SAN DIEGO, Nov. 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 $29.9 million for the third quarter of 2015, a
decrease of 21% compared to revenues of $37.9 million for the third quarter of 2014.
The decrease is primarily the result of lower cash
collections related to services performed in prior periods.
Over the course of the past year, Sequenom has collected claims for
services more quickly, resulting in a lower balance of unrecorded
receivables to recognize on a cash basis when collected.
"We are excited by the launch of the MaterniT™ GENOME
laboratory-developed test and the enthusiastic reception it has
received from the maternal fetal medicine specialist
community. With MaterniT GENOME, Sequenom Laboratories is
once again introducing a new paradigm in prenatal testing, which
has the potential to increase Sequenom's revenue and market share,"
said Dr. Dirk van den Boom, Interim
President and Chief Executive Officer of Sequenom, Inc.
"During the third quarter, we also announced several
collaborations with key opinion leaders for the advancement of our
circulating cell-free tumor DNA assays, opening new market
opportunities for Sequenom in oncology. Finally, we initiated
a focused review of the Company's commercial operations, cost
structure, and new product programs, and we plan to implement
changes in these areas in the coming quarters that will improve
revenues and reduce costs."
Third Quarter 2015 Results
Total revenues for the
third quarter of 2015 were $29.9
million, a decrease of 21% compared to revenues of
$37.9 million for the third quarter
of 2014. Revenues for the third quarter of 2014 included
approximately $8.4 million more in
collections for services performed in prior periods. The
timeliness of collections has improved throughout 2015 with
additional payor contracts and the use of the specific CPT code for
fetal aneuploidy tests, resulting in fewer unrecorded receivables
available to collect in the third quarter of 2015. The
conversion of a referring laboratory partner to a patent pool
licensee at the beginning of 2015 resulted in a reduction of
diagnostic services revenue of approximately $2.6 million in the third quarter of 2015
compared to the third quarter of 2014, although this conversion did
contribute to higher license revenue.
License revenue increased to $2.2
million for the third quarter of 2015, compared to
$0.6 million for the third quarter of
2014, reflecting the increase in test fees received under the
Pooled Patents Agreement that was entered into in December 2014.
Total patient samples accessioned decreased by 12% to 41,000
patient samples during the third quarter of 2015, compared to the
prior year third quarter. Approximately 35,500 of those
patient samples accessioned were for noninvasive prenatal tests
(NIPT), including the MaterniT21® PLUS, VisibiliT™ and
MaterniT GENOME laboratory-developed tests, which is a 7.8%
decrease in testing volume compared to the third quarter of 2014.
This decline is primarily due to the transition of referring
laboratories to licensees under the Pooled Patents
Agreement.
Total cost of revenues decreased to $15.1
million for the third quarter of 2015, compared to
$21.0 million for the prior year
period. Cost of revenues decreased primarily due to the
continued cost improvements for Sequenom Laboratories' existing
tests as well as the decrease in test volumes.
Gross margin for the third quarter of 2015 was 50% as compared
to gross margin of 45% for the third quarter of 2014. Higher
license fee revenue and improved efficiencies in processing patient
samples largely drove this increase.
Total operating expenses excluding cost of revenues for the
third quarter of 2015 were $22.9
million, as compared to total operating expenses of
$23.0 million for the third quarter
of 2014. Total operating expenses for the third quarter of
2015 were down sequentially from total operating expenses of
$23.2 million for the second quarter
of 2015 which included $0.7 million
in restructuring cost related to asset impairment and
severance.
The operating loss for the third quarter of 2015 was
$7.3 million, as compared to a loss
of $6.0 million for the same period
in 2014. A gain of $0.8 million
related to the sale of the Grand
Rapids laboratory assets was included in the operating loss
for the third quarter of 2015. Net loss for the third quarter
of 2015 was $9.4 million or
$0.08 per share, as compared to a net
loss of $6.1 million, or $0.05 per share, for the same period in
2014. An income tax benefit of $2.1
million was reflected in the net loss for the third quarter
of 2014.
Cash burn for the third quarter of 2015 was $7.9 million, compared to $6.4 million in the same period of 2014 and
$2.9 million in the second quarter of
2015. Cash burn in the third quarter includes semi-annual
interest payments on the convertible debt.
Unrecorded accounts receivable for tests performed and
recognized on a cash basis are estimated to be $19 to $21 million as of September 30, 2015.
As of September 30, 2015, total
cash, cash equivalents, and marketable securities was $80.4 million.
Operational Updates
In the first nine months of 2015,
Sequenom Laboratories accessioned approximately 114,000 NIPT tests
and more than 138,000 total test samples for all of its
laboratory-developed tests, compared to 119,000 NIPT tests and
146,000 total tests for the first nine months of 2014.
Sequenom Laboratories now has coverage for over 200 million
commercial lives and 46 million lives under Medicaid programs.
On August 31, 2015, Sequenom
Laboratories launched MaterniT GENOME, the first and only NIPT to
detect genome-wide deletions/duplications 7 megabase level and
greater, plus the seven clinically relevant microdeletions reported
by the MaterniT21 PLUS test. Sequenom Laboratories has
recently completed a large clinical validation study on MaterniT
GENOME confirming the high sensitivity and specificity established
through previous analytical studies.
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 September 30, 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, purchases of property, equipment and
leasehold improvements, payments on long-term obligations, and
payment of convertible note transaction costs. 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 Dr. Dirk van den Boom, Interim
President and CEO, and other members of senior management will take
place today, November 4, at
5:00 p.m. ET (2:00 p.m. PT) 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 0455461. For interested
parties unable to listen to the live conference call, a replay will
be available through Friday, December 4,
2015. The replay will be accessible by dialing 877-344-7529
or 412-317-0088 internationally, and entering the conference number
10075290.
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, December 4, 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, MaterniT™ GENOME, 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™, MaterniT™
GENOME, MaterniT21® PLUS, NextView™,
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
The preliminary unaudited
financial information for the three and nine months ended
September 30, 2015 set forth in this
press release is based on information available at the time of this
press release and is subject to further review by our independent
accountants and management prior to our filing of our Quarterly
Report on Form 10-Q for the third quarter ended September 30, 2015. Furthermore, any results
reported for any completed period should not be considered
indications of our future performance.
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 potential of MaterniT GENOME
to increase Sequenom's revenue and market share, the potential of
Sequenom Laboratories' circulating cell-free tumor DNA assays
to open new market opportunities for Sequenom in oncology and the
ability of Sequenom to implement changes in the Company's
commercial operations, cost structure, and new product programs in
the coming quarters to improve revenues and reduce costs,
Sequenom's ability to continue to improve the timeliness of
collections of accounts receivable, and Sequenom Laboratories'
ability to change the landscape in genetic diagnostics using
proprietary cutting edge technologies. 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
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Diagnostic services,
net
|
$ 27,688
|
|
$ 37,376
|
|
$ 94,283
|
|
$ 113,475
|
|
License
|
2,213
|
|
561
|
|
6,190
|
|
1,305
|
|
Total
revenues
|
29,901
|
|
37,937
|
|
100,473
|
|
114,780
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
15,069
|
|
21,000
|
|
50,971
|
|
66,180
|
|
Selling and
marketing
|
8,541
|
|
7,448
|
|
25,386
|
|
23,927
|
|
Research and
development
|
5,892
|
|
6,073
|
|
17,413
|
|
19,949
|
|
General and
administrative
|
8,431
|
|
9,457
|
|
25,617
|
|
36,527
|
|
Restructuring costs
and other charges
|
—
|
|
—
|
|
656
|
|
1,885
|
|
Total costs and
expenses
|
37,933
|
|
43,978
|
|
120,043
|
|
148,468
|
|
Gain on pooled patents
agreement and sale of assets
|
750
|
|
—
|
|
21,750
|
|
—
|
|
Operating income
(loss)
|
(7,282)
|
|
(6,041)
|
|
2,180
|
|
(33,688)
|
|
Interest and other
expense, net
|
(2,077)
|
|
(2,144)
|
|
(6,144)
|
|
(6,334)
|
|
Loss from continuing
operations before income taxes
|
(9,359)
|
|
(8,185)
|
|
(3,964)
|
|
(40,022)
|
|
Income tax benefit
(expense)
|
(84)
|
|
2,107
|
|
(207)
|
|
8,911
|
|
Loss from continuing
operations
|
(9,443)
|
|
(6,078)
|
|
(4,171)
|
|
(31,111)
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
Earnings from
discontinued operations, net of tax
|
—
|
|
—
|
|
—
|
|
13,812
|
|
Net loss
|
$
(9,443)
|
|
$
(6,078)
|
|
$
(4,171)
|
|
$ (17,299)
|
|
|
|
|
|
|
|
|
|
Net loss per
common share, basic
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
(0.08)
|
|
$
(0.05)
|
|
$
(0.04)
|
|
$
(0.27)
|
|
Discontinued
operations
|
$
—
|
|
$
—
|
|
$
—
|
|
$
0.12
|
|
Net loss
|
$
(0.08)
|
|
$
(0.05)
|
|
$
(0.04)
|
|
$
(0.15)
|
|
Shares used in
computing loss per share
|
|
|
|
|
|
|
|
|
Basic
|
118,432
|
|
117,067
|
|
118,098
|
|
116,516
|
|
SEQUENOM,
INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
September
30,
2015
|
|
December
31,
2014
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash, cash equivalents
and marketable securities
|
$ 80,401
|
|
$ 93,897
|
|
Accounts receivable,
net
|
6,329
|
|
9,131
|
|
Inventories
|
4,562
|
|
6,516
|
|
Other current assets
and prepaid expenses
|
5,345
|
|
12,112
|
|
Total current
assets
|
96,637
|
|
121,656
|
|
Property, equipment
and leasehold improvements, net
|
11,209
|
|
15,348
|
|
Other
assets
|
20,859
|
|
24,067
|
|
Total
assets
|
$ 128,705
|
|
$ 161,071
|
|
|
|
|
|
Liabilities and
stockholders' deficit
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
6,423
|
|
$
6,089
|
|
Accrued
expenses
|
13,498
|
|
22,155
|
|
Long-term debt and
obligations, current portion
|
346
|
|
4,144
|
|
Other current
liabilities
|
634
|
|
2,581
|
|
Deferred gain on
pooled patents agreement
|
—
|
|
21,000
|
|
Total current
liabilities
|
20,901
|
|
55,969
|
|
Long-term
liabilities
|
135,514
|
|
136,266
|
|
Total stockholders'
deficit
|
(27,710)
|
|
(31,164)
|
|
Total liabilities and
stockholders' deficit
|
$ 128,705
|
|
$ 161,071
|
|
SEQUENOM,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
Nine Months
Ended
|
|
September
30,
|
|
2015
|
|
2014
|
|
Operating
activities
|
|
|
|
|
Net loss
|
$
(4,171)
|
|
$ (17,299)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
Gain on pooled patents
agreement and sale of assets
|
(21,723)
|
|
—
|
|
Earnings from
discontinued operations, net of tax
|
—
|
|
(13,812)
|
|
Share-based
compensation
|
5,465
|
|
9,091
|
|
Depreciation and
amortization
|
8,049
|
|
9,247
|
|
Non-cash restructuring
costs and other charges
|
386
|
|
1,885
|
|
Other non-cash
items
|
925
|
|
143
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
2,801
|
|
(4,040)
|
|
Inventories
|
1,954
|
|
5,608
|
|
Prepaid expenses and
other assets
|
336
|
|
250
|
|
Accounts payable and
accrued expenses
|
(8,546)
|
|
(4,074)
|
|
Deferred taxes
(benefit)
|
494
|
|
(9,212)
|
|
Other
liabilities
|
(1,994)
|
|
(129)
|
|
Net cash used in
operating activities of continuing operations
|
(16,024)
|
|
(22,342)
|
|
Investing
activities
|
|
|
|
|
Purchases of
property, equipment and leasehold improvements
|
(1,691)
|
|
(1,007)
|
|
Purchases of
marketable securities
|
(20,150)
|
|
(40,149)
|
|
Maturities of
marketable securities
|
20,000
|
|
19,169
|
|
Net cash received
from sale of segment
|
—
|
|
29,291
|
|
Proceeds from pooled
patents agreement
|
6,000
|
|
—
|
|
Proceeds from the
sale of assets
|
750
|
|
—
|
|
Change in restricted
cash
|
500
|
|
—
|
|
Net cash provided by
investing activities of continuing operations
|
5,409
|
|
7,304
|
|
Financing
activities
|
|
|
|
|
Payments on term loan
and capital lease obligations
|
(4,042)
|
|
(5,641)
|
|
Proceeds from common
stock issued under employee stock plans
|
1,046
|
|
1,777
|
|
Net cash used in
financing activities of continuing operations
|
(2,996)
|
|
(3,864)
|
|
Discontinued
operations
|
|
|
|
|
Net cash provided by
operating activities of discontinued operations
|
—
|
|
2,816
|
|
Net cash used in
investing activities of discontinued operations
|
—
|
|
(164)
|
|
Net cash provided by
discontinued operations
|
—
|
|
2,652
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(33)
|
|
—
|
|
Net decrease in cash
and cash equivalents
|
(13,644)
|
|
(16,250)
|
|
Cash and cash
equivalents at beginning of period
|
63,309
|
|
61,589
|
|
Cash and cash
equivalents at end of period
|
$ 49,665
|
|
$ 45,339
|
|
|
|
|
SEQUENOM,
INC.
|
|
RECONCILIATION OF
CASH BURN
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine months ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Cash
Burn:
|
|
|
|
|
|
|
|
|
Net cash used in
operating activities
|
$
7,677
|
|
$
4,156
|
|
$
16,024
|
|
$
22,342
|
|
Purchases of
property, equipment and leasehold improvements
|
65
|
|
456
|
|
1,691
|
|
1,007
|
|
Payments on long-term
obligations
|
108
|
|
1,827
|
|
4,042
|
|
5,641
|
|
Payment of
convertible note exchange transaction costs
|
—
|
|
—
|
|
(1,605)
|
|
—
|
|
Cash
burn(1)
|
$
7,850
|
|
$
6,439
|
|
$ 20,152
|
|
$ 28,990
|
|
|
|
|
|
|
|
|
|
(1) See accompanying
Non-GAAP Financial Measures section for description of
adjustments.
|
|
|
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SOURCE Sequenom, Inc.