CombiMatrix Reports Second Quarter 2014 Financial and Operating Results

CombiMatrix Reports Second Quarter 2014 Financial and Operating Results

                 - Reports Record Revenue and Test Volumes -

- Company to Host Conference Call and Webcast at 1:30 p.m. PDT, Today, August
                                  6, 2014 -

IRVINE, Calif., Aug. 6, 2014 (GLOBE NEWSWIRE) -- CombiMatrix Corporation
(Nasdaq:CBMX), a molecular diagnostics company specializing in DNA-based
testing services for developmental disorders and cancer diagnostics, today
reported financial results for the second quarter and six months ended June
30, 2014. The Company will host a conference call and webcast at 1:30 p.m.
PDT, today.

"Our second quarter and first half of 2014 performance continues to
demonstrate that we are executing on our growth plan," said Mark McDonough,
president and chief executive officer of CombiMatrix. "Once again, we recorded
record array testing volumes and revenues in core service offerings. We now
have 14 of the 15 sales representatives that we planned on hiring at the
beginning of 2014 on board and out in the field championing the benefits of
the CombiMatrix service offerings to current and prospective customers. Going
forward, we expect to continue to invest in our direct sales and marketing
infrastructure and to continue to leverage our partnerships to drive adoption.
We plan to lever that infrastructure by expanding our service offerings in the
coming months."

Operational Results

The Company recorded record test volumes for the second quarter and first six
months of 2014. Operational highlights include:

  *Record prenatal array volume of 872 tests in the second quarter of 2014, a
    60 percent increase compared to the second quarter of 2013. For the six
    months ended June 30, 2014, core prenatal array test volume also grew 60
    percent compared to the same period in 2013.
    
  *The Company's customer base continued to grow reaching 177 customers
    sending tests during the second quarter of 2014, a new record for
    CombiMatrix, compared to 125 customers sending tests during the second
    quarter of 2013.
    
  *The Company's "new" customer total grew to55 new customers added in the
    second quarter of 2014 from 30 customers added in the second quarter of
    2013.

Financial Results

Quarter ended June 30, 2014 compared to quarter ended June 30, 2013

For the quarter ended June 30, 2014, CombiMatrix reported total revenues of
$1.9 million, a 29 percent increase over total revenues of $1.5 million for
the second quarter of 2013.

Total operating expenses were $4.6 million for the second quarter of 2014
compared to $3.0 million in the comparable quarter of 2013. The increase was
driven primarily by continued investment in sales and marketing by increasing
the Company's sales force to 14 sales representatives, as well as higher legal
defense costs from ongoing litigation, which alone accounted for $795,000 of
the increase in general and administrative expenses over the second quarter of
2013. Total operating expenses also reflect a 370 basis point gross margin
improvement and by general and administrative expense growth that was slower
than revenue growth, excluding litigation expenses.

Net loss was $2.6 million for the second quarter of 2014 compared to a net
loss of $0.5 million in the comparable quarter of 2013. The net loss in the
second quarter of 2013 was positively impacted by a $1.0 million non-cash
warrant derivative gain, compared to only $152,000 of non-cash warrant
derivative gain in the second quarter of 2014. A reduction in the number of
derivative warrants outstanding due to warrant exercises in late 2013 and
early 2014 was the primary driver for the decrease in the gain as compared to
the second quarter of 2013.

The Company reported a net loss attributable to common stockholders of $2.6
million, or $0.23 per basic and diluted shares outstanding, compared to a net
loss attributable to common stockholders of $1.7 million, or $0.48 per basic
and diluted shares outstanding, for the same period in 2013.

Six months ended June 30, 2014 compared to six months ended June 30, 2013

For the six months ended June 30, 2014, CombiMatrix reported total revenues of
$3.8 million, a 21 percent increase over total revenues of $3.1 million for
the same period in 2013.

Total operating expenses were $8.4 million for the six months ended June 30,
2014 compared to $6.2 million in the comparable period in 2013. The increase
was driven primarily by continued investment in sales and marketing as well as
higher legal defense costs from ongoing litigation, which alone accounted for
$1.2 million of the increase in general and administrative expenses over the
comparable period in 2013. Total operating expenses also reflect a 350 basis
point gross margin improvement and by general and administrative expense
growth that was slower than total revenue growth, excluding litigation
expenses.

Net loss was $4.6 million for the six months ended June 30, 2014 compared to
$1.2 million in the comparable period in 2013. A significant component of the
difference was a $2.2 million non-cash warrant derivative gain recognized in
the first half of 2013 compared to only $152,000 of non-cash warrant
derivative gain recognized in the first half of 2014. Again, a reduction in
the number of derivative warrants outstanding due to recent warrant exercises
was the primary driver for the decrease in the gain period-over-period.

Net loss attributable to common stockholders was $4.6 million, or $0.42 per
basic and diluted shares outstanding, compared to $3.1 million, or $1.04 per
basic and diluted shares outstanding in the prior year period.

Cash, cash equivalents and short-term investments totaled $10.1 million as of
June 30, 2014 compared to $14.0 million as of December 31, 2013. For the three
and six months ended June 30, 2014, net cash used in operating activities was
$2.5 million and $4.0 million, respectively, compared to $1.3 million and $2.9
million in the comparable 2013 periods, respectively. Management believes the
Company has fully mitigated its risk of continuing as a going concern and has
sufficient cash to last well beyond the next twelve months.

Second Quarter and Early Third Quarter 2014 Business Highlights

  *Trilochan Sahoo, M.D. FACMG, has recently joined the Company as Director
    of Cytogenetics. Dr. Sahoo's expertise is in the development, evaluation
    and implementation of microarray-based technologies, especially as used as
    an important diagnostic tool in clinical cytogenetics and genomics.
    
  *Long Island Pathology (LI Path) is now offering its patients CombiMatrix's
    chromosomal microarray analysis (CMA) testing for miscarriage analysis. LI
    Path, based in East Setauket, New York, is a physician-led diagnostic
    pathology laboratory serving the New York, New Jersey and northeastern
    Pennsylvania areas.
    
  *CombiMatrix's chromosomal microarray analysis (CMA) test to identify
    development disorders in pediatric patients, the CombiSNP™ Array for
    Pediatric Analysis, and its fresh tissue or paraffin-embedded tissue
    sample miscarriage analysis test, the CombiSNP™ Array for Pregnancy Loss,
    have received conditional approval from the New York Department of Health
    for testing on patient samples.
    
  *CombiMatrix signed a contract with Stratose Networks Division, one of the
    largest directly-managed PPO networks in U.S., to provide coverage of
    CombiMatrix's diagnostic laboratory services.

Conference Call and Webcast

CombiMatrix will host a conference call at 1:30 p.m. PDT (4:30 p.m. EDT) today
to discuss the second quarter and year-to-date 2014 financial and operating
results. To access the presentation by phone, dial 1-877-407-0784 for domestic
callers and 1-201-689-8560 for direct dial or international callers. Please
ask for the "CombiMatrix Corporation 2014 Second Quarter Financial Results
Conference Call." The conference call will be webcast live under the investor
relations section of CombiMatrix's website at www.combimatrix.com. A replay of
the presentation will be available following the presentation for 30 days,
either via the CombiMatrix website Investor/Events section or by dialing
1-877-870-5176 for domestic callers or 1-858-384-5517 for direct-dial
international callers. When prompted, enter playback pin number 13587798.

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995

This press release contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995. These statements are based upon our current expectations, speak only
as of the date hereof and are subject to change. All statements, other than
statements of historical fact included in this press release, are
forward-looking statements. Forward-looking statements can often be identified
by words such as "anticipates," "expects," "intends," "plans," "goal,"
"predicts," "believes," "seeks," "estimates," "may," "will," "should,"
"would," "could," "potential," "continue," "ongoing," similar expressions, and
variations or negatives of these words and include, but are not limited to,
statements regarding projected results of operations and management's future
business, operational and strategic plans, recruiting efforts and test menu
expansion. These forward-looking statements are not guarantees of future
results and are subject to risks, uncertainties and assumptions that could
cause our actual results to differ materially and adversely from those
expressed in any forward-looking statement. The risks and uncertainties
referred to above include, but are not limited to: our ability to successfully
expand the base of our customers and strategic partners, add to the menu of
our diagnostic tests, develop and introduce new tests and related reports,
expand and improve our current suite of services, optimize the reimbursements
received for our microarray testing services, and increase operating margins
by improving overall productivity and expanding sales volumes; our ability to
successfully accelerate sales, steadily increase the size of our customer
rosters in both prenatal and developmental genetic testing markets; our
ability to attract and retain a qualified sales force in wider geographies;
our ability to ramp production from our sales force and our strategic
partners; rapid technological change in our markets; changes in demand for our
future services; legislative, regulatory and competitive developments;
litigation; general economic conditions; and various other factors. Further
information on potential factors that could affect our financial results is
included in our Annual Report on Form 10-K, Quarterly Reports of Form 10-Q,
and in other filings with the Securities and Exchange Commission. We undertake
no obligation to revise or update publicly any forward-looking statements for
any reason, except as required by law.

                                TABLES FOLLOW


COMBIMATRIX CORPORATION
CONSOLIDATED SUMMARY FINANCIAL INFORMATION
(In thousands, unaudited)

                                    Three Months Ended   Six Months Ended
                                    June 30,             June 30,
                                    2014       2013      2014       2013
                                                                 
Revenues:                                                         
Diagnostic services                  $1,906    $1,445   $3,696    $3,031
Royalties                            35         55        67         80
Total revenues                       1,941      1,500     3,763      3,111
                                                                 
Operating expenses:                                               
Cost of services                     1,053      851       2,051      1,788
Research and development             224        177       358        360
Sales and marketing                  1,109      695       1,995      1,336
General and administrative           2,216      1,251     3,973      2,624
Patent amortization and royalties    28         66        60         126
Total operating expenses            4,630      3,040     8,437      6,234
Operating loss                       (2,689)    (1,540)   (4,674)    (3,123)
Other income (expense)                                            
Interest income                      24         1         29         1
Interest expense                     (22)       (19)      (38)       (321)
Warrant derivative gains             152        1,045     152        2,244
Warrants consideration               (44)       --        (44)       --
Total other income (expense)       110        1,027     99         1,924
Net loss                             $(2,579)  $(513)   $(4,575)  $(1,199)
Series A convertible preferred stock $--       $--      $--       $(246)
dividends
Series C convertible preferred stock --         (11)      --         (11)
dividends
Deemed dividends from issuing Series --         --        --         (417)
B convertible preferred stock
Deemed dividends from issuing Series --         (1,213)   --         (1,213)
C convertible preferred stock
Net loss attributable to common      $(2,579)  $(1,737) $(4,575)  $(3,086)
stockholders
                                                                 
Basic and diluted net income (loss)  $(0.23)   $(0.14)  $(0.42)   $(0.41)
per share
Series A convertible preferred stock --         --        --         (0.08)
dividends
Deemed dividends from issuing Series --         --        --         (0.14)
B convertible preferred stock
Deemed dividends from issuing Series --         (0.34)    --         (0.41)
C convertible preferred stock
Basic and diluted net loss per share                              
attributable                         $(0.23)   $(0.48)  $(0.42)   $(1.04)
to common stockholders
                                                                 
Basic and diluted weighted average                                
common                               11,063,246 3,547,709 10,995,351 2,934,653
shares outstanding

                                                               
                                                               
CONSOLIDATED BALANCE SHEET INFORMATION:                         
                                                       June 30, December 31,
                                                       2014     2013
                                                               
Total cash, cash equivalents and short-term investments $10,098  $14,036
Total assets                                            $13,444  $16,832
Total liabilities                                       $2,447   $2,168
Total stockholders' equity                              $10,997  $14,664

CONTACT: Company Contact:
         Mark McDonough
         President & CEO, CombiMatrix Corporation
         (949) 753-0624
        
         Investor Contact:
         Robert Flamm, Ph.D.
         Russo Partners, LLC
         (212) 845-4226
         robert.flamm@russopartnersllc.com
        
         Media Contact:
         David Schull or Lena Evans
         Russo Partners LLC
         (212) 845-4271
         david.schull@russopartnersllc.com
         lena.evans@russopartnersllc.com

CombiMatrix Corporation
 
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