Sequenom has maintained for months that it “mishandled” clinical test results of a noninvasive prenatal test for Down syndrome, but one of its partners is now accusing the company of committing fraud by having “deliberately doctored” the data.
New York-based Xenomics said in October that it is suing San Diego-based Sequenom (NASDAQ: [[ticker:SQNM]]), for as much as $300 million, but today it offered more explanation. Xenomics now says it was “purposely misled” by Sequenom, based on preliminary results of an ongoing internal investigation. Xenomics, which makes technology for collecting urine samples, entered into a licensing agreement with Sequenom in October 2008.
Sequenom is already facing investigations from the FBI and the SEC, and a litany of shareholder lawsuits over what it has publicly described as “mishandling” of clinical trial results for a non-invasive prenatal test to see whether a developing fetus has Down syndrome. Sequenom made a big splash in September 2008, and claimed it would become the “Google of molecular diagnostics.” Based on a trial of 400 pregnant women, the company said it technology, which tests a sample of the mother’s blood, was 100 percent accurate at predicting whether a fetus has Down syndrome. The results were said to have been verified with the gold standard, and more invasive tests, known as amniocentesis and CVS. The market for such a test was thought to be huge, because there are about 4.2 million live births in the U.S. every year, and about two-thirds get tests for Down syndrome, a chromosomal abnormality that causes mental retardation.
But Sequenom said in April that the data for its test wasn’t reliable anymore, and an internal investigation followed. By September, the board fired CEO Harry Stylli, as well as Elizabeth Dragon, the head of R&D, and three other employees. Two other company officers resigned. But, citing the need to cooperate with ongoing investigations by federal authorities, the company didn’t describe in detail what went wrong.
Xenomics was more blunt in its assessment today.
“Xenomics preliminary investigations prior to the discovery process leads the company to believe that Sequenom’s Down Syndrome data were deliberately doctored in order to create an extremely robust data set. This announcement also fraudulently induced Xenomics into granting Sequenom an exclusive license to its non-invasive transrenal urine testing technology for fetal testing.”
Sequenom says there wasn’t fraud, only data mishandling, according to today’s Xenomics statement. A spokesman for Sequenom, citing pending litigation, declined to comment.
