What happened
Shares of NanoString Technologies (NSTG -17.91%) were down more than 16% Thursday morning and were down as much as 28.3% earlier in the day after the life sciences company lost a patent ruling in Germany. The stock is down more than 11% so far this year.
So what
NanoString makes instruments and services to profile genes and proteins from tissue samples. The biotech company lost a patent court fight to 10x Genomics (TXG 3.52%) that forces NanoString to quit selling its CosMx Spatial Molecular Imager instruments and CosMx reagents for RNA detection in Germany. 10x Genomics is also planning on seeking injunctions against NanoString's selling of the CosMx SMI and the CosMX SMI RNA reagents wherever they are sold, including the United States. NanoString said it would appeal the decision.
It's important to note that the ruling applies only to the CosMx's use to profile genes, not to the instrument's detection of proteins. NanoString said it will challenge 10x Genomics' patent's validity through a parallel nullity action with the German Federal Patent Court, but a decision regarding that won't come until after a hearing scheduled for May 2024.
Now what
It's a big blow to NanoString as its CosMx Spatial Molecular Imager instruments were mentioned as driving increased revenue in the company's first-quarter report. In the first quarter, the company reported revenue of $35.8 million, up 15.2% year over year, led by increased CosMx shipments, which drove 110% growth in spatial instrument revenue compared to the same quarter last year. The company lost $41.2 million in the quarter, compared to a loss of $39.5 million in the first quarter of 2022.
NanoString recently increased guidance to say it expects annual revenue of $175 million to $185 million, up from a previous range of $170 million to $180 million. However, that was based on anticipated increased sales of CosMx Spatial Molecular Imager instruments and those sales may now be in jeopardy, depending on the outcome of the company's appeal.
