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Sequenom Reports 2 Percent Increase in Q1 Revenues

NEW YORK (GenomeWeb) – Sequenom reported after the close of the market on Wednesday that its first quarter revenues rose 2 percent year over year.

The San Diego-based molecular diagnostics company reported Q1 revenues of $37.8 million compared to $37.1 million in Q1 2014, missing the Wall Street consensus estimate of $38.6 million.

First quarter revenue included $2.1 million the company earned from licenses from the patent pool it shares with Illumina, including a one-time payment of $800,000 from a laboratory upon validation of its test.

During the quarter, Sequenom accessioned 52,800 tests, a 6 percent increase from the 50,000 tests run in Q1 2014. Approximately 44,700 of those tests were the MaterniT21 Plus test, a 12 percent increase over the 39,800 MaterniT21 Plus tests run in the previous year's quarter.

During a conference call discussing Sequenom's first quarter results, CEO Bill Welch noted that under the license agreement, Quest validated and began marketing its own noninvasive prenatal test in April. Welch added that Quest would continue to market Sequenom's MaterniT21 Plus test to "select" customers as well as to customers in New York State since it does not yet have a permit to market its test in the state.

Due to Quest's conversion, Welch said he anticipated that tests performed by Sequenom's laboratories would decline in the second quarter. Quest's conversion as well as other licensees running their own tests "could reduce our total revenues in the quarter by approximately $3 million compared to the first quarter," Welch said.

Nonetheless, Welch added that Sequenom still has a goal of accessioning over 200,000 tests in 2015 and said that although the firm expects full-year revenues to still fall within the projected range of $150 million to $170 million, they will likely be at the "lower end" of that range. Meantime, revenues from test fees and royalties will be "at the mid point" of the $6 million to $14 million range.

Net earnings for the quarter were $14.3 million, or $.11 per share, compared to a net loss of $15.7 million, or $.13 per share, in the year ago quarter. It beat the average analyst estimate of a loss of $.03 per share. The firm attributed the improvement in earnings to the $21.0 million it gained in its patent pool agreement with Illumina, improved gross margins, and reduced operating expenses.

"We are pleased with our continued financial and operational improvements as well as the addition of test fee revenues from our NIPT patent pool," Welch said in a statement. "In addition, we expanded our prenatal testing menu with the launches of the VisibiliT and HerediT Universal laboratory-developed tests to support future growth."

Sequenom reduced R&D spending 13 percent to $5.9 million from $6.8 million in Q1 2014. It cut its SG&A costs 18 percent to $17.2 from $21.1 million.

As of March 31, total cash, cash equivalents, and marketable securities were $90.7 million.