NEW YORK (GenomeWeb) – Foundation Medicine reported after the close of the market Wednesday a 55 percent year-over-year increase in second quarter revenues amid a widening net loss.
The firm's shares dropped 23 percent in Thursday morning trade on the Nasdaq to $22.60 after it fell short of Wall Street's estimates and lowered its revenue guidance for 2015.
Revenues for the Cambridge, Massachusetts-based company increased to $22.5 million in the second quarter from $14.5 million during the same period in 2014, falling short of the Wall Street estimate of $24.4 million.
Clinical testing revenue increased 32 percent to $12.4 million from $9.4 million in Q2 of 2014, while revenue from pharmaceutical customers rose 97 percent year over year to $10 million.
Foundation Medicine reported 8,846 clinical tests in the second quarter, an increase of 50 percent over Q2 2014. Clinical tests included 7,809 FoundationOne and 1,037 FoundationOne Heme tests. In addition, the firm ran 1,451 tests for pharmaceutical clients. Its cancer knowledgebase, FoundationCore, grew to more than 50,000 clinical cases, it said in a statement.
During a conference call to discuss second quarter earnings, CEO Michael Pellini said that about 60 percent of clinical tests continued to come from community oncologists, and about 40 percent from academic medical centers.
The company's net loss for the second quarter amounted to $33.1 million, or $.98 per share, compared to a net loss of $13.8 million, or $.49 per share, in the second quarter of 2014. Foundation Medicine noted that adjusted for a one-time $14.4 million advisor fee expense related to the closing of the company's strategic collaboration with Roche, its net loss was $18.7 million, or $.56 per share. On average, analysts had expected a net loss of $.53 per share.
The firm's R&D expenses totaled $10.3 million, up from $8.6 million in Q2 2014. SG&A expenses increased to $36.3 million from $13.0 million during the same period last year and included the aforementioned advisor fee expense. The increase in expenses was driven by "key investments in our sales and marketing infrastructure as well as in product development areas," said CFO Jason Ryan during the call.
Foundation Medicine finished the quarter with $263.6 million in cash and cash equivalents.
The company lowered its testing volume and revenue guidance for 2015 as a result of "slower-than-anticipated progress towards obtaining a local coverage determination from our regional Medicare Administrative Contractor (MAC) and by some competitive noise in the market," CEO Michael Pellini said in a statement.
Foundation Medicine now expects to report between 35,000 and 38,000 clinical tests this year, and to book between $85 million and $95 million in revenues. It previously said that it anticipated revenues to be in the range of $105 million to $115 million and to report between 43,000 and 47,000 clinical tests in FY 2015.
The firm still plans to launch a circulating tumor DNA test for its biopharmaceutical partners by the end of this year, and a commercial ctDNA assay for clinical testing in 2016.