GenMark Diagnostics, Inc. - FORM 8-K - EX-99.1 - March 12, 2013

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Exhibit 99.1

March 12, 2013

GenMark Diagnostics Reports Fourth Quarter and Year End 2012 Results

GenMark Exceeds 2012 Revenue Guidance; 2012 Sales Top $20 million

 

  •  

Quarterly Reagent Revenue Grows 404% and Annual Reagent Revenue Grows 367%

 

  •  

Installed Base Grows to 297 Analyzers

 

  •  

Quarterly Gross Margin Reaches 50% and Annual Gross Margin Reaches 43%

 

  •  

Annuity Per Analyzer Increased to $143,000

 

  •  

FY 2013 Revenue Guidance at $35 million

CARLSBAD, Calif.—(BUSINESS WIRE)— GenMark Diagnostics, Inc. (Nasdaq:GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today reported financial results for the fourth quarter and year ended December 31, 2012.

Revenues for the quarter ended December 31, 2012 were $9.4 million compared with $2.0 million during the fourth quarter of 2011. The 364% year-over-year increase in quarterly total revenue reflects an increase in the number of systems in the field, growth in test menu and a significant increase in the number of tests sold. Reagent revenues for the fourth quarter grew 404% year over year to $9.1 million from $1.8 million. Instrument and other revenues increased by 39% year-over-year to $312,000 from $224,000 due mainly to capital sales of instruments. The Company placed a net of 42 analyzers during the quarter, bringing the installed base to 297 at year end, all in end-user laboratories within the U.S. market.

“Boosted by a more severe than usual flu season, the continued expansion of our installed base and annuity per system enabled our commercial team to close out 2012 with another very robust quarter. This year we will continue to leverage the significant runway still available for our current XT-8 system to maintain this performance trajectory,” commented Hany Massarany, GenMark’s President and CEO. “We will also continue to focus our R&D organization on completing the development of our NexGen multiplex sample-to-answer system,” Mr. Massarany further stated.

Gross profit for the quarter ending December 31, 2012 was $4.7 million, or 50% of sales, compared with a gross profit of $0.4 million, or 20% of sales, for the same period in 2011.

Operating expenses increased $3.5 million to $9.3 million during the fourth quarter of 2012 compared with the fourth quarter of 2011. The increase in operating expenses was across all areas of the Company and reflected higher volumes, increased headcount, infrastructure spending, and product research and development costs.

Loss per share was $0.15 for the fourth quarter of 2012, compared with a loss per share of $0.27 in the fourth quarter of 2011.

For the fiscal year ended December 31, 2012, total revenue increased 309%, from $5 million in 2011 to $20.5 million in 2012, and gross profit turned from negative $1.2 million to positive $8.8 million for the years ended December 31, 2011 and 2012, respectively. Annual reagent revenues grew 367% year over year to $19.6 million from $4.2 million. The Company placed a net of 130 analyzers during the year, bringing the total installed base to 297, and reagent annuity per analyzer increased from $51,000 to $143,000.

The Company ended 2012 with $52.6 million in cash, cash equivalents and restricted cash, reflecting the cash proceeds from the follow-on offering completed during the year. The Company intends to continue utilizing its cash balances to invest in new product and menu development, including the development of its NexGen platform, and for infrastructure improvements and general corporate purposes.

For 2013, the Company expects revenue to grow by 70% over 2012 levels to approximately $35 million, with a disproportionate amount of the revenue occurring in the first and fourth quarters of the year due to the seasonality of the Company’s Respiratory Viral Panel Test, which is highly utilized during the flu season. In addition, the Company expects to significantly grow the installed base in 2013 by placing in excess of 150 analyzers in customer laboratories. Gross margin is expected to remain just above 50% throughout 2013 with some

slight improvements commensurate with anticipated volume growth and quarterly fluctuations due to seasonal volume. Lastly, the Company expects to continue investing in its NexGen platform and menu development in support of its plans for international commercialization by early 2014, and simultaneous FDA submissions for IVD approval and subsequent US launch.

INVESTOR CONFERENCE CALL

GenMark will hold a conference call to discuss the fourth quarter and year end 2012 results at 4:30 PM EST today. The conference call and webcast can be accessed live through the Company’s website under the Investor Relations section and will be archived for future reference. To listen to the conference call, please dial (877) 312-5847 (US/Canada) or (253) 237-1154 (International) and use the conference ID number 16992443 approximately five minutes prior to the start time.

About GenMark Diagnostics

GenMark Diagnostics is a leading provider of automated, multiplex molecular diagnostic testing systems that detect and measure DNA and RNA targets to diagnose disease and optimize patient treatment. Utilizing GenMark’s proprietary eSensor® detection technology, GenMark’s eSensor XT-8™ system is designed to support a broad range of molecular diagnostic tests with a compact, easy-to-use workstation and self-contained, disposable test cartridges. GenMark currently markets four tests that are FDA cleared for IVD use: Cystic Fibrosis Genotyping Test, Respiratory Viral Panel, Thrombophilia Risk Test, and Warfarin Sensitivity Test. A number of other tests, including HCV Genotyping, 2C19 Genotyping, and 3A4/3A5 Genotyping are in development. For more information, visit www.genmarkdx.com.

SAFE HARBOR STATEMENT

This press release includes forward-looking statements regarding events, trends, and business prospects, which may affect our future operating results and financial position. Such statements including, but not limited to, those regarding our growth strategy and expected financial performance, are all subject to risks and uncertainties that could cause our actual results and financial position to differ materially from those expressed or implied by such statements. Some of these risks and uncertainties include, but are not limited to, our research and development plans and timelines, including those with respect to our NexGen platform, risks related to our history of operating losses, the need for further financing and our ability to access the necessary additional capital for our business, inherent risk and uncertainty in the protection of our intellectual property rights, risks and uncertainties regarding governmental and third party payor reimbursement policies, and regulatory uncertainties regarding approval or clearance of our products, as well as other risks and uncertainties described under the “Risk Factors” in our public filings with the Securities and Exchange Commission. We assume no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made.

GenMark Diagnostics, Inc.

Consolidated Balance Sheets

(In thousands, except par value)

 

     As of December 31,  
     2012        
     (Unaudited)     2011  

Current assets

     

Cash and cash equivalents

    $ 51,250      $ 25,320   

Short-term investments

      —          5,000   

Restricted cash

      1,343        —     

Accounts receivable - net of allowance of $30 and $98

      3,190        1,098   

Inventories, net

      1,993        2,168   

Other current assets

      226        322   
  

 

 

    

 

 

  

Total current assets

      58,002        33,908   

Property and equipment - net

      7,074        2,836   

Intangible assets - net

      1,832        1,362   

Other long-term assets

      1,108        80   
  

 

 

    

 

 

  

Total assets

    $ 68,016      $ 38,186   
  

 

 

    

 

 

  

Current liabilities

     

Accounts payable

    $ 2,445      $ 1,201   

Accrued compensation

      3,076        1,521   

Current portion loan payable

      638        1,000   

Other current liabilities

      3,015        2,659   
  

 

 

    

 

 

  

Total current liabilities

      9,174        6,381   

Long-term liabilities

     

Loan payable, net of current portion

      63        583   

Other noncurrent liabilities

      2,329        588   
  

 

 

    

 

 

  

Total liabilities

      11,566        7,552   
  

 

 

    

 

 

  

Commitments and contingencies—See note 6

     

Stockholders’ equity

     

Common stock, $0.0001 par value; 100,000 authorized; 32,753 and 20,478 shares issued
and outstanding as of December 31, 2012 and December 31, 2011, respectively

      3        2   

Preferred stock, $0.0001 par value; 5,000 authorized, none issued

      —          —     

Additional paid-in capital

      247,449        199,531   

Accumulated deficit

      (190,566 )      (168,463 ) 

Accumulated other comprehensive loss

      (436 )      (436 ) 
  

 

 

    

 

 

  

Total stockholders’ equity

      56,450        30,634   
  

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 68,016      $ 38,186   
  

 

 

    

 

 

  

GenMark Diagnostics, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share amounts)

 

     Year ended December 31,  
     2012              
     (Unaudited)     2011     2010  

Revenue

       

Product revenue

    $ 20,211      $ 4,700      $ 2,341   

License and other revenue

      258        309        223   
  

 

 

    

 

 

    

 

 

  

Total revenue

      20,469        5,009        2,564   

Cost of sales

      11,640        6,206        3,979   
  

 

 

    

 

 

    

 

 

  

Gross profit (loss)

      8,829        (1,197 )      (1,415 ) 

Operating expenses

       

Sales and marketing

      6,378        4,969        4,555   

General and administrative

      10,806        8,960        7,415   

Research and development

      13,536        8,737        6,646   
  

 

 

    

 

 

    

 

 

  

Total operating expenses

      30,720        22,666        18,616   
  

 

 

    

 

 

    

 

 

  

Loss from operations

      (21,891 )      (23,863 )      (20,031 ) 
  

 

 

    

 

 

    

 

 

  

Other (expense) income

       

Foreign exchange gain (loss)

      6        6        (1 ) 

Interest (expense) income, net

      (49 )      (74 )      —     

Therapeutic discovery credit

      —          —          1,644   

Other income (expense)

      (21 )      13        —     
  

 

 

    

 

 

    

 

 

  

Total other (expense) income

      (64 )      (55 )      1,643   
  

 

 

    

 

 

    

 

 

  

Loss before income taxes

      (21,955 )      (23,918 )      (18,388 ) 

Provision for income taxes

      (148 )      (52 )      (15 ) 
  

 

 

    

 

 

    

 

 

  

Net loss

    $ (22,103 )    $ (23,970 )    $ (18,403 ) 
  

 

 

    

 

 

    

 

 

  

Net loss per share, basic and diluted

      (0.84 )      (1.45 )      (1.88 ) 

Weighted average number of shares outstanding

      26,215        16,572        9,797   

Consolidated Statements of Comprehensive Loss For the Years
ended December 31, 2012, 2011 and 2010

       

Net loss

    $ (22,103 )    $ (23,970 )    $ (18,403 ) 

Foreign currency translation adjustment

      —          14        (35 ) 
  

 

 

    

 

 

    

 

 

  

Comprehensive loss

    $ (22,103 )    $ (23,956 )    $ (18,438 ) 
  

 

 

    

 

 

    

 

 

  

GenMark Diagnostics, Inc.

Consolidated Statement of Cash flows

(In thousands)

 

     Year ended December 31,  
     2012              
     (unaudited)     2011     2010  

Cash flows from operating activities:

       

Net loss

    $ (22,103 )    $ (23,970 )    $ (18,403 ) 

Adjustments to reconcile net loss to net cash used in operating activities:

       

Depreciation and amortization

      1,198        1,326        1,063   

Share-based compensation

      2,352        1,872        1,553   

Bad debt provision

      (24 )      —          —     

Non-cash inventory adjustments

      (482 )      517        —     

Changes in operating assets and liabilities:

       

Accounts receivable

      (2,068 )      (420 )      (508 ) 

Inventories

      880        (1,742 )      (651 ) 

Other current assets

      68        1,846        (1,404 ) 

Accounts payable

      728        378        (1,058 ) 

Accrued compensation

      1,811        979        547   

Other liabilities

      1,397        —          —     
  

 

 

    

 

 

    

 

 

  

Net cash used in operating activities

      (16,243 )      (19,214 )      (18,861 ) 
  

 

 

    

 

 

    

 

 

  

Cash flows from investing activities

       

Restricted cash

      (1,343 )      —          —     

Purchase of preferred securities

      (1,000 )      —          —     

Payments for intellectual property licenses

      (1,327 )      (734 )      —     

Purchases of property and equipment

      (3,476 )      (1,376 )      (1,860 ) 

Maturities of short-term investments

      5,000        (5,000 )      —     
  

 

 

    

 

 

    

 

 

  

Net cash used in investing activities

      (2,146 )      (7,110 )      (1,860 ) 
  

 

 

    

 

 

    

 

 

  

Cash flows from financing activities

       

Proceeds from issuance of common stock

      48,300        34,533        27,600   

Costs incurred in conjunction with public offering

      (3,211 )      (2,854 )      (4,991 ) 

Proceeds from borrowings

      991        2,000        —     

Principal repayment of borrowings

      (1,984 )      (417 )      5   

Proceeds from stock exercises

      223        —          —     
  

 

 

    

 

 

    

 

 

  

Net cash provided by financing activities

      44,319        33,262        22,614   
  

 

 

    

 

 

    

 

 

  

Effect of foreign exchange rate changes

      —          53        (47 ) 

Net increase in cash and cash equivalents

      25,930        6,991        1,846   

Cash and cash equivalents at beginning of year

      25,320        18,329        16,483   
  

 

 

    

 

 

    

 

 

  

Cash and cash equivalents at end of year

    $ 51,250      $ 25,320      $ 18,329   
  

 

 

    

 

 

    

 

 

  

Non-cash investing and financing activities:

       

Property and equipment purchased with capital lease

    $ 109      $ —        $ —     

Transfer of systems from property and equipment into inventory

    $ 223      $ 46      $ 109   

Property and equipment costs incurred but not paid included in accounts payable

    $ 592      $ 76      $ 276   

Intellectual property acquisition included in accrued expenses

    $ —        $ —        $ 1,389   

Reclassification of deposits on systems in other current assets and inventory to property and equipment

    $ —        $ —        $ 289   

Tenant improvement Allowance

    $ 1,359      $ —        $ —     

IPO costs incurred but not paid

    $ —        $ —        $ 103   

Supplemental cash flow disclosures:

       

Cash received for income taxes.net

    $ —        $ 3      $ 5   
  

 

 

    

 

 

    

 

 

  

Cash paid for income taxes, net

    $ 14      $ —        $ —     
  

 

 

    

 

 

    

 

 

  

Cash received for interest

    $ 42      $ 21      $ 25   
  

 

 

    

 

 

    

 

 

  

Cash paid for interest

    $ 90      $ 95      $ —     
  

 

 

    

 

 

    

 

 

  

GenMark Diagnostics, Inc.

Richard B. Slansky

Chief Financial Officer

760-448-4358

Source: GenMark Diagnostics, Inc.

GenMark Diagnostics, Inc. Reports