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Great Basin Q2 Revenues Rise 31 Percent

This story has been updated from a previous version to include comments from Great Basin's Q2 earnings call.

NEW YORK (GenomeWeb) – Molecular diagnostics firm Great Basin Scientific today reported that its second quarter revenues climbed 31 percent year over year due to growth in its customer base.

For the three months ended June 30, the Salt Lake City-based firm reported revenue of $525,506, up from $402,446 in the second quarter of 2014.

In the quarter, the firm reported a 55 percent increase in US customers, from 74 to 115, and said that the number of evaluations either in progress or scheduled rose to 49 from 13 in the year-ago period.

"We continue to see very strong demand for the Great Basin platform in small to medium hospitals and reference labs that make up our target market," Ryan Ashton, the firm's president and CEO, said during a conference call recapping the earnings.

"We believe our powerful product offering, which combines sample-to-result ease of use, no-cost instrumentation, and low per-test cost, continues to resonate deeply with the under-400-bed hospitals that historically lack the resources, both capital and personnel, to implement molecular testing," Ashton said.

Net income for the quarter was $19.2 million, or $.71 per share, compared to a net loss of $3.2 million, or $28.05 per share in Q2 2014. During Q2, a change in the fair value of derivative liability related to various common stock warrants generated non-cash other income of $24.3 million. Excluding this, the company took an adjusted net loss of $5.2 million in Q2.

The firm's R&D spending increased 85 percent to $1.9 million from $1.0 million because of increased clinical and regulatory activities related to the firm's Group B Streptococcus assay and ongoing clinical trials for two other tests. SG&A expenses, meanwhile, increased 69 percent to $2.2 million from $1.3 million, the result of increased sales commission, increased business activities, and the cost of operating as a public company.

Great Basin finished the first half of the year with $15.3 in cash.

During the quarter, Great Basin was awarded about $5 million in funding from the National Institutes of Health to develop an assay for carbapene-resistant Enterobacteriaceae in collaboration with Brigham Young University. It was also granted 510(k) clearance from the US Food and Drug Administration for its Group B Strep test, and it received European patent protection for its on-chip amplification technology.

For the Group B Strep test, Ashton noted that the firm has now secured 53 commitments to evaluate the assay, and has eight customers who have already adopted the test and are reporting results.

"This is well ahead of our expectation for the timing adoption given the requirement that each lab must perform a complete evaluation and validation of each new Great Basin test they bring on, a process that can typically last from one to three months," Ashton noted.

The firm anticipates it will file 510(k) applications with the FDA before the end of the third quarter for a staphylococcus identification and resistance assay and a test for Shiga toxin-producing Escherichia coli. "If the process goes well post-submission with the FDA, we should see both clearances by the end of the year," Ashton said during the call.

The company reaffirmed guidance that it expects to end the calendar year with approximately 170 to 180 customers, and another 50 to 60 sites in evaluation or scheduled for evaluation.

"With the instruments already manufactured or for which we have already procured materials, we now have adequate instruments to reach 250 customers, a target we expect to achieve in the first half of next year," Ashton said. He further noted that the average revenue per customer for the firm's Clostridium difficile test has been approximately $20,000 per year. "With the four tests we expect in our menu by end of year, we now expect potential revenue per customer will triple to just under $60,000 per year," he said.