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FDA Clearance for GenMark's ePlex Intensifies Competition in Highly Plexed MDx Test Market

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NEW YORK (GenomeWeb) – US regulatory clearance for a highly anticipated instrument and respiratory panel is expected to provide a surge in revenue growth for GenMark Diagnostics, according to analysts covering the company.

After a long product development cycle, the firm this week received 510(K) clearance for its ePlex instrument and Respiratory Pathogen Panel, which detects more than 20 viral and bacterial pathogens that commonly cause upper respiratory infections.

For full year 2017, the firm said it continues to expect revenues in the range of $65 million to $70 million, which represents 30 to 40 percent growth over 2016. But research analysts said that they expect that the company could grow revenues by about 40 to 50 percent year over year over the next couple of years.

To achieve this kind of growth, the firm would need to execute well on its commercial plans as it competes with established players, such as BioMérieux and Luminex, in the markets for highly multiplexed, molecular testing for respiratory and other infections, Piper Jaffray research analyst William Quirk said in an interview.

GenMark will also need to watch out for companies that have competitive highly multiplexed instruments and assays in development, such as Danaher's Cepheid, and for emerging infection identification and antimicrobial susceptibility testing firms, such as Accelerate Diagnostics, he added.

James McNally, senior vice president for marketing and business development at GenMark, said that BioMérieux's BioFire business and Nanosphere are likely its closest competitors.

"They've done a good job developing this market globally," he said. However, he echoed a sentiment also expressed by Quirk, that a lot of "white space," or untapped opportunity, lies in wait in the US and Europe.

"There are a lot of sites that are still running traditional methods that can benefit from adopting rapid, sample-to-answer multiplexed tests," McNally said.

This is true not only for respiratory testing, but also disease states such as bloodstream infections, where time-to-result and time-to-optimal therapy is critically important and infections have been shown in the literature to have a direct impact on mortality, he said.

To that end, GenMark has a CE-marked fungal pathogen panel for bloodstream infections that it will launch in Europe this quarter, and it has developed gram-positive and gram-negative bloodstream infection panels that it expects to have CE marked before the end of this quarter, he said.

Purchasing decisions

In the end, clinical laboratory directors and other buyers will look closely at the breadth of competitors' menus, the turnaround time for receiving a test result, and pricing, Quirk said.

"When it comes to menu, BioFire appears to have an advantage," he noted. "And they recently received an expanded 510(k) clearance, adding Bordatella, and reducing the turnaround time of their test to 45 minutes."  

The time to result may be less important for testing patients staying in hospitals than for patients visiting clinics or doctors' offices, who want to leave as soon as possible, Quirk said.

McNally noted that the time it takes from a lab receiving a test to when a doctor receives a result may be the most important measure. That ties in directly with "a new level of integration" that GenMark has brought to this market segment, he said, adding, "We have very thoughtfully integrated that entire diagnostic process from when the test order is received in the lab to when an actionable test result is reported back to the physician for use in patient management, and that is what really matters when it comes to impacting patient care."

He noted that the instrument enables lab personnel to prepare resources to handle testing volumes in advance of receiving them, enabling them to optimize their response, and it allows automatic flagging of unusual test results, as well as electronic sign off and approvals by clinicians if needed before the results are released.

In a study conducted at Rhode Island Hospital and presented last month at the 2017 Clinical Virology Symposium in Savannah, Georgia, a GenMark ePlex Respiratory Pathogen Panel was shown to save the equivalent of 305 minutes hands-on time daily for lab staff compared to a high-complexity Luminex xTAG respiratory viral panel.

The study did not provide a comparison with the BioFire Torch or Nanosphere Verigene respiratory panels, which are ePlex's more advanced competitors, however.

The Lifespan microbiology laboratory in which the study was conducted performs about 8,000 respiratory viral multiplex panel assays per year at Rhode Island Hospital for a multi-hospital system, and more than 80 percent of the time a multiplex assay is used for in-patient diagnosis of respiratory infections. Use of ePlex enabled dropping the average time to a clinically actionable result by 38 hours to about 3.5 hours, according to the study. 

McNally noted that pricing for the instrument and assay are going to depend on several variables, including the acquisition methods for the purchasing institution, volumes, and other factors. He said that the list price for the ePlex respiratory panel is $157 per panel, and specific customer pricing is based on that value.

"We expect our pricing to be competitive in the market, and we hope that some of the unique aspects that ePlex brings will shift the discussion from pricing to value," he said. "What we're hearing from customers is that the focus is really shifting to solving the value equation of how to provide the highest quality of care at the lowest overall cost of care."

GenMark expects its commercialization efforts will benefit from the proceeds of a $75 million public offering of common shares, which the firm initiated this week.

The proceeds would be used for general corporate purposes in support of the commercial rollout of ePlex and other panels, McNally said.

The firm had previously announced a new manufacturing facility in Carlsbad, near its corporate headquarters in the same city. "That manufacturing facility and capacity expansion is intended to give us the ability to handle demand for many years to come," McNally said. "We're continuing to invest in our manufacturing capacity and our manufacturing excellence programs, and we have also been expanding our commercial team," which includes direct sales force and sales support expansion in the US and Europe.

The firm said recently that it has already secured more than 70 ePlex customer agreements for more than 100 analyzers. It further noted that it expects revenues from ePlex installations at US customer sites to have a positive impact on its financial results for the second half of 2017.

"Until now, the vast majority of our revenues have come from the US," McNally said. "We expect a larger contribution from Europe as we grow there this year with multiple products, and XT8 will continue to be an important part of our business going forward."

The eSensor XT8 is GenMark's earlier-generation molecular testing platform, and McNally noted that the firm expects it to contribute "the bulk" of the revenue for 2017 and especially through the first half of the year, while "ePlex will expand its contribution in the back half of the year both in the US and Europe."

Competitive dynamics

Industry analysts generally reacted positively to the announced clearance. "Within the landscape of heavy multiplexed PCR testing, the GenMark clearance has been long awaited, and it took longer than expected," Quirk said. 

"In terms of the competitive dynamic, we believe that the market's perception is that BioFire and GenMark are the more competitive systems in part because Nanosphere at present still requires multiple components to complete a test," Quirk said. "To their credit, [Luminex, which owns Nanosphere now] is developing a system that will consolidate these components into a single platform, like GenMark's and BioFire's."

With that said, GenMark also has customers for its eSensor XT8 instrument that it "presumably will try to transition over to ePlex." A large number of hospitals currently don't have highly multiplexed molecular systems, Quirk said, adding, "There's quite a bit of open terrain to chase in the US, but there's clearly less than there was a couple of years ago."

It's important to note, he said, that BioMérieux's BioFire has a head start in the highly-multiplexed segment of the molecular market with 4,500 placements that are predominantly in the US, but also growing outside the US.

Outside of the molecular space, GenMark will also compete with Accelerate Diagnostics, whose genotypic technology to identify infectious pathogens and phenotypic technology to conduct antibiotic susceptibility testing received FDA clearance in February.

"Accelerate has developed a rapid ID-AST that's faster than anything on the market today," Quirk said. The company's clearance permits it to market the test for bloodstream infections, but the firm's next pipeline product will be for lower respiratory conditions, he said. "We don't consider them a direct competitor of GenMark today," but they are likely to become competitors, he added.

Antimicrobial resistance as a driver of clinical lab decisions may also give GenMark an edge.

"In addition to pathogen identification, we have also added broad coverage for antibiotic resistance genes" to our BCID panels, McNally said. "As healthcare in the US and Europe shifts more toward a value-based focus, we think that’s a big part of the story for multiplex testing going forward, and we see that market overall growing as fast as it has because people outside of the lab are seeing the benefits of this kind of in-patient care."

The firm is commencing its launch plans for a BCID fungal panel in Europe, and its commercialization activities will continue through the summer and fall for its gram positive and gram-negative panels.  

In April, the firm achieved CE marking for its ePlex Blood Culture Identification fungal pathogen panel, the first in the GenMark Sepsis Solution, the firm said at the time, which will also include its BCID Gram-Positive and Gram-Negative panels.

"Our goal is to have the FDA clinical study for the BCID products completed in the second half of this year, and complete the FDA submission before the end of the calendar year," McNally said. "Beyond that we have announced an enteric pathogen panel that we expect to commercialize in Europe either at the end of this year or very early in 2018."

Multiple clearances are expected to bode well for the company's future financial results.

Canaccord Genuity analyst Mark Massaro wrote recently in a research note that he believes GenMark "has very strong global commercial capabilities," in Europe and the US, and that it is now "well equipped to penetrate a large global market," which the investment bank pegs at about $2.5 billion.

Raymond James analyst Nicholas Jansen said that he believes GenMark is poised to double revenues over the next 2 years "amidst successful ePlex adoption and planned menu expansion."

Meanwhile, Cowen's Doug Schenkel added that he expects the launch of ePlex to drive 40 to 50 percent revenue growth for GenMark for the next several years.

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