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Sequenom Collects 18K Samples for MaterniT21 Plus in Q3, Expects to Bill for Over 50K Tests in 2012

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Sequenom expects to "significantly exceed" its internal goal of billing for 50,000 MaterniT21 Plus LDT non-invasive prenatal fetal tests this year, following strong sales of the test in the third quarter and endorsements of non-invasive prenatal testing by two technology assessment committees.

Last week, the company reported that its laboratory, the Sequenom Center for Molecular Medicine, received 18,000 MaterniT21 Plus test samples during the third quarter, and 37,000 during the first year since the test's launch in the fall of 2011.

As of the end of the third quarter, Sequenom's annualized test volume for MaterniT21 Plus had increased to 90,000, or 1,700 samples per week on average, which the company noted is more than 10 percent of the annual US market of 750,000 high-risk pregnancies. The firm said that about a third of maternal fetal medicine specialists in the US have ordered its test so far.

Two technology assessment committees, the Blue Cross and Blue Shield Association Medical Advisory Panel and the California Technology Assessment Forum, recently concluded that non-invasive prenatal tests, including MaterniT21 Plus, meet their criteria, following independent evaluations.

CTAF, which evaluated non-invasive prenatal tests from Sequenom and several of its competitors, said that the use of cell-free fetal DNA as a prenatal advanced screening test for trisomy 21 and trisomy 18 in high-risk women meets all five of its criteria for safety and efficacy and improvement in health outcomes (CSN 10/24/2012).

The BCBS panel, meantime, concluded that 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 criteria of its Technology Evaluation Center.

Sequenom chairman and CEO Harry Hixson noted during a call to discuss the firm's third-quarter earnings that the CTAF and BCBS evaluations are "considered the highest level technology assessments in the country" and "are often utilized by local, regional, national payors" for making coverage and policy decisions.

Sequenom is still awaiting guidelines on non-invasive prenatal testing from the American Congress of Obstetricians and Gynecologists and from the Society for Maternal-Fetal Medicine, which it hopes will be issued before the end of the year, said Bill Welch, Sequenom's senior vice president of diagnostics.

In the US, the number of people with in-network access to MaterniT21 Plus has increased to 46 million, up from 26 million at the end of the second quarter, through new agreements with networks and insurance providers.

The agreements are with regional and local payors but not national plans, Hixson said, and the company continues to target contracts with two national plans by the end of this year.

The test is now available in all 50 US states, compared to 20 metropolitan areas at launch, and Sequenom's sales force has increased to 75, from 20 a year ago. In the third quarter alone, the company hired 25 sales representatives.

As planned this summer (CSN 8/1/2012), the company has signed additional distribution partnerships abroad for MaterniT21 Plus, which now cover Japan, Hong Kong, the Czech Republic, Slovakia, the Netherlands, and Israel.

LifeCodexx of Germany, which licenses Sequenom's technology for Germany, Austria, and Switzerland, began offering CE-marked testing services in August.

Also as planned, Sequenom CMM has doubled its test capacity for MaterniT21 Plus from 100,000 to more than 200,000 test samples per year by multiplexing 12 samples per sequencing run. The center continues to build out and validate its North Carolina facility, which is slated to start offering testing services by mid-2013.

Sequenom CMM has also upgraded its bioinformatics and automated library prep processes and has validated these improvements in accordance with guidelines from the College of American Pathologists and CLIA.

The company remains in patent litigation with several of its competitors over intellectual property related to its MaterniT21 Plus test (GWDN 7/17/2012). Hixson noted that the US Patent and Trademark Office recently issued a notice of allowance regarding a patent application that Sequenom licenses exclusively. The application covers methods for the use of next-gen sequencing to detect fetal aneuploidies that were developed by Dennis Lo and colleagues at the Chinese University of Hong Kong. "When issued, this new patent will be a significant addition to Sequenom's intellectual property portfolio," Hixson said.

Regarding its competition – from Ariosa Diagnostics, Verinata Health, and Natera – the company appears to be undaunted. "I do think that the space is a rich space, and as you might imagine, people want to get it, but it seems to not have slowed down our growth to date," said Paul Maier, Sequenom's chief financial officer.

Hixson added that the company is competing on turnaround time, low no-call rates, service, and clinical performance data, claiming that it "is very tough to compete against us."

In addition, he said, competitors have been offering their tests for both high-risk and low or average-risk pregnancies, but Sequenom expects recommendations and guidelines will focus on high-risk use. "We think that's clearly to our benefit and our competitors are going to have to refocus or reformulate their approach to the marketplace," he said. "With these recommendations being for high risk only, I don't think the payors are going to be interested in reimbursing for the low risk segment."

Revenues Increase, Loss Widens

Overall, Sequenom's revenue for the quarter increased 68 percent year-over-year, to $22.9 million from $13.6 million, primarily driven by growth in diagnostic services, and within that, by increased adoption of MaterniT21 Plus.

Of that, the company posted $12.5 million in revenue derived from diagnostic testing services, performed by the Sequenom Center for Molecular Medicine, up from $2.2 million a year ago.

$10.4 million of revenues came from the genetic analysis segment, a 9 percent decrease over the third quarter of last year resulting from reduced system and consumables sales.

Research and development expenses for the quarter were $13.2 million, compared to $12.6 million during the third quarter of 2011, an increase related to facilities and supplies.

General and administrative expenses increased to $10.1 million during the quarter, from $5.5 million a year ago, primarily due to higher legal costs from patent litigation and higher labor costs.

Sequenom's net loss for the third quarter increased to $30.2 million from $18.2 million during the same period last year, resulting from increased costs from the growth in testing volume for MaterniT21 Plus.

As of Sept. 30, Sequenom had $193.4 million in cash, cash equivalents, and marketable securities, following a private offering of $130 million in convertible notes during the third quarter.

The company plans to use the additional cash to continue commercialization of MaterniT21 Plus and for general corporate purposes.

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