NEW YORK (GenomeWeb) – GenMark Diagnostics reported after the close of the market on Tuesday that its first quarter revenues rose 9 percent thanks to strong sales of its XT-8 molecular diagnostics system.
For the three months ended March 31, the molecular diagnostics firm reported revenues of $11.1 million, up from $10.1 million a year ago, and beating the consensus Wall Street estimate of $10.7 million.
Revenues from product sales were $11.0 million, with licensing and other revenues rounding out the total.
"Our commercial team drove another quarter of strong XT-8 results in spite of a light flu season," President and CEO Hany Massarany said in a statement. "Furthermore, as a result of our focused efforts over the past couple of months, we were able to identify the main root cause of ePlex manufacturing variability and we believe we've now put in place appropriate measures to rectify this problem. We have resumed production-level manufacturing and rigorous testing of the ePlex Respiratory Pathogen panel, and we are on track to achieve CE mark by the end of this quarter."
On a conference call with analysts, Massarany gave additional details on the company's efforts to solve the ePlex system's variability issues, a problem that became evident in February when the firm started manufacturing the system. GenMark focused on refitting every step of the manufacturing process from raw materials to quality control, and found that the main cause of the variability was an outsourced reagent GenMark had bought. The firm has put measures in place to fix this problem, and also made small tweaks along the way to optimize the rest of the manufacturing process.
Founder and Senior Vice President of Research and Development Jon Faiz Kayyem further added that GenMark is working with its current reagent supplier as well as suppliers of other similar products to determine why this custom reagent caused the problems that it did, and to test other reagents. He emphasized, however, that the variability issues were not a result of a design issue or internal manufacturing problems.
GenMark anticipates it will complete the analytical studies and documentation required to apply for a CE mark by the end of the quarter or before, and plans to launch the product in Europe soon thereafter, Massarany added. The firm also plans to initiate US IVD studies for the ePlex, and will submit it to the US Food and Drug Administration by the end of the third quarter or the beginning of the fourth.
Further, Massarany told analysts that the company's symposium at the European Congress of Clinical Microbiology and Infectious Diseases meeting in Amsterdam in April was well attended. He believes the ePlex has "significant traction" with customers and views hospitals — many of which have yet to move to a multiplex sample-to-answer system — as a significant opportunity.
The company's net loss widened to $13.0 million, or $.30 per share, from $9.9 million, or $.24 per share, a year ago, and missed analysts' average estimate for a loss of $.29.
Its R&D costs rose 40 percent to $12.3 million from $8.8 million in Q1 2015, and its SG&A costs fell 4 percent to $7.1 million from $7.4 million. CFO Scott Mendel told analysts that the increase in R&D costs was directly related to the company's efforts in getting the ePlex system ready for CE marking. Those costs should decline in ongoing quarters, he added.
GenMark ended the quarter with $27.9 million in cash and cash equivalents.
For 2016, Mendel said, the company is reiterating its previous guidance for revenues of between $47 million and $51 million. Analysts expect revenues of $47.9 million for the year.