On July 29, 2015 Foundation Medicine, Inc. (NASDAQ:FMI) reported financial and operating results for its second quarter ended June 30, 2015 (Press release, Foundation Medicine, JUL 29, 2015, View Source [SID:1234506738]). Highlights for the quarter included:

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8,846 clinical tests reported in the second quarter, 50% year-over-year growth;

Second quarter revenue of $22.5 million, 55% year-over-year growth;

Second quarter revenue from biopharmaceutical customers of $10.0 million, 97% year-over-year growth;

FoundationCORE molecular information knowledgebase grew to over 50,000 patient cases;

Updated full-year 2015 revenue guidance to a range of $85 to $95 million, and full-year 2015 reported clinical test volumes to a range of 35,000 to 38,000.

Foundation Medicine reported total revenue of $22.5 million in the second quarter of 2015, compared to $14.5 million in the second quarter of 2014 and $19.3 million in the first quarter of 2015. Revenue from clinical testing in the second quarter of 2015 was $12.4 million, compared to $9.4 million in the second quarter of 2014 and $11.1 million in the first quarter of 2015.

The company reported 8,846 clinical tests in the second quarter of 2015, a 50% increase from the same quarter last year and a 13% increase from this year’s first quarter. This number includes 7,809 FoundationOne tests and 1,037 FoundationOne Heme tests. The results of an additional 1,451 tests were also reported to biopharmaceutical customers in this year’s second quarter.

Revenue from biopharmaceutical customers grew to $10.0 million in the second quarter, a 97% increase from the same quarter last year and an increase of 22% from the first quarter of 2015. This growth underscores the diversification of revenue generating activities provided to the company’s biopharmaceutical customers across clinical trial support, molecular information data access, and companion diagnostic development support.

"Foundation Medicine delivered 16% quarter-over-quarter revenue growth demonstrating that our commercial team continues to leverage a portfolio of differentiated products for both our clinical and biopharmaceutical clients and partners," said Michael Pellini, M.D., chief executive officer of Foundation Medicine. "That said, our clinical volume growth was affected by slower than anticipated progress towards obtaining a local coverage determination from our regional Medicare Administrative Contractor (MAC) and by some competitive noise in the market. As a result, we are adjusting guidance for clinical volume and annual revenues. We remain focused on building and investing in this business to deliver growth and value creation by integrating our molecular information products into routine patient care."

The company’s cancer knowledgebase, FoundationCORE, grew to more than 50,000 clinical cases. FoundationCORE is a unique asset and critical component of the value that Foundation Medicine delivers to both 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 second quarter of 2015 were approximately $46.6 million, but included a one-time expense of $14.4 million in advisor fees related to the closing of our strategic collaboration with Roche, compared with $21.6 million for the second quarter of 2014. Net loss was approximately $33.1 million in the second quarter of 2015, or a $0.98 loss per share. Adjusted for this same one-time advisor fee expense in the second quarter, net loss was approximately $18.7 million. At June 30, 2015, the company held $264 million in cash and cash equivalents.

Recent Enterprise Highlights

Foundation Medicine announced the initiation of a large, multi-center clinical study to validate and support the anticipated commercial launch of its novel, circulating tumor DNA (ctDNA) assay to advance precision medicine in oncology.

HealthChoice Oklahoma and one additional regional payer in Southern California each enacted broad, pan-cancer coverage policies for FoundationOne and FoundationOne Heme for their members.

Palmetto GBA, a Medicare Administrative Contractor (MAC) with expertise in molecular diagnostics, issued a final local coverage determination on July 6th for comprehensive genomic profiling in a subset of patients with non-small cell lung cancer.
In June, Foundation Medicine and IMS Health announced a collaboration to advance the understanding and effectiveness of precision medicine for treating cancer. The collaboration associates claims, electronic medical records and biomarker data at the anonymized patient level with FoundationCORE to improve cancer care by better connecting patients to the right targeted therapies at the right time.

In June, Foundation Medicine and its collaborators presented 22 oral and poster presentations at the 2015 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting, including promising clinical outcomes underscoring the importance of integrating comprehensive genomic profiling into clinical oncology care.

In May, new clinical data presented at the 3rd Biennial Pediatric Neuro-Oncology Basic and Translational Research Conference demonstrated that FoundationOne identified a high frequency of clinically relevant genomic alterations in pediatric gliomas that informed treatment decisions and, in some, cases, resulted in promising outcomes.

2015 Outlook

The company expects to report between 35,000 and 38,000 clinical tests in 2015.

The company anticipates 2015 revenue will be in the range of $85 to $95 million.

The company expects operating expenses in the range of $128 to $138 million, plus an additional $14.4 million one-time advisor fee expense recognized in the second quarter related to 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.