NEW YORK (GenomeWeb) – Sequenom reported after the close of the market on Tuesday that its diagnostic revenues in the second quarter increased 62 percent year over year.
For the three months ended June 30, the San Diego-based company pulled in $39.8 million, all from its Sequenom Center for Molecular Medicine business, compared to diagnostic revenues of $24.5 million in Q2 2013.
In the second quarter of 2013, the firm also recorded $10.3 million in revenues from its bioscience business, but it sold that business segment to Agena Bioscience in June for $31.8 million and no longer includes revenues and spending from that business segment in its year-over-year comparisons.
Total revenues fell short of the average analyst estimate of $44.3 million.
Sequenom also said today that it has signed a license agreement with Mayo Medical Laboratories for noninvasive prenatal testing patents and applications.
"We have great appreciation for Mayo Clinic's commitment to research, innovation, and patient care, and we welcome the opportunity to partner with the organization's leading clinical research laboratory to expand patient access to this revolutionary technology," Sequenom CEO William Welch said in a statement.
Sequenom increased the number of tests it ran in the second quarter by 7 percent, to 50,100 patient samples, approximately 40,800 of which were for the MaterniT21 Plus noninvasive prenatal aneuploidy test, compared to 38,000 in Q2 2013. On a sequential basis, MaterniT21 Plus test volume increased by about 3 percent.
As of June 30, Sequenom had more than 140 million lives covered for the MaterniT21 Plus test and had agreements with three of the top five national payors, it said. In addition, the company has continued to increase the volume of Medicaid tests in the 15 states that now provide reimbursement, while continuing to limit the number of Medicaid tests in states that do not currently reimburse. The volume of Medicaid tests was 18 percent of total tests accessioned in the second quarter of 2014 compared with 16 percent in the first quarter of 2014 and 26 percent in the second quarter of 2013, when Sequenom's reimbursement policy for Medicaid was implemented.
In addition, Sequenom estimated that as of June 30 it had unrecorded diagnostic accounts receivable of between $36 million and $40 million.
"We are pleased with the steady improvements in reimbursements and collections resulting in increased revenues," Carolyn Beaver, Sequenom's chief financial officer, said in a statement.
During a conference call discussing the company's second quarter results, however, Beaver said that average per-test reimbursement has declined somewhat from $1,200 at the end of the fourth quarter of 2013. Beaver said that in 2013, average per-test reimbursement declined around 10 percent, and that the company expects a similar trend in 2014.
Sequenom had net earnings of $4.5 million, or $.04 per share, compared to a net loss of $31.0 million, or $.27 per share, a year ago. Excluding the impact of the discontinued operations of the bioscience division on net earnings, Sequenom had a net loss from continuing operations for the second quarter of $.07 per share, which included a tax benefit of $.06 per share. Analysts, on average, estimated a loss per share of $.11.
The firm's R&D spending was $7.1 million, down 35 percent from $10.9 million in the year-ago quarter, while its SG&A costs were $22.5 million, up around 1 percent from $22.2 million in Q2 2013.
Beaver added that the company still has a goal of reaching break even and cash flow positive by the fourth quarter of this year, though legal expenses may vary and could affect the firm's ability to reach this goal.
In Q2 2014, Sequenom's legal expenses were $5.3 million. Welch said that although the US Patent and Trademark Office issued a ruling in April that went in favor of Sequenom with regard to a patent interference with Verinata Health, the ruling is now subject to appeal. Welch said that he expects the trial to begin in February 2015.
Sequenom received $33.0 million in proceeds from the sale of its biosciences business, including a milestone payment of $2.0 million for obtaining US Food and Drug Administration clearance for the Impact Dx Factor V Leiden and Factor II Genotyping Test for use on the Impact Dx system.
As of June 30, the firm had total cash, cash equivalents, and marketable securities of $82.1 million.
Sequenom plans to launch a noninvasive prenatal screening test next month for the average-risk market, dubbed VisibiliT, which will give risk scores for trisomy 21 and trisomy 18. The test will have a list price of $790. It will be made available first in international markets through Sequnom's partners and then "rolled out selectively in the US, initially on a cash basis," Welch said. Once reimbursement policies are in place for an average-risk screening test, the company will distribute it more broadly, he added.
In early Wednesday trade on the Nasdaq, shares of Sequenom were down around 2 percent at $3.65.