NSTG - Earnings call transcript Q3 2018 | NanoString Technologies, Inc.

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Operator

Good day ladies and gentlemen and welcome to the NanoString 2018 Third Quarter Financial Results call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] As a reminder this call is being recorded. I would now like to introduce your host for today's conference Mr. Investor President Vice Farrell, Relations. Doug begin. Sir you may

Doug Farrell

Thank you Good afternoon operator. everyone.

we with call Bailey, Brad today copy results of me be XXXX. Gray, release on quarter the the our our third for our Earlier the Tom is A and our today On website of nanostring.com. financial CEO; President CFO. can press released found and at

related projections, business statements objectives, During are timing forward-looking, strategic and financial we growth, recent about of future collaborations, make our that anticipated planned prospects and and existing call, and expanding future product this statements and markets, status, for penetrating offerings. factors, trends including and success the addressable development and focus

control, including risks described are time our time uncertainties subject in the to risks from statements filings. many to our of SEC uncertainties, and Forward-looking beyond and which are

We'll Our call, Conference. be differ in the week. to in at those to DSP a me today’s you many those and to York New well projected for statements. Canaccord of dinner Brad. we Boston catching We're results as that the KOL on update materially obligation forward call as looking with let forward-looking no turn over may from on up undertake With the road next

Brad Gray

an core We've to update four well the growth. last review the for on Good nCounter afternoon turn guidance overview and and over to Tom the our our us Thanks I'll our brief year. Doug. going strategic Then operating call solid and thank joining update provide for I'm and to of quarter executed returned third business quarters a you objectives. to today. of our performance over our QX results for the details to the

and infrastructure steps row we've the taken our strengthen For our successful. have the our and of to have service quarters exceeded three commercial that guidance, demonstrating been that a revenues in end team top products

strong XXXX a the service launch will accelerate Profiler prior markets. we $XX.X interest compared instrument year. product addition, our results our consumables, In benefited from recorded approximately that instruments, Our SPRINT Spatial each revenue than for the from next were for instrument across drove quarter, growth direct revenue to instrument year-over-year we've GeoMx believe placements. with in our and stage in third growth. bio-pharma growing Digital rate successful by accounted million year setting XX% solid about have greater generated who tremendous XX% These the we the generating In board revenue half and of customers of XX% in demand service,

more beyond. XX% approximately force and consumable quarter range. focused consumables our of teams the with pull Prosigna sales provided and core last base while sets strongest in yet. particularly third than or than XX% separate delivered growth installed continued business. which an at end on instruments our Within has the business reagents XXXX both growth quarter. The consumables Total months, the life I'm by than science XX over includes laying the more XX% trajectory pleased our increased Our foundation during and grew for nCounter Meanwhile, in of bifurcation flat into of our will consumer in its we delivered linearity code has resulting through Prosigna high panels, year-on-year. custom guidance sciences annualized life more were the consumables visibility

for Now, year. the an on strategic I'd to provide objectives like our update

oncology Our and research first extending strategic is in diagnostics. objective our leadership

our be about engine markets. in the placements primary accounting oncology the instrument for of business XX% growth our third continued During to quarter direct for new

incorporated into product immune newer products fastest-growing remains our portion to revenue by of of systematically our and largest biopharma approximately launch our top-selling biomarker panel companies. remains profiling where IO year-on-year. of These our Our consumable remain the and PanCancer Much discovery research date. grew immuno-oncology XX% driven this PanCancer panel growth the panels is are our paradigms XXX being panel

For example, biomarkers MGDXXX XXX predictive for MacroGenics with to last program. use their IO collaboration week a identify research signatures who translational announced we

We or accelerate will clinical in the be other potentially the a of development Novel signatures MDGXXX diagnostic yielding enhance evaluating may Tumor companion and Gene that the Expression Inflammation future. Signature

of in for designed is was major it momentum post our SITC the in and believe a expect currently can XX data entirety address using We we unmet need of help monitoring. eight business. over workflow We're a in to research studies collaboration and continue. including making use with the features We diagnostic active product morning than currently and programs meeting CAR-T and active underway are immuno-oncology for launch that immunotherapy across where of annual Panel our and companies the there XXX studies use also therapies. XXX biopharma cancer announced Characterization with This CAR-T The the for of infusion development This and on more progress leading generated a field of side centers panel steady CAR-T new underway. society leukapheresis manufacturing than or created the of cell is our manufacturing more platforms. in this

record We range. exceed of in million Prosigna $X provided million expect across driven revenue for now end of our generated previously $X.X Prosigna above revenue growth Prosigna top putting to we QX During the XXXX by revenue guidance all us geographies.

positive growth the addition, continue technology In Prosigna’s expect to health will from benefit assessments. we

and on in for available stage [Night] widely its instance patients that Prosigna to is website this which beginning setting guidance be of UK's December includes Prosigna the to UK has to become draft XXXX. published scheduled in year For finalized the

objective second to applications. therapeutic XXXX new Our into for strategic drive is nCounter and areas

sales campaigns oncology, of product outside paying off efforts launches quarter Immunology These began has this are an quarters several instrument we've metric. oncology. nCounter of and third area increase of to most particular growth strength. the approximately been came since tracking XX% during substantially of to Over awareness the the meaningful new areas outside marketing we contribution and past from used the

all for while placements immunology this portfolio panel year-on-year. Neuroscience of and accounted XX% new where During year. instrument the another is sales introduced we than approximately of grew more of for accounted our new panels third quarter panels focus area quarter one immunology third one earlier about

is life about half product repeat their encouraging customers in purchasing try from behavior early remain who these cycle, reorders panels these date. of the with to panels While

few units progress of objective remain Our leading seeing year-end. to third sites Profiling platform track has DSP initiate The are first by to a achieve ship launch on in beta fantastic We this to Spatial our early objective the indicators expect strong we Digital the on of XXXX external access quarter. we've multiple our later months that and been is made GeoMx strategic launch. to this and past

DSP to NanoString for their customers impressive an expanded Our samples DSP processing by sending technology access has pace. program allows experience or TAP which to at

During companies and TAP QX TAP studies than we’ve begun our exceeds received backlog capacity. XXXs Biopharma a XX more total projects substantial that of orders submit carrying samples of to internal have currently and orders. patient are from new we demand

is the of addition, DSP yielding major at and presentations steady TAP a program data In stream meetings.

Just papers this program studies six of and high-impact peer-reviewed data week different cancer authored independent a the meeting yielded at The simultaneously Medicine. scientists. include by covering are that type TAP SITC Nature there two each published a journal in recently the DSP different set

publish medical an the program place biopharma startup in in power who delivery ahead of GeoMx who system top researchers from provides or instrument adoption. data recently his the of GeoMx To in beginning program on program For TAP of at through ordering XXXX GPS demand One companies working the to highlighting access research customers we systems samples service of to potential its oversubscribed samples. to The among large whole leading funnel as with access our XXXX. we capturing program GioMx of $XXX,XXX launch select from program. receive by a to centers, was instruments package will the instrument, not a we've the the GPS delivery XX program manuscripts sites work opportunity the participants next and on the immune-oncology. a allowing institutions, the XX number and research access limited data system. that five in centers. of MD who will GPS In won contract after was status a technology a GeoMx an for first us generate the planned We're organizations. over build year of and been co-authored selected site their which commercial reagents, commercial of Prize be research to half DSP additional Nobel expect interested early sites including purchase Participating price GPS first for Outside are tracking to Allison of substantially preorder Anderson customers priority the while their researchers created early the supporting Jim begin August, we'll for we open

more than received grant During around researchers ran a DSP applications QX. GeoMx world. program the academic that we from XXX from

the customers. a of applicants winning GeoMx as the recipient substantial Oxford While the University was other potential funnel selected of form

XXXX news applicants demand program, some early confidence by launch. won many and responded signals successful seeing grant they across the GeoMx grant the of not fact, and In TAP, immediately GPS a our we strong access, a purchase our for quote In system. the a requesting contest the are of to that had summary, that increase

advance to objective a strategic Hyb commercial platform launch. fourth our Our Seq & is towards

AMP in the highlighted of are progressing or new at developments association week, the applications we last technical pathology As molecular meeting nicely.

which the reagent milestone fully first the program. a X,XXX a This major & a scaled front, combination barcode included covering possible data generalizable and sequencing development On reagent public the provides chemistry Hyb every sequencing we six set Seq our [genome]. provided any set in technical base in fully of achieved from set disclosure

identification seamlessly to Seq Seq killer measure allowing next-generation for customer and area using fall disease clinical that be be profiles. rapid infectious highlighted where presented and we browser is an Hyb gene showcased applications turnaround how an opportunity of and for Hyb Hyb pathogens standard hospital expression from testing Seq ultra-fast sequencing. detect supercharged could visualize the Hyb & the an or we to RNA rapid needs, a one parallel, the also simple were of susceptibility Seq. counting of system pathogen using creating used work technologies nCounter general of collaborators of selected our workflow for for & DNA a Seq. antibiotic to analyze genome & of and In Researchers Massachusetts work presentation digital their could and on existing demonstrating sequencing the a oral up We approach & in open ability Hyb significant This like time field data new believe rapidly & applications short

from The including fungi. researchers and bacteria, and Medical use identify pathogens study viruses, second at rapidly Hyb to accurately Center & Seq Cornell across Weill kingdoms

be & major Advances at QX AGBT Conference or Technology on and of the next Biology Hyb Our Seq Genome update in year. will in next

quarter and the third to our Now the over the year. Tom financial guidance of our turn for results update the call review I'll to for balance

Tom Bailey

have the results I'm our opportunity Brad. third review and XXXX pleased year. Thanks the quarter outlook to our to of operating for for updated the

of representing For XXXX service quarter product year-over-year growth the and of a $XX.X was million XX%. revenue third

Our primarily compared by for XX% growth of represents consumable revenue service third $XX.X quarter nine consumable for for sales DSP million access total our $X.X revenue demand the of quarter brings driven technology and and product total service GeoMX instrument the $XX.X million included year. and million. the sales strong in and XXXX It first to third last nine at result Product sales. program. months This months performance as to first was

end Consumable QX well to than increasing Prosigna sales, for third for Our million over were year revenue Revenue revenue $XX.X year. TAP Life million million $XX.X Prosigna XX% an and installed of was consumable pull-through revenue more the as compared the last bringing time total $X.X year-to-date our above DSP, from with was more XX% instrument science over growth grew by our XX% $X.X GeoMx, continued systems. base includes recognized science million. than growth is benefited quarter high from for over to prior collaborations driven revenue of at million increase base annualized Service consumables at guidance. reflecting $X.X demand XX% the sales. as collaboration also Life of growth. year-over-year consumables excluding this panel $XX,XXX of installed

and received Gross $X.X was on XX% For recognized our of cash our with collaboration collaborators collaborators quarter cash revenue the Lam received The and revenue from quarter product from service to bringing $XX.X partnership received Research we Research. XX% which derived for program during with year-to-date million, of supported from the third margin was of cash million. the in over majority million & was Lam consistent quarter from prior Investment program Hyb third in the XXXX. was R&D approximately million expense year. increase received payments increase the Seq of $XX.X by for was our an quarter. $X the accounted bulk and the of

would QX by in expenses portion to its have ‘XX than expenses Excluding R&D R&D compared been our Hyb from less the to our of in is expense year funded now new relate as that DSP away Lam, and significant commercial prior lower development remaining a a a our platform Seq investment GeoMx year launch. &

for of trade Stock short-term certain we the expenses and $XX based Our are million lower than X% with third to SG&A expense for shows, of activity ended the quarter cash, quarter expense primarily timing $XX.X lower the equivalents as The fees. related XXXX. investments. compared the The decrease the lower and current of in quarter related $X.X quarter, quarter cash was costs. was and million a to million to planned marketing and compensation legal personnel accounting expenses modestly and of

revenue we and $X revenue a outlook by full again raising for as result are to our outlook, we financial and our third the product year. our product million for quarter Turning service guidance exceeded approximately the service

increase XX% For compared expect representing range This through this now growth XX% range result service panel our an pull consumable XXXX year sales customer revenue and XX%. product annual August $XX and to to to of our consumables a as products rate the revenue to strong revised nCounter team. product dedicated our $XX full by is for XX% of past million million demand annual in of offered we our service and by driven outlook of

GeoMx, also DSP, revenue primarily supported Our TAP. service raised driven growth is by our and outlook by

prior expect margin to gross to in to with be of the our XX% XX% range consistent guidance. continue We

of million expect collaboration related previous Seq sequential spending of and be the the our to $XX We in scale is approximately fully the Seq & a recognized reagent received and Hyb chemistry. to cash efforts significant relative Hyb $XX result QX in following R&D This reduction of update revenue to in million. approximately guidance & set QX ‘XX expected

estimate of total expect includes million guidance. collaborations to $XXX and revenue our $XXX We our with which from previous million revenue consistent

our for As detailed prior guidance narrowing operating in our press are release we expenses. range

We share the are loss the per provided. updates also year pursuant loss reflecting modest net for to guidance GAAP for net changes our just updating and

expected loss impact equity net guidance July. GAAP Our per in share shares additional the the also of completed offering in issued reflects

would pull-through be QX $XX XXXX sequentially in over the approximately growth the million line For system. with compared revenue Annualized our guidance to of of the steady instrument of revenue fourth $XX,XXX we continue for the to to the to quarter as expected expect $XX million consumables service which consistent of is entirety $XX,XXX range X% guidance near at to expected product and revenue end X% our to of last of with year. per quarters of is instrument or represent prior XXXX. couple top

to program. demand show expect in We access continue will from revenue consistent strong technology service benefiting DSP growth a year-over-year QX GeoMx for

Seq of the We spend earlier. $X expect as & Hyb reflecting R&D pacing approximately from revenue in to updates QX collaborations described million recognized planned during

million $XX tour million. of we $XX expect Finally, approximately to new

the quarter approximately exited in cash we million third with sheet, balance to the hand. $XX on Turning

after we plans fund We business Research receive expect resources which close balance financing at $XXX new Lam from recently Thank our and business. existing and and and cash over offers equity in this $XX addition, the Brad $XX beyond DSP which ultimately including provide with significantly approximately to million our facility call. million dollar us with transaction million our today draw the lender you time believe term CRG dented our to cash GeoMx related to loan $X Gross terms together and announced capital necessary repaying for now back launch. funding your interest and at of more additional our initial In our million. your forma and loan fund transaction potential better old to we replaces proceeds in recently pro million the facility the of it totaled NanoString to fees XXXX we and I'll the turn conclude the completed puts old $XXX

Brad Gray

outlook is In our is business strong summary, Tom. positive. on Thanks and growth our footing core

oncology successfully expanding and strong and therapeutic Our leadership into areas. new we remains are

XXXX As GeoMx a our and We're we our products ahead open to of ability for see raise profile. adoption expect supplemented that call your questions. to markets execute. optimistic about We confident nCounter we look continued for we launch the company's by DSP and in now to like growth the

Operator

you. Instructions] comes with Brennan question UBS. [Operator Dan at Thank And your first from

open. is line Your

Dan Brennan

quarter. Congrats the Thanks you. guys. the for good Thank Great. on the question

So the can I your and you define a with side elaborate then obviously with the oncology can more existing little wanted there. this little like? a bit on panel quarter seeing consumable you what start particularly maybe a you're business looks to what on CAR-T opportunity just bit panels strong Maybe

Brad Gray

Dan. Thanks Sure.

grown So for oncology panel immune-oncology therapy. majority last for profiling predictor and year-on-year of PanCancer remains our and because us. revenue be signature biopharma the a from which panel demonstrated some as been both includes our IO number PanCancer have by coming panelists the our quite academic The grew appealed the in two for one product newer the panel over from researchers accounted has to XX% year time panel strength of a of core it's which over it and companies. helpful tumor Merck area immune In XXX response XXX developed biopharma selling inflammation our particular IO companies has demand with is by robustly inhibitor checkpoint both the

it That's really biopharma do our complex through extract challenge therapeutic. the high a to of same panel process and how the though monitor coalition final then test of CAR-T the a into of of fourth continue all make CAR-T that the out will outset. odd that XXX time. it a process, offers the person, of who hope make companies in characterize use to CAR-T we material the hope consumer contribution process manufacture products can cancer seen leading built you we've with installed to we will back re-infuse into goes really quarter they and which manufacturing So continues that companies. bio The grow. to markers other grappling as make same shipping patient. and systematically do it go and that material this The is put applications control in when happen was type obviously of panel a [material] expression it that therapy line nCounter before flex expect into over a academic is the this year to will right grow it developing other will gene some we quality therapy expect can identify living the the could run long that organizations manufacturing What are the with processes as their samples product in that to with the process from research manufacturing manufacturing centers are help an important a is begin we we from very What don't then incorporate reproducible processing which way much profiling in base

Dan Brennan

higher When towards to consistently you likely drive and or that an pull that customers, mean, think eventually XX XX kind or of ‘XX beyond you instruments it forward trend exceed is way kind as simultaneously you in panels I drive an of proliferation NOI your inflection so of it to of we the and panel it XX is with about guess, can a look the to rate to immunology, there's is pull do to XX increasing breadth those is So about of think think you right given I about your you upward about flat way impact neurology, have? from expect rate? that growth instrument through CAR-T, such going the asking we this think to inflect long

Brad Gray

think new placement Dan, consumable that we guided The through benefit placement is way year. this range demonstrated instrument we have continued consumable new of with neurology primarily now I areas in terms that in a flat panels autoimmune about XX as like areas pull not nCounter sustain will seeing. purchase and guided introduction of expected and in XX current to to year we oncology business the maybe just right and us instrument this it the and our in expect help outside CAR-T will pull-through drive we're instrument oncology both and pace meaningfully rate, that disease like that above motivating will

Dan Brennan

on Okay, let one and then DSP. just me

the So will thoughts share and when lot extensive you about about XXXX? give trial You of a that's ongoing. some initial of amount color

about your needs related when of So for ‘XX the first manufacturing how look ship sitting how a what's of thinking we for like of out no to that the left kind is up is and in inventory on ahead of go bass is still in-house to terms to to will that just scale process much be done it's be and I lot before these still you we be out running lot get to should you've mean work fully got inherent scale ready commercial you. in there to of it or up Thanks. up product a transition

Dan Brennan

Yes.

we'll launch modeling I have of you recall expect launch SPRINT XXXX expectations What the our SPRINT full-year can when sold of on formally may guiding look have about around we kind DSP the for XX we call launched revenue in that think quarters. is obviously lot units to that for the the about did, mid-year first provide always initial said as February. first wrap-up do and typically our we we we in in like So quarter as be couple a the

more as next on able call. clear we'll and year be willing for we'll when systems to provide to DSP having the expectations with sold XX a DSP be get recognized lot we time more XX would February that with know and bottom line goes and systems our So a the current guidance if revenue

through going since of changes that the The I been for instrumentation terms to August. think The step we remains paces be any their feel put instruments, the complete launch. before shape. us us which combination big user of off development a with the is of is because power part of and the DSP a flex expression before gene really design now part being material instruments and debugging efforts. what ongoing proteomic launch in the rate high In limiting full beta a the that's commercial and of there's the of to house in the images data we're don't important in system the the very in then platform good software They're visualization right our there's of have really experience coming for focus

activity could wrong first beta it's any But those the about to to customers to smooth not that in making In sure rate addition, engineering time throttle quarters new new customer unlike an for to to user it'll first smoke at important are to and possible. of want there reagents DSP of set is be that launch we very process This us go are anything install as that when from used support as so we excellent order make to that experiences customers ensure the anything and early this in have of get and that we platform to customers experiences can tremendous now the positive. full commercial our train before, the and levels QX a sure one. in experience instruments working in out for great we'll systems so really software complete we'll stage. scale to provide be be and can working is placement the major that It's up the or

Dan Brennan

you. Thank Great.

Operator

you. Thank

from question comes Schulte Baird. next Catherine from Your

Your open. line is

Catherine Schulte

the questions Hey and congrats quarter. guys a thanks on nice for

a that DSP up? are and First initial what quickly capacity limitations they're to manufacturing ramp perspective on we how from expect your should

Brad Gray

I the think of to it's of sufficient capacity the number to described I have units analogous that manufacturing Yes launch. sort provide we instrument SPRINT just

to process service supporting going I more that platform to installation on we're first the answer be customers be technology our people alluded new how service question capacity absolutely a their to constraint that so on experiences our we're We about Dan's for how and the side. different on many and how want later initiates install is we reasonably many this lot more teams, the access can service that we in early have get trial provide be the to time guidance a run a reasonably get we how need, still the year. on think white hard instruments to about to quarter beta we to an be and As we February what we think we'll certain many want accomplish first that we program, say and and glove the want we'll and I that sure month that, going need thinking next and ourselves when organize program the they that the they of can is to at

Catherine Schulte

Okay you any about more a about and the think bit should a How talk and then we can unfolding potential timelines phase for collaboration. this MacroGenics move into three?

Brad Gray

for our help by patients otherwise. development a studies XXX either gene of product. really are or finding the of of expression some sense focused Sure, initially the early retrospectively the and the can analyzing MacroGenics development MGDXXX the diagnostic that companion We're that IO hope on collaboration selecting in not [biopharama] the panel a our is expertise moving using that with unlike of patterns our collaborations towards accelerate other biopharma we instead

we'll be focusing we will at XX development. So really it before to the that samples escalation that we content cohorts determine diagnostic and require XX position used companion dose next on further for dose in testing could a from be in least months, and be those months expansion really have

Catherine Schulte

got feedback at DSP give conference? some Great level and comments ANP the you from one just the can did you How you're on last qualitative me compared on expecting? interest then to what

Brad Gray

one and the stopped number take system a of a exceeded has from AMP DSP almost in at and Rimm level At Dr. people had photographs every we meeting experience our of listening of interest had that's leaders being The the there key to Yes. expectations the opportunity. the we booth DSP by dinner cancer presenting which Bernie we number Immunotherapy theater about corporate was Providence and good at SITC an have experience again sent who's at really out display of were as on week with on from of this of people have Fox week there, opinion speak, packed that workshop Society me hear attended studies of to SITC another on yesterday present the a at the David coming people absolutely I six Healthcare for. look turnout to expect DSP team we this presented a some his

category as I in have going I of position up think the products the leadership is DSP opportunity genomic of a clear we establish is and has that leader of the no and yet a technologies proteomic a spatial interest most here. think category, based So one level real exciting and that to lot, category imaging

Catherine Schulte

you. Thank Great.

Operator

and I'm I'd to questions for the showing further Thank to at call Farrell turn remarks. over closing back like no this Doug you time.

Doug Farrell

all today. us Thank you joining for

you miss any and XXX-XXX-XXXX half caller's be or portion please will available the and hour request did so dial call in replay use the If there access next a XXXXXXX. code of a we the

XXX-XXX-XXXX If again you're the conference please an dial thanks international and XXXXXXX for caller us code joining today. again

Operator

today's you day. disconnect. the program gentlemen thank and all wonderful and in conclude participating Everyone does have for This you may Ladies conference. a

NanoString (NSTG) 10 Nov 182018 Q3 Earnings call transcript