This story has been corrected to note that Quest has not yet stopped offering Natera's Panorama test.
NEW YORK (GenomeWeb) – Sequenom ran 40,800 of its MaterniT21 Plus tests in the second quarter of 2014, up 7 percent from the second quarter of 2013, the company reported this week.
As a result, Sequenom reported total revenues for the quarter of $39.8 million, a 62 percent increase over revenues in Q2 2013. For complete financial details of Sequenom's second quarter, see this GenomeWeb Daily News story.
The company said that it has made progress on the reimbursement front, including signing a contract with Cigna this quarter to bring its total number of national payor contracts to three and lives covered to 140 million. The reimbursement rate for each test continues to fall, however.
In addition, Sequenom announced this week that it signed a licensing agreement with Mayo Medical Laboratories that will enable Mayo to license intellectual property from Sequenom in order to develop its own noninvasive prenatal test.
During a conference call discussing the firm's second quarter results, CEO William Welch said that Sequenom continues to be the "market leader in noninvasive prenatal testing," adding that the company's Enhanced Sequencing Series II option, which includes testing for six microdeletions and trisomies 16 and 22, makes it the most comprehensive offering on the market for high-risk pregnancies.
Also in the second quarter, Sequenom signed two agreements with Quest Diagnostics. Under the agreements, Quest plans to begin offering the MaterniT21 Plus test in the third quarter. Meantime, a second agreement enables the diagnostic firm to develop its own noninvasive prenatal laboratory-developed test by licensing certain of Sequenom's patents and patent applications. Quest plans to begin offering that test in 2015.
Quest subsequently plans to stop offering Natera's noninvasive prenatal Panorama test after an initial term, though it continues to offer the test at this time. Quest and Natera had previously inked a deal in 2013.
The deal with Quest "provides further validation of the strength of our technology," Welch said, and "provides us an additional distribution channel, which enhances our competitive position."
Reimbursement progress mixed
Progress on the reimbursement front has been mixed. The company continues to increase the number of tests that are reimbursed and now has contracts with three major payors — Cigna, Aetna, and Blue Cross Blue Shield — bringing its total number of lives under contract by private payors to 140 million. An additional 30 million lives are being covered by Medicaid in 15 states that are reimbursing for MaterniT21 Plus.
Welch added that in January 2015, the new molecular diagnostic code for next-gen sequencing-based fetal aneuploidy tests will be implemented, which will "help facilitate the reimbursement process and reduce the time required for third-party payors to process claims."
Although the number of tests that are reimbursed continues to increase, the average per-test reimbursement rate has declined. Over the course of 2013, average per-test reimbursement declined 10 percent to $1,200 by the end of the year, CFO Carolyn Beaver said during the call. She added that she expects average per-test reimbursement to fall another 10 percent over the course of 2014.
Average risk market
Earlier this month, Sequenom announced that it plans to develop a lower-cost test for the average-risk market that would give risk scores for fetal trisomy 21 and 18 — chromosomal aneuploidies that are typically evaluated with conventional prenatal serum screens. The new test, dubbed VisibiliT, will have a list price of $790 and will launch next month outside of the US.
On the conference call, Welch said that in a clinical evaluation study of over 1,000 low- and high-risk samples, the test demonstrated 99 percent sensitivity and 99.9 percent specificity. The company presented these initial results at the International Conference on Prenatal Diagnosis and Therapy in Brisbane, Australia earlier this month. Since then, additional testing has confirmed that performance, and, in total, VisibiliT has been tested on more than 100 cases of trisomy 21 and more than 30 cases of trisomy 30, Welch said.
Sequenom will also launch VisibiliT selectively in the US, initially on a cash basis, and will be ready for broader distribution and utilization "when coverage policies are adopted," Welch added.
Sequenom has been involved in lawsuits with all of its competitors since it first launched MaterniT21 in 2012. In the second quarter, the firm incurred $5.3 million in litigation expenses and going forward, Beaver said that litigation expenses could vary beyond the firm's predictions.
Welch said that the company received favorable rulings in April with regard to patent interference cases with Verinata Health. The US Patent and Trademark Office ruled that all claims of US Patent No. 8,008,018, which is licensed by Verinata, lacked sufficient disclosure to meet the written description test for the patent claims. The USPTO also rejected the claims of a patent application licensed by Verinata on the same grounds. In a third case regarding two patent applications, one licensed by Sequenom and one by Verinata, the USPTO ruled that the interference should proceed to a priority phase to determine which came first.
Welch said that the USPTO's rulings are now subject to appeal and that a trial will likely begin in February 2015.
Late last year, Sequenom received an unfavorable ruling on its US Patent No. 6,258,540, a broad patent which a federal judge said covered a phenomenon of nature, which is unpatentable.
Sequenom said at the time that it planned to appeal the decision.
It is unclear how the result of these lawsuits will impact Sequenom's recent licensing agreements with Quest and the Mayo Clinic, or its licensing agreements with international laboratories such as LifeCodexx. For instance, if Sequenom loses lawsuits, the labs may no longer have to pay royalties.
Welch said that the company is confident in its legal position.