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Sequenom Posts 25 Percent Q2 Revenue Growth, Extends Co-Marketing Pact with SensiGen

NEW YORK (GenomeWeb News) – Sequenom today said that increased sales of its MassArray system and consumables drove a 25-percent increase in second-quarter revenues to $12.8 million from $10.2 million in the second quarter of 2007.
 
Harry Stylli, president and CEO of Sequenom, said in a conference call to discuss the company’s financial results that the firm placed around 16 MassArray systems during the quarter.
 
Separately, the company announced that it has expanded an existing alliance with SensiGen under which SensiGen agreed to develop a test for human papillomavirus exclusively on Sequenom's MassArray platform.
 
Under the expanded agreement announced today, SensiGen will also develop and market tests for chronic kidney disease and lupus that will run on the MassArray platform.
 
Sequenom said the expanded agreement also gives it the future right to a minority equity interest in SensiGen, but did not disclose additional financial terms of the alliance.
 
For the three months ended June 30, Sequenom’s R&D expenses rose nearly 50 percent to $6.4 million from $4.3 million in the year-ago period. The company said that the increase in R&D spending was due to development expenses for its noninvasive prenatal diagnostic technology, MassArray system product improvements and new applications, and “increased headcount-related expenses, including higher stock-based compensation expense.”
 
SG&A spending also increased, to $10.6 million from $7 million in the second quarter of 2007, “as a result of an expansion in the sales force in Japan and India, increased marketing and advertising expenses, and other headcount-related expenses including higher stock-based compensation expense.”
 
Sequenom’s total costs and expenses for the second quarter rose 46 percent to $22.5 million from $15.4 million in the prior-year period.
 
The company’s net loss nearly doubled to $9.7 million, or $.21 per share, from $4.8 million, or $.13 per share, for the second quarter of 2007.
 
The company reiterated its previous revenue guidance for the full year of between $50 million and $53 million, which would represent around 30 percent growth over 2007 revenues.
 
Full-year net loss is expected to be higher than earlier forecasts, in the range of $34 million to $36 million as compared to the previously announced guidance of $30 million to $33 million. The company said the increase is a result of increased stock-based compensation expenses as well as projected legal expenses.
 
Sequenom said that it expects its cash burn for the year to be around $30 million as compared to the previously announced guidance of $26 million to $28 million.
 
As of June 30, Sequenom had cash, cash equivalents, restricted cash, and marketable securities of $29.5 million. This does not include net proceeds of $92 million from the company’s stock offering in early July.
 
In the conference call, Stylli said that the company is considering building or acquiring a CLIA-compliant lab some time this year in order to “take control” over the commercialization of its homebrew tests. He estimated that this would cost in the range of $10 million to $30 million.
 
Paul Hawran, Sequenom’s CFO, said during the call that the company’s projected cash burn for the year does not take into account any costs associated with the proposed CLIA lab.
 
Stylli said that in the current quarter, the company plans to launch a new MassArray application for determining copy number variations, as well as a new application that will help researchers identify genes that have mutated or have been influenced by environmental or other factors. 
 
By the end of the calendar year, Sequenom intends to launch an oncogene mutation panel. Stylli said that while the panel will be marketed for research use only, it has “the potential to be used for genetically typing tumor biopsies to help guide molecular therapy selection by physicians.”
 
In addition, Stylli said that the company plans to complete proof-of-concept studies for the optical nanopore sequencing technology that it licensed from Harvard University last year. He cautioned that the technology is “still very early stage,” and said that the proof-of-concept studies are designed to “demonstrate if it’s likely to deliver the kind of solution we’d want.”
 
In the second half of 2009, the company plans to launch a “closed tube” assay that is intended to simplify the workflow for the MassArray system, which will “enable Sequenom to enter new segments of the genomic analysis market and will enable the MassArray platform to be even more competitive in molecular diagnostics,” Stylli said.
 
Stylli added that the company plans to build upon a 200-sample clinical study that it completed earlier this year to validate its molecular test for Down syndrome. He said that the study could involve up to 10,000 samples from “high-prevalence” patients and should be complete by the third quarter of 2009.
 
He reiterated the company’s previously disclosed plans to commercialize the Down syndrome assay as a homebrew test in the first half of 2009.

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