September 23, 2008
Sequenom Announces Acquisition of CLIA-Certified Laboratory and Partnerships With Spectrum Health and Van Andel Research Institute
Sequenom (NASDAQ:SQNM) today announced that it entered into an agreement to acquire the Center for Molecular Medicine (CMM), a Clinical Laboratory Improvement Act (CLIA) certified clinical diagnostics laboratory based in Grand Rapids, Michigan. CMM is an innovative joint venture between Spectrum Health, one of the largest not-for-profit health systems in Michigan, and the Van Andel Research Institute, an independent research institute with significant molecular biology expertise. Under the terms of the agreement, Sequenom will pay a purchase price of approximately $4.0 million (less CMM's cash at closing) to acquire CMM and will enter into collaborative agreements with Spectrum Health and the Van Andel Research Institute. Ninety percent of the purchase price will be paid in shares of Sequenom common stock. Sequenom also received a tax incentive package valued at up to $20 million over 12 years. The project includes a potential, near-term capital investment of approximately $10 million and the potential creation of several hundred jobs over five years.
Daniel H. Farkas, Ph.D., HCLD, executive director of CMM, and a nationally recognized leader in the field of molecular diagnostics, will continue to oversee the lab and join the Sequenom management team. Sequenom also announced its plans to complete a CLIA-certified laboratory facility in San Diego, California which is expected to be used to expand existing genetic research and serve as a West Coast adjunct to Sequenom's prenatal business that will be serviced by the CMM laboratory.
"We believe CMM's expertise in molecular diagnostic testing and its relationship with a key health care system with the stature of Spectrum Health, as well as the Van Andel Research Institute's innovative genomic and translational research capabilities will be valuable and complementary additions to Sequenom," stated Harry Stylli, Ph.D., President and Chief Executive Officer of Sequenom. "This acquisition positions us well to successfully launch our SEQureDx Trisomy 21 Down syndrome test through a CLIA-certified lab on schedule during the first half of 2009. The agreement also provides us with a partnership with Spectrum Health, which is one of the largest health care providers in the country, with more than 140 service sites and approximately 8,000 births each year. Our relationship with Spectrum Health should be invaluable as we expedite prospective clinical validation studies for our Trisomy 21 test as part of our market development plan."
Dr. Stylli added, "The relationships we are forging with the Van Andel Research Institute, to collaborate on cutting edge research, and the economic development leaders in West Michigan will allow us to be well positioned to increase our presence and provide significant value to our clinical development and commercialization efforts down the road."
Acquisition of the CLIA-certified lab will allow Sequenom control over all aspects of the commercialization of its SEQureDx technology, including marketing and communication programs, and critical sales and third-party payer reimbursement contracting strategies.
Matthew G. Van Vranken, chairman of the board of CMM, executive vice president of Spectrum Health System and president of the Spectrum Health Hospital Group added, "The Center for Molecular Medicine was an investment in the future of health and this agreement with Sequenom accelerates our commitment to realizing the promise of personalized medicine. We are very pleased to offer physicians and patients access to Sequenom's advanced diagnostic tools and tests, and to be a part of bringing them to the broader health care market."
"Sequenom and the Van Andel Research Institute have a shared vision - to move important scientific findings from research laboratory to clinical laboratory to patients," stated David Van Andel, chairman and chief executive officer of the Van Andel Institute. "CMM was created to leverage new technologies for the purposes of more precise treatment options for patients and through this acquisition by Sequenom and our research collaboration, this goal can be realized more immediately."
Dr. Farkas, CMM executive director, possesses extensive experience in the molecular diagnostics industry and has established three hospital-based molecular diagnostics laboratories in his nearly 20 years in the field: Saint Barnabas Medical Center, Livingston, NJ; William Beaumont Hospital, Royal Oak, MI; and The Methodist Hospital, Houston, TX. Dr. Farkas has held faculty positions at Weill Medical College of Cornell University, Baylor College of Medicine, Michigan State University (current) and William Beaumont Hospital. He has also written extensively on molecular diagnostics, and lectured internationally on the subject. Dr. Farkas was President of the Association for Molecular Pathology in 2003 and is a consultant for the FDA Clinical and Molecular Genetics Advisory panel.
Sequenom is committed to providing the best genetic analysis products that translate the results of genomic science into solutions for noninvasive prenatal diagnostics, biomedical research, translational research and molecular medicine applications, and for research conducted in the agro (agricultural and livestock) industry. The Company's proprietary MassARRAY system is a high-performance (in speed, accuracy and cost efficiency) nucleic acid analysis platform that quantitatively and precisely measures genetic target material and variations. The Company has exclusively licensed intellectual property rights for the development and commercialization of non-invasive prenatal genetic tests for use with the MassARRAY system and other platforms.
About Spectrum Health
Spectrum Health is a not-for-profit health system in West Michigan that offers a full continuum of care through its seven hospitals, more than 140 service sites and Priority Health, a health plan with nearly 500,000 members. Spectrum Health's 14,000 employees, 1,500 medical staff members and 2,000 volunteers are committed to delivering the highest quality care to those in medical need. The organization provided $111.1 million in community benefit during its 2008 fiscal year. As a system, Spectrum Health has earned more than 100 awards during the past 10 years.
About Van Andel Research Institute
Founded in 1996 by Jay and Betty Van Andel, and located in Grand Rapids, Michigan, Van Andel Institute is committed to improving the health and enhancing the lives of current and future generations through biomedical research and science education. This commitment is carried out by two complementary institutes: Van Andel Research Institute (VARI) and Van Andel Education Institute (VAEI). VARI is an independent medical research facility dedicated to basic and translational research into the genetic and molecular origins of cancer, Parkinson's disease, and other diseases. VARI's laboratories and core facilities work to translate discoveries into therapies with the potential to conquer illness and enhance lives. VAEI is nurturing the scientists of tomorrow. From groundbreaking elementary educational programs to a graduate school training professionals in cell and molecular biology, VAEI is building on curiosity and problem-solving skills with real, hands-on experiences, working to strengthen science education and preparing and motivating individuals to pursue careers in science.
About the Proposed Transaction
The closing of the acquisition of CMM by Sequenom is subject to the satisfaction of a number of closing conditions, including the accuracy of representations and warranties, compliance with covenants in the asset purchase agreement for the CMM acquisition, satisfactory completion of Sequenom's due diligence review, receipt of necessary governmental approvals and receipt of necessary third party consents.
Except for the historical information contained herein, the matters set forth in this press release, including statements regarding the closing of the acquisition of CMM, potential tax benefits, investment, and job opportunities created by the acquisition, the proposed employment of Dr. Farkas, Sequenom's plans to establish a CLIA certified laboratory facility in San Diego, collaboration arrangements with Spectrum Health and the Van Andel Institute and any impact or benefits of those arrangements, potential synergies from the CMM acquisition including potential benefits to the development and commercialization of Sequenom's molecular diagnostics including Sequenom's expected launch of its Trisomy 21 Down syndrome test during the first half of 2009, are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the risks and uncertainties associated with demand for and market acceptance of Sequenom's products, services, and technologies, new technology and product development and commercialization, reliance upon the collaborative efforts of other parties, competition, government regulation, obtaining or maintaining regulatory approvals, and other risks detailed from time to time in the Company's SEC reports, including the Company's Annual Report on Form 10-K for the year ended December 31, 2007 and subsequent periodic reports and other SEC filings. These forward-looking statements are based on current information that is likely to change and speak only as of the date hereof. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and Sequenom undertakes no obligation to revise or update any forward-looking statement to reflect events or circumstances after the issuance of this press release.