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Sequenom Posts 27 Percent Q3 Revenue Growth as It Plans FDA Talks on T21 Test

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Sequenom reported after the close of the market Thursday that its third-quarter revenues increased 27 percent, as sales for both its consumables and MassArray instruments grew year over year.

The San Diego-based firm reported total revenues of $11.7 million for the three-month period ended Sept. 30, compared to revenues of $9.2 million for the third quarter of 2009. It beat analysts' consensus estimate of $11.3 million for the quarter.

In reaction to the results, Sequenom's shares jumped 8 percent in early Friday trade on the Nasdaq to $7.20.

The firm's consumables increased to $5.7 million from $5.4 million, and its MassArray and other product-related revenues were $4.3 million, up from $3.7 million year over year. Sequenom's contract research services increased to $965,000 from $103,000, while the firm reported its first diagnostic revenues, totaling $687,000 for the quarter.

The company shipped 11 research use only MassArray systems during the third quarter, 10 of which were the MassArray 4, the newest version of its platform that was launched earlier in the year, Sequenom Chariman and CEO Harry Hixson said during a conference call following the release of the financial results.

Sequenom's net loss for the quarter was $22.7 million, or $.30 per share, compared to a net loss of $14.9 million, or $.24 per share, for Q3 2009.

The loss was driven partially by a $7 million non-cash charge tied to litigation settlement. In addition, the firm's R&D expenses increased 33 percent to $11.3 million from $8.5 million. Its SG&A expenses declined 3 percent to $12.2 million from $12.6 million.

Sequenom finished the quarter with $55.8 million in cash, cash equivalents, and marketable securities.

During the conference call, Hixson and Ron Lindsay, interim SVP of R&D, provided an update on the firm's CLIA lab and its diagnostic test pipeline.

They said that the Sequenom Center for Molecular Medicine (CMM), the firm's CLIA lab, has been inspected by the California Department of Public Health and found to be in compliance with all applicable codes. It currently is awaiting issuance of a California Clinical Laboratory license. In addition, Sequenom said that it will submit the necessary application to the College of American Pathologists to obtain CAP accreditation for the lab.

The Sequenom CMM recently completed a "locked-assay" study of the firm's highly anticipated trisomy 21 test. The study included 480 clinical plasma samples obtained from pregnant women at increased risk for fetal trisomy 21. The firm has already submitted a manuscript of the study to a peer-reviewed journal for publication, Hixson said.

Though the studies used Illumina's GAIIx sequencer, the next step for the test is a large, pivotal validation study using the Illumina HiSeq 2000 sequencer. The firm had already announced plans in September to migrate to the newer Illumina platform.

Hixson said the validation study is expected to include around 2,000 samples, of which about 200 will be T21 positive. "We're confident that the Sequenom CMM will have the required number of samples to initiate the study later in the fourth quarter and to complete the study by the end of the second quarter of 2011," said Hixson.

A launch of a T21 laboratory-developed test at the Sequenom CMM is expected by the end of 2011, after the validation study results are published by the firm's academic collaborators.

In addition, Hixson said the firm is planning discussions with the US Food and Drug Administration regarding the potential regulatory pathway for an in vitro diagnostic test for trisomy 21. The firm already has submitted a Pre-Investigational Device Exemption package with the FDA and expects to discuss the clinical study design with FDA officials in early 2011.

Hixson also said that the development of the firm's LDT for age-related macular degeneration is "progressing well." He noted that the Sequenom CMM plans to bring the test to market by mid-2011.

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