GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Sequenom Inc. Reports Operating Results (10-Q)

August 06, 2009 | About:

Sequenom Inc. (SQNM) filed Quarterly Report for the period ended 2009-06-30.

Sequenom Inc. is in the field of industrial genomics. Industrial genomics is the large scale commercial use of the knowledge of DNA variations for improving health agriculture and livestock. These variations are the differences between individuals including disease predispositions and variations in drug responses. Single nucleotide polymorphisms are the most common variations. The company has developed the MassArray system an accurate cost-effective technology that is capable of high throughput single nucleotide polymorphism analysis at high speeds. Sequenom Inc. has a market cap of $371.7 million; its shares were traded at around $6.08 with and P/S ratio of 7.9.

Highlight of Business Operations:

MassARRAY and product related revenues for the three and six months ended June 30, 2009 were $3.3 million and $6.4 million, respectively, as compared to $6.6 million and $11.2 million for the same periods in 2008. The decrease of $3.3 million and $4.8 million for the three and six months ended June 30, 2009 as compared to the same period in 2008 was due to a reduction in MassARRAY system hardware sales of $3.4 million and $4.8 million, respectively, due to fewer system placements in the three and six months ended June 30, 2009. The decrease in system hardware sales was attributable to the academic, pharmaceutical, and clinical research institutions slowing capital expenditure requirements associated with the current economic environment. Revenue from product related sales, including MassARRAY system maintenance contracts, for the three and six months ended June 30, 2009 were $0.8 million and $1.5 million, respectively, compared to $0.7 million and $1.5 million, respectively, for the same periods in 2008.

We recorded services revenue of $0.7 million and $1.5 million, respectively, for the three and six months ended June 30, 2009, as compared to $1.2 million and $2.5 million for the same periods in 2008. The decreases of $0.5 million and $1.0 million are attributable to our cost cutting initiative that commenced in April 2009. Service revenue is expected to continue to decline over the remainder of 2009.

The increase in research and development expenses of $3.8 million for the three months ended June 30, 2009, as compared to the same period in 2008 primarily relates to increased headcount and related costs of $0.3 million, $0.9 million of costs related to our CLIA certified laboratory acquired in the fourth quarter of 2008, $0.7 million related to clinical trial costs associated with our prenatal diagnostic, molecular diagnostics and genetic analysis programs, $0.6 million for higher share-based compensation charges, increased operating supplies of $0.4 million primarily associated with our noninvasive prenatal diagnostic research and development, $0.3 million of increased research and development collaborations, $0.1 million of increased depreciation primarily associated with the acquisition of

The increase in research and development expenses of $7.7 million for the six months ended June 30, 2009 compared to the same period in 2008 primarily relates to headcount and related costs of $1.2 million, $1.6 million of costs related to our CLIA certified laboratory acquired in the fourth quarter of 2008, $1.5 million related to clinical trial costs associated with our prenatal diagnostic, molecular diagnostics and genetic analysis programs, $1.2 million for higher share-based compensation charges, increased operating supplies of $0.6 million primarily associated with our noninvasive prenatal diagnostic research and development, $0.5 million of increased research and development collaborations, $0.2 million of increased depreciation primarily associated with the acquisition of our CLIA certified laboratory in the fourth quarter of 2008 and $1.0 million in higher allocated overhead charges primarily due to the full allocation of our IT department across all functional areas. These increases were offset by decreased consultant expenses of $0.2 million due to an increase in headcount to support various research and development projects.

The increase in general and administrative expenses of $3.9 million for the three months ended June 30, 2009 from the same period in 2008 was primarily due to $3.2 million of increased legal fees associated with new and ongoing litigation, as well as investigative expenses, $0.1 million for increased headcount and related expenses, $0.2 million of increased insurance expense and other corporation expense, $0.5 million of higher rent and communications expenses associated with our San Diego facilities and $0.5 million in higher share-based compensation charges, offset by increased allocation of IT department expenses to other functional departments of $0.5 million and a decrease of $0.2 million in acquisition related expenses.

six months ended June 30, 2009, was $27.4 million, as compared to $15.6 million for the same period in 2008. The use of cash was primarily a result of the net loss of $37.7 million for the six months ended June 30, 2009, adjusted for non-cash items of depreciation and amortization of $2.6 million, share-based compensation of $6.2 million, non-cash compensation charges related to vesting of restricted stock of $0.3 million, offset by a non-cash change in deferred rent of $0.3 million and the recovery of bad debt expense of $0.2 million. The changes in our operating assets and liabilities primarily consisted of an increase in other current assets and prepaid expenses of $1.0 million and an increase in deferred revenue of $0.3 million at June 30, 2009 compared to December 31, 2008. These changes were offset by decreases in accounts receivable of $2.8 million, accounts payable and accrued expenses of $0.6 million and inventory of $0.2 million at June 30, 2009 compared to December 31, 2008. At our current and anticipated level of operating loss, we expect to continue to incur an operating cash outflow on a quarterly basis for the foreseeable future.

Read the The complete Report

Rating: 4.0/5 (6 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide