NanoString Technologies Releases Operating Results for First Quarter of 2021

SEATTLE–(BUSINESS WIRE)–NanoString Technologies, Inc. (NASDAQ:NSTG), a leading provider of life science tools for discovery and translational research, today reported financial results for the first quarter ended March 31, 2021.

First Quarter Financial Highlights

  • Product and service revenue of $31.4 million, 28% year-over-year growth
  • Instrument revenue of $11.7 million, 19% year-over-year growth. Instrument revenue includes $7.0 million of GeoMx® Digital Spatial Profiler (DSP) instrument revenue
  • Consumables revenue of $16.0 million, 39% year-over-year growth. Consumables revenue includes $2.7 million GeoMx® DSP consumables revenue
  • Service revenue of $3.7 million, 17% year-over-year growth
  • Cash, cash equivalents and short-term investments balance of $409.9 million

“Spatial Biology is in a period of tremendous growth, revolutionizing research in fields from oncology to COVID-19. During Q1, NanoString extended its lead in this exciting market, with strong demand for our GeoMx DSP, a record number of new peer-reviewed publications, and growing excitement generated by our Spatial Molecular Imager,” said Brad Gray, president and CEO of NanoString. “The launch of our GeoMx Whole Transcriptome Atlas is off to a great start, and is now driving more than 60% of new projects in our GeoMx Technology Access Program. Meanwhile, our nCounter business showed continued durability, with steady demand for new instruments continuing more than a decade after the platform’s introduction.”

GeoMx DSP

  • GeoMx Installed Base: Grew installed base to approximately 160 GeoMx® DSP Systems at March 31, 2021, as compared to approximately 55 at March 31, 2020
  • GeoMx Whole Transcriptome Atlas: Began commercial shipments of the GeoMx Whole Transcriptome Atlas in the first quarter
  • GeoMx Technology Access Program (TAP): Generated approximately 95 new GeoMx TAP orders in the first quarter, of which over 60% utilized the GeoMx Whole Transcriptome Atlas
  • GeoMx Publications: Increased cumulative peer-reviewed publications to 47 as of March 31, 2021, with a record 12 new publications during the quarter
  • 2021 American Association of Cancer Research (AACR) Conference: Highlighted an emerging body of spatial biology research that included eight abstracts that utilized GeoMx DSP, four of which were presented by investigators from the GeoMx Breast Cancer Consortium
  • Illumina Accelerator and Doloromics GeoMx Collaboration: Announced a collaboration with Illumina Accelerator and Doloromics that will leverage high-resolution spatial profiling for the development of a new generation of pain therapeutics

nCounter

  • nCounter Installed Base: Grew installed base to approximately 995 nCounter® Analysis Systems at March 31, 2021, as compared to approximately 865 systems at March 31, 2020
  • nCounter Publications: Surpassed 4,300 cumulative peer-reviewed publications utilizing nCounter technology at March 31, 2021
  • 2021 AACR Conference: Highlighted the use of the nCounter Analysis System in approximately 45 scientific abstracts

Corporate

  • Appointment of New Board Members: Expanded the Board of Directors with the appointments of Dana Rollison, Ph.D., and Janet George. Dr. Rollison is vice president, chief data officer and associate center director of Data Science for the Moffit Cancer Center. Ms. George is group vice president of Autonomous Enterprise, Advanced Analytics with Machine Learning, and Artificial Intelligence for Oracle

First Quarter Financial Results

We have elected to present selected non-GAAP, or adjusted, financial measures, including Adjusted EBITDA. These adjusted financial measures are calculated excluding certain items that may make it more challenging to compare our GAAP operating results across periods. Such items may include collaboration revenue, stock-based compensation, depreciation and amortization, or one-time charges such as transaction related fees and expenses or restructuring charges and severance costs. A reconciliation of adjusted financial measures to the nearest comparable GAAP financial measure can be found in the notes and table at the end of this press release.

(dollars in thousands)

Three Months Ended March 31,

 

GAAP

 

Non-GAAP Adjusted

 

2021

 

2020

 

2021

 

2020

Product and service revenue

$

31,394

 

 

$

24,496

 

 

$

31,394

 

 

$

24,496

 

Collaboration revenue

223

 

 

2,109

 

 

 

 

 

Total revenue

31,617

 

 

26,605

 

 

31,394

 

 

24,496

 

Cost of product and service revenue

15,623

 

 

11,017

 

 

15,027

 

 

10,588

 

Research and development

15,063

 

 

17,502

 

 

12,573

 

 

14,839

 

Selling, general and administrative

26,799

 

 

25,721

 

 

20,958

 

 

22,468

 

Adjusted EBITDA

N / A

 

 

N / A

 

 

$

(17,164

)

 

$

(23,399

)

 

 

 

 

 

 

 

 

Non-operating expense, net

(1,844

)

 

(10,989

)

 

(1,844

)

 

(3,846

)

Net loss

$

(27,712

)

 

$

(38,624

)

 

$

(19,008

)

 

$

(27,245

)

Supplemental Information

As a supplement to the table above, we have posted to the investor relations section of our website, at www.nanostring.com, supplemental financial data that includes our adjusted financial measures as compared to the nearest comparable GAAP financial measures, for the first quarter of 2021 and for each quarter of and the full year of 2020.

Conference Call

Management will host a conference call today beginning at 1:30 pm PT / 4:30 pm ET to discuss these results and answer questions. Investors and other interested parties can register for the call in advance by visiting http://www.directeventreg.com/registration/event/9493413. After registering, an email confirmation will be sent, including dial-in details and unique conference call codes for entry. Registration is open throughout the call, but to ensure connection for the full call, registration in advance is recommended. The link to the webcast and audio replay will be made available at the Investor Relations website: www.nanostring.com. A replay of the call will be available beginning May 10, 2021 at 7:30pm ET through midnight ET on May 17, 2021. To access the replay, dial (800) 585-8367 or (416) 621-4642 and reference Conference ID: 9493413. The webcast will also be available on our website for one year following the completion of the call.

Non-GAAP, or Adjusted, Financial Information

We believe that the presentation of non-GAAP, or adjusted, financial information provides important supplemental information to management and investors regarding financial and business trends relating to our financial condition and results of operations. Reconciliation of adjusted financial measures to the most directly comparable financial result as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. A reconciliation of adjusted guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding certain expenses that may be incurred in the future. For further information regarding why we believe that these adjusted measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to “Notes Regarding Non-GAAP Financial Information” at the end of this press release.

About NanoString Technologies, Inc.

NanoString Technologies is a leading provider of life science tools for discovery and translational research. Our 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. Our GeoMx® Digital Spatial Profiler enables highly-multiplexed spatial profiling of RNA and protein targets in a variety of sample types. Our technology platforms are designed to facilitate a wide variety of basic research and translational medicine applications, including biomarker discovery and validation. 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 expectations for demand for our products and growth in our business, future revenue growth, the impact of new products and expansion into new markets, the growth trajectory of our nCounter and GeoMx franchises, the anticipated launch of new products and technology and our anticipated GAAP and non-GAAP 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; the extent and duration of the impact of the COVID-19 pandemic and adverse conditions in the general domestic and global economic markets; 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 and product development; as well as the other risks set forth in our 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 logo, NanoString, NanoString Technologies, GeoMx, and nCounter are trademarks or registered trademarks of NanoString Technologies, Inc., in the United States and/or other countries.

NANOSTRING TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

Three Months Ended March 31,

 

2021

 

2020

Revenue:

 

 

 

Instruments

$

11,745

 

 

$

9,834

 

Consumables

15,963

 

 

11,500

 

Services

3,686

 

 

3,162

 

Total product and service revenue

31,394

 

 

24,496

 

Collaboration

223

 

 

2,109

 

Total revenue

31,617

 

 

26,605

 

Costs and expenses:

 

 

 

Cost of product and service revenue

15,623

 

 

11,017

 

Research and development

15,063

 

 

17,502

 

Selling, general and administrative

26,799

 

 

25,721

 

Total costs and expenses (a) (b)

57,485

 

 

54,240

 

Loss from operations

(25,868

)

 

(27,635

)

Other income (expense):

 

 

 

Interest income

118

 

 

704

 

Interest expense

(1,870

)

 

(2,883

)

Other expense, net

(32

)

 

(1,607

)

Loss on extinguishment of debt and termination of revolving loan facility

 

 

(7,143

)

Total other expense, net

(1,784

)

 

(10,929

)

Net loss before provision for income taxes

(27,652

)

 

(38,564

)

Provision for income tax

(60

)

 

(60

)

Net loss

$

(27,712

)

 

$

(38,624

)

Net loss per share, basic and diluted

$

(0.62

)

 

$

(1.04

)

Weighted average shares used in computing basic and diluted net loss per share

44,669

 

 

36,999

 

 

 

 

 

(a) Includes $7.4 million and $4.3 million of stock-based compensation expense for the three months ended March 31, 2021 and 2020, respectively.

(b) Includes $1.4 million and $1.2 million of depreciation and amortization expense for the three months ended March 31, 2021 and 2020, respectively.

NANOSTRING TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

March 31,

 

December 31,

 

2021

 

2020

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

396,502

 

 

$

411,848

 

Short-term investments

13,416

 

 

28,883

 

Accounts receivable, net

33,183

 

 

31,100

 

Inventory, net

24,434

 

 

22,959

 

Prepaid expenses and other

6,910

 

 

4,190

 

Total current assets

474,445

 

 

498,980

 

Property and equipment, net

21,730

 

 

20,828

 

Operating lease right-of-use assets

20,703

 

 

21,492

 

Other assets

3,680

 

 

2,895

 

Total assets

$

520,558

 

 

$

544,195

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

5,811

 

 

$

5,313

 

Accrued liabilities

3,913

 

 

4,970

 

Accrued compensation and other employee benefits

11,476

 

 

15,262

 

Customer deposits

1,332

 

 

1,631

 

Deferred revenue, current portion

6,714

 

 

5,610

 

Operating lease liabilities, current portion

4,393

 

 

4,313

 

Total current liabilities

33,639

 

 

37,099

 

Deferred revenue, net of current portion

1,984

 

 

1,843

 

Long-term debt, net

224,070

 

 

172,703

 

Operating lease liabilities, net of current portion

24,473

 

 

25,602

 

Total liabilities

284,166

 

 

237,247

 

Total stockholders’ equity

236,392

 

 

306,948

 

Total liabilities and stockholders’ equity

$

520,558

 

 

$

544,195

 

Notes Regarding Non-GAAP Financial Information. In addition to our results reported in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe certain non-GAAP, or adjusted, measures are useful in evaluating our operating performance. We use adjusted financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that adjusted financial measures, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, adjusted financial information has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In particular, other companies, including companies in our industry, may calculate similarly titled non-GAAP or adjusted measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our adjusted financial measures as tools for comparison. A reconciliation is provided below for adjusted financial measures to the most directly comparable financial measure stated in accordance with U.S. GAAP. Investors are cautioned that there are a number of limitations associated with the use of non-GAAP, or adjusted, financial measures as analytical tools. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these adjusted financial measures to their most directly comparable U.S. GAAP financial measure, and not to rely on any single financial measure to evaluate our business.

Expenses excluded from non-GAAP, or adjusted, cost of product and service revenue, research and development expense and selling, general and administrative expense. We exclude stock-based compensation expense and depreciation and amortization expense, which are non-cash expenses, from certain of our adjusted financial measures because we believe that excluding such items provides meaningful supplemental information regarding operational performance. We exclude reorganization and restructuring costs and certain expenses related to collaborations from certain of our adjusted financial measures because such expenses have no direct correlation to the continuing operation of our business as such expenses are non-recurring or non-operating in nature, and therefore we believe excluding these items provides meaningful supplemental information regarding operational performance.

Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure defined as GAAP net loss adjusted for collaboration revenue, stock-based compensation expense, depreciation and amortization, net interest expense, other non-operating expense or income, provision for income tax and other special items as determined by management, including loss on extinguishment of debt, reorganization and restructuring costs and certain expenses related to collaborations.

Reconciliation of Adjusted EBITDA ($ in thousands)

 

 

Three Months Ended March 31,

 

 

2021

 

2020

Net loss – GAAP

 

$

(27,712

)

 

$

(38,624

)

Collaboration revenue

 

(223

)

 

(2,109

)

Stock-based compensation1

 

7,416

 

 

4,303

 

Depreciation and amortization2

 

1,441

 

 

1,213

 

Interest expense, net

 

1,752

 

 

2,179

 

Other expense, net

 

32

 

 

1,607

 

Loss on extinguishment of debt and termination of revolving loan facility

 

 

 

7,143

 

Provision for income tax

 

60

 

 

60

 

Reorganization and restructuring charges3

 

 

 

629

 

Certain collaboration agreement expenses4

 

70

 

 

200

 

Adjusted EBITDA – non-GAAP

 

$

(17,164

)

 

$

(23,399

)

1 For the three months ended March 31, 2021, our cost of product and service revenue, research and development expenses and selling, general and administrative expenses included stock-based compensation expense of $0.4 million, $1.4 million and $5.6 million, respectively. For the three months ended March 31, 2020, our cost of product and service revenue, research and development expenses and selling, general and administrative expenses included stock-based compensation expense of $0.2 million, $0.9 million and $3.2 million, respectively.

2 For the three months ended March 31, 2021, our cost of product and service revenue, research and development expenses and selling, general and administrative expenses included depreciation and amortization expense of $0.2 million, $1.0 million and $0.2 million, respectively. For the three months ended March 31, 2020, our cost of product and service revenue, research and development expenses and selling, general and administrative expenses included depreciation and amortization expense of $0.2 million, $0.9 million and $0.1 million, respectively.

3 For the three months ended March 31, 2020, our research and development expenses included reorganization and restructuring charges of $0.6 million.

4 For the three months ended March 31, 2021, our research and development expenses included expenses related to certain of our collaboration agreements of $0.1 million. For the three months ended March 31, 2020, our research and development expenses included expenses related to certain of our collaboration agreements of $0.2 million.

Contacts

Doug Farrell

Vice President, Investor Relations & Corporate Communications

dfarrell@nanostring.com
Phone: 206-602-1768