SQNM » Topics » 15. Subsequent Events

This excerpt taken from the SQNM 10-Q filed May 11, 2009.

(15) Subsequent Events

In April 2009, we formally approved and implemented a cost cutting initiative in our genetic analysis business. This initiative includes a decrease in the genetic analysis workforce of approximately 30 employees that will result in an estimated charge of approximately $850,000 to be recorded in the second quarter of 2009 in connection with one-time termination benefits and other related costs.

On April 29, 2009, we announced that the expected launch of our Down syndrome test has been delayed due to the discovery of employee mishandling of research and development test data and results. Accordingly, we are no longer relying on our previously announced research and development test data and results. Our Board of Directors has formed a special committee of independent directors to oversee an independent investigation of the employees’ activity related to the test data and results. The committee has engaged independent counsel to assist the committee in the conduct of the investigation.

Beginning April 30, 2009 several complaints were filed in the U.S. District Court for the Southern District of California against us and certain of our executive officers on behalf of certain purchasers of our common stock. The complaints include claims asserted under Section 10 of the Exchange Act and Sections 11 and 12(a)(2) of the Securities Act and have been brought as purported shareholder class actions. In general, the complaints allege that we and certain of our executive officers issued materially false and misleading statements regarding our Down syndrome test under development, thereby artificially inflating the price of our common stock. The plaintiffs are seeking unspecified monetary damages and other relief. We will vigorously defend against the claims advanced.

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

All statements in this report that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. These forward-looking statements can generally be identified as such because the context of the statement will include words such as “may,” “will,” “intend,” “plans,” “believes,” “anticipates,” “expects,” “estimates,” “predicts,” “potential,” “continue,” “opportunity,” “goals,” or “should,” the negative of these words or words of similar import. Similarly, statements that describe our future plans, strategies, intentions, expectations, objectives, goals or prospects are also forward-looking statements. These forward-looking statements are or will be, as applicable, based largely on our expectations and projections about future events and future trends affecting our business, and so are or will be, as applicable, subject to risks and uncertainties including but not limited to the risk factors discussed in this report, that could cause actual results to differ materially from those anticipated in the forward-looking statements. We caution investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements. Our views and the events, conditions and circumstances on which these future forward-looking statements are based, may change. All forward statements are qualified in their entirety by this cautionary statement and we undertake no obligation to revise or update any such statements to reflect events or circumstances after the date hereof.

SEQUENOM®, SpectroCHIP®, iPLEX® , and MassARRAY® are registered trademarks and EpiTYPER™, SEQureDx™ , MassCLEAVE™, iSEQ™ and AttoSense™ are trademarks of Sequenom, Inc. This report may also refer to trade names and trademarks of other organizations.

Sequenom, Inc. was incorporated in 1994 under the laws of the State of Delaware. As used in this report, the words “we,” “us,” “our,” and “Sequenom” refer to Sequenom, Inc. and its wholly owned subsidiaries on a consolidated basis, unless explicitly noted otherwise.

These excerpts taken from the SQNM 10-K filed Mar 12, 2009.

15. Subsequent Events

 

On February 27, 2009, we completed an asset purchase agreement among us, our wholly owned subsidiary SCMM, SensiGen, LLC, a Michigan limited liability company (SensiGen), and George Smith (solely to act as the representative of the members of SensiGen), in which SCMM acquired certain assets from SensiGen related to their business in gene-based molecular diagnostic tests relating to cervical cancer, head and neck cancer, chronic kidney disease and lupus (the Transaction). Under the terms of the Transaction, we paid to SensiGen cash consideration of approximately $1.9 million, and issued common stock of 92,679 shares utilizing the minimum floor price of $20.94 per share as defined by the Transaction. An additional $1,300,000 (the Milestone Amount) will be payable to SensiGen upon the completion of certain triggering events as provided for in the Transaction with any shares of our common stock issued as consideration for the Milestone Amount to be priced at the average closing price of our common stock over the ten trading day period ending on the third trading day prior to the applicable triggering event for such payment. In connection with this transaction we have commenced a valuation study of the intangible assets acquired in order to allocate the purchase price in accordance with SFAS 141(R). We anticipate this valuation study to be completed in the second quarter of 2009.

 

Assets acquired in the Transaction include intellectual property, trade secrets and other general intangibles related to the SensiGen’s AttoSense™ portfolio of tests, including tests for the detection and monitoring of human papillomavirus, systemic lupus erythematosus, chronic kidney disease and inflammatory bowel disease.

 

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SEQUENOM, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

December 31, 2008

 

On January 27, 2009, we commenced an exchange offer to acquire all of the outstanding shares of common stock of EXACT Sciences Corporation in an all-stock exchange valued at approximately $41.0 million. The exchange offer was subsequently terminated by us on January 28, 2009.

 

On March 3, 2009, our Board of Directors adopted a Share Purchase Rights Plan (the Rights Plan). The terms of the Rights Plan provide for a dividend distribution of one preferred share purchase right (a Right) for each outstanding share of our common stock, par value $0.001 per share. Common Shares that are newly issued after the record date of March 20, 2009, will also carry Rights.

 

The Rights have certain anti-takeover effects and will cause substantial dilution to a person or group that attempts to acquire us on terms not approved by our Board of Directors. The Rights should not interfere with any merger or other business combination approved by the Board of Directors since the Rights may be amended to permit such acquisition or redeemed by us at $0.001 per Right prior to the earliest of (i) the time that a person or group has acquired beneficial ownership of 15% or more of the Common Shares or (ii) the final expiration date, as defined by the Rights Plan.

 

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15. Subsequent Events

 

On February 27, 2009, we completed an asset purchase
agreement among us, our wholly owned subsidiary SCMM, SensiGen, LLC, a Michigan limited liability company (SensiGen), and George Smith (solely to act as the representative of the members of SensiGen), in which SCMM acquired certain assets from
SensiGen related to their business in gene-based molecular diagnostic tests relating to cervical cancer, head and neck cancer, chronic kidney disease and lupus (the Transaction). Under the terms of the Transaction, we paid to SensiGen cash
consideration of approximately $1.9 million, and issued common stock of 92,679 shares utilizing the minimum floor price of $20.94 per share as defined by the Transaction. An additional $1,300,000 (the Milestone Amount) will be payable to SensiGen
upon the completion of certain triggering events as provided for in the Transaction with any shares of our common stock issued as consideration for the Milestone Amount to be priced at the average closing price of our common stock over the ten
trading day period ending on the third trading day prior to the applicable triggering event for such payment. In connection with this transaction we have commenced a valuation study of the intangible assets acquired in order to allocate the purchase
price in accordance with SFAS 141(R). We anticipate this valuation study to be completed in the second quarter of 2009.

 

STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%">Assets acquired in the Transaction include intellectual property, trade secrets and other general intangibles related to the SensiGen’s
AttoSense™ portfolio of tests, including tests for the detection and monitoring of human papillomavirus, systemic lupus erythematosus, chronic kidney disease and inflammatory bowel disease.

STYLE="margin-top:0px;margin-bottom:0px"> 


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SEQUENOM, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

SIZE="1"> 

December 31, 2008

 


On January 27, 2009, we commenced an exchange offer to acquire all of the outstanding shares of
common stock of EXACT Sciences Corporation in an all-stock exchange valued at approximately $41.0 million. The exchange offer was subsequently terminated by us on January 28, 2009.

SIZE="1"> 

On March 3, 2009, our Board of Directors adopted a Share Purchase Rights Plan (the Rights Plan). The terms of the Rights
Plan provide for a dividend distribution of one preferred share purchase right (a Right) for each outstanding share of our common stock, par value $0.001 per share. Common Shares that are newly issued after the record date of March 20, 2009, will
also carry Rights.

 

The Rights have certain anti-takeover
effects and will cause substantial dilution to a person or group that attempts to acquire us on terms not approved by our Board of Directors. The Rights should not interfere with any merger or other business combination approved by the Board of
Directors since the Rights may be amended to permit such acquisition or redeemed by us at $0.001 per Right prior to the earliest of (i) the time that a person or group has acquired beneficial ownership of 15% or more of the Common Shares or (ii) the
final expiration date, as defined by the Rights Plan.

 


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