NanoString Technologies
Nov 2, 2017

NanoString Technologies Releases Operating Results for Third Quarter of 2017

SEATTLE, Nov. 02, 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 third quarter of 2017. The results were consistent with the company's announcement of preliminary revenue on October 11, 2017.

Third Quarter Financial Highlights

"We have taken a number of actions to improve the growth of our life science business, including appointing new commercial leadership, expanding and specializing our sales channel, and launching a number of new consumable products, and we expect these initiatives will help to stabilize the business in the fourth quarter and return to growth over the course 2018," stated Brad Gray, president and chief executive officer of NanoString. "Our management team is intensely focused on revitalizing the growth of our core business while advancing our pipeline of new instrument platforms, including Digital Spatial Profiling, which is scheduled to launch late next year."

Recent Business Highlights

Third Quarter Financial Results

Revenue for the three months ended September 30, 2017 increased by 13% to $27.0 million, as compared to $23.9 million for the third quarter of 2016. Instrument revenue was $4.4 million, 36% lower than the prior year period, primarily due to a reduction in the number of systems sold. Consumables revenue, excluding Prosigna, was $9.0 million for the third quarter of 2017, 12% lower than in the comparable 2016 quarter due to a reduction in the consumable pull through from the installed base of systems. Prosigna IVD kit revenue was $1.7 million for the quarter, an increase of 47% over the third quarter of 2016. Collaboration revenue totaled $10.1 million, compared to $4.8 million for the third quarter of 2016. Gross margin on product and service revenue was 57% for the third quarter of 2017, compared to 58% for the third quarter of 2016.

Research and development expense increased by 30% to $11.4 million for the third quarter of 2017 versus $8.7 million for the third quarter of 2016, reflecting investments in new products and technologies under development for the life science research market, including Digital Spatial Profiling and Hyb & Seq technologies, as well as increased costs associated with biopharma collaborations.  Selling, general and administrative expense increased by 18% to $18.4 million for the third quarter of 2017 compared to $15.6 million for the prior year period, reflecting added staffing, including expansion of the sales channel, and other costs supporting the company's growth.

Net loss for the three months ended September 30, 2017 was $11.4 million, or a loss of $0.45 per share, compared with $10.1 million, or $0.51 per share, for the third quarter of 2016.

Outlook for 2017

The company has revised its financial outlook for 2017 as follows:

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 88331168. 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 November 2, 2017 at 7:30pm ET through 7:30pm ET on November 9, 2017. To access the replay, dial (855) 859-2056 or (404) 537-3406 and reference Conference ID: 88331168. 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 1,700 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 impact of changes in the company's commercial organization and future growth prospects, the capabilities of the company's new products and future products under development, the timing of future product launches, development funding 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, Hyb & Seq, nCounter, PanCancer IO 360 and Prosigna are registered trademarks or trademarks of NanoString Technologies, Inc. in various jurisdictions.

Contact
Douglas Farrell
Vice President, Investor Relations & Corporate Communications
dfarrell@nanostring.com
Phone: 206-602-1768


 
NANOSTRING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2017 2016 2017 2016
Revenue:       
Instruments$4,444  $6,898  $14,949  $16,744 
Consumables9,020  10,303  26,806   26,579 
In vitro diagnostic kits1,689  1,147  4,963   3,142 
Services1,762  819  4,272  2,326 
Total product and service revenue16,915  19,167  50,990  48,791 
Collaboration10,101  4,766  28,682  12,466 
Total revenue27,016  23,933  79,672  61,257 
Costs and expenses:       
Cost of product and service revenue7,305  8,075  22,692  21,816 
Research and development11,374  8,717  33,213  24,724 
Selling, general and administrative18,380  15,607  54,590  46,018 
Total costs and expenses (a) (b)37,059  32,399  110,495  92,558 
Loss from operations(10,043) (8,466)  (30,823) (31,301)
Other income (expense):       
Interest income252  104  549  266 
Interest expense(1,556) (1,509) (4,585) (4,150)
Other income (expense)(12) (179) 185  (238)
Total other income (expense), net(1,316) (1,584) (3,851) (4,122)
Net loss before provision for income taxes(11,359) (10,050) (34,674) (35,423)
Provision for income taxes(45)  (38) (137) (73)
Net loss$(11,404) $(10,088) $(34,811) $(35,496)
Net loss per share, basic and diluted$(0.45) $(0.51) $(1.50) $(1.79)
Shares used in calculating basic and diluted net loss per share25,240  19,864  23,172  19,779 
        
(a) Includes $3.1 million and $2.2 million of stock-based compensation expense for the three months ended September 30, 2017 and 2016, respectively, and $8.2 million and $6.5 million for the nine months ended September 30, 2017 and 2016, respectively.
(b) Includes $0.8 million of depreciation and amortization expense for both the three months ended September 30, 2017 and 2016, and $2.5 million and $2.2 million for the nine months ended September 30, 2017 and 2016, respectively.
 


 
NANOSTRING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 September 30, December 31,
 2017 2016
Assets    
Current assets:   
Cash and cash equivalents$28,797  $20,583 
Short-term investments61,051  53,453 
Accounts receivable, net18,288  22,193 
Inventory18,520  13,812 
Prepaid expenses and other6,109  3,744 
Total current assets132,765  113,785 
Property and equipment, net13,867  12,158 
Other assets555  430 
Total assets$147,187  $126,373 
Liabilities and Stockholders' Equity   
Current liabilities:   
Accounts payable$2,389  $4,935 
Accrued liabilities20,047  12,344 
Deferred revenue, current portion 16,678  19,033 
Deferred rent, current portion479  13 
Lease financing obligations, current portion   58 
Total current liabilities39,593  36,383 
Deferred revenue, net of current portion5,407  22,664 
Deferred rent and other liabilities, net of current portion8,584  7,655 
Long-term debt and lease financing obligations, net of current portion and debt issuance costs48,533  47,366 
Total liabilities102,117  114,068 
Total stockholders' equity45,070   12,305 
Total liabilities and stockholders' equity$147,187  $126,373 
        

 

Source: NanoString Technologies, Inc.

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