This story was originally posted on March 1.
After a year that saw CombiMatrix transition from a focus on R&D to a commercial enterprise with a growing sales and marketing team, the molecular diagnostic services company has achieved "significant momentum" in its business, officials said last week.
The firm is also planning to expand its test menu this year by adding new gene mutation tests and SNP array-based services, and is looking into adopting next-generation sequencing.
CEO Judd Jessup in an earnings call characterized CombiMatrix's performance in the past year as "exceptional" and said that the "pace of activity and accomplishment has accelerated" in recent months.
He had the numbers to prove it. The Irvine, Calif.-based company, which offers array-based tests for developmental disorders and cancer, reported this week that total revenues for the three months ended Dec. 31, 2011, spiked 52 percent to $1.2 million from $804,000 during the same period of 2010.
CombiMatrix performed a total of 1,318 billable diagnostic tests for 103 customers in the fourth quarter of 2011, compared to 912 tests for 89 customers in the fourth quarter of 2010. The company billed for 4,634 tests compared to 3,279 in 2010, a 41 percent increase.
For full-year 2011, diagnostic service revenues increased by 39 percent to $4.6 million as compared to $3.3 million for the comparable 2010 period, the firm said.
Chief Financial Officer Scott Burell in the call attributed the growth to "increased penetration of sales and marketing efforts," a point that Jessup echoed. Since the end of the third quarter, the firm has added two more sales people to market its developmental testing services, adding to a team of seven who were already selling those tests. It has also added two sales people to market its oncology testing services, bringing that sales team to three people.
CombiMatrix has also expanded its test menu in recent quarters, which Jessup said led to an increase in business. In particular, he mentioned demand for gene mutation testing, which it introduced last year (BAN 8/16/2011).
CombiMatrix offers tests for BRAF mutations associated with birth defects and cancer and for KRAS mutations associated with leukemia, colon, pancreatic, and lung cancer, in addition to other diseases. Jessup said this week that the company will soon introduce testing for EGFR mutations that are associated with cancer. This expanded gene mutation menu allows CombiMatrix to run more tests on the same sample, which is appealing to customers, Jessup said.
"Once we have a sample in house for testing, it is simpler and faster for our customers to conduct additional mutation testing without having to send sample to a third party," he said.
Jessup discussed adding new technologies to CombiMatrix's stable. He said that the firm will in the second quarter begin offering testing using arrays with SNP content. The company has used Agilent Technologies-manufactured comparative genomic hybridization arrays in the past. Agilent also sells chips containing CGH and SNP content. Jessup declined to comment on what chip the firm will be using.
Jessup said that it was "important" for CombiMatrix to adopt an array with SNP content because SNPs will allow to firm to pick up loss of heterozygosity in heterozygous tumor samples.
CombiMatrix is also looking into adopting next-generation sequencing, but has no immediate plans to deploy tests on that platform, Jessup said. He said the company is working with collaborators and in house to familiarize itself with sequencing, should it become a feasible diagnostic platform.
"We need to become experts in that technology and participate in it as it becomes clinically accepted," he said.
During the call Jessup said that CombiMatrix had spent 2011 getting its "commercial engine in place." This year, it aims to achieve "regular sequential growth in addition to strong year-over-year increases," he said.
CombiMatrix will accomplish this by continuing to target clinical laboratories, for whom it offers "tech only" services which allow them to outsource the testing to the firm but conduct — and also charge for — the interpretation of the results. CombiMatrix is also looking to "establish a greater presence at national and regional pathology meetings," Jessup said.
One market that CombiMatrix expects to grow is array-based prenatal testing. Jessup pointed to a recent study that found arrays to be a more informative technology than microscope-based molecular karyotyping (BAN 2/21/2012). He expressed hope that professional associations would revise their guidelines to recommend the test, a sentiment the study leaders have also expressed, and said that CombiMatrix was readying itself to educate clinicians should that happen.
According to Jessup, prenatal genetic testing is currently a $600 million market, though array-based testing represents a "very small subset" of that.
He noted that CombiMatrix last year introduced microscope-based karyotyping, allowing the firm to "get the sample earlier" in the testing process.
As array-based prenatal testing becomes more accepted it should allow CombiMatrix to "get far more testing volumes" and offer prenatal testing "from beginning to end," Jessup said.
Elsewhere in Q4 and FY 2011
CombiMatrix's shift in focus from R&D to sales was apparent in its full-year 2011 results, as R&D costs fell 30 percent to $1.4 million from $2 million, while SG&A costs increased 8 percent to $8.3 million from $7.7 million.
For Q4, R&D costs increased 8 percent year over year to $361,000 from $334,000, while SG&A expenses climbed 17 percent to $2.1 million.
The firm's net loss for the quarter was $2 million compared to a net loss of $1.5 million in Q4 2010. CombiMatrix said the wider loss in 2011 was due to a one-time recognition of $489,000 of other income from the qualified therapeutic discovery program received and recognized in the fourth quarter of 2010.
For FY 2011, the company narrowed its net loss to $7.6 million from $13.1 million in 2010.
The company ended the year with $6.4 million in cash and cash equivalents.
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