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BG Reports 257 Percent Jump in Q3 Revenues, May Offer CardioScore Through CLIA Lab as LDT

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BG Medicine this week reported a 257 percent year-over-year increase in third-quarter revenues driven by sales of its BGM Galectin-3 test.

The company also announced shifts in its commercialization strategy, including the launch of a major campaign to increase BGM Galectin-3 sales in hospitals and the opening of a CLIA lab to increase access to the Galectin-3 test and provide another potential commercialization path for its CardioScore biomarker test for cardiovascular risk.

BG's revenues for the three months ended Sept. 30 nearly quadrupled to $641,000 from $179,000 a year ago as product revenues from the sale of the BGM Galectin-3 test increased seven-fold to $610,000 from $87,000. Service revenues narrowed to $31,000 from $92,000.

The firm's revenues missed the consensus Wall Street estimate of $820,000.

BG's loss widened to $6.8 million, or $.34 per share, from a net loss of $4.9 million, or $.25 per share, a year ago, missing the average analyst estimate of a net loss of $.33 per share, as expenses increased. The firm's R&D spending rose to $2.5 million from $1.9 million a year ago, while SG&A costs rose to $4.4 million from $3.1 million.

The company said the R&D increase was related primarily to its CardioScore program. In August BG Medicine withdrew its submission to the US Food and Drug Administration seeking 510(k) clearance for the test, saying it would not be able to respond in full to a request from FDA to confirm certain data from the company's validation study for the test (PM 8/10/2012). The company said this week that it remains in discussions with the agency regarding the additional information.

On a conference call following release of the results, president and CEO Eric Bouvier suggested, however, that, given the delay in its FDA submission, BG might launch CardioScore in the US as a lab-developed test through its planned CLIA lab. The company plans to open the lab in the first half of 2013 and aims to launch sales of CardioScore around the same time. It is also targeting a mid-2013 launch for the test in Europe, assuming it receives the necessary CE mark.

In addition to providing an alternative commercialization path for CardioScore, the CLIA lab will also allow the company to offer better access to the BGM Galectin-3 test for hospitals without the onsite capacity to perform the test, Bouvier said.

Key to the company's new sales strategy is marketing the test to hospitals as a tool for reducing readmission rates. Last month the Centers for Medicare and Medicaid Services implemented new guidelines with penalties aimed at reducing hospital readmissions, and, according to data cited by Howard Rosen, BG's vice president of sales and marketing, heart failure patients with elevated levels of galectin-3 are two to three times more likely than other heart failure patients for hospital readmissions within 30 days of discharge.

As part of its shift in strategy, the company has reorganized its R&D operations away from a previous focus on early-stage discovery to an emphasis on supporting sales of BGM Galectin-3 and CardioScore. As a result, 11 positions in early discovery research have been eliminated.

Despite the jump in sales, BG will likely not achieve the revenue benchmarks required for it to draw down an additional $5 million under its loan agreement with General Electric, said chief financial officer Chuck Abdalian. To do so, the company is required to achieve $2.5 million in product revenues in the six months ending Dec. 31.

During the company's Q2 earnings call, then-chief financial officer Mike Rogers said he believed BG would hit this target (PM 8/10/2012), but, Abdalian noted this week, it appears it will fall short.

The firm had $17.6 million in cash and cash equivalents as of Sept. 30.

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