NanoString Technologies
Mar 1, 2017

NanoString Technologies Releases Fourth Quarter and Full Year 2016 Operating Results and Provides 2017 Outlook

Highlights for 2016 Include 38% Revenue Growth, Two New Major Biopharma Diagnostic Collaborations and Substantial Progress on Pipeline of New Products and Technologies

SEATTLE, March 01, 2017 (GLOBE NEWSWIRE) -- NanoString Technologies, Inc. (NASDAQ:NSTG), a provider of life science tools for translational research and molecular diagnostic products, today reported financial results for the fourth quarter and year ended December 31, 2016.

Fourth Quarter Financial Highlights

Full Year 2016 Financial Highlights

"In 2016 we grew our revenue by 38%, and entered into two landmark companion diagnostic collaborations," stated Brad Gray, NanoString president and chief executive officer. "In 2017, we will be investing in our commercial channel to improve our productivity, hiring new commercial leadership and launching a number of products that will build on the unique value proposition of the nCounter® platform. We're also investing in the future, preparing for the launch of companion diagnostic tests as well as a portfolio of breakthrough instruments to enhance our long-term growth prospects."

Recent Business Highlights

Fourth Quarter Financial Results

Revenue for the three months ended December 31, 2016 increased by 13% to $25.2 million, as compared to $22.3 million for the fourth quarter of 2015. Instrument revenue was $7.5 million, down 6% versus the prior year period, with nCounter SPRINT systems representing approximately one-third of systems sold. Consumables revenue, excluding Prosigna, was $11.0 million for the fourth quarter of 2016, 11% higher than in the comparable 2015 quarter. Prosigna IVD kit revenue was $1.0 million for the quarter, an increase of 25% over the fourth quarter of 2015. Collaboration revenue totaled $4.9 million, compared to $2.9 million for the fourth quarter of 2015. Gross margin on product and service revenue was 59% for the fourth quarter of 2016, up from 56% for the prior year period.

Research and development expense increased by 41% to $10.0 million for the fourth quarter of 2016 versus $7.1 million for the fourth quarter of 2015, reflecting increased costs associated with biopharma collaborations announced in 2016 and investments in new products and technologies under development for the life science research market.  Selling, general and administrative expense increased by 17% to $16.7 million for the fourth quarter of 2016 compared to $14.2 million for the prior year period.

Net loss for the three months ended December 31, 2016 increased to $11.6 million, or a loss of $0.55 per share, compared with $8.8 million, or a loss of $0.44 per share, for the fourth quarter of 2015.

Full Year 2016 Financial Results

Revenue for 2016 increased by 38% to $86.5 million, as compared to $62.7 million for 2015. Instrument revenue was $24.2 million, up 16% versus the prior year. Consumables revenue, excluding Prosigna, was $37.5 million for 2016, 23% higher than in 2015. Prosigna IVD kit revenue was $4.2 million, an increase of 70% over 2015. Collaboration revenue totaled $17.4 million, compared to $6.0 million for 2015. Gross margin on product and service revenue was 56% for 2016, up from 54% for the prior year.

Research and development expense increased by 41% to $34.7 million for 2016 versus $24.6 million for 2015.  Selling, general and administrative expense increased by 18% to $62.7 million for 2016 compared to $53.2 million for the prior year.

Net loss for 2016 was $47.1 million, or $2.34 per share, compared with $45.6 million, or a loss of $2.40 per share, for 2015.

The company ended 2016 with approximately $74.0 million of cash, cash equivalents, and short-term investments.

Outlook for 2017

Conference Call

Management will host a conference call today beginning at 1:30 pm PT / 4:30 pm ET to discuss these results and answer questions.  Individuals interested in listening to the conference call may do so by dialing (888) 793-9492 for domestic callers, or (734) 385-2643 for international callers. Please reference Conference ID 4371012. To listen to a live webcast, please visit the investor relations section of the company's website at: www.nanostring.com. A replay of the call will be available beginning March 1, 2017 at 7:30pm ET through 7:30pm ET on March 2, 2017. To access the replay, dial (855) 859-2056 or (404) 537-3406 and reference Conference ID: 4371012. The webcast will also be available on the company's website for one year following the completion of the call.

About NanoString Technologies, Inc.

NanoString Technologies provides life science tools for translational research and molecular diagnostic products. The company's nCounter Analysis System has been employed in life sciences research since it was first introduced in 2008 and has been cited in more than 1,500 peer-reviewed publications. The nCounter Analysis System offers a cost-effective way to easily profile the expression of hundreds of genes, proteins, miRNAs, or copy number variations, simultaneously with high sensitivity and precision, facilitating a wide variety of basic research and translational medicine applications, including biomarker discovery and validation. The company's technology is also being used in diagnostics. The Prosigna Breast Cancer Prognostic Gene Signature Assay together with the nCounter Dx Analysis System is FDA 510(k) cleared for use as a prognostic indicator for distant recurrence of breast cancer. In addition, the company is collaborating with multiple biopharmaceutical companies in the development of companion diagnostic tests for various cancer therapies, helping to realize the promise of precision oncology.

For more information, please visit www.nanostring.com

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding the company's plans to invest in its commercial channel, hire new commercial leadership and launch new products, the market demand for the company's products and the related impact on long-term growth prospects, the capabilities of its current and future products, and its estimated 2017 operating results. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include market acceptance of our products; delays or denials of regulatory approvals or clearances for products or applications; delays or denials of reimbursement for diagnostic products; the impact of competition; the impact of expanded sales, marketing, product development and clinical activities on operating expenses; delays or other unforeseen problems with respect to manufacturing, product development or clinical studies; adverse conditions in the general domestic and global economic markets; as well as the other risks set forth in the company's filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. NanoString Technologies disclaims any obligation to update these forward-looking statements.

The NanoString Technologies logo, NanoString, NanoString Technologies, nCounter, nCounter SPRINT, Prosigna, Hyb & Seq, and Vantage 3D are registered trademarks or trademarks of NanoString Technologies, Inc. in various jurisdictions.

 
NANOSTRING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2016 2015 2016 2015
Revenue:       
Instruments$7,485  $7,948  $24,229  $20,974 
Consumables10,966  9,898  37,545  30,597 
In vitro diagnostic kits1,026  822  4,168  2,457 
Services866  731  3,192  2,611 
Total product and service revenue20,343  19,399  69,134  56,639 
Collaboration4,889  2,916  17,355  6,028 
Total revenue25,232  22,315  86,489  62,667 
Costs and expenses:       
Cost of product and service revenue8,429  8,626  30,245  26,126 
Research and development9,996  7,071  34,720  24,597 
Selling, general and administrative16,682  14,202  62,700  53,186 
Total costs and expenses (a) (b)35,107  29,899  127,665  103,909 
Loss from operations (9,875) (7,584) (41,176) (41,242)
Other income (expense):       
Interest income124  52  390  233 
Interest expense(1,522) (1,010) (5,672) (4,017)
Other expense(277) (108) (515) (389)
Total other income (expense), net(1,675) (1,066) (5,797) (4,173)
Net loss before provision for income taxes(11,550) (8,650) (46,973) (45,415)
Provision for income taxes(43) (166) (116) (166)
Net loss$(11,593) $(8,816) $(47,089) $(45,581)
Net loss per share, basic and diluted$(0.55) $(0.44) $(2.34) $(2.40)
Shares used in calculating basic and diluted net loss per share21,120  19,519  20,116  19,027 
        
(a) Includes $2.5 million and $1.5 million of stock-based compensation expense for the three months ended December 31, 2016 and 2015, respectively, and $9.0 million and $6.3 million for the 12 months ended December 31, 2016 and 2015, respectively.
(b) Includes $0.8 million and $1.0 million of depreciation and amortization expense for the three months ended December 31, 2016 and 2015, respectively, and $3.0 million and $2.4 million for the 12 months ended December 31, 2016 and 2015, respectively.


NANOSTRING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 December 31,
 2016 2015
Assets   
Current assets:   
Cash and cash equivalents$20,583  $21,856 
Short-term investments53,453  27,188 
Accounts receivable, net22,193  19,725 
Inventory13,812  10,138 
Prepaid expenses and other3,744  3,886 
Total current assets113,785  82,793 
Property and equipment, net12,158  9,414 
Other assets430  662 
Total assets$126,373  $92,869 
Liabilities and Stockholders' Equity   
Current liabilities:   
Accounts payable$4,935  $3,243 
Accrued liabilities12,344  12,181 
Deferred revenue, current portion19,033  5,261 
Deferred rent, current portion13   
Lease financing obligations, current portion58  226 
Total current liabilities36,383  20,911 
Deferred revenue, net of current portion22,664  6,486 
Deferred rent and other liabilities, net of current portion7,655  4,257 
Long-term debt and lease financing obligations, net of current portion and debt issuance costs47,366  41,000 
Total liabilities114,068  72,654 
Total stockholders' equity12,305  20,215  
Total liabilities and stockholders' equity$126,373  $92,869 

Contact

Douglas Farrell

Vice President, Investor Relations & Corporate Communications

dfarrell@nanostring.com

Phone: 206-602-1768

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Source: NanoString Technologies

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