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Sequenom's Q4 Revenues Drop 11 Percent

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Sequenom reported after the close of the market Monday that its fourth-quarter revenues dropped 11 percent due to lower sales for its MassArray products and services and an increase in spending.

The San Diego-based molecular diagnostics firm generated total revenues of $10.8 million for the three months ended Dec. 31, compared to $12.2 million for the fourth quarter of 2008.

The firm's consumables sales increased to $5.2 million from $5 million, while its MassArray and other product-related sales fell to $4.9 million from $5.8 million, and its services revenues declined to $592,000 from $1.4 million.

Sequenom's net loss for the quarter was $18.4 million, or $.30 per share, up from a net loss of $15.4 million, or $.25 per share, for Q4 2008.

The company beat analysts' consensus estimate for revenues of $9.1 million, however it missed the net loss per share estimate of $.25.

Its R&D spending increased 10 percent to $10 million from $9.1 million, while its SG&A expenses rose 5 percent to $12.9 million from $12.3 million. The firm also recorded a restructuring charge of $106,000 for the fourth quarter of 2009.

For full-year 2009, Sequenom's revenues declined around 20 percent to $37.9 million from $47.1 million. Its consumbales sales were $20.5 million versus $19.5 million the prior year, and its MassArray and product related revenues dropped to $15 million from $22.7 million. The firm's services revenues declined more than 50 percent to $2.2 million from $4.8 million.

Sequenom's net loss for the year totaled $71 million, or $1.16 per share, up from its 2008 net loss of $44.2 million, or $.83 per share.

Its R&D spending for the year increased to $37.5 million from $27.5 million, and its SG&A spending increased to $55 million from $42.7 million. The firm also recorded an FY2009 restructuring charge of $1.6 million.

Sequenom finished the year with cash, cash equivalents, and short-term marketable securities of $42.7 million.

Company officials said during the firm's conference call following the release of the financial results that they will not provide guidance for the next quarter or the year for at least the rest of 2010.

"We are pleased with the steady pace of the progress we are making on all fronts," Sequenom Chairman and CEO Harry Hixson said in a statement. "The recent launches of the SensiGene Fetal RHD Genotyping and Fetal Sex Determination tests are clear indicators that the science of detecting circulating cell free fetal nucleic acids can be developed into commercially viable tests."

Hixson said during the call that Sequenom has added five additional sales reps to its diagnostic sales force, which now stands at 21 people. He said the sales force will enable the firm to service Ob/Gyn and maternal fetal medicine specialists in metropolitan areas across the US.

Sequenom is in the midst of recovering from a scandal in 2009 that resulted in the firing of certain top executives, including President and CEO Harry Stylli and Senior VP of R&D Elizabeth Dragon, following an investigation into the mishandling of test data for the firm's SEQureDx Down syndrome test.

Though the mishandling of the data nullified the previously reported positive test results and created a significant delay in the firm's timeline for launching the test, Sequenom has continued development of the T21 program.

In a statement accompanying the firm's financial results Monday, Sequenom said it "remains committed to the development, third party validation, and launch of a noninvasive T21 test." It added that R&D efforts are focused on DNA-based approaches using its MassArray platform as well as next-generation sequencing platforms.

Hixson said during the call that the firm has put its RNA Down syndrome test program on the backburner as the firm allocates its resources to the DNA test program. "We're more optimistic about DNA methods," he said.

He said that the DNA methodologies are still being investigated by the firm's R&D staff, and "we're not going to put any kind of pressure on the scientists here," in regards to a timeline for publishing data.

Sequenom also intends to launch the next-generation version of its MassArray platform during 2010 and will be targeting an expanded testing market.

Copmany officials also said during the call that Sequenom will require additional funding later this year.

In early Tuesday trade on the Nasdaq, shares of Sequenom were down 18 percent at $6.38.

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