NanoString Technologies got started in the diagnostics business in Europe about six months ago, and now it’s gotten the go-ahead from regulators in the U.S.
The Seattle-based company (NASDAQ: NSTG) said today it has been cleared by the FDA to market its Prosigna test in the U.S. The test is designed to provide doctors and patients a prognostic score that estimates the chance that a woman with breast cancer will suffer a recurrence in the next 10 years. The NanoString test, which is done on its own instrument and with special chemical reagents, provides a digital readout on 50 genes that are implicated in the growth and spread of breast cancer.
NanoString said today it expects to install the first of its nCounter instruments with customers in certified U.S. labs before the end of the year, before making the tools more broadly available in the first quarter of 2014. Getting U.S. approval means NanoString will be in position to compete more directly with Redwood City, CA-based Genomic Health (NASDAQ: GHDX), which generated more than $235 million in sales last year from its Oncotype Dx test, which looks at a panel of 20 genes to assess the risk of breast cancer recurrence.
Winning the FDA clearance is “a key milestone for NanoString and is an important step forward in the treatment of breast cancer,” NanoString CEO Brad Gray said in a statement.
The clearance puts NanoString on track with what it promised investors earlier this year who bought into its initial public offering of stock. NanoString told investors in the leadup to the IPO that it hoped to launch the Prosigna test in the first quarter of 2014. In its first quarterly report as a public company this summer, NanoString said it placed three of its nCounter systems with leading medical centers in Europe, following market introduction in February.
The diagnostic market push is still a small part of NanoString’s business today, but it has the potential to be the dominant revenue driver in the future. NanoString has forecasted that it will generate $28.5 million to $30 million in revenue this year from its research-based customers, and about $1 million to $1.5 million from those using the tools for diagnostic purposes, according to Tycho Peterson, an analyst with JP Morgan. Peterson didn’t offer a 2014 sales forecast for NanoString in his most recent note to clients on Aug. 6.
NanoString plans to discuss the FDA approval and U.S. launch of Prosigna in greater detail on a conference call with investors at 8:30 am Eastern time/5:30 am Pacific tomorrow.