SAN DIEGO, March 4, 2015 /PRNewswire/ -- Sequenom, Inc.
(NASDAQ: SQNM), a life sciences company committed to enabling
healthier lives through the development of innovative products and
services, today reported total revenues of $36.8 million for the fourth quarter of 2014, an
increase of 13% compared to revenues of $32.7 million for the fourth quarter of 2013.
Total revenues for the year ended December 31, 2014, were $151.6 million, compared to $119.6 million for the prior year 2013, a 27%
increase.
Net loss from continuing operations improved by 87% to
$14.4 million, or $0.12 per share, for the full year 2014, as
compared to $109.6 million, or
$0.95 per share for 2013. The
improvement in the loss from continuing operations from prior year
is due to improved gross margins, reduced operating expenses and a
gain on the pooled patents agreement with Illumina. Net
earnings for 2014 were $1.0 million,
or $0.01 per share, compared to a net
loss of $107.4 million for 2013, or
$0.93 per share.
"2014 was a pivotal year for Sequenom. In addition to
growing the business and improving profitability, we completed
multiple strategic transactions including the divestiture of the
Sequenom Bioscience business unit, the buyout of the patent rights
from Isis Innovation, as well as the settlement and pooled patents
agreements with Illumina," said Bill
Welch, Chief Executive Officer of Sequenom, Inc.
"Separately, I am pleased to announce that Daniel Grosu, M.D. has joined Sequenom as Senior
Vice President and Chief Medical Officer. Dr. Grosu has worked
extensively with developing and commercializing innovative
diagnostic technologies in oncology, reproductive medicine, and
human genetics while he worked at Siemens Medical Solutions, Bayer
HealthCare Pharmaceuticals, and Johnson & Johnson. Dr.
Grosu most recently worked at Illumina as Vice President, Clinical
Development and Medical Affairs and was lllumina's first Chief
Medical Officer."
Fourth Quarter Results
Revenues for the fourth quarter of 2014 were $36.8 million, compared to $32.7 million for the fourth quarter of
2013. Revenues are recorded primarily on a cash basis with
accrual accounting used for several third-party payors and for
client bill arrangements. International revenue including
royalties, accounted for on an accrual basis, contributed 15% of
diagnostic services revenues in the fourth quarter. In total,
over 44% of Sequenom's revenue in the fourth quarter of 2014 is
accounted for on the accrual basis of accounting.
Total patient samples accessioned increased by 10.7% to 50,900
patient samples during the fourth quarter of 2014, compared to the
prior year fourth quarter. Approximately 43,500 of those
patient samples accessioned were for the MaterniT21®
PLUS laboratory-developed test (LDT), which is an increase in
testing volume of 17.9% compared to the fourth quarter of
2013. For the full year 2014, Sequenom Laboratories
accessioned 162,600 MaterniT21 PLUS tests and 197,500 total test
samples for all its LDTs, compared to 148,500 MaterniT21 PLUS tests
and more than 185,000 total tests for the full year 2013.
Total cost of revenues decreased to $17.3
million for the fourth quarter of 2014, compared to
$22.3 million for the prior year
period. Cost of revenues decreased primarily due to the continued
cost improvements to Sequenom Laboratories' existing tests offset
by the impact of higher test volumes.
Gross margin for the fourth quarter of 2014 was 53% as compared
to gross margin of 32% for the fourth quarter of 2013. This
improvement is attributable primarily to the increase in
collections for tests performed in the current and prior quarters,
the increase in the volume of tests on accrual accounting in 2014
and improved cost efficiencies in processing patient
samples.
Total operating expenses for the fourth quarter of 2014 were
$22.4 million, as compared to total
operating expenses of $29.5 million
for the fourth quarter of 2013. The decrease is primarily due
to reductions in selling and marketing expense, research and
development expense and litigation related expense.
Operating income for the fourth quarter of 2014 was $20.0 million as compared to a loss of
$19.2 million, for the same period in
2013. During the fourth quarter of 2014, the Company
recognized a gain of $22.8 million
related to the pooled patents agreement and settlement agreement
with Illumina. Net earnings for the fourth quarter of 2014
were $18.3 million or $0.14 per diluted share, as compared to a net
loss of $18.9 million, or
$0.16 per share, for the same period
in 2013.
Cash burn for the fourth quarter of 2014 was $7.5 million, compared to $12.7 million in the same period of 2013. Cash
receipts and payments related to the Illumina patent pool agreement
and purchase of the patent from Isis Innovation are not included in
cash burn.
Unrecorded accounts receivable for tests performed are estimated
to be $31 to $34 million as of
December 31, 2014. This range has
declined from the prior quarter due to collections in the fourth
quarter and additional amounts recorded as accounts receivable
using accrual accounting.
As of December 31, 2014, total
cash, cash equivalents, and marketable securities were $93.9 million. This includes the $44.0 million in cash received from Illumina
during the fourth quarter.
2014 Operational Updates and Highlights
- Sequenom and Illumina entered into settlement and pooled
patents agreements. The patent pool agreement is global in
nature and combines patents controlled by both companies, including
over 425 patents and patent applications for NIPT. As part of
the Illumina settlement, we now share in test fees paid by
licensees from around the world to the patent pool. At the
date of the agreement, there were 21 licensees to the patent pool
including Sequenom Laboratories and Verinata Health. During
the fourth quarter, Sequenom received $44.0
million in cash related to the agreements and received an
additional $6.0 million in cash in
January 2015.
- Sequenom purchased the global rights to the '540 patent from
Isis Innovation.
- Sequenom signed agreements with Quest Diagnostics and Mayo
Medical Laboratories to offer national access to Sequenom
Laboratories' MaterniT21 PLUS LDT.
- Sequenom divested the Bioscience business unit for $33.0 million.
- Sequenom Laboratories launched the Enhanced Sequencing Series
II for its MaterniT21 PLUS test and began reporting additional
findings for the presence of additional sub chromosomal micro
deletions, including 11q deletion (Jacobsen syndrome), 8q deletion
(Langer-Giedion syndrome), and 4p deletion (Wolf-Hirschhorn
syndrome).
- Sequenom Laboratories launched the VisibiliT™ test
internationally.
Non-GAAP Financial Measures
"GAAP" refers to financial information presented in accordance
with generally accepted accounting principles in the United States. To supplement the condensed
consolidated financial statements and discussion presented on a
GAAP basis, this press release includes non-GAAP financial measures
with respect to the quarter ended December
31, 2014. Management uses non-GAAP financial measures
because it believes that a cash flow metric incorporating cash used
by operations and certain other uses of cash are important to
understand the cash requirements of the business. The Company
reported cash burn as a non-GAAP financial measure. This non-GAAP
financial measure is not in accordance with or an alternative to
GAAP.
Management uses cash burn to evaluate performance compared to
forecasts. Cash burn is calculated as the sum of net cash used by
operating activities less the impact of the royalty prepayment in
connection with the patent purchase in 2014, the gain on settlement
of litigation, purchases of property, equipment and leasehold
improvements, and payments on long-term obligations. The
reconciliations of cash used by operating activities, the GAAP
measure most directly comparable to cash burn, is provided on the
attached schedule.
This press release contains certain unaudited financial
results for the Company's fiscal year and fourth quarter ended
December 31, 2014. These
unaudited results may change as a result of further review by the
Company's management and its independent auditors. The
completion of the audit of our financial results for 2014 could
result in changes to the unaudited financial results presented in
this press release. Final fourth quarter and annual results
will be provided in the company's annual report to the SEC on Form
10-K.
Conference Call Information
A conference call hosted by Bill
Welch, CEO, and other members of senior management will take
place today, March 4, at 5:00 p.m. EDT (2:00 p.m.
PDT) and will be webcast live on the Sequenom website. To
access the live teleconference call, dial 877-883-0383 in the U.S.
and Canada, and 412-902-6506 for
other international callers. Please use code 9550202. For
interested parties unable to listen to the live conference call, a
replay will be available through Friday,
April 3, 2015. The replay will be accessible by dialing
877-344-7529 or 412-317-0088 international toll or Canada toll free at 855-669-8658, and entering
the conference number 10059389.
The conference call webcast is also accessible through the
"Invest" section of the Sequenom Website at
www.sequenom.com/invest. An online replay will be available
following the initial broadcast until Friday, April 3, 2015.
About Sequenom
Sequenom, Inc. (NASDAQ: SQNM) is committed to enabling healthier
lives through the development of innovative products and
services. The Company serves patients and physicians by
providing early patient management information.
About Sequenom Laboratories
Sequenom Laboratories, a CAP-accredited and CLIA-certified
molecular diagnostics laboratory, has developed a broad range of
laboratory tests, with a focus principally on prenatal care.
Branded under the names HerediT™, MaterniT21® PLUS,
SensiGene® and VisibiliT™, these molecular genetic
laboratory-developed tests provide early patient management
information for obstetricians, geneticists, and maternal fetal
medicine specialists. Sequenom Laboratories is changing the
landscape in genetic diagnostics using proprietary cutting edge
technologies. To learn how Sequenom is interpreting the genome to
improve your life, visit www.sequenom.com and follow
@SequenomLabs.
SEQUENOM®, HerediT™, MaterniT21® PLUS,
RetnaGene™, SensiGene® and VisibiliT™, are trademarks of
Sequenom, Inc. All other trademarks and service marks are the
property of their respective owners.
Forward-Looking Statements
Statements contained in this press release regarding matters
that are not historical facts are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements regarding the development of
innovative products and services and the anticipation of receiving
a share of test fees paid by licensees to the patent
pool. Because such statements are subject to risks and
uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements. Risks
are described more fully in the Company's filings with
the Securities and Exchange Commission, including without
limitation the Company's most recent Quarterly Report on Form 10-Q
and other documents subsequently filed with or furnished to
the Securities and Exchange Commission. All
forward-looking statements contained in this press release speak
only as of the date on which they were made. The Company
undertakes no obligation to update such statements to reflect
events that occur or circumstances that exist after the date on
which they were made.
SEQUENOM,
INC
|
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
|
(Unaudited)
|
(In thousands,
except per share information)
|
|
Three Months
Ended
|
|
Years
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Diagnostic services
revenue, net
|
$
|
36,789
|
|
$
|
32,679
|
|
|
$
|
151,569
|
|
|
$
|
119,556
|
|
Cost of diagnostic
services revenue
|
17,295
|
|
22,347
|
|
|
83,475
|
|
|
87,302
|
|
Gross
margin
|
19,494
|
|
10,332
|
|
|
68,094
|
|
|
32,254
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Selling and
marketing
|
6,899
|
|
8,540
|
|
|
30,826
|
|
|
37,588
|
|
Research and
development
|
5,056
|
|
7,624
|
|
|
25,005
|
|
|
38,735
|
|
General and
administrative
|
10,383
|
|
13,315
|
|
|
46,910
|
|
|
52,545
|
|
Restructuring
costs
|
22
|
|
42
|
|
|
1,907
|
|
|
5,753
|
|
Total operating
expenses
|
22,360
|
|
29,521
|
|
|
104,648
|
|
|
134,621
|
|
Gain on pooled
patents agreement
|
22,850
|
|
—
|
|
|
22,850
|
|
|
—
|
|
Operating income
(loss)
|
19,984
|
|
(19,189)
|
|
|
(13,704)
|
|
|
(102,367)
|
|
Interest expense,
net
|
(1,968)
|
|
(2,047)
|
|
|
(8,129)
|
|
|
(8,443)
|
|
Other income
(expense), net
|
(34)
|
|
(36)
|
|
|
(207)
|
|
|
(110)
|
|
Earnings (loss) from
continuing operations before income taxes
|
17,982
|
|
(21,272)
|
|
|
(22,040)
|
|
|
(110,920)
|
|
Income tax (expense)
benefit
|
(1,235)
|
|
1,550
|
|
|
7,676
|
|
|
1,353
|
|
Earnings (loss) from
continuing operations
|
16,747
|
|
(19,722)
|
|
|
(14,364)
|
|
|
(109,567)
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
Earnings from
discontinued operations, net of tax
|
1,564
|
|
847
|
|
|
15,376
|
|
|
2,161
|
|
Net earnings
(loss)
|
$
|
18,311
|
|
$
|
(18,875)
|
|
|
$
|
1,012
|
|
|
$
|
(107,406)
|
|
Net earnings
(loss) per common share, basic
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.14
|
|
$
|
(0.17)
|
|
|
$
|
(0.12)
|
|
|
$
|
(0.95)
|
|
Discontinued
operations
|
$
|
0.01
|
|
$
|
0.01
|
|
|
$
|
0.13
|
|
|
$
|
0.02
|
|
Net earnings
(loss)
|
$
|
0.16
|
|
$
|
(0.16)
|
|
|
$
|
0.01
|
|
|
$
|
(0.93)
|
|
Net earnings
(loss) per common share, diluted
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.13
|
|
$
|
(0.17)
|
|
|
$
|
(0.12)
|
|
|
$
|
(0.95)
|
|
Discontinued
operations
|
$
|
0.01
|
|
$
|
0.01
|
|
|
$
|
0.13
|
|
|
$
|
0.02
|
|
Net earnings
(loss)
|
$
|
0.14
|
|
$
|
(0.16)
|
|
|
$
|
0.01
|
|
|
$
|
(0.93)
|
|
Shares used in
computing earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
117,377
|
|
115,743
|
|
|
116,729
|
|
|
115,378
|
|
Diluted
|
|
146,228
|
|
115,743
|
|
|
116,729
|
|
|
115,378
|
|
SEQUENOM,
INC
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
December
31,
|
|
2014
|
|
|
2013
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash, cash
equivalents and marketable securities
|
$
|
93,897
|
|
|
$
|
71,257
|
|
Accounts receivable,
net
|
9,131
|
|
|
2,552
|
|
Inventories
|
6,516
|
|
|
11,598
|
|
Other current assets
and prepaid expenses
|
12,112
|
|
|
2,653
|
|
Assets of
discontinued operations
|
—
|
|
|
13,474
|
|
Total current
assets
|
121,656
|
|
|
101,534
|
|
Property, equipment
and leasehold improvements, net
|
15,348
|
|
|
24,378
|
|
Other
assets
|
24,067
|
|
|
16,482
|
|
Non current assets of
discontinued operations
|
—
|
|
|
2,308
|
|
Total
assets
|
$
|
161,071
|
|
|
$
|
144,702
|
|
Liabilities and
stockholders' (deficit) equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
6,089
|
|
|
$
|
9,086
|
|
Accrued
expenses
|
22,155
|
|
|
25,256
|
|
Long-term debt and
obligations, current portion
|
4,144
|
|
|
7,643
|
|
Other current
liabilities
|
2,581
|
|
|
1,449
|
|
Deferred gain on
pooled patents agreement
|
21,000
|
|
|
—
|
|
Current liabilities
of discontinued operations
|
—
|
|
|
6,207
|
|
Total current
liabilities
|
55,969
|
|
|
49,641
|
|
Long-term
liabilities
|
136,266
|
|
|
140,618
|
|
Long-term liabilities
of discontinued operations
|
—
|
|
|
946
|
|
Total stockholders'
deficit
|
(31,164)
|
|
|
(46,503)
|
|
Total liabilities and
stockholders' deficit
|
$
|
161,071
|
|
|
$
|
144,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEQUENOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
Years ended
December 31,
|
|
|
2014
|
|
|
2013
|
|
|
Operating
activities:
|
|
|
|
|
|
|
Net earnings
(loss)
|
$
|
1,012
|
|
|
$
|
(107,406)
|
|
|
Adjustments to
reconcile net earnings (loss) to net cash used in operating
activities:
|
|
|
|
|
|
|
Gain on pooled
patents agreement related to sale of license
|
(21,000)
|
|
|
—
|
|
|
Gain on sale of
discontinued operations
|
(24,291)
|
|
|
—
|
|
|
(Earnings) loss from
discontinued operations, net of tax
|
583
|
|
|
(2,161)
|
|
|
Depreciation and
amortization
|
12,232
|
|
|
14,174
|
|
|
Share-based
compensation
|
11,519
|
|
|
9,527
|
|
|
Non-cash
restructuring costs
|
1,907
|
|
|
2,358
|
|
|
Other non-cash
items
|
387
|
|
|
1,111
|
|
|
Changes in operating
assets and
liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
(6,579)
|
|
|
(1,747)
|
|
|
Inventories
|
5,082
|
|
|
(6,636)
|
|
|
Prepaid expenses and
other assets
|
(1,675)
|
|
|
(151)
|
|
|
Accounts payable and
accrued expenses
|
(5,681)
|
|
|
2,099
|
|
|
Other
liabilities
|
(1,582)
|
|
|
737
|
|
|
Net cash used in
operating activities
|
(28,086)
|
|
|
(88,095)
|
|
|
Investing
activities:
|
|
|
|
|
|
|
Purchases of
property, equipment and leasehold improvements
|
(2,236)
|
|
|
(12,071)
|
|
|
Purchases of
marketable securities
|
(45,128)
|
|
|
(52,826)
|
|
|
Maturities of
marketable securities
|
24,203
|
|
|
95,393
|
|
|
Payment for the
purchase of intangible assets
|
(9,250)
|
|
|
—
|
|
|
Net cash received
from sale of segment
|
29,291
|
|
|
—
|
|
|
Proceeds from pooled
patents agreement
|
42,150
|
|
|
—
|
|
|
Distribution from
pooled patents agreement
|
(6,150)
|
|
|
—
|
|
|
Net cash paid for
other assets
|
—
|
|
|
(483)
|
|
|
Net cash provided by
(used in) investing activities
|
32,880
|
|
|
30,013
|
|
|
Financing
activities:
|
|
|
|
|
|
|
Payments on long-term
obligations
|
(7,541)
|
|
|
(7,574)
|
|
|
Proceeds from common
stock issued under employee stock plans
|
1,833
|
|
|
1,473
|
|
|
Net cash provided by
(used in) financing activities
|
(5,708)
|
|
|
(6,101)
|
|
|
Discontinued
Operations:
|
|
|
|
|
|
|
Net cash provided by
operating activities of discontinued operations
|
2,816
|
|
|
2,456
|
|
|
Net cash used in
investing activities of discontinued operations
|
(164)
|
|
|
(643)
|
|
|
Net cash provided by
discontinued operations
|
2,652
|
|
|
1,813
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(18)
|
|
|
157
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
1,720
|
|
|
(62,213)
|
|
|
Cash and cash
equivalents at beginning of year
|
61,589
|
|
|
123,802
|
|
|
Cash and cash
equivalents at end of year
|
$
|
63,309
|
|
|
$
|
61,589
|
|
|
|
|
|
|
|
|
|
|
|
SEQUENOM,
INC
RECONCILIATION OF
CASH BURN
(Unaudited)
(In
thousands)
|
|
Three Months Ended
December 31,
|
|
|
Years Ended
December 31,
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Cash
Burn:
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
operating activities
|
$
|
5,744
|
|
|
$
|
9,975
|
|
|
$
|
28,086
|
|
|
$
|
88,095
|
|
Litigation
settlement
|
1,850
|
|
|
—
|
|
|
1,850
|
|
|
—
|
|
Accelerated royalty
payment related to purchase of patents
|
(3,250)
|
|
|
—
|
|
|
(3,250)
|
|
|
—
|
|
Purchases of
property, equipment and leasehold improvements
|
1,229
|
|
|
640
|
|
|
2,236
|
|
|
12,071
|
|
Payments on long-term
obligations
|
1,900
|
|
|
2,047
|
|
|
7,541
|
|
|
7,574
|
|
Cash
burn(1)
|
$
|
7,473
|
|
|
$
|
12,662
|
|
|
$
|
36,463
|
|
|
$
|
107,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See accompanying
Non-GAAP Financial Measures section for description of Non-GAAP
adjustments
|
|
|
|
|
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SOURCE Sequenom, Inc.