NEW YORK (GenomeWeb) – Sequenom is looking to its deal with Quest Diagnostics and a new noninvasive prenatal test, VisibiliT, which it will launch in Europe for trisomies 21 and 18, to help drive new revenue growth, company officials said this week.
The San Diego-based firm's testing volumes in the third quarter of 2014 declined more than 3 percent compared to the third quarter of 2013 to 46,600 patient samples. MaterniT21 Plus tests remained stable year over year at around 38,500, although they declined by 2,300 tests sequentially.
During a conference call discussing Sequenom's third quarter earnings, CEO Bill Welch also provided an update on the firm's VisibiliT test, which is geared toward women at average risk for fetal aneuploidy, as well as its patent lawsuits, and its agreement with Quest.
The company saw total diagnostic revenues in the third quarter increase 14 percent year over year to $37.9 million from $33.3 million. For Sequenom's full financial results, see GenomeWeb Daily News story.
As of Sept. 30, Sequenom had more than 142 million lives covered by commercial payors for the MaterniT21 Plus test. Medicaid is covering additional lives in 15 states. In the previous quarter, the firm had 140 million lives under commercial contract and Medicaid was also reimbursing in 15 states.
Also in the third quarter, Sequenom added additional microdeletions to the Expanded Sequencing Series portion of its MaterniT21 Plus test — an 11q deletion known as Jacobsen syndrome, an 8q deletion known as Langer-Geidion syndrome, and a 4p deletion known as Wolf-Hirschhorn syndrome. In total, Sequenom now reports on seven microdeletions as well as trisomies 16 and 22 as part of its Enhanced Sequencing Series.
Welch attributed the third quarter test volume decline to the competitive market and seasonal testing rates, which tend to be lower in the summer.
"We observed an increased level of competitive activities in the third quarter," which he said was likely a consequence of announcements in the space by two national reference laboratory companies — Quest Diagnostics and Laboratory Corporation of America.
Quest, which had previously been offering Natera's test, announced in June that it had struck a deal with Sequenom to offer MaterniT21 Plus and said it would stop offering Natera's test. In addition, Quest licensed intellectual property from Sequenom to develop its own laboratory-developed test. Meantime, LabCorp, which had previously offered Ariosa Diagnostics' test, in August said it had developed and launched its own LDT, dubbed InformaSeq. Its agreement with Ariosa is no longer exclusive and LabCorp no longer lists the Ariosa's test on its website.
"This disruption seemed to cause a short-term jockeying by some NIPT providers trying to capture lost accounts and/or re-position themselves in the market," Welch said. He added that some companies have adopted "short-term aggressive billing policies," including the "routine waving of patient responsibility."
Looking ahead, however, he said that October patient samples reached "record levels," driven in part by the samples received from Quest. In October alone, the company ran 15,900 MaterniT21 Plus tests and 18,600 total tests, Welch said.
"Quest is now exclusively offering Sequenom's test to its healthcare provider network," Welch said. The deal with Quest also has an advantage in that Sequenom is not responsible for billing and obtaining reimbursement. Instead, Quest orders the test from Sequenom at a set "transfer" price and Quest then bills the healthcare provider.
Welch noted that Quest is also developing its own NIPT based on technology it licensed from Sequenom. He said he expects Quest to launch its test in the first half of 2015, with Sequenom receiving royalties for every test that Quest performs, Welch said.
In order to tap into the international and average-risk markets, Sequenom has been developing a separate noninvasive prenatal test, dubbed VisibiliT. The test assesses fetal aneuploidy in chromosomes 21 and 18, and provides a risk score for each chromosome, rather than a 'yes' or 'no' answer.
The company plans to launch the test first internationally in the fourth quarter of this year and will introduce it on a limited basis in the US in the first quarter of 2015 for patients who will likely initially pay out of pocket, Welch said. The list price of VisibiliT is $795, he noted. The company presented clinical data on VisibiliT at the International Conference on Prenatal Diagnosis and Therapy in Brisbane, Australia in July demonstrating a sensitivity and specificity of greater than 99 percent.
Welch anticipates that in the US market, the test will not be reimbursed until professional organizations issue guidelines recommending such screening for average-risk women.
Welch said the firm also applied for a CPT code for the VisibiliT test that, at the earliest, could go into effect in July 2015. In addition, he noted that the American Medical Association has issued a genomic sequencing procedural code for fetal chromosomal aneuploidy that will go into effect Jan. 1, 2015.
The new code should "help facilitate reimbursement processes and reduce the time required for third-party payors to process claims," Welch said.
On the legal front, Sequenom remains in lawsuits with Illumina's Verinata Health, Ariosa, and Natera.
As previously reported, the US Patent and Trademark Office board in September ruled that certain claims on a patent held by Sequenom are unpatentable, while upholding other claims to US Patent No. 6,258,540.
Welch said Sequenom will "continue to move forward with all appeals" and intends to "aggressively enforce" its IP.
In addition, with regards to a patent interference suit with Verinata, in April, the USPTO's Patent Trial and Appeal Board ruled in favor of Sequenom on four patent interference proceedings between patents that Sequenom licenses from the Chinese University of Hong Kong and patents and a patent application that Verinata licenses from Stanford University.
The USPTO in August also heard arguments in a separate patent interference case with Verinata surrounding its US Patent No. 8,195,415. Welch said that a decision by the patent office is expected on Dec. 9. That decision is especially important because Verinata has asserted the '415 patent against Sequenom in a patent infringement lawsuit. He added that the trial with Verinata will likely begin in February.