Sequenom vows to appeal court decision invalidating prenatal test patent

Sequenom's ($SQNM) stock plunged more than 22% in the aftermath of a court decision invalidating one of the major patents it uses for a prenatal genetic test. The struggling San Diego diagnostics company pledged to fight the ruling, which landed in favor of a suit filed two years ago by rival Ariosa Diagnostics.

"The company vigorously disagrees with the Order and ... intends to appeal the decision to the Federal Circuit Court of appeals," Sequenom said in a regulatory filing that acknowledges and responds to the decision from the U.S. District Court for the Northern District of California.

Sequenom closed at $1.92 at the end of trading on Oct. 31, a drop of nearly 22.6%.

The suit and its aftermath inject some drama into what is becoming an intensely competitive prenatal genetic testing market. Rivals including Natera, Illumina ($ILMN) and Ariosa all debuted their prenatal blood tests in recent months.

Specifically, the decision invalidates Sequenom's '540 patent it licenses from Isis Innovations involving the detection of fetal cell-free DNA in the bloodstream of pregnant women. It is a crucial part of its MaterniT21 test, Genome Web reported, which spots chromosomal abnormalities such as trisomy 21 and is a major driver of revenue. Ariosa sued Sequenom in December 2011 to make sure its Harmony Prenatal Test didn't infringe on Sequenom's patent. Harmony is designed to detect whether fetuses are at risk for Down syndrome and other chromosomal abnormalities, and Ariosa has pushed aggressively to expand the test's reach to other markets such as Brazil.

Ariosa, in announcing the ruling, said that it "validates Ariosa's long-standing view that it has freedom to develop new, innovative and market-leading technologies to provide improved genetic testing for pregnant women."

Dianna DeVore, the company's vice president of intellectual property and legal affairs, said in a statement that "Ariosa is an innovator in prenatal testing, and we are extremely pleased with the Court's decision in our favor."

If the U.S. district court ruling stands, Sequenom stands to lose a crucial piece of its business when it can least afford to. In August, Sequenom eliminated 75 jobs--about 12% of its workforce--in a bid to cut costs. Also in the mix, Sequenom has been looking to unload its once-promising genetic analysis arm.

The company booked $34.9 million in revenue during its 2013 second quarter, which represented strong growth. But Sequenom lost $31 million--numbers execs attributed, in part, to delays in insurance payments for diagnostic testing services in the wake of changes adopted by CMS, Medicaid and third-party payers.

- read the Ariosa announcement
- here's Sequenom's regulatory filing
- and the GenomeWeb story (reg. req.)
- check out FierceDiagnostics' take

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