NEW YORK (GenomeWeb) – T2 Biosystems reported after the close of the market on Monday a 75 percent jump in second quarter revenues, which were buoyed by increased research revenues but negatively impacted by a previously announced hold on shipments of its sepsis test cartridges.
For the three-month period ended June 30, T2's revenues rose to $990,000 from $564,000 in the year-ago quarter, widely missing analysts' consensus estimate of $1.5 million. Although revenues in the quarter included $151,000 in product sales— the company reported zero product revenues in the second quarter last year — its overall revenues were affected by an issue wherein cartridges for its T2Candida sepsis test were yielding higher-than-normal invalid results. As the company disclosed last month, in June it began holding cartridge shipments and replacing customers' existing inventory.
At the time, T2 also said that it expected to submit its investigational bacterial sepsis test T2Bacteria to US regulators in mid-2017. It had previously said it intended to have the test approved and ready for market launch at the beginning of next year.
During a conference call held to discuss the Q2 results, T2 CFO Shawn Lynch noted that the hold on cartridge shipments resulted in about $200,000 in lost revenues, while the replacement program cost approximately $60,000.
T2 President and CEO John McDonough added on the call that the invalid results issue is resolved and does not appear to have resulted in any "serious long-term negative commercial impact."
"Products were replaced as fast as it was pulled out, and all customers replenished with the inventory they needed in about two weeks," he said.
T2's Q2 net loss climbed to $14 million, or $.58 per share, from $11 million, or $.54 a share, in the same period last year, missing analysts' average expected loss per share of $.56.
R&D spending in the quarter fell slightly to $6.4 million from $6.7 million, while SG&A costs rose to $6.1 million from $4.4 million, in part due to T2's expansion of its sales force. McDonough said that T2's US sales force now totals 23, and that the company does not expect to add any reps for the remainder of 2016.
At the end of the second quarter, T2 had cash and cash equivalents totaling $50.2 million, as well as an additional $5.5 million available through an equipment lease credit line.
Looking ahead, McDonough said that T2 continues to anticipate closing 45 commitments for its T2Candida test in 2016. The company had previously been targeting 60 commitments, but adjusted this guidance to a range of 45 to 65 in April. Last month, T2 revealed that uptake of the test had been slower than anticipated and said that it was now targeting the lower end of this range for the year — a disclosure that prompted a 20 percent drop in its shares.
The stock has largely recovered and was trading up $1.38 at $7.04 on the Nasdaq Tuesday morning.
"It is very difficult to predict the timing of closing dates for hospital contracts, particularly when we are introducing a truly novel and disruptive technology," he said during the conference call. "Based on our analysis of our sales funnel activity and the number of institutions that are in the later stages of the sales cycle, we believe we can achieve the goal of closing 45 commitments and contracts this year."