), a leader in multiplex molecular tests systems, has recently
priced the secondary offering of its 10 million common shares at
$4.20 each in a bid to cover over-allotment. The company has also
granted the underwriters a 30-day option to purchase an additional
1.5 million shares. The offering is expected to close on June
The company plans to use the proceeds for research and
development expenditure in a planned attempt to enhance its product
portfolio as well as to develop its NexGen System. In its most
recent earnings release, GenMark stated that it expects increasing
expenses over the next few years due to the development of its
next-generation platform, the NexGen System.
The increase in R&D expenditure will go directly to fuel
growth in test menu expansion and upgrade its technology. The
proceeds will also enable the company to focus on its growth
strategy in the world market by expanding domestic and overseas
GenMark earlier asserted that any subsequent public offering
might negatively affect the market price of its common stock.
However, the contagion of economic problems in Europe as well as
challenging global market conditions have resulted in turmoil in
the financial service industry and credit market, leading to the
company's limited access to capital.
The book-running manager for the offering is J.P. Morgan
Securities LLC, a division of
JP Morgan Chase & Co.
). The co-managers are William Blair & Company, LLC and
Canacord Genuity Inc.
GenMark's net loss from operations and failure to achieve
profitability remain an overhang. To date, the company has funded
its operating activities mainly from the proceeds from common stock
offerings, revenues and borrowings. The rigorous efforts to bolster
sales and upgrade its technology are expected to yield positive
results for GenMark.
The stock currently retains a Zacks #2 Rank, which translates
into a short-term Buy.
GENMARK DIAGNST (GNMK): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
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