Sequenom Looks to Prolong Operations as Available Cash Runs Low
San Diego’s embattled Sequenom, which halted the debut of a new diagnostic product over mishandled data, is now considering steps to conserve cash. In an SEC document filed Monday, the life sciences tools company says it expects to end the year with $39 million in cash — too little to fund operations and capital expenditures at current levels through the end of 2010. There is “substantial doubt about our ability to continue as a going concern unless we adopt measures to conserve our cash and prolong our ability to operate,” Sequenom (NASDAQ: SQMN) says in its filing.
During a conference call, Sequenom’s interim CEO Harry Hixson said the company was in the process of developing a strategic and financial plan for 2010, and until the plan was completed, he could not estimate how long the $39 million would last. Last month, Sequenom named former Ligand Pharmaceuticals CFO Paul Meier as its interim CFO, effective today. Hixon says Sequenom also has put into place a cost control program to reduce unnecessary expenses and expects to reduce the number of programs it currently supports. He says some projects could be shelved, sold, out-licensed or partnered.
Bad news seems to keep coming from Sequenom, which stunned investors last April 29 with an announcement that the launch of the prenatal Down syndrome test would be delayed because scientific data had been mishandled. The company’s shares lost 76 percent of their value in trading the next day and have not recovered. The disclosure was a shock because just six days earlier – on April 23 – the company said the Down syndrome test was on track for a June launch. The SEC has opened an investigation to the company’s mishandling of its data and the Justice Department also is asking questions. The company has not fully explained what happened.
Hixson stepped in as interim CEO in September after the board fired former CEO Harry Stylli following an internal investigation. R&D senior vice president Elizabeth Dragon was also fired. CFO Paul Hawran resigned, as did another officer who was later revealed to be Steven Owings. Three employees also were terminated. Each has denied wrongdoing.
The company had previously said that none of the departing officers had benefitted from selling shares, but Hixson, who is also Sequenom’s chairman, said yesterday that in fact one of the officers had sold some stock to make a down payment on a house. The Wall Street Journal identified that officer as Owings, formerly the Sequenom vice president who oversaw development of prenatal diagnostics. Owings made nearly $300,000 from a series of stock sales on March 24. Hixson said the sales were “properly and timely reported” to the SEC. In addition, two lower-level employees who were terminated in September also sold stock, Hixson said.
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