Sequenom Raises $51.6 Million As It Prepares to Restart Down Syndrome Test
Sequenom can cross off another item on its long to-do list. The San Diego-based developer of diagnostic tests is announcing today that it has raised $51.6 million in a private placement, an important step toward regaining the confidence of investors. The much-needed funds will go toward R&D, product commercialization and general corporate purposes, Sequenom (NASDAQ: SQMN) says.
The announcement comes less than a week after Sequenom disclosed that it was resuming development of its prenatal test for Down syndrome. In April, 2009 Sequenom abruptly delayed launch of the test because of what it described as “employee mishandling of R&D test data and results.” The ensuing mess brought inquiries from the Justice Department, the Securities and Exchange Commission, and cost several executives, including then-CEO Harry Stylli, their jobs. Last week, Sequenom agreed to pay $14 million to settle a shareholder suit over the matter.
Purchasers of the 12.4 million shares sold in the private placement paid $4.15 a share, a 23 percent discount from Sequenom’s closing price of $5.37 on Tuesday, a sign that investors are somewhat skeptical of the company’s prospects, Hapoalim Securities analyst Raghuram Selvaraju told Reuters. The company’s accumulated deficit stood at $614.2 million at the end of March, up three percent from the end of last year. Sequenom’s shares were trading lower today.
Sequenom hasn’t said how much money it will need to restart its Down syndrome diagnostic development program. As Bruce reported last week, Sequenom had available cash and securities of $29.2 million on March 31 (it was also owed $8.6 million on unpaid bills). The company used net cash of $13.4 million in its first quarter to support operations. So if that spending trend continues, today’s cash infusion should last more or less a year.
Sequenom says a laboratory test for Down syndrome could launch in 2011. So Sequenom has a ways to go before it can cross everything off its list.