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Sequenom's Q4 Revenues Increase 12 Percent on Dx Services Gain

NEW YORK (GenomeWeb News) – Sequenom today reported that its fourth-quarter revenues jumped 12 percent, driven by diagnostic services sales that more than doubled year over year.

The San Diego-based firm brought in total revenues of $15.5 million for the three-month period ended Dec. 31, compared to $13.8 million for the fourth quarter of 2010. It fell short of analysts' consensus expectation of $15.8 million.

It had $12.7 million in sales from genetic analysis products and services, up from $12.5 million in Q4 2010, and $2.8 million in sales from diagnostic services provided by the Sequenom Center for Molecular Medicine, compared to $1.2 million for Q4 2010.

Sequenom posted a fourth-quarter net loss of $22.2 million, or $.22 per share, compared to a net loss of $22 million, or $.27 per share, for Q4 2010. Wall Street expected a loss of $.19 per share.

The firm's R&D spending increased 25 percent year over year to $13.1 million from $10.5 million, and its SG&A expenses climbed 24 percent to $16.9 million from $13.6 million.

For full-year 2011, Sequenom had revenues of $55.9 million, up 18 percent from $47.5 million. Analysts, on average, had expected revenues of $56.3 million.

Its revenues from genetic analysis products and services were $47.6 million versus $44.9 million, and sales from the Sequenom CMM were $8.3 million, up from $2.6 million.

"In our diagnostic business we have seen a steady increase in the adoption of MaterniT21 LDT," Sequenom Chairman and CEO Harry Hixson said on a conference call following the release of the financials. "Between its commercial launch in October and the end of 2011, we received approximately 1,000 orders for the test." The firm hopes to bill for a minimum of 25,000 MaterniT21 tests in 2012, he added.

Sequenom recently rebranded the test MaterniT21 Plus, which reflects the increased capability of testing for trisomy 13 and 18. The rebranding occurred after the publication earlier this year in Genetics in Medicine of a study that showed the test can detect trisomy 18 and trisomy 13.

"A total of more than 21,000 pre-natal and retinal tests were billed in 2011, thanks in large part in the increasing volume of the SensiGene Cystic Fibrosis Carrier Screening LDT," Hixson said.

The firm's net loss for the year was $74.2 million, or $.75 per share, down from $120.8 million, or $1.69 per share, for 2010.

Sequenom's R&D spending for the year climbed to $53.6 million from $43.4 million, and its SG&A costs increased to $53.2 million from $50.7 million.

It finished the year with cash, cash equivalents, and marketable securities of $84.2 million.

It has since raised around $62 million in a public offering of stock. "As a result, we are well-capitalized to implement our expansion plans and fund current operations," CFO Paul Maier said on the call.

Hixson noted on the call that the Sequenom CMM has completed the recruitment and training of 23 additional sales reps and two additional regional directors. The CMM now has 47 pre-natal sales representatives, which are serving all 48 states in the continental US. It also is adding three news sales reps this quarter to detail its RetnaGene AMD test.

In the face of several lawsuits challenging Sequenom's rights to patents covering both the MaterniT21 Plus and RetnaGene AMD tests, Hixson said the firm remains confident in its IP position. He said the firm wouldn't comment on the cases.

One of the firms locked in patent litigation with Sequenom is Verinata Health, which filed a suit against Sequenom a couple of weeks ago, and plans to launch its sequencing-based test for T21, T13, and T18 this month.

Hixson said, however, that Sequenom hasn't seen any competitors on the market yet. "We believe that we have the highest-quality test available in the marketplace," and it is competitively priced.

In addition, Sequenom recently filed a motion for a preliminary injunction against Aria Diagnostics to stop the production and use of that firm's sequencing-based test for detecting fetal chromosomal aneuploidy. The injunction request followed a suit Sequenom filed against Aria in January, claiming that its Harmony Prenatal Test infringes US Patent No. 6,258,540, to which Sequenom holds exclusive rights.

In early Thursday trade on the Nasdaq, shares of Sequenom were up 9 percent at $4.

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