Good day, ladies and gentlemen, and welcome to the second quarter 2014 earnings conference call. (Operator Instructions) I would now like to introduce your host for today's conference, Dr. Paul Sohmer, President and CEO. Please go ahead.
Thank you, Charlotte. Good morning, and welcome to the BG Medicine's second quarter of 2014 earnings conference call. I am joined today by Stacie Rader, our Senior Vice President of Executive Operations; Steve Hall, Chief Financial Officer; Howard Rosen, Vice President of Marketing and Sales; and Aram Adourian, Chief Scientific Officer.
I will now ask Stacie Rader to read a brief statement and then introduce Steve Hall, who will review our financial performance for the quarter. Stacie?
Good morning and thank you for joining us today. Before we begin our formal remarks, I will cover a few administrative details regarding the replay of information for today's call and forward-looking statements. Today's call will be recorded and a replay will be available on our website. The information to access the replay is available in our press release and also on the company website.
As a reminder, today's call contains forward-looking statements regarding events that involve risks and other uncertainties. The company's actual results may differ materially from those anticipated by our forward-looking statements. The risks and uncertainties are set forth and discussed in the company's most recent Annual Report on Form 10-K as well as updates to those risks and uncertainties that may be filed by the company from time to time with the Securities and Exchange Commission or otherwise made public.
With that, I will now turn the call over to Steve Hall.
Thank you, Stacie. On this morning's call, I'll provide a summary of our financial performance for the second quarter ended June 30, 2014.
Total revenues were $799,000 for the second quarter 2014 compared to $1 million for the same period in 2013. The decrease in total revenues reflected a $173,000 decrease in product revenues and a $34,000 decrease in service revenues.
The decrease in product revenues resulted from a $141,000 decline in orders from our largest clinical laboratory customers and a $90,000 decline in purchases relating to independent research studies that were partially offset by increased revenues of $58,000 from product sales to other clinical laboratory customers.
The reduction in service revenues resulted from the planned completion of the high-risk plaque initiative in 2013 and our decision to close our research facilities in 2013, as part of our initiative to streamline the operations of the company.
Operating expenses for the quarter declined by 52% or $2.7 million from the prior-year period. Operating expenses were $2.5 million for the second quarter 2014 compared to $5.2 million for the same period in 2013.
Research and development expenses decreased $544,000. The decrease was primarily attributable to closure of our research facilities, reduced professional fees, and completion of the CardioSCORE medical adjudication process.
Selling and marketing expenses decreased by $1 million. The decreased expenditures were primarily due to reductions in personnel, travel and other marketing expenses. General and administrative expenses decreased $1.1 million. This decrease was due to reductions in personnel, travel expenses and professional fees.
Net loss per share in the second quarter was reduced 67%. Net loss per share was $0.06 per share in 2014 as compared to $0.18 per share in 2013. The net loss was $2.2 million in Q2 2014 versus $4.8 million in 2013, a 55% reduction.
Operating cash burn for the quarter decreased by $2 million, a 43% decrease to $2.4 million compared to the operating cash burn of $4.2 million in the second quarter of 2013. For the six months ended June 30, 2014, net loss was $0.14 compared to $0.39 for the same period of 2013, a 64% reduction on total revenues $1.5 million in the first half of 2014 versus total revenues of $1.9 million in the first half of 2013.
Operating cash burn decreased by $3.8 million, a 43% decrease to $5 million in the first six months of 2014 compared to $8.8 million in the same period in 2013. As of June 30, 2014, we had $9.5 million in cash and our long-term debt was $5.2 million.
As to our outlook for 2014, we will provide the following update. Notwithstanding the modest revenue growth that we are achieving from the sales of our products for the majority of our clinical laboratory customers, we no longer expect our full year 2014 revenues to exceed our 2013 revenues, in light of the decrease in year-to-year revenues from our largest clinical laboratory customer and the lack of predictability of sales relating to independent research studies. Nevertheless, for the full year 2014, we continue to expect to decrease our operating cash burn as compared to 2013.
This concludes our financial review. I'll now turn the call back over to Paul Sohmer.
Thank you, Steve. Thank you, Stacie. I will focus my formal comments on galectin-3, and will be happy to answer any questions regarding other aspects of our business during the Q&A.
Here is what we've learned about the BGM galectin-3 test over the past year. The need for a simple, affordable and reliably-reimburse tool to help guide decisions, regarding where, who, and how heart failure patients and patients suffering from related post acute disorders are managed across the continued care is quite clear, and translates into strong interest in testing for galectin-3. It is a potentially powerful patient selection tool.
Early adopters among heart failure nurses, primary care physicians and cardiologists have enthusiastically integrated the BGM galectin-3 test into their management of chronic heart failure patients to identify, triage and treat patients, who are at increased risk of adverse outcomes.
Notwithstanding this interest and enthusiasm among early adopters, we believe a number of factors have thus far contributed to limiting demand and wider adoption of the test. First, despite the large body of literature that has been generated regarding galectin-3, nurses, primary care physicians and cardiologists need more practical information on how to use the results obtained with the test.
Second, in its current microtiter plate format access to testing by in large is limited to larger specialty and referenced laboratories. This in turn impacts both turnaround time and availability of test results. Third, some laboratories are deferring decisions regarding adoption of the test, until it is available in an automated format.
These three factors clearly define the critical catalyst for growth and sales of the galectin-3 test. We believe that we are making significant progress on addressing each of these issues. First, we are in the process of shifting our focus to begin setting the stage for the anticipated U.S. market introduction of galectin-3 automated testing by our partners Abbott and bioMerieux.
In collaboration with our partners, we are evaluating how best to deploy our marketing and sales resources to continue to develop the market for galectin-3 testing and help drive future sales. Obviously, the introduction of automated testing for galectin-3 will eliminate the objections related to the more labor-intensive microtiter plate testing method and will improve access to testing and turnaround time.
Second, there is now considerable experience among some of the early adopters, as to how decision is made based on BGM galectin-3 test results have impacted patient outcomes. Both independent and BGM sponsored efforts are now underway to formally collect, analyze and report outcome data from these real-world applications of the test.
Third, we are engaged in a series of clinical research studies that seek to further affirm the potential clinical utility and impact of galectin-3 testing in heart failure and related disorders. These studies are designed to assess the role of galectin-3 in heart failure, the impact of galectin-3 testing on the management of heart failure and the role of galectin-3 in other post acute disorders.
Fourth, we continue to support and promote the publication of results of clinical research studies that demonstrate the potential utility of testing for galectin-3. The results for some of these studies reflect clinical claims that are applicable today. Others define new clinical claims and indications for use that will require additional clinical studies and clearance or approval by regulatory body such as the FDA.
Recent publications have included papers that reflect the clinical, economic and analytical performance of testing for galectin-3, using the Abbott ARCHITECT Automated Platform, and the association of galectin-3 levels with sudden cardiac death in patient suffering from chronic heart failure with cardiovascular risk in the elderly with atrial fibrillation and as a potential predictor of response to cardiac resynchronization therapy.
In summary, we remain confident in the value of galectin-3. We are focused on executing to what we believe are the critical catalyst for its wider adoption and accelerated revenue growth and continue to rigorously manage our finances. Thank you.
Charlotte, this completes our formal remarks. We are now ready to take questions.
Question and Answer Session
(Operator Instructions) Our first question comes from the line of Kevin DeGeeter from Ladenburg.
Kevin DeGeeter - Ladenburg
A few questions, can you provide an update or your current thinking on the potential timeline for introduction of an automated version of galectin-3 from Abbott or from one of your other partners in the U.S.?
As I think we've said previously, the Abbott submission has been made and it is in process with FDA. So we're waiting on hearing about that clearance.
Kevin DeGeeter - Ladenburg
So as I think about that in the context of your guidance, does the guidance assume no introduction of an automated test at least or at least no commercial revenues from an automated test for 2014?
Kevin DeGeeter - Ladenburg
And I want to know a little bit more about, just how to think about the scope in potential budgeting of additional research programs to additional publications and datasets to support the clinical utility of galectin-3. And specifically, in the context of keeping relatively modest R&D spend, should we think about the majority of the studies that we may see coming out over coming months as being investigator-sponsored studies and/or additional analysis of dataset or samples collected previously by BG Medicine or do you expect to prospectively enroll additional clinical cohorts?
Actually, I think the answer to the question is all of the above. So I think there are a number of factors here. And I think we feel very comfortable that we've developed the strategy around this in which we can adequately manage our resources to support the studies. One thing that we did that we were very aggressive about is took a look at the breadth of studies that the company was doing last year, and started to focus those down to the issues that we felt were most critical in terms of clinical questions being asked about the product.
That being said, the other factor we've been able to leverage is that, given the experience now with some of our early adopters who are now collecting data has presented an opportunity for us to evaluate outcome in real world settings, taking advantage of various computational techniques to be able to determine what really was the impact on and codifying the responses we've been getting from those particular parties.
Second, I think that the kind of studies we're doing, some are independent and some studies that are being supported by us are very targeted to very specific questions that we think is the most commonly asked questions about this from a clinical perspective.
Kevin DeGeeter - Ladenburg
And then just maybe then going back to just some of the revenue aspects from your current laboratory partners. So I'm just trying to sort of square off the guidance a little bit. Specifically, a few of your competitors have also noted that or peers, I would say, have also noted there is kind of change in order patterns from some of the specialty labs in 2014. But have generally kind of characterized those as being sort of one-offs, more kind of inventory shift.
Your guidance seems to suggest something a little more fundamental, maybe a more recurring going on. Can you just comment in terms of what you're seeing out there among your partners? And whether or not you view the change in adoption trajectory being more a transient phenomenal or more reflective of long-term trend?
Well, I think, first of all, let me comment, we're being very conservative, that is how we approach this. It's pretty important for us to be able to -- we're trying to manage and harbor our resources and understand where we need to spend. So we are looking at this from a very conservative perspective. In the first quarter, we saw decline that was reported to us is attributable to the weather.
And we saw a decline here in the second quarter, which we think is related to, as we've been told, is related to introduction of efficiencies in the operation, but I think as a matter of principle, given what we have seen I think we felt that it's the most conservative approach to take the kind of guidance that we've articulated today. Hopefully, there is upside, but based on the pattern that we saw in the first two quarters, we thought that was the most rational and logical way to approach this.
Kevin DeGeeter - Ladenburg
Then maybe one more from me. Can you just comment for the outlook for CardioSCORE specifically, now that the re-adjudication is done has a decision been made as to whether there is a path to market within the context of commercializing the program at BG or is this a program that might be appropriate for business development and out-licensing? Just an update on CardioSCORE would be helpful?
So there is a fair amount of activity going on regarding CardioSCORE. So let me summarize. So as you stated, we completed the adjudication. That was completed. And I think it's probably worthwhile noting that the prevalence of cardiovascular events identified in the BioImage study, which is the basis for this, that cohort is broadly in line, what would be expected in the U.S.-based epidemiological cohort.
This had real significance we think for two aspects. One in terms of really clarifying, defining CardioSCORE, but in a moment I'll suggest it has implications for some of the other things that we're doing. So as we look at CardioSCORE, we're looking at it in terms of the U.S., as well as in Europe. And here in the U.S., we're still working on the strategy. We actually have a strategy that we're developing regarding a submission regarding cardiovascular risk, obviously, initially initiated because of CardioSCORE.
In fact, we're looking at this as a broader opportunity for the company. And that we're working on now, and we're developing. We obviously have concerns about reimbursements of multi-analyte algorithmic assay, if you're in the U.S. and other sort of regulatory aspects about that.
In Europe, what we have done is we have revised the package insert to reflect the epidemiologic studies that have been performed specifically in Europe. So that one can compare the results of CardioSCORE versus the outcome, sort of, predicted by European scores. We think this is a big step forward, and I think it further articulates a potential product here.
We have actually been engaged in exploring opportunities to commercialize, to monetize, to license the product. I can't give you the specific what those might be right now, but there has been a fair amount of activity around that. The third aspect of this that should not be forgotten is the impact on BioImage, which is we believe an extremely important asset for the company, having a validated by direction of the FDA.
The outcomes in this study, it creates an opportunity for us to apply BioImage, not only to develop other products, but to use it for other kinds of evaluation going forward. And we look forward to talking about this in the future about how we expect to leverage the value of BioImage to develop our business going forward.
And at this time, I'm not showing any further questions.
Well, thank you all for your participation this morning. Your ongoing interest and support is obviously greatly appreciated. And we look forward to updating you on our progress. Thank you.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone have a great day.
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