Date: Mar 08, 2012 Source: Associated Press
NEW YORK (AP) -- Shares of Sequenom Inc. climbed Thursday after the company reported strong fourth-quarter sales of its new MaterniT21 test, a key product that is designed to detect Down syndrome in a fetus.
THE SPARK: The San Diego, Calif., company reported its results after the market closed Wednesday. Sequenom said it received about 1,000 samples for MaterniT21 testing between the approval of the test in mid-October and the end of the year. It said it has received another 2,500 samples in January and February, and is on pace to perform around 20,000 test in 2012. Sequenom said those figures should improve because it has expanded its sales force.
Bolstered by early revenue from the MaterniT21 test, revenue from the company's diagnostic service business more than doubled to $2.8 million. Revenue from its genetic analysis business rose 1 percent to $12.7 million.
THE BIG PICTURE: MaterniT21 is a prenatal blood test intended for women who are at high risk of carrying a fetus with Down syndrome. The company said the test can detect the chromosomal anomaly that causes Down syndrome as early as 10 weeks of pregnancy. It is intended to be less invasive than amniocentesis and hormone testing.
Sequenom says it is aiming to run at least 25,000 billed MaterniT21 tests in 2012.
Sequenom also said Wednesday that it lost $22.2 million, or 22 cents per share, in the last three months of 2011 on revenue of $15.5 million. Its net loss was flat from the year before, while revenue rose 13 percent.
Marketing expenses increased 14 percent as it began marketing the MaterniT21 test.
THE ANALYSIS: Jefferies & Co. analyst Jon Wood said the company is making good progress toward its testing goal, as it is reporting strong growth even without a significant contribution from the expanded sales force. He believes the company will handle 22,250 paid tests for the year, and wrote that Sequenom shares should recover as the market gains enthusiasm for sales of the test. The stock is down 31 percent since Oct. 17, the day the Food and Drug Administration approved the MaterniT21 test.
Wood maintained a "Neutral" rating on the stock.
Wedbush analyst Zarak Khurshid said he now expects the company to run 40,000 of the tests in 2012, up from a prior estimate of 37,000, and said that number should double to 80,000 in 2013. Still, Khurshid repeated an "Underperform" rating, saying regulation, cost concerns and competition may cause MaterniT21 sales to fall below Wall Street expectations.
SHARE ACTION: Sequenom shares gained 54 cents, or 15 percent, to $4.20 in afternoon trading.