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Sequenom Discloses Payments, Terms of Licensing Deal with Chinese University

NEW YORK (GenomeWeb News) – Sequenom has disclosed a $1.5 million upfront payment to the Chinese University of Hong Kong as part of a licensing deal it forged with the school for intellectual property related to size-based genomic analysis.

The San Diego-based company had previously announced the licensing agreement but had not revealed its terms. In its second-quarter earnings document filed with the US Securities and Exchange Commission filed earlier this month, Sequenom said that in addition to the $1.5 million upfront payment to CUHK, it also will pay the school another $1.5 million within one year.

The licensing deal covers IP for prenatal diagnostics, prognostics, and analysis. Sequenom has exclusive worldwide rights to the IP, excluding Hong Kong.

Sequenom also will have to pay CUHK royalties on sales incorporating the licensed technology and on amounts it may receive from sublicensing deals. CUHK also is eligible for payments if Sequenom achieves certain development and commercialization milestones.

As part of the agreement, Sequenom issued to an affiliate of CUHK a warrant to purchase up to 200,000 shares of its common stock at $7 per share. The warrant has a term of seven years and was valued at $1.2 million, which was recorded as an R&D expense during the second quarter, Sequenom said.

Sequenom also said that the two parties have entered into a four-year research agreement for projects that are of mutual interest and benefit to the company and the school. CUHK has granted Sequenom certain license and license option rights.

In return, Sequenom is paying CUHK $4.1 million over the four years.

In addition, Sequenom has licensed patent rights from CUHK covering the use of cell-free fetal nucleic acids from biological samples, such as plasma, serum, whole blood and urine, for prenatal diagnostic testing by massively parallel shotgun sequencing. The rights include a patent application in the US, as well as applications in Australia, Brazil, Canada, China, Eurasia, Europe, Israel, India, Japan, Korea, Mexico, New Zealand, Singapore, and South Africa.

CUHK retains the right to use and develop any of the licensed technology for academic, research, and publication purposes, Sequenom said in its SEC document. The university also reserves the right to use one of the licensed technologies in accordance with its agreement with the Hong Kong government. It also may grant to Hong Kong's Commissioner for Innovation and Technology a non-exclusive, worldwide license to certain licensed patent rights not related to prenatal diagnostic testing by massively parallel shotgun sequencing.

Sequenom made an upfront payment for an undisclosed amount in relation to the deal, and will be required to make milestone payments upon commercial and regulatory events relating to the licensed patents. CUHK is also entitled to royalty payments on net sales of such products.

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