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GenMark Diagnostics Reports Third Quarter 2012 Results

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, 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 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, and regulatory uncertainties regarding approval or clearance for 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
       
As of
September 30, 2012 As of
(unaudited) December 31, 2011
Current assets
Cash and cash equivalents $ 53,371 $ 25,320
Short-term investments 5,000
Restricted cash 3,594
Accounts receivable, net of allowance of $53 and $98 at September 30, 2012 and December 31, 2011, respectively 1,152 1,098
Inventories 2,131 2,168
Other current assets 183 322
Total current assets 60,431 33,908
Property and equipment, net 5,215 2,836
Intangible assets, net 1,868 1,362
Other long-term assets   1,128   80
 
Total assets $ 68,642 $ 38,186
 
Current liabilities
Accounts payable $ 2,357 $ 1,201
Accrued compensation 2,136 1,521
Current portion of long-term debt 852 1,000
Other current liabilities 2,371 2,659
Total current liabilities 7,716 6,381
Long-term liabilities
Long-term debt 67 583
Other non-current liabilities   743   588
 
Total liabilities   8,526   7,552
 
Stockholders’ equity
Preferred stock, $0.0001 par value; 5,000 authorized, none issued
Common stock, $0.0001 par value; 100,000 authorized; 32,667 and 20,478 issued and outstanding as of September 30, 2012 and December 31, 2011, respectively 3 2
Additional paid-in capital 246,422 199,531
Accumulated deficit (185,873 ) (168,463 )
Accumulated other comprehensive loss   (436 )   (436 )
 
Total stockholders’ equity   60,116   30,634
 
Total liabilities and stockholders’ equity $ 68,642 $ 38,186

 
                     
GENMARK DIAGNOSTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012 2011
Product revenue $ 5,194 $ 1,206 $ 10,876 $ 2,765
License and other revenue   62   110   150   210
 
Total revenue 5,256 1,316 11,026 2,975
Cost of sales   3,027   1,785   6,878   4,580
 
Gross profit (loss)   2,229   (469 )   4,148   (1,605 )
 
Operating expenses
Research and development 4,467 1,903 9,437 6,759
Sales and marketing 1,485 1,328 4,264 3,767
General and administrative   2,510   2,405   7,743   6,338
 
Total operating expenses   8,462   5,636   21,444   16,864
 
Loss from operations (6,233 ) (6,105 ) (17,296 ) (18,469 )
Other income (expense)
Other expense, net (2 ) (180 ) (15 ) (50 )
Interest (expense) income, net   (16 )   (29 )   (56 )   6
 
Total other income (expense), net   (18 )   (209 )   (71 )   (44 )
 
Loss before income taxes (6,251 ) (6,314 ) (17,367 ) (18,513 )
(Provision) benefit for income taxes   (1 )   1   (43 )   (21 )
 
Net loss

$
(6,252 ) $ (6,313 ) $ (17,410 ) $ (18,534 )
 
Net loss per share, basic and diluted $ (0.20 ) $ (0.31 ) $ (0.71 ) $ (1.20 )
 
Weighted average number of shares outstanding 31,751 20,043 24,370 15,393
Condensed consolidated statements of comprehensive loss for the three and nine months ended September 30, 2012 and 2011
Net loss $ (6,252 ) $ (6,313 ) $ (17,410 ) $ (18,534 )
Foreign currency translation adjustment     56     (8

)
 
Comprehensive loss $ (6,252 ) $ (6,257 ) $ (17,410 ) $ (18,542 )
       
GENMARK DIAGNOSTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Nine Months Ended
September 30,
2012 2011
Cash flows from operating activities:
Net loss $ (17,410 ) $ (18,534 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 918 948
Share-based compensation 1,509 1,639
Change in allowance for doubtful accounts (45 ) 71
Non-cash inventory adjustments 563 428
Changes in operating assets and liabilities:
Accounts receivable (9 ) (117 )
Inventories (402 ) (1,448 )
Other current assets 92 1,741
Accounts payable 907 510
Accrued compensation 871 22
Other current   523   731
 
Net cash used in operating activities   (12,483 )   (14,009 )
 
Investing activities:
Restricted cash (3,594 )
Purchases of preferred securities (1,000 )
Payments for intellectual property licenses (1,306 ) (728 )
Purchases of property and equipment (2,919 ) (1,172 )
Maturities (purchases) of short-term investments   5,000  

(5,000
)
 
Net cash used in investing activities   (3,819 )   (6,900 )
 
Financing activities:
Proceeds from issuance of common stock 48,300 34,532
Costs incurred in conjunction with public offering (3,226 ) (2,790 )
Proceeds from borrowings 835 2,000
Proceeds from stock option exercises 52
Principal repayment of long-term debt   (1,608 )   (167 )
 
Net cash provided by financing activities   44,353   33,575
 
Effect of foreign exchange rate changes 6
Net increase in cash and cash equivalents 28,051 12,672
Cash and cash equivalents at beginning of period   25,320   18,329
 
Cash and cash equivalents at end of period $ 53,371 $ 31,001
 
Supplementary schedule of non-cash transactions:
Property and equipment purchased with capital lease $ 109 $
Transfer of systems from property and equipment into inventory 124

46
Property and equipment costs incurred but not paid included in accounts payable and other liabilities 249

163

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