February 24, 2015

NanoString Technologies Releases Fourth Quarter and Full Year 2014 Financial Results and Provides 2015 Outlook

Record Revenue Driven by Significant Installed Base Growth, Continued Robust Consumable Pull-Through and Initial Companion Diagnostic Collaboration

SEATTLE, Feb. 24, 2015 (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, 2014.

Fourth Quarter Financial Highlights:

  • Total revenue of $15.6 million, 54% year-over-year growth
  • Instrument revenue of $6.3 million, 20% year-over-year growth
  • Consumables revenue of $7.2 million, 69% year-over-year growth
  • Collaboration revenue of $1.4 million

Full Year 2014 Financial Highlights:

  • Total revenue of $47.6 million, 52% year-over-year growth
  • Instrument revenue of $18.1 million, 39% year-over-year growth
  • Consumables revenue of $23.8 million, 43% year-over-year growth
  • Collaboration revenue of $3.1 million and approximately $12.0 million of cash received

"Our fourth quarter and full year 2014 results reflect strong performance, with meaningful progress across all three aspects of our business - Life Sciences, Companion Diagnostics, and Prosigna," said President and Chief Executive Officer, Brad Gray. "Life Sciences continued to be the primary engine driving our growth, as we substantially expanded our installed base of nCounter® Analysis Systems while maintaining a high level of consumable pull-through. The year also marked our entry into companion diagnostics, and I am proud of the results we achieved during 2014 in our collaboration with Celgene."

Recent Business Highlights:

  • Delivered validated assay to Celgene, enabling clinical trial initiation in January 2015
  • Positive results from first Decision Impact Study on Prosigna usage reported at the annual San Antonio Breast Cancer Symposium in December
  • Installed base of 264 nCounter Analysis Systems at December 31, 2014, representing an increase of 44% over December 31, 2013
  • More than 600 cumulative peer-reviewed publications of studies based on nCounter technology

"Entering 2015, our foundation is strong, and we are looking ahead to an exciting year," added Gray. "Our plans include further penetrating the research and clinical markets with our nCounter technology and Prosigna Breast Cancer Assay, expanding our addressable markets through multiple product launches, and pursuing new collaboration opportunities with biopharmaceutical partners."

Fourth Quarter Financial Results

Revenue for the three months ended December 31, 2014 rose 54% to $15.6 million, from $10.1 million for the fourth quarter of 2013. Instrument revenue was $6.3 million, up 20% from the prior year period. Consumables revenue was $7.2 million for the fourth quarter of 2014, 69% higher than in the comparable 2013 quarter. Prosigna revenue was $156,000 for the quarter, and collaboration revenue totaled $1.4 million. Gross margin on product and service revenue was 53% for the fourth quarter of 2014 compared to 52% for the prior year period. 

Research and development expense increased to $5.4 million for the fourth quarter of 2014, versus $4.5 million for the fourth quarter of 2013, reflecting increased investment in technology development, including the engineering and testing of the next generation nCounter Analysis System, as well as increased costs related to diagnostic product development, including the lymphoma subtyping test being developed in collaboration with Celgene. Selling, general and administrative expense was $15.0 million for the fourth quarter of 2014 compared to $9.1 million for the prior year period. The increase reflects the build-out of the company's commercial team to support the Prosigna launch, further expansion of the company's lab-based sales channel and increased administrative costs.

Net loss attributable to common stockholders for the three months ended December 31, 2014 was $12.4 million, or a loss of $0.68 per diluted share, compared with $8.8 million, or a loss of $0.60 per diluted share, for the fourth quarter of 2013. Non-GAAP net loss for the three months ended December 31, 2014 was $9.7 million, or a loss of $0.53 per diluted share, compared with non-GAAP net loss of $7.5 million, or a loss of $0.51 per diluted share, for the prior year period (see accompanying table for reconciliation of GAAP and non-GAAP financial measures).

Full Year 2014 Financial Results

Revenue for 2014 rose 52% to $47.6 million, from $31.4 million for 2013. Instrument revenue was $18.1 million, up 39% from the prior year. Consumables revenue was $23.8 million for 2014, 43% higher than for the prior year. Prosigna revenue for 2014 was $668,000, and revenue associated with companion diagnostic collaborations was $3.1 million for the year. Gross margin on product and service revenue was 52% for 2014.  

Research and development expense was $21.4 million for 2014, versus $15.0 million for 2013. Selling, general and administrative expense was $51.1 million for 2014 compared to $29.9 million for the prior year.

Net loss attributable to common stockholders for 2014 was $50.0 million, or a loss of $2.80 per diluted share, compared with $33.9 million, or a loss of $4.44 per diluted share, for 2013. Non-GAAP net loss for 2014 was $39.4 million, or a loss of $2.21 per diluted share, compared with non-GAAP net loss of $25.6 million, or a loss of $2.14 per diluted share, for the prior year (see accompanying table for reconciliation of GAAP and non-GAAP financial measures).

The company ended 2014 with $72.2 million of cash, cash equivalents, and short-term investments.

Outlook for 2015:

  • Total revenue in the range of $58 million to $61 million
  • Gross margin in the range of 53% to 55%
  • Operating expenses in the range of $77 million to $81 million
  • Operating loss in the range of $43 million to $49 million

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 February 24, 2015 at 7:30pm ET through midnight on February 25, 2015. To access the replay, dial (855) 859-2056 or (404) 537-3406 and reference Conference ID: 71481687. 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 over 600 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 further penetration of the research and clinical markets, expansion of market potential through planned product introductions, anticipated companion diagnostic collaborations and our estimated 2015 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 reimbursement for diagnostic products; delays or other unforeseen problems with respect to manufacturing, product development or clinical studies; the impact of competition; the impact of expanded sales, marketing, product development and clinical activities on operating expenses; 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)
(unaudited)
         
  Three Months Ended December 31, Year Ended December 31,
  2014 2013 2014 2013
Revenue:        
Instruments $ 6,337  $ 5,281  $ 18,078  $ 12,995 
Consumables 7,198  4,262  23,819  16,642 
In vitro diagnostic kits 156  140  668  181 
Services 528  437  1,932  1,585 
Total products and services revenue 14,219  10,120  44,497  31,403 
Collaboration 1,399  -- 3,096  --
Total revenue 15,618  10,120  47,593  31,403 
Costs and expenses:        
Cost of product revenue 6,693  4,821  21,149  15,009 
Research and development 5,437  4,510  21,404  14,979 
Selling, general and administrative 14,994  9,090  51,063  29,912 
Total costs and expenses 27,124  18,421  93,616  59,900 
Loss from operations  (11,506)  (8,301)  (46,023)  (28,497)
Other income (expense):        
Interest income 68  40  272  68 
Interest expense  (892)  (530)  (4,140)  (1,942)
Revaluation of preferred stock warrant liability -- -- -- 1,156 
Other income (expense)  (50)  (36)  (147)  (66)
Total other income (expense)  (874)  (526)  (4,015)  (784)
Net loss  (12,380)  (8,827)  (50,038)  (29,281)
Accretion of mandatorily redeemable convertible preferred stock -- -- --  (4,653)
Net loss attributable to common stockholders  $ (12,380)  $ (8,827)  $ (50,038)  $ (33,934)
Net loss per share, basic and diluted  $ (0.68)  $ (0.60)  $ (2.80)  $ (4.44)
Shares used in calculating basic and diluted net loss per share 18,219  14,617  17,839  7,643 
 
NANOSTRING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
     
  December 31, December 31,
  2014 2013
     
ASSETS    
Current assets:    
Cash and cash equivalents $ 17,223  $ 9,941 
Short-term investments 55,002  32,715 
Accounts receivable, net 12,436  8,331 
Inventory 5,444  6,750 
Prepaid expenses and other 5,242  2,999 
Total current assets 95,347  60,736 
     
Property and equipment, net 6,366  3,065 
Other assets 1,035  571 
Total assets $ 102,748  $ 64,372 
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $ 3,380  $ 3,354 
Accrued liabilities 10,403  7,088 
Long-term debt, current portion 251  6,136 
Deferred revenue, current portion 4,627  1,462 
Other 147  590 
Total current liabilities 18,808  18,630 
Long-term debt, net of current portion 30,675  12,157 
Deferred revenue, net of current portion 7,135  803 
Other non-current liabilities 1,317  1,313 
Total liabilities  57,935   32,903 
Total stockholders' equity 44,813  31,469 
Total liabilities and stockholders' equity $ 102,748  $ 64,372 
 
NANOSTRING TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(in thousands, except per share amounts)
(unaudited)
         
  Three Months Ended December 31, Year Ended December 31,
  2014 2013 2014 2013
         
Net loss attributable to common stockholders (GAAP)  $ (12,380)  $ (8,827)  $ (50,038)  $ (33,934)
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 1,322  379  4,926  1,145 
Depreciation and amortization 424  419  1,539  1,779 
Interest expense 892  530  4,140  1,942 
Net loss (non-GAAP)  $ (9,742)  $ (7,499)  $ (39,433)  $ (25,571)
Shares used in calculating basic and diluted net loss per share (GAAP) 18,219  14,617  17,839  7,643 
Shares of common stock issuable upon conversion of mandatorily redeemable convertible preferred stock --  -- -- 4,280 
Shares used in calculating basic and diluted net loss per share (non-GAAP) 18,219  14,617  17,839  11,923 
Net loss per share, basic and diluted (GAAP)  $ (0.68)  $ (0.60)  $ (2.80)  $ (4.44)
Net loss per share, basic and diluted (non-GAAP)  $ (0.53)  $ (0.51)  $ (2.21)  $ (2.14)
CONTACT: Leigh Salvo of Westwicke Partners

         leigh.salvo@westwicke.com

         415-513-1281

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Source: NanoString Technologies, Inc.

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