Irvine-based CombiMatrix Corp.’s stock price has been riding the power of the medical press.
The molecular diagnostic laboratory, which specializes in DNA-based testing, saw its shares shoot up more than 200% earlier this month after a pair of studies published in the New England Journal of Medicine validated its test offerings. The studies favored chromosomal microarray analysis—CombiMatrix’s testing specialty—over traditional karyotype tests for genetic prenatal diagnosis and genetic analysis of stillbirths.
CombiMatrix’s daily trading volume spiked to nearly 3 million shares a few days after the reports—more than 300 times its prior average.
“It was kind of a double benefit rather than just one article,” said Chief Executive R. Judd Jessup.
The gains pushed CombiMatrix’s market value to $6.6 million and helped it stave off a possible delisting by Nasdaq, which had sent a warning letter after the company’s shares fell below $1 for an extended period earlier this year.
Good Publicity
The positive publicity for the company—which lost $7.6 million on $4.6 million in sales in 2011, and is set to report fourth-quarter and 2012 financial results on Feb. 25—helped offset what Jessup called “overselling” of shares and a recent 1-for-10 reverse stock split.
• Headquarters: Irvine
• Business: Molecular diagnostics laboratory
• Founded: 1995
• Ticker symbol: CBMX (Nasdaq)
• 2011 revenue: $4.6 million
• Recent earnings: ($1.3 million)
• Market value: about $6.6 million
• Notable: Recent studies in New England Journal of Medicine validate company’s test offerings, send shares up 200%
CombiMatrix’s shares have held the recent gains, for the most part, and look set to finish 2012 up by about 70%.
“We certainly didn’t expect it to take the kind of jump that it did and the volume it did, but we were pleased,” Jessup said.
CombiMatrix still has a low profile on Wall Street in spite of its recent activity, with no analysts following the company.
“We’re a micro-cap company—we would love to get some analyst coverage right now,” Jessup said, adding that he’s talked to a number of analysts who indicated interest in initiating coverage of CombiMatrix.
The company is counting on the prenatal, pediatric and oncology markets for growth, Jessup said.
“There’s certainly a market to be had right now, given the fact that karyotyping is probably going to be eliminated as a [diagnostic] test and replaced by microarrays,” he said.
CombiMatrix’s strategy over the last two quarters “has been to really go after the prenatal market and the miscarriage market,” Jessup said. “So we’ve redeployed the sales force in those two areas. In May, we eliminated a number of our oncology salespeople.”
CombiMatrix is still receiving samples for cancer testing from some clients but “we’re not actively selling it,” Jessup said.
Competitors
The company employs 40 people, the majority of whom are in Irvine. It competes against bigger competitors, including Redwood City-based Genomic Health Inc., and sells its testing services to doctors such as maternal-fetal medicine specialists, OB-GYNs and pathologists.
It’s “getting reimbursed by virtually all the insurance carriers for the microarray test—so we’re pleased at the reimbursement,” Jessup said.
CombiMatrix has been in Orange County for about two years.
The company, which was founded in 1995, went public at the end of 2002 and separated from Newport Beach patent owner and licensor Acacia Research Corp. in 2007. It moved its corporate headquarters from the Seattle suburb of Mukilteo, Wash., in order to cut operating expenses and refocus on its diagnostic business.
“We’ve made some pretty good inroads into reducing expenses,” Jessup said.
CombiMatrix’s cash burn rate is roughly $5.3 million a year.
Jessup, a previous chief executive of U.S. Labs Inc. (now part of Laboratory Corp. of America), became CombiMatrix’s boss a few months after the move to Orange County was announced.
