Nanosphere Reports In-Line

Nanosphere 4th Quarter Earnings Results
 
Nanosphere, Inc. (NSPH - Snapshot Report) reported financial results for the 4th quarter and full-year 2008 following the market close on February 26, 2009. Revenue and EPS were $312,760 and ($0.43), inline with our estimate of $308,000 and ($0.41) (Street estimate $380,000 and -$0.42).

Product revenue, consisting of system rentals/sales as well as cartridge sales, accounted for all of the revenue in the quarter with government grants and contracts providing no revenue. Cartridge utilization was below the company’s previous expectations due to softness in the warfarin test market, which was partially offset by higher utilization for the hypercoagulation test. The company was able to add 9 new customers during the 4th quarter, bringing its current installed base to 50 customers.

Revenue and EPS for the full-year were $1.367 million and ($1.67). Product revenue of $1.021 million accounted for 75% of total revenue, with government grants and contracts accounting for the remaining 25%. The company exited the year with $75.4 million in cash and equivalents. Cash used in operating activities was $7.83 million for the quarter and $31.97 million for the full-year. Capital expenditures were $2.73 million in 2008.

We do not expect the cash-burn rate to increase materially in 2009 and continue to believe the company’s current cash balance should be sufficient to fund operations and amortize the credit facility for at least the next two years.

The company also provided product and pipeline updates during the 4th quarter earnings call. Nanosphere currently has 4 products under FDA review (cystic fibrosis assay, infectious disease assay, HFE assay and the Verigene SP system) and recently initiated clinical trials for its cardiac troponin assay.

We expect the Verigene SP system (Verigene II) and the cystic fibrosis and infectious disease assays to launch in 2009 and provide the company with significant revenue growth relative to 2008. The HFE assay requires a longer FDA review period and could launch in late 2009 or 2010. For 2009, we look for revenue to grow to $6.47 million and forecast EPS of ($1.72), down from ($1.67) in 2008 as marketing expenses increase to support new product launches.