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Sequenom Posts 27 Percent Increase in Q1 Revenues, Cuts Loss

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Sequenom reported after the close of the market Thursday that its first-quarter revenues increased 27 percent while it cut its net loss around 25 percent year over year.

The San Diego-based molecular diagnostics and research instruments firm reported total revenues of $13.5 million for the three months ended March 31, compared to $10.6 million for the first quarter of 2010. It beat analysts' consensus estimate for revenues of $12.7 million.

Sequenom said that sales of its consumables increased to $5.3 million from $5.1 million, while MassArray and other product-related revenues were $5.8 million versus $4.8 million. It also reported diagnostics sales of $1.7 million, compared to $204,000 for the first quarter of 2010, and contract research services revenues of $698,000, compared to $481,000.

As was the case last quarter, diagnostics revenues were derived from CMM's SensiGene-branded laboratory developed tests for cystic fibrosis and fetal Rhesus D genotyping, CFO Paul Maier noted during a conference call following the release of the financial results.

The firm's net loss for the quarter dropped to $12.7 million, or $.13 per share, from $16.9 million, or $.27 per share. Sequenom beat Wall Street's estimate for a loss of $.19 per share.

Its R&D expenses declined around 4 percent year over year to $10.7 million from $11.2 million, and its SG&A spending dropped 3 percent to $10.9 million from $11.1 million.

Sequenom finished the quarter with $125.3 million in cash, cash equivalents, and investment securities.

The firm noted in a statement that its Sequenom Center for Molecular Medicine has completed testing samples from a pivotal clinical validation study evaluating the performance of its SensiGene Trisomy 21 (T21) laboratory developed test. The test is being developed to detect an overabundance of chromosome 21 in pregnant women, the chromosome that is associated with fetal Down syndrome.

Sequenom said that study results are expected to be announced later this year following their submission and publication in a yet-to-be determined peer reviewed journal.

"As we pursue our goal of providing a noninvasive prenatal test for T21, we are continuing to execute on our plan to expand our organizational capabilities, hiring needed specialists in the Sequenom CMM CLIA-certified laboratory, adding sales professionals in the field and working to solidify our relationships with key suppliers, partners and vendors," Sequenom Chairman and CEO Harry Hixson said in the statement.

Specifically, Hixson said during the call that the firm is adding "clinical laboratory specialists, diagnostic marketing support, and field sales professionals. We're also working to further develop and solidify our relationships with key suppliers, partners, and vendors."

He said Sequenom is sticking with its previous forecast for launching the LDT after publication of the study results in a peer-reviewed journal, expected either at the end of this year or the beginning of 2012. "The manuscript is under preparation at this time," said Hixson.

He also noted on the call that Sequenom has retained the services of two consulting firms, which he did not name. One of the firms is helping Sequenom develop its reimbursement strategy for the T21 LDT, while the other is helping the firm work on its sales and marketing strategy, which will help Sequenom determine the size of its sales force at launch as well as expansion of the sales staff and sales territories afterward.

In addition to the T21 test, Sequenom officials gave an update on the firm's RetnaGene AMD test to assess the risk of developing the wet form of age-related macular degeneration. They expect to launch the test as an LDT next week, about one quarter ahead of schedule.

Hixson also said that this week Sequenom entered into several licensing agreement with the Chinese University of Hong Kong for exclusive, worldwide (except Hong Kong) rights to intellectual property covering prenatal diagnostics and prognostics. Among the IP covered is technology related to fetal whole genome sequencing and size-based genomic analysis of fetal nucleic acids, broadening Sequenom's IP coverage in massively parallel sequencing, it said. The licensed patents have been applied for, but have not yet been issued, Hixson noted on the call.

In early Friday trade on the Nasdaq, shares of Sequenom jumped 10 percent to $7.34.

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