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Q1 2013 Earnings Call
May 08, 2013 11:00 am ET
Rene Caron - President and Chief Operating Officer
Mark McDonough - Chief Executive Officer, President, Chief Commercial Officer and Director
Scott R. Burell - Chief Financial Officer, Principal Accounting Officer, Secretary and Treasurer
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Thank you, Andrea, and good morning, everyone. Welcome to the CombiMatrix Corporation 2013 first quarter results conference call. With us this morning are CombiMatrix President and CEO, Mark McDonough; and the company's Chief Financial Officer, Scott Burell.
Earlier this morning, CombiMatrix distributed a news release that summarized its financial results for the first quarter ended March 31, 2013. If you have not received a copy of the news release or want to be added to the company's distribution list, please contact our office at (949) 474-4300 and we will send you a copy and take care of your request.
I've been asked to remind you that today’s presentation and answers to questions in the question-and-answer portion of the call will include forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to be materially different from those anticipated.
For a list and description of those risks and uncertainties, please see the CombiMatrix’s filings with the Securities and Exchange Commission.
CombiMatrix does not assume any obligation to update or revise any financial projections or forward-looking statements made today.
Furthermore, this call contains some time-sensitive information and is accurate only as of this call today, May 8, 2013. Copies of CombiMatrix SEC filings are available online from the SEC or by clicking on Investor Relations on the CombiMatrix website.
With that, it's now my pleasure to turn the call over to CombiMatrix President and CEO, Mark McDonough. Good morning, Mark.
Good morning, Rene, and thank you and good morning, everyone. I'm pleased to start my first results conference call as CEO by saying we had a very solid first quarter. We had record prenatal testing volumes, which we previously announced. Total revenues increased by 28% over the first quarter of 2012, and most importantly, revenues in our core prenatal testing services grew by 158% over Q1 2012.
At the same time, we're continuing to cut costs, which means we have to work smarter. Our CFO, Scott Burell, will get into our financial details later in the call. But our goal is to make CombiMatrix leaner but more focused and more effective. We have implemented a strategy to reduce cash burn while concurrently keeping the necessary resources in place to take advantage of what we see as a huge opportunity, that is a rapidly expanding prenatal microarray testing market and our unique place in it.
There is no question the overall prenatal molecular diagnostic market is growing. The market is estimated to be about $600 million annually, but it's in transition and undergoing some fundamental changes.
New clinical data, including 2 large NIH-sponsored studies published late last year in the New England Journal of Medicine, showed that chromosomal microarray analysis, or CMA which we specialize in, does a better job of identifying significant genetic abnormalities than traditional karyotyping for both genetic prenatal diagnosis and genetic evaluation of stillbirths.
As more and more women realize the value of CMA, we believe the standard of care for prenatal testing will change and our share of the market will continue to grow rapidly. Additionally, we believe the advent of noninvasive prenatal testing, another market growing very rapidly, will only increase our market share. These noninvasive tests can be complementary to what we do and we believe will serve to grow our overall market.
The noninvasive tests screen for genetic conditions like Down syndrome, while our tests are more definitive and confirm the wide range of genetic abnormalities that can impact the pregnancy or the child once it's born. We are finding already that many parents who receive a positive NIPT result of a screen want to move to microarray analysis to confirm the screening results and generally to learn more. Interestingly enough, we're also getting cases where negative screens are reflects, as well to the array when the clinical picture is still unclear despite the negative screen.
As every day goes by, it is more apparent that our decision last year to go from a laboratory that was trying to do a variety of testing diverse markets to one focused on prenatal and pediatric testing, particularly CMA, was the right move. We are encountering significant headwinds in the oncology market at the time, which we have now deemphasized. And now we are seeing tailwinds in the prenatal and pediatric testing markets where we are focused. Today, we are the only publicly-traded company in the world that specializes in CMA.
As most of you know, I come from the sales and marketing side of the business. So an important part of what I brought to this role was a first-hand knowledge of our sales force and our sales strategy. I knew how we are deploying our efforts. As a result, we made the strategic decision to adopt a 3-tiered approach to our sales and marketing.