Sequenom, Inc. Reports Financial Results For The Third Quarter Of 2012 And
Announces 90,000 Annualized Run Rate For MaterniT21™ PLUS Tests
Forty-Six Million Lives Now Under Coverage For Sequenom CMM MaterniT21™ PLUS
SAN DIEGO, Nov. 8, 2012
SAN DIEGO, Nov. 8, 2012 /PRNewswire/ -- Sequenom, Inc. (NASDAQ: SQNM), a life
sciences company providing innovative genetic analysis solutions, today
reported revenue of $22.9 million for the third quarter of 2012, an increase
of 25% from revenue of $18.3 million in the second quarter of 2012 and a 68%
increase compared to revenue of $13.6 million for the third quarter of 2011.
Revenues from the Sequenom Center for Molecular Medicine (Sequenom CMM)
diagnostic testing services operating segment grew to $12.5 million in the
third quarter of 2012, while revenues from the genetic analysis operating
segment were $10.4 million in the third quarter of 2012.
Also during the third quarter of 2012, Sequenom CMM established a number of
new agreements with networks and insurance providers, increasing the number of
lives covered with in-network access to the MaterniT21 PLUS laboratory
developed test (LDT) from 26 million to 46 million.
"The results from this quarter illustrate the impact of the Company's
strategic approach, as we have focused on maintaining our leadership position
within our markets," said Harry Hixson, Jr., Ph.D., Chairman and CEO of
Sequenom. "Overall, the last year has been an exciting time as Sequenom CMM
introduced the MaterniT21 PLUS LDT and dramatically scaled up operations to
support the overwhelming response from the obstetrics and maternal-fetal
medicine physician community. We are pleased that Sequenom CMM has reached a
90,000 annualized test volume run rate for the MaterniT21 PLUS test. We will
also continue to seek new molecular diagnostic growth opportunities as we move
Diagnostic services revenue is primarily recognized when cash is received,
while costs are recognized in the current period upon completion of the
services. The costs associated with increasing test volumes resulted in
decreased gross margins as the Company has not yet recognized revenue related
to the increased number of laboratory tests performed, which have been billed
but not yet collected.
Gross margin in the third quarter of 2012 was 26% of revenues as compared to a
gross margin of 60% in the same period one year ago, a difference primarily
attributable to current cash accounting for diagnostics revenue and higher
test volumes, a result of the growing market adoption of the Sequenom CMM
MaterniT21 PLUS LDT. Gross margin is expected to continue to fluctuate
quarterly due to changes in sales volumes and the timing of cash receipts
until the Company converts to accrual accounting for diagnostic services
revenue, which is expected to occur after sufficient reimbursement history has
Total operating expenses for the third quarter of 2012 were $35.7 million, as
compared to total expenses of $26.4 million for the third quarter of 2011.
This change primarily reflects a 49% increase in selling and marketing expense
resulting from higher labor costs associated with additional headcount to
increase market penetration and support the continued expansion of the
diagnostic services market, including sales force expansion during the third
General and administrative expenses increased in the third quarter of 2012 to
$10.1 million as compared to $5.5 million in the same period one year ago.
The increase was due primarily to higher legal costs associated with patent
litigation, and higher labor costs associated with additional headcount to
support operations. Total stock-based compensation expense was $3.1 million
for the third quarter of 2012, flat as compared to the third quarter of 2011.
Net loss for the third quarter of 2012 grew to $30.2 million, or $0.26 per
share, resulting from an increase in costs associated primarily with the
growth in testing volume of the MaterniT21 PLUS LDT. This compares to a net
loss of $18.4 million, or $0.19 per share for the same period in 2011.
"We are pleased with the continuing ramp up of our diagnostic services
revenue, driven primarily by the rapid adoption of Sequenom CMM MaterniT21
PLUS LDT. Importantly, we are seeing greater recognition from the payors and
networks as 46 million Americans now have network access to the test," said
Paul V. Maier, Sequenom's CFO. "Additionally, to support our continued
growth, we strengthened our balance sheet significantly with the completion of
our $130 million convertible note financing transaction in September of 2012."
For the first nine months of 2012, the Company reported revenue of $56.0
million, an increase of 39% from revenue of $40.4 million for the first nine
months of 2011. Revenues in the first nine months of 2012 from the Sequenom
CMM diagnostics services operating segment grew to $25.4 million, while
revenues from the genetic analysis operating segment were $30.6 million in the
first nine months of 2012.
Gross margin for the first nine months of 2012 was 31% of revenue as compared
to gross margin of 63% for the first nine months of 2011. Total operating
expenses for the first nine months of 2012 were $100.6 million, as compared to
total expenses of $77.8 million for the first nine months of 2011.
Net loss for the first nine months of 2012 was $84.3 million, or $0.74 per
share, as compared to net loss of $52.0 million, or $0.52 per share for the
same period in 2011, reflecting an increase in costs associated primarily with
the growth in sales volume of the MaterniT21 PLUS LDT.
As of September 30, 2012, total cash, cash equivalents, and marketable
securities were $193.4 million. In the third quarter of 2012, the Company
completed a private offering of $130.0 million convertible, unsecured, senior
notes with the intent to use the net proceeds to fund continued
commercialization of the MaterniT21 PLUS LDT, as well as for other general
corporate purposes, which may include research and development expenses,
capital expenditures, working capital and general administrative expenses.
Net cash used in operating activities was $63.7 million for the first nine
months of 2012, while purchases of capital equipment and leasehold improvement
for the same period totaled $14.2 million, funded partially through
utilization of the Company's credit facility. As of September 30, 2012, the
Company had borrowed $20.0 million under the credit facility.
Sequenom CMM accessioned approximately 26,000 total test samples in the third
quarter of 2012, including nearly 18,000 MaterniT21 PLUS test samples.
Sequenom CMM celebrated the one-year anniversary of the commercial
availability of the MaterniT21 PLUS LDT with a total of approximately 37,000
samples accessioned since the launch in the fall of 2011. At the close of
October 2012, the annualized run rate of MaterniT21 PLUS samples accessioned
was more than 90,000 test samples, an average of more than 1,700 samples
weekly. Sequenom CMM now expects to significantly exceed its previously
announced internal goal of 50,000 MaterniT21 PLUS tests billed for 2012.
Additionally, The Blue Cross and Blue Shield Association Medical Advisory
Panel announced completion of their technology assessment, concluding nucleic
acid sequencing-based testing of maternal plasma for fetal trisomy 21 with
confirmatory testing of positive results in both high-risk women and
average-risk women being screened for fetal trisomy 21 meets the Blue Cross
and Blue Shield Association Technology Evaluation Center (TEC) criteria.
The California Technology Assessment Forum (CTAF) also completed an
independent evaluation of the cell-free fetal DNA technology used in the
Sequenom CMM MaterniT21 PLUS LDT. The CTAF recommended that the use of cell
free fetal DNA as a prenatal advanced screening test for fetal aneuploidy for
Trisomy 21 and Trisomy 18 in high risk women meets all five of the CTAF
criteria for safety and efficacy and improvement in health outcomes. Blue
Shield of California Foundation (BSCF) spearheads the CTAF, which was
established to assess new and emerging medical technology.
On November 2, 2012 the U.S. Patent & Trademark Office issued a Notice of
Allowance for a U.S. patent covering novel methods for the use of massively
parallel sequencing to detect fetal aneuploidies, such as Trisomy 21.
Sequenom has licensed the exclusive rights to the invention, which was made by
Drs. Dennis Lo, Rossa Chiu and Alan Chan of the Chinese University of Hong
Kong ("CUHK"). The Notice of Allowance was issued in connection with U.S.
patent application no. 12/178,181.
"The allowed patent claims are an important component of Sequenom's prenatal
patent strategy and the protection of its business and we look forward to
their issuance," continued Harry Hixson, Jr. "When issued, this new patent
will be a significant addition to Sequenom's intellectual property portfolio."
The Company also established additional international distribution agreements
to expand access to the MaterniT21 PLUS testing service outside the United
States. Current agreements now include Japan, Hong Kong, the Czech Republic,
Slovakia, the Netherlands and Israel.
In response to sustained growth in commercial interest for the MaterniT21 PLUS
testing service, Sequenom CMM increased its sequencing-based test capacity in
the third quarter, from 100,000 to more than 200,000 test samples per year.
Sequenom CMM has also rapidly expanded access to the testing services for
eligible patients, from 20 metropolitan areas at launch to all 50 states, with
a significantly augmented sales force of 75 representatives, up from 20 at
launch in the fall of 2011.
As of the end of the third quarter, the testing service run rate had reached
more than 10 percent of the high risk U.S. market of 750,000 women.
Approximately 30 percent of the maternal fetal medical specialists in the
United States have ordered the MaterniT21 PLUS test in their practices.
Conference Call Information
A conference call will take place today, November 8, 2012, at 2:00 p.m.
Pacific Time (5:00 p.m. Eastern Time) hosted by Chairman and CEO Harry F.
Hixson, Jr., Ph.D., and other members of senior management. To access the
live teleconference call, dial 800-860-2442 in the U.S., 866-605-3852 in
Canada (both are toll free), and 412-858-4600 for other international
callers. Please specify to the operator that you would like to join the
"Sequenom Third Quarter 2012 Earnings Conference Call." If you are unable to
listen to the live webcast, a teleconference replay will be available through
Friday, November 23, 2012. Interested parties can access the rebroadcast by
dialing 877-344-7529 or 412-317-0088 internationally and entering the
conference number 10016291.
The conference call webcast is accessible through the "Investors" section of
the Sequenom website at http://ir.sequenom.com. An online replay will be
available following the initial broadcast until Friday, November 23, 2012.
Sequenom, Inc. (NASDAQ: SQNM) is a life sciences company committed to
improving healthcare through revolutionary genetic analysis solutions.
Sequenom develops innovative technology, products and diagnostic tests that
target and serve discovery and clinical research, and molecular diagnostics
markets. The Company was founded in 1994 and is headquartered in San Diego,
California. Sequenom maintains a Web site at http://www.sequenom.com to which
Sequenom regularly posts copies of its press releases as well as additional
information about Sequenom. Interested persons can subscribe on the Sequenom
Web site to email alerts or RSS feeds that are sent automatically when
Sequenom issues press releases, files its reports with the Securities and
Exchange Commission or posts certain other information to the Web site.
About Sequenom Center for Molecular Medicine
Sequenom Center for Molecular Medicine (Sequenom CMM^®) is a CAP accredited
and CLIA-certified molecular diagnostics reference laboratorywith facilities
in San Diego, CA and Grand Rapids, MI. Sequenom CMM is dedicated to the
development and commercialization of laboratory developed tests for prenatal
and retinal conditions and diseases. Utilizing innovative proprietary
technologies, Sequenom CMM provides test results that can be used as tools by
clinicians in managing patient care. Testing services are available only upon
request to physicians. Sequenom CMM works closely with key opinion leaders
and experts in obstetrics, retinal care and genetics. Sequenom CMM scientists
use a variety of sophisticated and cutting-edge methodologies in the
development and validation of tests. Sequenom CMM is changing the landscape
in genetic diagnostics. Visit http://www.scmmlab.com for more information on
laboratory testing services.
SEQUENOM^®, Sequenom CMM^®, MaterniT21™ and MaterniT21™ PLUS are trademarks of
Sequenom. All other trademarks and service marks are the property of their
Except for the historical information contained herein, the matters set forth
in this press release are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, including statements regarding Sequenom's full-year MaterniT21 PLUS test
volume goal of 50,000 tests billed for 2012, and expectations of significantly
exceeding this goal, plans to seek new molecular diagnostic growth
opportunities, expected continued quarterly fluctuations in gross margin,
efforts to increase market penetration of diagnostic services, plans for
continued growth, including international distribution agreements, strategies
to expand the reach of Sequenom CMM's testing services, annualized sample
accession run rates for the MaterniT21 PLUS LDT, growing commercial interest
and demand for Sequenom CMM's testing services and Sequenom CMM's efforts to
further expand its prenatal sales force during the second half of 2012,
Sequenom's commitment to improving healthcare through revolutionary genetic
analysis solutions, Sequenom CMM's dedication to the development and
commercialization of laboratory developed tests, and changing the landscape in
genetic diagnostics, and Sequenom's expectations with respect to the issuance
of patents. These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially, including
the risks and uncertainties associated with Sequenom's ability to develop and
commercialize new technologies and products and to scale up its operations to
meet increased product demand, particularly for new technologies and products
such as Sequenom CMM's prenatal and other diagnostics testing services,
Sequenom's ability to manage its existing cash resources or raise additional
cash resources, customer demand for and Sequenom's ability to obtain payor
reimbursement and payment collection and the timing thereof, for Sequenom
CMM's diagnostic test services including the MaterniT21 PLUS LDT, Sequenom's
ability to convert to accrual accounting for its diagnostic test services
including the MaterniT21 PLUS LDT, competition, intellectual property
protection and intellectual property rights of others, government regulation
particularly with respect to diagnostic products and laboratory developed
tests, obtaining or maintaining regulatory approvals, ongoing litigation,
including patent litigation asserting infringement by our products or
challenging the validity of our patents, and other risks detailed from time to
time in Sequenom, Inc.'s most recent Quarterly Report on Securities and
Exchange Commission Form 10-Q and Annual Report on Securities and Exchange
Commission Form 10-K and other documents subsequently filed with or furnished
to the Securities and Exchange Commission. These forward-looking statements
are based on current information that may change and you are cautioned not to
place undue reliance on these forward-looking statements, which speak only as
of the date of this press release. All forward-looking statements are
qualified in their entirety by this cautionary statement, and Sequenom, Inc.
undertakes no obligation to revise or update any forward-looking statement to
reflect events or circumstances after the issuance of this press release.
[Financial tables follow]
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2012 2011 2012 2011
Genetic analysis product sales $ $ $ $
and services 10,352 11,362 30,633 34,929
Diagnostic services 12,501 2,219 25,392 5,494
Total revenues 22,853 13,581 56,025 40,423
Costs and expenses:
Cost of genetic analysis product 3,010 3,501 8,581 10,274
sales and services
Cost of diagnostic services 13,836 1,958 30,114 4,714
Total cost of revenues 16,846 5,459 38,695 14,988
Gross Margin 6,007 8,122 17,330 25,435
Selling and marketing 12,358 8,276 33,418 22,014
Research and development 13,243 12,643 39,776 40,420
General and administrative 10,126 5,461 27,425 15,337
Total operating expenses 35,727 26,380 100,619 77,771
Loss from operations (29,720) (18,258) (83,289) (52,336)
Other (expense) income, net (486) (24) (970) 409
Loss before income taxes (30,206) (18,282) (84,259) (51,927)
Income tax expense (20) (90) (42) (53)
Net loss (30,226) (18,372) (84,301) (51,980)
Net loss per share, basic and $ $ $ $
diluted (0.26) (0.19) (0.74) (0.52)
Comprehensive loss $ (30,071) $ $ $
(18,612) (84,304) (51,781)
Weighted-average shares 114,712 99,220 113,263 99,082
outstanding, basic and diluted
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
Cash, cash equivalents, marketable $ 193,388 $ 84,216
Restricted cash 162 66
Accounts receivable, net 8,095 6,972
Inventories 11,966 8,729
Other current assets and prepaid 4,102 3,533
Total current assets 217,713 103,516
Equipment and leasehold 29,298 19,629
Other assets 17,177 12,402
Total assets $ 264,188 $ 135,547
Liabilities and Stockholders'
Accounts payable $ $ 8,435
Accrued expenses and other current 18,750 16,530
Deferred revenue 1,942 2,137
Note payable, current portion 7,568 1,902
Total current liabilities 42,231 29,004
Long-term liabilities 146,370 15,155
Stockholders' equity 75,587 91,388
Total liabilities and stockholders' $ 264,188 $ 135,547
SOURCE Sequenom, Inc.
Contact: Marcy Graham, Senior Director, Investor Relations & Corp
Communications, Sequenom, Inc., +1-858-202-9028, firstname.lastname@example.org; or
Media, Jakob Jakobsen, Chandler Chicco Agency, +1-310-309-1003,
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