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Veracyte Q4 Revenues Up 15 Percent on Higher Afirma Gene Expression Classifier Volume

NEW YORK (GenomeWeb) — Veracyte announced after the close of the market Thursday a 15 percent rise in fourth quarter revenues amid strong growth in demand for the company's Afirma gene expression classifier (GEC) test.

For the three-month period ended Dec. 31, Veracyte's revenues climbed to $14 million from $12.2 million in the same period the year before, falling short of analysts' consensus estimate of $14.5 million.

Afima test volume grew 38 percent in the quarter to 5,609, an increase the company attributed to increased private payor coverage and new in-network contracts, as well as a growing body of data demonstrating the test's clinical utility in differentiating benign thyroid nodules from cancerous ones following inconclusive cytopathology analysis.

The company also announced that it is concluding its Afirma co-marketing alliance with Sanofi Genzyme in the US in mid-September. As a result, Veracyte will reacquire the full rights to the test domestically and no longer be obligated to pay Sanofi Genzyme 15 percent of Afirma's US revenues.

Veracyte's net loss in the fourth quarter dipped to $8.0 million, or $.29 a share, from $8.1 million, or $.36 per share, the year before, beating the average Wall Street estimate of a $.30 loss per share.

The company's R&D spending in the quarter edged up to $3.3 million from $3.2 million, while SG&A spending held steady at about $12.2 million.

For full-year 2015, Veracyte's revenues were up 30 percent to $49.5 million from $38.2 million, as total GEC tests performed during the year increased to 19,421 from $14,061 in 2014.

The firm posted a net loss for the year of $33.7 million, or $1.30 per share, versus a net loss of $29.4 million, or $1.36 per share, for FY 2014.

Its R&D costs in 2015 were $12.8 million compared with $9.8 million in 2014, as SG&A expenses for the year increased about 17 percent to $47.9 million from $40.8 million.

At the end of 2015, Veracyte had cash and cash equivalents totaling $39.1 million. Looking ahead, the company said it expects annual 2016 revenue to be in the range of $59 million to $63 million on Afirma test volume in the range of 24,000 to 25,500. During a conference call to discuss the financial results, Veracyte CFO Shelly Guyer said that Veracyte also plans to pursue debt financing during 2016 to increase its cash on hand. "This will give us sufficient runway to execute our growth strategy while retaining flexibility to tap the equity markets if they improve," she said, adding that details of the financing will be made public once the transaction has closed.

That 2016 growth strategy, CEO Bonnie Anderson said during the call, includes expanding sales and reimbursement coverage for Afirma; acquiring payor coverage for the recently launched Percepta Bronchial Genomic Classifier, which is designed to identify patients at low risk of lung cancer following inconclusive bronchoscopy; and launching a third test to diagnose idiopathic pulmonary fibrosis (IPF).

To help drive Afirma growth, and to accommodate the loss of Sanofi Genzyme as its US promotion partner, Veracyte aims to add 10 new dedicated associates to its currently 28-member sales team.

In terms of Percepta, Veracyte plans to seek Medicare coverage for the test by the end of the year, after which it will expand commercialization beyond the current 50 targeted sites and "ramp up our sales team and look for synergies in the institutional customer segment where Afirma is already offered," Anderson said. She added that the company does not expect to see meaningful revenues from Percepta until 2017.

Lastly, the IPF test is slated for commercial launch in the fourth quarter of 2016, at which time Veracyte will release data from ongoing multicenter prospective clinical studies. "We will then begin to amass and publish the evidence including clinical utility data as we pursue Medicare and private payer coverage following the same commercialization playbook that we use for Afirma and Percepta," Anderson added. 

During early morning trading on the Nasdaq Friday, shares of Veracyte were up more than 2 percent at $6.34.