NEW YORK (GenomeWeb News) – CombiMatrix reported after the close of the market on Thursday that its third-quarter revenues fell 41 percent due to reduced funding from government contracts year over year and a sharp drop in product sales.
The Mukilteo, Wash.-based firm generated total revenues of $1 million for the three-month period ended Sept. 30, compared to revenues of $1.7 million for the third quarter of 2007. Its government contracts revenue declined to $343,000 from $627,000, while its product sales fell to $140,000 from $828,000, and its services revenues increased sharply to $466,000 from $164,000. Revenues from collaboration agreements were flat at $62,000.
CombiMatrix President and CEO Amit Kumar said that the firm’s revenue was “impacted by a slowdown in capital equipment sales as well as a modest decrease in DoD utilization.” He added that the lower revenue from the Department of Defense was due to the completion of two contracts — though the firm announced in July that it had received a new contract worth $923,000 to develop a handheld biochemical detection system.
Kumar noted during the call that one of the firm’s four salespeople left the company at the beginning of the third quarter, which had a negative effect on product sales. He said since that time the company has added three salespeople, bringing its total sales staff to six people, who are focused primarily on diagnostics sales.
“The core focus of our business, diagnostic services, continued to grow and was 226 percent higher than the third quarter of 2007 and 17 percent higher than the second quarter of 2008,” Kumar said in a statement. “We continue to launch new products and plan to meet our commitment of at least one diagnostic product launch per quarter throughout 2007 and 2008.”
The firm plans to launch a prostate cancer assay during the last quarter of this year, he noted.
CombiMatrix posted a third-quarter net loss of $4.2 million, or $.70 per share, up around 26 percent from a loss of $3.4 million, or $.57 per share, for the third quarter of 2007.
The firm’s R&D expenses dropped around 32 percent to $1.3 million from $1.9 million, while its SG&A spending increased around 5 percent to $2.3 million from $2.2 million.
CombiMatrix finished the quarter with $11.1 million in cash, cash equivalents, and available-for-sale investments. During the summer, the company bolstered its balance sheet by raising $10 million in a convertible debt financing.
CombiMatrix is awaiting a payment of around $36 million from a judgment in its favor from US District Court for the Central District of California. That judgment came in May and ordered the National Union Fire Insurance Company to pay CombiMatrix that amount for refusing to defend and indemnify CombiMatrix under its director and officer’s insurance policy.
National Union has since appealed the judgment. Kumar noted during the call that the judgment would continue to collect interest until a final judgment on the appeal. He said that he believes CombiMatrix has enough cash, based on its current burn rate, to sufficiently finance its operations for the next four to five quarters, during which time it hopes to receive the payment from National Union.
“Although the capital markets and global economy are in turmoil, we are extremely fortunate that we do not have a need for any immediate financing,” said Kumar.