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HTG Molecular Q1 Revenues Drop 24 Percent

This story has been updated from a previous version to add comments made by company executive during HTG Molecular's earning call.

NEW YORK (GenomeWeb) – HTG Molecular Diagnostics reported after the close of the market on Thursday that its first quarter revenues dropped about 24 percent year over year.

For the three months ended March 31, the Tucson, Arizona-based firm's revenues fell to $3.2 million from $4.2 million in the same period the year before. It still beat the consensus Wall Street estimate of $2.7 million.

Revenues from products and product-related services — which include the sales of instruments and consumables— jumped 54 percent to $2.7 million from $1.7 million, reflecting growth in research-use-only and molecular diagnostic profiling revenue. Revenues from collaborative development programs plummeted 78 percent to $540,432 from $2.4 million in the year ago quarter.

In a conference call with investors following the release of the financial results, HTG CEO John Lubniewski said that collaborative development services revenue declined this quarter due to reduced activity in HTG's two active PDP development programs. 
He added that the firm is "pleased to see continued growth in our profiling business, driven primarily by our increased biopharma project pipeline, which now sits at a total of 70 total programs in Europe and the US."

Highlights in the quarter include HTG's launch of  its HTG EdgeSeq Mouse mRNA Tumor Response Panel, which is designed to identify and quantify gene and gene pathway expression. "We expect the newly launched mouse mRNA panel to continue to help drive our growth and believe it is a logical adjunct to our HTG-Seq human-based tissue based panels already in early stage pharma activity," Lubniewski said. 

HTG also inked a $40 million sales agreement with Cowen, which the firm will use for working capital and general corporate purposes.

Earlier this month, HTG amended its IVD Test Development and Component Supply Agreement with Illumina to expand into additional fields for development and commercialization of IVD test kits. The firm believes the agreement will help further its position to develop new RNA-based diagnostics in several disease areas. 

In April, HTG opened a San Carlos, California development facility in order to develop the firm's HTG Comprehensive Breast Assay. With the facility, the firm said it aims to develop US Food and Drug Administration-approved, clinically relevant test kits using its EdgeSeq technology to provide clinicians with information to enable precise and timely treatment plans for cancer patients.

"The team is expected to develop diagnostic assays that are unique to HTG but compliment our emerging companion diagnostic portfolio, " Lubniewski said on Thursday's call. "We expect to be able to share our initial product roadmap for the initiative by late summer."

HTG's Q1 net loss narrowed to $5.4 million, or $.19 per share, from a year-ago loss of $5.4 million, or $.22 per share. The consensus Wall Street estimate was for a per-share loss of $.20.

The firm's R&D spending in the quarter dropped 19 percent to $2.1 million from $2.6 million. Meanwhile, its SG&A costs dropped 22 percent year over year to $4.4 from $5.7 million, due to a decrease in stock-based compensation costs this quarter versus Q1 2018. 

HTG ended Q1 with cash and cash equivalents of $7.0 million, and short-term investments, available for sale at fair value, of $18.1 million.

In Thursday morning trading on the Nasdaq, HTG's stock was was up about 1 percent at $2.46.