NEW YORK (GenomeWeb News) – Sequenom reported after the close of the market Thursday that its first-quarter revenues grew 10 percent year over year, driven by a sharp uptick in diagnostic services that was somewhat offset by a decline in genetic analysis product sales and services.
The San Diego-based molecular diagnostics firm brought in total revenues of $14.9 million for the three-month period ended March 31, compared to $13.5 million for the first quarter of 2011. It fell short of Wall Street's consensus estimate of $16.3 million.
Sequenom's diagnostic services revenue, which is generated by its Sequenom Center for Molecular Medicine, climbed 187 percent to $4.8 million from $1.7 million. Its genetic analysis product sales and services, though, dropped 4 percent year over year to $10.1 million from $11.8 million.
"Our genetic analysis business continues to evolve as changing product mix and increased consumable sales comprise the larger part of the segment," Sequenom Chairman and CEO Harry Hixson said on a conference call following the release of the results. "Gross margins for the business have increased to 74 percent in the first quarter of 2012 based on this shift. However, we did see a reduction in systems sales during the quarter as compared to the same period last year."
The firm said that as of the last week in April, the 52-week run rate for its MaterniT21 PLUS test had increased to more than 45,000 tests. This follows an announcement the firm made a few weeks ago raising its estimates for the number of billed MateriT21 Plus tests for 2012 to 40,000.
Earlier this year, Sequenom rebranded its MaterniT21 test as MaterniT21 Plus to reflect the increased capability of testing for trisomy 13 and 18. The rebranding occurred after the publication in Genetics in Medicine of a study that showed the test can detect trisomy 18 and trisomy 13.
"To manage the growing diagnostic services business and ensure we can meet anticipated market demand, we continue to invest considerable resources to expand our operational capabilities and improve our process efficiency, which should reduce the cost of goods sold over time," said Hixson.
He added that by mid-year the firm expects to increase its level of sample multiplexing, which would translate into higher sample throughput per instrument, and it also plans to introduce automation steps to the sample prep. Those improvements will increase Sequenom's testing capabilities to 200,000 MaterniT21 tests per year.
Sequenom's net loss for the quarter nearly doubled to $24.5 million, or $.22 per share, from $12.7 million, or $.13 per share. The loss was $.03 higher than the Wall Street estimate.
Its R&D expenses increased 19 percent to $12.7 million from $10.7 million, and its SG&A spending jumped 57 percent to $17.1 million from $10.9 million. The sharp uptick in SG&A spending was due to higher labor costs associated with an expansion of its diagnostic sales force.
During the quarter, Sequenom added 23 new sales representatives, as well as three additional retinal sales representatives to detail its RetnaGene AMD test for age-related macular degeneration. It now has more than 50 diagnostic sales reps selling in all 50 states in the US, it said.
As of the end of the quarter, Sequenom held cash, cash equivalents, and marketable securities of $119.7 million.
In early Friday trade on the Nasdaq, shares of Sequenom were down 1 percent at $5.22.