Sequenom Highlights Its Good News, Keeps Lid on Bad

Sequenom (NASDAQ: [[ticker:SQNM]]) sought to assure shareholders on a variety of fronts today, nearly a year after the San Diego maker of genetic diagnostic tests canceled the launch of its flagship test for Down syndrome due to “employee mishandling of R&D test data and results.” Following an internal investigation, Sequenom announced five months later that the research data supporting its test were no longer reliable. That same investigation led to the ouster of former CEO Harry Stylli, R&D chief Elizabeth Dragon, and three other employees. Two other Sequenom executives resigned.

Sequenom, however, does not subscribe to the PR doctrine of getting all the bad news out at once. After 319 days, the company has yet to publicly disclose any details about what happened during its research and development of the Down test. Instead, as Sequenom did today, the company has sought to call attention to several of its positive developments amid a wider fourth-quarter loss that revealed higher costs and lower revenue. To wit:

—Sequenom tentatively agreed in January to pay $14 million and give a 9.95 percent ownership stake to settle a class-action lawsuit that was filed in federal court by shareholders over materially false and misleading statements the company issued about its non-invasive test for Down syndrome in the 11 months before the launch was canceled. Chairman and CEO Harry Hixson told analysts and investors during a conference call today that a final approval of the settlement, set for May 3 in federal court, will clear “the major obstacle” that Sequenom faces in raising new capital. While Sequenom has $42.7 million in available cash, Hixson added, “We need to secure additional financing this year. We don’t want to let the gas tank run too low.”

—In the press release issued today, Sequenom did not provide an update on separate federal criminal and civil investigations that are focused on potential misconduct underlying the “mishandled data” during development of the Down syndrome test. Hixson only mentioned in passing during the conference call that the government investigations (and other litigation) are “ongoing.” Hixson noted, though, that Sequenom has implemented

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Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.