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CombiMatrix Q4 Revenues Grow 25 Percent, Loss Widens

The story has been updated to include comments from the company's earnings conference call.

NEW YORK (GenomeWeb News) – CombiMatrix today said that revenues in the fourth quarter rose 25 percent year over year as revenues from core prenatal testing markets spiked 161 percent.

For the three months ended December 31, 2012, the Irvine, Calif.-based firm saw revenues increase to $1.5 million from $1.2 million a year ago.

CombiMatrix said in 2012 resources would be directed to the prenatal test market while oncology efforts would be de-emphasized. The firm reported today that prenatal testing revenues more than doubled year over year in the quarter to $791,000 from $303,000 a year ago.

Revenue growth in prenatal testing was driven by a 172 percent increase in billable test volumes, the company said, adding it performed 1,595 billable diagnostic tests for 108 customers during the fourth quarter, compared to 1,318 tests for 103 customers in the year-ago period.

"The growth in our core prenatal business continued to accelerate and exceeded our expectations in the fourth quarter," CombiMatrix President and CEO Judd Jessup said in a statement. "That business was driven principally by miscarriage management testing, where we see a great deal of opportunity. In addition, prenatal microarray testing volumes are also increasing as the seminal studies favorably comparing that technology to the current standard are becoming more widely accepted."

CombiMatrix's diagnostic services increased to $1.4 million from $1.2 million, while royalty revenues increased to $54,000 from $25,000.

Net loss grew to $3.8 million, or $3.96 per share, from a net loss of $2.0 million, or $1.87 per share, a year ago. In the fourth quarter, CombiMatrix took non-cash warrant derivative charges of $2.4 million resulting from the issuance of warrants to certain investors in the firm's Series A Preferred Stock financing, which close in two tranches, it said.

R&D costs were reduced in the quarter 18 percent to $297,000 from $361,000, while SG&A costs were down 19 percent to $1.7 million from $2.1 million.

In full-year 2012, revenues were up 15 percent year over year to $5.4 million from $4.7 million in 2011. Diagnostic service revenues improved to $5.0 million from $4.6 million, while royalty revenues increased to $180,000 from $100,000.

Prenatal test revenues doubled in 2012 to $2.0 million from $1.0 million in 2011, the company said.

Billable test volumes grew 25 percent year over year to 5,787 tests from 4,634 tests in 2011.

CombiMatrix had a net loss of $9.5 million, or $9.43 per share, in 2012 compared to a net loss of $7.6 million, or $7.69 per share, a year ago.

R&D expenses were relatively flat at $1.4 million. SG&A spending shrank 4 percent to $8.0 million from $8.3 million.

The company finished the year with $2.4 million in cash and cash equivalents.

On a conference call after the release of CombiMatrix's earnings results, an analyst noted that at the firm's current burn rate, it could run out of cash by the summer.

Jessup responded, "We are doing a number of things, we modified our warrants under Series A financing so that they can be exercised now, and can generate
as much as $1.7M in near-term capital. Considering other financial opportunities in terms of capital raising, I'm optimistic that we will be able to raise additional money in both of these ways, and don't see
a problem there."

Last week, CombiMatrix announced Jessup would be retiring effective March 15 and Mark McDonough would take over as CEO. McDonough is currently COO of the company.

On the call, McDonough said, "In the near term, I'll be keenly focused on commercial operations to make sure that the sales team and our lab don't miss a beat in this transition."

He said that Combimatrix "made the most important strategic decision in our history" last year, "from being a lab doing several tests in several markets, to focusing on what we do best, and where the market is growing, in prenatal and pediatric analysis, particularly CMA." He said this decision was made "midyear last year," and that "so far [the] market has responded relatively well. He noted that the "fastest growth is coming from area of miscarriage management."

In morning trading shares of CombiMatrix on Nasdaq were down 16 percent to $4.13.