Genetic Signatures halts development of US respiratory product due to competition

Global molecular diagnostics company Genetic Signatures (ASX: GSS) has decided to halt the development of its EasyScreen Essentials Respiratory Detection Kit for the US market due to increased competition and changing market dynamics. It will now focus its effort and investment on the anticipated launch of the EasyScreen Gastrointestinal Parasite Detection Kit in the US.

Subsequently, Genetic Signatures has ceased all US clinical development activities for this product and no longer intends to file a 510(k) application to the US Food & Drug Administration for it as previously guided.

Interim CEO Neil Gunn commented, “While it is disappointing to conclude the development of a key product at this late stage, we are very mindful that any investment we make in new products must continue to be aligned with a compelling commercial opportunity. 

“Based on our assessment of the commercial opportunity and the feedback we have had from our potential US customers, we are not sufficiently confident that our US Respiratory product will be able to rapidly win market share from the incumbent products in this increasingly competitive market.” 

Genetic Signatures assessment revealed two major challenges: increasing competition and COVID’s declining prevalence. Following the increase in molecular testing for respiratory pathogens during the COVID-19 pandemic, Genetic Signatures started developing the EasyScreen Essentials Respiratory Detection Kit specifically designed for the US market. This product focused on the most common US respiratory infections, including SARS-CoV-2, and used Genetic Signatures’ 3base technology to improve the potential to detect new, emerging strains of those respiratory pathogens. 

However, since the commencement of this product development program, several high-throughput, fully automated respiratory syndromic molecular tests have been cleared by the FDA and established in the US market. In parallel, molecular testing for respiratory pathogens has declined significantly over the past 24–36 months.

The Company does not believe its benefits over established and recently cleared incumbent automated products are sufficient enough for it to secure a commercially meaningful share of this increasingly crowded market. 

This development follows Dr. John Melki’s resignation on April 30, 2024, as CEO of Genetic Signatures after 11 years in the Company. Moreover, in Q3 FY24, its sales of $1.7 million—down from the prior quarter’s $2 million—were impacted by reduced Australian sales EasyScreen Respiratory Pathogen Detection Kit. Overall, its FY24 YTD revenue of $5.3 million decreased from PCP’s $12.4 million. It reported a cash burn of $4.3 million, with $20.3 million cash in hand at the end of the period. 

Closer to home, in April 2024, the Therapeutic Goods Administration (TGA) completed the review of Genetic Signatures’ redesigned EasyScreen Respiratory Pathogen Detection Kit and included the updated device within the ARTG (Australian Register of Therapeutic Goods) to allow supply within Australia. 

Gunn added, “We remain committed to our respiratory products in our domestic market of Australia, where we see increasing use as the winter season arrives.”

For the US, management and the Board are now focusing on the anticipated launch of the EasyScreen™ Gastrointestinal Parasite Detection Kit. The kit screens the body for eight of the most common gastrointestinal bugs and has an addressable market of over 5 million tests per annum. 

In September 2023, Genetic Signatures submitted a 510(k) application to the FDA for regulatory clearance to market its EasyScreen™ Gastrointestinal Parasite Detection Kit and automated workflow in the US. The application is still under review.

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Alinda Gupta

Alinda is a Business Reporter for The Sentiment

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