NanoString Technologies
Aug 6, 2013

NanoString Technologies Releases Second Quarter 2013 Financial Results and Provides 2013 Outlook

SEATTLE, Aug. 6, 2013 (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 three and six months ended June 30, 2013.

Highlights of the second quarter include:

  • Life Sciences revenue of $7.0 million, 18% year-over-year growth
  • Diagnostics revenue of $0.2 million

"The second quarter of 2013 was transformational for NanoString. We delivered strong revenue results in our Life Sciences business and achieved several important milestones in our Diagnostics business, while simultaneously completing a successful initial public offering," said President and Chief Executive Officer, Brad Gray. "With our ProsignaTM Breast Cancer Assay marketed in Europe and Israel, multiple commercial catalysts for our Life Sciences business, and the IPO proceeds in hand, we believe we are well positioned for continued strong growth."

Other recent business highlights include:

Revenue for the three months ended June 30, 2013 rose 21% to $7.2 million, from $5.9 million in the 2012 period. Life Sciences revenue was $7.0 million, up 18% from the prior year period. Diagnostics revenue was $0.2 million in the 2013 quarter versus no revenue a year ago.

Gross margin was 51.2% in the second quarter of 2013 compared to 43.9% in the 2012 period. The increase was due to product mix and increasing scale and utilization of consumable manufacturing capacity.

Research and development expense was $3.6 million in the 2013 quarter versus $3.0 million in the year ago period. Selling, general and administrative expense was $6.7 million in the quarter compared to $3.3 million in the 2012 period. The increase reflects the Prosigna launch costs for Europe and Israel, investments to expand the Life Sciences commercial organization and other increased corporate costs, including those related to the transition to becoming a public company.

Net loss attributable to common stockholders for the three months ended June 30, 2013 was $7.8 million, or a loss of $13.69 per diluted share, compared with $5.4 million, or a loss of $16.02 per diluted share, for the three months ended June 30, 2012. Non-GAAP net loss for the three months ended June 30, 2013 was $6.0 million, or a loss of $0.65 per diluted share, compared with non-GAAP net loss of $2.8 million, or a loss of $0.35 per diluted share, for the 2012 three-month period. (See accompanying table for reconciliation of GAAP and non-GAAP financial measures.)

The company ended the second quarter with $10.8 million of cash and equivalents, which did not include $50.2 million of IPO proceeds, net of underwriting fees, received in July.

NanoString's outlook for 2013 includes:

  • $28.5 to $30.0 million of Life Sciences revenue
  • $1.0 to 1.5 million of Diagnostics revenue.  

Conference Call

Management will host an investment community conference call today beginning at 1:30pm PT / 4:30pm 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, or from the webcast on the investor relations section of the company's website at: www.nanostring.com. The webcast will be available on the company's website for 14 days 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, which has been employed in basic and translational research since it was first introduced in 2008 and cited in more than 230 peer-reviewed publications, has also now been applied to diagnostic use in the European Union. The company's technology offers a cost-effective way to easily profile the expression of hundreds of genes, miRNAs, or copy number variations, simultaneously with high sensitivity and precision. The company's technology enables a wide variety of basic research and translational medicine applications, including biomarker discovery and validation. The nCounter-based Prosigna™ Breast Cancer Prognostic Gene Signature Assay is the first in vitro diagnostic kit to be marketed through the company's diagnostics business. For more information, please visit www.nanostring.com

The nCounter Analysis System is available for "Research Use Only" in North America. The Prosigna Assay has received a CE mark and is available for use by healthcare professionals in the European Union and other countries that recognize the CE Mark and in which Prosigna is registered; it is pending 510(k) clearance with the Food and Drug Administration and is not available for sale in the United States.

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 our expectations of continued growth, the launch and impact of new products and current estimates of 2013 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 results in connection with any ongoing or future legal proceeding; continued or worsening 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 and nCounter Elements are registered trademarks or trademarks of NanoString Technologies, Inc. in various jurisdictions.

Use of Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures in this release. Management of the company believes that these non-GAAP financial measures, considered together with GAAP financial information, provide useful information for investors by excluding certain non-cash and other income and expense that are not indicative of the company's core operating performance. Reconciliations of the non-GAAP financial measures used in this release to the most directly comparable GAAP measures for the respective periods can be found in "Reconciliation of Non-GAAP Financial Measures" immediately following the financial tables. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

-- Financial Tables Follow --

NANOSTRING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except per share amounts)
(unaudited)
     
  Three Months Ended June 30, Six Months Ended June 30,
  2013 2012 2013 2012
Product revenue:        
Instruments $ 2,523  $ 2,579  $ 4,162  $ 4,079 
Consumables 4,305  3,054  8,004  5,757 
Service revenue 390  310  728  609 
Total revenue 7,218  5,943  12,894  10,445 
Costs and expenses:        
Cost of product revenue 3,522  3,334  6,404  5,990 
Research and development 3,626  2,971  6,685  5,168 
Selling, general and administrative 6,708  3,251  12,834  6,418 
Total costs and expenses 13,856  9,556  25,923  17,576 
Loss from operations (6,638) (3,613) (13,029) (7,131)
Other income (expense):        
Interest income 13 
Interest expense (489) (220) (874) (332)
Revaluation of preferred stock warrant liability 1,638  71  1,156  97 
Other income (expense) (9) 185  (13) 172 
Total other income (expense) 1,143  42  275  (50)
Net loss  (5,495)  (3,571)  (12,754) (7,181)
Accretion of mandatorily redeemable convertible preferred stock (2,311) (1,844) (4,653) (3,637)
Net loss attributable to common stockholders $ (7,806) $ (5,415) $ (17,407) $ (10,818)
Net loss per share, basic and diluted $ (13.69) $ (16.02) $ (31.48) $ (32.49)
Shares used in calculating basic and diluted net loss per share 570  338  553  333 
 
NANOSTRING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
     
  June 30,
2013
December 31, 2012
ASSETS    
Current assets:    
Cash and cash equivalents $ 10,755  $ 21,692 
Accounts receivable, net 4,779  3,322 
Inventory 5,627  5,380 
Prepaid expenses and other 2,533  1,320 
Total current assets 23,694  31,714 
Deferred offering costs 3,384  1,765 
Property and equipment, net 3,028  3,674 
Other assets 384  253 
Total assets $ 30,490  $ 37,406 
     
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT    
Current liabilities:    
Accounts payable $ 2,727  $ 2,865 
Accrued liabilities 5,689  4,481 
Long-term debt, current portion 2,675  2,789 
Other 1,696  1,642 
Total current liabilities 12,787  11,777 
Long-term debt, net of current portion 15,047  9,970 
Preferred stock warrant liability 2,513  3,532 
Other non-current liabilities 2,173  2,265 
Total liabilities  32,520   27,544 
Mandatorily redeemable convertible preferred stock 108,275  103,622 
Total stockholders' deficit (110,305) (93,760)
Total liabilities, mandatorily redeemable convertible preferred stock and stockholders' deficit $ 30,490  $ 37,406 
 
NANOSTRING TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share amounts)
(unaudited)
 
  Three Months Ended June 30, Six Months Ended June 30,
  2013 2012 2013 2012
         
Net loss attributable to common stockholders (GAAP) $ (7,806) $ (5,415) $ (17,407) $ (10,818)
Accretion of mandatorily redeemable convertible preferred stock 2,311  1,844  4,653  3,637 
Change in the fair value of preferred stock warrant liability (1,638) (71) (1,156) (97)
Stock-based compensation expense 257  137  488  417 
Depreciation and amortization 437  490  901  974 
Interest expense 489  220  874  332 
Net loss (non-GAAP) $ (5,950) $ (2,795) $ (11,647) $ (5,555)
Shares used in calculating basic and diluted net loss per share (GAAP) 570  338  553  333 
Shares of common stock issuable upon conversion of mandatorily redeemable convertible preferred stock 8,631  7,567  8,631  7,567 
Shares used in calculating basic and diluted net loss per share (non-GAAP) 9,201  7,905  9,184  7,900 
Net loss per share, basic and diluted (GAAP) $ (13.69) $ (16.02) $ (31.48) $ (32.49)
Net loss per share, basic and diluted (non-GAAP) $ (0.65) $ (0.35) $ (1.27) $ (0.70)
CONTACT: Investor Contact:

         Lynn Pieper of Westwicke Partners

         For NanoString Technologies

         lynn.pieper@westwicke.com

         415-202-5678



         Media Contact:

         Nicole Litchfield

         For NanoString Technologies

         nicole@bioscribe.com

         415-793-6468
Source: NanoString Technologies, Inc.

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