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BG Medicine Posts 45 Percent Rise in 2013 Revenues, Sharp Drop in Operating Expenses


BG Medicine this week reported a 7 percent increase year over year in revenues for the fourth quarter.

The Waltham, Mass.-based firm said that revenues for the three months ended Dec. 31, 2013 totaled $1.15 million, up from $1.07 million a year ago and beating the average analyst estimate of $1.1 million. Product revenues, however, declined to $884,000 from $978,000 a year ago, a 10 percent drop. Service revenues were up 182 percent to $265,000 from $94,000 in Q4 2012.

The company trimmed its operating expenses in the quarter by 27 percent, resulting in a net loss for the quarter of $1.9 million, or $.06 per share, compared to $2.9 million, or $.14 per share, in Q4 2012. The consensus Wall Street estimate was for a loss of $.12 per share.

For full-year 2013, revenues increased 45 percent to $4.1 million from $2.8 million in 2012. This matched the consensus analyst estimate. Product revenues jumped to $3.7 million from $2.6 million a year ago, while service revenues rose to $390,000 from $245,000.

This revenue increase was primarily driven by growth in sales of BG's BGM Galectin-3 heart failure assay at the firm's "largest specialty cardiovascular laboratory provider and third party clinical research organizations," CFO Stephen Hall said on a conference call following release of the company's earnings.

BG's net loss for full year 2013 was $15.8 million, or $.58 per share, down 33 percent from $23.8 million, or $1.18 per share, a year ago, and beating the average Wall Street estimate of a loss of $.63 per share.

On the conference call, President and CEO Paul Sohmer credited a refocusing and restructuring of the company's commercialization and clinical research strategies to prioritize adoption of its BGM Galectin-3 test as key to the firm's revenue growth and reduced cash burn.

He also cited several factors that had helped drive adoption of the test in 2013, including recognition in the American College of Cardiology Foundation and American Heart Association Guideline for the Management of Heart Failure and the publication of 13 clinical research and review articles related to the utility of the test in heart failure and related disorders.

Looking to 2014, Sohmer said the company aims to further decrease its operating cash burn as compared to 2013, though he did not provide specific guidance. At the same time, BG Medicine also plans to "explore new indications and clinical claims" for galectin-3, he said.

In particular, Sohmer said, research has suggested the protein could prove a target for the development of new therapeutic agents.

"Other studies," he added, "suggest it could be used to identify patients who may or may not response to certain therapeutic interventions." As an example, he cited a patent recently awarded to the company relating to the use of galectin-3 in predicting patient response to cardiac resynchronization therapy.

Sohmer also touched on the progression of BG's CardioScore test, its multi-analyte assay for identifying individuals at high risk for near-term cardiovascular events.

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.

Sohmer said the company had recently completed a medical review of this study data and was now evaluating the results of this review. "This evaluation will guide our commercial, reimbursement, and regulatory strategies for CardioScore," he said, adding that "we hope over the next few months to have a clear pathway for how we are moving forward with [the test]."

One possible route could be an out-licensing deal, he said, noting that the company has received interest in such an arrangement.

Sohmer also discussed the company's efforts to drive European adoption of galectin-3.

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. Despite these approvals, however, European sales have contributed only negligibly to the company's revenues, a fact Sohmer attributed 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.

He said that BG is currently focused on the latter issue, noting that the company has "a considerable amount of effort devoted to [achieving inclusion in these guidelines] right now." He added that the company is "optimistic that we could see inclusion in at least one guideline perhaps as early as late 2015."

The company's Q4 results included $194,000 in R&D costs. In Q4 2012, it posted an $80,000 gain in R&D due to reversals of accrued expenses. SG&A costs were $2.3 million, down 34 percent from $3.5 million in Q4 2012.

For full year 2013, its R&D costs dropped 51 percent to $3.7 million from $7.6 million in 2012, while SG&A expenses were down 22 percent to $13.3 million from $17.0 million.

Trimming costs remains a primary goal for the company in 2014, Sohmer said. He addressed the potential tension between cutting costs and performing the research and clinical trial work needed to expand the clinical claims of the galectin-3 test by noting the significant amount of data the company already has on hand for aiding these efforts.

"We have a lot of data available to us," he said. "And that will allow us to reduce risk by identifying those things that may be a higher opportunity for us."

In particular, Sohmer cited the data from the company's BioImage study, which has followed more than 6,800 patients since 2009.

"We have exclusive rights to diagnostic inventions arising from our analysis of this proprietary observational and community-based cohort," he said. "Baseline blood, serum, plasma, DNA, and RNA samples collected from all participants have been stored and are available for our analysis. In addition, insurance claims including information regarding diagnoses and therapies related to over 1,200 non-fatal cardiovascular events experienced by participants in the cohort over the more than four years since follow-up was initiated is available to us for data mining."

"We believe that this asset provides us with a unique and proprietary platform from which we may develop new diagnostic products," he said.