On November 3, 2015 Foundation Medicine, Inc. (NASDAQ:FMI) reported financial and operating results for its third quarter ended September 30, 2015 (Press release, Foundation Medicine, NOV 3, 2015, View Source [SID:1234507926]). Highlights for the quarter included:

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Third quarter revenue of $25.4 million, 54% year-over-year growth;
Third quarter revenue from biopharmaceutical customers of $11.7 million, 75% year-over-year growth;
Third quarter revenue from clinical testing of $13.7 million, 40% year-over-year growth;
8,012 clinical tests reported in the third quarter, 25% year-over-year growth;
Broadening molecular information solutions with the launch of GeneKit, a genomic solutions portal for pathologists, and expanding FoundationCORE to approximately 60,000 patient cases;
United Healthcare’s published medical policy for coverage of highly validated genomic profiling in patients with non-small cell lung cancer; and,

Launching the Precision Medicine Exchange Consortium(PMEC) with eight leading academic and community-based cancer centers, including The Cleveland Clinic’s Taussig Cancer Institute, Hackensack University Medical Center, and Sidney Kimmel Cancer Center at Thomas Jefferson University.

Foundation Medicine reported total revenue of $25.4 million in the third quarter of 2015, compared to $16.4 million in the third quarter of 2014 and $22.5 million in the second quarter of 2015. Revenue from clinical testing in the third quarter of 2015 was $13.7 million, compared to $9.8 million in the third quarter of 2014 and $12.4 million in the second quarter of 2015.

The company reported 8,012 clinical tests in the third quarter of 2015, a 25% increase from the same quarter last year. This number includes 7,000 FoundationOne tests and 1,012 FoundationOne Heme tests. The results of an additional 2,676 tests were also reported to biopharmaceutical customers in this year’s third quarter.

Revenue from biopharmaceutical customers grew to $11.7 million in the third quarter, a 75% increase from the same quarter last year and an increase of 17% from the second quarter of 2015. This growth underscores the diverse revenue streams generated by biopharmaceutical customers engaged with the company in clinical trial, molecular information data access, and companion diagnostic development activities.

"Foundation Medicine delivered 54% year-over-year revenue growth driven by particularly strong results from our biopharmaceutical business," said Michael Pellini, M.D., chief executive officer of Foundation Medicine. "While our third quarter clinical revenue and volume increased significantly year-over-year, these numbers also reflect that we have work to do in this nascent market. We believe we are well-positioned for continued growth over the near and long term with our fully integrated, diversified business, a growing pipeline of innovative products, a strong balance sheet and a global partner in Roche."

The company’s cancer knowledgebase, FoundationCORE, grew to approximately 60,000 clinical cases. FoundationCORE is a unique asset and critical component of the value that Foundation Medicine delivers to its biopharmaceutical and physician customers. The increasing scale and breadth of a high quality, clinically relevant oncology data set derived from the company’s analytically validated testing platform continues to enhance clinical practice and enable improved outcomes for patients.

Total operating expenses for the third quarter of 2015 were approximately $35.6 million compared with $21.9 million for the third quarter of 2014. Net loss was approximately $20.6 million in the third quarter of 2015, or a $0.60 loss per share. At September 30, 2015, the company held approximately $250 million in cash and cash equivalents.

Recent Enterprise Highlights

At the end of October, Roche Pharmaceuticals (Israel) Ltd. commenced commercial activities in support of the company’s molecular information products in oncology. Roche Israel will act as the exclusive distributor of Foundation Medicine’s products and services.

United Healthcare published a medical policy for coverage of highly validated genomic profiling in patients with non-small cell lung cancer.

In September, Foundation Medicine launched the Precision Medicine Exchange Consortium (PMEC) to advance the integration of molecular information in clinical oncology and accelerate the adoption of precision care. PMEC brings together thought leaders from academic medical centers, regional hospital systems and community oncology networks to exchange molecular information and outcomes data.

In September, Foundation Medicine expanded its molecular decision support offerings with GeneKit, a genomic solutions portal for pathologists. GeneKit easily integrates into the pathologist’s workflow and expedites and improves the interpretation, analysis and reporting of genomic data for clinical use.

In September, Foundation Medicine successfully completed the migration of its physician customers to the newest version of Interactive Cancer Explorer, FoundationICE, which also includes the PatientMatch application that was launched commercially in May 2015.

2015 Outlook

The company anticipates 2015 revenue will be in the range of $85 to $95 million.
The company expects to report between 32,000 and 33,000 clinical tests in 2015.
The company expects operating expenses in the range of $128 to $138 million, plus an additional $14.4 million one-time expense during the second quarter related to advisor fees in connection with the closing of the Roche strategic collaboration.
The company expects to launch a circulating tumor DNA (ctDNA) test for its biopharmaceutical partners by year-end, and a commercial ctDNA assay for clinical testing in 2016.