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GenMark Q2 Revenues Rise 27 Percent

NEW YORK (GenomeWeb) – GenMark Diagnostics reported after the close of the market on Monday that its second quarter revenues increased 27 percent year over year.

For the three months ended June 30, the company posted $6.6 million in revenues, up from $5.2 million in the year-ago quarter, and above the average analyst estimate of $4.8 million. GenMark had preannounced in July its second quarter revenues.

Revenues from the company's base business, excluding revenues attributable to former customer National Molecular Testing, were up 71 percent year over year, the company said. NMT had been GenMark's largest customer, but in June 2013 the firm inked a multiyear collaboration with GenMark competitor Luminex, raising questions about the GenMark and NMT relationship going forward. NMT subsequently filed for Chapter 11 bankruptcy protection.

Product revenues were up to $6.5 million in Q2 2014, compared to $5.1 million in Q2 2013, while licensing and other revenues declined to $61,000 from $77,000. The company placed 31 net new XT-8 analyzers in Q2, bringing the total installed base to 475, all in end-user laboratories in the US.

On a conference call following the release of the financial results, GenMark CFO Scott Mendel said the firm is on track to place 125 new XT-8 instruments for full-year 2014, which would bring the total placements to 538 systems.

Consumables revenues increased 35 percent year over year to $6.2 million from $4.6 million, and on a base-business basis, consumables revenues were up 92 percent, GenMark said.

"Continued strong demand for our proprietary eSensor detection technology drove robust revenue growth in the quarter," GenMark President and CEO Hany Massarany said in a statement.

On the call, he provided an update on the firm's ePlex sample-to-answer platform, saying development of the instrument has been completed. GenMark and its partners are now in the final stages of developing test cartridges for the instrument, as well as lead assays panels for blood culture identification — both gram-positive and gram-negative — and for respiratory pathogens.

The ePlex, formerly called NexGen, had been originally slated for completion in April. Then the timing was pushed back to the end of the summer. On the call Massarany said that the delay results from the complexity of the system's technology.

"There are no substantial technical hurdles here that are remaining," he said. "We are combining multiple very sophisticated technologies, including digital microfluidics, eSensor detection, fluid storage and delivery … and really our focus has been on integration and optimization of this multiplex system. And frankly it has taken a little longer than we expected."

Rather than rushing the system to market, GenMark is choosing to make "the best system that we can," Massarany said.

The company's net loss for the quarter was $11.2 million, or $.27 per share, compared to a net loss of $8 million, or $.25 per share, a year ago, beating the consensus Wall Street estimate of $.29 per share.

GenMark's R&D costs increased 62 percent year over year to $8.1 million from $5 million. It increased its SG&A spending 27 percent to $6.5 million from $5.1 million.

The firm ended the second quarter with $26.8 million in cash and cash equivalents, and $62.6 million in marketable securities.

On the call Massarany said that GenMark is raising its full-year 2014 revenue guidance to a new figure of about $28 million from $25 million on growth in the XT-8 business.