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Form 8-K SEQUENOM INC For: Apr 30

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May 6, 2015 4:14 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 Form 8-K
 
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 6, 2015
 
SEQUENOM, INC.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Delaware
 
000-29101
 
77-0365889
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)
3595 John Hopkins Court, San Diego, CA
 
92121
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (858) 202-9000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 2.02
Results of Operations and Financial Condition.
On May 6, 2015, we issued a press release announcing our financial results for the quarter ended March 31, 2015. A copy of the press release and accompanying information is attached as Exhibit 99.1 to this current report.
The information in this Item 2.02, and Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this current report shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission, whether filed before or after the date hereof regardless of any general incorporation language in any such filing, unless we expressly set forth in such filing that such information is to be considered “filed” or incorporated by reference therein.

Item 9.01
Financial Statements and Exhibits.
(d) Exhibits
 
99.1
Press Release dated May 6, 2015
 

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
  
 
SEQUENOM, INC.
 
 
 
Dated: May 6, 2015
  
By:
 
/s/ Jeffrey D. Linton
 
  
Name:
 
Jeffrey D. Linton
 
  
Title:
 
Senior Vice President, General Counsel




    
 
 
Exhibit 99.1

FOR IMMEDIATE RELEASE
 
 
 
 
 
Sequenom Contacts:
 
 
Carolyn Beaver
 
Rachel Kennedy
Senior Vice President and Chief Financial Officer
 
Media Contact
Sequenom, Inc.
 
Chandler Chicco Agency
858-202-9028
 
858-449-9575
 

SEQUENOM, INC. REPORTS FINANCIAL RESULTS FOR THE FIRST QUARTER OF 2015

Expanded Testing Menu with VisibiliT™ and HerediT® Universal


SAN DIEGO, Calif. - May 6, 2015 - Sequenom, Inc. (NASDAQ: SQNM), a life sciences company committed to enabling healthier lives through the development of innovative products and services, today reported total revenues of $37.8 million for the first quarter of 2015, an increase of 2% compared to revenues of $37.1 million for the first quarter of 2014.

Net earnings improved to $14.3 million, or $0.12 per share, basic and $0.11 per share, diluted, for the first quarter, as compared to a net loss of $15.7 million, or $0.13 per share, basic and diluted, for the first quarter of 2014. The improvement in the net earnings from the prior year is due to a $21.0 million gain on the pooled patents agreement with Illumina, Inc., as well as improved gross margins and reduced operating expenses compared to the prior year first quarter.

Total cost of revenues decreased to $19.3 million for the first quarter of 2015, compared to $22.8 million for the prior year quarter. The decrease was primarily due to continued cost improvements to Sequenom Laboratories’ existing tests offset by the impact of higher test volumes.

Gross margin for the first quarter of 2015 was 49% as compared to gross margin of 39% for the first quarter of 2014. This improvement is attributable primarily to the increase in collections for tests performed in the current and prior quarters, the increase in the volume of tests on accrual accounting and improved cost efficiencies in processing patient samples.

“We are pleased with our continued financial and operational improvements as well as the addition of test fee revenues from our NIPT patent pool,” said Bill Welch, President and Chief Executive Officer of Sequenom, Inc. “In addition, we expanded our prenatal testing menu with the launches of the VisibiliT and HerediT Universal laboratory-developed tests to support future growth.”

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Operational highlights since the last earnings release:

•
License revenue for the first quarter of 2015 was $2.1 million, compared to $0.3 million in the first quarter of 2014. License revenue in 2015 includes $0.8 million earned upon validation of the technology by a licensee.
•
Total patient samples accessioned increased by 6% to 52,800 patient samples during the first quarter of 2015, compared to the prior year first quarter. Approximately 44,700 of those patient samples accessioned were for the MaterniT21® PLUS laboratory-developed test (LDT), which is an increase in testing volume of 12% compared to the first quarter of 2014.
•
Sequenom Laboratories launched the VisibiliT laboratory-developed test, to address the broader average risk population, in the U.S. market on a non-covered cash basis. Sequenom Laboratories also launched the HerediT Universal laboratory-developed test, a comprehensive universal carrier screening panel testing for over 250 genetic disorders.
•
We announced our plan to develop liquid biopsy-based tests in oncology. In March, a case study of the detection of possible circulating tumor DNA through our noninvasive prenatal test was presented at the 8th annual Future of Genomic Medicine conference in San Diego highlighting the power of our technology in circulating cell-free DNA analysis and its potential application for circulating tumor DNA.

Diagnostic services revenues are recorded primarily on a cash basis with accrual accounting used for several third-party payors and for client bill arrangements. License revenue is now reported on a separate line item within total revenues, and includes revenue from the pooled patents agreement and other license revenue. In total, over 42% of Sequenom’s revenue in the first quarter of 2015 is accounted for on the accrual basis of accounting.

Total costs and expenses, excluding cost of revenues for the first quarter of 2015 were $23.0 million, as compared to $28.7 million for the first quarter of 2014. The decrease is primarily due to reductions in litigation related expense.

Operating income for the first quarter of 2015 was $16.5 million as compared to a loss of $14.4 million for the same period in 2014. During the first quarter of 2015, the Company recognized a gain of $21.0 million related to the pooled patents agreement for the transfer of clinical samples and related study protocols.

Net cash used in operating activities was $7.2 million for the first quarter of 2015, an improvement compared to $16.1 million for the first quarter of 2014. Cash burn for the first quarter of 2015 was $9.4 million, compared to $18.4 million in the same period of 2014. The first quarter 2015 cash burn included $3.4 million of bonus payments compared to no bonus payments in the first quarter of 2014.




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Unrecorded accounts receivable for tests performed are estimated to be $29 to $32 million as of March 31, 2015. This range has declined by $2 million compared to the estimates in the prior quarter, due primarily to collections in the first quarter.
 
As of March 31, 2015, total cash, cash equivalents, and marketable securities were $90.7 million.

Non-GAAP Financial Measures

“GAAP” refers to financial information presented in accordance with generally accepted accounting principles in the United States. To supplement the condensed consolidated financial statements and discussion presented on a GAAP basis, this press release includes non-GAAP financial measures with respect to the quarter ended March 31, 2015. Management uses non-GAAP financial measures because it believes that a cash flow metric incorporating cash used by operations and certain other uses of cash are important to understand the cash requirements of the business. The Company reported cash burn as a non-GAAP financial measure. This non-GAAP financial measure is not in accordance with or an alternative to GAAP.
Management uses cash burn to evaluate performance compared to forecasts. Cash burn is calculated as the sum of net cash used by operating activities plus purchases of property, equipment and leasehold improvements, and payments on long-term obligations. The reconciliations of cash used by operating activities, the GAAP measure most directly comparable to cash burn, is provided on the attached schedule.


Conference Call Information
A conference call hosted by Bill Welch, President and CEO, and other members of senior management will take place today, May 6, at 5:00 p.m. EDT (2:00 p.m. PDT) and will be webcast live on the Sequenom Website. To access the live teleconference call, dial 877-883-0383 in the U.S. and Canada, and 412-902-6506 for other international callers. Please use code 3860983. For interested parties unable to listen to the live conference call, a replay will be available through Friday, June 5, 2015. The replay will be accessible by dialing 877-344-7529 or 412-317-0088 international toll or Canada toll free at 855-669-9658, and entering the conference number 10064729.
The conference call webcast is also accessible through the "Invest" section of the Sequenom Website at www.sequenom.com/invest. An online replay will be available following the initial broadcast until Friday, June 5, 2015. 

About Sequenom 
Sequenom, Inc. (NASDAQ: SQNM) is committed to enabling healthier lives through the development of innovative products and services. The Company serves patients and physicians by providing early patient management information. To learn how Sequenom is interpreting the genome to improve your life, visit www.sequenom.com.

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About Sequenom Laboratories

Sequenom Laboratories™, a CAP-accredited and CLIA-certified molecular diagnostics laboratory, has developed a broad range of laboratory tests, with a focus principally on prenatal care. Branded under the names HerediT®, HerediT® UNIVERSAL, MaterniT21® PLUS, NextView™, SensiGene® and VisibiliT™, these molecular genetic laboratory-developed tests provide early patient management information for obstetricians, geneticists, and maternal fetal medicine specialists. Sequenom Laboratories is changing the landscape in genetic diagnostics using proprietary cutting edge technologies. Visit www.laboratories.sequenom.com and follow @SequenomLabs.

SEQUENOM®, HerediT®, MaterniT21® PLUS, NextView™, RetnaGene™, SensiGene®, VisibiliT™ and Sequenom Laboratories™, are trademarks of Sequenom, Inc. All other trademarks and service marks are the property of their respective owners.


Forward-Looking Statements

Statements contained in this press release regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the development of innovative products and services, the expansion of our prenatal testing menu and our future growth, our ability to address the broader average risk population in the U.S. market and our ability to develop liquid biopsy-based tests in oncology. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Risks are described more fully in the Company’s filings with the Securities and Exchange Commission, including without limitation the Company’s most recent Quarterly Report on Form 10-Q and other documents subsequently filed with or furnished to the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made. The Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.





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SEQUENOM, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(In thousands, except per share information)
 
Three Months Ended March 31,
 
2015
 
2014
Revenues:
 
 
 
Diagnostic services, net
$
35,703

 
$
36,720

License
2,102

 
341

Total revenues
37,805

 
37,061

Costs and expenses:
 
 
 
Cost of revenues
19,306

 
22,770

Selling and marketing
8,486

 
8,559

Research and development
5,869

 
6,789

General and administrative
8,676

 
12,480

Restructuring costs
—

 
910

Total costs and expenses
42,337

 
51,508

Gain on pooled patents agreement
21,000

 
—

Operating income (loss)
16,468

 
(14,447
)
Interest and other expense, net
(2,108
)
 
(2,098
)
Earnings (loss) from continuing operations before income taxes
14,360

 
(16,545
)
Income tax benefit (expense)
(76
)
 
246

Earnings (loss) from continuing operations
$
14,284

 
$
(16,299
)
Discontinued operations:
 
 
 
Earnings from discontinued operations, net of tax
—

 
625

Net earnings (loss)
$
14,284

 
$
(15,674
)
 
 
 
 
Net earnings (loss) per common share, basic
 
 
 
Continuing operations
$
0.12

 
$
(0.14
)
Discontinued operations
$
—

 
$
0.01

Net earnings (loss)
$
0.12

 
$
(0.13
)
Net earnings (loss) per common share, diluted
 
 
 
Continuing operations
$
0.11

 
$
(0.14
)
Discontinued operations
$
—

 
$
0.01

Net earnings (loss)
$
0.11

 
$
(0.13
)
Shares used in computing earnings (loss) per share
 
 
 
Basic
117,737

 
116,134

Diluted
146,642

 
116,134





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SEQUENOM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
 
 
 
 
 
March 31,
2015
 
December 31,
2014
Assets
 
 
 
Current assets:
 
 
 
Cash, cash equivalents and marketable securities
90,708

 
93,897

Accounts receivable, net
7,663

 
9,131

Inventories
4,779

 
6,516

Other current assets and prepaid expenses
5,446

 
12,112

           Total current assets
108,596

 
121,656

Property, equipment and leasehold improvements, net
13,750

 
15,348

Other assets
23,104

 
24,067

                Total assets
$
145,450

 
$
161,071

 
 
 
 
Liabilities and stockholders' deficit
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
5,381

 
$
6,089

Accrued expenses
15,303

 
22,155

Long-term debt and obligations, current portion
2,313

 
4,144

Other current liabilities
1,212

 
2,581

Deferred gain on pooled patents agreement
—

 
21,000

            Total current liabilities
24,209

 
55,969

Long-term liabilities
136,336

 
136,266

Total stockholders' deficit
(15,095
)
 
(31,164
)
                 Total liabilities and stockholders' deficit
$
145,450

 
$
161,071





















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SEQUENOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
Three Months Ended March 31,
 
2015
 
2014
Operating activities
 
 
 
Net earnings (loss)
$
14,284

 
$
(15,674
)
Adjustments to reconcile net earnings (loss) to net cash used in operating activities:
 
 
 
Gain on pooled patents agreement
(21,000
)
 
—

Earnings from discontinued operations, net of tax
—

 
(625
)
Share-based compensation
1,542

 
2,577

Depreciation and amortization
2,892

 
3,219

Non-cash restructuring costs
—

 
941

Other non-cash items
236

 
285

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
1,468

 
(1,049
)
Inventories
1,737

 
4,285

Prepaid expenses and other assets
578

 
(316
)
Accounts payable and accrued expenses
(7,715
)
 
(8,907
)
Other liabilities
(1,220
)
 
(828
)
Net cash used in operating activities of continuing operations
(7,198
)
 
(16,092
)
Investing activities
 
 
 
Purchases of property, equipment and leasehold improvements
(289
)
 
(405
)
Purchases of marketable securities
(10,007
)
 
(9,994
)
Maturities of marketable securities
10,052

 
8,679

Proceeds from pooled patents agreement
6,000

 
—

Net cash provided by (used in) investing activities of continuing operations
5,756

 
(1,720
)
Financing activities
 
 
 
Payments on term loan and capital lease obligations
(1,909
)
 
(1,906
)
Proceeds from common stock issued under employee stock plans
177

 
592

Net cash used in financing activities of continuing operations
(1,732
)
 
(1,314
)
Discontinued Operations
 
 
 
Net cash provided by operating activities of discontinued operations
—

 
2,919

Net cash used in investing activities of discontinued operations
—

 
(28
)
Net cash provided by discontinued operations
—

 
2,891

Effect of exchange rate changes on cash and cash equivalents
(45
)
 
(14
)
Net decrease in cash and cash equivalents
(3,219
)
 
(16,249
)
Cash and cash equivalents at beginning of period
63,309

 
61,589

Cash and cash equivalents at end of period
$
60,090

 
$
45,340









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SEQUENOM, INC.
RECONCILIATION OF CASH BURN
(Unaudited)
(In thousands)
 
Three Months Ended March 31,
 
2015
 
2014
Cash Burn:
 
 
 
Net cash used in operating activities
$
7,198

 
$
16,092

Purchases of property, equipment and leasehold improvements
289

 
405

Payments on long-term obligations
1,909

 
1,906

Cash burn(1)
$
9,396

 
$
18,403

 
 
 
 
(1) See accompanying Non-GAAP Financial Measures section for description of adjustments.



















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