NEW YORK (GenomeWeb News) – The US Securities and Exchange Commission today said that it has charged a former executive of Sequenom with making false statements to investors about the firm's prenatal test for Down syndrome.
The SEC filed the complaint today in the US District Court for the Southern District of California alleging that Elizabeth Dragon, former senior vice president of research and development for Sequenom, had lied during at least three public events where she had made presentations to analysts and investors.
"Dragon gave presentations to analysts and investors falsely stating that the test could predict with almost 100 percent accuracy whether a fetus had Down syndrome," the SEC asserted in the filing. "However, she knew at all relevant times that the test was far less than 100 percent accurate, making it much less marketable."
Dragon was fired last fall from Sequenom, along with former President and CEO Harry Stylli, following an investigation into the mishandling of test data for the Down syndrome test. Certain other executives also resigned from the firm at that time.
The investigation was the result of mishandling of R&D data on the SEQureDx Down syndrome test, which the firm disclosed in April 2009.
The SEC noted in its complaint that Dragon's "materially misleading statements," along with company press releases that included similar information, had led to a more than tripling of Sequenom's stock price over the course of several months. The day after announcing the mishandled data, the firm's shares tumbled 76 percent.
The SEC also alleges that Dragon provided scientists in the company with known outcomes of test samples, allowing them to manipulate the data in order to produce more accurate results, falsified the number of samples tested by Sequenom, and lied about the test's performance.
According to the commission, Dragon has consented to a judgment permanently enjoining her from future violations of certain SEC rules and barring her from serving as an officer or director of a public company. It added that the court will decide the amount of financial penalty she will be required to pay.
Meanwhile, Sequenom recently said that it will continue working on its DNA-based test for Down syndrome. Last month, it said that it hopes to have the test on the market by the end of 2011.