Was Sequenom (SQNM) just hype? Maybe. Maybe not. In the end, it will all probably be for a judge (or judges) to decide as shareholder lawsuits pile up like cars on a foggy interstate.

Last week, SQNM announced that they would not be releasing their Down Syndrome test this summer, as previously anticipated, because the data was “mishandled” by individuals in the company, raising “significant concerns regarding the integrity of that data.” The news absolutely tanked the stock by almost 70%.

Since the news broke, investors and shareholders have been filing lawsuit after lawsuit accusing SQNM and its officers of federal securities violations. Yesterday, SQNM acknowledged the filing of “several” suits, which it said could have a “material adverse impact” on its business or results should it not prevail in court. The company also said that it will “vigorously defend against the claims” but that it “could be forced to make significant payments to stockholders and their lawyers” if it does not prevail in the litigation.

Ouch.

Lawsuits have been filed by Coughlin Stoia Geller Rudman & Robbins and Johnson Bottini of San Diego, Izard Nobel of Connecticut, Brodsky & Smith of Pennsylvania and Stull Stull & Brody of New York, all alleging that SQNM inflated the share price by issuing materially false and misleading statements about the test.

SQNM was down $0.29 (7%) to $3.76 at the time of this post, a long way off from its stock price of almost $15 one week ago. SQNM finished Q1 with about $81M in cash.

Stay tuned…

Image from edmunds

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