COVID-19 has been tough on companies across many different industries but the current pandemic has shined a spotlight on what was previously a quieter corner of medtech: molecular diagnostics. And for the companies in that sector that have stepped up and responded to the crisis with tests to detect SARS-CoV-2 test, the virus that causes COVID-19, those efforts are paying off.
On Tuesday, Carlsbad, CA-based GenMark Diagnostics, a provider of automated, multiplex molecular diagnostic testing systems, preannounced first-quarter revenue of about $38.7 million, representing an increase of about 80% over the first quarter of 2019. On March 18 FDA awarded an emergency use authorization for GenMark's ePlex SARS-CoV-2 test and GenMark said consumable revenue from that test accounted for roughly 5% of the company's total ePlex revenue in the quarter. The SARS-CoV-2 test also was a key factor in the company placing 54 ePlex analyzers during the quarter a 48% jump compared to the number of the devices placed during the first quarter of 2019.
“GenMark is honored to play an important role in fighting the COVID-19 global pandemic,” said Scott Mendel, GenMark's, interim president and CEO. "Our sample-to-answer test enables healthcare providers to determine if a patient has COVID-19 in under two hours and is a critical diagnostic solution for hospitals. I'm extremely proud of our team’s hard work throughout this crisis as we continue to work at maximum capacity to provide our ePlex SARS-CoV-2 test and Respiratory Pathogen panel.”
The ePlex sample-to-answer instrument is designed to perform multiplex molecular testing for infectious disease diagnostic in high-risk patients. Physicians can quickly and effectively identify bacterial, viral, and fungal infections, as well as antibiotic resistance markers to aid in determining the appropriate treatment. The technology helped land GenMark among the 25 most attractive medtech companies on the M&A radar, according to a 2019 report by Mike Matson at Needham & Co.
As a result of its first-quarter success, GenMark bumped its 2020 revenue guidance by $12 million. That guidance may prove to be a bit on the conservative side, according to a report Matson issued Tuesday after GenMark's announcement. The analyst said he spoke with management in late March and they indicated at that time that their maximum test cartridge manufacturing capacity was roughly 100K per month, which would limit GenMark's maximum revenue to between $140 million and $150 million for the year (compared to the updated guidance of between $112 million and $120 million).
"While there is a growing number of competing COVID-19 tests available and it is unclear how long the pandemic will last, we note that [GenMark] only raised its guidance by the amount that it beat 1Q20 consensus," Matson said in his report.
“Our sales and implementation teams responded to significant demand for ePlex instruments resulting in 109 gross placements in the quarter. Our installed base increased by 54 net placements in the quarter as we opportunistically repositioned 55 ePlex analyzers to provide COVID-19 testing capacity across as many customer sites as possible," Mendel said. "Importantly, this aggressive repositioning strategy also allowed us to expand into many new customer sites. We believe these placements will drive enduring revenue streams beyond this pandemic as new customers adopt our Respiratory Pathogen (RP) and Blood Culture Identification (BCID) panels."
Not only did GenMark report significant top line growth, Mendel said the company continued to make progress on reducing its direct material costs and managed to increase production volumes. The company will continue to assess the duration of the elevated RP/COVID-19 demand while also evaluating the impact implementations of the BCID panels, he said.
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