
NanoString Pre-Releases Positive 3Q23 Results Showing Accelerating Spatial Biology Revenue and Announces Restructuring; Focus Still on Freedom to Operate
NanoString Technologies, a technology provider in life science tools sector specializing in discovery and translational research, has released preliminary financial results above expectations in the 3Q23. The company expects total revenue in the third quarter of over $48 million representing 63% year-on-year growth, surpassing the upper end of the Q3 guidance range ($45-$47) and consensus forecasts of $46 million. The quarter saw an acceleration in spatial biology revenue in the quarter with noted strong instrument placements with total instrument revenue up 348% year-over-year for the CosMx SMI instrument. The company also noted that it maintained 95% of orders in its book following the European Unified Patent Court ruling.
Source: NSTG Financials
NanoString also announced that it has initiated a strategic reorganization targeting its research and development (R&D) and manufacturing operations. This restructuring aims to enhance the company’s profitability by streamlining its operations and optimizing resource allocation. As a result of this reorganization, NanoString anticipates annual expense reductions exceeding $15 million (110 positions eliminated). Importantly, in the third quarter NanoString noted that it had decreased its cash burn from 2Q23 levels to approximately ($20M) compared to ($37M) last quarter. Cash has become an increasing investor concern with cash balances declining from $349M at the end of 2021 to $118M last quarter.
While the revenue performance in the quarter is clearly positive, and the Company is taking necessary steps to mitigate its cash burn, the focus of investors will still clearly be on the question of freedom to operate in the high growth spatial biology segment after the company announced the European Unified Patent Court’s (UPC) preliminary injunction against its CosMx™ Spatial Molecular Imager (SMI) products for RNA detection in its ongoing patent dispute with 10x Genomics and Harvard. The preliminary injunction, which applies immediately in 17 European Union Member States, and NanoString has announced its intention to appeal this decision in the UPC Court of Appeal in Luxembourg. Litigation is also still pending in the U.S. in the U.S. District Court for the District of Delaware with a trial currently set for June 2024.