BG Medicine this week reported second quarter revenues of $1 million, up 62 percent from $622,000 in the second quarter of 2012.
The revenue increase was driven by $972,000 in sales of the company's BGM Galectin-3 test, a 72 percent jump from the $566,000 it posted in Q2 2012. The remaining $34,000 in revenues came from BG's services business, down 39 percent from $56,000 a year ago.
The company's revenues fell short of the average Wall Street estimate of $1.27 million.
On a conference call following the release of the results, Charles Abdalian, BG's executive vice president and CFO, said the increase in galectin-3 revenues resulted "primarily from increased volume from our largest specialty cardiovascular laboratory provider and also increased purchases relating to third-party clinical research studies."
During the call, BG CEO Paul Sohmer announced a shift in company strategy, saying that the firm would prioritize driving adoption of its BGM Galectin-3 test over other efforts, including the development of a CLIA lab and commercialization of its CardioScore test for identifying individuals at high risk for near-term cardiovascular events.
"We will redirect our effort and investments from the previously announced CLIA laboratory, launch of CardioSCORE in Europe – except as partnership opportunities arise – and longer term clinical studies so that we may further develop and support the message, the product, and the product features that are required to drive the adoption of galectin-3 testing," Sohmer said.
Sohmer took over as the company's president and CEO in May, replacing Eric Bouvier.
In 2011, BG submitted CardioScore for US Food and Drug Administration 510(k) clearance, but withdrew the submission last year upon determining that it would not be able to respond in full to a request from FDA to confirm certain data from its BioImage validation study for the test.
Medical review of that data is ongoing, Sohmer said, adding that the company expects the review to be completed by the end of the year and that the results will guide its strategy regarding commercialization of the test going forward.
"In the interim, we may move forward with a European launch in test markets as partnership opportunities arise," he said.
BG had previously discussed launching CardioScore as a laboratory-developed test out of its planned CLIA lab while it awaited FDA approval. As Sohmer noted, those plans are now on hold as the company narrows its focus to driving adoption of the BGM Galectin-3 test.
BG has long held that key to driving adoption will be the development of automated versions of the test, and it has partnered on such products with Abbott, BioMérieux, Siemens, and Alere.
This year, Abbott and BioMérieux launched CE-marked automated galectin-3 tests in Europe, though Abdalian said the company expects to realize only "minimal revenues" from those tests in the second half of 2013.
Abbott, BioMérieux, and Siemens are also pursuing FDA 510(k) clearance of automated galectin-3 tests and, according to Sohmer, Abbott expects to resubmit its 510(k) application for its test this year.
The company also highlighted progress in BGM Galectin-3 sales under its May agreement with the Trenton, NJ-based community health improvement collaborative Trenton Health Team, under which THT will be using the test to help reduce hospital readmissions for its heart failure patients (PM 5/10/2013).
According to Howard Rosen, BG's vice president of sales and marketing, the company has seen "several primary care physicians" with the THT collaborative start to order the BGM Galectin-3 test since the signing of the agreement.
The hospital readmission market has become a key focus for BG Medicine's commercialization plans for the BGM Galectin-3 test. The shift toward this space comes in response to new guidelines implemented by the US Centers for Medicare and Medicaid Services in October that penalize hospitals with high patient readmission rates. In March, the company published two studies comprising 3,300 subjects that indicated that serial evaluation of galectin-3 levels could help clinicians identify heart failure patients at increased risk of unplanned hospital readmissions (PM 3/8/2013).
BG's net loss for the quarter was $4.8 million, or $0.18 per share, compared to a net loss of $6.4 million, or $0.32 per share, in the second quarter of last year, and beating the average Wall Street estimate of a net loss of $0.20 per share.
The decrease was due primarily to lower operating expenses, primarily in research and development, Abdalian said.
For the quarter, the company's R&D spending was down 48 percent to $1.1 million from $2.1 million in Q2 2012. Its SG&A expenses were $4 million, down 7 percent from $4.3 million in the year-ago period.
The company provided full-year 2013 guidance of revenues between $3.8 million and $4.0 million, and an expected operating cash burn of $15.5 million to $16.5 million.
BG Medicine ended the quarter with $16.2 million in cash and cash equivalents, and $288,000 in restricted cash. According to Abdalian, the company has adequate funds to "take us through at least the next 12 months."
He also noted that BG had begun making principal payments on its term loan agreement as per the terms of the agreement that it amended in May 2013.
The amended agreement provided for a three-month deferral of principal amortization beginning May 1, 2013. It also provided for an additional three months of deferral if BG met certain minimum liquidity requirements. The company, however, was not able to meet these requirements, Abdalian said.