Response Genetics' ($RGDX) third-quarter results reflect sobering declines in revenue and rising net losses. But the molecular diagnostics maker said it is well underway with plans to reposition itself for larger revenue gains down the line through new products and larger clients.
Los Angeles-based Response said it pulled in $4.1 million in revenue for the 2013 third quarter, down from $5.4 million in the 2012 third quarter. Net losses grew to $2.7 million, versus a $1.4 million net loss through the same period a year ago.
Why did revenue decline so much? Response said the change likely stemmed from switching its sales efforts to "larger new potential accounts," made possible by the addition of new diagnostic testing services and more diagnostic testing products. But in the interim, the results hurt. Among the highlights: Pharmaceutical client revenue declined 30%. Revenue from the company's ResponseDx platform revenue dropped 18%, a downturn Response said was unexpected.
"The results for the third quarter of 2013 were clearly disappointing," Thomas Bologna, Response Genetics' chairman and CEO, said in a statement. He insisted, however, that the company's shift to "more sizeable and scalable potential accounts" should start to "deliver meaningful top-line Dx growth in the coming quarters."
Response does have Big Pharma interest. GlaxoSmithKline ($GSK) acquired 5 million shares in the company in 2012, and Response conducts companion diagnostic tests for GSK's immunotherapy and cancer pipeline drug candidates, among other clients.
Response focuses on molecular diagnostic tests that can help determine how well a patient is responding to cancer treatment. It took a number of steps in Q3 to shore up its business in the space. In late August, for example, Response snatched up "key assets" of the defunct Pathwork Diagnostics. They include an FDA-cleared and Medicare-approved test designed to spot metastatic tumors and cancers whose origin is hard to figure out.
Response also noted that it launched four new tests during Q3, including one that spots the HER2 mutation in an effort to treat lung cancer.
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