On November 6, 2023 NanoString Technologies, Inc. (NASDAQ:NSTG), a leading provider of life science tools for discovery and translational research, reported financial results for the third quarter ended September 30, 2023 (Press release, NanoString Technologies, NOV 6, 2023, View Source [SID1234637058]). The Company also announced it had reached agreement with holders to exchange approximately $216 million, or 94%, principal amount of its Convertible Notes for new Senior Secured Notes due September 1, 2026 and common stock warrants.

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"The last few months have been extraordinarily productive for our team. During the third quarter, we delivered record revenue while reducing our cash burn by nearly 50% sequentially," said Brad Gray, President and CEO of NanoString. "In the early weeks of Q4, we took critical steps to transform our financial profile through a reorganization that helps support our march to breakeven, and sets us up to achieve our goal of a first full year of profitability in 2025."

"We were pleased to complete the exchange transaction with the largest holders of our Convertible Notes, with these major investors showing their conviction in our business opportunity," said Thomas Bailey, Chief Financial Officer of NanoString. "The longer-dated notes provide the window needed for us to achieve profitability prior to maturity, which we believe will support improved terms and availability of any new financing that may be required. In addition to the maturity date extension, updated terms allow for payment-in-kind interest for the first year as we work to optimize our cash burn and profitability profile."

Third Quarter Financial Highlights

•Total revenue of $48.1 million
•Spatial biology revenue of $28.9 million
•nCounter revenue, inclusive of all service and other revenue, of $19.2 million
•Cash, cash equivalents and short-term investments balance of $97.1 million as of September 30, 2023
Spatial Biology
•Accelerated CosMx SMI shipments during Q3, resulting in Q3 spatial biology instrument revenue growth of 350% year-over-year
•Successfully defended sizeable CosMx instrument order book, fulfilling or retaining approximately 95% of cumulative orders as of September 30, 2023
•Recorded spatial biology consumables revenue growth of 70% year-over-year, and approximately $70,000 of annualized pull-through driven by a steady GeoMx consumables pull-through over a larger installed base supplemented by growing shipments of CosMx consumables
•Announced the launch of the GeoMx IO Proteome Atlas (IPA) assay, which enables spatial profiling of more than 500 immuno-oncology relevant protein targets from Formalin-Fixed, Paraffin-Embedded (FFPE) tissue sections with commercial availability expected in Q4 2023
•Grew total spatial biology system installed base to approximately 510 systems, an increase of approximately 55% year-over-year
•Total peer-reviewed publications featuring our spatial biology platforms were approximately 340 as of September 30, 2023, representing an increase of approximately 180 publications in the last 12 months
nCounter
•Recorded nCounter revenue, inclusive of all service and other revenue, of $19.2 million and approximately $37,000 of annualized pull-through
•Total installed base of our nCounter platforms of approximately 1,140, an increase of approximately 3% year-over-year
•Total peer-reviewed publications featuring nCounter were approximately 7,315 as of September 30, 2023, representing an increase of approximately 1,215 publications in the last 12 months
Financial
•Completed exchange with holders of approximately $216 million principal amount of the Company’s Convertible Senior Notes due March 1, 2025 for new Senior Secured Notes, with key updated terms as follows:
◦Maturity extended to September 1, 2026
◦Interest rate of 6.95% per year, with interest payable quarterly
◦Interest payable in-kind in the form of additional notes in the first year, at the Company’s election
◦Issuance of warrants to purchase 16 million shares of common stock, with an exercise price of $1.69, replacing approximately 4.5 million shares of common stock potentially issuable under the old Convertible Senior Notes
◦Secured by substantially all of the assets of the Company
2023 Outlook
Management updated its financial outlook for 2023 with results now expected as follows:
•Total revenue of $175 to $180 million, as compared to the previous range of $175 to $185 million
◦Spatial biology revenue of $96 to $100 million, as compared to the previous range of $100 to $105 million
◦nCounter revenue, inclusive of all service and other revenue, of $79 to $80 million, as compared to the previous range of $75 to $80 million
•Adjusted EBITDA loss of approximately $80 to $85 million, as compared to the previous range of $65 to $75 million

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 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 tables at the end of this press release.