On July 30, 2019 Veracyte, Inc. (Nasdaq: VCYT) reported financial results for the second quarter ended June 30, 2019 and provided an update on recent business highlights (Press release, Veracyte, JUL 30, 2019, View Source [SID1234537912]). For the second quarter of 2019, revenue was $30.1 million, an increase of 32% over the second quarter of 2018. Net cash used in operating activities in the second quarter of 2019 was $2.5 million, an improvement of 21% compared with the second quarter of 2018.
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"Our strong second quarter performance was fueled by the growth of our products in three clinical indications, biopharmaceutical services revenue from milestone achievements and operational and financial discipline," said Bonnie Anderson, chairman and chief executive officer of Veracyte. "In addition, we completed the transition of all three of our classifiers to our RNA whole-transcriptome sequencing platform with the launch of our Percepta Genomic Sequencing Classifier, positioning the company to advance our pipeline to address additional questions across the clinical care continuum."
Second Quarter 2019 Financial Results
For the second quarter of 2019 as compared with the second quarter of 2018:
Revenue was $30.1 million, an increase of 32%; excluding $3.5 million of biopharmaceutical services revenue, revenue was $26.7 million, an increase of 20%.
Gross Margin was 71%, an increase of seven percentage points; excluding biopharmaceutical services revenue, gross margin was 67%, an increase of four percentage points.
Operating Expenses, Excluding Cost of Revenuewere $24.5 million, an increase of 20%.
Net Loss was $2.5 million, an improvement of 60%.
Net Loss Per Share was $0.05, an improvement of 72%.
Net Cash Used in Operating Activities was $2.5 million, an improvement of 21%.
Cash and Cash Equivalents was $192.6 million at June 30, 2019.
For the six-month period ended June 30, 2019, as compared with the prior year period of 2018:
Revenue was $59.7 million, an increase of 39%; excluding $7.6 million of biopharmaceutical services revenue, revenue was $52.1 million, an increase of 23%.
Gross Margin was 71%, an increase of nine percentage points; excluding biopharmaceutical services revenue, gross margin was 67%, an increase of five percentage points.
Operating Expenses, Excluding Cost of Revenue were $47.5 million, an increase of 14%.
Net Loss was $4.4 million, an improvement of 71%.
Net Loss Per Share was $0.10, an improvement of 78%.
Net Cash Used in Operating Activities was $3.5 million, an improvement of 67%.
Second Quarter 2019 and Recent Business Highlights
Commercial Growth and Reimbursement Expansion:
Launched the "next-generation" Percepta Genomic Sequencing Classifier (GSC) in June 2019, ahead of the company’s expectations, completing the transition of all of the company’s classifiers to its RNA whole-transcriptome sequencing platform.
Grew total genomic test volume in the second quarter of 2019 to 9,663, an increase of 26% over the second quarter of 2018.
Increased Percepta classifier test volume to 744 tests and revenue to more than $1.0 million, representing a 142% and 159% increase, respectively, compared with the second quarter of 2018.
Ramped Envisia Genomic Classifier test volume as well as the number of institutions ordering the test by more than 100% sequentially from the first quarter of 2019 to 130 tests and 76 sites, respectively.
Grew Afirma classifier test volume to 8,789 tests, an increase of 19% over the second quarter of 2018.
Achieved in-network status with four Blue Cross Blue Shield plans in New Jersey, North Carolina, South Carolina and Vermont, covering nearly 8.5 million medical members.
Strengthened Library of Clinical Evidence:
Unveiled clinical validation data for the Percepta GSC during ATS 2019, demonstrating the test’s ability to down-classify lung nodule patients to "low risk" for cancer so they may avoid unnecessary invasive procedures (NPV of 91%), while also up-classifying patients to "high risk" to help guide next steps (PPV of 65%).
Published clinical validation and utility study findings for the Envisia classifier in The Lancet Respiratory Medicine, showing that the test helps physicians distinguish idiopathic pulmonary fibrosis (IPF) from other interstitial lung diseases without the need for surgery, and that when paired with HRCT results and patient clinical history, the test provided physicians with a higher level of confidence in making an IPF diagnosis.
Positive data were presented at the 2019 ASCO (Free ASCO Whitepaper) Annual Meeting demonstrating the ability of the Afirma Xpression Atlas (XA) to identify gene mutations in medullary thyroid cancer that may guide targeted treatment decisions for patients concurrent with diagnosis by the Afirma GSC.
Independent clinical utility study for the Afirma GSC was published in Thyroid showing that use of the test enabled Ohio State University researchers to identify significantly more benign thyroid nodules and therefore meaningfully decrease surgeries compared to the original test.
Publication in Cancer Cytopathology detailed how new RNA sequencing-based genomic testing, the technology behind the Afirma GSC and Afirma XA, is helping to reduce unnecessary surgeries in thyroid cancer diagnosis and inform on surgery and treatment decision-making using the same minimally invasive patient sample.
Financing and Debt Facility
Issued and sold 6,325,000 shares of common stock in May 2019 in a registered public offering, including the underwriters’ exercise in full of their option to purchase an additional 825,000 shares, at a price to the public of $23.25 per share. Net proceeds from the offering were approximately $137.8 million.
Used $12.4 million of offering proceeds to reduce the company’s principal debt balance from $12.5 million at the end of the first quarter of 2019 to $0.1 million at the end of the second quarter of 2019.
Updated 2019 Financial Outlook
Veracyte is increasing its 2019 annual revenue guidance to a range of $119 million to $122 million from its previous guidance range of $117 million to $121 million. The company is also revising its full-year 2019 guidance for net cash used in operating activities to a range of $2 million to $4 million from its prior guidance of $4 million to $6 million. Veracyte continues to expect to achieve operating cash flow breakeven before the end of this year.
Conference Call and Webcast Details
Veracyte will host a conference call and webcast to discuss its financial results and provide a general business update at 5:00 p.m. Eastern time today.
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
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.:
9769085