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GenMark Diagnostics Seeing Continued Demand for Respiratory Panels, Plans 510(k) Submission

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NEW YORK ─ GenMark Diagnostics' CEO Scott Mendel on Thursday gave short shrift to a report that the firm has been approached by potential buyers and instead drew attention to the continuing high demand for its ePlex molecular diagnostics respiratory panel for coronavirus testing and the firm's belief that demand for the test will continue to grow for the foreseeable future.

The Carlsbad, California-based firm ─ which reported on Thursday that its fourth quarter revenues rose 84 percent year over year ─ is also drawing up plans for its business in a post-pandemic world, and intends to introduce new testing panels on its ePlex molecular diagnostic testing platform and enhance a respiratory panel for which it received Emergency Use Authorization to prepare it for a 510(k) submission to the US Food and Drug Administration.

Mendel said during a conference call to discuss its financial results that GenMark is also looking to drive greater adoption of its three blood culture identification panels (BCID) in an underpenetrated, large addressable market.

However, the company's top priority for menu expansion in 2021 is to complete the development of an ePlex gastrointestinal panel and initiate clinical validation studies in the second half of the year. Its assay development team is further enhancing its ePlex Respiratory Pathogen Panel 2, or RP2, and further developing it for a future 510(k) submission, which would be required if the FDA decides to terminate EUAs for SARS-CoV-2 tests, Mendel said.

Additionally, GenMark is beginning the development of two new ePlex testing panels this year for undisclosed medical conditions. "We are confident that now is the time to accelerate our investment in menu development and lay the groundwork for strong revenue growth in the years to come," Mendel said.

Canaccord Genuity analyst Max Masucci in a research note on Friday said that GenMark "has now strung together four straight quarters of outstanding operational execution and has managed expectations extremely well during the most transformative 14 months in the history of infectious disease diagnostics."

Its success is being driven in part by the increased awareness of multiplex syndromic testing during the pandemic and ePlex providing utility in the hospital laboratory channel, Masucci said. The investment bank believes GenMark can deliver success "over the next several years, either as a standalone or under the umbrella of a larger diagnostics company," he added.

Despite the report that the company may be for sale, Mendel said GenMark remains focused on its "mission to deliver high-quality molecular diagnostics solutions that enable better patient outcomes."

In 2020, its top-line growth drove "cash flow positivity for the first time in GenMark's history," Mendel said during the conference call. The company quickly shifted R&D priorities during 2020 to develop RP2, which became central to its revenue growth. The panel simultaneously identifies 21 pathogens including SARS-CoV-2 and provides a more streamlined workflow than an earlier ePlex respiratory panel, according to GenMark.

GenMark's revenue growth is also tied to a growing installed base of ePlex analyzers. More than 95 percent of its 2020 placements resulted in multi-year agreements with committed volumes for RP2 or BCID panels testing, which provides GenMark with "an enduring and predictable revenue stream of approximately $135 million using an expected annuity of $175,000 per placement," he said.

While demand for its RP2 panel continues to drive a large portion of its current revenue, GenMark is also looking to its BCID panels for continued revenue growth in the near and longer term. Mendel noted that its BCID panels are designed with broad coverage of organisms and resistance genes, "which is critically important in managing bloodstream infections that can lead to sepsis."

Three large, undisclosed hospitals implemented its BCID panels this past year, representing more than $4 million in expected annual revenue, he said.

Like many companies looking to meet high demand during the pandemic, the firm is also expanding testing capacity. It is investing $20 million in a new manufacturing facility with six additional ePlex consumable production lines. The firm validated the first line in December, enabling it to reach a capacity of 160,000 consumables per month by the end of 2020 and it expects to increase its testing capacity to about 250,000 consumables per month by the end of this year.

The additional lines will help it meet demand, reduce employee overtime, and provide "capacity to support our assay development," Mendel said.