rose 145 percent year over year.

The Cambridge, Mass.-based tumor profiling firm reported total revenues of $14.5 million for the three months ended June 30, up from $5.9 million in Q2 2013 and beating the average analyst estimate of $13.4 million. The company also noted that Q2 revenues rose 27 percent sequentially from $11.5 million in the first quarter.

Revenue from clinical testing was $9.4 million, a 233 percent year-over-year increase from $2.8 million. The company reported 5,908 clinical tests, including 4,960 FoundationOne tests and 948 FoundationOne Heme tests, in Q2 2014, an increase of 263 percent from the 1,626 tests reported in Q2 2013, and a 26 percent increase from the 4,702 tests reported in the first quarter.

Of the clinical tests, around 60 percent were from community oncologists, compared to 54 percent in the previous quarter.

Average per-test reimbursement for the quarter was $3,600, an increase of around $200 over the previous quarter, mainly due to the higher price of FoundationOne Heme, Jason Ryan, the firm's senior vice president of finance, said during a conference call discussing the company's results. In addition, he said that the company is still not receiving payment from Medicare.

Revenue from company's pharmaceutical partnerships was $5.1 million, a 65 percent year-over-year increase, Ryan added.

"We continued to gain commercial momentum in the second quarter, with strong growth in clinical test volumes and in the revenue contribution from our pharmaceutical industry partnerships," CEO Michael Pellini said in a statement.

In addition, Pellini commented during the conference call on the US Food and Drug Administration's recent announcement that it is developing a risk-based approach for regulating laboratory-developed tests.

"We welcome the adoption of rigorous standards where life-altering treatment decisions can be made based on the results of these tests," he said. "We are confident that FDA oversight in our space will further improve our competitive advantage and differentiation in the marketplace, given the extremely high standards we have already set for comprehensive genomic profiling in oncology."

Earlier this month, the company released the updated version of its FoundationOne test, which now includes 314 genes and promoter and intronic regions from 29 genes. Last month, the New York State Department of Health approved both FoundationOne and FoundationOne Heme.

In addition, the company in June launched its FoundationOne CareLine, a personalized case management service offered to patients to help them gain access to therapies.

"We remain focused on facilitating the practical utilization of our test findings in clinical care," Vincent Miller, chief medical officer of Foundation Medicine, said in a statement. "Our critical role in the Lung-MAP trial and launch of FoundationOne Careline emphasize our commitment to patients and physicians and our efforts to improve access to FDA-approved therapies and other therapies under study in clinical trials."

R&D expenses for the quarter were $8.6 million, up 41 percent from $6.1 million in the year ago quarter. SG&A expenses were $13 million, up 71 percent from $7.6 million in Q2 2013. Increases in expense were driven primarily by investment in commercial infrastructure and R&D, the company noted.

Net loss was $13.8 million, or $.49 per share, just missing the average Wall Street estimate of $.48 per share.

Reiterating its prior guidance for 2014, the company said it expects to report between 22,000 and 25,000 clinical tests and recognize revenue in the range of $52 million to $58 million. In addition, it plans to launch its Cancer Explorer portal for physicians that will include outcomes collection capabilities in the second half of the year.

As of June 30, the company had $97.1 million in cash and cash equivalents.

In Wednesday morning trade on the Nasdaq, shares of Foundation Medicine were down nearly 4 percent at $24.75.

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