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Transgenomic Q2 Revenues Drop 7 Percent

NEW YORK (GenomeWeb) — Transgenomic said after the close of the market on Wednesday that its second quarter revenues declined 7 percent year over year.

For the three months ended June 30, the Omaha, Neb.-based company reported $6.8 million in revenues compared to $7.3 million in the same quarter last year. Transgenomic said this decline was attributable to a $300,000 decrease in its Genetic Assays and Platforms segment due to fewer instrument sales, and a $200,000 drop in Laboratory Services revenues due to lower sales of contract development services to pharmaceutical clients.

More specifically, Genetic Assays and Platforms sales were $2.9 million in Q2 2014 compared to $3.3 million in the year-ago period, while Laboratory Services sales totaled $3.8 million in Q2 2014 compared to $4.0 million during the same quarter last year.

During a conference call recapping the company's earnings, CEO Paul Kinnon noted that Q2 revenues showed "nearly double-digit percentage growth above revenues in the first quarter of 2014, led by an encouraging bright spot, our patient testing business, which we view as a key growth area and which continues to show renewed strength."

Kinnon added that Transgenomic expects this trend to continue, and that it is also "projecting growth beginning this quarter for new projects in our biomarker identification business unit, which provides contract services for the pharmaceutical industry."

Transgenomic's SG&A expenses in Q2 rose 12 percent to $5.6 million from $5.0 million in the comparable quarter last year, while its R&D expenses dipped slightly to $785,000 from $913,000.

The firm's net loss in the quarter swelled to $3.9 million, or $0.57 per share, from $2.9 million, or $0.41 per share, in the year-ago period.

Transgenomic finished the quarter with $1.2 million in cash and cash equivalents.

During the quarter Transgenomic announced an exclusive license with the Dana-Farber Cancer Institute for worldwide rights to develop and commercialize multiplexed versions of ICE COLD-PCR technology.

"The new license provides us with a critical advantage, because multiplexed ICE COLD-PCR is far more enabling by allowing multiple regions of DNA to be targeted in one assay, improving the overall efficiency of cancer diagnostics, leading to the adoption of personalized cancer therapy as part of routine clinical practice in the future," Kinnon said during Wednesday's call. "We are actively pursuing a number of activities to develop, protect, and commercialize the multiplexed ICE COLD-PCR opportunity and technology."

After the quarter ended, in July Transgenomic sold the rights to its Surveyor Nuclease technology and assets to Integrated DNA Technologies for a minimum of $4.25 million. As part of this agreement, IDT is exclusively sublicensing rights for all clinical and diagnostic applications of the technology back to Transgenomic. Net proceeds from this sale will be used to pay down debt under Transgenomic's revolving credit facility, which may be redrawn as needed, and for working capital and other general corporate purposes, the company said.

Kinnon also noted during the call that during the second quarter Transgenomic ended its relationship with PDI, which the companies forged in October, to commercialize Transgenomic's CardioPredict test for identifying specific genes that influence the safety and effectiveness of commonly used cardiovascular drugs.

The relationship, Kinnon noted, ended "for a variety of reasons outside of our control. PDI was not able to gain significant traction, and we both thought it would be best to move on. We continue to believe in the importance and viability of the product, and it has good commercial potential. We are currently developing and commercializing a plan for re-launching CardioPredict, and we'll have more to say about this topic later in the year."