Stock Update (NASDAQ:NSPH): Nanosphere, Inc. Announces Record Q1 2015 Results, New and Expanded Debt Facility, $4.4 Million at the Market Registered Direct Offering

Nanosphere, Inc. (NASDAQ:NSPH), a company enhancing medicine through targeted molecular diagnostics, today reported financial and operating results for the first quarter ended March 31, 2015 and other recent developments.

Nanosphere achieved record revenues for the first quarter of $4.6 million compared to $3.3 million in the first quarter 2014. This 41% year-over-year revenue growth was driven by U.S. based microbiology laboratories’ continued adoption of our Gram Positive (BCGP) and Gram Negative (BCGN) blood culture tests, which grew more than 100% over the first quarter of 2014.

“We are pleased to report continued adoption of our Verigene system and its expanding menu though our U.S. customer base. In addition, we have made significant progress on our next generation Verigene system. This system will utilize our proven chemistry in a best-in-class fully automated design that will optimize footprint and user interface and increase throughput. This new system will ensure and extend our leadership position as the microbiology market continues to convert to rapid, accurate and clinically actionable panels that can improve both patient outcomes and healthcare economics,” said Michael McGarrity, Nanosphere’s president and chief executive officer. “The remainder of 2015 will be spent advancing the significant progress made to date and preparing for clinical trials targeted to commence by year-end.”

Gross margins increased to 46% in the first quarter of 2015 from 38% in the first quarter of 2014, driven by consumable cost reductions, coupled with lower royalty expenses due to the expiration of certain agreements. Sales, general and administrative expenses in the first quarter of 2015 decreased to $5.2 million from $5.6 million in the prior year period, and research and development expenses decreased to $3.6 million in the first quarter of 2015, as compared to $5.2 million in the first quarter of 2014 due to reduced staffing and clinical trial expenses.

Net loss for the first three months of 2015 was $7.5 million, as compared to $10.0 million in the first quarter of 2014.

Cash at March 31, 2015 was $14.2 million. Cash used in operations for the quarter ended March 31, 2015 was $5.6 million, as compared to $8.4 million for the same period in 2014 due to a lower net operating loss.

Nanosphere also announced today that it has entered into a definitive agreement with a dedicated healthcare institutional investor in a registered direct offering for $4,400,000 of convertible preferred stock (which are convertible into a total of 1,168,659 shares of common stock at a conversion price of $3.765) and warrants to purchase shares of common stock exercisable for up to 1,168,659 additional shares of common stock, in the aggregate. The warrants have an exercise price of $3.65 per share and are exercisable for 5 years commencing six months from the closing date. The preferred stock is perpetual and does not have a required dividend right or voting rights and has a liquidation preference of $0.01 per share. The preferred stock has a limitation on conversion into common stock to preclude the holder from acquiring beneficial ownership of more than 4.99% of our outstanding common stock, which may be increased to 9.99% in certain circumstances.

The Company intends to use the proceeds of the offering for general corporate purposes and working capital.

The closing of the offering is expected to take place on or about May 14, 2015, subject to the satisfaction of customary closing conditions.

H.C. Wainwright & Co., LLC acted as the exclusive placement agent in connection with this offering. (Original Source)

Shares of Nanosphere closed today at $4.29, up $0.65 or 17.86%. NSPH has a 1-year high of $35.60 and a 1-year low of $3.50. The stock’s 50-day moving average is $4.28 and its 200-day moving average is $6.24.

On the ratings front, Nanosphere has been the subject of a number of recent research reports. In a report issued on April 13, Roth Capital analyst Chris Lewis reiterated a Buy rating on NSPH, with a price target of $6.50, which implies an upside of 51.5% from current levels. Separately, on February 12, Piper Jaffray’s William Quirk downgraded the stock to Hold and has a price target of $6.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Chris Lewis and William Quirk have a total average return of 2.2% and 7.2% respectively. Lewis has a success rate of 48.7% and is ranked #1635 out of 3596 analysts, while Quirk has a success rate of 59.1% and is ranked #1325.

Nanosphere Inc develops, manufactures and markets molecular diagnostics platform, the Verigene System, which enables sensitive genomic and protein testing on a single platform.

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