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GenMark Diagnostics Q1 Revenues Grow 4 Percent

NEW YORK (GenomeWeb) – GenMark Diagnostics reported after the close of the market on Tuesday that its first quarter revenues rose 4 percent, driven in part by sales growth of its ePlex molecular diagnostics analyzer.

For the three months ended March 31, 2019 the molecular diagnostics firm reported revenues of $21.5 million, up from $20.6 million a year ago, and exceeding the consensus Wall Street estimate of $20.9 million.

"We achieved strong first quarter results across our key business priorities, including ePlex placements, revenue growth, and gross margin improvement," Hany Massarany, GenMark's president and CEO, said in a statement.

The firm's commercial teams delivered year-over-year growth in both total revenue and ePlex revenue compared to an "exceptionally severe flu season" experienced in the first quarter of 2018, he said.

GenMark also saw improvement in its manufacturing and cost efficiencies which drove higher ePlex gross margin in the quarter, Massarany said, adding, "Menu expansion continues to be a top priority and we were delighted to receive [US Food and Drug Administration] clearance for our third BCID panel."

In a research note on Tuesday, Canaccord Genuity analyst Mark Massaro said GenMark is driving improvement in manufacturing yields of ePlex cartridges, reducing scrap, and undergoing initiatives to lower direct labor and direct materials costs per cartridge.

Earlier this month, GenMark had received FDA 510(k) clearance for its ePlex Blood Culture Identification Gram-Negative Panel, completing the company's suite of three blood culture identification panels to receive clearance.

The regulatory clearances are "a good set-up for growth" for GenMark, Massaro said.

In Q1, the firm booked ePlex revenues of $15.7 million, representing 73 percent of total revenue and growing 31 percent compared to the prior-year period. The company placed 39 net new ePlex analyzers, expanding the global installed base to 393 placements and growing its installed base by 72 percent compared to the prior-year period.

GenMark also announced that it has expanded its commercial team in North America with the addition of Michael Harkins as senior vice president of sales and the transition of Michael Gleeson to senior vice president of corporate and strategic accounts.

On a conference call to discuss the company's financial results, Massarany noted that the results in Q1 "highlight strong market adoption of the ePlex platform and respiratory pathogen panel."

Some of the highest volume testing labs and smaller hospitals continue to see the value of near-patient rapid molecular testing, he said, adding, "Our blood culture ID panels and differentiated approach to sepsis testing were important drivers of ePlex placements in the first quarter."

Massarany said that he believes that the potential market opportunity for the firm's BCID panels "could be as large as the available market for our ePlex respiratory pathogen panel, which we estimate to be around $500 million globally."

He said that the firm expects BCID "to be a key contributor" to its 2019 performance, driving both ePlex placement and assay sales.

Massarany further noted that he anticipates that between 20 and 30 percent of the firm's installed base could be running all of its ePlex panels by the end of this year.

The company's net loss widened to $12.1 million, or $.21 per share, from $11.4 million, or $.21 per share, a year ago, missing analysts' average estimate for a loss of $.20 per share.

GenMark's R&D costs rose 17 percent to $6.3 million from $5.4 million in Q1 2018, and its SG&A costs rose 9 percent to $10.4 million from $9.5 million.

The firm ended the quarter with $35.3 million in cash and cash equivalents, and $13.1 million in marketable securities.

For full-year 2019, GenMark expects total revenue to be in the range of $85 million to $90 million.

It anticipates that global ePlex placements will be in the range of 170 to 190 net new analyzers with an annuity per analyzer of $135,000 to $145,000. The ePlex platform is expected to reach 75 percent of total 2019 revenue, representing 70 percent year-over-year growth in ePlex revenues.

GenMark Chief Operating Officer Scott Mendel noted on the call that the firm's R&D, clinical, and regulatory teams are now focused on developing future ePlex panels and technology capabilities, with a gastrointestinal panel being its top priority.

Cowen analyst Doug Schenkel said in a research note on Tuesday that the pure-play multiplex molecular diagnostics company is positioned to grow revenues at a rate of 20 percent to 25 percent per year for the next several years.

In morning trading on the Nasdaq, GenMark's shares were up more than 2 percent at $7.41.