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T2 Biosystems Shares Dive on Slow Uptake of Sepsis Test, Other Issues

NEW YORK (GenomeWeb) – Shares of T2 Biosystems tumbled more than 20 percent today after the company disclosed that it had secured fewer commitments for its T2Candida sepsis test than expected, that it has encountered problems with test results from T2Candida cartridges, and that it has had to delay plans to submit its upcoming T2Bacteria bacterial sepsis test to US regulators.

During mid-morning trading on the Nasdaq, shares of T2 were down $1.53 to $6.08.

T2Candida was approved in 2014 for the 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.

In April, T2 announced that it was backing away from previous guidance on the number of commitments for T2Candida in 2016 after only five customers adopted the test in the first quarter — lower than the 11 it had anticipated. While the company had originally said it would secure commitments from 60 customers in 2016, it adjusted that number to a range of 45 to 65. 

Still, T2 was confident it could hit its original goal of 60 commitments, T2 President and CEO John McDonough said at the time.

In a corporate update issued after the close of the market yesterday, T2 said that it closed six commitments for the T2Candida test in the second quarter — four with domestic customers and two with international ones

As a result, T2 is now aiming for 45 commitments in 2016 — the low end of its guidance. In a statement, McDonough attributed the change to an evolving approval process for adopting new diagnostic tests at hospitals and hospital systems, as well as tweaks the company is making to its sales process.

T2 also said today that has begun reporting to T2Candida customers that test cartridges are yielding higher-than-normal invalid results as the cartridges age, and that it had begun holding cartridge shipments at the beginning of June.

The firm said that it does not believe the issue affects the accuracy of positive and negative test results, has anything to do with the test's underlying technology, or that it presents an increased risk to patient health. Still, T2 said that it is going to remove current customer inventory in the field and replace it with cartridges that are made using a prior manufacturing process.

T2 said that the cost of addressing the cartridge issue is expected to be less than $750,000. However, shifting internal resources toward fixing the problem, along with the logistics involving with scaling its business to handle multiple products, will impact the completion of a pivotal trial for T2Bacteria.

The company now anticipates completing that study and filing the test with the US Food and Drug Administration in mid-2017. T2 had previously expected to have secured FDA approval and launched the test by the beginning of next year.