The Securities and Exchange Commission on Wednesday accused a former executive of San Diego-based biotech company Sequenom Inc. of lying to analysts about the accuracy of the company's prenatal screening test for Down syndrome.
In a complaint filed in federal court in San Diego, the SEC alleged that Elizabeth A. Dragon, the company's former vice president of research and development, told analysts in 2008 and 2009 that the company's screening test could predict with nearly 100% accuracy whether a fetus would be born with Down syndrome.
At the time, the complaint said, Dragon knew that the test was far less accurate and therefore much less marketable.
As a result of Dragon's statements, the company's stock price more than tripled over the course of several months, the SEC complaint said. In April 2009, the company disclosed that it was delaying launch of the screening test because of "mishandling" of the test data. Its stock price plunged 76% the next day.
"Elizabeth Dragon knew the truth about Sequenom's Down syndrome test, yet she told the public it was a near-perfect success," said Rosalind Tyson, director of the SEC's Los Angeles office. "Her actions misled investors with exaggerated information about a significant new product that never materialized."