NEW YORK (GenomeWeb) – T2 Biosystems announced after the close of the market Monday that it was backing away from earlier guidance on the number of commitments for its T2Candida sepsis panel expected in 2016 after a lower-than-expected number of customers adopted the test during the first quarter.
The company similarly adjusted its first quarter revenue guidance ahead of the planned May 2 release of its full Q1 financial results. The company now expects revenues in the quarter to be flat with the previous quarter.
T2Candida, the company's first diagnostic product, was approved in the US in late 2014 for the direct detection of five sepsis-causing yeast pathogens — Candida albicans, Candida tropicalis, Candida parapsilosis, Candida glabrata, and Candida krusei — in whole blood samples. It runs on the company's T2Dx instrument and can be completed within three to five hours, with greater sensitivity and specificity, compared with up to six days with traditional blood culture.
When T2 reported its fourth quarter and full-year 2015 financial results earlier this year, company officials said that the firm expected to secure commitments for T2Candida from 30 hospitals and hospital systems in 2016, with around 11 of those coming in the first quarter. If it hit this target, T2 would end 2016 with a total of 90 commitments.
However, T2 disclosed Monday that it had secured commitments from only five customers in the first quarter — three in the US and two in Europe through distribution partners. The company said it now expects to sign on between 45 and 65 T2Candida customers globally in 2016, rather than the 60 it had previously predicted.
T2 also now expects its first quarter revenues to be approximately $1 million, with about 40 percent coming from consumable tests and 60 percent from research projects. It had previously said that revenues would exceed the $1 million generated in the fourth quarter of 2015. Analysts had reached a consensus estimate of $1.5 million in revenues for the firm in Q1.
During a conference call Monday afternoon, T2 President and CEO John McDonough cited the challenge of predicting contract close rates over a short period of time in the early stages of product adoption. He also noted that the rapid growth in the number of hospitals using the T2Candida test took some attention away from the company's sales force, which needed to service newly signed accounts at the expense of securing new customers.
McDonough further said that T2 has been on track with plans to expand its sales force to around 20 by mid-year, and that this team is now "appropriately structured to ensure that we can meet the needs of our clients while pursuing new commitments." The firm currently has 19 sales reps.
T2 is still confident that it can hit its original goal of 60 commitments in 2016, "but we're also realistic and we recognize that this quarter represents a lost opportunity," McDonough added, saying he believes that providing a guidance range, rather than a definite number, is "a prudent approach."
He noted that T2 remains on track with its next panel, T2Bacteria for the diagnosis of bacterial sepsis, which is expected to launch in the US in early 2017.
The firm's shared fell more than 12 percent to $9.29 in Tuesday morning trading on the Nasdaq.