NEW YORK (GenomeWeb) – T2 Biosystems reported after the close of the market Tuesday a rise in its fourth quarter net loss amid increased costs associated with promoting its Candida test T2Candida and development of new assays, although it still topped Wall Street expectations.
For the three-month period ended Dec. 31, T2's revenues jumped to $1 million from $119,000 in the same period a year earlier, but missed analysts' consensus estimate of $1.2 million. Fourth quarter revenues included $343,000 in product revenue primarily from the sale of consumable diagnostic tests, and $668,000 in research revenue.
During a conference call held to discuss the financial results, T2 President and CEO John McDonough noted that during the fourth quarter two major hospital systems — representing 22 and 14 hospitals, respectively — signed commitments to adopt the company's T2Dx diagnostic system and the T2Candida test.
"That gave us 30 hospitals and hospital systems in all for the year, which had been our goal since … 2014," he said. "As we projected, the rate of hospital commitments grew throughout the year with 10 in the first half, nine in the third quarter, and 11 in the fourth quarter, for a total of 20 in the second half of 2015. We believe that momentum will continue to grow in 2016."
He noted, however, that hospitals on average begin implementing T2Candida three to six months after contract signing. Most accounts close in the third month of each quarter, and as a result only nine of the 19 accounts closed as of Sept. 30 were online by the end of 2015.
The company's net loss in the fourth quarter rose to $12 million, or $.56 per share, from a year-ago loss of $9.1 million, or $.45 a share, beating analysts' average expected loss per share of $.59.
R&D costs rose to $6.6 million from $5.2 million, reflecting T2's ongoing development of new tests including T2Bacteria for bacterial sepsis, which entered clinical testing in December, and the hemostasis profiling panel T2HemoStat, which is slated to enter a pivotal trial in the third quarter.
SG&A expenses, meanwhile, increased to $5 million from $3.7 million as the firm expanded its sales force behind T2Candida and the T2Dx instrument.
At the end of 2015, T2 had 15 direct sales representatives in the US, McDonough said. "Our plan this year is to grow the sales team to 20 reps by the middle of 2016, and then to assess [potentially] scaling the organization further as we prepare for the launch of T2Bacteria" in early 2017.
He added that the firm continues to eye the European market, which represents a particularly attractive opportunity for T2Candida as antifungal drugs there can cost up to three times more than in the US.
"We plan to bring onboard two distributors to focus on certain European market opportunities in Q1 and plan to enter at least two additional European markets later this year," McDonough said. "We are evaluating our go-to-market approach and expansion into other European regions as we progress through the year."
For full-year 2015, T2 posted a $2.8 million in revenue compared with $119,000 in 2014, missing the average analyst estimate of $3 million for the year.
The company's 2015 net loss was $45.3 million, or $2.21 a share, compared with $31.4 million, or $4.15 a share, in 2014. Analysts' consensus estimate was for a loss of $2.24 per share.
T2 noted that its loss per share calculation for the full year of 2015 was impacted by the weighted average increase in common shares outstanding resulting from a December secondary public offering of common stock. The loss per share calculation for the full year of 2014 was impacted by the weighted average increase in common shares outstanding resulting from its August 2014 initial public offering.
R&D spending last year surged to $25.4 million from $19.8 million, while SG&A costs rose to $19.1 million from $11 million.
T2 ended 2015 with cash and cash equivalents totaling $73.7 million.
Looking ahead, T2 CFO Moe Castonguay said that the company expects to double its T2Candida placement rate and sign on 60 additional hospitals and hospital systems to end 2016 with a total of 90 commitments.
Product revenues are expected to he higher in the first quarter of 2016 than in the fourth quarter of 2015 as hospitals that have recently signed commitments for T2Candida begin implementing the test and others begin testing more patients.
First quarter 2016 operating expenses, Castonguay said, are expected to be between $13 million and $13.4 million, reflecting growth in the company's sales team, ongoing R&D, and the costs of running clinical trials.