Well known biotech executives “face-off” in Licensing Deal gone awry
Xenomics'(XNOM.PK) announced today that an ongoing internal preliminary investigation concluded that Sequenom (SQNM) willfully manipulated its Down Syndrome data in its presentations.In late October 2008 Xenomics granted an exclusive license to Sequenom for its transrenal technology based upon Sequenom’s announced success in developing a Down Syndrome test. Xenomics is presently suing Sequenom to recover the Transrenal DNA and RNA Intellectual Property in the area of fetal diagnostics.
On October 6, 2009 Xenomics announced a “restart” with the appointment of Mr. Bruce Huebner as CEO and Board member
along with a planned name change in the Company to TrovaGene. Xenomics’ is also working on a urine test for HPV and KRAS tests in urine for colon cancer. Mr. Huebner has worked in many clinical diagnostic companies over the years most recently Osmetech and Nanogen. Dr. Tom Adams (Formerly of Genprobe,Iris, Genta, Hybritech etc.) is currently Chairman of the Company and in April with a management restructuring was granted an option to buy 4.8M shares of common stock at $0.50.
Yesterday Sequenom announced a strengthening of its Board with two members Dr. Kenneth Buechler and Mr. David Pendarvis.Dr. Harry Hixson is the Chairman and interim CEO of Sequenom after the firings of virtually the whole top management team.
With many experienced diagnostic executives in both companies this drama raises some important issues:
1. Why would Xenomics grant an exclusive license to its core Transrenal technology without substantial up-front funding and R&D support? What are the grounds for termination of the license?
2. At the present time it appears that the cash position of Xenomics is under $1M with significant ongoing operating expenses. Does the new management team at Xenomics already have a partner or financing lined up for the Transrenal technology?
3. Is this a matter of Sequenom being down so hit them hard because Xenomics’ needs to get back the “family jewels”? What is the market potential of Transrenal tests?
This event would appear to be another major headache for Sequenom but a survival action for Xenomics (TrovaGene).
SQNM stock has been volatile lately but has been going through a bottoming process in the $3-4 range from early October after crashing from 15 in May 2009. Many investors have been speculating on the value of Sequenom with average trading volume in the 6M range, based on the value of its core technology and IP in genomics and SNP’s.