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GenMark's Q3 Revenues Nearly Double, Driven by Product Sales

NEW YORK (GenomeWeb News) – GenMark Diagnostics today announced that revenues grew 92 percent as product revenues ballooned 84 percent.

Total revenues rose to $1.3 million for the three months ended Sept. 30 from $684,000 a year ago, paced by product revenues, which grew to $1.2 million from $656,000 a year. Product sales were comprised completely of reagent sales.

The growth in total revenues, the Carlsbad, Calif.-based firm said, was due to a higher number of systems in the field, an expanded test menu, and "a significant increase" in the number of tests sold.

During the quarter, GenMark placed 22 analyzers, bringing the total installed base to 141.

Its licensing and other revenues, which include instrument revenues, increased to $110,000 from $28,000 a year ago. The rise, the company said, was due to higher partnering contract revenue.

GenMark's R&D spending increased to $1.9 million, a 12 percent uptick from $1.7 million a year ago, as the firm pumped more money into clinical trials and new product development, particularly for its Hepatitis C genotyping test, launched during the third quarter, and its respiratory viral panel.

The firm's SG&A costs rose to $3.7 million, a 32 percent increase from $2.8 million a year ago.

For the quarter, GenMark's net loss climbed to $6.3 million, or $.31 per share, from a net loss of $4.9 million, or $.42 per share, during the year-ago period. On a non-GAAP basis, loss per share was $.29 for the quarter.

On a conference call after the release of the company's earnings results President and CEO Hany Massarany said that building on its recently launched HCV genotyping test, GenMark is collaborating with experts in the field to develop additional tests for HCV subtypes as well as tests that may identify how patients respond to different treatments.

The company, he said, expects to launch other HCV tests starting next year "to round out our HCV franchise."

He also provided an update on GenMark's respiratory viral panel for the detection of 21 upper respiratory viruses. The company is completing the final phase of its expanded clinical trial for the test and is on track to submit a 510(k) application to the US Food and Drug Administration by the end of the year.

The company originally planned on filing with FDA in the second quarter and to launch in time for the 2011-2012 flu season, but during the second-quarter earnings call GenMark said it had determined that FDA would require more data from companies submitting molecular tests, based on "substantial" delays from competitors developing flu tests.

As a result, GenMark introduced additional steps into its IVD regulatory submissions to include reviews by external regulatory consultants to ensure there would be no gaps in its submission.

On today's call Massarany said that the company expects the RVP test to be cleared before next year's flu season.

He also said discussions continue with FDA about the most appropriate regulatory pathway for the firm's 2C19 genotyping test for identifying appropriate patients for the anticoagulant Plavix (clopidogrel).

Lastly, the company continues to hope to bring to market its KRAS test for colorectal cancer "as early as possible" in 2012, first as a research-use only test followed by a premarket approval submission to the FDA. GenMark would not be the first to market with a PMA for KRAS, Massarany said, "so at this stage, we're not planning to invest on a prospective clinical study with end clinical outcomes … but rather, we would do an equivalent study," to demonstrate concordance with a predicate device already with PMA clearance from the agency.

"Then we'll come to market with an equivalent product," Massarany said.

GenMark is developing its eSensor next-generation sample-to-answer-platform and has completed the technology assessment "for integrating sample preparation steps including extraction and amplification with our eSensor detection system on a single sample-to-answer cartridge," he said. The firm is finalizing deals with development partners and plans to launch the system in late 2013.

The company finished the third quarter with $31 million in cash and cash equivalents and $5 million in short-term investments. In June, it raised net proceeds of about $31.7 million through a follow-on equity offering.

In early morning trading today, shares of GenMark on the Nasdaq were down about 5 percent at $4.94.

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