NEW YORK (GenomeWeb News) – GenMark Diagnostics said after the close of the market Monday that it has lowered its annual revenue guidance to approximately $30 million from its previous expectation of $35 million.
The updated guidance comes a week after GenMark's single largest customer, Natural Molecular Testing, entered into a multiyear collaboration and licensing deal with Luminex related to the development and launch of a personalized medicine panel. During the first quarter NMT-associated revenues accounted for an estimated 63 percent of GenMark's total revenues.
Last week's announcement caused GenMark's shares to plummet, though later in the week GenMark CEO Hany Massarany said that NMT has reassured the firm that the Luminex deal is independent of its alliance with GenMark, and NMT plans to continue using GenMark's platform, as well as Luminex's xMAP platform, for its work.
"As previously communicated, we remained prudently cautious regarding the future revenue contribution from the pharmacogenomics sector, including our single largest customer," Massarany said in a statement. "In light of the recent developments which introduced additional uncertainty regarding this customer, we have taken a more conservative outlook and reduced our revenue expectations for the remainder of the year."
Even with the lowered guidance, GenMark expects to post year-over-year revenue growth of about 50 percent.
Massarany noted on a conference call after the announcement that GenMark had expected NMT's contribution to the firm's revenues to decline over the next few quarters, and it now expects that revenue contribution to account for a percentage in the low 30s at the end of this year. He added that GenMark at this time isn't providing more specific details.
He also said that the NMT deal with Luminex and the launch of the panel wasn't the only reason for the lowered guidance. "There are uncertainties in relation to the pharmacogenomics sector in general," said Massarany. "We talked about trends in reimbursement that have actually put pressure on pricing and volume."
In Monday trade on the Nasdaq, shares of GenMark closed down 8 percent at $10.97. The stock feel an additional 5 percent to $10.40 in Tuesday morning trade.
"[T]he reduction in guidance is obviously disappointing news and the stock will likely continue to trade off while the market digests the news," Oppenheimer analyst Brian Weinstein said in a note published this morning. "Looking ahead, as the uncertainty around the NMTC relationship begins to clear, we expect the discussion will again turn to the longer-term story of the NexGen instrument and the potential for that product to transform the GenMark business beginning in 2015."
The NexGen system will feature fully integrated and automated nucleic acid extraction and amplification, as well as the firm's eSensor detection technology, and is expected to enable GenMark to expand its technology footprint further into the hospital and reference laboratory market. The system is expected to launch next year.