SAN DIEGO, March 2, 2016 /PRNewswire/ -- Sequenom, Inc.
(NASDAQ: SQNM), a life sciences company committed to enabling
healthier lives through the development of innovative products and
services, today reported results for the fourth quarter and full
year 2015.
Fourth Quarter and Full Year 2015 Highlights:
- Fourth quarter total accessions of 42,200, up from 41,000 in Q3
2015
- Fourth quarter noninvasive prenatal test (NIPT) accessions of
37,300, up from 35,500 in Q3 2015
- Total accessions of 180,400 and total NIPT accessions of
156,300 in 2015
- Fourth quarter and 2015 total revenue of $27.8 million and $128.3
million, respectively
- Fourth quarter and 2015 license revenue of $2.3 million and $8.4
million, respectively
- Fourth quarter and 2015 net loss of $12.2 million and $16.3
million, respectively
"We believe the clearest view of Sequenom's current business
trend can be seen by comparing our fourth quarter units to those in
our third quarter of 2015," said Dr. Dirk
van den Boom, President and Chief Executive Officer.
"When viewed from this perspective, our commercial efforts are
beginning to pay off in the form of higher test volumes, which we
expect to continue into 2016."
Diagnostic services revenue for the fourth quarter and full year
2015 were impacted by $6.6 million
and $6.9 million, respectively,
associated with the transition of certain laboratory customers to
licensees in 2015. The transition of these licensees reduced the
total accessions in the fourth quarter of 2015 by approximately
10,000 units compared to the fourth quarter of 2014. These
licensees, along with other patent pool participants, contributed
to the increase in license revenue from $3.0
million in 2014 to $8.4
million in 2015.
"We made several key transitions in 2015, with our business
model now including a recurring revenue stream. 2015
was the first full year under the patent pool agreement, which
allows Sequenom to benefit financially when others use the
intellectual property we developed for NIPT. During
2015, we launched three new tests including the most comprehensive
NIPT available on the market today, MaterniT®
GENOME. With MaterniT GENOME's unmatched performance,
Sequenom now offers the greatest number of options to physicians
seeking to provide the best in patient care. Other key 2015
accomplishments included an agreement with United Healthcare to
bring Sequenom's tests in-network, and the completion of key
oncology development milestones including analytical validation and
the signing of more than five academic collaboration agreements,"
said Dr. van den Boom. "We believe
that these accomplishments, together with our early 2016 decisions
to achieve operating cost reductions and explore partnerships for
our oncology programs, will allow Sequenom to establish its tests
in new markets and position the company to achieve a neutral
operating cash flow run rate by the end of 2017, in line with prior
guidance."
Fourth Quarter Results
Total patient samples accessioned increased by 3% to 42,200
patient samples during the fourth quarter of 2015, compared to the
third quarter of 2015. Total NIPT samples accessioned in the
fourth quarter were 37,300, a 5% increase compared to 35,500
samples accessioned in the third quarter of 2015. This volume
growth is attributable primarily to our launch of MaterniT GENOME
in the third quarter. Test samples accessioned decreased by
17.1% compared to the prior year's fourth quarter. Total NIPT
samples accessioned decreased by 14.6% compared to the fourth
quarter of 2014. These decreases are due to the conversion of
certain international and domestic laboratory customers to licensee
status in 2015.
Revenue for the fourth quarter of 2015 was $27.8 million, compared to $29.9 million for the third quarter of 2015 and
$36.8 million for the fourth quarter
of 2014. Revenue is recorded primarily on a cash basis, with
accrual accounting used for several third-party payors and for
client bill arrangements. The decline in revenue in the
fourth quarter of 2015 compared to the third quarter is attributed
to reimbursement rates and timing of cash collections.
Diagnostic services revenue for the fourth quarter of 2015 was
approximately $6.6 million lower than
the same period in 2014 as a result of the transition of certain
customers to licensee status, which contributed to the increase in
license fee revenue. Collections related to services
performed in prior periods declined in the fourth quarter of 2015
as the amount available to collect from cash basis services in
prior periods was lower.
Total cost of revenue decreased to $16.0
million for the fourth quarter of 2015, compared to
$17.3 million for the prior year
period. Cost of revenue decreased primarily due to the reduced
volume of tests and continued cost reductions, offset by higher
costs to process the more complex MaterniT GENOME test.
Gross margin for the fourth quarter of 2015 was 43% as compared
to gross margin of 53% for the fourth quarter of 2014. The decrease
in gross margin is attributable primarily to lower revenue as a
result of reduced reimbursement per test, reduced test volume,
delays in receiving payment, and higher costs for MaterniT GENOME
tests, offset by higher margin license fee revenue.
Total operating expenses for the fourth quarter of 2015 were
$21.9 million, as compared to total
operating expenses of $22.4 million
for the fourth quarter of 2014. The decrease is primarily due to
lower general and administrative costs, partially offset by
increases in selling and marketing expense.
Operating loss for the fourth quarter of 2015 was $10.1 million as compared to operating income of
$20.0 million for the same period in
2014. During the fourth quarter of 2014, the Company
recognized a gain of $22.9 million
related to the pooled patents and settlement agreements with
Illumina. Excluding this gain, the operating loss for the
fourth quarter of 2014 was $2.9
million. Net loss for the fourth quarter of 2015 was
$12.2 million, or $0.10 per diluted share, as compared to a net
income of $18.3 million, or
$0.14 per diluted share, for the same
period in 2014.
Cash burn for the fourth quarter of 2015 was $4.7 million, compared to $7.5 million in the same period of 2014.
2015 Full Year Results
For the full year 2015, Sequenom Laboratories accessioned
156,300 NIPT patient samples and 180,400 total patient samples for
all of its laboratory developed tests, compared to 163,000 NIPT
samples and 197,500 total samples for the full year 2014. The
decrease is primarily due to the conversion of an international
laboratory customer to licensee status in 2015, which was partially
offset by increased volume from a domestic laboratory customer.
Revenue for 2015 was $128.3
million, compared to $151.6
million in 2014. Diagnostic services revenue decreased
to $119.8 million in 2015 from
$148.6 million in 2014, partially as
a result of the shift of an international laboratory customer to
licensee status at the beginning of 2015. This shift, when
combined with the impact of a domestic laboratory customer who
converted to licensee status and the benefit of the pooled patents
agreement, increased license revenue to $8.4
million in 2015 from $3.0
million in 2014. This change decreased diagnostic services
revenue by $6.9 million in
2015. Lower collections related to services performed in
prior years also reduced revenue in 2015 compared to 2014, as lower
amounts were available to collect. In total during 2015, 39%
of diagnostic services revenue was recorded on an accrual basis
compared to 27% in 2014.
Net loss for 2015 of $16.3
million, $0.14 per share,
includes gains on the pooled patents agreement and asset sales of
$21.8 million. Net income for
2014 of $1.0 million, $0.01 per share, included gains of $22.9 million on the pooled patents agreement and
$15.4 million as a result of the sale
of our Bioscience business.
Net cash used in operating activities was $20.2 million for 2015, compared to $28.1 million in the prior year.
Unrecorded accounts receivable has declined from prior periods
due to collections and additional amounts recorded as accounts
receivable using accrual accounting. At December 31, 2015, the estimate of unrecorded
accounts receivable for tests performed but not yet recognized as
revenue ranges from $16 million to $18
million.
As of December 31, 2015, total
cash, cash equivalents, and marketable securities were $76.2 million.
2015 Operational Highlights
- At December 31, 2015, there were
39 participants in the patent pool, including Illumina and
Sequenom, 18 of which were active. Many inactive licensees are in
the process of developing and validating a NIPT to be performed in
their own laboratories.
- Sequenom Laboratories completed an agreement with United
Healthcare to bring Sequenom's NIPT testing services in-network,
effective October 1, 2015. Sequenom
Laboratories now has coverage for over 200 million commercial lives
and 46 million Medicaid lives.
- Sequenom Laboratories launched 3 new NIPT during 2015:
VisibiliT™ (US launch), HerediT® UNIVERSAL, and MaterniT
GENOME. Over 3,000 MaterniT GENOME tests were performed in 2015,
with the fourth quarter as the first full quarter following
launch.
- We reached all of our development milestones in the oncology
program, including analytical validation, and started our clinical
program with more than five domestic and international academic
collaborations to explore Sequenom's research use only oncology
assays.
2016 Developments
- We announced the publication of our clinical validation results
for MaterniT GENOME in the American Journal of Obstetrics and
Gynecology. The MaterniT GENOME test showed exceptional performance
in the detection of full chromosome aneuploidies as well as sub
chromosomal abnormalities as small as 7 megabases. MaterniT
GENOME's content as well as its performance have been well received
by the physician community.
- Sequenom Laboratories completed an agreement with Anthem Blue
Cross for its tests to be in-network in California, starting March 1, 2016. This agreement covers tests for
high risk and average risk pregnancies. This agreement is a first
step in our strategy to leverage the testing portfolio for the
average risk market, which Sequenom Laboratories entered at the end
of 2015.
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 full year and quarter ended December 31, 2015. Management uses non-GAAP
financial measures because it believes that a cash flow metric
incorporating cash used in 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 and, payments on long-term
obligations. In 2015, cash burn was also adjusted for the
cash payment of convertible note exchange transaction costs.
In 2014, cash burn also was adjusted to exclude the cash
proceeds from the litigation settlement and the accelerated royalty
payment in connection with the purchase of certain patents, since
these transactions were not used to evaluate management performance
related to cash burn. 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, President and CEO, and other members of senior
management will take place today, March 2,
2016 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 (U.S. / Canada) or 412-902-6506 (other countries).
Please use code 9189690. For interested parties unable to listen to
the live conference call, a replay will be available through
April 2, 2016. The replay will be
accessible by dialing 877-344-7529 (US toll free), 855-669-9658
(Canada toll free), or
412-317-0088 (international toll), and entering the conference
number 10081831.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 April
2, 2016.
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
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 expectation of higher test
volumes in 2016, the ability to achieve operating cost reductions
and secure partnerships for our oncology programs, the ability to
establish Sequenom's tests in new markets including the
average-risk pregnancy market and the ability to position the
Company to achieve a neutral operating cash flow run rate by the
end of 2017. 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,
our Annual Report on Form 10-K, which we expect to file shortly 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 December
31,
|
|
Years Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenues:
|
|
|
|
|
|
|
|
Diagnostic services,
net
|
$ 25,555
|
|
$ 35,130
|
|
$ 119,838
|
|
$ 148,605
|
License
|
2,255
|
|
1,659
|
|
8,444
|
|
2,964
|
Total
revenues
|
27,810
|
|
36,789
|
|
128,282
|
|
151,569
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of
revenues
|
15,981
|
|
17,295
|
|
66,952
|
|
83,475
|
Selling and
marketing
|
9,338
|
|
6,899
|
|
34,725
|
|
30,826
|
Research and
development
|
5,427
|
|
5,056
|
|
22,839
|
|
25,005
|
General and
administrative
|
7,124
|
|
10,383
|
|
32,741
|
|
46,910
|
Restructuring costs
and other charges
|
—
|
|
22
|
|
656
|
|
1,907
|
Total costs and
expenses
|
37,870
|
|
39,655
|
|
157,913
|
|
188,123
|
Gain on pooled patents
agreement and sale of assets
|
—
|
|
22,850
|
|
21,750
|
|
22,850
|
Operating (loss)
income
|
(10,060)
|
|
19,984
|
|
(7,881)
|
|
(13,704)
|
Interest and other
expense, net
|
(2,062)
|
|
(2,002)
|
|
(8,206)
|
|
(8,336)
|
(Loss) income from
continuing operations before income taxes
|
(12,122)
|
|
17,982
|
|
(16,087)
|
|
(22,040)
|
Income tax (expense)
benefit
|
(37)
|
|
(1,235)
|
|
(244)
|
|
7,676
|
(Loss) income from
continuing operations
|
(12,159)
|
|
16,747
|
|
(16,331)
|
|
(14,364)
|
Discontinued
operations:
|
|
|
|
|
|
|
|
Earnings from
discontinued operations, net of tax
|
—
|
|
1,564
|
|
—
|
|
15,376
|
Net (loss)
income
|
$ (12,159)
|
|
$ 18,311
|
|
$ (16,331)
|
|
$
1,012
|
|
|
|
|
|
|
|
|
Net (loss) income
per common share, basic
|
|
|
|
|
|
|
|
Continuing
operations
|
$
(0.10)
|
|
$
0.14
|
|
$
(0.14)
|
|
$
(0.12)
|
Discontinued
operations
|
$
—
|
|
$
0.01
|
|
$
—
|
|
$
0.13
|
Net (loss)
income
|
$
(0.10)
|
|
$
0.16
|
|
$
(0.14)
|
|
$
0.01
|
Net (loss) income
per common share, diluted
|
|
|
|
|
|
|
|
Continuing
operations
|
$
(0.10)
|
|
$
0.13
|
|
$
(0.14)
|
|
$
(0.12)
|
Discontinued
operations
|
$
—
|
|
$
0.01
|
|
$
—
|
|
$
0.13
|
Net (loss)
income
|
$
(0.10)
|
|
$
0.14
|
|
$
(0.14)
|
|
$
0.01
|
Shares used in
computing (loss) income per share
|
|
|
|
|
|
|
|
Basic
|
118,591
|
|
117,377
|
|
118,223
|
|
116,729
|
Diluted
|
118,591
|
|
146,228
|
|
118,223
|
|
116,729
|
SEQUENOM,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(In
thousands)
|
|
|
December
31,
2015
|
|
December
31,
2014
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash, cash equivalents
and marketable securities
|
$ 76,170
|
|
$ 93,897
|
Accounts receivable,
net
|
6,421
|
|
9,131
|
Inventories
|
2,417
|
|
6,516
|
Other current assets
and prepaid expenses
|
3,991
|
|
12,112
|
Total current
assets
|
88,999
|
|
121,656
|
Property, equipment
and leasehold improvements, net
|
10,059
|
|
15,348
|
Other
assets
|
19,724
|
|
24,067
|
Total
assets
|
$ 118,782
|
|
$ 161,071
|
|
|
|
|
Liabilities and
stockholders' deficit
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
5,234
|
|
$
6,089
|
Accrued
expenses
|
15,368
|
|
22,155
|
Long-term debt and
obligations, current portion
|
316
|
|
4,144
|
Other current
liabilities
|
589
|
|
2,581
|
Deferred gain on
pooled patents agreement
|
—
|
|
21,000
|
Total current
liabilities
|
21,507
|
|
55,969
|
Long-term
liabilities
|
135,673
|
|
136,266
|
Total stockholders'
deficit
|
(38,398)
|
|
(31,164)
|
Total liabilities and
stockholders' deficit
|
$ 118,782
|
|
$ 161,071
|
SEQUENOM,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In
thousands)
|
|
|
Years
Ended
|
|
December
31,
|
|
2015
|
|
2014
|
Operating
activities
|
|
|
|
Net (loss)
income
|
$ (16,331)
|
|
$
1,012
|
Adjustments to
reconcile net (loss) income to net cash used in operating
activities:
|
|
|
|
Gain on pooled patents
agreement and sale of assets
|
(21,723)
|
|
(21,000)
|
Gain on sale of
discontinued operations
|
—
|
|
(24,291)
|
Loss from discontinued
operations, net of tax
|
—
|
|
583
|
Share-based
compensation
|
7,038
|
|
11,519
|
Depreciation and
amortization
|
10,144
|
|
12,232
|
Non-cash restructuring
costs and other charges
|
386
|
|
1,907
|
Other non-cash
items
|
1,285
|
|
387
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
2,710
|
|
(6,579)
|
Inventories
|
4,099
|
|
5,082
|
Prepaid expenses and
other assets
|
1,238
|
|
(1,675)
|
Accounts payable and
accrued expenses
|
(7,641)
|
|
(5,681)
|
Deferred
taxes
|
577
|
|
345
|
Other
liabilities
|
(1,984)
|
|
(1,927)
|
Net cash used in
operating activities of continuing operations
|
(20,202)
|
|
(28,086)
|
Investing
activities
|
|
|
|
Purchases of
property, equipment and leasehold improvements
|
(2,067)
|
|
(2,236)
|
Purchases of
marketable securities
|
(25,187)
|
|
(45,128)
|
Maturities of
marketable securities
|
30,000
|
|
24,203
|
Net cash received
from sale of segment
|
—
|
|
29,291
|
Proceeds from pooled
patents agreement
|
6,000
|
|
42,150
|
Proceeds from the
sale of assets
|
750
|
|
—
|
Change in restricted
cash
|
996
|
|
—
|
Distribution from
pooled patents agreement
|
—
|
|
(6,150)
|
Net cash paid for
other assets
|
—
|
|
(9,250)
|
Net cash provided by
investing activities of continuing operations
|
10,492
|
|
32,880
|
Financing
activities
|
|
|
|
Payments on term loan
and capital lease obligations
|
(4,144)
|
|
(7,541)
|
Proceeds from common
stock issued under employee stock plans
|
932
|
|
1,833
|
Net cash used in
financing activities of continuing operations
|
(3,212)
|
|
(5,708)
|
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
|
(43)
|
|
(18)
|
Net (decrease)
increase in cash and cash equivalents
|
(12,965)
|
|
1,720
|
Cash and cash
equivalents at beginning of period
|
63,309
|
|
61,589
|
Cash and cash
equivalents at end of period
|
$
50,344
|
|
$
63,309
|
SEQUENOM,
INC.
|
RECONCILIATION OF
CASH BURN
|
(Unaudited)
|
(In
thousands)
|
|
|
Three Months
Ended December
31,
|
|
Years Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Cash
Burn:
|
|
|
|
|
|
|
|
Net cash used in
operating activities
|
$ 4,178
|
|
$ 5,744
|
|
20,202
|
|
28,086
|
Purchases of
property, equipment and leasehold improvements
|
376
|
|
1,229
|
|
2,067
|
|
2,236
|
Payments on long-term
obligations
|
102
|
|
1,900
|
|
4,144
|
|
7,541
|
Payment of
convertible note exchange transaction costs
|
—
|
|
—
|
|
(1,605)
|
|
—
|
Litigation
settlement
|
—
|
|
1,850
|
|
—
|
|
1,850
|
Accelerated royalty
payment related to purchase patents
|
—
|
|
(3,250)
|
|
—
|
|
(3,250)
|
Cash
burn(1)
|
$ 4,656
|
|
$ 7,473
|
|
$ 24,808
|
|
$ 36,463
|
|
(1) See accompanying
Non-GAAP Financial Measures section for description of
adjustments.
|
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SOURCE Sequenom, Inc.