Sequenom Reports 2008 Second Quarter Financial Results

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Jul 30 2008, 4:05 PM EST Sequenom Reports 2008 Second Quarter Financial Results
News source: Business Wire
Sequenom, Inc. ( NASDAQ: SQNM ), a leading provider of molecular diagnostic applications andgenetic analysis products and services, today reported financialresults for the three months and six months ended June 30, 2008.

Sequenom reported revenues for the second quarter of 2008 of $12.8million, an increase of 25%, compared with revenues of $10.2million for the second quarter of 2007. The increase was primarilyattributable to an increase in MassARRAY(R) system and consumablesproduct sales. The net loss for the second quarter of 2008 was $9.7million, or $0.21 per share, compared with $4.8 million, or $0.13per share, for the second quarter of 2007.

Cost of product and service revenue for the second quarter of 2008was $5.5 million, compared with $4.2 million for the second quarterof 2007, with the increase primarily associated with higher salesvolumes. Overall gross margin was 57% for the second quarter of2008, compared to 59% for the second quarter of 2007. Overall grossmargin was primarily affected by lower gross profit margins in theContract Research Services group.

Research and development expenses were $6.4 million for the secondquarter of 2008, compared with $4.3 million for the same period inthe prior year. Research and development expenses for the 2008second quarter reflected additional expenses associated withnoninvasive prenatal diagnostic technology and product development,MassARRAY system product improvements and new applications, andincreased headcount-related expenses, including higher stock-basedcompensation expense. Selling, general and administrative expensesof $10.6 million for the second quarter of 2008 increased from $7.0million for the second quarter of the prior year as a result of anexpansion in the sales force in Japan and India, increasedmarketing and advertising expenses, and other headcount-relatedexpenses including higher stock-based compensation expense. Totalcosts and expenses for the second quarter of 2008 were $22.5million, compared with $15.4 million for the comparable quarter in2007.

Year-to-Date Financial Results

Revenues for the first six months of 2008 totaled $23.4 million, anincrease of 17%, compared with $20.0 million for the first sixmonths of 2007. Cost of product and services revenues for the firstsix months of 2008 was $10.1 million, compared with $8.6 millionreported for the first six months of 2007. Total costs and expensesfor the first six months of 2008 were $41.2 million, versus $29.3million for the comparable period in 2007. Sequenom reported a netloss for the six months ended June 30, 2008 of $18.3 million, or$0.40 per share, versus a net loss for the comparable period in2007 of $8.6 million, or $0.24 per share.

As of June 30, 2008, Sequenom had total cash, cash equivalents andshort- and long-term marketable securities of $36.2 million, whichdoes not include net proceeds of $92 million from the underwrittenpublic offering of common stock completed in early July 2008.

"We have taken major steps toward the introduction of ournoninvasive prenatal test for Down syndrome, based on ourSEQureDx(TM) technology," commented Harry Stylli, Ph.D., Presidentand Chief Executive Officer of Sequenom. "On June 3 at theInternational Society of Prenatal Diagnostics conference inVancouver, we announced study results involving 200 normal andhigh-risk samples. The results showed that we correctly identifiedall Down samples, with no false-positives. This compares to currentscreening tests that have detection rates of 70% to 90% withapproximately 5% false-positives. We are currently focused onanalyzing first trimester samples to validate the applicability ofour Down syndrome test for first trimester screening.

"In early July we introduced the iSEQ(TM) product, a MassARRAYcomparative sequence analysis application for automated,high-throughput identification and typing of microbes and viruses,as well as human disease-related molecular markers. This opens newmarkets for us in infectious disease identification and tracking,"he added.

2008 Second Quarter and Recent Highlights

-- Down Syndrome Screening Study Results: In early June, weannounced positive results from screening studies using ournoninvasive circulating cell-free fetal (ccff) nucleic acidSEQureDx technology, which enables the detection of fetalaneuploidy, including Down syndrome from maternal blood. Wereported that in blinded studies performed at Sequenom involvingapproximately 200 clinical samples collected both prospectively andretrospectively, our proprietary test for Down syndrome correctlyidentified all Down syndrome samples, without any false-positiveoutcomes. Currently available serum-testing options havingdetection rates between 70% to 90%, and false-positive rates ashigh as 5%.

-- $92.0 Million Public Offering: In early July we completed anunderwritten public offering of 6,325,000 shares of company stock,including the exercise in full of the underwriters' option,resulting in net proceeds to the Company of approximately $92.0million. Lehman Brothers Inc. and UBS Investment Bank were jointbook-running managers for the offering. The co-managers wereLeerink Swann, Lazard Capital Markets LLC, Oppenheimer & Co., Inc.and Rodman & Renshaw, LLC.

-- iSEQ Application Launch: In early July we introduced the iSEQproduct, a MassARRAY comparative sequence analysis application forautomated, high-throughput identification and typing of microbesand viruses, as well as human disease-related molecular markers.

-- Distribution Agreement: In April we announced our agreement withInvitrogen Corporation under which Invitrogen became the exclusivedistributor for Sequenom's MassARRAY system and consumable productsin Central and South America.

-- Customer News: We announced the following MassARRAY systempurchases by highly-respected institutions:

-- W.M. Keck Foundation Biotechnology Resource Laboratory at YaleUniversity. Yale plans to use the system as a platform forgenotyping, copy number variation (CNV), methylation andquantitative gene expression (QGE) applications. -- DNA DiagnosticLab of the McKusick-Nathans Institute of Genetic Medicine and theTranslational Technology Core of the Institute for TranslationalClinical Research at Johns Hopkins University School of Medicine.Johns Hopkins plans to use the system as a platform for genotyping,clinical genotyping, DNA methylation and QGE analyses. -- OregonHealth & Science University (OHSU) Cancer Institute. The OHSUCancer Center plans to use the system for the discovery,development and testing of biomarker panels for rapidclassification and characterization of cancer.

-- Investment Community Presentations: In June Sequenom held ananalyst-and-investor briefing, "Sequenom: The Future of NoninvasivePrenatal Diagnostics," which included presentations from Companymanagement and distinguished speakers including:

-- Allan T. Bombard, M.D., Chief Medical Officer, Sharp Mary BirchHospital; Adjunct Professor, Obstetrics and Gynecology/SUNYDownstate Medical Center; Clinical Professor, Albert EinsteinCollege of Medicine -- Jacob Canick, Ph.D., Professor of Pathologyand Laboratory Medicine, Brown University Medical School -- DennisLo, Ph.D., consultant to Sequenom Additionally, managementpresented at the Rodman & Renshaw 5th Annual Global HealthcareConference in May and at the 7th Annual Needham & CompanyBiotechnology & Medical Technology Conference in June.

Updated 2008 Financial Guidance

Sequenom is updating its full year 2008 financial guidance asfollows:

-- Revenue guidance remains unchanged and is expected to be $50 to$53 million, representing about 30% growth over 2007 revenues;

-- Net loss is expected to be $34 to $36 million as compared to thepreviously announced guidance of $30 to $33 million; the expectedincreased loss is primarily reflective of increased stock-basedcompensation expenses due to the recent increase in our stock pricein conjunction with new employee stock option awards, as well asprojected legal expenses; and

-- Cash burn is expected to be approximately $30 million ascompared to the previously announced guidance of $26 to $28million.

Conference Call

Sequenom's management will host a conference call today beginningat 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discussfinancial results, provide a business update and answer questions.Individuals interested in participating in the conference call maydo so by dialing (866) 844-2998 for domestic callers or (706)679-9912 for international callers. Those interested in listeningto the conference call live via the Internet may do so by visitingthe Investor Relations section of the Company's Web site atwww.sequenom.com.

A webcast replay will be available on the Sequenom Web site for 14days. A telephone replay will be available for 48 hours followingthe conclusion of the call by dialing (800) 642-1687 for domesticcallers, or (706) 645-9291 for international callers, and enteringreservation code 55870198.

About Sequenom

Sequenom is committed to providing the best genetic analysisproducts that translate the results of genomic science intosolutions for noninvasive prenatal diagnostics, biomedicalresearch, translational research and molecular medicineapplications, and for research conducted in the agro (agriculturaland livestock) industry. The Company's proprietary MassARRAY systemis a high-performance (in speed, accuracy and cost efficiency)nucleic acid analysis platform that quantitatively and preciselymeasures genetic target material and variations. The Company hasexclusively licensed intellectual property rights for thedevelopment and commercialization of non-invasive prenatal genetictests for use with the MassARRAY system and other platforms.

Sequenom(R), MassARRAY(R), iSEQ(TM) and SEQureDx(TM) are trademarksof Sequenom, Inc.

Except for the historical information contained herein, the mattersset forth in this press release, including statements regarding theCompany's plan to introduce a noninvasive prenatal test for Downsyndrome, new markets for infectious disease identification andtracking, customers' plans for recently purchased MassARRAYsystems, and all of the statements under Updated 2008 FinancialGuidance, are forward-looking statements within the meaning of the"safe harbor" provisions of the Private Securities LitigationReform Act of 1995. These forward-looking statements are subject torisks and uncertainties that may cause actual results to differmaterially, including the risks and uncertainties associated withthe Company's operating performance, demand for and marketacceptance of the Company's products, services, and technologies,new technology and product development and commercializationparticularly for new technologies such as molecular diagnostics,and particularly noninvasive prenatal diagnostics, reliance uponthe collaborative efforts of other parties, research anddevelopment progress, competition, government regulation, obtainingor maintaining regulatory approvals, and other risks detailed fromtime to time in the Company's SEC (U.S. Securities and ExchangeCommission) filings, including the Company's Annual Report on Form10-K for the year ended December 31, 2007 and other documentssubsequently filed with or furnished to the SEC. Theseforward-looking statements are based on current information thatmay change and you are cautioned not to place undue reliance onthese forward-looking statements, which speak only as of the dateof this press release. All forward-looking statements are qualifiedin their entirety by this cautionary statement, and the Companyundertakes no obligation to revise or update any forward-lookingstatement to reflect events or circumstances after the issuance ofthis press release. (Financial tables to follow)

SEQUENOM, Inc. Condensed Consolidated Financial Statements (inthousands, except per share data) Consolidated Summary ofOperations ----------------------- ----------------------- Threemonths ended Six months ended June 30, June 30, 2008 2007 2008 2007======================= ======================= (unaudited)(unaudited) (unaudited) (unaudited) Product revenues: Consumables $4,940 $ 3,763 $ 9,600 $ 7,962 System related 6,640 5,449 11,15210,358 Services 1,190 941 2,548 1,714 Research and other 75 - 12011 ----------------------- ----------------------- Total revenues12,845 10,153 23,420 20,045 Costs and expenses: Costs of productand service revenues 5,462 4,155 10,133 8,581 Research anddevelopment expenses 6,413 4,256 11,298 7,131 Selling and marketingexpenses 6,326 3,896 12,139 7,356 General and administrativeexpenses 4,252 3,054 7,622 6,274 ---------------------------------------------- Total costs and expenses 22,453 15,36141,192 29,342 Operating loss (9,608) (5,208) (17,772) (9,297)Interest income and other, net 162 404 542 725 Loss on marketablesecurities (240) - (1,069) - ---------------------------------------------- Loss before incomes taxes (9,686) (4,804)(18,299) (8,572) Deferred tax expense (57) (3) (70) (3)----------------------- ----------------------- Net loss $ (9,743)$ (4,807) $ (18,369) $ (8,575) ============================================== Weighted average shares outstanding, basicand diluted 47,147 38,008 46,239 35,740 Net loss per share, basicand diluted: $ (0.21) $ (0.13) $ (0.40) $ (0.24)----------------------- -----------------------

SEQUENOM, Inc. Condensed Consolidated Financial Statements (inthousands, except per share data) Consolidated Balance SheetInformation June 30, December 31, 2008 2007------------------------ Assets: (unaudited) (audited) Cash, cashequivalents, restricted cash and marketable securities $ 29,480 $52,150 Accounts receivable, net 10,105 10,957 Inventories, net6,592 4,191 Other current assets 2,037 1,094 ----------------------- Total current assets 48,214 68,392 Property, equipmentand leasehold improvements, net 6,743 5,959 Marketable securities6,736 929 Other assets 741 766 ----------- ------------ Totalassets $ 62,434 $ 76,046 =========== ============ Liabilities andStockholders' Equity: Accounts payable $ 6,928 $ 8,408 Accruedexpenses 6,161 5,760 Deferred revenue 1,534 873 Other currentliabilities 1,319 661 ----------- ------------ Total currentliabilities 15,942 15,702 Long-term liabilities 6,138 6,079Stockholders' equity 40,354 54,265 ----------- ------------ Totalliabilities and stockholders' equity $ 62,434 $ 76,046 ======================= *T Email Print Back Share