Sequenom Inc. (SQNM, Financial) filed Quarterly Report for the period ended 2010-03-31.
Sequenom Inc. has a market cap of $347.7 million; its shares were traded at around $5.6 with and P/S ratio of 9.2. SQNM is in the portfolios of Steven Cohen of SAC Capital Advisors.
MassARRAY and other product related revenues were $4.8 million for the three months ended March 31, 2010, as compared to $3.1 million for the same period in 2009. The increase of $1.7 million was primarily due to an increase in MassARRAY system hardware sales to $3.5 million for the three months ended March 31, 2010 from $2.4 million for the same period in 2009 due to higher system placements in the three months ended March 31, 2010. Revenue from other product sales, which primarily represents MassARRAY system maintenance contract revenue, for the three months ended March 31, 2010 and 2009 were $1.3 million and $0.7 million, respectively. This increase is due to more service contracts in effect over our larger installed base against the comparative period.
The increase in research and development expenses of $2.4 million for the three months ended March 31, 2010, as compared to the same period in 2009 primarily relates to restricted stock compensation expense of $0.3 million associated with a performance based grant to all employees in December 2009, $1.8 million related to clinical trial costs associated with our trisomies, Rhesus D and gender programs, a February 2010 licensing payment to Optherion of $1.0 million, $0.3 million of higher depreciation primarily associated with a larger capital base for our lab located at Sequenom CMM, $0.1 million in higher temporary labor costs to support various research and development projects, offset in part by decreased operating supplies of $1.1 million primarily associated with a reduction in our noninvasive prenatal diagnostic research and development activities due to the recent commercialization of three diagnostic tests (cystic fibrosis in the fourth quarter of 2009 and Rhesus D genotyping and Fetalxy sex determination in the first quarter of 2010) that were in development in the comparative period. Share-based compensation expense remained consistent between the two periods.
The decrease in selling and marketing expenses of $1.1 million for the three months ended March 31, 2010 compared to the same period in 2009 primarily were related to decreases in advertising and marketing projects associated with molecular diagnostic programs of $0.1 million, lower share-based compensation expense of $0.1 million, a decrease of $0.1 million associated with the reduction in consulting expenses within genetic analysis marketing programs, $0.1 million in lower recruiting costs due to a decrease in hiring versus the comparative period, lower facilities and equipment expenses of $0.1 million, reduced miscellaneous corporate expenses of $0.1 million, a reduction in travel expenses of $0.3 million and lower allocated charges of $0.5 million, offset in part by increased costs of $0.2 million for higher corporate related costs primarily associated with postage and freight related to sample transportation and restricted stock compensation expense of $0.1 million associated with a performance based grant to all employees in December 2009.
The decrease in general and administrative expenses of $2.0 million for the three months ended March 31, 2010 from the same period in 2009 was primarily due to a $1.2 million decrease in legal fees, lower share-based compensation expense of $0.5 million, a $0.1 million decrease in travel expenses, the non-recurrence of $0.3 million for investor relations fees associated with acquisition activities in the comparative period, a $0.1 million decrease in recruiting expenses and a $0.1 million decrease associated with lower equipment and miscellaneous expenses. These decreases were partially offset by an increase in restricted stock compensation expense of $0.3 million associated with a performance based grant to all employees in December 2009.
As of March 31, 2010, cash, cash equivalents and current marketable securities totaled $29.2 million, compared to $42.7 million at December 31, 2009. Our cash equivalents and current marketable securities are held in U.S. Government securities with ratings of AAA and repurchase agreements collateralized by U.S. Government securities with ratings of AAA. As of March 31, 2010 and December 31, 2009, we have auction rate securities with an estimated fair value of $0 million and $0.5 million, respectively. These estimated fair values reflect a $2.0 million and $3.8 million adjustment to the principal value of $2.0 million and $4.3 million as of March 31, 2010 and December 31, 2009, respectively. Additional discussion with respect to the risks and uncertainties associated with our auction rate securities is included in the Risk Factors in Item 1A of this report, in Quantitative and Qualitative Disclosures about Market Risk in Item 3 of this report and in the notes to our condensed consolidated financial statements included elsewhere in this report.
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Sequenom Inc. has a market cap of $347.7 million; its shares were traded at around $5.6 with and P/S ratio of 9.2. SQNM is in the portfolios of Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Under the terms of the agreement, in the event that the first commercial sale of a licensed product in the United States has not occurred on or before January 31, 2011, we will pay Optherion a non-creditable license maintenance fee equal to $260,000 per year. The license maintenance fee will be pro-rated for any period less than a full year before the first commercial sale of a licensed product in the United States. Following the first commercial sale of a licensed product in the United States, we will no longer be required to pay the license maintenance fee, but instead we will pay Optherion a minimum royalty payment each year during the term of the agreement ranging between $260,000 and $270,000 per year and such minimum payment shall be creditable against any royalties due based upon licensed product sales. We have also agreed to make payments to Optherion upon the achievement of specified development, regulatory and commercial milestones, and during the life of the patent claims licensed under the agreement, royalties on the cumulative worldwide annual net sales of products successfully developed and commercialized covered by the patent claims and know-how licensed under the agreement. We also agreed, upon entry into the agreement, to reimburse Optherion for its prior patent related costs and expenses in the amount of approximately $1.1 million. The agreement will remain in force in each country until the expiration of our obligation to make royalty payments in such country, subject to earlier termination by either party upon uncured material breach or other specified circumstances. Optherion may terminate the agreement if we challenge the validity of any patent covered by the licensed technology, if we abandon or suspend our research, development, marketing or commercialization of the licensed products, or if we fail to comply with certain insurance requirements set forth in the agreement. We may terminate the agreement for any reason upon 90 days prior written notice, provided that if such notice of termination is delivered prior to the first anniversary of the effective date of the agreement, we shall be required to pay Optherion a non-creditable termination fee of $2,000,000. In the event that the agreement expires pursuant to its terms, we will retain the licenses and sublicenses granted under the agreement as fully paid and royalty free, subject to certain specified limitations.MassARRAY and other product related revenues were $4.8 million for the three months ended March 31, 2010, as compared to $3.1 million for the same period in 2009. The increase of $1.7 million was primarily due to an increase in MassARRAY system hardware sales to $3.5 million for the three months ended March 31, 2010 from $2.4 million for the same period in 2009 due to higher system placements in the three months ended March 31, 2010. Revenue from other product sales, which primarily represents MassARRAY system maintenance contract revenue, for the three months ended March 31, 2010 and 2009 were $1.3 million and $0.7 million, respectively. This increase is due to more service contracts in effect over our larger installed base against the comparative period.
The increase in research and development expenses of $2.4 million for the three months ended March 31, 2010, as compared to the same period in 2009 primarily relates to restricted stock compensation expense of $0.3 million associated with a performance based grant to all employees in December 2009, $1.8 million related to clinical trial costs associated with our trisomies, Rhesus D and gender programs, a February 2010 licensing payment to Optherion of $1.0 million, $0.3 million of higher depreciation primarily associated with a larger capital base for our lab located at Sequenom CMM, $0.1 million in higher temporary labor costs to support various research and development projects, offset in part by decreased operating supplies of $1.1 million primarily associated with a reduction in our noninvasive prenatal diagnostic research and development activities due to the recent commercialization of three diagnostic tests (cystic fibrosis in the fourth quarter of 2009 and Rhesus D genotyping and Fetalxy sex determination in the first quarter of 2010) that were in development in the comparative period. Share-based compensation expense remained consistent between the two periods.
The decrease in selling and marketing expenses of $1.1 million for the three months ended March 31, 2010 compared to the same period in 2009 primarily were related to decreases in advertising and marketing projects associated with molecular diagnostic programs of $0.1 million, lower share-based compensation expense of $0.1 million, a decrease of $0.1 million associated with the reduction in consulting expenses within genetic analysis marketing programs, $0.1 million in lower recruiting costs due to a decrease in hiring versus the comparative period, lower facilities and equipment expenses of $0.1 million, reduced miscellaneous corporate expenses of $0.1 million, a reduction in travel expenses of $0.3 million and lower allocated charges of $0.5 million, offset in part by increased costs of $0.2 million for higher corporate related costs primarily associated with postage and freight related to sample transportation and restricted stock compensation expense of $0.1 million associated with a performance based grant to all employees in December 2009.
The decrease in general and administrative expenses of $2.0 million for the three months ended March 31, 2010 from the same period in 2009 was primarily due to a $1.2 million decrease in legal fees, lower share-based compensation expense of $0.5 million, a $0.1 million decrease in travel expenses, the non-recurrence of $0.3 million for investor relations fees associated with acquisition activities in the comparative period, a $0.1 million decrease in recruiting expenses and a $0.1 million decrease associated with lower equipment and miscellaneous expenses. These decreases were partially offset by an increase in restricted stock compensation expense of $0.3 million associated with a performance based grant to all employees in December 2009.
As of March 31, 2010, cash, cash equivalents and current marketable securities totaled $29.2 million, compared to $42.7 million at December 31, 2009. Our cash equivalents and current marketable securities are held in U.S. Government securities with ratings of AAA and repurchase agreements collateralized by U.S. Government securities with ratings of AAA. As of March 31, 2010 and December 31, 2009, we have auction rate securities with an estimated fair value of $0 million and $0.5 million, respectively. These estimated fair values reflect a $2.0 million and $3.8 million adjustment to the principal value of $2.0 million and $4.3 million as of March 31, 2010 and December 31, 2009, respectively. Additional discussion with respect to the risks and uncertainties associated with our auction rate securities is included in the Risk Factors in Item 1A of this report, in Quantitative and Qualitative Disclosures about Market Risk in Item 3 of this report and in the notes to our condensed consolidated financial statements included elsewhere in this report.
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