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Sequenom's Q2 Revenues Rise 17 Percent as It Names T21 Test

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Sequenom reported after the close of the market Thursday that its second-quarter revenues jumped 17 percent as sales rose for its genetic analysis products and diagnostic services.

The San Diego-based molecular diagnostics developer brought in total revenues of $13.3 million for the three months ended June 30, compared to revenues of $11.4 million for the second quarter of 2010. It missed Wall Street's estimate of $13.8 million.

Revenues for its genetic analysis products and services increased to $11.7 million from $11 million, and sales from its diagnostics services increased sharply to $1.6 million from $444,000. Sequenom did not disclose how many MassArray instruments it placed during the quarter but said that the increased revenues were due to an increase in the installed base in systems, which also led to an increase in consumables sales.

Sequenom CFO Paul Maier said during a conference call following the release of the financial results that the increase in diagnostics services revenues was due to increased sales volume for both cystic fibrosis and fetal rhesus D genotyping.

During the quarter, Sequenom CMM launched its RetnaGene AMD test to assess the risk of developing the wet form of AMD. While company officials would not break out sales for the test, Maier said that the firm did receive revenue related to the test in the quarter, but "it was just the beginning of the launch. Our expectations internally for that product this year are very modest."

Sequenom Chairman and CEO Harry Hixson said during the call that the firm's clinical lab, the Sequenom Center for Molecular Medicine, still intends to launch the T21 laboratory developed test following the publication of clinical data on the test, which is expected in late 2011 or early 2012. He added that a manuscript has been submitted to journal but has not yet been accepted.

The firm also noted that it has named the test MaterniT21.

Hixson said that the firm has been hiring staff in the second quarter to "build the capacity necessary to meet the commercial opportunity that lies ahead." He added that Sequenom expects to have 20 prenatal sales representatives in place by the end of August.

Earlier this month, Sequenom said that it had entered into a three-year supply agreement with Illumina for sequencing equipment and consumables. The firm is using the Illumina products for the development of the T21 test. Hixson said today that it is a straight-forward purchasing agreement, but Illumina "will not share the cost, at least under current plans … for an IVD submission for T21."

Company officials were asked during the Q&A portion of the call whether they were looking at developing a next-generation of the T21 test that might include technology to detect trisomy 13 and trisomy 18, which was recently described in a paper authored by Dennis Lo of the Chinese University of Hong Kong. Lo had licensed to Sequenom the rights to the T21 technology that underlies the MaterniT21 test.

Ronald Lindsay, Sequenom's EVP of R&D, said that the firm's focus is on getting the T21 LDT established scientifically and clinically and getting the test on the market. "Dr. Lo's paper on 18 and 13 shows where we're likely to go. We talk with him frequently, [and] we collaborate with him closely."

However, Lindsay noted that there is a challenge in finding enough cases of trisomy 18 and trisomy 13 that would be required to have statistical power in studies. But, "you can anticipate over time there will be sufficient data," he added.

Sequenom's net loss was $20.9 million, or $.21 per share, compared to $59.1 million, or $.86 per share, for the second quarter of 2010. Last year's Q2 included $41.8 million litigation settlement charge.

The firm's R&D spending for the quarter increased 66 percent to $17.1 million from $10.3 million, while its SG&A expenses declined 7 percent to $12.7 million from $13.7 million. The increased R&D costs were primarily due to higher research-related intellectual property licensing and collaboration costs related to agreements with the Chinese University of Hong Kong, said Maier.

Sequenom finished the quarter with $114.4 million in cash, cash equivalents, and investment securities.