UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): January 12, 2015 |
GENMARK DIAGNOSTICS, INC. |
(Exact name of registrant as specified in its charter) |
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Delaware | 001-34753 | 27-2053069 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
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5964 La Place Court Carlsbad, California | 92008 |
(Address of principal executive offices) | (Zip Code) |
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760-448-4300 |
(Registrant’s telephone number, including area code) |
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(Former Name or Former Address, if Changed Since Last Report) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |
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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
On January 12, 2015, GenMark Diagnostics, Inc. (the “Company”), and its domestic subsidiaries as guarantors (together with the Company, the “Loan Parties”), entered into a Loan and Security Agreement (the “Agreement”) with General Electric Capital Corporation (“GECC”) and the financial institutions that are or become parties to the Agreement as lenders (together with GECC, the “Lenders”). Pursuant to the Agreement, the Lenders are providing the Company with (a) up to $35,000,000 in a series of term loans and (b) a revolving loan in the maximum amount of $5,000,000, each of which is further described below. Under the terms of the Agreement, the Company may, subject to certain conditions, borrow from the Lenders:
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• | $10,000,000 on or before March 31, 2015 (“Term Loan A”); |
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• | an additional $10,000,000 (“Term Loan B”), subject to the Company’s satisfaction of regulatory requirements necessary to CE Mark its ePlex™ system in Europe by a specified date; |
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• | an additional $15,000,000 (“Term Loan C,” and together with Term Loan A and Term Loan B, the “Term Loans”), subject to the Company’s satisfaction of FDA 510(k) market clearance for the sale of the Company’s ePlex™ system in the United States by a specified date; and |
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• | up to $5,000,000 in the form of a revolving loan, which is subject to a defined borrowing base as set forth in the Agreement (the “Revolving Loan”). |
Borrowings under the Agreement may be used to satisfy the Company’s future working capital needs, including funding the commercial launch of the Company’s ePlex™ system internationally and domestically. The Company has not yet borrowed any amounts under the Agreement.
Under the Agreement, the Term Loans will accrue interest at a rate equal to (a) the greater of 1.00% or the 3-year treasury rate in effect at the time of funding, plus (b) an applicable margin between 4.95% and 5.90% per annum based on certain criteria set forth in the Agreement. The Company is only required to make interest payments on amounts borrowed pursuant to the Term Loans from the applicable funding date until March 1, 2017 (the “Interest Only Period”). Following the Interest Only Period, monthly installments of principal and interest under the Term Loans will be due until the original principal amount and applicable interest is fully repaid by January 12, 2019 (the “Maturity Date”).
Amounts may be borrowed, prepaid and re-borrowed from time to time under the Revolving Loan following the funding of Term Loan A (the “Revolving Credit Facility Activation Date”). Borrowings under the Revolving Loan will accrue interest at a rate equal to (a) the greater of 1.25% per annum or GECC’s base rate as determined by a three-month LIBOR-based formula, plus (b) an applicable margin between 2.95% and 3.95% based on certain criteria as set forth in the Agreement. All principal and interest outstanding under the Revolving Loan is due and payable on the Maturity Date. Following the Revolving Credit Facility Activation Date, the Company would be required to pay GECC a commitment fee equal to 0.75% per annum of the amounts made available but unborrowed under the Revolving Loan.
Upon entering into the Agreement, the Company paid GECC a non-refundable closing fee and a non-refundable agency fee as set forth in the Agreement. Pursuant to the Agreement, the Company is required to pay GECC an annual management fee as set forth in the Agreement through the Maturity Date. The Company would also be required to pay an additional non-refundable closing fee to GECC upon the funding of Term Loan C. In addition, on the date which the Company pays the outstanding principal amount of any Term Loan in full, or the date on which the Company partially prepays any Term Loan prior to the Maturity Date, the Company is required to pay the Lenders a non-refundable final payment fee as set forth in the Agreement. The Agreement further provides that the Company shall reimburse GECC and the Lenders for all fees, costs and expenses presented as of the closing date.
Subject to certain conditions, the Company may voluntarily prepay any Term Loan and voluntarily terminate or permanently reduce lending commitments under the Revolving Loan, in each case in full or in part. Any such prepayment, termination or reduction in lending commitment is subject to a prepayment premium if it occurs on or before the first anniversary of (a) the funding of such Term Loan, with respect to amounts prepaid under the Term Loans, or (b) the Revolving Credit Facility Activation Date, with respect to permanent reductions or the termination of commitments under the Revolving Loan (as applicable, the “Prepayment Fee Termination Date”). Any amounts prepaid under the Term Loans, or the termination
or permanent reduction of commitments under the Revolving Loan, in each case occurring after the applicable Prepayment Fee Termination Date, would not be subject to any prepayment premium.
Pursuant to the terms of the Agreement, the Lenders are granted a security interest in (a) all of the personal property of the Loan Parties, other than intellectual property (which is subject to a negative pledge), but including the Loan Parties’ rights to payment in respect of intellectual property, (b) the stock of all of the Company’s domestic subsidiaries, and (c) 65% of the voting stock and 100% of the non-voting stock of each of the Company’s non-U.S. subsidiaries.
The Agreement contains customary affirmative and negative covenants, including, without limitation, delivering reports and notices relating to the Company’s financial condition and certain regulatory events and intellectual property matters, as well as limiting the creation of liens, the incurrence of indebtedness, and the making of certain investments, payments and acquisitions, other than as specifically permitted by the Agreement.
The Agreement also contains customary events of default (subject, in certain instances, to specified cure periods), including, but not limited to, the failure to make payments of interest or premium when due, the failure to comply with certain covenants and agreements specified in the Agreement, and the occurrence of a material adverse change, certain regulatory events, or certain insolvency events. Upon the occurrence of an event of default, the Lenders may declare all outstanding principal and accrued but unpaid interest under the Agreement immediately due and payable and may exercise the other rights and remedies as set forth in the Agreement.
The foregoing description of the terms of the Agreement is qualified in its entirety by reference to the text of such document, a copy of which will be filed in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), with portions omitted and filed separately with the SEC pursuant to a request for confidential treatment.
Item 2.02. Results of Operations and Financial Condition.
On January 12, 2015, the Company issued a press release announcing its preliminary financial results for the fourth quarter and fiscal year ended December 31, 2014. A copy of the press release is attached hereto as Exhibit 99.1.
The information furnished under this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in any such filing, unless the Company expressly sets forth in such filing that such information is to be considered “filed” or incorporated by reference therein.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K that relates to the creation of a direct financial obligation of the Company is incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) The following exhibit is furnished with this Current Report:
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Exhibit No. | | Description |
99.1 | | Press release dated January 12, 2015 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
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| GENMARK DIAGNOSTICS, INC. |
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Date: January 12, 2015 | /s/ Scott Mendel |
| Scott Mendel |
| Chief Financial Officer (Principal Financial and Accounting Officer) |
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EXHIBIT INDEX
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Exhibit No. | | Description |
99.1 | | Press release dated January 12, 2015 |
Exhibit 99.1
January 12, 2015
GenMark Announces Completion of ePlex™ Development and Preliminary Q4 Financial Results
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• | ePlex Sample-to-Answer System Development Completed |
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▪ | Fourth Quarter Revenue Expected to be $9.8 million, Up 52% Versus Prior Year |
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• | XT-8 Installed Base Expected to Grow by 38 to 540 |
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• | Debt Facility Established for up to $40 Million |
CARLSBAD, Calif.—(BUSINESS WIRE)— GenMark Diagnostics, Inc. (Nasdaq:GNMK), a leading provider of automated, multiplex molecular diagnostic testing systems, today announced completion of the development stage of its ePlex system, positive preliminary fourth quarter 2014 results, and the closing of a debt facility of up to $40 million led by GE Capital, Healthcare Financial Services.
The Company expects fourth quarter 2014 revenue of $9.8 million, an increase of 52% over the prior year period. Full year 2014 revenue is expected to be $30.6 million, an increase of 59% versus 2013 base business revenue, which excludes former customer NMTC. During the quarter, 38 additional XT-8 analyzers were placed in end-user laboratories, resulting in a total installed base of 540 analyzers within the U.S. market.
In addition, during the fourth quarter the Company completed the development stage of the ePlex sample-to-answer system. “We are delighted to have completed the development of the ePlex system in line with previously communicated expectations. Our team is now preparing to execute the relevant analytical and clinical studies, which must be completed prior to launching the system,” said Hany Massarany, President and Chief Executive Officer of GenMark. “The ePlex sample-to-answer system is designed to be the most competitively differentiated platform in multiplex molecular diagnostics delivering superior performance and testing efficiency to customers globally,” added Massarany. The Company expects a mid-year launch of ePlex in Europe and 510(k) submission to the FDA in the second half of the year.
The Company also announced that it has established a debt facility for up to $40 million led by GE Capital’s Healthcare Financial Services business. The facility will provide additional working capital as the Company launches ePlex globally. “As we focus on bringing ePlex to market, this debt facility provides additional capacity to launch ePlex internationally as well as domestically. The facility’s structure is synchronized with our commercial launch milestones and provides access to capital as ePlex commercialization efforts commence,” concluded Massarany.
The Company will be hosting a conference call to discuss fourth quarter results in further detail and release 2015 guidance on Tuesday, February 24, 2015 starting at 4:30 p.m. Eastern Time. The conference call will be concurrently webcast. The link to the webcast will be available on the GenMark Diagnostics, Inc. website at www.genmarkdx.com under the investor relations section and will be archived for future reference. To listen to the conference call, please dial (877) 312-5847 (US/Canada) or (253) 237-1154 (International) and use the conference ID number 61540488 approximately five minutes prior to the start time.
ABOUT GENMARK DIAGNOSTICS
GenMark Diagnostics is a leading provider of automated, multiplex molecular diagnostic testing systems that detect and measure DNA and RNA targets to diagnose disease and optimize patient treatment. Utilizing GenMark’s proprietary eSensor® detection technology, GenMark’s eSensor® XT-8 system is designed to support a broad range of molecular diagnostic tests with a compact, easy-to-use workstation and self-contained, disposable test cartridges. The eSensor® detection technology is also incorporated into GenMark’s sample-to-answer system, ePlex. For more information, visit www.genmarkdx.com.
SAFE HARBOR STATEMENT
This press release includes forward-looking statements regarding events, trends and business prospects, which may affect our future operating results and financial position. Such statements, including, but not limited to, those regarding the timely commercialization of our ePlex system and the availability of future financing, are all subject to risks and uncertainties that could cause our actual results and financial position to differ materially. Some of these risks and uncertainties include, but are not limited to, our ability to successfully commercialize our ePlex system and its related test menu in a timely manner, constraints or inefficiencies caused by unanticipated acceleration and deceleration of customer demand, our ability to successfully expand sales of our product offerings outside the United States, and third-party payor reimbursement to our customers, as well as other risks and uncertainties described under the “Risk Factors” in our public filings with the Securities and Exchange Commission. We assume no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made.
GenMark Diagnostics, Inc.
Hany Massarany
President/Chief Executive Officer
760-448-4358
Source: GenMark Diagnostics, Inc.
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