SAN DIEGO, May 3, 2012 /PRNewswire/ -- Sequenom, Inc. (NASDAQ: SQNM), a life sciences company providing innovative genetic analysis solutions, today reported revenue of $14.9 million for the first quarter of 2012, an increase of 10% compared to revenue of $13.5 million for the first quarter of 2011. First quarter 2012 revenues from the Sequenom Center for Molecular Medicine (Sequenom CMM) diagnostics services operating segment grew more than 187%, while revenues from the genetic analysis operating segment decreased 14% in the first quarter of 2012 as compared to the prior year period. Net loss for the first quarter of 2012 was $24.5 million, or $0.22 per share, as compared to net loss of $12.7 million, or $0.13 per share for the same period in 2011, reflecting an increase in costs associated primarily with the early commercialization of the Sequenom CMM MaterniT21 PLUS laboratory developed test (LDT).
As to be expected in the first year following the launch of a new LDT, gross margin was reduced in the first quarter of 2012 as compared to the same period one year ago, falling to 36% of revenue as compared to gross margin of 63% for the first quarter of 2011. Diagnostic services revenue is primarily recognized when cash is received and costs are recognized at the time services are performed. The delay in revenue recognition results in a decrease in gross margin, which is significantly magnified by increasing test volumes. Therefore, diagnostic revenue recognized in the current period does not relate directly to the costs incurred in the same period. This will continue until such time as the company converts to accrual accounting for diagnostic services revenue which is expected when sufficient reimbursement history has been established.
Gross margin is expected to continue to fluctuate on a quarterly basis due primarily to changes in sales volumes and the timing of cash receipts. During the first quarter of 2012, gross margin on diagnostic services revenue was negative, while gross margin on genetic analysis revenues increased by 3% to 74%, primarily due to a change in product mix, with higher margin consumables comprising a larger percentage of overall segment revenues.
Total operating expenses for the first quarter of 2012 were $29.8 million, as compared to total expenses of $21.6 million for the first quarter of 2011. This change reflects increased selling and marketing expenses resulting primarily from higher labor costs associated with increased headcount and an expanded diagnostic sales force, as well as increased research and development expenses associated with facilities allocation and overhead, higher operational supply expenses and labor related costs.
General and administrative expenses also increased for the first quarter, primarily due to increased facilities and legal expenses as compared to the same period one year ago. Total stock-based compensation expense was $2.9 million for the first quarter of 2012, as compared to $2.6 million as recorded during the first quarter in 2011.
“Our performance during the quarter reflects the successful achievement of our operational goals throughout the organization, specifically those associated with the expansion of Sequenom CMM’s testing services and the launch and rapid adoption of the MaterniT21 PLUS laboratory developed test,” said Paul V. Maier, Sequenom’s CFO. “We ended the quarter with a favorable cash position as we continued to strengthen our balance sheet, raising $58.2 million during the period through an underwritten public offering, the proceeds of which will primarily be used to fund the expansion of our operations in support of the growing demand for our testing services.”
As of March 31, 2012, total cash, cash equivalents, and marketable securities were $119.7 million. Net cash used in operating activities was $23.3 million for the first quarter, while purchases of capital equipment for the same period totaled $1.8 million, funded primarily through utilization of the Company’s credit facility. As of March 31, 2012, the Company had borrowed $17.0 million under the credit facility.
Operational Updates
The Company recently reported that more than 12,700 total tests, including in excess of 4,900 MaterniT21 PLUS laboratory-developed tests (LDT) offered by Sequenom CMM, were accessioned during the first quarter of 2012, a 140% increase over the same period in 2011. At the close of the first quarter of 2012, the number of MaterniT21 PLUS samples accessioned on an annualized basis equated to approximately 30,000 tests. As of the last week in April, the 52-week run rate had increased to more than 45,000 tests.
“The first quarter of 2012 has been an active and productive one for Sequenom and Sequenom CMM, as we have received and responded to the strong interest in Sequenom CMM’s testing services, particularly with regard to Sequenom CMM’s MaterniT21 PLUS LDT,” said Harry Hixson, Jr., Ph.D., Chairman and CEO of Sequenom. “It is our goal to build on this positive momentum as the year progresses. We will continue to expand our reach to meet growing demand and deliver on our objective of providing high quality testing services offered by Sequenom CMM to physician customers nationwide.”
Due to the successful growth in adoption year-to-date, the Company also increased its internal goal to 40,000 MaterniT21 PLUS LDTs billed for the calendar year 2012, up from the original goal of billing 25,000 tests for the year.
In response to the growing commercial interest and demand for its testing services, Sequenom CMM expanded its prenatal sales force during the first quarter, adding 23 new sales representatives, and three additional retinal sales representatives, bringing the total to more than 50 diagnostic sales representatives actively selling in all 50 states in the U.S.
During the first quarter, Sequenom CMM announced the publication of an independent multi-center study on the MaterniT21 LDT, demonstrating that the test can detect fetal trisomy 21, 18 and 13 with high accuracy from a maternal blood sample. The Company expanded the application of the MaterniT21 LDT to include the detection of trisomies 18 and 13 in addition to trisomy 21, rebranding it under the name MaterniT21 PLUS.
Conference Call Information
A conference call will take place today, May 3, 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 First Quarter 2012 Earnings Conference Call.” If you are unable to listen to the live webcast, a teleconference replay will be available through May 11, 2012. Interested parties can access the rebroadcast by dialing 877-344-7529 or 412-317-0088 internationally and entering the conference number 10012419.
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 June 2, 2012.
About Sequenom
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.
