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GenMark's Q2 Revenues Grow 35 Percent

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Molecular diagnostic firm GenMark Diagnostics today reported revenue growth of 35 percent year over year for the second quarter as product revenue bounced 66 percent.

Total revenues rose to $901,000 for the three months ended June 30, compared to $665,000 a year ago. Product revenues grew to $866,000 during the quarter from $523,000.

In a statement, the Carlsbad, Calif.-based company said that total revenue growth resulted from an increase in the number of its systems in the field, growth in the company's test menu, and a "significant" increase in the number of tests sold. Reagent revenues grew 104 percent year over year to $825,000, though instrument and other revenues slid to $185,000 due to lower partnering contract revenue, GenMark said.

During the quarter, the company placed 17 analyzers, bringing the total number of placements in 2011 to 37, the company's CEO Hany Massarany said on a conference call following the earnings release. The company has a total of 119 system installations.

Massarany also provided an update on GenMark's tests under development and said that it will launch its Hepatitis C genotyping test this month, following a recently completed beta trial. At its price point, the test addresses a $50 million market in the US, and a $100 million market globally, he said.

GenMark is currently in discussions with the US Food and Drug Administration about a clinical trial for its respiratory viral panel for the detection of 21 different upper respiratory viruses, which the company had originally planned on filing with FDA in the second quarter and to launch in time for the 2011-2012 flu season.

But based on "substantial" delays from competitors developing flu tests, GenMark has determined that the agency is demanding more data from companies submitting molecular tests for 510(k) clearance, and as a result GenMark has introduced additional steps into its IVD test regulatory submissions to include reviews by external regulatory consultants "to ensure there are no gaps in our submission."

For the RVP test, it was determined additional testing was needed around uncommon viral subtypes in order to meet the FDA sample size requirements. The company is testing additional banked samples, Massarany said, and a submission to FDA is anticipated to be delayed by "several months."

GenMark expects the submission to be completed before the end of 2011, he added, but it is unclear that it will launch in time for the 2011-2012 flu season. Because most of the company's planned RVP revenue for 2011 comes from research-based customers and is independent of FDA approval, "we do not expect the RVP submission delay to have a material impact on our revenue forecast for 2011," Massarany said.

Massarany reiterated revenue guidance for 2011 of $5.1 million. He also said that for each of the third and fourth quarters, between 15 and 20 system installations are expected.

Meanwhile, the company continues its discussions with FDA on the regulatory pathway for GenMark's 2C19 genotyping test for identifying appropriate patients for the anticoagulant Plavix (clopidogrel). The company remains hopeful that it can submit the test to FDA during the first half of 2012.

GenMark also is exploring a 510(k) submission, "which will enable us to launch a 2C19 test with a broader panel of 11 genotypes rather than just the two specified by FDA for PMA clearance," Massarany said.

Lastly, GenMark is moving to launch its KRAS test for colorectal cancer "as early as possible" in 2012.

The company is also developing its eSensor next-generation sample-to-answer platform and successfully completed technology feasibility "for integrating extraction and amplification steps with our eSensor detection system on a single sample-to-answer cartridge" Massarany said.

With its development collaborators, the company has "built detailed work plans for completing the system" in time to launch it in the second half of 2013, he added.

In the second quarter, the firm's R&D spending climbed to $2.3million, up 28 percent from $1.8 million a year ago, while SG&A spending decreased 8 percent to $1.2 million from $1.3 million.

GenMark's net loss for the quarter increased to $5.6 million, or $.39 per share, up from $5.1 million, or $.60 per share, a year ago.

GenMark ended the quarter with $43.5 million in cash and cash equivalents.

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