Test scandal widens Sequenom loss, but revenue is up
Grand Rapids Business Journal
Article by Elizabeth Slowik
The Sequenom Center for Molecular Medicine, based in Grand Rapids, is processing blood samples for a research and development study that is crucial to its parent company's effort to prove that it has a prenatal Down syndrome blood test that works.
Sequenom Inc. on Thursday reported revenue growth for the second quarter as well as for the first six months of 2010. But the company's bottom line was dragged down by settlements for legal actions in the wake of last year's testing scandal.
The former research executive has admitted to the Securities and Exchange Commission and in federal court that she lied about the effectiveness of Sequenom's first Down syndrome test in order to boost the stock price.
Sequenom Chairman & CEO Harry Hixson Jr. said the company is on track to publish results from both the 450-sample Down syndrome test that is underway in Grand Rapids and a larger verification test from Brown University.
He said the company will wait for publication in technical journals, anticipated in early 2011, before launching the Trisomy 21 test for Down syndrome.
"We are planning for success," Hixson said.
Hixson said a second CLIA-certified laboratory is nearly finished in San Diego, and that is where a commercialized Down syndrome test would be processed. The company is headquartered there.
The SCMM in Grand Rapids processes result from prenatal tests that Sequenom already has on the market, for Rh D factor and gender, as well as another test for adult cystic fibrosis carriers. CFO Paul V. Maier said diagnostics revenue was $444,000 for the second quarter.
However, Hixson announced that the gender determination test has performed poorly in the direct to consumer market and will be discontinued as of Sept. 15.
Total revenue in the second quarter grew to $11.2 million from $9.2 million in the second quarter of 2009.
Net loss for the quarter was $59.1 million, or 86 cents per share, compared to a loss of $20.2 million in the second quarter of 2009. Maier said that is due primarily to a non-cash charge of $40.13 million for shares that will be issued to settle federal class action lawsuits and a $1.5 million fixed charge related to settle derivative litigation. The legal action was related to the test-results debacle.
