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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

Commission File Number:  000-29101

SEQUENOM, INC.
(Exact name of registrant as specified in its charter)

               Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

The number of shares of the Registrant’s Common Stock outstanding as of August 9, 2002 was 37,616,386.

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SEQUENOM, INC.

INDEX

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PART I - FINANCIAL INFORMATION

CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share information)

See accompanying notes.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

          (1)     Basis of Presentation

The accompanying unaudited consolidated financial statements of SEQUENOM, Inc. (“SEQUENOM” or the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of results for a full year.

The condensed balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.   Certain amounts in the December 31, 2001 balance sheet have been reclassified to conform with current year presentation.

These financial statements should be read in conjunction with the audited financial statements and footnotes thereto included in SEQUENOM’s Annual Report on Form 10-K for the year ended December 31, 2001, as filed with the Securities and Exchange Commission (“SEC”).

(2) Segment information

The Company reports its financial results in two business segments, SEQUENOM Genetic Systems and SEQUENOM Pharmaceuticals. Segment financial information for SEQUENOM Genetic Systems and SEQUENOM Pharmaceuticals prior to 2002 has not been provided as SEQUENOM then operated in one business segment, making it impracticable to do so.

Unaudited segment information for the three months and six months ended June 30, 2002 is as follows (Dollars in thousands, unaudited):

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The SEQUENOM Pharmaceuticals segments loss from its operations in the three and six months  ended June 30, 2002 includes a $3 million integration charge for the closure of the Swedish operations at our Uppsala facility. This site was acquired as part of  Gemini Genomics plc in September 2001.

The Company has no intersegment revenues. Corporate costs are allocated to segments based on the segments’ estimated proportion of total operational expenses. The Company does not currently segregate assets by segment as a significant proportion of the Company’s total assets are cash, cash equivalents, and marketable securities which the Company does not assign to its two operating segments. Goodwill is attributable entirely to the SEQUENOM Pharmaceutical segment.

(3) Comprehensive Income (Loss)

Statement of Financial Accounting Standards (“SFAS”) No. 130, Reporting Comprehensive Income  requires reporting and displaying comprehensive income (loss) and its components which, for SEQUENOM, includes net loss and unrealized gains and losses on investments and foreign currency translation gains and losses.  In accordance with SFAS No.130, the accumulated balance of other comprehensive income (loss) is disclosed as a separate component of stockholders’ equity. Other comprehensive income (loss) for the three month and six month period ending June 30, 2002 was approximately a gain of $169,000 and a loss of $817,000, respectively, compared to losses of approximately $215,000 and $191,000 in the three month and six month periods ended June 30, 2001.

(4) Net Loss Per Share

In accordance with SFAS No. 128, Earnings Per Share, and SEC Staff Accounting Bulletin No. 98, basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period.  Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common and common equivalent shares outstanding during the period.  Common equivalent shares are comprised of incremental common shares issuable upon the exercise of stock options and warrants, and were excluded from historical diluted loss per share because of their anti-dilutive effect.

(5) Cumulative Effect of Accounting Change.

In January 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets,  which requires that goodwill and intangible assets deemed to have an indefinite useful life no longer be amortized but be reviewed for impairment upon adoption of SFAS No. 142 and annually thereafter. The Company will perform its annual impairment review during the fourth quarter of each year, commencing in the fourth quarter of 2002.

Under SFAS No. 142, goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. No amortization on the goodwill arising on acquisition of Gemini Genomics plc in September 2001 was recognized during 2001 in accordance with the transition arrangements in SFAS No. 142. Quarterly results as reported are

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therefore comparable. Upon adoption of SFAS No. 142 in January 2002, the Company recognized a one-time, non-cash charge of $116.9 million to reduce the carrying value of its goodwill. The charge is non-operational in nature and is reflected as a cumulative effect of an accounting change in the consolidated statement of operations. In calculating the impairment charge, the fair value of the SEQUENOM Pharmaceuticals segment was estimated using a discounted cash flow methodology. The charge relates entirely to the SEQUENOM Pharmaceuticals segment.

The SFAS No. 142 goodwill impairment charge is associated solely with goodwill resulting from the acquisition of Gemini Genomics plc. The amount of the impairment primarily reflects a decline in long term market expectations for genomics companies which in turn has led to a decline in the Company’s stock price since the acquisition was announced and valued for accounting purposes in May 2001.

(6) Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market value.  Standard cost, which approximates actual cost, is used to value inventories. The components of inventories were (in  thousands):

(7) New Accounting Pronouncements

In October 2001, the Financial Accounting Standards Board issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 replaces SFAS No. 121 and provisions of APB Opinion No. 30 for the disposal of segments of a business and is effective for fiscal years beginning after December 15, 2001. The statement creates one accounting model, based on the framework established in SFAS No. 121, to be applied to all long-lived assets

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including discontinued operations. SFAS No. 144 was effective for the Company on January 1, 2002. The Company has determined that the adoption of this statement will not have a material impact on our consolidated financial statements.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

All statements in this Form 10Q that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our “expectations,” “beliefs,” “hopes,” “goals,” “intentions,” “strategies” or the like. Such statements are based on management’s current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. We caution investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, the risk factors discussed in this Form 10-Q under the caption “Risks and Uncertainties.”  We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions, or circumstances on which any such statements are based.

OVERVIEW

We are a genetics company with the tools, information and strategies for determining the impact of genes and genetic variations. Our business is organized into two segments:

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Since our inception, we have incurred significant losses. As of June 30, 2002, we had an accumulated deficit of $281.4 million. We expect to incur losses for the foreseeable future, and expect our expenses to increase, as we expand development and commercialization of new products, including information-based products and our SEQUENOM Pharmaceuticals business unit. The addition of subsidiaries based in foreign countries from the acquisition of Gemini Genomics, has resulted in an increase in operating costs. The operating expenses from these subsidiaries are included in our consolidated statement of operations from October 2001.

Results of Operations for the Three and Six Months Ended June 30, 2002 and 2001

Business Segment Highlights for the three and six months ended June 30, 2002

Segment financial information for SEQUENOM Genetic Systems and SEQUENOM Pharmaceuticals prior to 2002 has not been provided as SEQUENOM then operated in one business segment, making it impracticable to do so. Management discussion and analysis compares the total revenues, costs and expenses for the company in the three and six months ended June 30, 2002 to the same periods in 2001. Beginning in the quarter ended March 31, 2003, the management discussion and analysis will compare revenues and costs and expenses on a business segment basis.

Revenues

Total revenues for the three month and six months ended June 30, 2002 were $9.2 million and $17.8 million, respectively, increasing from $7.4 million and $12.6 million, respectively for the same periods in 2001.

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Product related revenues for the three and six months ended June 30, 2002 increased to $5.7 million and $12.5 million, respectively from $5.0 million and $8.7 million, respectively for the same periods in 2001. These product revenues were derived from the sale of MassARRAY systems, consumable kits containing our proprietary SpectroCHIP^TM chips, licensing of our proprietary software and the license fees from end-users. We placed nine of our MassARRAY systems during the quarter ended June 30, 2002, compared to nine systems in the same period of the prior year. We placed 20 systems in the six month period ended June 30, 2002 compared to 16 systems in the same period of the prior year. The increase in our installed system base from 38 at June 30, 2001 to 75 at June 30, 2002, resulted in an increase in our SpectroCHIP chip and proprietary software revenues.

Service revenues for the three and six months ended June 30, 2002 were $3.4 million and $5.2 million, respectively, compared to $2.3 million and $3.8 million, respectively, in the same periods in 2001.  We derived these revenues from the completion of significant phases in genetic validation projects.

Research and development grant revenue for the three and six months ended June 30, 2002 were $78,000  and $119,000, respectively, compared to $36,000 and $103,000, respectively, for the same periods of 2001.

We expect that future revenues will be affected by, among other things, customer budgets, new product introductions, competitive conditions and government research funding.

Cost of Product and Service Revenue

Total cost of product and service revenue for the three months and six months ended June 30, 2002 were $5.3 million and $10.1 million, respectively, compared to $5.0 million and $9.2 million, respectively, for the same periods in 2001.  Gross margin for the three and six months ended June 30, 2002 was 42% and 43%, respectively, compared to 31% and 26%, respectively, for the same periods of the prior year.  Gross margins increased in the three and six month periods ended June 30, 2002 due to the increased margins from MassARRAY consumables and genetic services compared to the same periods in 2001.

Research and Development Expenses

Research and development expenses for the three and six months ended June 30, 2002 increased to $8.1 million and $16.2 million, respectively, from $6.8 million and $12.1 million, respectively, in the same period in the prior year. These expenses consist primarily of salaries and related personnel costs, materials costs and costs related to our disease gene discovery program,  improvements to our existing products and validation of products under development.  The $1.3 million and $4.1 million increases from the three and six month periods ending June 30, 2001 to 2002 resulted from an increase in personnel to support our expanded research and development activities in the disease gene discovery, as well as the acquisition of Gemini Genomics in the third quarter of 2001, whose research and development expenses are now consolidated with ours.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three and six months ended June 30, 2002 increased to $7.2 million and $14.3 million, respectively, from $5.5 million and $10.0 million, respectively, in the same periods in the prior year. These expenses consist primarily of salaries and related costs for sales and marketing, customer support, business development, legal, finance and human resource personnel, and their related function’s expenses.  The $1.7 million and $4.3 million three and six month increases from 2001 to 2002 resulted primarily from additional sales, marketing and customer support activities and expenses associated with filing patent applications on our intellectual property and expenses to support Gemini Genomics’ selling, general and administrative activities following our acquisition in September 2001.

Amortization of Acquired Intangibles

In connection with the acquisition of Gemini Genomics, we acquired approximately $18.7 million of intangible assets, including clinical data collections and patents.  These intangible assets will be amortized over three to five years and are allocated to the SEQUENOM Pharmaceuticals segment. The amortization expense in the three and six month periods ending June 30, 2002 was approximately $936,000 and $1.9 million, respectively. No charge was made in the three and six month periods ending June 30, 2001 as the acquisition of Gemini Genomics did not occur until the third quarter of 2001.

Amortization of Deferred Stock Compensation

Deferred stock compensation represents the difference between the estimated fair value of our common stock and the exercise price of options at the date of grant. Amortization of this amount for the three and six months ended June 30, 2002 was approximately $119,000 and $264,000, respectively, compared to approximately $250,000 and $541,000, respectively, for the same periods in the prior year. The deferred compensation is being amortized over the vesting periods of the individual stock options using the graded vesting method. We expect to record amortization for deferred compensation approximately as follows: $155,000 during the remainder of 2002, and $187,000 during 2003.

Net Interest Income

Net interest income represents returns on our cash and short term investments, less interest expense on our bank loans and capital lease obligations. Net interest income for the three and six months ended June 30, 2002 declined to $1.1 million and $2.1 million, respectively, from $1.6 million and $3.6 million in the same periods in the prior year. The decrease in interest income resulted from lower interest rates.

Cumulative Effect of Accounting Change

In January 2001, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets,  which requires that goodwill and intangible assets deemed to have an indefinite useful life will no longer be amortized but will be reviewed for impairment upon adoption of SFAS No. 142 and

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annually thereafter. The Company will perform its annual impairment review during the fourth quarter of each year, commencing in the fourth quarter of 2002.

Under SFAS No. 142, goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. No amortization on the goodwill arising on acquisition of Gemini Genomics in September 2001 was recognized during 2001 in accordance with the transition arrangements in SFAS No. 142. Quarterly results as reported are therefore comparable. Upon adoption of SFAS No. 142 in January 2002, the Company recognized a one-time, non-cash charge of $116.9 million to reduce the carrying value of its goodwill. The charge is non-operational in nature and is reflected as a cumulative effect of an accounting change in the consolidated statement of operations. In calculating the impairment charge, the fair value of the SEQUENOM Pharmaceuticals segment was estimated using a discounted cash flow methodology, and the charge relates entirely to the SEQUENOM Pharmaceuticals segment.

The SFAS No. 142 goodwill impairment is associated solely with goodwill resulting from the acquisition of Gemini Genomics. The amount of the impairment primarily reflects a decline in long term market expectations for genomics companies which in turn has led to a decline in the Company’s stock price since the acquisition was announced and valued for accounting purposes in May 2001.

Liquidity and Capital Resources

In February 2000, we completed our initial public offering (IPO) raising net proceeds of approximately $144.1 million.  Prior to our IPO, we funded our operations with $55.6 million from private equity financings, $6.0 million in loans and convertible loans and $2.2 million from equipment financing arrangements.  At June 30, 2002, cash, cash equivalents, short-term investments and restricted cash totaled $114.2 million compared to $143.1 million at December 31, 2001. Our cash reserves are held in a variety of interest-bearing instruments including investment-grade corporate bonds, commercial paper and money market accounts.

Cash used in operations for the six months ended June 30, 2002 was $23.4 million compared with $15.6 million for the same period in 2001. The net loss of $142.4 million for the six months ended June 30, 2002 was partially offset by non-cash charges of $120.9 million, of which $116.9 million was related to the cumulative effect of accounting change upon the adoption of SFAS No. 142, $4.0 million of depreciation and amortization, approximately $328,000 from losses in our investee, approximately $263,000 related to stock-based compensation, offset by approximately $654,000 of deferred income tax benefit.   Investing activities, other than the changes in our short-term investments and restricted cash, used $2.3 million in cash during the first six months of 2002 due to purchases of additional laboratory equipment associated with our high-throughput genotyping activities, and $1.0 million for our investment in Provid Pharmaceuticals, Inc., a product-oriented drug discovery company with expertise in small molecule therapeutics.

Net cash used by financing activities was approximately $321,000 for the six months ended June 30, 2002 compared to approximately $647,000 provided by financing activities for the same period in 2001. Financing activities in the first six months of 2002 included approximately $968,000 used to repay long-term debt and capital lease obligations offset by the receipt of proceeds from the exercise of stock options and employee stock purchase plan purchases of approximately $647,000.

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The following table summarizes our contractual obligations at June 30, 2002 (in millions):

We believe our existing cash, cash equivalents and short-term investments, will be sufficient to fund our operating expenses, debt obligations and capital requirements through at least the next 12 months.  However, the actual amount of funds that we will need during or after the next 12 months will be determined by many factors, some of which are beyond our control, and we may need funds sooner than currently anticipated.  These factors include:

We have a $25.0 million bank line of credit, of which $22.4 million is available for borrowing.  We have no commitments for any additional financings. When we require additional funds, general market conditions or the then-current market price of our common stock may not support capital raising transactions such as an additional public or private offering of our common stock.  If additional funds are required and we are unable to obtain them on a timely basis or on terms

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favorable to us, we may be required to cease or reduce further commercialization of our products, to sell some or all of our technology or assets or to merge with another entity.  If we raise additional funds by selling shares of our capital stock, the ownership interest of our stockholders will be diluted.

Option Exchange Program

On November 1, 2001, the Company initiated a voluntary stock option exchange program for its employees, officers and board members.  As a result of a decline in the price of the Company’s Common Stock during fiscal year 2001, the exercise prices associated with the majority of the Company’s outstanding stock options were higher than the market price of the Company’s Common Stock.  The Board of Directors determined that these options were not attractive or effective as an incentive to retain and motivate employees and were unlikely to be exercised.  By offering employees, officers and board members the opportunity to exchange certain of their stock options, the Company intended to provide its employees with the benefit of holding stock options that over time may have a greater potential to increase in value, and thereby create better incentives for its employees to remain with the Company and to contribute to the attainment of its business and financial objectives and the creation of value for its stockholders.

Pursuant to the terms of the program, employees, officers and board members of the Company were offered the opportunity to exchange all outstanding Company Common Stock options with an exercise price equal to or greater than $10.00 per share for replacement options to purchase shares of the Company’s Common Stock at a new exercise price.  The replacement options were granted on May 31, 2002 and have an exercise price of $4.89 per share, the fair market value of the Company’s Common Stock on that date.  Each replacement option is subject to the same vesting schedule and has the same vesting commencement date as the option for which it was exchanged.  Approximately 1.2 million of the 3.3 million options issued and outstanding at the time of the offer were exchanged.

Risks and Uncertainties

The following is a summary of the many risks we face in our business.  You should carefully read these risks and uncertainties in evaluating our business.

Recent Operating Losses; Accumulated Deficit

We have experienced significant operating losses in each period since our inception.  We expect these losses to continue and it is uncertain when, if ever, we will become profitable.  These losses have resulted principally from costs incurred in research and development and from selling, general and administrative costs associated with our operations.  Our costs have exceeded our revenues in each period since our inception.  We expect to incur increasing operating losses in the future as a result of expenses associated with marketing and sales, production, research and product development, selling, general and administrative costs as well as costs associated with consolidating and completing the integration of Gemini Genomics, a company that we acquired in September 2001, into our business.

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We Have a Limited Operating History

We are a relatively new company and, for the most part, our technologies are still in the early stages of development and commercialization.  We have only recently begun to incorporate our technologies into commercial products.  We need to make significant investments to ensure our products perform correctly and are cost-effective.  In addition, we may need to obtain additional regulatory approvals to sell our products for future application in diagnostics and therapeutics.  Even if we develop our products for commercial use and obtain all necessary regulatory approval, we may not be able to develop products that:

Our Operating Results May Fluctuate Significantly

Our revenues and results of operations may fluctuate significantly, depending on a variety of factors, including the following:

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In particular, our revenues and operating results are unpredictable because they depend on the number, timing and type of MassARRAY system placements that we make during the year, the quantity and timing of consumables sales, completion of milestones in service agreements and  the duration of revenue generating license agreements and collaborative programs with partners.  Any delay in generating or recognizing revenues could cause significant variations in our operating results from year to year and could result in increased operating losses.

We believe that period-to-period comparisons of our financial results will not necessarily be meaningful.  You should not rely on these comparisons as an indication of our future performance.  If our operating results in any future period fall below the expectations of securities analysts and investors, our stock price will likely fall.

A Reduction in Revenues from Sales of MassARRAY Systems Would Harm Our Business

A decline in the demand for MassARRAY Systems would reduce our total revenues and harm our business.  We expect that sales of the MassARRAY system will account for a substantial portion of our total revenues for the foreseeable future.  The following factors, among others, may reduce the demand for MassARRAY systems:

A Reduction in Revenues from Service Contracts and Collaborations Would Harm Our Business

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A decline in the demand for our genetic services or a reduction in the level of such services performed on behalf of collaborators would reduce our total revenues and harm our business. We expect that revenue from service contracts will account for a substantial portion of our total revenues for the foreseeable future. The following factors, among others, may reduce the demand for our services:

We May Need Additional Capital in the Future to Support Our Growth

Based on our current plans, we believe our cash, cash equivalents and short-term investments will be sufficient to fund our operating expenses, debt obligations and capital requirements through at least the next 12 months.  However, the actual amount of funds that we will need during or after the next 12 months will be determined by many factors, some of which are beyond our control, and we may need funds sooner than currently anticipated.  These factors include:

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When we require additional funds, general market conditions or the then-current market price of our common stock may not support capital raising transactions such as an additional public or private offering of our common stock.  If we require additional funds and we are unable to obtain them on a timely basis or on terms favorable to us, we may be required to cease or reduce further commercialization of our products and services, sell some or all of our technology or assets or merge with another entity.  If we raise additional funds by selling additional shares of our capital stock, the ownership interest of our stockholders will be diluted.

We May Not Be Able to Successfully Adapt Our Products for Commercial Applications

A number of potential applications of our MassARRAY technology will require significant enhancements in our core technology.  If we are unable to complete the development, introduction or scale-up of the manufacturing of any product or genotyping facility, or if any of our products do not achieve a significant level of market acceptance, our business, financial condition and results of operations could be seriously harmed.  In addition, we may fail to sustain the market acceptance of our already established products, such as our MassARRAY systems as well as new products.  Sustaining or achieving market acceptance will depend on many factors, including demonstrating to customers that our technology is superior to other technologies and products which are available now or which may become available in the future.  We believe that our revenue growth and profitability will substantially depend on our ability to overcome significant technological challenges, successfully introduce our newly developed products and services into the marketplace.

We May Not Be Able to Form and Maintain the Collaborative Relationships that Our Business Strategy Requires and the Relationships May Lead to Disputes Over Technology Rights

We must form research collaborations and licensing arrangements with several partners at the same time to operate our business successfully.  To succeed, we will have to maintain our existing relationships and establish additional collaborations.  We cannot be sure that we will be able to establish any additional research collaborations or licensing arrangements necessary to develop and commercialize products using our technology or that we can do so on terms favorable to us. If our collaborations are not successful or we are not able to manage multiple collaborations successfully, our programs will suffer.  If we increase the number of collaborations, it will become more difficult to manage the various collaborations successfully and the potential for conflicts among the collaborators will increase.

We and our Collaborative Partners May Not Be Successful in Developing or Commercializing Therapeutic, Diagnostic or Other Products Using Our Products, Services or Discoveries

Development of therapeutic, diagnostic and other products based on our discoveries and/or our collaborative partners’ discoveries will be subject to risks of failure inherent in their development or commercial viability.  These risks include the possibility that any such products will:

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If a partner or we discover therapeutic, diagnostic or other products using our products, services or discoveries, we may rely on that partner for product development, regulatory approval, manufacturing and marketing of those products before we can realize revenue and some of the milestone payments, royalties and other payments we may be entitled to under the terms of our collaboration agreements.  If we are unable to successfully achieve milestones or our collaborative partners fail to develop successful products, we will not earn the revenues contemplated.  Our collaboration agreements may allow the partner significant discretion in electing whether to pursue any of these activities.  We cannot control the amount and timing of resources our collaborators may devote to our programs or potential products.  As a result, we cannot be certain that our collaborators will choose to develop or commercialize any products or will be successful in doing so. In addition, if a collaborator is involved in a business combination, such as a merger or acquisition or changes in its business focus, its performance in its agreement with us may suffer and, as a result, we may not generate any revenues or only limited revenues from the royalty, milestone and similar payment provisions of our agreement with that collaborator.

We May Not Successfully Develop or Derive Revenues From Our Genotyping and Gene Discovery Programs

Our genotyping and gene discovery programs are still in the early stages of implementation, continue to evolve, and may not result in marketable products.  We are directing our technology and development focus primarily toward identifying genes that are believed to be responsible for, or indicate the presence of, certain diseases.

We have only identified a limited number of specific candidate genes under our research programs.  Our technologies and approach to gene discovery may not enable us to successfully identify the specific genes that cause or predispose individuals to the complex diseases that are the targets of our efforts to identify genetic variations that have medical utility.  In addition, the diseases we are targeting are generally believed to be caused by a number of genetic and environmental factors.  It may not be possible to address such diseases through gene-based therapeutic or diagnostic products.  Accordingly, even if we are successful in identifying specific genes, our discoveries may not lead to the development of commercial products.

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We May Not Successfully Obtain Regulatory Approval of any Therapeutic, Diagnostic or Other Product which We or Our Collaborative Partners Develop

The Food and Drug Administration, or FDA, must approve any drug product before it can be marketed in the U.S.  A drug product must also be approved by the regulatory agencies of foreign governments before the product can be sold outside the U.S.  Before a new drug application can be filed with the FDA, the potential product must undergo preclinical testing and clinical trials.  Commercialization of any therapeutic, diagnostic or other product which we or our collaborators may develop depends upon successful completion of these preclinical studies and clinical trials.  Preclinical testing and clinical development are long, expensive and uncertain processes and we do not know whether we, or any of our collaborative partners, will be permitted to undertake clinical trials of any potential products.  It may take us or our collaborative partners many years to complete any such testing, and failure can occur at any stage of testing.  Preliminary results of trials do not necessarily predict final results, and acceptable results in early trials may not be repeated in later trials.  A number of companies in the pharmaceutical industry, including biotechnology companies, have suffered significant setbacks in advanced clinical trials, even after promising results in earlier trials.  Delays or rejections of potential products may be encountered based on changes in regulatory policy for product approval during the period of product development and regulatory agency review.  Moreover, if and when our projects reach clinical trials, we or our collaborative partners may decide to discontinue development of any or all of these projects at any time for commercial, scientific or other reasons.

If the Medical Relevance of SNPs Becomes Questionable, We May Have Less Demand for Our Products and Services

Some of the products we hope to develop involve new and unproven approaches.  They are based on the assumption that information about genes may help scientists better understand complex disease processes.  Scientists generally have a limited understanding of the role of genes in diseases, and few products based on gene discoveries have been developed.  We cannot be certain that genetic information will play a key role in the development of drugs and diagnostics in the future.  If we are unable to generate valuable information that can be used to develop these drugs and diagnostics, the demand for our products and services will be reduced and our business will be harmed.

If We Do Not Succeed in Obtaining Development and Marketing Rights for Some of the Assays Developed in Collaboration with Others, our Revenue and Profitability Could Be Reduced

Our business strategy includes, in part, the development of assays in collaboration with others, and we intend to obtain commercialization rights to those assays.  If we are unable to obtain rights to those assays, our revenue and profitability could be reduced.  To date, we have initiated limited activities towards the exploitation of any commercialization rights or products developed in collaboration with third parties.  Even if we obtain commercialization rights, commercialization of products may require resources that we do not currently possess and may not be able to develop or obtain.

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We Depend on Sales of SpectroCHIP Array Chips and Other Consumables for a Significant Portion of Our Revenues

Sales of SpectroCHIP chips and other consumables are an important source of revenue.  Factors which may limit the use of SpectroCHIP chips and other consumables include: failure to achieve additional sales of MassARRAY systems, the acceptance of our technology by our customers, the extent of our customers’ level of utilization of their MassARRAY systems, and the training of customer personnel.  If our customers do not purchase sufficient quantities of SpectroCHIP chips and other consumables, our revenues will be lower than anticipated.

The Sales Cycle For Our Products is Lengthy.  We May Expend Substantial Funds and Management Effort With No Assurance of Successfully Selling Our Products or Services.

Our sales cycle is typically lengthy.  Our sales effort requires the effective demonstration of the benefits and differentiation of our products and services to and significant training of many different departments within a potential customer.  These departments might include research and development personnel and key management.  In addition, we may be required to negotiate agreements containing terms unique to each customer which contributes to the length of our sales cycle.  We may expend substantial funds and management effort with no assurance that we will successfully sell our products or services.

If Our Customers Are Unable to Adequately Prepare Samples As Required By Our MassARRAY System, the Overall Market Demand For Our Products May Decline.

Before using our MassARRAY system, customers must prepare samples by following several steps that are prone to human error, including DNA isolation and DNA segment amplification.  If DNA samples are not prepared appropriately, or proposed assays are extremely complex, our MassARRAY system may not generate a reading.  If our customers experience similar difficulties, they may achieve lower levels of throughput than those for which our system was designed.  If our customers are unable to generate expected levels of throughput, they may not continue to purchase our consumables, they may express their discontent with our products in the marketplace, potentially driving down demand for our products, or they may collaborate with others to jointly use our products.  Any or all of these actions would reduce the overall market demand for our products.

If Ethical, Privacy or Other Concerns Surrounding the Use of Genetic Information Becomes Widespread, We May Have Less Demand for Our Products and Services

Genetic testing has raised ethical issues regarding privacy and the appropriate uses of the resulting information.  For these reasons, governmental authorities may call for limits on or regulation of the use of genetic testing or prohibit testing for genetic predisposition to certain conditions, particularly for those that have no known cure.  Similarly, such concerns may lead individuals to refuse to use genetics tests even if permissible.  Any of these scenarios could reduce the potential markets for our products and services, which could seriously harm our business, financial condition and results of operations.

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If We Do Not Have Adequate Access to Genetic Materials, We Will Not Be Able to Develop Our Pharmaceuticals Business

We depend on third parties for the collection of extensive and detailed proprietary clinical data and the collection and storage of large quantities of genetic material, such as DNA, and other biological samples.  We need access to normal and diseased human tissue samples, other biological materials and related clinical and other information to develop our products and services.  We may not be able to obtain or maintain access to these materials and information.  If the validity of the consents obtained from our volunteers or our collaborators’ volunteers is successfully challenged, we may lose access to genetic material.  In addition, government regulation in the United States and foreign countries could result in restricted access to, or use of, human and other tissue samples.  If we lose access to sufficient numbers or sources of tissue samples, or if tighter restrictions are imposed on our use of the information generated from tissue samples, our business will suffer.

We May Not Successfully Integrate Gemini Genomics and any Other Future Acquisitions

In September 2001 we completed our acquisition of Gemini Genomics.  In the future, we may acquire additional companies or technologies.  Managing our acquisition of Gemini Genomics and any future acquisition will entail numerous operational and financial risks, including:

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If the Validity of the Consents From Our Volunteers or Our Clinical Collaborators’ Volunteers Is Successfully Challenged, We Could Be Forced To Stop Using Some Of Our Clinical Or Genetic Resources, Which Could Hinder Our Gene Discovery Programs

We have attempted to ensure that all clinical data and genetic and other biological samples that we receive from our subsidiaries and our clinical collaborators have been collected from volunteers who have provided our collaborators or us with appropriate consents for the data and samples to be used for purposes which extend to cover our gene discovery program and other activities.  In addition, we have attempted to ensure that data and samples that have been collected by our clinical collaborators are provided to us on an anonymous basis.  We have also attempted to ensure that the volunteers from whom our data and samples are collected do not retain or have conferred on them any proprietary or commercial rights to the data or samples or any discoveries derived from them.  Our clinical collaborators are based in a number of different countries.  While we believe that one of our advantages is the number of different ethnic groups we have information about in our clinical databases, the fact that our data and samples come from and are collected by entities based in different countries results in complex legal questions regarding the adequacy of consents and the status of genetic material under a large number of different legal systems.  The consents obtained in any particular country could be challenged in the future, and those consents may prove invalid, unlawful or otherwise inadequate for our purposes.  Any findings against us or our clinical collaborators could deny us access to or force us to stop using some of our clinical or genetic resources which could hinder our gene discovery programs.  Also, we could become involved in legal challenges which could consume a substantial proportion of our management and financial resources.

We May Not Have the Resources Required to Successfully Compete in the Biotechnology Industry

The biotechnology industry is highly competitive.  We expect to compete with a broad range of companies in the United States and abroad that are engaged in the development and production of products, services and strategies to analyze genetic information.  They include:

Many of our competitors have much greater financial, technical, research, marketing, sales, distribution, service and other resources than we do. Moreover, our competitors may offer broader product lines, services and have greater name recognition than we do, and may offer discounts as a competitive tactic.  In addition, several early stage companies are currently making or developing products that compete with our products.  Our competitors may develop or market technologies or products that are more effective or commercially attractive than our current or future products, or that may render our technologies or products obsolete.  We may also compete against some of our customers, which may adversely affect our relationships with them.

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Our Ability to Compete in the Market May Decline If We Lose Some of Our Intellectual Property Rights Due to Lawsuits to Protect or Enforce our Patents

Our success will depend on our ability to obtain and protect patents on our technology and to protect our trade secrets.  Our patents, which have been or may be issued, may not afford meaningful protection for our technology and products.  Others may challenge our patents and, as a result, our patents could be narrowed, invalidated or unenforceable.  In addition, our current and future patent applications may not result in the issue of patents in the United States or foreign countries.  Competitors may develop products similar to ours that do not conflict with our patents.  In addition, others may develop products for use with the MassARRAY system in violation of our patents that could reduce sales of consumables.  In order to protect or enforce our patent rights, we may initiate interference proceedings, oppositions, or patent litigation against third parties, such as infringement suits.  These lawsuits could be expensive, take significant time and divert management’s attention from other business concerns.  The patent position of biotechnology firms generally is highly uncertain, involves complex legal and factual questions, and has recently been the subject of much litigation.  No consistent policy has emerged from the U.S. Patent and Trademark Office or the courts regarding the breadth of claims allowed or the degree of protection afforded under biotechnology patents.  In addition, there is a substantial backlog of biotechnology patent applications at the U.S. Patent and Trademark Office, and the approval or rejection of patent applications may take several years.

Our Success Will Depend Partly on Our Ability to Operate Without Infringing on or Misappropriating the Proprietary Rights of Others

We may be sued for infringing on the patent rights or misappropriating the proprietary rights of others.  From time to time, we receive letters from companies regarding their issued patents and patent applications alleging or suggesting possible infringement.  Intellectual property litigation is costly, and, even if we prevail, the cost of such litigation could adversely affect our business, financial condition and results of operations.  In addition, litigation is time consuming and could divert management attention and resources away from our business.  If we do not prevail in any litigation, in addition to any damages we might have to pay, we could be required to stop the infringing activity or obtain a license.  Any required license may not be available to us on acceptable terms, or at all.  In addition, some licenses may be non-exclusive, and therefore, our competitors may have access to the same technology licensed to us. If we fail to obtain a required license or are unable to design around a patent, we may be unable to sell some of our products, which could have a material adverse affect on our business, financial condition and results of operations.

The Rights We Rely Upon to Protect the Intellectual Property Underlying Our Products May Not Be Adequate, Which Could Enable Third Parties to Use Our Technology and Would Reduce Our Ability to Compete in The Market

We require our employees, consultants and advisors to execute confidentiality agreements.  However, we cannot guarantee that these agreements will provide us with adequate protection against improper use or disclosure of confidential information.  In addition, in some situations, these agreements may conflict with, or be subject to, the rights of third parties with whom our employees, consultants or advisors have prior employment or consulting relationships.  Further,

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others may gain access to our trade secrets  or independently develop substantially equivalent proprietary information and techniques.

If We Do Not Effectively Manage Our Growth, It Could Affect Our Ability to Pursue Business Opportunities and Expand Our Business

Growth in our business has placed, and will continue to place, a significant strain on our personnel, facilities, management systems and resources.  We will need to continue to improve our operational and financial systems and managerial controls and procedures and train and manage our workforce.  We will have to maintain close coordination among our technical, accounting, marketing, sales and research departments.  If we fail to effectively manage our growth and address the above concerns, it could affect our ability to pursue business opportunities and expand our business.

If We Cannot Attract and Retain Highly-Skilled Personnel, Our Growth Might Not Proceed as Rapidly as We Intend

The success of our business will depend on our ability to identify, attract, hire, train, retain and motivate highly-skilled personnel, in particular scientific, medical and technical personnel, for our future success.  Competition for highly skilled personnel is intense, and we might not succeed in attracting and retaining these employees.  If we cannot attract and retain the personnel we require, we might not be able to expand our business as rapidly as we intend.

We Have Limited Commercial Production Capability and Experience and May Encounter Production Problems or Delays, Which Could Result in Lower Revenue

We assemble the MassARRAY system and manufacture the SpectroCHIP chip and MassARRAY kits.  To date, we have only produced these products in moderate quantities.  Our customers require that we comply with current good manufacturing practices that we may not be able to meet.  We may not be able to maintain acceptable quality standards as we ramp up production.  To achieve anticipated customer demand levels, we will need to scale-up our production capability and maintain adequate levels of inventory.  We may not be able to produce sufficient quantities to meet market demand.  If we cannot achieve the required level and quality of production, we may need to outsource production or rely on licensing and other arrangements with third parties.  This reliance could reduce our gross margins and expose us to the risks inherent in relying on others.  We may not be able to successfully outsource our production or enter into licensing or other arrangements with these third parties, which could adversely affect our business.

We Depend on Third-Party Products and Services and Sole or Limited Sources of Supply to Develop and Manufacture our Products and Components and Materials Used in Our Products

We rely on outside vendors to supply certain products and the components and materials used in our products.  Some of these products, components and materials are obtained from a single supplier or a limited group of suppliers.  We have experienced quality problems with, and delays in receiving, oligonucleotides, which are necessary materials used in connection with the

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operation of the MassARRAY system.  Our reliance on outside vendors generally, and a sole or a limited group of suppliers in particular, involves several risks, including:

We May Be Unable to Obtain Licenses to Patented SNPs, Which Could Prevent Us from Obtaining Significant Revenue or Becoming Profitable

The U.S. Patent and Trademark Office has issued and continues to issue patents claiming SNP discoveries and their related associations and functions.  If important SNPs are patented, we will need to obtain rights to those SNPs in order to develop, use and sell related assays.  Required licenses may not be available on commercially acceptable terms, or at all.  If we fail to obtain licenses to important patented SNPs, we may never achieve significant revenue or become profitable.

Because Our Products Currently Depend on Components Licensed or Supplied from Third Parties, Our Breach of Any of the Terms of These Licenses or Supply Agreements or Their Termination Could Result in Our Loss of Access to These Components and Could Delay or Suspend Our Commercialization Efforts

We have acquired or licensed components of our technology from third parties.  Our failure to maintain the right to use these components could seriously harm our business, financial condition and results of operations.  In addition, changes to or termination of our agreements with these third parties and litigation related thereto could result in the loss of access to these aspects of our technology and could delay or suspend our commercialization efforts and may be costly.

Our grants from the government give the government certain license rights to inventions resulting from funded work.  Our business could be harmed if the government exercises those rights.

Our Revenues Are Derived Primarily From, and Are Subject to Risks Faced By, Pharmaceutical and Biotechnology Companies and Governmental and Others Research Institutions

We expect that our revenues in the foreseeable future will be derived primarily from products and services provided to pharmaceutical and biotechnology companies and governmental and other research institutions.  Accordingly, our success will depend upon their demand for our products and services.  Our operating results may fluctuate substantially due to reductions and delays in research and development expenditures by these customers.  These reductions and delays may result from factors such as:

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None of these factors is within our control.

We are Subject to Risks Associated with Our Foreign Operations

  As a result of our acquisition of Gemini Genomics, we are subject to the increased risks of doing business abroad.

We expect that a significant portion of our sales will be made outside the United States.  A successful international effort will require us to continue to develop relationships with international customers and partners.  We may not be able to identify, attract or retain suitable international customers and partners.  Expansion into international markets will require us to continue to establish and grow foreign operations, hire additional personnel to run these operations and maintain good relations with our foreign customers and partners.  International operations involve a number of risks not typically present in domestic operations, including:

Our international operations are also subject to the risks associated with the imposition of legislation and regulations relating to the import or export of high technology products.  We cannot predict whether tariffs or restrictions upon the importation or exportation of our products will be implemented by the United States or other countries.

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If Our Production and Laboratory Facilities are Damaged, We Could Experience Lost Revenue and Our Business Would Be Seriously Harmed

Our only production facility is located in San Diego, California.  During 2001 we had laboratories located in California, Massachusetts, Germany, Sweden, the United Kingdom and Canada.  Damage to our facilities due to fire, natural disaster, power loss, communications failure, terrorism, unauthorized entry or other events could prevent us from conducting our business for an indefinite period, could result in a loss of important data or cause us to cease development and production of our products.  We have limited insurance to protect against business interruption; however, there can be no assurance this insurance will be adequate or will continue to be available to us on commercially reasonable terms, or at all.

Our Stock Price Has Been and May Continue to Be Volatile and Your Investment Could Suffer a Decline in Value

The trading price of our common stock has been volatile and could be subject to wide fluctuations in price in response to various factors, many of which are beyond our control, including:

The stock market in general, and the Nasdaq National Market and the market for life sciences companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the listed companies.  Further, there has been particular volatility in the market prices of securities of biotechnology and pharmaceutical companies.  These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.  In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against that company as is the present case today.  Such litigation could result in substantial costs and a diversion of management’s attention and resources, which could seriously harm our business, financial condition and results of operation.

We Have Adopted Anti-takeover Provisions Which May Limit the Ability of Another Party to Acquire Us, and Which Could Cause Our Stock Price to Decline

Various provisions of our certificate of incorporation, bylaws, stockholder rights plan and Delaware law may discourage or prevent a third party from acquiring us, even if doing so might be beneficial to our stockholders.  These provisions provide for, among other things, a classified board of directors, by which approximately one third of the directors are elected each year, advance notice requirements for proposals that can be acted upon at stockholder meetings and limitations on who may call stockholder meetings.  Additionally, in October 2001, we adopted a Stockholder Rights Plan.  Pursuant to our stockholders rights plan, each share of our outstanding

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common stock has an associated preferred share purchase right.  The rights will not trade separately from our common stock until, and are exercisable only upon, the acquisition or potential acquisition by a person or group of, or the tender offer for, fifteen percent or more of our common stock.  As a result of these provisions, we could delay, deter or prevent a takeover attempt or third party acquisition that our stockholders consider to be in their best interests, including a takeover attempt that results in a premium over the market price for the shares held by our stockholders.  Additionally, our board of directors, without further approval of the stockholders, is authorized to issue “blank check” preferred stock and to fix the dividend rights and terms, conversion rights, voting rights, redemption rights and terms, liquidation preferences and any other rights, preferences, privileges and restrictions applicable to this preferred stock.  The issuance of preferred stock could adversely affect the voting power of the holders of our common stock, also make it more difficult for a third party to gain control of us, discourage bids for our common stock at a premium or otherwise adversely affect the market price of our common stock.

Responding to Claims Relating to Improper Handling, Storage or Disposal of Hazardous Chemicals and Radioactive and Biological Materials Which We Use, Could Be Time Consuming and Costly

We use controlled hazardous and radioactive materials in the conduct of our business.  The risk of accidental contamination or injury from these materials cannot be completely eliminated.  If an accident with these substances occurs, we could be liable for any damages that result, which could seriously harm our business.  Additionally, an accident could damage our research and manufacturing facilities and operations, resulting in delays and increased costs.  Such damage and any expense resulting from delays, disruptions or any claims may not be covered by our insurance policies.

We Are Highly Dependent on Our Board of Directors and Principal Members of Our Management and Scientific Staff, the Loss of Whom Would Impair Our Ability to Compete

The loss of the services of any of these persons could delay or reduce our product development and commercialization efforts.  We may not be able to attract and retain qualified personnel at the Board of Directors level or any management level, which could seriously harm our business, financial condition and results of operations.

We May Not Have Adequate Insurance and If We Become Subject to Product Liability or Other Claims, We May Experience Reduced Demand for Our Products and Services or Be Required to Pay Damages that Exceed Our Insurance Limitations or For Which Insurance Coverage Does Not Exist

Our business exposes us to potential product liability and other types of claims.  Any claim in excess of our insurance coverage would have to be paid out of our cash reserves, which would have a detrimental effect on our financial condition.  It is difficult to determine whether we have obtained sufficient insurance to cover potential claims.  Also, we cannot assure you that we can or will maintain our insurance policies on commercially acceptable terms, or at all.

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Power Shortages Caused by the California Energy Crisis Could Materially Interrupt Our Operations

Some locations in California have experienced sporadic periods of electricity outages in the past.  This condition may arise in the future especially during periods of peak energy consumption.  An interruption in power supplied to our facilities could disrupt the performance of our computer systems and could adversely affect our ability to store and use genetic data, identify the specific function of genes and affect our ability to conduct normal operations.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Short-Term Investments

The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive from our investments without significantly increasing risk. Some of the securities that we invest in may have market risk. This means that a change in prevailing interest rates may cause the fair value of the principal amount of the investment to fluctuate. For example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the prevailing interest rate later rises, the fair value of the principal amount of our investment will probably decline. To minimize this risk in the future, we intend to maintain our portfolio of cash equivalents and short-term investments in a variety of securities, including commercial paper, money market funds, government and non-government debt securities. The average duration of all of our investments has generally been less than one year. Due to the short-term nature of these investments, we believe we have no material exposure to interest rate risk arising from our investments. Therefore, no quantitative tabular disclosure is provided.

Foreign currency rate fluctuations

We have foreign subsidiaries whose functional currencies are the Great British Pound (“GBP”), the Euro (“EUR”), the Swedish Krona (“SEK”) and the Canadian dollar (“CAN”). The subsidiaries accounts are translated from the relevant functional currency to the US dollar using the current exchange rate in effect at the balance sheet date, for balance sheet accounts, and using the average exchange rate during the period for revenues and expense accounts. The effects of translation are recorded as a separate component of stockholders’ equity. Our subsidiaries conduct their business with customers in local currencies. Exchange gains and losses arising from these transactions are recorded using the actual exchange differences on the date of the transaction. We have not taken any action to reduce our exposure to changes in foreign currency exchange rates, such as options or futures contracts, with respect to transactions with our subsidiaries or transactions with our customers where the invoicing currency is not the US dollar. We have significant exposure to exchange rate effects following our September 2001 acquisition of Gemini Genomics as substantially all of Gemini’s cash is denominated in U.S. dollars, leading to potential exchange gain and losses if the GBP and US dollar exchange rate changes significantly. A strengthening of the British pound against the US dollar could result in a material increase in our comprehensive losses for any given financial period. We have made net comprehensive foreign currency gains in the six months ended June 30, 2002, but you should not view this gain as an indicator of future financial performance in this area. Based on our monetary assets and liabilities that are not denominated in the functional currency used by us or our subsidiary or affiliate having the asset or liability at June 30, 2002, a movement of 1% in the US dollar to Great British pound exchange rate would create an unrealized gain or loss of approximately $210,000.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In November, 2001, we and certain of our current or former officers and directors were named as defendants in a class action shareholder complaint filed by Collegeware USA in the United States District Court for the Southern District of New York. Similar complaints were filed in the same Court against hundreds of other public companies that conducted initial public offerings, or IPOs, of their common stock in the late 1990s and early 2000 (the “In re IPO Securities Litigation”). In the complaint, the plaintiff alleges that the Company, certain of its officers and directors, and its IPO underwriters violated the federal securities laws because the Company’s IPO registration statement and prospectus contained untrue statements of material fact or omitted material facts regarding the compensation to be received by, and the stock allocation practices of, the IPO underwriters.  The plaintiff seeks unspecified monetary damages and other relief.  In April 2002, the plaintiffs filed an amended complaint against the Company and some of our officers and directors. The Company has not been required to answer or respond to either complaint, and no discovery has been served on the Company.  In July 2002, the issuers, directors and officers named as defendants in the In re IPO Securities Litigation cases (including the Company and some of our officers and directors) filed a motion to dismiss all such cases for failure to state a claim against the issuers, directors or officers. We deny all material allegations and intend to defend the action vigorously.

Item 2.  Changes in Securities and Use of Proceeds

On January 31, 2000, our Form S-1 registration statement (File No. 333-91665) was declared effective by the Securities and Exchange Commission.  The registration statement, as amended, covered the offering of 5,250,000 shares of common stock.  The offering commenced on January 31, 2000 and the sale to the public of shares of common stock at $26.00 per share was completed on February 3, 2000 for an aggregate price of approximately $136.5 million.  The registration statement covered an additional 787,500 shares of common stock that the underwriters had the option to purchase solely to cover over-allotments.  These shares were purchased on February 2, 2000 at $26.00 per share for an aggregate price of approximately $20.5 million.  The managing underwriters for the offering were Warburg Dillon Read LLC, FleetBoston Robertson Stephens Inc. and SG Cowen Securities Corporation.  Expenses incurred in connection with the issuance and distribution of common stock in the offering included underwriting discounts, commissions and allowances of approximately $11.0 million and other expenses of approximately $1.9 million, results in net offering proceeds to us of approximately $144.1 million.  No payments or expenses were paid to our directors, officers or affiliates or 10% owners of any class of our equity securities. Of the net offering proceeds, through June 30, 2002, approximately $5.8 million has been used to payoff long-term and other debt, approximately $28.1 million to purchase equipment or make leasehold improvements, approximately $11.9 million related to our acquisition of Gemini Genomics, and approximately $78.2 million for general corporate purposes, including hiring additional personnel, expansion of facilities, development and manufacturing of products, and expenses for filing and prosecuting patent

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applications.  The balance is invested in a variety of interest-bearing instruments including investment-grade corporate bonds, commercial paper and money market accounts.

Item 4.  Submission of Matters to a Vote of Security Holders

     SEQUENOM held its Annual Meeting of Stockholders on May 31, 2002. Out of 37,505,134 shares of common stock entitled to vote at such Annual Meeting, there were present in person or represented by proxy 28,593,796 shares. At the Annual Meeting, the stockholders of SEQUENOM approved the following matters:

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits

No exhibits were filed during the quarter ended June 30, 2002.

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the quarter ended June 30, 2002.

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SIGNATURE

               Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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CERTIFICATION

             Pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. § 1350, as adopted), Antonius Schuh, Chief Executive Officer of the registrant, hereby certifies that, to the best of his knowledge:

CERTIFICATION

             Pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. § 1350, as adopted), Stephen L. Zaniboni, Chief Financial Officer of the registrant, hereby certifies that, to the best of his knowledge:

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