Sequenom Shares Tank After Executives Ousted Over Data Mishandling

9/28/09Follow @xconomy

Sequenom shares plummeted 44 percent today in after-hours trading after the San Diego-based company said it has ousted CEO Harry Stylli and its head of R&D in the wake of an investigation into mishandling of data for its prenatal genetic test for Down Syndrome.

Chairman Harry Hixson, 71, the former president of Amgen, has assumed the role of interim CEO of Sequenom (NASDAQ: SQNM), along with the responsibility for explaining the situation to investors on a conference call this afternoon. He couldn’t say much beyond his prepared remarks about what really went wrong with data handling procedures, because the company is facing class-action shareholder lawsuits, and is “fully cooperating” with an ongoing investigation by the Securities and Exchange Commission.

Whatever really happened, the company repeated that the public and investors should no longer rely on the company’s previous claims to have developed a noninvasive prenatal blood test that was 100 percent accurate at detecting Down Syndrome, when compared with the standard, more invasive tests known as CVS and amniocentesis. The company essentially said that its data handling protocols weren’t good enough, and that certain employees failed to provide adequate supervision of the process, leading to errors and inconsistencies in the data released to the public.

When asked by one analyst on the conference call today whether the company will seek to bring criminal charges against people responsible for the mishandling, Hixson would only say “we are fully cooperating with the SEC, and that’s all I should say.”

Sequenom shares fell $2.50, or 44 percent, to $3.20 in after-hours trading after the conference call. That’s a painful free fall for investors who bought last year on the enthusiastic news about Sequenom’s test, which drove shares up to $27.76 the day after the original announcement on Sept. 23, 2008.

Hixson, who said he plans to stay in the CEO job as long as he’s needed, acknowledged that he and Ronald Lindsay, the new senior vice president of R&D, have their work cut out. “This has been a significant setback and the company will face significant challenges ahead,” Hixson said on the conference call. He added, “It’s fair to say that Ron and I will have to work very hard to regain the confidence of investors.”

Even though the data can’t be relied upon anymore, Hixson said the company still … Next Page »

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