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CombiMatrix's Q1 Revenues Jump 27 Percent on Prenatal Microarray Testing Demand

NEW YORK (GenomeWeb News) – CombiMatrix today announced a 27 percent rise in first-quarter revenues, driven by a 158 percent jump in sales generated by its prenatal chromosomal microarray analysis testing services.

The Irvine, Calif.-based molecular diagnostics company said that total revenues for the three months ended March 31 increased to $1.6 million from $1.2 million in the first quarter of 2012. Growth in prenatal testing revenues was driven by a 124 percent increase in billable test volumes, as the firm noted when it released its preliminary results one month ago.

CEO Mark McDonough said in a statement that miscarriage management testing, in particular, contributed to the company's Q1 revenue growth. While such testing continues to represent a "wide open opportunity" for CombiMatrix, he noted that prenatal testing volumes are also increasing as "physicians are recognizing the clinical benefits highlighted in recent high-profile studies."

McDonough, who became president and CEO of CombiMatrix in March, said on a conference call following the release of the results, "There is no question the overall prenatal molecular testing market is growing. It is estimated to be over $600 million annually, but it is in transition and is undergoing changes."

He said the emerging sequencing-based, non-invasive prenatal tests "will only increase our market share," and he views them as complementary.

"Non-invasive tests screen for abnormalities like Down syndrome, but our tests are more definitive confirm widerange of abnormalities," he said. "We are finding already that many parents who receive a positive non-invasive prenatal testing result want to move to a microarray analysis to confirm the screening results and to generally learn more."

CombiMatrix said it performed a total of 1,718 billable diagnostic tests for 119 customers in Q1, compared to 1,377 tests for 105 customers in the prior-year period. Prenatal testing revenues during the quarter were $959,000, compared to $372,000 in Q1 2012. The company said that revenue growth outpaced test volume growth in prenatal testing in Q1 due to a "stronger product mix toward microarrays and a stabilizing reimbursement mix among third-party payors."

Prenatal testing has become a core focus for CombiMatrix since it made a strategic decision to focus on the prenatal market while de-emphasizing its efforts to market its menu of oncology tests directly and instead rely on laboratory partnerships to sell those tests.

The firm's R&D costs dropped 60 percent to 183,000 from 450,000 in Q1 2012, while SG&A costs dropped 18 percent to $2 million from $2.4 million in the year-ago period. Despite the cost reductions, McDonough said the firm is investing in sales and marketing by placing new personnel in "key markets where payback will be rapid," initiating and fostering relationships with labs that lack CombiMatrix's array knowhow or resources and "working to secure additional strategic corporate relationships that could drive significant growth well into the future."

Due in part to the decrease in operating costs, the company was able to narrow its net loss to $48,000, or $0.02 per share, from $2.4 million, or $2.21 per share, year over year. Still, CombiMatrix noted that the improvement was primarily driven by a non-cash, warrant derivative gain of $1.8 million recognized during the quarter.

CombiMatrix had $3.4 million in cash and cash equivalents as of March 31.

The company recently announced its intention to raise an additional $2.4 million to support its activities.

In Wednesday morning trade on the Nasdaq, shares of CombiMatrix were down 3 percent at $3.47.

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