Sequenom Ousts CEO Harry Stylli, After Investigating Mishandling of Down Syndrome Test

9/28/09Follow @xconomy

[Update: 1:58 pm Pacific, 9/28/09] San Diego-based Sequenom has ousted president and CEO Harry Stylli after an investigation by independent members of the company’s board raised “serious concerns” about the mishandling of data to support the company’s non-invasive prenatal test for Down Syndrome, the company said today in a statement.

Besides terminating Stylli, the board ousted Elizabeth Dragon, the company’s senior vice president of research and development, and received resignations from Paul Hawran, the chief financial officer, and one other officer who wasn’t identified, the company said in a statement. Three other employees were also terminated.

While each of the officers has denied wrongdoing, the special committee’s investigation “has raised serious concerns, resulting in a loss of confidence by the independent members of the company’s board of directors in the personnel involved,” according to the statement. Members of the Sequenom special committee, and its counsel, plan to present the findings of the investigation to staff of the Securities and Exchange Commission.

Sequenom (NASDAQ: SQNM) has been through a nightmare of a year ever since it disclosed in April that it had opened the investigation into “mishandling” of clinical trial data to support the market introduction of SEQureDx, a first-of-its-kind noninvasive blood test for prenatal screening of Down Syndrome. Last October, Stylli went so far as to claim that Sequenom would become “the Google of molecular diagnostics” based on a study of 400 pregnant women which found its test was 100 percent accurate at predicting whether a developing fetus has Down. That finding excited investors, because such a test could supplant much more invasive and risky tests known as CVS and amniocentesis.

Sequenom had planned to roll out the commercial version of this test by mid-2009, but that was before the data mishandling came to light in April. Now, the company “is no longer relying on, and the public should no longer rely on, any of the previously announced test data and results for the company’s noninvasive prenatal test.” The company said it can no longer provide guidance for when it will complete R&D of the test, or start commercializing it, but stated that it still “continues to believe in the science underlying the test.”

Based on the findings of the investigators, who interviewed 40 witnesses and reviewed over 300,000 documents and e-mails, the company said it has imposed a number of new procedures to prevent something like this from happening again. These steps include new disclosure controls, changes in organizational reporting structure, enhanced ethics training, new procedures for storing samples, and a new science committee on the board of directors to oversee R&D strategy and activities.

Sequenom named chairman Harry Hixson, 71, as interim CEO, according to a regulatory filing. Fellow director Ronald Lindsay was named interim senior vice president of research and development. Controller Justin File has been designated as the principal financial and accounting officer.

[Update: 1:58 pm Pacific, 09/28/09]. Stylli didn’t immediately respond to a request for comment sent to his work e-mail.

The company is planning on holding a conference call at 5 pm Eastern/2 pm Pacific to discuss the findings of the investigation in greater detail. We’ll update this space or follow up with separate stories if we hear anything more of note.

By posting a comment, you agree to our terms and conditions.