NEW YORK (GenomeWeb) - NanoString Technologies reported after the close of the market Wednesday that its second quarter revenues increased 73 percent, attributable to collaboration revenue, instrument sales, and consumables pull-through.
For the three months ended June 30, the Seattle-based molecular diagnostics firm reported total revenues of $22.6 million compared to $13.1 million in the prior-year period, beating the average Wall Street analyst estimate of $19.6 million.
"We had a successful second quarter characterized by strong commercial execution and rapid progress in delivering against diagnostic milestones in our biopharma collaborations," NanoString CEO Brad Gray said in a statement.
In the products and services segment, revenues from consumables rose 32 percent year over year to $9.1 million from $6.8 million. Instrument revenue grew 46 percent to $6.4 million from $4.4 million a year ago. Consumables pull-through was consistent with historical run rate of over 100k per system on an annual basis, NanoString CFO Jim Johnson said.
The firm's total nCounter installed base grew to more than 410 during the quarter. "Our nCounter Sprint profiler accounted for approximately half of units sold, driving 46 percent year-on-year growth in instrument revenue and underscoring the value of Sprint in reaching new customers and expanding our installed base," Gray added.
Sales of the Prosigna breast cancer test rose to $1.2 million from $592,000, and services revenues rose to $735,000 from $661,000. The US remains the driving market for Prosigna, the company said. Overall, product and service revenues rose 40 percent to $17.5 million from $12.5 million in Q2 2015.
Collaboration revenue also rose to $5.1 million from $568,000 the year before. Gray said the firm achieved milestones in its collaborations with Merck and Medivation/Astellas valued at $13.5 million, of which $8.5 million will be received in the third quarter.
On a conference call following the release of results, Gray provided the first details of the companion diagnostic the firm is developing with Merck. "This assay measures expression of 18 genes that indicate the type and functional status of immune cells within the tumor, which are important metrics for predicting patient response," he said. NanoString is calling the gene panel the "tumor inflammation signature."
The firm continues to explore additional projects with pharmaceutical companies, and currently has 33 projects with 17 different partners ongoing.
On the call, NanoString executives also highlighted the growth in instrument sales revenue during the quarter. "We sold more of every model compared to Q1," Gray said, noting that the company sold 17 Sprint instruments in Q2, representing about half of all units sold so far and a record for the instrument. About two-thirds of the Sprint placements went to new academic institutions or biopharma companies, he added, saying, "Sprint is expanding our reach and is a leading indicator of new streams of consumables revenue."
He also noted that instrument revenue growth was strong even when considering a slip in Q1 2016 sales. "It's not just a catch up, it's a return to strong instrument revenue growth," Gray said, adding that had the instrument sales that slipped into Q2 from Q1 been ignored, the firm would still have seen instrument revenue grow 30 percent year over year.
Gray further noted that he believes the trend will continue into the rest of the year. "We actually think that instrument revenue will outpace, in terms of growth rate, consumable revenue in the second half," he said.
NanoString's net loss narrowed to $10.8 million, or $.55 per share, from $12.4 million, or $.66 per share, a year ago, beating the consensus Wall Street estimate for a loss of $.66 per share.
The firm's R&D spending increased 52 percent to $8.8 million from $5.8 million a year ago, attributable to costs associated with its pharma collaborations and new product development. Its SG&A expenses grew 21 percent to $15.5 million from $12.8 million in Q2 2015.
NanoString ended the quarter with $19.3 million in cash and cash equivalents, and $37.8 million in short-term investments. The cash includes $5 million drawn under an existing term loan facility, Johnson said.
The company also raised its guidance for full-year 2016 revenues to a range of $89 million to $93 million, up from a range of $86 million to $90 million, and reduced its net loss per share estimate to between $2.15 and $2.30, down from $2.30 to $2.45. Analysts were, on average, expecting revenues of $87.5 million and a loss per share of $2.42 for the year.