SAN DIEGO, May 6, 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 $37.8 million for the first quarter of 2015, an
increase of 2% compared to revenues of $37.1
million for the first quarter of 2014.
Net earnings improved to $14.3
million, or $0.12 per share,
basic and $0.11 per share, diluted,
for the first quarter, as compared to a net loss of $15.7 million, or $0.13 per share, basic and diluted, for the first
quarter of 2014. The improvement in the net earnings from the
prior year is due to a $21.0 million
gain on the pooled patents agreement with Illumina, Inc., as well
as improved gross margins and reduced operating expenses compared
to the prior year first quarter.
Total cost of revenues decreased to $19.3
million for the first quarter of 2015, compared to
$22.8 million for the prior year
quarter. The decrease was primarily due to continued cost
improvements to Sequenom Laboratories' existing tests offset by the
impact of higher test volumes.
Gross margin for the first quarter of 2015 was 49% as compared
to gross margin of 39% for the first quarter of 2014. 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 and
improved cost efficiencies in processing patient samples.
"We are pleased with our continued financial and operational
improvements as well as the addition of test fee revenues from our
NIPT patent pool," said Bill Welch,
President and Chief Executive Officer of Sequenom, Inc. "In
addition, we expanded our prenatal testing menu with the launches
of the VisibiliT and HerediT Universal laboratory-developed tests
to support future growth."
Operational highlights since the last earnings
release:
- License revenue for the first quarter of 2015 was $2.1 million, compared to $0.3 million in the first quarter of 2014.
License revenue in 2015 includes $0.8
million earned upon validation of the technology by a
licensee.
- Total patient samples accessioned increased by 6% to 52,800
patient samples during the first quarter of 2015, compared to the
prior year first quarter. Approximately 44,700 of those patient
samples accessioned were for the MaterniT21® PLUS
laboratory-developed test (LDT), which is an increase in testing
volume of 12% compared to the first quarter of 2014.
- Sequenom Laboratories launched the VisibiliT
laboratory-developed test, to address the broader average risk
population, in the U.S. market on a non-covered cash basis.
Sequenom Laboratories also launched the HerediT Universal
laboratory-developed test, a comprehensive universal carrier
screening panel testing for over 250 genetic disorders.
- We announced our plan to develop liquid biopsy-based tests in
oncology. In March, a case study of the detection of possible
circulating tumor DNA through our noninvasive prenatal test was
presented at the 8th annual Future of Genomic Medicine conference
in San Diego highlighting the
power of our technology in circulating cell-free DNA analysis and
its potential application for circulating tumor DNA.
Diagnostic services revenues are recorded primarily on a cash
basis with accrual accounting used for several third-party payors
and for client bill arrangements. License revenue is now
reported on a separate line item within total revenues, and
includes revenue from the pooled patents agreement and other
license revenue. In total, over 42% of Sequenom's revenue in
the first quarter of 2015 is accounted for on the accrual basis of
accounting.
Total costs and expenses, excluding cost of revenues for the
first quarter of 2015 were $23.0
million, as compared to $28.7
million for the first quarter of 2014. The decrease is
primarily due to reductions in litigation related expense.
Operating income for the first quarter of 2015 was $16.5 million as compared to a loss of
$14.4 million for the same period in
2014. During the first quarter of 2015, the Company
recognized a gain of $21.0 million
related to the pooled patents agreement for the transfer of
clinical samples and related study protocols.
Net cash used in operating activities was $7.2 million for the first quarter of 2015, an
improvement compared to $16.1 million
for the first quarter of 2014. Cash burn for the first
quarter of 2015 was $9.4 million,
compared to $18.4 million in the same
period of 2014. The first quarter 2015 cash burn included
$3.4 million of bonus payments
compared to no bonus payments in the first quarter of 2014.
Unrecorded accounts receivable for tests performed are estimated
to be $29 to $32 million as of
March 31, 2015. This range has
declined by $2 million compared to
the estimates in the prior quarter, due primarily to collections in
the first quarter.
As of March 31, 2015, total cash,
cash equivalents, and marketable securities were $90.7 million.
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 March 31, 2015. 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 plus 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.
Conference Call Information
A conference call hosted by Bill
Welch, President and CEO, and other members of senior
management will take place today, May
6, 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 3860983. For
interested parties unable to listen to the live conference call, a
replay will be available through Friday,
June 5, 2015. The replay will be accessible by dialing
877-344-7529 or 412-317-0088 international toll or Canada toll free at 855-669-9658, and entering
the conference number 10064729.
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, June 5, 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. To learn how Sequenom is
interpreting the genome to improve your life, visit
www.sequenom.com.
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®, HerediT® UNIVERSAL,
MaterniT21® PLUS, NextView™,
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. Visit www.laboratories.sequenom.com and follow
@SequenomLabs.
SEQUENOM®, HerediT®,
MaterniT21® PLUS, NextView™,
RetnaGene™, SensiGene®, VisibiliT™
and Sequenom Laboratories™, 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, the expansion of our prenatal
testing menu and our future growth, our ability to address the
broader average risk population in the U.S. market and our ability
to develop liquid biopsy-based tests in oncology. 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
March 31,
|
|
2015
|
|
2014
|
Revenues:
|
|
|
|
Diagnostic services,
net
|
$
|
35,703
|
|
|
$
|
36,720
|
|
License
|
2,102
|
|
|
341
|
|
Total
revenues
|
37,805
|
|
|
37,061
|
|
Costs and
expenses:
|
|
|
|
Cost of
revenues
|
19,306
|
|
|
22,770
|
|
Selling and
marketing
|
8,486
|
|
|
8,559
|
|
Research and
development
|
5,869
|
|
|
6,789
|
|
General and
administrative
|
8,676
|
|
|
12,480
|
|
Restructuring
costs
|
—
|
|
|
910
|
|
Total costs and
expenses
|
42,337
|
|
|
51,508
|
|
Gain on pooled
patents agreement
|
21,000
|
|
|
—
|
|
Operating income
(loss)
|
16,468
|
|
|
(14,447)
|
|
Interest and other
expense, net
|
(2,108)
|
|
|
(2,098)
|
|
Earnings
(loss) from continuing operations before income taxes
|
14,360
|
|
|
(16,545)
|
|
Income tax benefit
(expense)
|
(76)
|
|
|
246
|
|
Earnings (loss) from
continuing operations
|
14,284
|
|
|
(16,299)
|
|
Discontinued
operations:
|
|
|
|
Earnings from
discontinued operations, net of tax
|
—
|
|
|
625
|
|
Net earnings
(loss)
|
$
|
14,284
|
|
|
$
|
(15,674)
|
|
|
|
|
|
Net earnings
(loss) per common share, basic
|
|
|
|
Continuing
operations
|
$
|
0.12
|
|
|
$
|
(0.14)
|
|
Discontinued
operations
|
$
|
—
|
|
|
$
|
0.01
|
|
Net earnings
(loss)
|
$
|
0.12
|
|
|
$
|
(0.13)
|
|
Net earnings
(loss) per common share, diluted
|
|
|
|
Continuing
operations
|
$
|
0.11
|
|
|
$
|
(0.14)
|
|
Discontinued
operations
|
$
|
—
|
|
|
$
|
0.01
|
|
Net earnings
(loss)
|
$
|
0.11
|
|
|
$
|
(0.13)
|
|
Shares used in
computing earnings (loss) per share
|
|
|
|
Basic
|
117,737
|
|
|
116,134
|
|
Diluted
|
146,642
|
|
|
116,134
|
|
SEQUENOM,
INC
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
March 31,
2015
|
|
December 31,
2014
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash, cash
equivalents and marketable securities
|
$
|
90,708
|
|
|
$
|
93,897
|
|
Accounts receivable,
net
|
7,663
|
|
|
9,131
|
|
Inventories
|
4,779
|
|
|
6,516
|
|
Other current assets
and prepaid expenses
|
5,446
|
|
|
12,112
|
|
Total current assets
|
108,596
|
|
|
121,656
|
|
Property, equipment
and leasehold improvements, net
|
13,750
|
|
|
15,348
|
|
Other
assets
|
23,104
|
|
|
24,067
|
|
Total assets
|
$
|
145,450
|
|
|
$
|
161,071
|
|
|
|
|
|
Liabilities and
stockholders' deficit
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
5,381
|
|
|
$
|
6,089
|
|
Accrued
expenses
|
15,303
|
|
|
22,155
|
|
Long-term debt and
obligations, current portion
|
2,313
|
|
|
4,144
|
|
Other current
liabilities
|
1,212
|
|
|
2,581
|
|
Deferred gain on
pooled patents agreement
|
—
|
|
|
21,000
|
|
Total current liabilities
|
24,209
|
|
|
55,969
|
|
Long-term
liabilities
|
136,336
|
|
|
136,266
|
|
Total stockholders'
deficit
|
(15,095)
|
|
|
(31,164)
|
|
Total liabilities and stockholders' deficit
|
$
|
145,450
|
|
|
$
|
161,071
|
|
SEQUENOM,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In
thousands)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2015
|
|
2014
|
Operating
activities
|
|
|
|
Net earnings
(loss)
|
$
|
14,284
|
|
|
$
|
(15,674)
|
|
Adjustments to
reconcile net earnings (loss) to net cash used in operating
activities:
|
|
|
|
Gain on pooled
patents agreement
|
(21,000)
|
|
|
—
|
|
Earnings from
discontinued operations, net of tax
|
—
|
|
|
(625)
|
|
Share-based
compensation
|
1,542
|
|
|
2,577
|
|
Depreciation and
amortization
|
2,892
|
|
|
3,219
|
|
Non-cash
restructuring costs
|
—
|
|
|
941
|
|
Other non-cash
items
|
236
|
|
|
285
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
1,468
|
|
|
(1,049)
|
|
Inventories
|
1,737
|
|
|
4,285
|
|
Prepaid expenses and
other assets
|
578
|
|
|
(316)
|
|
Accounts payable and
accrued expenses
|
(7,715)
|
|
|
(8,907)
|
|
Other
liabilities
|
(1,220)
|
|
|
(828)
|
|
Net cash used in
operating activities of continuing operations
|
(7,198)
|
|
|
(16,092)
|
|
Investing
activities
|
|
|
|
Purchases of
property, equipment and leasehold improvements
|
(289)
|
|
|
(405)
|
|
Purchases of
marketable securities
|
(10,007)
|
|
|
(9,994)
|
|
Maturities of
marketable securities
|
10,052
|
|
|
8,679
|
|
Proceeds from pooled
patents agreement
|
6,000
|
|
|
—
|
|
Net cash provided by
(used in) investing activities of continuing operations
|
5,756
|
|
|
(1,720)
|
|
Financing
activities
|
|
|
|
Payments on term loan
and capital lease obligations
|
(1,909)
|
|
|
(1,906)
|
|
Proceeds from common
stock issued under employee stock plans
|
177
|
|
|
592
|
|
Net cash used in
financing activities of continuing operations
|
(1,732)
|
|
|
(1,314)
|
|
Discontinued
Operations
|
|
|
|
Net cash provided by
operating activities of discontinued operations
|
—
|
|
|
2,919
|
|
Net cash used in
investing activities of discontinued operations
|
—
|
|
|
(28)
|
|
Net cash provided by
discontinued operations
|
—
|
|
|
2,891
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(45)
|
|
|
(14)
|
|
Net decrease in cash
and cash equivalents
|
(3,219)
|
|
|
(16,249)
|
|
Cash and cash
equivalents at beginning of period
|
63,309
|
|
|
61,589
|
|
Cash and cash
equivalents at end of period
|
$
|
60,090
|
|
|
$
|
45,340
|
|
SEQUENOM,
INC
|
RECONCILIATION OF
CASH BURN
|
(Unaudited)
|
(In
thousands)
|
|
|
Three Months Ended
March 31,
|
|
2015
|
|
2014
|
Cash
Burn:
|
|
|
|
Net cash used in
operating activities
|
$
|
7,198
|
|
|
$
|
16,092
|
|
Purchases of
property, equipment and leasehold improvements
|
289
|
|
|
405
|
|
Payments on long-term
obligations
|
1,909
|
|
|
1,906
|
|
Cash
burn(1)
|
$
|
9,396
|
|
|
$
|
18,403
|
|
|
|
|
|
(1) See accompanying
Non-GAAP Financial Measures section for description of
adjustments
|
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SOURCE Sequenom, Inc.