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GenMark Dx Provides Updates on NexGen System and Menu, International Sales Initiatives

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GenMark Diagnostics CEO Hany Massarany elaborated recently on the company's plans for its automated NexGen system and its associated test menu, as well as GenMark's efforts to reach European customers.

Massarany provided these and other updates during an earnings call held last week to discuss the Carlsbad, Calif.-based firm's third quarter results, as well as in a follow-up interview with BioArray News.

While GenMark's Q3 revenues fell 12 percent, largely due to the loss of a major customer as well as challenges experienced by its customers in getting reimbursed for GenMark's pharmacogenetic tests, Massarany portrayed the firm as positioned for future growth.

GenMark plans to launch its new NexGen product in the second half of next year. The system will integrate sample preparation steps, including extraction and amplification, with GenMark's existing eSensor detection technology in a single test cartridge. Customers who use GenMark's current XT-8 system must complete these steps separately before analyzing their samples.

"We are designing the system with all the necessary reagents fully incorporated in self-contained test cartridges and the required fluidic movement enabled by proprietary digital microfluidics technology," Massarany said on the call.

According to Massarany, GenMark has achieved assay integration on the new cartridge of its Respiratory Viral Panel, which enables detection of 14 respiratory virus types. Massarany called RVP one of GenMark's "most complex assays" and said that the firm is "very pleased" with its performance.

GenMark is also planning NexGen panels for gram-negative and gram-positive sepsis, a gastrointestinal pathogen panel, and a hepatitis C virus genotyping panel.

Based on the firm's progress on developing these five tests, Massarany said that the company's board of directors has approved funding for two more assay development teams. Massarany told BioArray News this week that the multiplex tests will target other infectious diseases, but declined to elaborate.

He noted on the call that the company expects to achieve CE-IVD markings for NexGen and its initial assay menu in Europe once the system is commercialized in the second half of next year. Massarany added that the company will carry out studies to support a submission of NexGen to the US Food and Drug Administration in the second half of 2015.

GenMark already offers a number of FDA-cleared tests for use on its XT-8 system. In addition to its RVP in vitro diagnostic, the company sells IVDs for cystic fibrosis carrier screening, and to assess warfarin sensitivity and thrombophilia risk.

On the call, Massarany said that demand for the company's RVP IVD, as well as its research use only HCV Genotyping Test continues to drive system placements and reagent sales growth. This has helped to offset its loss of sales to Seattle-based Natural Molecular Testing, which earlier this year moved its pharmacogenomic test offering to Luminex's platform and last month filed for Chapter 11 bankruptcy protection.

According to Massarany both the RVP and HCV assays continue to sell well. More specifically, he said that, excluding NMTC-related revenues in the third quarter of 2012, the company's reagent sales actually grew by 145 percent year over year.

Thanks to the availability of the RVP, Massarany said that the firm has "secured a significant number of very large volume customers in the US market." He added that feedback related to the HCV assay "in terms of detection accuracy, workflow, and turnaround time, continues to be very positive."

The company is also continuing to advance the HCV test toward an eventual FDA submission, Massarany said this week, noting that "multiple independent studies using our RUO HCVg Direct Test have demonstrated excellent genotyping performance and efficient workflow."
He did not elaborate.

While the fallout from NMTC's adoption of Luminex's platform is behind GenMark, Luminex still remains a major competitor. The company already offers respiratory viral and gastrointestinal pathogen panels, and next year plans to debut a new generation of its xTAG assays that also require limited hands-on time.

Ex-US

During last week's call, Massarany said that the company has moved forward with its plans to establish sales channels outside of the US prior to the launch of the NexGen system. He said the company is working to establish international distribution partnerships, as well as direct operations. Massarany noted that GenMark has finalized a comprehensive business plan that outlines the roll out of its products by country. Still, the company has not announced any distribution agreements this year, and does not list any partners on its website.

GenMark's main thrust into the international markets will be focused on coaxing key opinion leaders in Europe to adopt the XT-8 System.

"We intend to introduce our XT-8 systems to KOL sites in certain countries, and establish our technology on certain tests to these markets in preparation for the launch of NexGen," Massarany told BioArray News. He added that while the company believes that its NexGen system and assay menu have "great potential globally," the company will focus its initial geographic coverage on "key IVD markets within Europe and plan to expand beyond the European market in 2015."

Given the continued interest in the XT-8, plus its central role in GenMark's attempts to build its business outside the US, Massarany affirmed that the company will support XT-8 customers after the launch of NexGen next year.

"We will continue to service and support the XT-8 following the launch of NexGen and have no plans to discontinue the platform in the foreseeable future," Massarany said.

Analyst takes note

At least one analyst seems to agree with Massarany's projections for GenMark's business. In a research note released last week, Raymond James Equity Research's Nicholas Jansen said that the company is "well positioned" for growth in coming years.

In the note, Jansen said that GenMark's NexGen menu of seven assays "supports likely healthy adoption" of the system. After viewing a demonstration of the system at the Association of Molecular Pathologists meeting in Phoeniz, Ariz., Jansen noted that it requires "virtually no hands-on time," and said that its ease of use should make it "attractive to a broader range of hospitals and laboratories that lack the technical or economic resources to perform molecular diagnostic testing with existing products and technology."

Following discussions with GenMark's management, Jansen said that the company might have as many as 15 NexGen panels in development, and that the company will focus more on higher-multiplex assays going forward, "given the increasing value-add of these mega panels." He added that he expects these new assays to be "premium priced, reflective of the dollars saved with sample prep steps completely removed from the equation."

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