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Sequenom's Q2 Revenues Sink 28 Percent on Softness in Capital Equipment Market

NEW YORK (GenomeWeb News) – Sequenom reported after the market closed Thursday that its second-quarter revenues declined 28 percent, which it said was primarily due to softness in the capital equipment market.

The San Diego-based firm generated total revenues of $9.2 million for the three-month period ended June 30, down from $12.8 million for the second quarter of 2008. The company beat analysts' consensus revenue estimate of $8.2 million.

Its consumables sales increased to $5.2 million from $4.9 million year over year, while its system-related sales dropped to $3.3 million from $6.6 million, and its services revenue fell to $677,000 from $1.2 million.

Sequenom CFO Paul Hawran said during the company's conference call Thursday that it had placed eight of its MassArray systems during the quarter, including "one or two" of its new Compact 96 version of the platform.

"We are seeing light at the end of the tunnel and are cautiously optimistic that in combination with our additional focus and rebound in the economy, our genetic analysis business will resume a normal growth pattern," Hawran said.

Sequenom's net loss for the quarter more than doubled to $20.2 million, or $.33 per share, from $9.7 million, or $.21 per share. The loss was higher than the $.27 predicted by analysts who cover the company.

Its R&D spending increased 59 percent to $10.2 million from $6.4 million, and its SG&A expenses grew 42 percent year over year to $15.1 million from $10.6 million. In addition, the most recent quarter included $1 million in restructuring charges.

"This recent period has been a challenging time for Sequenom," Harry Stylli, president and CEO of Sequenom, said in a statement. "Our announcement at the end of April was immensely disappointing and has resulted in a setback in our molecular diagnostics programs."

Sequenom disclosed at the end of April that company employees had mishandled R&D test data and results for its SEQureDx Down syndrome test. The firm has been forced to start over in running studies on the test that can be validated.

Sequenom said that it is evaluating both RNA and DNA approaches for a Down syndrome test, and it intends to publish results from studies on these tests in peer-reviewed journals prior to any launch. In addition, the firm said that it is on track to launch three diagnostic products through its CLIA laboratory by the first quarter of 2010: a cystic fibrosis carrier screen (CFTR), RHD test, and a fetal sex determination test.

Sequenom finished the quarter with cash, cash equivalents, and short- and long-term marketable securities of $69.3 million. The company has predicted a cash burn rate of between $52 million and $57 million for full-year 2009.

In addition, the firm expects its genetic analysis business to bring in revenues of between $32 million and $35 million with a net loss of $11 million. It expects its molecular diagnostics business to generate a net loss of around $54 million for the year, but it did not provide revenue guidance for that segment.

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