Sequenom Makes Over C-Suite, Settles Lawsuit With Former CFO
Sequenom, the San Diego-based molecular lab focused on prenatal testing, has lined up a virtually new C-suite and has settled litigation with its former chief financial officer. William J. Welch, Sequenom’s current chief operating officer, will replace current CEO Harry F. Hixson when he retires on June 10. Hixson will remain as chairman. Welch was […]
Sequenom, the San Diego-based molecular lab focused on prenatal testing, has lined up a virtually new C-suite and has settled litigation with its former chief financial officer. William J. Welch, Sequenom’s current chief operating officer, will replace current CEO Harry F. Hixson when he retires on June 10. Hixson will remain as chairman. Welch was hired by Sequenom as a senior vice president in 2011 after working for years as a consultant to molecular labs and was appointed COO in 2012. Paul V. Maier will also retire as CFO in June. He will be replaced by Carolyn D. Beaver, who has served as the company’s chief accounting officer since June 2012. The changes come at a time when the company has been engaged in a fast-growth mode. Its 2013 revenue was up 81 percent from 2012, fueled by growing sales of its MaterniT21 PLUS, a noninvasive test for detecting genetic abnormalities in fetuses. “I am confident that Bill, Dirk, Carolyn and the other members of our executive management team will continue to deliver on our short and long-term goals to achieve value for our shareholders, customers and patients around the world,” Hixson said in a statement. Sequenom also settled ongoing litigation with its former CFO, Paul Hawran. He served in the role for 29 months before resigning in September 2009 during a shake-up at the company involving the alleged corruption of test data for a developing assay to detect Down syndrome. Hawran resigned along with the then-CEO Harry Stylli and its research, development head Elizabeth Dragon and four other executives. Although the Securities and Exchange Commission launched an investigation and concluded there was no wrongdoing, the company eventually paid $14 million and issued new stock to settle 12 class-action lawsuits filed by shareholders in connection to the data corruption. It also agreed to make a number of changes to its management structure to improve communication and better validate the integrity of its research. However, Hawran sued the company not long after his departure, claiming that the vague reasons given for his resignation—and linking him to what Sequenom described as a “loss of confidence”—defamed him. The terms of the settlement were not disclosed. Sequenom noted in the statement announcing the settlement that “the SEC concluded its investigation without any action against Mr. Hawran.” Despite the changes in management and the dramatic uptick in revenue, Sequenom’s stock is trading for about $2.40 a share on the Nasdaq exchange, about half its price from a year ago and a fraction of its more than $16-a-share price prior to the 2009 shake-up. However, Zacks has made two positive upward earnings revisions for the company in the past month and suggested in a recent bulletin that the stock could move upward during the calendar year. Along with the pending changes among the senior management staff, Sequenom has also engaged in a cost-cutting program that is expected to save as much as $13 million this year. It recently announced a new pact with Aetna and that its tests are available to as many as 113 million insured lives. Sequenom has also landed agreements with 12 separate state Medicaid agencies that have added an additional 21 million lives. In addition to its MaterniT21 test, the company has an application pending with the Food and Drug Administration for marketing approval for IMPACT Dx, a test and testing platform that is to assist in detecting thrombophilia, a blood coagulation abnormality that can lead to thrombosis. Takeaway: Despite its dramatic revenue growth, Sequenom’s stock is still struggling to gain traction, and the company has engaged in its second large-scale management turnover in less than five years.