Sequenom, Inc. (SQNM)
Q2 2012 Earnings Conference Call
July 26, 2012 5:00 PM ET
Marcy Graham - Senior Director, Investor Relations
Harry Hixson - Chairman and CEO
Paul Maier – CFO
Ron Lindsay - Director and EVP
Bill Welch - SVP, Diagnostics
Dirk van den Boom - SVP, Research &Development
Nandita Koshal - Barclays Capital
Bill Quirk - Piper Jaffray
Brian Weinstein - William Blair
Brandon Couillard – Jefferies & Co.
David Ferreiro – Oppenheimer & Co.
Zarak Khurshid - Wedbush Securities
Kevin DeGeeter - Ladenburg Thalmann & Co.
Junaid Husain – Dougherty & Company
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Good afternoon, and welcome to the Sequenom’s Second Quarter 2012 Earnings Conference Call. All participants will be in listen-only-mode. (Operator Instructions). After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions). Please note this event is being recorded.
And I would now like to turn the conference over to Marcy Graham, Senior Director, Investor Relations. Please go ahead.
Thank you, Emmy. Welcome to the Sequenom conference call to discuss operating results for the second quarter of 2012. Joining me today are Dr. Harry Hixson, Chairman and CEO, Paul Maier, CFO, Ron Lindsay, Director and Executive Vice President of Research and Development, Bill Welch, Senior Vice President of Diagnostics and Dr. Dirk van den Boom, Senior Vice President of Research and Development, both of whom will join us later for the Q&A portion of our call.
This call is also being broadcast live over the web and will be available for replay through August, 4
on the investor section of our website at www.sequenom.com. Before we begin, please note that this call will include a discussion of Sequenom and Sequenom CMM’s current plans and intentions regarding operations and commercialization, including diagnostic test projections, goals, diagnostics test enhancements, operational enhancements and other matters, as well as expectations regarding Sequenom’s future financial performance and reporting.
Statements that are not historical facts, but are forward-looking statements. Forward-looking statements are not guarantees of performance, they involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by any forward-looking statement.
For information about the risks and uncertainties that Sequenom faces, please refer to the risk factors set forth in our recent filings with the Securities and Exchange Commission. Sequenom assumes no obligation and expressly disclaims any duty to update any forward-looking statements to reflect events or circumstances after today’s call, or to reflect the occurrence of unanticipated events. With that, I would like to now turn the call over to Harry Hixson. Harry?
Thank you, Marcy. Good afternoon and thank you for joining us on today’s call to discuss Sequenom’s results for the second quarter of 2012. We’ve continued to build on our positive first quarter results and I am pleased to report that the adoption rate of Sequenom’s CMM’s MaterniT21 PLUS LDT has continued to exceed our expectations. We ended the second quarter of 2012 with over 20,000 MaterniT21 PLUS samples accessioned since launching the testing service in October of last year. On the basis of this excellent uptake, we have upwardly revised our internal goal of invoicing a minimum of 40,000 MaterniT21 PLUS tests to 50,000 tests for 2012. This is double our original goal of invoicing 25,000 tests in 2012 as announced in January of this year. In the second quarter alone, more than 13,000 MaterniT21 PLUS samples were accessioned. Nearly three times the volume of samples accessioned in the first quarter of this year.
At the close of the first quarter of 2012, the 52-week run rate of MaterniT21 PLUS samples accessioned, equates to approximately 30,000 tests. As of the last week of June 2012, the annualized run rate had increased to approximately 65,000 samples accessioned.
The positive trajectory of MaterniT21 PLUS test adoption in the market place since its launch in fall of 2011, it’s been extraordinary and we are pleased to report that the MaterniT21 PLUS test is now our largest contributor to diagnostic revenues.
Based on the positive feedback we’ve received from patients and their physicians, we expect this trend to continue in the future. Until such time as we convert from cash to accrual accounting for diagnostic revenues, we will continue to report samples that accessioned at the end of each quarter as a method of providing clear visibility of our growth trajectory and the market acceptance of Sequenom’s CMM’s testing services.
Our total revenue growth has been strong, improving 37% in the second quarter over this quarter last year led primarily by growth in revenues from by diagnostics services segments. This increase is largely due to the adoption of the Sequenom’s CMM’s MaterniT21 PLUS LDT, as well as continued increased demand in testing services or cystic fibrosis and to a smaller degree those for age related macular degeneration and Fetal RHD.
Our genetic analysis business continues to be a major contributor to total revenues even as the business profile and product mix continues to evolve. However, we did see softness is the overall genetics analysis revenue during the quarter as compared to the same period last year.
As market demand for the MaterniT21 PLUS LDT continues to grow, we are again expanding our sales footprint. We will be adding more than 25 additional sales representatives and managers to the Sequenom’s CMM team during the third quarter. This will bring the total number of prenatal diagnostics sales representatives to approximately 75 team members nationwide. We expect this expansion to help reinforce our presence in existing territories and will allow us to enter into new territories and broaden our overall national reach.