Sequenom scuttles GR test plans

May 17, 2010
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Sequenom Inc. plans to add CLIA-certified laboratory capacity in San Diego for processing its Down syndrome test instead of using its laboratory in Grand Rapids, a company spokesman said last week.

The Trisomy 21 maternal blood test is still under development; recently, the company announced plans to introduce the test to the market by the end of 2011.

The company’s decision to process the Down syndrome test near its San Diego headquarters throws any possible expansion plans for the Grand Rapids facility into uncertainty.

“I think it’s premature to talk about the expansion plans anywhere for Sequenom’s CLIA lab network, wherever those labs might be — whether that’s Grand Rapids, whether that’s San Diego, whether that’s additional labs,” Sequenom spokesman Ian Clements said.

In 2008, Sequenom purchased the Center for Molecular Medicine, a joint venture between Spectrum Health and the Van Andel Institute, for $4 million and stock. Sequenom secured state and city tax breaks with a promise to hire more than 500 people in Grand Rapids.

Clements said the company remains committed to its Grand Rapids lab, which is accredited for human specimen processing under federal CLIA regulations.

“I think we still remain committed to that lab at this point. It’s an integral part of our strategy,” he said

Clements said Sequenom decided to use a DNA-based sequencing process for the Trisomy 21 test, instead of using RNA and the company’s propriety MassARRAY spectrometry system. 

“The majority of our expertise, if not all of our expertise, in sequencing actually resides here in San Diego,” Clements said. He added that the company is able to establish as many as four additional laboratories anywhere in the U.S. under the Clinical Laboratory Improvement Amendments license for the Grand Rapids facility.

“Building out a second lab here in San Diego has been driven by the fact that we’ve selected sequencing as a methodology for T21,” he said. “At launch, we want to make sure we have all the experts close to home around that, so that the launch kind of goes smoothly.”

MichBio President & CEO Stephen Rapundalo said there are good business reasons for Sequenom to establish a second laboratory, for example, as a back-up to the first. “What that may or may not mean for Grand Rapids is sort of an open question,” he said.

Sequenom announced during its conference call on first quarter results that it has established a new timeline for introducing the Down syndrome test. Development of the test was sidetracked last year when it was discovered that test data about its effectiveness was faulty.

In the meantime, Sequenom has brought three genetic diagnostics to the marketplace: fetal sex determination, RhD factor and cystic fibrosis carrier. It also has struck a deal with another company to launch a genetic test for age-related macular degeneration, expected to be ready for sales in 2011, Clements said.

The company reported $204,000 in first quarter revenue from those tests.

“Clearly, we have three tests on the market which are all MassARRAY-based. All of those are still going to be run out of Grand Rapids. And, indeed, the fourth test we are looking to launch, which will actually be our next test — the age-related macular degeneration test — that’s also based on MassARRAY. So the sensible place where that would be in terms of running would be Grand Rapids, as well,” Clements added.

Last week, Sequenom announced it has raised $51.6 million through a private placement of 12.6 million discounted shares. Company officials had indicated that cash burn was a concern as it completes research and development and prepares for the launch of the Down syndrome test, Sequenom’s main focus for 2010.

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