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CombiMatrix's Q4 Revenues Rise 21 Percent

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – CombiMatrix reported after the close of the market on Thursday that fourth-quarter revenues increased 21 percent year over year, driven by a 38 percent spike in service revenues.

For the three months ended Dec. 31, 2010, the Irvine, Calif.-based molecular diagnostics company said total revenues came in at $804,000, compared to $637,000 a year ago. Service revenues rose to $791,000 from $575,000 during the year-ago period, making up for a 79 percent drop in product revenues, consisting of CombiMatrix's CGH array sales, to $13,000 from $62,000 a year ago.

During the quarter, CombiMatrix reduced its R&D costs by 55 percent to $334,000 from $743,000 a year ago. Its SG&A costs increased to $1.8 million from $1.4 million, a 29 percent increase.

The company posted a net loss of $1.5 million, or $.19 per share, in the fourth quarter, a 58 percent improvement from a net loss of $3.6 million, or $.47 per share, during the fourth quarter of 2009.

For full-year 2010, CombiMatrix's revenues rose 38 percent to $3.6 million from $2.6 million in 2009. Service revenues increased 43 percent to $3.3 million from $2.3 million a year ago, while product revenues climbed 14 percent to $271,000 from $238,000.

The firm's R&D spending in 2010 slid to just over $2.0 million from $2.8 million a year ago, a 29 percent drop, while SG&A spending increased 18 percent to $7.7 million from $6.5 million.

CombiMatrix's net loss for the year narrowed to $13.1 million, or $1.72 per share, a 26 percent improvement from $17.6 million, or $2.48 per share, in 2009.

Ten months ago, the company announced a restructuring of its business, and during a conference call today after the release of its earnings results, Judd Jessup, president and CEO of CombiMatrix, provided an update on the firm's progress as it seeks to turn its fortunes around.

The company has hired new sales and marketing personnel to, among other things, formalize relationships with other laboratories without the capabilities to perform CombiMatrix's CGH array analysis on hematology specimens as well as solid tumors; grow sales territories; and carry out branding initiatives, he said.

Jessup added that the company is in the process of expanding its test menu to include chromosome analysis for the prenatal market, which will enable CombiMatrix to perform traditional cytogenetic analysis on amniotic fluid.

"This is a first tier test in the prenatal market and will enable the client to request the microarray in the event there is an abnormal ultrasound with a normal chromosome analysis demonstrated by traditional cytogenetics," Jessup said.

In the oncology test space, the company is developing tests for the analysis of specific gene mutations, though he did not elaborate.

Efforts are also being directed to optimize reimbursements that the company receives for its tests, and to increase its operating margins, he said.

During the call, Bill Vlahos, the founder of Odyssey Value Advisors, a San Francisco-based fund, questioned the continued presence of Amit Kumar on CombiMatrix's board, saying the company's immediate past CEO had "destroyed a lot of shareholder value."

Jessup, who has been with CombiMatrix only since August, responded that Kumar still adds value in terms of the company's legacy business and institutional knowledge of the company. He also is knowledgeable about the market and the investment community, as well as potential transactions that CombiMatrix may enter into, Jessup said.

As of Dec. 31, CombiMatrix said it had about $6.6 million in cash and cash equivalents.

In early Friday trade on the Nasdaq, shares of CombiMatrix were up 1 percent at $2.31.