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Sequenom CEO Schuh Resigns, CFO Zaniboni is Acting CEO; Company Seeks Dx Traction

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Toni Schuh has resigned as CEO of Sequenom, the company said this week in a terse statement.

Steve Zaniboni, Sequenom’s chief financial officer, will take over Schuh’s position while the company looks for a permanent replacement, Sequenom said. Schuh has also resigned as a company director, and Sequenom said it has not yet tapped a replacement.

Schuh will remain as a consultant to Sequenom for up to 12 months, the company said.

Schuh has been under pressure from his board to revive the high-throughout genotyping company after a fling with drug discovery hurt revenue growth and investor confidence [see Pharmacogenomics Reporter, 7/29/04], and nearly cost the company its position on the Nasdaq exchange.

Since abandoning its drug-discovery business in August, Sequenom has turned its attention toward selling its flagship MassArray genotyping platform — which had been lagging behind rival instruments — and has signed on new customers. The San Diego-based company has also been trying to grow its presence in the molecular diagnostics industry.

On this front, Sequenom is making some gains. This week, Sequenom said Iceland Genomics will analyze its panels of genetic markers associated with breast and prostate cancer in Icelandic patient samples. Sequenom hopes the collaboration will help validate its markers, which may play a role in disease onset, progression, and therapeutic response.

Terms of this deal call for Iceland Genomics to use its collections of breast and prostate cancer patient samples and clinical databases to study SNPs from the ICAM and the NuMA gene regions, Sequenom said. The companies will jointly analyze the resulting data to determine to what extent these markers are linked to specific clinical endpoints.

Financial terms of the deal were not disclosed, though Sequenom said it will retain rights to commercialize products developed as a result of the collaboration. In addition, Iceland Genomics is entitled to receive royalties from sales of those products.

In December 2004 investors sent Sequenom shares up more than 37 percent after the company said its MassArray helped discover alleles linked to a 40-percent increased risk of breast and prostate cancer.

Sequenom said these “common genetic variations” in intercellular adhesion molecule genes are “believed to be among the most important findings in cancer genetics since the discovery of BRCA1 and BRCA2.”

These results, which appeared in the Dec. 15 issue of Cancer Research, showed that individuals with a “deleterious version” of the ICAM gene region have a 40-percent greater risk of developing breast or prostate cancer compared to people without it.

The data also showed that the breast cancer risk increases “to more than” 300 percent in women with a family history of breast cancer. Though the variations were originally discovered in a genome-wide search for genes involved in breast cancer, the study results showed they “confer a similar risk of prostate cancer.”

And earlier that month, Sequenom experienced an 8.8-percent jump in share price after announcing that a major US university had used its genotyping technology to identify SNPs in Escherichia coli.

The research, led by Bernhard Palsson, professor of bioengineering at the University of California at San Diego, was published in the December issue of Genome Research. Charles Cantor, Sequenom’s chief scientific officer, said that the research represents the first time that the company’s MassArray platform has been used to conduct high-throughput genetic analysis of bacteria, and provides a foundation for the development of large-scale comparative sequencing processes using the technology.

Sequenom got another shot in the arm later that month when it said Siemens, the giant German medical-systems manufacturer, will buy four MassArray platforms as part of a broader collaboration to develop new molecular diagnostics platforms.

“We are interested in novel platforms for different nucleic acid-based diagnostic applications,” Mohammad Naraghi, senior vice president of business development at Siemens Medical Solutions, said in a statement. He said the MassArray technology “may be a good foundation” for the molecular diagnostics market.

As part of a “joint working group” the companies created for this collaboration, Siemens will install the four systems in certain diagnostic and clinical labs in Europe and North America, where Sequenom and Siemens will “execute a comprehensive functional requirement analysis,” Sequenom said.

“There is a huge potential for innovation in diagnostics and IT systems,” Erich Reinhardt, president and CEO of Siemens Medical Solutions, said in the statement. “Molecular medicine will have a significant impact on these platform developments.”

MassArray Sales Off to a Slow Start

Despite its renewed MassArray efforts, product sales in the three months ended Sept. 30, 2004 — the most current financial data available — fell 26 percent to $4.8 million from $6.6 million year over year. Total receipts for the period also fell 26 percent, to $5.2 million from $7.2 million one year ago.

MassArray sales were “below expectations,” Zaniboni said in a statement in October. However, consumables increased 32 percent during the third quarter.

“The main causes of this [decline] are increased competition and price erosion in the ultra-high-throughput gene discovery market,” Zaniboni said. He said the company “expect[s] to see an increase in MassArray Compact system installations” as Sequenom “continue[s] to penetrate the molecular medicine market.”

But last month, Sequenom investors reacted warmly to news that the company placed nine MassArray systems during the fourth quarter. The company said the placements bring to 20 the total systems delivered in 2004. Sequenom added that the recently approved MassArray Compact system helped drive the placements.

Sequenom began selling the compact MassArray in September 2003. The product, which is 73 percent smaller than the full-size system, takes 45 minutes to run a single plate, according to a company spokesperson. The standard MassArray platform takes around 25 minutes.

Another difference is that the compact system holds two chips per plate, while the larger one holds 10. With lower throughput and a price of around $285,000 without the liquid handler — the larger instrument runs around $500,000 — the spokesperson, who has since left the company, said the junior platform will be marketed to smaller academic labs and to the clinical-research market. Sequenom will hold a conference call discussing its fourth-quarter and 2004 year-end financial results on Feb. 10.

— KL

 

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