On February 25, 2019 Veracyte, Inc. (Nasdaq: VCYT) reported financial results and business progress for the quarter and full year ended December 31, 2018, and provided financial guidance for 2019 (Press release, Veracyte, FEB 25, 2019, Veracyte Announces Fourth Quarter and Full-Year 2018 Financial Results and Provides 2019 Financial Outlook
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"We delivered exceptional growth in 2018 and are off to a strong start in 2019," said Bonnie Anderson, Veracyte’s chairman and chief executive officer. "Our 2018 performance was driven by several factors. Our Afirma GSC and Xpression Atlas launch broadened our thyroid offering to inform both diagnosis and treatment decisions, and the first full year of Percepta classifier adoption was strong with the fourth quarter acceleration in growth positioning us for a strong 2019. Clearly, our multi-product sales strategy that is designed to give us the leverage we need to be a profitable enterprise is working."
Anderson added, "In 2018, we also entered into biopharmaceutical collaborations with Loxo Oncology and Johnson & Johnson Innovation and the Johnson & Johnson Lung Cancer Initiative that recognize the value of our novel scientific platform and can help advance our pipeline. As we look to 2019 and beyond, we believe we are well-positioned for continued success as we further increase the number of patients whose lives can be improved by our innovative tests."
Fourth Quarter and Full-Year 2018 Financial Results
For the three- and twelve-month periods ended December 31, 2018, compared to the prior year:
Revenue was $25.8 million and $92.0 million, respectively, an increase of 31% and 28%;
Gross Margin was 66% and 64%, respectively, an increase of 6% and 3%;
Operating Expenses, Excluding Cost of Revenue, were $20.1 million and $81.2 million, respectively, an increase of 12% and 15%;
Net Loss and Comprehensive Loss was ($3.1) million and ($23.0) million, respectively, an improvement of 63% and 26%;
Basic and Diluted Net Loss Per Common Share was ($0.08) and ($0.62), respectively, an improvement of 67% and 32%;
Net Cash Used in Operating Activities was $1.2 million and $13.5 million, respectively, an improvement of 79% and 44%;
Cash Burn1 was $1.7 million and $15.4 million, respectively, an improvement of 73% and 39%; and
Cash and Cash Equivalents were $78.0 million at December 31, 2018.
2018 Full-Year and Recent Business Highlights
Commercial Expansion:
Grew total genomic test volume to 9,154 tests in the fourth quarter of 2018, representing 28% growth over 2017, which resulted in full-year 2018 growth of 22% over 2017, or 31,710 tests.
Transitioned all Afirma customers to the second-generation Afirma Genomic Sequencing Classifier (GSC) platform and launched the Afirma Xpression Atlas to provide a comprehensive solution that informs both thyroid cancer diagnosis and treatment decisions. Notably, 30% of Afirma GSC orders included Xpression Atlas in 2018, ahead of the company’s expectations.
Grew Percepta Bronchial Genomic Classifier volume to nearly 1,550 tests in its first full year of commercialization, with genomic volume accelerating 74% sequentially from the third quarter to the fourth quarter of 2018.
Established 20 leading Early Access Program (EAP) sites across the United States for Envisia in 2018, addressing physician demand for patient access to the classifier which improves idiopathic pulmonary fibrosis (IPF) diagnosis and builds a solid foundation for the company to commercially expand it in 2019.
Biopharmaceutical Collaborations
Executed a long-term strategic collaboration with Johnson & Johnson, LLC and Johnson & Johnson’s Lung Cancer Initiative to advance diagnostics, including a nasal swab test, for early lung cancer detection. Veracyte estimates the combined monetary and non-monetary value of the collaboration to be more than $50 million. The company believes this collaboration expands its addressable lung cancer diagnostic market to a more than $30 billion global opportunity.
Entered into a research collaboration with Loxo Oncology, through which Loxo has access to data from Veracyte’s Afirma Xpression Atlas platform to help in its development of therapies for patients with genetically defined cancers, including thyroid cancer.
Reimbursement Progress:
Received draft Medicare coverage for the Envisia Genomic Classifier through the MolDX program, with a final positive coverage decision expected in early 2019.
Achieved in-network status as a service provider with the last of the major commercial health plans, which Veracyte believes will facilitate coverage and reimbursement for its Percepta and Envisia classifiers.
Evidence Development:
Afirma – Published clinical validation data for the Afirma GSC in JAMA Surgery, demonstrating the next-generation test’s ability to help approximately 70% of patients with indeterminate thyroid nodules avoid unnecessary surgery. Presented 12 Afirma studies at three endocrinology conferences, including real-world data showing that the Afirma GSC is helping even more patients avoid unnecessary surgery than is suggested by the clinical validation study findings.
Percepta – Presented early, interim results at the 2018 CHEST Annual Meeting from the ongoing registry clinical utility study showing the test changed clinical decision-making and reduced invasive procedures at every evaluation time point up to 12 months post-testing.
Envisia – Published a study quantifying and qualifying the challenges in obtaining timely, accurate diagnosis of IPF and other interstitial lung diseases, thus underscoring the clinical need for the Envisia classifier. Presented data at a leading pulmonology conference demonstrating the test’s ability to improve the diagnosis of IPF without the need for surgery.
Financing and Debt Facility:
In July 2018, Veracyte issued and sold 5,750,000 shares of common stock in a registered public offering, including the underwriters’ exercise in full of their option to purchase an additional 750,000 shares, at a price to the public of $10.25 per share. Net proceeds from the offering were approximately $55.0 million.
In January 2019, the company used $12.5 million of cash and cash equivalents to reduce its principal debt balance from $25.0 million to $12.5 million.
2019 Outlook
Veracyte is guiding to full-year 2019 revenue in the range of $113 million to $117 million and full-year 2019 net cash used in operating activities in the range of $4 million to $6 million.
Conference Call and Webcast Details
Veracyte will host a conference call and webcast today at 5:00 p.m. Eastern Time to discuss the company’s financial results and provide a general business update. The conference call will be webcast live from the company’s website and will be available via the following link: View Source The webcast should be accessed 10 minutes prior to the conference call start time. A replay of the webcast will be available for one year following the conclusion of the live broadcast and will be accessible on the company’s website at View Source approximately two hours following the completion of the call.
The conference call can be accessed as follows:
U.S./Canada participant dial-in number (toll-free): (855) 541-0980
International participant dial-in number: (970) 315-0440
Conference I.D.: 5498321