Sequenom Settles Shareholder Lawsuit for $14M, Plus Stock
Sequenom (NASDAQ: SQNM) has reached a legal settlement in a class action suit filed by a group of shareholders. The San Diego-based company said today that it has agreed to pay shareholders $14 million from its insurance proceeds, and issue them new shares worth a 9.95 percent stake in the company.
The settlement still needs approval from the U.S. District Court in for the Southern District of California. The settlement agreement doesn’t include any admission of liability, but the company is settling the lawsuit “to avoid potentially lengthy, costly, distracting and time-consuming litigation,” according to a statement.
Sequenom’s troubles surfaced last April 29, when it said it “mishandled” clinical trial to support the commercialization of its non-invasive prenatal test for Down syndrome. The company hasn’t fully explained what happened, but after an internal investigation, the company ousted CEO Harry Stylli, former R&D chief Elizabeth Dragon, and three other employees in September. The SEC has opened an investigation to the company’s mishandling of its data and the Justice Department also is asking questions. There was no update today on the status of those inquiries.
Sequenom’s chairman and interim CEO, Harry Hixson, said in a statement that settling the shareholder lawsuit, “is in the best interest of the company and its shareholders. I look forward to closing this chapter for the company and focusing on meeting our 2010 milestones, which include the launch of a number of molecular diagnostic tests.”
Shares of Sequenom climbed about 5 percent to $4.35 at 10:05 am Eastern time after the announcement.