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GenMark Diagnostics Bullish After Meeting With Management

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By on BioPharma

Following what has been a tough stretch for the GenMark Diagnostics, we hosted the company’s CEO Hany Massarany for meetings with investors late last week. As we were not aware of anything within the current business or the product development of the NexGen instrument that would justify a negative move in the stock, we thought it would be a good time for investors to re-acquaint themselves with this small-cap name. In addition, these were the first meetings with new CFO Scott Mendel, who we were impressed with in our time with him.

The tone of the meetings was quite positive and seemed to focus on three issues: 1) NexGen development, 2) competition, and 3) building out-year revenue estimates. Following these meetings and what we have seen out of the company during the spring scientific conference season (CVS, ECCMID, ASM), we continue to be positive on the longterm potential for GenMark and believe that with momentum building in the lab community about the company’s NexGen instrument, this remains an interesting small-cap name in the diagnostics space that investors should be looking to add to their portfolios.

The overall thesis on this stock is that the company is doing a nice job using its firstgeneration XT-8 system to gain customer awareness and build brand recognition that we expect will be supplemented by the launch of the fully automated NexGen platform and broad menu that will accompany the instrument. As this plays out over the next couple of years, near-term catalysts have been sparse, and with investors having shied away from illiquid small-cap life sciences/diagnostics/biotech type names, this stock has predictably suffered.

However, with GenMark’s high-quality management team in place and the opportunity to deliver a game-changing product still on the table and progressing nicely, we continue to like this stock and believe that investors should consider initiating or adding to positions as we await commercial launch of NexGen and subsequent share price appreciation.

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