NEW YORK (GenomeWeb News) – BG Medicine this week posted first quarter revenues of $739,000, down 17 percent from $888,000 in the first quarter of 2013.
The drop stemmed from declines in revenues from both the company's BGM Galectin-3 heart failure test and its services business. BG did $739,000 in galectin-3 sales, down 10 percent from $820,000 in Q1 2013. It posted no service revenue in the quarter, compared to $68,000 in service revenues in the year-ago period.
On a conference call following release of the results, BG President and CEO Paul Sohmer blamed harsh winter weather for the drop in BGM Galectin-3 orders. The drop in service revenues, he said, resulted from the completion of the High Risk Plaque initiative and the company's decision in 2013 to close its research facilities.
Upon taking over as CEO in May 2013, Sohmer shifted BG's strategy to focus more narrowly on driving adoption of the BGM Galectin-3 test, directing resources away from the development of a CLIA lab and commercialization of the company's CardioScore test for identifying individuals at high risk for near-term cardiovascular events.
In the months following that shift, BG posted steadily increasing sales of the galectin-3 test, with revenues rising from $566,000 in Q2 2013 to a peak of $1 million in Q3 2013. Over the last two quarters, however, test sales have dropped, falling to $884,000 in Q4 2013 and to $739,000 in Q1 2014. Both figures represent 10 percent declines compared to the year-ago quarters.
The Q1 2014 galectin-3 revenue decline comes even as the test's price as determined by the US Centers for Medicare and Medicaid Services has risen, suggesting that the decline in the actual number of tests sold could be larger than the reported 10 percent drop in revenues.
In December of last year, BG won an increase in the Medicare national limitation amount for the company's galectin-3 test to a price of $30.01. That was an almost 70 percent jump from the test's 2013 national limitation of $17.80. The 2014 limitation went into effect on Jan. 1 in all states except in Ohio and West Virginia, where rates of $23.99 and $26.40, respectively, apply.
This week Sohmer said that BG plans to use the roughly $8.9 million in proceeds from its April public offering to take steps to grow its revenues, including "restructuring and expanding [its] sales organization in order to accelerate the development of market demand for [the] BGM Galectin-3 test."
BG aims to expand its sales force to 10 by the end of the second quarter, which would roughly double the number of sales people the company had in the field at the end of Q2 2013, he said, adding that this will include "sales professionals who are experienced in the clinical and laboratory introduction of new diagnostic products."
Sohmer said that to drive European sales BG plans to "engage a regional distribution network to replace the EU-based direct and contract sales organizations that we eliminated in the first quarter of this year."
BG received an EU CE mark for a manual version of the BGM Galectin-3 test in 2010, and Abbott received a CE mark for an automated version of the test in April 2013, a development that BG has characterized as a key milestone in its commercialization efforts.
Despite these approvals, however, European sales have contributed only negligibly to the company's revenues. On the company's Q1 2014 earnings call, Sohmer attributed this to several factors, including a lack of outpatient reimbursement for the test and an inability, to date, to get the test included in European patient management guidelines.
This week he noted that BG plans "to continue to work with clinicians to ensure that testing for galectin-3 is recognized in clinical practice guidelines and consensus recommendations and is integrated into nursing and medical education and practice," adding that the firm believes "this effort will accelerate the development of market demand worldwide and is essential to ensuring adequate reimbursement for galectin-3 testing outside the US."
He also noted that BG has had the results of 20 research studies of galectin-3 accepted for presentation at the 2014 European Society of Cardiology Heart Failure Congress annual meeting this month.
While galectin-3 testing is the primary focus of BG's business, the company has continued work on its CardioScore test.
BG submitted CardioScore for US Food and Drug Administration 510(k) clearance in 2011, but withdrew the submission the following 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.
The company recently completed a medical review of this study data led by researchers at Mount Sinai School of Medicine, which found, Sohmer said this week, that "the prevalence of cardiovascular events identified in the BioImage study cohort is broadly in line with what we would expect in a US-based epidemiological cohort of this composition."
Based on these results, BG is currently "reviewing [its] regulatory strategy for potential indication on assessing cardiovascular risk," he added, though he did not provide specific details on how the company might proceed with commercialization of the test.
BG had previously discussed launching CardioScore as a laboratory-developed test out of its planned CLIA lab. However, those plans were halted when the company dropped its CLIA lab development program as part of its refocus on galectin-3. During the company's Q4 2013 earnings call in March, Sohmer suggested the company might look to out-license the CardioScore test, noting that it had received interest in such an arrangement.
While BG's revenues were down in the quarter, the company managed also to bring down its operating expenses.
The firm's R&D spending was down 60 percent to $560,000 from $1.4 million in Q1 2013. Its SG&A expenses dropped 53 percent to $1.9 million from $4.0 million in the year-ago period.
BG's net loss fell to $2.2 million, or $.08 per share, from $5.4 million, or $.21 per share, in Q1 2013.