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CombiMatrix's Q3 Revenues Rise 20 Percent on Strong Sales, New Tests

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This story has been updated to include comments from a company official.

By Justin Petrone

CombiMatrix last week reported a 20-percent spike in third-quarter revenues, largely due to increased demand for its array-based tests and the introduction of new offerings in the quarter, such as gene-mutation testing.

The Irvine, Calif.-based molecular diagnostics service provider reported total revenues of $1.2 million for the three-month period ended Sept. 30, compared to $1 million for the third quarter of 2010.

CombiMatrix said that it performed a total of 1,157 billable tests for 101 customers during the quarter, up from 967 tests for 77 customers during the third quarter of 2010.

CEO Judd Jessup attributed the performance to the firm's intensified sales and marketing efforts.

"Our sales force has been successful in winning business from clients that provide a consistent revenue stream week after week," he said during a call to discuss the Q3 results.

Jessup said that CombiMatrix will continue to build its sales force and recently added a sales manager to cover the eastern US. The company plans to add more sales personnel this quarter, focused on its array-based tests for developmental disorders and oncology.

CombiMatrix currently employs eight sales personnel in total, with seven focused on serving clients that offer developmental-disorder testing and one focused on selling the firm's menu of oncology tests. Jessup said that during the current quarter CombiMatrix will add two more sales people to its developmental-disorders team and two more to its oncology team, bringing its total sales force to 12.

Jessup also said that the company has been able to take market share from its competitors. In particular, he said that Signature Genomics' integration into PerkinElmer has opened up opportunities for CombiMatrix.

Reasons he cited for the increase in market share included "turnover" in Signature's sales force and the departure of medical director Bassem Bejjani, whom Jessup described as "critical in the growth of Signature Genomics."

Bejjani left Signature Genomics, the company he co-founded in 2003, earlier this year (BAN 7/12/2011). PerkinElmer acquired the Spokane, Wash.-based laboratory services shop in 2010 (BAN 4/20/2010).

PerkinElmer did not respond to a request for comment in time for this publication.

Jessup also noted that CombiMatrix can analyze formalin-fixed, paraffin-embedded samples, something that some of its competitors cannot do.

Another contributor to CombiMatrix's third-quarter sales performance was the introduction of new tests. During the quarter, CombiMatrix began offering gene-mutation testing.

Jessup told BioArray News this week that the company has introduced testing for the BRAF gene, mutations in which can cause birth defects and cancer.

He added that the firm will soon add testing for KRAS mutations, which are associated with leukemia, colon, pancreatic, and lung cancer, in addition to other diseases.

Jessup said that CombiMatrix has other gene mutation tests in its pipeline, but declined to discuss them.

In the call, he said that menu expansion is "critical to building customer relationships in oncology among these laboratories."

Once the firm has a tissue sample in house for microarray testing, it's "often more convenient to conduct any additional mutation analysis that may provide prognostic or therapeutic information, without having to send the sample back or to a third party," he said. "This is particularly true in the areas of colon and lung cancer, where mutation analysis has become a standard of care."

CombiMatrix also began offering karyotyping earlier this year, which Jessup said has helped it attract more cytogenetics labs to use its services, including those that have not yet adopted chromosomal microarrays for their primary analyses.

"This test has helped us increase revenue on the prenatal segment of our business since, in many instances, we will also get the [fluorescence in situ hybridization] test and the follow up microarray when appropriate," he said this week.

CombiMatrix posted a net loss of $2 million for the quarter, down from $2.2 million.

The company's R&D expenses declined to $345,000 from $575,000, while SG&A spending jumped 29 percent to $2.2 million from $1.7 million.

The increase was "due primarily to higher sales and marketing charges from expansion of the company's sales force and commercialization efforts during 2011 as compared to 2010," the firm said in a statement.

CombiMatrix finished the quarter with $7.9 million in cash and cash equivalents.


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