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Sequenom's Q3 Revenues Jump 68 Percent

NEW YORK (GenomeWeb News) – Sequenom reported after the close of the market Thursday that its third-quarter revenues jumped 68 percent year over year on sales of its MaterniT21 Plus laboratory-developed test.

The San Diego-based firm brought in total revenues of $22.9 million for the three months ended Sept. 30, up from $13.6 million for the third quarter of 2011 but falling shy of the consensus Wall Street estimate for revenues of $23.2 million.

Sales for its genetic analysis products and services declined to $10.4 million from $11.4 million, while diagnostics services, as carried out by its Sequenom Center for Molecular Medicine, climbed to $12.5 million from $2.2 million.

"We did see softness in overall genetic analysis revenue on a year-over-year basis, which declined 9 percent but showed an increase of 2 percent as compared to the second quarter of 2012," Sequenom Chairman and CEO Harry Hixson said on a conference call following the release of the financial results.

He said sales slowed in Europe and Asia but showed some improvement in the US as the firm expanded its menu of research reagent panel content.

The firm launched its flagship diagnostic product, the MaterniT21 test for detection of trisomy 21, in the fall of 2011. It later added detection of trisomies 13 and 18 and rebranded the test as MaterniT21 Plus.

Throughout the year Sequenom has increased the expected annualized test volume for the test, and in a statement Hixson said that the firm's lab has reached a 90,000 annualized test volume run rate. That's double the number of tests the firm expected in early May.

"Importantly, we are seeing greater recognition from the payors and networks as 46 million Americans now have network access to the test," Sequenom CFO Paul Maier said in the statement.

In total, the Sequenom CMM accessioned approximately 26,000 total test samples in the third quarter of 2012, including nearly 18,000 MaterniT21 Plus test samples. It said that it now expects to "significantly exceed" its previously announced goal of 50,000 MaterniT21 Plus tests billed in 2012.

The company also noted that approximately 30 percent of the maternal fetal medical specialists in the US have ordered the MaterniT21 Plus test, and the Sequenom CMM increased its sequencing-based test capacity in the third quarter from 100,000 to more than 200,000 test samples per year.

In addition, Sequenom officials noted recent technology evaluations for T21 testing by the Blue Cross and Blue Shield Association Medical Advisory Panel and the California Technology Assessment Forum.

BCBS concluded that 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 Blue Cross and Blue Shield Association Technology Evaluation Center criteria. CTAF recommended that the use of cell free fetal DNA as a prenatal advanced screening test for fetal aneuploidy for Trisomy 21 and Trisomy 18 in high risk women meets all five of the CTAF criteria for safety and efficacy and improvement in health outcomes.

Hixson said on the call that the BCBS and CTAF evaluations "are considered the highest level technology assessments in the country … those technology assessments are often utilized by local, regional, national payers because it's hard to do those kinds of work in the evaluation."

Sequenom's Q3 net loss grew to $30.2 million, or $.26 per share, from $18.4 million, or $.19 per share, year over year. It said the increased loss was driven primarily by costs associated with the growth in test volume for MaterniT21 Plus.

Analysts, on average, had expected a loss of $.24 per share.

The firm's R&D expenses increased 5 percent to $13.2 million from $12.6 million, and its SG&A expenses jumped 64 percent to $22.5 million from $13.7 million. The increase in SG&A was partially driven by higher legal costs associated with patent litigation and higher labor costs associated with additional headcount to support operations, the firm said.

As of the end of the quarter Sequenom had $193.4 million in cash, cash equivalents, and marketable securities.

In September Sequenom completed a private placement of $130 million of 5 percent convertible senior notes due 2017. That notes offering followed a public offering of Sequenom common stock earlier this year that brought in $62 million in gross proceeds.

In early Friday trade on the Nasdaq shares of Sequenom climbed nearly 12 percent to $3.38.

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