Sequenom, Inc. Reports Financial Results For The Second Quarter Of 2012 And Increases Full-Year MaterniT21™ PLUS Test …

Posted: July 27, 2012 at 5:11 am

SAN DIEGO, July 26, 2012 /PRNewswire/ -- Sequenom, Inc. (SQNM), a life sciences company providing innovative genetic analysis solutions, today reported revenue of $18.3 million for the second quarter of 2012, an increase of 23% from revenue of $14.9 million in the first quarter of 2012 and a 38% increase compared to revenue of $13.3 million for the second quarter of 2011. Second quarter 2012 revenues from the Sequenom Center for Molecular Medicine (Sequenom CMM) diagnostic services operating segment grew more than 400%, while revenues from the genetic analysis operating segment decreased 14% in the second quarter of 2012 as compared to the prior year period.

"We have continued to see strong increases in the uptake of the MaterniT21 PLUS laboratory developed test (LDT) and Sequenom CMM has now analyzed more than 20,000 test samples since the product was launched in October of last year. We have been able to effectively meet this increasing demand by expanding our operational capacity so that we can continue to meet the needs of our physician customers and their patients in a prompt and timely manner," said Harry Hixson, Jr., Ph.D., Chairman and CEO of Sequenom. "We believe that our operational model, additional efforts and test enhancements planned for the second half of the year will position us well for sustainable growth and product leadership going forward."

Gross margin in the second quarter of 2012 was 32% of revenues as compared to a gross margin of 67% in the same period one year ago, a difference primarily attributable to the cost associated with the launch and increasing market adoption of the Sequenom CMM MaterniT21 PLUS LDT. 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 tests performed, which have been billed but not yet collected. 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 been established.

Total operating expenses for the second quarter of 2012 were $35.1 million, as compared to total expenses of $29.9 million for the second quarter of 2011. This change reflects increased selling and marketing expenses resulting primarily from higher labor costs associated with increased headcount to support operations and the continued expansion of the diagnostic services infrastructure. Research and development expenses decreased 19% from the prior year period, primarily due to a reduction in research-related licensing and collaboration costs.

General and administrative expenses increased in the second quarter of 2012 to $9.9 million, an increase due primarily to facilities and legal expenses, and higher labor costs associated with increased headcount to support operations as compared to the same period one year ago. Total stock-based compensation expense was $3.2 million for the second quarter of 2012, as compared to $3.5 million recorded during the second quarter of 2011.

Net loss for the second quarter of 2012 was $29.6 million, or $0.26 per share, as compared to net loss of $20.9 million, or $0.21 per share for the same period in 2011, resulting from an increase in costs associated primarily with the growth in testing volume of the MaterniT21 PLUS LDT.

"Even as we continue to invest in strategies to expand the reach of Sequenom CMM's testing services, our second quarter results are generally in line with our expectations given the rapid adoption of the MaterniT21 PLUS LDT," said Paul V. Maier, Sequenom's CFO. "Importantly, for the first time, this quarter the MaterniT21 PLUS LDT made the largest contribution to Sequenom's diagnostic services revenue, a trend we expect to continue moving forward. We expect our diagnostic services margins to improve in the second half of 2012 as Sequenom CMM implements further test enhancements and the steps to achieve the benefits of volume growth."

First Half Results For the first half of 2012, the Company reported revenue of $33.2 million, an increase of 24% from revenue of $26.8 million for the first half of 2011. Revenues in the first half of 2012 from the Sequenom CMM diagnostics services operating segment grew 295%, while revenues from the genetic analysis operating segment decreased 14% in the first half of 2012 as compared to the prior year period.

Gross margin for the first half of 2012 was 34% of revenue as compared to gross margin of 64% for the first half of 2011, a difference primarily attributable to the cost associated with the increased test volume resulting from the launch and increased market adoption of the Sequenom CMM MaterniT21 PLUS LDT.

Total operating expenses for the first half of 2012 were $64.9 million, as compared to total expenses of $51.4 million for the first half of 2011. This change reflects increased selling and marketing expenses resulting primarily from higher labor costs associated with increased headcount to support operations and the continued expansion of the diagnostic services infrastructure. Research and development expenses decreased 4% as compared to the first half of 2011, primarily due to a reduction in research-related licensing and collaboration costs.

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Sequenom, Inc. Reports Financial Results For The Second Quarter Of 2012 And Increases Full-Year MaterniT21™ PLUS Test ...

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