On March 1, 2017 NanoString Technologies, Inc. (NASDAQ:NSTG), a provider of life science tools for translational research and molecular diagnostic products, reported financial results for the fourth quarter and year ended December 31, 2016 (Press release, NanoString Technologies, MAR 1, 2017, View Source [SID1234517941]). Schedule your 30 min Free 1stOncology Demo! Fourth Quarter Financial Highlights
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Total revenue of $25.2 million, 13% year-over-year growth
Total product and service revenue of $20.3 million, 5% year-over-year growth
Consumables revenue of $12.0 million, including $1.0 million of Prosigna IVD kits, 12% year-over-year growth
Instrument revenue of $7.5 million, 6% year-over-year decline
Collaboration revenue of $4.9 million, 68% year-over-year growth
Full Year 2016 Financial Highlights
Total revenue of $86.5 million, 38% year-over-year growth
Total product and service revenue of $69.1 million, 22% year-over-year growth
Consumables revenue of $41.7 million, including $4.2 million of Prosigna IVD kits, 26% year-over-year growth
Instrument revenue of $24.2 million, 16% year-over-year growth
Collaboration revenue of $17.4 million, nearly tripling versus the prior year
"In 2016 we grew our revenue by 38%, and entered into two landmark companion diagnostic collaborations," stated Brad Gray, NanoString president and chief executive officer. "In 2017, we will be investing in our commercial channel to improve our productivity, hiring new commercial leadership and launching a number of products that will build on the unique value proposition of the nCounter platform. We’re also investing in the future, preparing for the launch of companion diagnostic tests as well as a portfolio of breakthrough instruments to enhance our long-term growth prospects."
Recent Business Highlights
Grew installed base to approximately 480 nCounter Analysis Systems at December 31, 2016, with approximately 140 systems sold during the year, including approximately 60 nCounter SPRINT Profilers
Maintained consumable pull through above $100,000 per system for the full year 2016
Surpassed 1,500 cumulative peer-reviewed publications of studies utilizing nCounter technology
Received positive coverage decision from Humana and positive assessment from Blue Cross Blue Shield Association Evidence Street for Prosigna
Launched a Technology Access Program for Digital Spatial Profiling technology and presented first customer data at ASCO (Free ASCO Whitepaper)-SITC 2017
nCounter Vantage 3D assays, enabling simultaneous analysis of DNA, RNA, and protein, were recognized by The Scientist as a Top 10 Innovation of 2016
Highlighted progress with Hyb & Seq single molecule sequencing chemistry at Advances in Genome Biology and Technology (AGBT) meeting, including sequencing of oncogenes from FFPE samples with high accuracy and simple workflow free of library, enzymes and amplification
Fourth Quarter Financial Results
Revenue for the three months ended December 31, 2016 increased by 13% to $25.2 million, as compared to $22.3 million for the fourth quarter of 2015. Instrument revenue was $7.5 million, down 6% versus the prior year period, with nCounter SPRINT systems representing approximately one-third of systems sold. Consumables revenue, excluding Prosigna, was $11.0 million for the fourth quarter of 2016, 11% higher than in the comparable 2015 quarter. Prosigna IVD kit revenue was $1.0 million for the quarter, an increase of 25% over the fourth quarter of 2015. Collaboration revenue totaled $4.9 million, compared to $2.9 million for the fourth quarter of 2015. Gross margin on product and service revenue was 59% for the fourth quarter of 2016, up from 56% for the prior year period.
Research and development expense increased by 41% to $10.0 million for the fourth quarter of 2016 versus $7.1 million for the fourth quarter of 2015, reflecting increased costs associated with biopharma collaborations announced in 2016 and investments in new products and technologies under development for the life science research market. Selling, general and administrative expense increased by 17% to $16.7 million for the fourth quarter of 2016 compared to $14.2 million for the prior year period.
Net loss for the three months ended December 31, 2016 increased to $11.6 million, or a loss of $0.55 per share, compared with $8.8 million, or a loss of $0.44 per share, for the fourth quarter of 2015.
Full Year 2016 Financial Results
Revenue for 2016 increased by 38% to $86.5 million, as compared to $62.7 million for 2015. Instrument revenue was $24.2 million, up 16% versus the prior year. Consumables revenue, excluding Prosigna, was $37.5 million for 2016, 23% higher than in 2015. Prosigna IVD kit revenue was $4.2 million, an increase of 70% over 2015. Collaboration revenue totaled $17.4 million, compared to $6.0 million for 2015. Gross margin on product and service revenue was 56% for 2016, up from 54% for the prior year.
Research and development expense increased by 41% to $34.7 million for 2016 versus $24.6 million for 2015. Selling, general and administrative expense increased by 18% to $62.7 million for 2016 compared to $53.2 million for the prior year.
Net loss for 2016 was $47.1 million, or $2.34 per share, compared with $45.6 million, or a loss of $2.40 per share, for 2015.
The company ended 2016 with approximately $74.0 million of cash, cash equivalents, and short-term investments.
Outlook for 2017
Total revenue in the range of $100 million to $105 million
Gross margin on product and service revenues in the range of 57% to 58%
Operating expenses in the range of $117 million to $120 million
Operating loss in the range of $49 million to $53 million
Net loss per share in the range of $2.51 to $2.69