NanoString Technologies
Nov 4, 2014

NanoString Technologies Releases Financial Results for Third Quarter of 2014

Record Total Revenue of $12.3 Million, Reflecting 47% Year-Over-Year Growth

SEATTLE, Nov. 4, 2014 (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 ended September 30, 2014.

Financial Highlights:

"Third quarter results demonstrated meaningful progress across all aspects of our business. Momentum in our life science research business continues, driven by instrument placements, record consumable revenue, and strong demand for our PanCancer Pathway and Immune Profiling Panels," said President and Chief Executive Officer, Brad Gray. "Our companion diagnostic collaboration with Celgene is progressing ahead of plan, resulting in an accelerated milestone achievement during the quarter. Finally, we made important progress in gaining reimbursement for Prosigna®, including from UnitedHealthcare®, the largest private payer in the US."

Recent Business Highlights:

Third Quarter Financial Results

Revenue for the three months ended September 30, 2014 rose 47% to $12.3 million, from $8.4 million for the third quarter of 2013. Instrument revenue was $4.5 million, up 27% from the prior year period. Consumables revenue for the quarter was $6.0 million, up 37% from the third quarter of 2013. Prosigna revenue was $0.3 million for the quarter. Revenue associated with the Celgene companion diagnostic collaboration was $1.1 million.

Gross margin on product and service revenues was 53% for the three months ended September 30, 2014 compared to 55% for the prior year period. The decrease was largely due to an increased proportion of sales to distributors in the third quarter of 2014, which have a lower gross margin, as well as several large consumable orders with unusually low per unit manufacturing costs and certain favorable overhead cost variances, which drove a higher gross margin in the third quarter of 2013.

Research and development expense for the third quarter of 2014 increased to $6.0 million compared to $3.8 million in the prior year period. The increase reflects an increased investment in technology, new product development and, to a lesser extent, costs to support the Celgene collaboration.

Selling, general and administrative expense for the quarter was $12.5 million compared to $8.0 million in the prior year period. The increase reflects Prosigna launch costs, including establishment of an oncology sales force; expansion of the laboratory focused commercial organization; and other increased corporate costs.

Net loss attributable to common stockholders for the third quarter of 2014 was $12.1 million, or $(0.67) per diluted share, compared with $7.7 million, or $(0.53) per diluted share, for the third quarter of 2013. Non-GAAP net loss for the quarter was $9.8 million, or $(0.54) per diluted share, compared with non-GAAP net loss of $6.4 million, or $(0.44) per diluted share, for the prior year period (see accompanying table for reconciliation of GAAP and non-GAAP financial measures).

The company had $67.5 million of cash, cash equivalents and short-term investments as of September 30, 2014.

NanoString's 2014 Outlook

The company's updated financial outlook for 2014 includes:

Conference Call

Management will host an investment community 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, or from the webcast link in the investor relations section of the company's website at: www.nanostring.com. A replay of the call will be available beginning November 4, 2014 at 7:30pm ET through midnight on November 5, 2014. To access the replay, dial (855) 859-2056 or (404) 537-3406 and reference Conference ID: 17072966. The webcast will also be available on the company's website for one quarter 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 hundreds of peer-reviewed publications. The nCounter Analysis System 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, facilitating a wide variety of basic research and translational medicine applications, including biomarker discovery and validation. The company's technology has now been applied to diagnostic use. 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.

For more information, please visit www.nanostring.com.

The NanoString Technologies logo, NanoString, NanoString Technologies, nCounter and Prosigna are registered trademarks or trademarks of NanoString Technologies, Inc. in various jurisdictions.

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 continuing growth in our life science research business and our estimated 2014 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.

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 GAAP to Non-GAAP Financial Information" 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.

NANOSTRING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
         
  Three Months Ended September 30, Nine Months Ended September 30,
  2014 2013 2014 2013
Revenue:        
Instruments  $ 4,528  $ 3,552  $ 11,741  $ 7,714
Consumables 5,978 4,376 16,621 12,380
In vitro diagnostic kits 270 41 512 41
Services 488 420 1,404 1,148
Total products and service revenue 11,264 8,389 30,278 21,283
Collaboration 1,079 1,697
Total revenue 12,343 8,389 31,975 21,283
Costs and expenses:        
Cost of product and service revenue 5,271 3,784 14,456 10,188
Research and development 5,961 3,784 15,967 10,469
Selling, general and administrative 12,515 7,988 36,069 20,822
Total costs and expenses 23,747 15,556 66,492 41,479
Loss from operations (11,404) (7,167) (34,517) (20,196)
Other income (expense):        
Interest income 65 22 204 28
Interest expense (697) (538) (3,248) (1,412)
Revaluation of preferred stock warrant liability 1,156
Other expense (112) (17) (97) (30)
Total other income (expense) (744) (533) (3,141) (258)
Net loss (12,148) (7,700) (37,658) (20,454)
Accretion of mandatorily redeemable convertible preferred stock (4,653)
Net loss attributable to common stockholders  $ (12,148)  $ (7,700)  $ (37,658)  $ (25,107)
Net loss per share, basic and diluted  $ (0.67)  $ (0.53)  $ (2.13)  $ (4.74)
Shares used in calculating basic and diluted net loss per share 18,134 14,616 17,711 5,292
 
NANOSTRING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
     
     
  September 30, 2014 December 31, 2013
ASSETS    
Current assets:    
Cash and cash equivalents $18,826 $9,941
Short-term investments 48,674 32,715
Accounts receivable, net 15,266 8,331
Inventory 5,790 6,750
Prepaid expenses and other 4,353 2,999
Total current assets 92,909 60,736
     
Property and equipment, net 5,746 3,065
Other assets 878 571
Total assets $99,533 $64,372
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $2,166 $3,354
Accrued liabilities 7,755 7,088
Deferred revenue, current portion 4,425 1,462
Long-term debt, current portion 251 6,136
Other 807 590
Total current liabilities 15,404 18,630
Long-term debt, net of current portion 20,497 12,157
Deferred revenue, net of current portion 7,168 803
Other non-current liabilities 784 1,313
Total liabilities 43,853 32,903
Total stockholders' equity 55,680 31,469
Total liabilities and stockholders' equity $99,533 $64,372
 
NANOSTRING TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(in thousands, except per share amounts)
         
  Three Months Ended September 30, Nine Months Ended September 30,
  2014 2013 2014 2013
         
Net loss attributable to common stockholders (GAAP)  $ (12,148)  $ (7,700)  $ (37,658)  $ (25,107)
Accretion of mandatorily redeemable convertible preferred stock 4,653
Change in the fair value of preferred stock warrant liability (1,156)
Stock-based compensation expense 1,306 278 3,604 766
Depreciation and amortization 370 459 1,115 1,360
Interest expense 697 538 3,248 1,412
Net loss (non-GAAP)  $ (9,775)  $ (6,425)  $ (29,691)  $ (18,072)
Shares used in calculating basic and diluted net loss per share (GAAP) 18,134 14,616 17,711 5,292
Shares of common stock issuable upon conversion of mandatorily redeemable convertible preferred stock 5,723
Shares used in calculating basic and diluted net loss per share (non-GAAP) 18,134 14,616 17,711 11,015
Net loss per share, basic and diluted (GAAP)  $ (0.67)  $ (0.53)  $ (2.13)  $ (4.74)
Net loss per share, basic and diluted (non-GAAP)  $ (0.54)  $ (0.44)  $ (1.68)  $ (1.64)
CONTACT: Investor Contact:

         Leigh Salvo of Westwicke Partners

         For NanoString Technologies

         leigh.salvo@westwicke.com

         415-513-1281



         Media Contact:

         Nicole Litchfield of Bioscribe Inc.

         For NanoString Technologies

         nicole@bioscribe.com

         415-793-6468

NanoString Technologies, Inc. logo

Source: NanoString Technologies, Inc.

News Provided by Acquire Media