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Nanosphere Exploring Strategic Alternatives, Hires Jefferies as Advisor

NEW YORK (GenomeWeb) – Nanosphere said after the close of the market on Thursday that it is exploring potential strategic alternatives and has hired Jefferies as an advisor.

The announcement from the Northbrook, Ill.-based molecular diagnostics firm comes about one month after it said that its second quarter revenues were up 42 percent year over year. At the same time, though, it lowered its full-year 2014 revenue guidance to $14 million from a previous range of $19 million to $21 million. It also reduced its guidance for instrument placements for the year to a range of 175 to 200 from a previous guidance of about 200.

In a statement about the company's financial results in August, Nanosphere President and CEO Michael McGarrity said that while its consumables business improved and its customer base grew, instrument sales fell "well short of expectations due to timing of hospital capital budgets and a continued lengthy customer implementation process."

Following the lowered guidance, some Wall Street analysts lowered their revenue forecasts for the company, including Jefferies' Brandon Couillard, who said that he anticipated Nanosphere would exhaust most of its $22 million in cash by the end of 2014 "as it may be unable to tap the remaining $10 million option on its debt facility."

The revised guidance also resulted in a sell-off of its stock. During the month of August, Nanosphere's stock dropped 45 percent from its July finish. On Thursday, its shares closed down around 15 percent on the Nasdaq at $.65 per share, a 52-week low.

In early morning trading on Friday, Nanosphere's shares inched up a fraction of 1 percent to $.66 per share.

Piper Jaffray's William Quirk also lowered his estimates following Nanosphere's changed guidance, but said at the time that he continued to believe in the company's long-term microbiology opportunity. In a note on Thursday, he reiterated his optimism about Nanosphere's prospects.

He said that the strategic review could include a potential sale of the company and he suspects "a strategic transaction will likely garner a premium to its current market value, although it is difficult to predict the ultimate acquisition price if/when a strategic transaction occurs."

Nanosphere said that Jefferies will help the company develop and evaluate "a full range" of possible strategic alternatives, but added that there is no assurance that it will enter into any strategic transaction.

In Friday morning trade on the Nasdaq, shares of Nanosphere were down nearly 10 percent at $.59.

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