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GenMark Diagnostics' Q2 Revenues Rise 44 Percent

NEW YORK (GenomeWeb News) – GenMark Diagnostics said after the close of the market on Wednesday that revenues for its second quarter increased 44 percent year over year with strong growth in reagent and instrument revenues.

For the three months ended June 30, total revenues rose to $5.2 million from $3.6 million and beat the average Wall Street estimate of $5.1 million. The increase, GenMark said, "reflects an increase in the number of systems placed at customer sites, growth in test menus, and an increase in the number of tests sold."

Reagent revenues were up 33 percent year over year to $4.6 million from $3.5 million, while instrument and other revenues rose to $583,000 from $141,000 due mainly to instrument sales.

Product revenues, as a whole, increased to $5.1 million from $3.6 million, and licensing and other revenues improved to $77,000 from $50,000, the Carlsbad, Calif.-based company said.

GenMark placed 45 analyzers in the second quarter, bringing its total installed base to 384, all in end-user laboratories within the US market.

The firm's net loss for the quarter increased to $8.0 million, or $.25 per share, compared to a net loss of $5.6 million, or $.26 per share, a year ago. It edged out the consensus analyst estimate for a net loss of $.26 per share.

The company increased its R&D spending 67 percent year over year to $5.0 million from $3.0 million, while its SG&A spending rose 28 percent to $5.1 million from $4.0 million.

GenMark finished the quarter with $18.8 million in cash and cash equivalents.

In June, Luminex and Natural Molecular Testing entered into a multiyear collaboration and licensing deal, resulting in a comprehensive personalized medicine panel. NMT is GenMark's largest customer, responsible for an estimated 60 percent of GenMark's total revenues, and the announcement sent GenMark's shares plunging.

On a conference call following the release of the company's financial results, though, GenMark officials said that excluding NMT, GenMark's base business continues to grow at a rapid clip. In Q2 2012, $1.6 million in revenues came from GenMark's base business, excluding NMT's contributions, while in the first half of 2012, base business revenues totaled $2.9 million, GenMark CFO Richard Slansky said.

By comparison, in Q2 2013, $2.8 million in revenues came from GenMark's base business, and for H1 2013, $8.2 million of revenues came from its base business, Slansky added.

"There is significant growth in the base business without that one customer," he said.

However, the overall pharmacogenetics space is anticipated to be soft moving forward, and President and CEO Hany Massarany said that the company has reduced anticipated revenues from its pharmacogenetics business.

Citing an uncertain reimbursement landscape, Massarany said that GenMark projects "very little revenue from our largest pharmacogenetics customers in the second half of 2013 and in 2014."

Massarany also updated the company's progress in the development of its NexGen multiplex sample-to-answer platform, expected to launch in the second half of 2014.

Assay integration on the cartridge will be completed in the third quarter, and GenMark is using its RVP assay, "one of our most complex assays … as the vehicle for the integration process," he said.

Initially, the assay menu for NexGen will comprise RVP, sepsis — both gram-negative and gram-positive — gastrointestinal panel, and HCV genotyping.

The company plans to unveil an advanced prototype of the system at the Association for Molecular Pathology's annual meeting in November, Massarany said.

In morning trading on the Nasdaq, shares of GenMark were up nearly 6 percent at $9.53.