Management Turnover as Change Agent

Tuesday, September 29, 2009

Biotech Terminates CEO and Others

The board of directors of Sequenom SQMN (NASDAQ) terminated the employment of the president and CEO, Harry Stylli and Elizabeth Dragon, the SVP of R&D after an investigation into the mishandling of test data. Sequenom a biotechnology firm involved in the development of a test for Down’s Syndrome acted quickly after the results of the investigation was completed. Other employees have been affected as well including the firm’s CFO. According to story in GenomeWeb Daily News,

One Year Stock Performance of SequenomThe clear out comes following the completion of an investigation into the mishandling of R&D test data and results on the firm’s SEQureDx Down syndrome test. Sequenom disclosed the problems last April and opened an investigation at that time.

“While each of these officers and employees has denied wrongdoing, the special committee’s investigation has raised serious concerns, resulting in a loss of confidence by the independent members of the company’s board of directors in the personnel involved,” the firm said in a statement.

“In making the transition from researching potential molecular diagnostic tests to developing and commercializing those tests, the company failed to put in place adequate protocols and controls for the conduct of studies in the T21 program … and some employees failed to provide adequate supervision,” Hixson said during a conference call following the announcement. “This resulted in inadequately substantiated claims, inconsistencies and errors in the test data, and results for our T21 program.”

In a recent interview conducted by The Wall Street Transcript of Zarak Kurshid, a vice president for Caris and Company published on September 14, 2009, he said,

”We’re recommending selling Sequenom.”

According to a story by David Olmos for Bloomberg,

(The company’s) planned launch of a prenatal test for Down syndrome may be delayed by more than a year after a finding that research data gathered to develop the screen was mishandled.

Following the terminations and resignations the firm’s board according to its own SEC 8K filing,

… appointed Chairman Harry Hixson, a former president and chief operating officer of Amgen, and Director Ronald Lindsay to serve on an interim basis as CEO and SVP of R&D, respectively. The company’s board of directors also has designated controller Justin File to serve as principal financial and accounting officer.

There is likely more to come as the SEC is investigating the problems at the firm as well.

For more:


Wall Street Journal

San Diego Union Tribune

Seeking Alpha (update 9/30)

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