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UPDATE: GenMark Q3 Revenues Rise Sharply

The story has been updated to include comments from a conference call this morning.

NEW YORK (GenomeWeb News) – GenMark Diagnostic's third-quarter revenues increased four-fold year over year, the Carlsbad, Calif.-based molecular diagnostics firm reported after the close of the market on Wednesday.

For the three months ended Sept. 30, revenues rose to $5.3 million from $1.3 million, with product revenues reaching $5.2 million, compared to $1.2 million a year ago. Licensing and other revenues fell to $62,000 from $110,000.

GenMark attributed the sharp revenue rise to an increase in the number of system placements and in the number of tests sold. Reagent revenues spiked to $5.1 million from $1.1 million, while instrument and other revenues inched up to $157,000 from $156,000, GenMark said.

The company placed 35 analyzers in the quarter, bringing the total installed base to 255, all with end-user laboratories in the US. Four of the placements in the quarter were outright sales, and through the first nine months of the year, GenMark placed 88 analyzers, President and CEO Hany Massarany said on a conference call this morning.

Reagent annuity per analyzer in the quarter increased to $93,000 from $73,000 in the second quarter, he added. The growth was driven primarily by sales to a long-term reference laboratory customer. Massarany did not identify the lab but said its main area of focus is pharmacogenomics testing.

It is not clear that sales to this customer will continue at the recently elevated levels, however, he said.

In September, GenMark received US Food and Drug Administration clearance of its eSensor Respiratory Virus Panel, and Massarany said that the company anticipates "a much bigger revenue contribution" from the test in the fourth quarter and the first quarter of 2013 as the flu season gets under way.

Additionally, the company launched the eSensor 3A4/3A5 Genotyping test during the third quarter. The test is for detecting and genotyping the 1B ,2, *3, *12, and *17 alleles of the CYP450 3A4 gene locus and the *1D, *2, *3, *3B, *6, *7, *8, and *9 alleles of the CYP450 3A5 gene locus.

The launch enables the company "to further capitalize on this emerging high volume market segment," and revenues generated by the test is anticipated to be grow significantly in future quarters as GenMark ramps up sales of the test, Massarany said.

The firm's R&D costs in the quarter more than doubled to $4.5 million from $1.9 million a year ago, as the company expanded its R&D team, increased its menu for the eSensor XT-8 molecular diagnostic system, and started development of its NexGen System, a sample-to-answer platform.

Its SG&A costs rose 8 percent to $4.0 million from $3.7 million due to the increase in revenue, headcount growth, and other corporate expenses, the company said.

GenMark's net loss for the quarter was $6.3 million, or $.20 per share, compared to a net loss of $6.3 million, or $.31 per share, a year ago. The number of shares used to calculate the net loss per share for the recently completed quarter was about 31.8 million shares, up from 20.0 million shares a year ago. In June the firm completed a public offering of 11.5 million shares of its common stock, raising $45.1 million in net proceeds.

GenMark increased its full-year 2012 revenue expectations to an "excess of $18 million" from an estimate of more than $15 million announced in June.

It finished the quarter with $53.4 million in cash and cash equivalents.

"We will continue to drive our high performance commercial execution that will see us place more than 100 new analyzers in the market place and more than triple our revenues from 2011 levels," Massarany said on the conference call. In 2011, the company posted $5 million in revenues and placed 85 analyzers.

Additionally, the company will continue its focus on further development of the NexGen platform, expanding its menu of multiplex molecular tests, and building an infrastructure to sustain expected growth in the company during the next few years, Massarany said.

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