Sequenom, Inc. (Sequenom) has reported total revenues of $47.1 million for the full year of 2008, up 15%, compared with the total revenues of $41 million in the previous year-end. It has also reported a net loss of $44.2 million, or $0.83 per share, for the full year of 2008, compared with the net loss of $22 million, or $0.57 per share, in the previous year-end.
“This past year was pivotal for Sequenom as we continued to advance our genetic analysis and molecular diagnostics businesses,” stated Harry Stylli, president and chief executive officer of Sequenom. “We accomplished many key milestones over the last 12 months and are well-positioned for the launch of our SEQureDx™ Down syndrome technology in June. The data reported from our R&D study containing 858-patient samples clearly shows that our SEQureDx screening technology is considerably more accurate than the current standard-of-care screening technology, and even compares favorably against current invasive procedures. We intend to review in extensive detail the specifics of our promising study results and commercialization milestones by dedicating substantial time to these during our quarterly investment-community conference call later today.”
Sequenom reported total revenues for the fourth quarter of 2008 of $12.2 million, an increase of 9% against total revenues of $11.1 million for the fourth quarter of 2007. The net loss for the fourth quarter of 2008 was $15.4 million, or $0.25 per share, against the net loss for the fourth quarter of 2007 of $7.9 million, or $0.18 per share.
For the fourth quarter gross margin improved to 59.5% from 54.8% in the same quarter last year, due to increased sales of higher-margin consumable products. Operating expenses rose to $21.3 million from $13.5 million in the prior year, due primarily to additional expenses associated with the research and commercial activities related to the company’s Molecular Diagnostic programs and in-licensing activities.
Full year 2008 financial results
Gross margin for the full year was 58.5% up from 55.9% in 2007 primarily associated with increased sales of higher-margin consumable products and stronger margins on completed contract service projects. Operating expenses in 2008 were $70.2 million, against $45.5 million in 2007, due primarily to additional expenses associated with the research and commercial activities related to the Company’s molecular diagnostic programs and in-licensing activities.
As of December 31, 2008, Sequenom had cash, cash equivalents, restricted cash and marketable securities of $99.7 million, against $52.2 million as of December 31, 2007.
“Among our many activities, we are in the process of transferring our RNA-based SEQureDx technology to our CLIA laboratory and expect to have a fully operational laboratory by early March,” said Stylli. “We have made substantial investments in our IT infrastructure to enhance the capabilities of the laboratory to track samples and provide electronic ordering and reporting, and have put in place sample collection and transportation systems that can be readily scaled. We are also building relationships with payers that will support our pricing structure and reimbursement opportunities.”
2009 financial outlook
Outlook for 2009 is limited to the Genetic Analysis tools business and corporate administration.
Revenue for the genetic analysis business is projected to be flat in the first half of 2009 against the first half of 2008, and is projected to grow about 15% in the second half of the year. Revenues are expected to range between $49 million to $53 million for 2009.
Gross margins are expected to be up slightly to about 60% in 2009 due to higher consumables sales and higher margins in the Genetic Services business.
Operating expenses for the Genetic Analysis business are expected to be about $29 million for 2009. Based on this, the Genetic Analysis business is expected to be slightly cash flow positive in 2009.
Corporate G&A expenses in 2009 will be about $16 million, reflecting additional administrative costs due to the launch of our molecular diagnostics business and increased legal costs.
The company expects stock-based compensation to be between $6 million and $8 million for 2009.
In summary, the company expects genetic analysis revenues to be about $49 million to $53 million and our total operating expenses, excluding molecular diagnostics, to be about $53 million.
Fourth quarter 2008 highlights
New Data Indicates Next-generation Noninvasive Technology Accurately Quantifies Maternal Plasma DNA Sequences for Down syndrome: In December Sequenom announced new data from a collaborative project with The Chinese University of Hong Kong, published in the Early Edition of the Proceedings of the National Academy of Sciences, that demonstrate Sequenom’s innovative, next-generation, noninvasive prenatal diagnostic technology accurately quantified maternal plasma DNA sequences for Down syndrome, based on samples taken from women in the first and second trimesters of pregnancy. These data are the first to suggest that this future approach, based on massively parallel genomic DNA sequencing, can be effective in women who had not previously undergone invasive procedures.
Noninvasive Prenatal Diagnostic Technology Allows Diagnosis of Monogenic Diseases: In November Sequenom announced that breakthrough data from a collaborative project with The Chinese University of Hong Kong supporting the noninvasive prenatal diagnosis of monogenic diseases were published online in the Early Edition of the Proceedings of the National Academy of Sciences. Monogenic diseases, which include cystic fibrosis, ß-thalassemia and sickle cell anemia, are currently definitively diagnosed prenatally only through invasive procedures following extensive carrier screening testing on both parents.
Sequenom Acquires CLIA-Certified Laboratory: In November Sequenom completed the acquisition of Grand Rapids, Mich.-based Center for Molecular Medicine, a CLIA-certified clinical diagnostics laboratory. As part of the acquisition, Sequenom formalized certain collaborative agreements with Spectrum Health and the Van Andel Research Institute, which were joint venture partners in the CLIA laboratory. The CLIA laboratory has been renamed the Sequenom Center for Molecular Medicine (SCMM).
Exclusive License for Fetal Diagnostics from Maternal Urine: In October Sequenom exclusively licensed intellectual property for the use of fetal nucleic acids from maternal urine. The license provides Sequenom with the exclusive global right to use transrenal fetal DNA in maternal urine for noninvasive prenatal diagnostics and analysis on a technology-independent basis for all uses, excluding the limited field of fetal gender determination solely by the presence of Y chromosome. The licensed intellectual property includes issued patents in the United States and Europe and is part of the Company’s continuing strategy to expand and protect Sequenom’s SEQureDx franchise through the identification and licensing of new technologies and sampling methodologies.
Launch of Onco-Carta Gene Mutation Panel. During the fourth quarter, Sequenom launched the research use only Onco-Carta panel for the identification of genes associated with the development of specific cancers. This panel has the potential to be used for genetically typing tumor biopsies to help guide molecular therapy selection by physicians and is a part of Sequenom’s companion interests in oncology and molecular diagnostics.