November 2, 2016

NanoString Technologies Releases Operating Results for Third Quarter of 2016

Revenue Growth of 53% Year-Over-Year Driven by Increased nCounter SPRINT Demand and Strong Commercial Execution

SEATTLE, Nov. 02, 2016 (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, 2016.

Third Quarter Financial Highlights

  • Total revenue of $23.9 million, 53% year-over-year growth
  • Total product and service revenue of $19.2 million, 38% year-over-year growth
  • Consumables revenue of $11.5 million, including $1.1 million of Prosigna® IVD kits, 27% year-over-year growth
  • Instrument revenue of $6.9 million, 62% year-over-year growth
  • Collaboration revenue of $4.8 million

"We continued to execute well during the third quarter, generating strong growth across our business while advancing our product pipeline and partnerships," said president and chief executive officer Brad Gray.  "A highlight of the quarter was the robust demand for our nCounter SPRINT™ Profiler, which helped drive 62% year-on-year growth in instrument revenue and validated that SPRINT's ability to reach new customers is accelerating instrument placement."

Recent Business Highlights

  • Grew installed base to approximately 450 nCounter® Analysis Systems at September 30, 2016
  • Launched new nCounter Vantage 3D™ Solid Tumor Panels for proteins and single nucleotide variations to enable simultaneous analysis of DNA mutations, messenger RNA, fusion genes, and proteins on a single platform
  • Presented data demonstrating the potential workflow advantages of Hyb & Seq™ sequencing chemistry, requiring less than 60 minutes of sample processing to enable initiation of a sequencing run
  • Appointed Kirk Malloy, Ph.D., seasoned life sciences executive, to the company's board of directors

Third Quarter Financial Results

Revenue for the three months ended September 30, 2016 increased by 53% to $23.9 million, as compared to $15.7 million for the third quarter of 2015. Instrument revenue was $6.9 million, up 62% versus the prior year period, with nCounter SPRINT systems representing approximately half of systems sold. Consumables revenue, excluding Prosigna, was $10.3 million for the third quarter of 2016, 23% higher than in the comparable 2015 quarter. Prosigna IVD kit revenue was $1.1 million for the quarter, an increase of 73% over the third quarter of 2015. Collaboration revenue totaled $4.8 million, compared to $1.8 million for the third quarter of 2015. Gross margin on product and service revenue was 58% for the third quarter of 2016, up from 55% for the prior year period.

Research and development expense increased by 50% to $8.7 million for the third quarter of 2016 versus $5.8 million for the third quarter of 2015, reflecting increased costs associated with biopharma collaborations announced earlier this year and new products and technologies under development for the life science research market.  Selling, general and administrative expense increased by 30% to $15.6 million for the third quarter of 2016 compared to $12.0 million for the prior year period.

Net loss for the three months ended September 30, 2016 increased to $10.1 million, or a loss of $0.51 per share, compared with $9.5 million, or a loss of $0.49 per share, for the third quarter of 2015.

Outlook for 2016

The company's financial outlook for 2016 is unchanged, and includes:

  • Total revenue in the range of $89 million to $93 million
  • Gross margin on product and service revenues in the range of 54% to 55%
  • Operating expenses in the range of $94 million to $99 million
  • Operating loss in the range of $37 million to $40 million
  • Net loss per share in the range of $2.15 to $2.30
  • Cash from collaborations in 2016 in the range of $40 million to $45 million

Conference Call

Management will host a conference call today beginning at 1:30 pm PT / 4:30 pm ET to discuss quarterly operating 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 91871843. 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, 2016 at 7:30pm ET through 7:30pm ET on November 3, 2016. To access the replay, dial (855) 859-2056 or (404) 537-3406 and reference Conference ID: 91871843. 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 1,300 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 market demand for the company's products, the capabilities of its current and future products, and its estimated 2016 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.

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,
 2016 2015 2016 2015
Revenue:       
Instruments$6,898  $4,256  $16,744  $13,026 
Consumables10,303  8,352  26,579   20,699 
In vitro diagnostic kits1,147  662  3,142  1,635 
Services819  640  2,326  1,880 
Total product and service revenue19,167  13,910  48,791  37,240 
Collaboration 4,766  1,783  12,466  3,112 
Total revenue23,933  15,693  61,257  40,352 
Costs and expenses:       
Cost of product and service revenue8,075  6,289  21,816  17,500 
Research and development8,717  5,812  24,724  17,526 
Selling, general and administrative15,607  12,036  46,018  38,984 
Total costs and expenses (a) (b)32,399  24,137  92,558   74,010 
Loss from operations(8,466) (8,444) (31,301) (33,658)
Other income (expense):       
Interest income104  58  266  181 
Interest expense(1,509) (1,022) (4,150)  (3,007)
Other expense(179) (59) (238) (281)
Total other income (expense), net(1,584) (1,023) (4,122)  (3,107)
Net loss before provision for income taxes(10,050) (9,467) (35,423) (36,765)
Provision for income taxes(38)   (73)  
Net loss$(10,088) $(9,467) $(35,496) $(36,765)
Net loss per share, basic and diluted$(0.51) $(0.49) $(1.79) $(1.95)
Shares used in calculating basic and diluted net loss per share19,928  19,431  19,779  18,862 
        
(a) Includes $2.2 million and $1.8 million of stock-based compensation expense for the three months ended September 30, 2016 and 2015, respectively, and $6.5 million and $4.7 million for the nine months ended September 30, 2016 and 2015, respectively.
(b) Includes $0.8 million and $0.3 million of depreciation and amortization expense for the three months ended September 30, 2016 and 2015, respectively, and $2.2 million and $1.4 million for the nine months ended September 30, 2016 and 2015, respectively.


NANOSTRING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 September 30,
2016
 December 31,
2015
Assets   
Current assets:   
Cash and cash equivalents$10,468  $21,856 
Short-term investments43,116  27,188 
Accounts receivable, net21,041  19,725 
Inventory11,730  10,138 
Prepaid expenses and other4,385  3,886 
Total current assets90,740  82,793 
Property and equipment, net10,705  9,414 
Other assets812  662 
Total assets$102,257  $92,869 
Liabilities and Stockholders' Equity (Deficit)   
Current liabilities:   
Accounts payable$2,127  $3,243 
Accrued liabilities9,917  12,181 
Deferred revenue, current portion16,748  5,261 
Deferred rent, current portion5   
Lease financing obligations, current portion92  226 
Total current liabilities28,889  20,911 
Deferred revenue, net of current portion26,752  6,486 
Deferred rent and other liabilities, net of current portion6,192  4,257 
Long-term debt and lease financing obligations, net of current portion and debt issuance costs46,980  41,000  
Total liabilities108,813  72,654 
Total stockholders' equity (deficit)(6,556)  20,215 
Total liabilities and stockholders' equity (deficit)$102,257  $92,869 

 

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