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CombiMatrix Posts Decline in Q2 Revenues; Seeking Options for Business

NEW YORK (GenomeWeb News) – CombiMatrix reported after the close of the market Wednesday that its second-quarter revenues declined around 43 percent, which the firm said was due to "non-recurring events."

The Mukilteo, Wash.-based life science tools and molecular diagnostics firm also said that it is seeking options for the company, including a potential acquisition or partnership.

CombiMatrix reported revenues of $1.2 million for the three-month period ended June 30, compared to revenues of $2.1 million for the second quarter of 2008. The revenues fell far short of analysts' consensus estimate of $1.9 million for the quarter.

Its revenue from government contracts fell sharply to $291,000 from $968,000 year over year, while its product revenue declined to $300,000 from $623,000, and its revenue from services grew to $582,000 from $414,000.

"While we demonstrated strong growth of our diagnostic lab business year-over-year, we are disappointed with our quarter-over-quarter decline in revenues," Amit Kumar, president and CEO of CombiMatrix, said in a statement. "This decline was driven primarily by non-recurring events including a short delay in the initiation of a funded, 200-patient prostate cancer study that is now expected to be completed by the end of 2009."

He also said that the company was unable to perform tests for residents of the State of New York because it did not hold a CLIA license for the state. "New York informed us that it was no longer acceptable to offer our tests under the exemption and that we needed state licensure," said Kumar. "We have applied for the license and hope to receive approval shortly."

CombiMatrix posted a net loss of $4.6 million, or $.65 per share, for the quarter, up 39 percent from a net loss of $3.3 million, or $.54 per share.

Its R&D spending increased to $1.3 million from $913,000 year over year, and its SG&A expenses climbed to $2.9 million from $2.4 million.

CombiMatrix finished the quarter with $11 million in cash, cash equivalents, and available-for-sale investments.

Kumar added in the statement that CombiMatrix will engage an investment bank to help the firm "unlock shareholder value," with an announcement expected soon.

"While we have had discussions with some companies that have expressed interest in acquiring or partnering with our company or certain portions of our company, we seek to now develop a formal process for evaluating those options," said Kumar. "We feel that this is an opportune time for us to begin this process and aggressively seek to create shareholder value."