SAN DIEGO (AP) — Diagnostic test maker Sequenom Inc. said Friday it will pay $14 million plus stock to settle a class action securities lawsuit over the mishandling of study data on a potential test for Down syndrome.
The company said the $14 million will be funded through insurance proceeds. Also, the company agreed to issue a number of shares to the plaintiffs after the settlement gets court approval amounting to 9.95 percent of Sequenom’s outstanding stock.
As of Dec. 23, the company had 61.7 million common shares outstanding
Sequenom admits no liability and said it is settling the lawsuit to avoid “potentially lengthy, costly, distracting and time-consuming litigation.’
On April 29, Sequenom said study data and results for the SEQureDx Down test could not be relied on due to “employee mishandling.” SEQureDx appeared to be a promising test that was faster, cheaper, less invasive and less risky than other methods, like amniocentesis. Its results in preliminary studies were positive.
The announcement sent shares plunging, with the stock losing well over half its value.
In September, the company forced out four executives and three other employees, including its president and CEO and the executive in charge of research and development. The shake-up followed a company investigation into the mishandling of test results. Each employee denied any wrongdoing, and the company said it did not discover any deliberate wrongdoing.
Instead, Sequenom had said it did not put adequate protocols and controls in place. Some employees were not adequately supervised.
It moved to create new disclosure protocols and procedures and give employees more training in ethics and scientific procedures, and make new rules for the conduct of research and development and clinical studies.
The suit was pending in U.S. District Court for the Southern District of California.
Shares of Sequenom rose 21 cents, or 5.1 percent, to $4.36 in morning trading. The stock has traded between $2.55 and $25.99 over the last 52 weeks.