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Sequenom Reports 20 Percent Increase in Q1 Revenues

NEW YORK (GenomeWeb) – Sequenom reported after the close of the market Thursday that its first quarter revenues climbed 20 percent compared to the first quarter of 2013, driven by its diagnostics business, including sales of its MaterniT21 Plus noninvasive prenatal test for fetal aneuploidy.

The San Diego-based molecular diagnostics firm reported total Q1 revenues of $46.3 million, compared to $38.5 million in the first quarter 2013. Revenues were slightly above the Wall Street consensus estimate.

Diagnostics revenue from Sequenom Laboratories grew 27 percent year over year to $37.1 million from $29.1 million. Diagnostic revenue from international customers comprised 12.5 percent of total diagnostics revenue, or $4.6 million, up from $800,000 in Q1 2013. The firm accessioned 50,000 diagnostic tests, 39,800 of which were the MaterniT21 Plus test.

Revenues from Sequenom Bioscience decreased 2 percent to $9.2 million from$9.4 million in the prior year period, and the firm said it continues to investigate strategic alternatives for that business segement.

"We continue to make progress within the payor community, bringing the current number of lives covered under commercial signed contracts to 118 million and government programs to 24 million," Sequenom Chairman and CEO Harry Hixson said in a statement.

Previously, Sequenom implemented a program to reduce the number of uncompensated Medicaid tests, and in the previous quarter, Medicaid tests represented 13 percent of the total. Now, 13 states are reimbursing, and the percentage of Medicaid tests increased to 16 percent in the quarter while revenue from government payors increased 104 percent to $2.3 million, CFO Paul Maier said during a conference call discussing the firm's first quarter results.

In addition, Sequenom said today that its application for a CPT code specific for using next-generation sequencing to diagnose fetal aneuploidy was accepted by the American Medical Association. Sequenom expects the code to be implemented Jan. 1, 2015.

Its net loss for the quarter was $15.7 million, or $.13 per share, down from $29.4 million, or $.26 per share, in the year-ago period. Adjusted net loss for the first quarter of 2014 was $14.7 million, or $0.13 per share, slightly better than the Wall Street consensus estimate of $.14 per share.

Sequenom's R&D spending was down 41 percent to $8.2 million in the quarter from $13.8 million in Q1 2013. Its SG&A costs dropped 10 percent to $24.6 million from $27.2 million. In addition, the firm incurred $929,000 in restructuring costs tied to the exiting of a facility in the third quarter of 2013.

"We are pleased to see sequential improvements in volume, revenue, gross margin and expenses during the quarter, an indication of steady growth, and improving profitability and cash flow in 2014," Maier said in a statement.

During the call, Hixson reiterated the firm's previously set goals of becoming cash-flow positive and developing a low-cost version of its noninvasive prenatal test on an alternative platform by the end of the year.

In addition, Sequenom said that it has had some successes in its patent disputes with Illumina-owned Verinata Health. On April 7, the US Patent and Trademark Office made rulings that were favorable to Sequenom on three patent interference cases, the firm said, stating that the three patents licensed to Verinata "lacked sufficient disclosure to meet the written requirement for the claims in the patent and patent applications."

Sequenom finished the quarter with cash, cash equivalents, and marketable securities of $56.3 million.

In Friday morning trade on the Nasdaq, shares of Sequenom were up 12 percent at $3.00.