Sequenom's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Sequenom ( SQNM)

Q4 2011 Earnings Call

March 7, 2012 5:00 p.m. ET


Marcy Graham - Senior Director, IR

Harry Hixson - Chairman and CEO

Paul Maier - CFO

Ron Lindsay - Director and EVP

Bill Welch - SVP, Diagnostics

Dirk van den Boom - SVP, Research and Development


Nandita Koshal - Barclays Capital

David Ferreiro - Oppenheimer

Brian Weinstein - William Blair

Kevin DeGeeter - Ladenburg Thalmann

David Clair - Piper Jaffray

Jon Wood - Jefferies

Junaid Husain - Dougherty & Company

Elemer Piros - Rodman & Rodman & Renshaw

Zarak Khurshid - Wedbush Securities



Good afternoon, and welcome to the Sequenom fourth quarter and full year 2011 earnings conference call. [Operator instructions.] I would now like to turn the conference over to Marcy Graham, senior director of investor relations. Please go ahead.

Marcy Graham

Thank you operator. Welcome to the Sequenom conference call to discuss operating results for the fourth quarter and full year 2011. Joining me today is Dr. Harry Hixon, chairman and CEO; Paul Maier, CFO; Dr. 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, will all three join us later for the Q&A portion of our call.

This is also being broadcast live over the web, and will be available for replay through Thursday, March 15, 2012 on the investor section of our website at Before we begin, please note that this call will include a discussion of Sequenom and Sequenom CMM's current plans and intentions regarding product development and commercialization and other matters, as well as expectations regarding Sequenom's financial resources or future financial performance, statements that are not historical facts but 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 statements.

For information about the risks and uncertainties that Sequenom faces, please refer to the risk factors section 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?

Harry Hixson

Thank you Marcy. Good afternoon and thanks to everyone on the line for joining us on today’s call to discuss Sequenom’s fourth quarter and full year results for 2011. 2011 was an excellent year for Sequenom and the Sequenom Center for Molecular Medicine, or SCMM.

It was marked by the launch of two new laboratory developed tests, one which opened up a new market for CMM in ophthalmology with the laboratory developed test, or LDT for age-related macular degeneration, or AMD. The other, the world’s first noninvasive blood-based test for the prenatal detection of trisomy 21, the MaterniT21 LDT.

We saw continued growth in our genetic analysis business in 2011, despite difficult economic conditions throughout the world. We broadened the content delivered to customers who use our systems for research use only, in the translational medicine marketplace. We also initiated plans to obtain a pre-market 510k clearance for the MassARRAY system, which we expect to submit to the U.S. FDA in late 2012.

In our diagnostic business, we have seen a steady increase in the adoption of the MaterniT21 LDT. Between its commercial launch in mid-October to the end of 2011, we received approximately 1,000 orders for the test. The introduction in late 2011 of a new, simplified blood collection process that enables physicians to draw and ship patient blood samples directly from their offices makes the process of ordering a MaterniT21 LDT even more convenient for patients. It also significantly reduces the operational cost associated with offering the testing service to patients and their physicians nationwide.

Since the start of the year, SCMM has received more than 7,500 patient samples from physicians for all of our currently available laboratory developed tests. This includes approximately 2,500 MaterniT21 patient samples in the first two months of 2012. As of the week ending March 3, SCMM’s run rate for the MaterniT21 PLUS LDT equated to an annualized rate in excess of 20,000 for the year, and this more than doubles the annualized run rate at the close of 2011.

A total of more than 21,000 prenatal and retinal tests were billed in 2011, thanks in large part to the increasing volume of the SensiGen cystic fibrosis carrier screening LDT. The successful commercialization this high volume of CF testing is a testament to our expertise in running a sizable CLIA-certified laboratory with increasing testing sample volumes. We have effectively recruited and trained an experienced nationwide sales force. We have implemented a collection and billing process, thereby gaining additional payer experience that will serve us well as the demand for SCMM’s testing services increase.

So far this year, the weekly test volumes of the MaterniT21 LDT have grown steadily week over week. We are optimistic that this growth will continue as we work toward our goal of building a minimum of 25,000 MaterniT21 tests in 2012.

SCMM is continually seeking methods to improve its product offerings, as exemplified most recently by expanding the application of the MaterniT21 LDT to include the detection of trisomies 18 and 13. As is our policy, this addition followed the publication of a peer reviewed manuscript, which appeared in February in the journal Genetics and Medicine, the second publication stemming from the independently conducted Women’s and Infant’s Study demonstrates the MaterniT21 test can detect trisomies 13 and 18, with high accuracy.

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