improving healthcare through revolutionary ... - annual report · about sequenom, inc. sequenom,...

2009 Summary Annual Report

Improving healthcare through revolutionary genetic analysis solutions

About Sequenom, Inc.

Sequenom, Inc. (NASDAQ: SQNM) is a life sciences company committed to improving healthcare through revolutionary genetic analysis solutions. Sequenom develops innovative technology, products and diagnostic tests that target and serve discovery & clinical research, and molecular diagnostics markets. The company was founded in 1994 and is headquartered in San Diego, California. Sequenom maintains a Web site at http://www.sequenom.com to which Sequenom regularly posts copies of its press releases as well as additional information about Sequenom. Interested persons can subscribe on the Sequenom Web site to email alerts or RSS feeds that are sent automatically when Sequenom issues press releases, files its reports with the Securities and Exchange Commission or posts certain other information to the Web site.

About Sequenom Center for Molecular Medicine

Sequenom Center for Molecular Medicine® (Sequenom CMM), a CAP accredited and CLIA-certified molecular diagnostics laboratory, is developing a full range of advanced prenatal diagnostics. Branded under the name SensiGene™, these genetic tests provide earlier patient management alternatives for obstetricians, geneticists and maternal fetal medicine specialists. Sequenom CMM is changing the landscape in genetic disorder diagnostics using proprietary cutting edge technologies. Visit http://www.scmmlab.com for more information on laboratory services.

In 2009 Sequenom opened the year at a euphoric high

and in late April experienced the depths of despair as

an organization. By the fall the Sequenom team had

regrouped and was focused on our strengths and long

term goals. By the end of the year I believe that the team

was functioning smoothly and on the path to recovery

from the setback surrounding our noninvasive Down

syndrome test. I believe the actions that the company

and board took in September 2009 have positioned the

company to become an important player in the life science

tools and molecular diagnostics markets.

We now have a new senior management team in place at

Sequenom and I am delighted that the board asked me to

serve as chief executive officer. The addition of Paul Maier,

as interim chief financial officer and Ron Lindsay as interim

head of research and development, strengthened the

existing impressive and dedicated team of professionals.

Additionally, we elected two new independent directors

to our board, Dr. Kenneth Buechler and David Pendarvis.

The addition of Drs. Yves Ville and Wolfgang Holzgreve to

our clinical advisory board further enhances our domain

expertise in prenatal diagnostics.

When I stepped into my new role as CEO, dealing with the

aftermath of the April 2009 announcement was one of my

main priorities and I believe that we have made significant

progress in resolving these issues.

We secured an extension of the exclusive rights to the

’540 patent licensed from Isis Innovation. This patent

covers the detection of fetal nucleic acids in maternal

serum or plasma and is the foundation of our prenatal

diagnostics franchise. We also reinforced our relationships

with expert in the field and the inventor of the ‘540 patent,

Dr. Dennis Lo, and the Chinese University of Hong Kong.

In December, we settled a dispute with former

shareholders of SensiGen, a company that we acquired

in early 2009. Later that same month, we reached

agreement with the lead plaintiff in the consolidated federal

securities class action lawsuit and obtained preliminary

approval of the Federal District Court in January. At this

time we are awaiting final court approval of this case.

In September 2009 the Sequenom Center for Molecular

Medicine, our CLIA-certified laboratory in Grand Rapids,

Michigan, reached a critical milestone. We launched

our first laboratory developed test (LDT), the SensiGene

Cystic Fibrosis Carrier Screening test. This innovative test

screens for 103 mutations and five variants, including the

23 mutations recommended by the American College of

Medical Genetics (ACMG).

Strategic Focus

While we were addressing these other matters in late

2009 we conducted a strategic review of our business

going forward into 2010 and beyond. As we reviewed

our existing research and development programs and

potential new opportunities it became apparent that we

had been devoting efforts to more programs than we could

successfully execute.

Therefore we decided to focus on research and

development funding a smaller number of priority projects

that include our Down syndrome test and a diagnostic

for assessing the progression risk of age-related macular

degeneration (AMD). The most promising of the unfunded

programs were identified for future funding or for possible

partnering with third parties. We have already initiated

exploratory partnering discussions for some of these

programs.

Dear Sequenom Shareholder,

We plan to invest heavily in molecular diagnostics and to

continue to grow our genetic analysis business. Our Down

syndrome test program will remain our largest single

investment in 2010. The company remains committed to

completing the development, validation and launch of a

noninvasive Down syndrome test.

Recent Developments

A recent development that illustrates our diagnostic strategy is our license agreement with Optherion, under which we were granted an exclusive, worldwide license to know-how and a consolidated portfolio of issued and pending patent rights relating to AMD diagnostics. The license agreement covers extensive intellectual property rights for significant AMD related genetic variants. The AMD molecular diagnostic market represents a significant opportunity for Sequenom as there are approximately nine million people in the US who suffer from dry AMD, an early form of AMD that may lead to blindness. The ability to diagnose risk of progression in this debilitating disease could be an important tool for retinal specialists. We plan to launch a LDT for AMD in the first half of 2011.

The launches of the SensiGene Fetal RHD Genotyping and Fetal Sex Determination tests in February 2010 are clear indicators that the science of detecting circulating cell free fetal nucleic acids can be developed into commercially viable tests.

In order to satisfy the anticipated demand for all of the LDTs that we are developing, we are evaluating plans for additional CLIA-certified laboratory sites. We anticipate that a San Diego laboratory will be operational early in the fourth quarter of 2010.

The launches of the SensiGene Fetal RHD Genotyping and

Fetal Sex Determination tests in February 2010 are clear

indicators that the science of detecting circulating cell free fetal

nucleic acids can be developed into commercially viable tests.

In order to satisfy the anticipated demand for all of the

LDTs that we are developing, we are evaluating plans for

additional CLIA-certified laboratory sites. We anticipate that

a San Diego laboratory will be operational early in the fourth

quarter of 2010.

Building on our Strengths

We are entering a critical time for our company. The synergies between our Genetic Analysis and Molecular Diagnostics businesses have never been greater. With the recent launch of our MassARRAY Analyzer 4, which was developed under design control, we believe a pathway exists for FDA approval of our system. The MassARRAY Analyzer 4 should enable the basic and translational research communities to advance findings from basic genetic and biomarker studies towards clinical utility in diagnosis, prognosis and monitoring of diseases. Sequenom will monitor progress in these areas to identify new molecular diagnostic opportunities.

Despite facing a combination of macro-economic, external and internal challenges during the past year, I am excited about the opportunity we have to positively impact human health care and build value for our stockholders.

As always, from all of us at Sequenom, we thank you for your continued encouragement and support.

Harry F. Hixson, Jr. Ph.DChairman and CEOApril 28, 2010

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934(Mark One)È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009OR

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

For the transition period from to .Commission File Number: 000-29101

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

DELAWARE 77-0365889(State or other jurisdiction

or incorporation or organization)(I.R.S. Employer

Identification No.)3595 John Hopkins Court

San Diego, California 92121(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (858) 202-9000Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $.001 par value(Title of class)

The NASDAQ Stock Market, LLC(Name of Each Exchange on Which Registered)

Securities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ‘ No È

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive DataFile required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or forsuch shorter period that the registrant was required to submit and post such files). Yes ‘ No ‘

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 ExchangeAct 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 subjectto such filing requirements for the past 90 days. Yes È No ‘

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not becontained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K. È

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ‘ Accelerated filer È Non-accelerated filer ‘ Smaller reporting company filer ‘

(Do not check if a smallerreporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È

The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of the Common Stockon June 30, 2009 as reported on The NASDAQ Global Market, was approximately $236.7 million. Shares of Common Stock held by eachexecutive officer and director and by each person who owns 10% or more of the outstanding Common Stock have been excluded in that suchpersons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of February 12, 2010, there were 62,096,371 shares of the registrant’s Common Stock outstanding.DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates by reference information from the registrant’s definitive proxy statement to be filed with the Securities and ExchangeCommission (the Commission) in connection with the solicitation of proxies for the registrant’s annual meeting of stockholders to be held onJune 14, 2010. Such definitive proxy statement will be filed with the Commission no later than 120 days after December 31, 2009.

SEQUENOM, Inc.FORM 10-K

For the Fiscal Year Ended December 31, 2009Index

Page

PART I

ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ITEM 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ITEM 1B. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

ITEM 4. (REMOVED AND RESERVED) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERMATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . 41

ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . 58

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . 60

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTINGAND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

ITEM 9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

ITEM 9B. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . . . . . . . 65

ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTORINDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . 67

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

i

PART I

Item 1. BUSINESS

All statements in this report that are not historical are forward-looking statements within the meaning ofSection 21E of the Securities Exchange Act. These forward-looking statements can generally be identified assuch because the context of the statement will include words such as “may,” “will,” “intend,” “plans,” “believes,”“anticipates,” “expects,” “estimates,” “predicts,” “potential,” “continue,” “opportunity,” “goals,” or “should,” thenegative of these words or words of similar import. Similarly, statements that describe our future plans,strategies, intentions, expectations, objectives, goals or prospects are also forward-looking statements. Theseforward-looking statements are or will be, as applicable, based largely on our expectations and projections aboutfuture events and future trends affecting our business, and so are or will be, as applicable, subject to risks anduncertainties including but not limited to the risk factors discussed in this report, that could cause actual results todiffer materially from those anticipated in the forward-looking statements. We caution investors that there can beno assurance that actual results or business conditions will not differ materially from those projected or suggestedin such forward-looking statements. Our views and the events, conditions and circumstances on which thesefuture forward-looking statements are based, may change. All forward statements are qualified in their entiretyby this cautionary statement and we undertake no obligation to revise or update any such statements to reflectevents or circumstances after the date hereof.

SEQUENOM®, SpectroCHIP®, iPLEX®, and MassARRAY® are registered trademarks and EpiTYPER™,SEQureDx™, MassCLEAVE™, iSEQ™, AttoSense™ and SensiGene™ are trademarks of Sequenom, Inc. Thisreport may also refer to trade names and trademarks of other organizations.

Sequenom, Inc. was incorporated in 1994 under the laws of the State of Delaware. As used in this report, thewords “we,” “us,” “our,” and “Sequenom” refer to Sequenom, Inc. and its wholly-owned subsidiaries on aconsolidated basis, unless explicitly noted otherwise.

Overview

We are a molecular diagnostic testing and genetics analysis company committed to providing products,services, diagnostic testing, applications and genetic analysis products that translate the results of genomicscience into solutions for biomedical research, translational research, molecular medicine applications, andagricultural, livestock, and other areas of research. Our development and commercialization efforts in variousdiagnostic areas include noninvasive women’s health related and prenatal diagnostics, age-related maculardegeneration diagnostics, oncology, infectious diseases, and other disorders and diseases.

1

Operating Segments

We operate our business on the basis of two reportable segments, Molecular Diagnostics and GeneticAnalysis. A further description of the operations of these segments is below. The following table sets forth as ofDecember 31, 2009, revenues, research and development expenses, sales and marketing expenses and operating(loss) income for our Molecular Diagnostic and Genetic Analysis segments:

(In thousands)Revenues:

Molecular Diagnostics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94Genetic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,769

$ 37,863

Research and development expenses:Molecular Diagnostics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,935Genetic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,587Unallocated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,932

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,454

Sales and marketing expenses:Molecular Diagnostics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,780Genetic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,644Unallocated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,421

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,845

Operating (loss) income:Molecular Diagnostics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(27,033)Genetic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,379Unallocated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48,068)

$(70,722)

(1) Management evaluates research and development expenses and sales and marketing expenses exclusive ofshare based compensation, indirect overhead expenses and allocated and absorbed costs and operating (loss)income is evaluated by management exclusive of general and administrative expenses, share basedcompensation, indirect overhead expenses and allocated and absorbed costs, as these costs are not allocatedto our business segments for performance assessment by our chief operating decision maker.

We do not discretely allocate assets to our operating segments, nor does our chief operating decision makerevaluate operating segments using discrete asset information.

Molecular Diagnostics and SEQureDx™ Technology

Molecular Diagnostics

We are committed to researching, developing and pursuing the commercialization of various noninvasivemolecular diagnostic tests for prenatal genetic disorders and diseases, women’s health related disorders anddiseases, age-related macular degeneration diagnostics, oncology, infectious diseases, and other diseases anddisorders. We have branded our diagnostic technology for prenatal diagnostics under the trademark SEQureDx.Our efforts in molecular diagnostics are focused on noninvasive diagnostics currently using our proprietaryMassARRAY system; however, we may in the future employ other instrumentation platforms with our diagnosticapplications as may be more suitable on a case-by-case basis considering optimum test performance andcommercialization factors.

Currently, we are primarily focused on developing and commercializing prenatal screening and diagnostictests using our foundational, patent protected, noninvasive, circulating cell-free fetal (ccff) nucleic acid basedassay technology. This technology uses a simple maternal blood draw (meaning noninvasive compared toinvasive procedures such as amniocentesis, chorionic villus sampling, or surgery) for a prenatal diagnosis or risk

2

assessment in order to provide reliable information about the status of the fetus early in pregnancy. In early 2010we launched noninvasive Rhesus D genotyping and Fetalxy sex determination laboratory developed tests (LDTs)using this patented ccff technology which we in-license from Isis Innovation Limited (Isis). We also launched, inSeptember 2009, a noninvasive molecular based cystic fibrosis carrier screening LDT. These tests have all beenlaunched through our College of American Pathology (CAP) accredited and Clinical Laboratory ImprovementAmendments (CLIA) certified laboratory, Sequenom Center for Molecular Medicine, LLC, (Sequenom CMM)located in Grand Rapids, Michigan. Most molecular genetic tests are LDTs. We have made substantialinvestments in our information technology infrastructure to enhance the capabilities of our laboratory to tracksamples and provide electronic ordering and reporting, and have put in place sample collection and transportationlogistics that can be readily scaled. We have also expanded our molecular diagnostic sales force and ourmarketing efforts. We are entering into contracts with third party payors to establish pricing for our tests andprovide reimbursement. We also plan to conduct the development, validation, and other activities necessary tofile submissions with the Food and Drug Administration (FDA) seeking approval for selected diagnostic tests.Revenues from our cystic fibrosis test were not significant from September through the end of 2009.

We are in the process of researching and evaluating a potential LDT for Trisomy 21 (Down syndrome), anda potential LDT for age-related macular degeneration (a highly prevalent, late onset, genetically linked visiondisorder that is a common cause of legal blindness in the elderly). The tests we are researching and evaluating areall expected to use simple blood draws from patients rather than more invasive procedures. In April 2009, weannounced that the expected launch of our Trisomy 21 test had been delayed. We are no longer relying on ourpreviously announced research and development test data and results as the basis for launching a Trisomy 21 test.Our current research and development efforts are focused on DNA based approaches using our MassARRAYplatform and next-generation whole genome sequencing platforms, for use in connection with a potentialTrisomy 21 test. Our goal is to design a test that has better specificity and sensitivity than currently availablescreening tests, that could be utilized during first and second trimesters of pregnancy, has maximum ethniccoverage of the global population and is a genetic test, not a surrogate marker. There is no guarantee that we willbe able to achieve any or all of these goals. We are continuing to collect clinical samples for sponsored clinicalstudies through independent third parties, the results of which will be published in a peer-reviewed journal.

Supporting our initiatives in women’s health, oncology and infectious disease we completed our acquisitionof the complete AttoSense portfolio of gene-based molecular tests and related assets from SensiGen, LLC inFebruary 2009. The acquisition included highly-sensitive and specific tests for the detection and monitoring ofhuman papillomavirus (HPV) (the primary cause of cervical and head and neck cancers), systemic lupuserythematosus (Lupus), chronic kidney disease (CKD), and other tests, all of which utilize our proprietaryMassARRAY platform. These tests will require further development and have not been commercialized.

We are also in the process of researching and evaluating a potential LDT for age-related maculardegeneration. Supporting this initiative, in February 2010, we entered into a license agreement with Optherion,Inc. (“Optherion”), under which we were granted an exclusive, worldwide, royalty-bearing license to know-howand a consolidated portfolio of patent rights that had been licensed to Optherion by a number of prominentacademic institutions, for research and commercial use, including LDTs or in vitro diagnostic tests, inconjunction with various types of technology platforms. The licensed patent portfolio includes 17 issued orallowed United States and foreign patents, and 68 pending United States and foreign patent applications. Thelicense agreement covers extensive intellectual property rights for significant age-related macular degenerationrelated genetic variants. Under the agreement we agreed to conduct developmental activities with respect to thelicensed technology for use with therapeutic products being developed by Optherion, and we also agreed to usecommercially reasonable efforts to develop and commercialize licensed products and to achieve certaincommercial milestones.

Under the terms of the agreement, in the event that the first commercial sale of a licensed product in the UnitedStates has not occurred on or before January 31, 2011, we will pay Optherion a non-creditable license maintenancefee equal to $260,000 per year. The license maintenance fee will be pro-rated for any period less than a full yearbefore the first commercial sale of a licensed product in the United States. Following the first commercial sale of a

3

licensed product in the United States, we will no longer be required to pay the license maintenance fee, but insteadwe will pay Optherion a minimum royalty payment each year during the term of the agreement ranging between$260,000 and $270,000 per year and such minimum payment shall be creditable against any royalties due basedupon licensed product sales. We have also agreed to make payments to Optherion upon the achievement ofspecified development, regulatory and commercial milestones, and during the life of the patent claims licensedunder the agreement, royalties on the cumulative worldwide annual net sales of products successfully developedand commercialized covered by the patent claims and know-how licensed under the agreement. We also agreed,upon entry into the agreement, to reimburse Optherion for its prior patent related costs and expenses in the amountof approximately $1.1 million. The agreement will remain in force in each country until the expiration of ourobligation to make royalty payments in such country, subject to earlier termination by either party upon uncuredmaterial breach or other specified circumstances. Optherion may terminate the agreement if we challenge thevalidity of any patent covered by the licensed technology, if we abandon or suspend our research, development,marketing or commercialization of the licensed products, or if we fail to comply with certain insurancerequirements set forth in the agreement. We may terminate the agreement for any reason upon 90 days prior writtennotice, provided that if such notice of termination is delivered prior to the first anniversary of the effective date ofthe agreement, we shall be required to pay Optherion a non-creditable termination fee of $2,000,000. In the eventthat the agreement expires pursuant to its terms, we will retain the licenses and sublicenses granted under theagreement as fully paid and royalty free, subject to certain specified limitations.

Prenatal Diagnostics Licenses

We have exclusively in-licensed patent rights (U.S. Patent No. 6,250,540 and its foreign equivalents) to usecell-free fetal nucleic acids for diagnostic testing of serum and plasma samples obtained from pregnant womenfrom Isis. Our exclusive license rights, which are platform independent and not limited to mass spectrometry,cover the general diagnostic use of cell-free fetal nucleic acids derived from maternal plasma or serum interritories including the United States, Europe, Australia, Canada, Hong Kong and Japan as well as non-exclusiverights in China.

In October 2005, and as amended thereafter, we entered into the agreement with Isis (the Isis Agreement),pursuant to which Isis granted us an exclusive royalty-bearing license in the United States, Canada, France,Germany, Great Britain and other countries in Europe, to develop, use and market products covered by the patentclaims of U.S. Patent No. 6,250,540 and its foreign equivalents, licensed under the Isis Agreement (the LicensedProducts), except for the field of Rhesus D blood typing by RT-PCR amplification platforms in Europe. Thelicensed technology, including improvements made by the inventors prior to the Isis Agreement, coversnoninvasive prenatal genetic diagnostic testing on fetal nucleic acids.

In October 2006 we entered into an amendment to the Isis Agreement pursuant to which, in exchange for anupfront payment by us and entitlement to milestone and royalty payments, Isis granted us an expanded exclusivelicense including the field of prenatal gender determination for social or lifestyle purposes and an expanded territoryfor the field of gender determination for social or lifestyle purposes including Japan and Australia. In November2007, we entered into a second amendment to the Isis Agreement pursuant to which, in exchange for an upfrontpayment by us, a right to a milestone fee upon completion of a specified event, and royalty payments on sales, Isisgranted us an expanded licensed territory to include Japan, Australia, and Hong Kong, excluding in the case ofHong Kong the field of gender determination for social or lifestyle purposes. In November 2009, we entered into athird amendment to the Isis Agreement pursuant to which Isis agreed to a modification of certain time-basedcommercial launch milestones relating to aneuploidy and other Licensed Products. In exchange for thismodification, we agreed to make an immediate one-time payment of $1,000,000, increase royalty payments underthe agreement during the final 12 months of the patent term and increase the specified minimum royalty amounts.

We also have an exclusive option to negotiate a further license of any improvements made by Isis inventors.Subject to the license rights granted under the Isis Agreement, intellectual property rights created in connectionwith improvements made to the licensed technology will belong to the party developing the improvements. Wealso granted to Isis a perpetual royalty-free license to the University of Oxford to use and publish material

4

relating to the licensed technology and any of our improvements solely for non-commercial use. The Universityof Oxford’s right to publish is subject to our right to delay publication of information to protect the licensedtechnology or our improvements.

We have agreed to make up-front payments to Isis and pay to Isis royalties on net sales of LicensedProducts, including specified minimum royalty amounts, and milestone payments upon commercial events withrespect to Licensed Products for particular indications.

The Isis Agreement will remain in force for the life of any patent issued in connection with the patentapplication covering the licensed technology, subject to earlier termination by either party upon uncured materialbreach or other specified circumstances. Isis may terminate the Isis Agreement if we file a petition to wind-up ordissolve or upon 30 days written notice if we were to challenge the validity of the patent rights covering thelicensed technology or fail to make the up-front payments as provided in the Isis Agreement. After the thirdanniversary of the Isis Agreement, we may terminate the Isis Agreement for any reason with six months advancewritten notice. In the event we fail to achieve certain milestone requirements with respect to particularindications, Isis may convert the exclusive license into a non-exclusive license with respect to those indications.

We have also exclusively in-licensed numerous patent rights from the Chinese University of Hong Kong,and Xenomics Inc. (renamed TrovaGene, Inc.), covering the general use, on any technology platform, of fetalnucleic acids derived from maternal plasma, serum, urine, and in some cases whole blood, for noninvasiveprenatal genetic diagnostic testing, including genetic, expression-based, sequencing-based and epigenetic-basedassays and tests.

Our license agreement with Xenomics, Inc. provides us with exclusively licensed patent rights (includingUnited States Patent Nos. 6,251,638; and RE 39,920) for the use of fetal nucleic acids obtained from maternalurine. The license provides us with the exclusive global right to use transrenal fetal DNA in maternal urine fornoninvasive prenatal diagnostics and analysis on a technology-independent basis for all uses, excluding thelimited field of fetal gender determination solely by the presence of Y chromosome. This intellectual property forurine-based tests provides us with additional options for test development and commercialization. We havecollected and continue to collect urine samples for purposes of developing urine-based tests and we have initiatedexploratory experiments. The licensed intellectual property includes issued patents in the United States andEurope and is part of our continuing strategy to expand and protect our SEQureDx franchise through theidentification and licensing of new technologies and sampling methodologies. As described under Item 3 of thisreport, we are currently engaged in litigation with Xenomics regarding our rights under the license agreement.

We also hold exclusive rights to issued patents and pending patent applications providing fundamentalpatent rights for digital PCR technologies and methods through a licensing agreement with GenomicNanosystems, LLC, a wholly-owned subsidiary of the Cytonix Corporation. The issued patents are United StatesPatent Nos. 6,143,496; 6,391,559; and 7,459,315 and will expire in 2017. The license provides us with theexclusive right to use patented and patent pending digital PCR methods on any platform for noninvasive prenataldiagnostics and analysis for any sample (for example, fetal cells, amniocentesis fluids, plasma, urine, etc.). Wealso secured the exclusive right to use digital PCR methods in conjunction with mass spectrometry for anycommercial, diagnostic or research purpose, excluding second generation sequencing.

In January 2007, as part of our platform independent commercialization strategy, we announced our firstcommercial partnership with Lenetix Medical Screening Laboratory, Inc., on a non-exclusive basis, who hasdeveloped a CLIA validated test for Rhesus D blood incompatibility using real time polymerase chain reactionRT-PCR (the Lenetix Agreement). In December 2007, Lenetix received New York State approval of anoninvasive prenatal LDT performed on a real-time PCR (RT-PCR) platform to detect fetal Rhesus D status(including male sex determination as an internal control) in the second trimester of pregnancy, based on ourtechnology licensed and the work performed under the Lenetix Agreement. Commercial sales of the test byLenetix commenced in January 2008. We have not and do not expect to derive significant revenues from theLenetix Agreement in the future.

5

Molecular Diagnostics Market

The United States molecular diagnostics testing market represents one of the fastest growing areas of the$51.7 billion clinical laboratory industry in the United States. Within this market, the molecular diagnosticsmarket segment is estimated to be $4 billion growing at a rate of approximately 17% per year.

The total available markets for our currently marketed and planned molecular diagnostics tests are as follows:

• Each year in the U.S. there are approximately 528,000 Rhesus D negative women who are pregnant andcould benefit from an assessment of the RhD status of their fetus. We estimate the total dollar size of theU.S. market to be approximately $250 million per year.

• Our Fetalxy test is a physician-ordered/patient pay test. Based on our market research we believe themarket opportunity for our test to be approximately $50 million.

• There are a number of tests available for cystic fibrosis carrier screening. In the U.S. about 1.1 milliontests are performed annually and the average cost of these tests is between $200 and $400 per test. Thetotal available market in the U.S. is estimated to be approximately $300 million.

• We estimate the total available market for a noninvasive Trisomy 21 screening test to be approximately$1.5 billion in the U.S. down syndrome affects about 1 in every 800 pregnancies.

• Age-related Macular Degeneration (AMD) affects 15-20 million people in the U.S., over 2.5 millionpeople in Canada, and more than 50 million people worldwide. In North America there are 2 millionpeople with vision loss and more than 600,000 people that are legally blind due to the disease. Theworldwide incidence of the disease increases from 1 in 10 people over the age of 60 to more than 1 in 4people over the age of 75. According to the AMD Alliance, macular degeneration is more common thanParkinson’s disease, Alzheimer’s disease, breast cancer and prostate cancer combined.

Genetic Analysis

Our proprietary MassARRAY system, comprised of hardware, software applications, consumable chips andreagents, is a high performance (in speed, accuracy and cost efficiency) nucleic acid analysis platform thatquantitatively and precisely measures genetic target material and variations. Our platform is widely accepted as aleading high-performance DNA analysis platform for the fine mapping genotyping market and continues to gaintraction for newer applications, such as agricultural-biotechnology and clinical research. Our customers includepremier clinical research laboratories, bio-agriculture, bio-technology and pharmaceutical companies, academicinstitutions, and various government agencies worldwide. To provide customer support for our expanding userbase and in an effort to maximize market penetration, we have established direct sales and support personnelserving North America, Europe and Asia, in addition to distribution partners in several major countriesthroughout the world.

Our MassARRAY system provides reliable results for a wide range of DNA/RNA analysis applicationsincluding single nucleotide polymorphism (SNP) genotyping detection of mutations, analysis of copy numbervariants and other structural genome variations. In addition, the system provides quantitative gene expressionanalysis, quantitative DNA methylation analysis, comparative sequence analysis of haploid organisms, SNPdiscovery, and oligonucleotide quality control. These applications are provided through proprietary applicationsoftware that operates on the MassARRAY platform and through the purchase of consumable chips and reagentsets. While the MassARRAY system is versatile across many applications, it is a robust and cost-effectivegenotyping solution for fine mapping projects enabled through our iPLEX multiplexing assay, which permitsmultiplexed SNP analysis using approximately the same amount of reagents and chip surface area as is used for asingle locus/SNP analysis.

Our research and development efforts in genetic analysis are committed to producing new and improvedcomponents and applications for the MassARRAY system that deliver greater system versatility and higher dataquality at a competitive price per data point. These research and development activities and new applications alsoserve to facilitate and support our diagnostics initiatives.

6

As a result of weaker demand for our MassARRAY systems resulting from the economic environment inearly 2009, in April 2009 we formally approved and implemented a cost cutting initiative in our genetic analysisbusiness, which resulted in approximately $8.0 million decrease in costs in 2009 and an overall annualizedreduction in costs of approximately $12.1 million. This initiative included a decrease in the genetic analysisworkforce that resulted in a cumulative charge of approximately $1.6 million for the year ended December 31,2009 in connection with one-time termination benefits, office closures and other related costs.

Genetic Analysis Markets

Biomedical Research and Molecular Medicine

MassARRAY systems have been placed in academic, pharmaceutical, and clinical research institutionsacross the global biomedical research market to identify genetic markers with potential clinical utility. Whole-genome population studies are conducted for general research purposes to create SNP maps and to determineallele frequencies in different ethnicities or species. Whole genome association studies and linkage studies areconducted for genetic discovery purposes. In general, these studies are high throughput studies that analyze asmall number of samples against a high number of SNPs. Candidate gene and candidate region associationstudies typically follow whole-genome population genetics studies, whole genome association studies, andlinkage studies. Once target regions are identified and connections to disease are made, these institutions thentypically perform fine mapping genotyping studies, which are conducted in an effort to apply genetics todiseases. Institutions conducting fine mapping genotyping studies use the MassARRAY system to performcandidate gene and candidate region association studies. Candidate gene association studies demonstrate thatunderlying genetic defects reside in specific biological pathways. From there, biomarker discovery efforts canpotentially lead to clinical validation and use.

Oncology and Translational Research

Cancer is fundamentally a genetic disease and although the understanding of the genes, pathways, andsignaling networks has increased exponentially over the past few decades, relatively little of this information hasresulted in significant improvements in cancer mortality rates. The gap between the understanding of cellular andbiological processes as they relate to tumor initiation and progression and improvements in patient survival maybe due to an inability to comprehensively and systematically approach each cancer as an individual disease. Theemerging field of translational medicine is directed at addressing this inability by integrating research inputsfrom the basic sciences and translating the results of clinical trials into changes in clinical practice. Themolecular characterization of tumors is one of the areas of cancer research where science has made great stridesin understanding the genetic changes associated with tumor initiation and progression and where it has lead todemonstrable improvements in patient care. We provide key research tools for translational medical researchtargeted at oncology. These tools allow evaluation of genomic alterations and mutations, which include basesubstitutions that inactivate tumor suppressor genes or cause constitutive activation of proto-oncogenes, largegenomic deletions, large and small intragenic deletions, chromosomal translocations, as well as aberrantpromoter methylation and other epigenetic events.

Clinical Research, Public Health Initiatives, Biodefense

Our iSEQ Comparative Sequencing Analysis application is directed to the clinical research market (with itsfocus on public health issues), healthcare industries, pharmaceutical sectors and homeland defense initiatives. Inthese areas nucleic acid based detection and identification of bacteria and viruses, especially pathogens of publichealth interest, have become reliable alternatives to classical detection methods. DNA based analyses are ofincreasing importance for pathogen typing and antibiotic resistance profiling. A large number of sequencingefforts in the past decade have provided reference sequences for massive parallel comparative sequencing ofindividuals to ascertain variations within populations and to identify informative genomic markers for routineDNA based microbial and viral typing and monitoring. This continuing effort requires accurate, reproducible,high-throughput technologies for large-scale comparative sequencing in extensive archives of microbes. Theautomation, throughput, accuracy, data portability and reproducibility of the MassARRAY iSEQ ComparativeSequence Analysis application serves these needs.

7

Agricultural: Plant Crops and Livestock

There is market demand for genetic testing as it relates to trait selection and feedlot management. There isalso demand for genetic analysis of crops, including maize, rice, and others for potentially growing agriculturalproducts with enhanced traits, such as nutritional quality, disease resistance, and crop yields.

Our MassARRAY platform is widely accepted by livestock-focused service providers in the United Statesand Europe for genotyping, due to its suitability for routine testing of a large number of DNA samples withmodest numbers of SNPs. Beginning with our first MassARRAY system placement with the U.S. Department ofAgriculture in 1999, we have provided genotyping solutions for customers in the livestock industry. We serve thelivestock market through product sales, panel development and optimization. Our competitive advantage in thelivestock market is based upon the capability of the MassARRAY system to perform high-volume routinetesting. While other genetic analysis platform companies have been successful in the whole genome mappingsegment of the market, their platforms are not optimal for routine tests involving tens to hundreds of SNPs.

Strategic Direction

In our molecular diagnostics business we are focusing on developing and commercializing variousnoninvasive diagnostic tests. We plan to develop tests in prenatal care, women’s health and other disease areasincluding, oncology and infectious disease. In addition to our CLIA laboratory’s development of diagnostic testsfor noninvasive prenatal diagnostics, we are pursuing partnering opportunities for the development andadaptation of the MassARRAY system for commercialization of molecular diagnostics in general. For example,in February 2010 we in-licensed age-related macular degeneration patent rights and plan to develop andcommercialize a molecular diagnostic test for this eye disease.

Our genetic analysis business strategy leverages our technology, intellectual property and other assets toexpand deeper into and beyond the fine mapping segment of the genetic analysis market, to more aggressivelytarget pharmaceutical companies and other for-profit institutions, particularly in areas of translational researchand molecular medicine and capitalizing on our potential in molecular diagnostics markets. In our core geneticanalysis business, we are focusing on prioritizing key products that we believe will drive growth and createvalue.

Our strategy includes:

• Investing in our genetic analysis business by developing and commercializing new biomarker panels;

• Launching and marketing a next-generation MassARRAY system, built under design controlspecifications for use in research and diagnostic applications;

• Developing and commercializing noninvasive prenatal diagnostic assays and other proprietary tests forwomen’s health, age-related macular degeneration, oncology, infectious disease, and other areas;

• Expanding our diagnostic offerings through in-licensing, partnering and acquisitions;

• Investing in our CAP accredited and CLIA-certified laboratory, Sequenom CMM, enabling us toefficiently and effectively develop and market our proprietary molecular diagnostic tests.

Intellectual Property

To establish and protect our proprietary technologies and products, we rely on a combination of patent,copyright, trademark and trade secret laws, as well as confidentiality provisions in our contracts.

We have implemented a diligent patent strategy, including in-licensing, designed to facilitate our researchand development and commercialization of current and future products. Our patent portfolio, includingin-licensed patent rights, includes approximately 487 issued or allowed patents and approximately 343 pendingpatent applications, in the United States and other major industrial nations throughout the world.

Our prenatal diagnostic patent portfolio includes numerous in-licensed issued patents and in-licensedpending patent applications. The issued patents include United States Patent Nos. 6,250,540, 6,927,028, and

8

6,664,056, and foreign equivalents for portions of the portfolio that include Canada and Europe. These patents willexpire between 2017 and 2022. Most of the patent applications that are in-licensed are in the early stages of patentprosecution and it is difficult to predict when patents will issue from those applications, if at all. These patents andpatent applications cover methods of analyzing fetally-derived nucleic acids in maternal serum or plasma, methodsof analyzing the methylation status of fetal nucleic acid to differentiate it from maternal nucleic acid, and variousDNA and RNA markers which may be useful in detecting and diagnosing various fetal disorders, such as Downsyndrome or maternal disorders, such as preeclampsia. We in-licensed United States Patent No. 6,250,540 and itsforeign equivalents from ISIS in the United Kingdom. The European counterpart patent to U.S. PatentNo. 6,250,540 is European Patent No. 994963. The 994963 Patent was the subject of an Opposition proceeding inthe European Patent Office (the “EPO”), which was brought against ISIS by Ravgen, Inc. The Oppositionconcluded with the EPO’s decision to affirm the grant of the European 994963 Patent, however, with amendedclaims consistent with the issued claims of its counterpart United States Patent. Ravgen has appealed the EPO’sdecision (Appeal No. T146/07-334) and the appeal remains currently pending before the EPO.

The majority of our issued United States patents pertaining to mass spectrometry-based nucleic acid analysismethods and technology will expire between 2013 and 2017. United States Patent Nos. 6,500,621, 6,300,076,6,258,538, and 5,869,242 and European Patent No. EP 0815261 each claim nucleic acid analysis by massspectrometry methods, including methods that may be performed using our MassARRAY system. Each of thesepatents expires in 2015.

Through our exclusive license agreement with Xenomics, Inc, we hold exclusive rights to patents forprenatal research and diagnostic uses and products using fetal nucleic acids found in maternal urine. The licensedpatent rights include United States Patent Nos. 6,251,638; and RE 39,920, and foreign equivalents in Europe.These patents will expire between 2017 and 2018. The license provides us with exclusive rights to use transrenalfetal nucleic acids in maternal urine for noninvasive prenatal diagnostics and analysis on a platform andtechnology-independent basis for all uses, excluding fetal gender determination solely by the presence of Ychromosome. As described under Item 3 of this report, we are currently engaged in litigation with Xenomicsregarding our rights under the license agreement.

Through our exclusive license agreement with Genomic Nanosystems, LLC, we hold exclusive rights toissued patents and pending patent applications providing fundamental rights for digital PCR technologies andmethods. The issued patents are United States Patent Nos. 6,143,496; 6,391,559; and 7,459,315. These patentswill expire in 2017. The license provides us with the exclusive right to use the technology on any platform fornoninvasive prenatal diagnostics and analysis for any sample (for example, fetal cells, amniocentesis fluids,plasma, urine, etc.) and also in conjunction with mass spectrometry for any commercial, diagnostic or researchpurpose, excluding second generation sequencing.

Our success depends to a significant degree upon our ability to continue to develop proprietary products andtechnologies, to identify and validate useful genetic markers and to thoroughly understand their associations withdisease, and to in-license desirable or necessary intellectual property as appropriate. We intend to continue to filepatent applications as we develop new products and methods for nucleic acid analysis, and as we developdiagnostic and molecular medicine related technology and products. Patents provide some degree of protectionfor our intellectual property. However, the assertion of patent protection involves complex legal and factualdeterminations and is therefore uncertain. The laws governing patentability and the scope of patent coveragecontinue to evolve, particularly in the areas of genetics, molecular biology, and prenatal and moleculardiagnostics that are of interest to us. There can be no assurance that patents will issue from any of our patentapplications. The scope of any of our issued patents including U.S. Patent No. 6,250,540, may not be sufficientlybroad to offer meaningful protection.

Our issued patents may be successfully challenged, invalidated, circumvented or declared unenforceable sothat our patent rights would not create an effective competitive barrier. The laws of some foreign countries may notpermit such assignments or may not protect our proprietary rights to the same extent, as do the laws of the UnitedStates. In view of these factors, our intellectual property positions bear some degree of uncertainty. We also rely inpart on trade secret protection and confidentiality agreements for protection of our intellectual property. We attempt

9

to protect our trade secrets and confidential information by entering into confidentiality agreements with outsideparties and with our employees and consultants. Our employees also sign agreements requiring that they assign tous their intellectual property interests in work performed for us as a part of their employment. The laws of someforeign countries may not permit such assignments or may not protect our proprietary rights to the same extent, asdo the laws of the United States. All employees sign an agreement not to compete unfairly with us during theiremployment and upon termination of their employment, through the misuse of confidential information, solicitingemployees, soliciting customers, and the like. It is possible that these agreements may be breached or invalidatedand if so, there may not be an adequate corrective remedy available. Parties may breach the confidentialityprovisions in our contracts or infringe or misappropriate our patents, copyrights, trademarks, trade secrets,confidential information, and other proprietary rights. Outside parties may independently discover or inventcompeting technologies or reverse engineer our trade secrets or other technology. The measures we are taking toprotect our proprietary rights may not be adequate due to factors beyond our control.

In the future, parties may file claims asserting that our technologies or products infringe on their intellectualproperty. We cannot predict whether parties will assert such claims against us, or whether those claims will harmour business. If we are forced to defend against such claims, we will face costly litigation and diversion ofmanagement’s attention and resources. As a result of such disputes, we may have to develop costlynon-infringing technology or enter into licensing agreements. These agreements, if necessary, may beunavailable on terms acceptable to us, which could seriously harm our business and financial condition.

Competition

We face competition from various companies offering nucleic acid analysis systems and services, fromvarious companies developing and commercializing diagnostic assays, and from various companies researchingand developing prenatal diagnostic technology.

In the molecular diagnostic business, including the noninvasive prenatal diagnostic market, our tests arebased on detection of circulating cell-free fetal nucleic acid in maternal plasma. Our exclusive license to theintellectual property surrounding the use of free fetal nucleic acids in maternal serum or plasma, combined withthe precision and accuracy of our MassARRAY system provide us with a competitive advantage in this space. Inaddition to invasive techniques, our competition arises from alternative methods of noninvasive prenataldiagnostics such as fetal cell purification from maternal blood and trophoblast purification from cervical swabs,fetal cell approaches, and potentially from sequencing approaches. Competitors potentially include Ikonysis, Inc.,Artemis Health, Inc., Celula Inc. and Fluidigm Corp. and others.

In the nucleic acid analysis marketplace, our MassARRAY system competes with alternative technologyplatforms that differ in cost per data point, throughput, sample amplification, analysis process, sample separationor method of DNA detection, turnaround time and quality of results. Most competitive technologies do not relyon direct detection methods such as mass spectrometry, but instead use indirect sample detection methods, suchas hybridization or labeling. Competitive technologies are offered by Life Technologies, Corp. (formerly AppliedBiosystems, Inc.), Beckman Coulter, Inc., Illumina Inc., Biotage AB, Fluidigm Corp., Ibis Biosciences, Inc. (nowAbbott), Luminex and others.

Research and Development

We believe that investment in research and development is essential to establishing a long-term competitiveposition as a provider of genetic analysis tools and as a provider or an enabler of diagnostic tests. Our researchand development expenses for the years ended December 31, 2009, 2008, and 2007, were $37.5 million,$27.5 million, and $14.4 million, respectively.

During 2009, we conducted most of our research and development activities at our facilities in theUnited States. Our research and development is augmented by advisory and collaborative relationships with others.

During 2009, we reviewed our research and development initiatives and determined to focus our researchand development efforts on our key initiatives. Our efforts are primarily focused on our continuing efforts to

10

develop a noninvasive ccff prenatal test for Trisomy 21, a new initiative to develop a noninvasive test forage-related macular degeneration, completion of the launch of a next-generation MassARRAY system withimproved performance and reliability, expansion of the applications for our MassARRAY technology and theintroduction of new panels for our research and translational medicine customers.

Government Regulation

Regulation by governmental authorities in the United States and other countries will be a significant factorin the development, testing, production and marketing of diagnostic products, including tests that may bedeveloped by us or our corporate partners, collaborators or licensees. Certain diagnostic products developed byus or our collaborators may require regulatory approval by governmental agencies prior to commercialization.Products that we develop in the diagnostic markets, depending on their intended use, will be regulated as medicaldevices by the FDA and comparable agencies of other countries and require either premarket approval (PMA) or510(k) clearance from the FDA prior to marketing. The 510(k) clearance pathway usually takes from three to sixmonths from submission, but can take significantly longer. The premarket approval pathway is much morecostly, lengthy, uncertain and generally takes from nine months to one year or longer from submission. Thereceipt and timing of regulatory clearances or approvals for the marketing of such products may have asignificant effect on our future revenues. Human diagnostic products are subject to rigorous testing and otherapproval procedures by the FDA in the United States and similar health authorities in foreign countries. Variousfederal and state statutes and regulations also govern or influence the manufacturing, safety, labeling, storage,record keeping and marketing of diagnostic products.

Obtaining these approvals and the subsequent compliance with these regulations require the expenditure ofsubstantial resources over a significant period of time, and there can be no assurance that any approvals will begranted. Any such delay in obtaining or failure to obtain such approvals could adversely affect our ability to earnsales revenues, royalties or other license-based fees. Current governmental regulations may change as a result offuture legislation or administrative action and cannot be predicted.

As mentioned above, our strategy focuses on capitalizing on our potential in molecular diagnostics markets bycommercializing various noninvasive diagnostic tests and laboratory platform systems. Our approach involvesinitial commercialization of tests as LDTs through our CLIA certified laboratory in Grand Rapids, Michigan. Thisapproach involves transferring basic technology to the laboratory. The laboratory is solely responsible for thedevelopment, validation and commercialization of the assay. Such LDT testing is currently under the purview ofCMS and State agencies that provide oversight of the safe and effective use of LDTs. To date, the FDA hasexercised its regulatory discretion not to regulate LDTs, as LDTs are developed and used by a single laboratory. TheFDA and the U.S. Department of Health and Human Services have been reviewing their approach to regulation inthe area of genetic testing and LDTs, and the laws and regulations may undergo change in the near future. Althoughrecent reforms and enforcement actions have focused on them, we have no current plans to utilize analyte specificreagents (ASRs) or In-Vitro Diagnostic Multivariate Index Assay (IVDMIAs) in our LDT strategy so the effect onus of any of these specific changes in FDA policy is currently considered remote to our business.

Sequenom CMM and any other CLIA certified laboratories that we may partner with are subject to CLIAregulations, which are designed to ensure the quality and reliability of clinical laboratories by mandating specificstandards in the areas of personnel qualifications, administration and participation in proficiency testing, patienttest management, quality control, quality assurance and inspections. The sanction for failure to comply withCLIA requirements may be suspension, revocation or limitation of a laboratory’s CLIA certificate, which isnecessary to conduct business, as well as significant fines and/or criminal penalties. Sequenom CMM is alsosubject to regulation of laboratory operations under state clinical laboratory laws. State clinical laboratory lawsmay require that laboratories and/or laboratory personnel meet certain qualifications, specify certain qualitycontrols or require maintenance of certain records. Certain states, including Florida, Maryland, New York,Pennsylvania and Rhode Island, each require that you obtain licenses to test specimens from patients residing inthose states and additional states may require similar licenses in the future. Potential sanctions for violation ofthese statutes and regulations include significant fines and the suspension or loss of various licenses, certificatesand authorizations.

11

Our research and development activities involve the controlled use of hazardous materials and chemicals,however, the concentration and volumes of these chemicals are limited. We are subject to federal, state and locallaws and regulations governing the use, storage, handling and disposal of such materials and chemicals, as wellas certain waste products.

Employees

As of February 12, 2010, we employed 234 persons, of whom 46 hold Ph.D. or M.D. degrees and 44 holdother advanced degrees. Our success will depend in large part upon our ability to attract and retain employees.We face competition in this regard from other companies, research and academic institutions, governmententities, and other organizations.

Executive Officers

Our executive officers, their positions with us, and their ages as of February 12, 2010 are as follows:

Name Age Position

Executive OfficersHarry F. Hixson, Jr., Ph.D . . . . . . . . 71 Chief Executive Officer and DirectorCharles R. Cantor, Ph.D. . . . . . . . . . . 67 Chief Scientific Officer and DirectorRonald M. Lindsay, Ph.D. . . . . . . . . 62 Interim Senior Vice President, Research and DevelopmentPaul V. Maier, M.B.A. . . . . . . . . . . . 62 Interim Chief Financial OfficerAllan Bombard, M.D., M.B.A. . . . . . 57 Chief Medical OfficerMichael Monko, M.B.A. . . . . . . . . . . 50 Senior Vice President, Sales and MarketingLarry Myres . . . . . . . . . . . . . . . . . . . 51 Vice President, OperationsClarke Neumann, J.D. . . . . . . . . . . . . 46 Vice President and General CounselShawn Marcell . . . . . . . . . . . . . . . . . 48 Vice President of Commercial Development, Prenatal DiagnosticsKarsten Schmidt, Ph.D. . . . . . . . . . . . 48 Vice President, Business DevelopmentDereck Tatman, Ph.D., M.B.A. . . . . . 37 Vice President, Business DevelopmentAlisa Judge . . . . . . . . . . . . . . . . . . . . 54 Vice President, Human ResourcesGary Riordan . . . . . . . . . . . . . . . . . . . 51 Vice President, Regulatory Affairs and Quality

Harry F. Hixson, Jr., Ph.D. Dr. Hixson has served as our chief executive officer since September 28, 2009.Dr. Hixson has served as chairman of the board of directors since 2003. He also currently serves as a director ofBrainCells, Inc., a biopharmaceutical company focused on central nervous system drug development, where hewas chief executive officer from July 2004 until September 2005. Dr. Hixson served as chief executive officer ofElitra Pharmaceuticals, Inc., a biopharmaceutical company focused on anti-infective drug development, fromFebruary 1998 until May 2003. He served as president and chief operating officer of Amgen Inc., and as amember of its board of directors from 1988 to 1991. Prior to Amgen, Dr. Hixson held various managementpositions with Abbott Laboratories, including vice president, diagnostic products business group, and vicepresident, research and development, in the Diagnostics Division. Dr. Hixson also is a director of ArenaPharmaceuticals, Inc., Infinity Pharmaceuticals, Inc., and Novabay Pharmaceuticals. Dr. Hixson received hisPh.D. in Physical Biochemistry from Purdue University and an M.B.A. from the University of Chicago.

Charles R. Cantor, Ph.D. Dr. Cantor joined us as Chief Scientific Officer and Chairman of the ScientificAdvisory Board in August 1998 and has served as a member of our board of directors since 1998. Dr. Cantor isalso Chief Executive Officer of DiThera, Inc., a biotechnology company that he founded in 2007. Since 1992,Dr. Cantor has served as a professor in the Department of Biomedical Engineering and Co-Director of the Centerfor Advanced Biotechnology at Boston University. Prior to that time, Dr. Cantor held positions at ColumbiaUniversity and the University of California, Berkeley. He was also Director of the Human Genome Center of theDepartment of Energy at Lawrence Berkeley Laboratory. Dr. Cantor published the first textbook on genomics,The Science and Technology of the Human Genome Project, and remains active in the Human Genome Projectthrough his membership in a number of the project’s advisory committees and review boards. Dr. Cantor is amember of the National Academy of Sciences. He is also a scientific advisor to 12 biotechnology and life sciencecompanies and one venture capital firm. Dr. Cantor currently serves as a director of ExSAR, Inc., HumanBioMolecular Research Institute, and Retrotrope, Inc. Dr. Cantor received his Ph.D. in Chemistry from theUniversity of California, Berkeley.

12

Ronald M. Lindsay, Ph.D. Dr. Lindsay has served as our interim senior vice president of research anddevelopment since September 28, 2009. Dr. Lindsay has served as a member of our board of directors since2003. He currently operates Milestone Consulting, a biopharmaceutical consulting firm. Dr. Lindsay served asvice president, research and development, and chief science officer of diaDexus Inc., a biotechnology company,from 2000 to January 2004. From 1997 through 2000, Dr. Lindsay served in various senior management roleswith Millennium Pharmaceuticals, Inc., a biopharmaceutical company. From 1989 to 1997, Dr. Lindsay served invarious roles with Regeneron Pharmaceuticals Inc., of which he was a founding scientist. He is a director ofArqule Inc., and HistoRx Inc. Dr. Lindsay received his Ph.D. in Biochemistry from the University of Calgary.

Paul V. Maier, M.B.A. Mr. Maier has served as our interim chief financial officer since November 10, 2009.Mr. Maier served as senior vice president and chief financial officer of Ligand Pharmaceuticals Incorporatedfrom 1992 until January 2007, where he helped build Ligand from a venture stage company to a commercial,integrated biopharmaceutical organization. Prior to Ligand, Mr. Maier spent six years in various managementand finance positions at ICN Pharmaceuticals. Mr. Maier currently serves as a director of Hana Biosciences, Inc.,Pure Bioscience, and International Stem Cell Corporation. Mr. Maier received his M.B.A. from HarvardUniversity.

Allan Bombard, M.D., M.B.A. Dr. Bombard joined us as Chief Medical Officer in January 2009. FromOctober 2008 to January 2009, Dr. Bombard was the Chief Executive Officer of Lenetix Medical Laboratory,which provides genetic screening and diagnostic testing for obstetricians, gynecologists, family practitioners,nurse midwives, laboratories, diagnostic facilities and other healthcare providers. From April 2005 to October2008, Dr. Bombard was Chief Medical Officer of Sharp Mary Birch Hospital for Women. From 2002 to 2005,Dr. Bombard served as Senior Vice President, Chair, and Residency Program Director of the Department ofObstetrics and Gynecology at Lutheran Medical Center. Prior to Lutheran Medical Center, he served as theWestern U.S. Medical Director for Women’s Health at Aetna. Since 1998, Dr. Bombard has been a clinicalprofessor in the Department of Obstetrics and Gynecology & Women’s Health at the Albert Einstein College ofMedicine and since 2004. Dr. Bombard received his M.D. from the George Washington University and hisM.B.A. from the University of San Diego.

Michael Monko, M.B.A. Mr. Monko joined us as Senior Vice President, Sales and Marketing in August2006. Mr. Monko served as Vice President of Sales for the organization that is now the diagnostics strategicbusiness unit of Millipore, a bioscience research and biopharmaceutical manufacturing supplier, from 2005 toJuly 2006. Previously, he served 19 years in various sales roles at Invitrogen Corporation (now LifeTechnologies, Corp.), a biotechnology tools company. Mr. Monko received his M.B.A. from Babson College.

Larry Myres. Mr. Myres joined us as Vice President, Operations in November 2005. Mr. Myres was VicePresident of Operations for DexCom, Inc., a medical device company, from 2000 to 2005 and Precision VascularSystems, a medical device company, from 1997 to 2000. Mr. Myres received his Bachelor of Science degreefrom Westminster College of Salt Lake City.

Clarke Neumann, J.D. Mr. Neumann joined us in 1999 and has served as Vice President, General Counseland Assistant Secretary since 2001. Prior to joining us, Mr. Neumann was an attorney at Lyon & Lyon, LLP,specializing in intellectual property litigation, strategic counseling, business litigation and transactionalmatters. Mr. Neumann holds a J.D. from Loyola Law School, Los Angeles.

Shawn Marcell. Mr Marcell joined us in 2008, through our acquisition of SensiGen, LLC, where he servedas president and Chief Executive Officer. Prior to joining SensiGen Mr. Marcell was senior vice president ofcommercialization at the Science Center in Philadelphia where he was responsible for commercialization of abusiness incubator housing 36 companies. He also acted as Chief Executive Officer of the Science Center’s leadportfolio company, Neuro Diagnostic Devices, Inc., which he formed and for which he raised financing. Prior tojoining the Science Center, Mr. Marcell was co-founder and Chief Executive Officer of Linguagen Corp. (nowRedpoint Bio), a biotechnology company involved in the science of taste. Mr. Marcell was Global Head of Sales,Marketing and Business Development at Centocor, Inc., Diagnostics Division where he was responsible forbusinesses in the U.S., Europe and Japan. Prior to Centocor, Mr. Marcell held sales and marketing positions of

13

increasing responsibility with Abbott Laboratories Diagnostic division. Mr. Marcell holds a B.A. in economicsfrom the George Washington University, Washington, DC.

Karsten Schmidt, Ph.D. Dr. Schmidt joined us in January 1999 as Director, Business Development and hasserved as Vice President, Business Development, since December 2005. He has also served previously asManaging Director of our German subsidiary, Vice President, European Operations, and Vice President,Operations. Before joining us, Dr. Schmidt held a senior management position at Rhône-Poulenc Rorer where hewas responsible for all drug regulatory affairs activities in the asthma and allergy area. Dr. Schmidt is a trainedpharmacist. He received his Ph.D. in pharmaceutical biology from the University in Bonn.

Dereck Tatman, Ph.D., M.B.A. Dr. Tatman joined us in 2000 as a Business Development Analyst and hasserved as Vice President, Business Development since July 2004. Prior to joining us, Dr. Tatman was employedat Dow Agrosciences in the biotechnology business development group. Dr. Tatman holds a Ph.D. from ArizonaState University and a M.S. in Management from Krannert School of Business at Purdue University.

Alisa Judge. Ms. Judge joined us in June 2007 as Vice President, Human Resources, and brings over 20years of human resources experience having previously served as vice president of human resources at Claritas, adivision of the Nielsen Company, the world’s leading provider of marketing information and audiencemeasurement. Prior to Claritas, Ms. Judge held the same role for GKN Aerospace Chem-tronics, a leading globalsupplier to the world’s automotive and aerospace manufacturers. Prior to GKN, she was Director of GlobalStaffing and Retention at Invitrogen Corp. (now Life Technologies, Corp.), a global biotech manufacturer basedin Carlsbad, Calif. She also held the title of Vice President, Human Resources, at Advanced Marketing Services,Inc., who provides wholesaling and distribution services to book retailers, where she spent 10 years. Ms. Judgeholds a B.S. in Business from Humboldt State University.

Gary Riordan. Mr. Riordan joined us in September 2008 as Vice President, Regulatory Affairs and Quality.Prior to joining us, Mr. Riordan served as Director, Regulatory Affairs at Ventana Medical Systems, Inc., adiagnostic systems supplier, from November 2004 to September 2008, and at Roche Molecular Systems, Inc.,from December 1997 to October 2004. Mr. Riordan worked at the U.S. Food and Drug Administration from June1990 to December 1997 where he evaluated regulatory submissions for antibody- and nucleic acid-based HIVand Hepatitis diagnostic assays and conducted inspections of in vitro diagnostic manufacturers.

Available Information

We file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K,amendments to those reports, and other information with the SEC. We will supply a copy any document we filewith the SEC, without charge. To request a copy, please contact Investor Relations, Sequenom, Inc., 3595 JohnHopkins Court, San Diego, CA, 92121, USA. The public may also read and copy any document we file with theSEC at its public reference facilities at 100 F Street NE, Washington, D.C. 20549, or by calling the SEC at1-800-SEC-0330, or by accessing the SEC’s website at www.sec.gov, where the SEC maintains reports, proxyand information statements and other information regarding us and other issuers that file electronically with theSEC. In addition, as soon as reasonably practicable after such materials are filed with or furnished to the SEC, wemake copies available to the public free of charge through our website at www.sequenom.com. We also regularlypost on our corporate website copies of our press releases as well as additional information about us. Interestedpersons can subscribe on our website to email alerts that are sent automatically when we issue press releases, fileour reports with the SEC or certain other information is available.

Item 1A. RISK FACTORS

Before deciding to invest in us or deciding to maintain or increase your investment, you should carefullyconsider the risks described below, in addition to the other information contained in this report and in our otherfilings with the SEC. The risks and uncertainties described below and in our other filings are not the only onesfacing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial mayalso affect our business. If any of these known or unknown risks or uncertainties actually occurs, our business,financial condition and results of operations could be seriously harmed. In that event, the market price for ourcommon stock could decline and you may lose your investment.

14

If we fail to obtain the capital necessary to fund our operations, our financial results, financial conditionand our ability to continue as a going concern will be adversely affected and we will have to delay orterminate some or all of our product development programs.

Our business will require additional financial investment that we have not yet secured. Our consolidatedfinancial statements as of December 31, 2009 have been prepared assuming that we will continue as a goingconcern. As of December 31, 2009, we had an accumulated deficit of approximately $597.3 million. We expectto continue to incur losses for the foreseeable future and will have to raise substantial cash to fund our plannedoperations. As a result, there is substantial doubt about our ability to continue as a going concern unless we areable to successfully raise additional capital or we adopt measures to conserve our cash resources and prolong ourability to operate.

Our cash, cash equivalents and current marketable securities is $42.7 million as of December 31, 2009,which based on our current projections will not be sufficient to fund our obligations through the third quarter of2010 if we continue our spending at our current levels. Our plans for research and development activities toexpand our diagnostic test menu over the next 12 months can only be implemented if we are successful in raisingsignificant funds during this period. In addition, there can be no assurances that our research and developmentactivities will be successful. We need to collect a large number of patient samples in a timely manner in order toexecute our molecular diagnostic research and development activities. If we do not make sufficient research anddevelopment progress, this could adversely impact our ability to raise significant additional funds, which couldadversely impact our ability to continue as a going concern. The actual amount of funds that we will need and thetiming of any such investment will be determined by many factors, some of which are beyond our control.

We intend to pursue raising additional capital during 2010. In addition to raising capital in 2010, weanticipate that we will need to raise additional funds in the future for the continued development andcommercialization of our molecular diagnostic technology. We will need to sell equity or debt securities to raisesignificant additional funds. The sale of additional securities will likely result in dilution to our stockholders.Additional financing may not be available in amounts or on terms satisfactory to us or at all. We may be unableto raise additional financing due to a variety of factors, including our financial condition, the status of ourresearch and development programs, the status of ongoing litigation and pending governmental investigationsand the general condition of the financial markets. If we fail to raise significant additional financing, we willhave to delay or terminate some or all of our research and development programs, our financial condition andoperating results will be adversely affected and we may have to cease our operations.

If we obtain significant additional financing, we expect to continue to spend substantial amounts of capitalon our operations for the foreseeable future. The amount of additional capital we will need depends on manyfactors, including:

• the size of our future operating losses;

• our and our distributors’ success in selling our MassARRAY products and services;

• our success in selling our cystic fibrosis carrier screening, Rhesus D genotyping, and Fetalxy sexdetermination tests, the level of reimbursement we receive and our collections for those tests;

• the terms and conditions of sales contracts, including extended payment terms;

• our ability to introduce and sell new products and services and successfully reduce inventory levels ofearlier products;

• the level of our selling, general and administrative expenses;

• the extent of our investment in diagnostic technology, including prenatal genetic analysis technology,molecular diagnostics and noninvasive prenatal diagnostic technology, patient sample collection,development, commercialization, and regulatory approval;

• our ability to validate our diagnostic tests and the level of sensitivity and specificity of our diagnostictests;

15

• our success in, and the expenses associated with, researching, developing and commercializingdiagnostic products, alone or in collaboration with our partners, and obtaining any required regulatoryapproval for those products;

• the level of our success alone or in collaboration with our partners in launching and selling anydiagnostic products and services;

• the extent and success of our research and development pursuits, including our level of investment inMassARRAY product research and development, and diagnostic assay and other technology researchand development;

• the extent to which we enter into, maintain, and derive revenues from licensing agreements, includingagreements to out-license our noninvasive prenatal analysis technology, research and othercollaborations, joint ventures and other business arrangements;

• the level of our legal expenses and insurance policy coverage, if any, including those expensesassociated with the independent investigation, the investigations by the SEC, NASDAQ, the Office ofthe U.S. Attorney for the Southern District of California and the FBI, intellectual property protection,securities and stockholder derivative class actions and those expenses and any damages and settlementpayments (as well as issuances of securities in connection with any settlements) associated with thesecurities, stockholder derivative, and Xenomics litigations and any future litigation that may arise;

• the dilution from any issuance of securities in connection with the settlement of litigation;

• the extent to which we acquire, and our success in integrating, technologies or companies;

• the level of our expenses associated with the audit of our consolidated financial statements as well ascompliance with other corporate governance and regulatory developments or initiatives; and

• regulatory changes and technological developments in our markets.

General market conditions, the market price of our common stock, uncertainty about our Trisomy 21 test, aswell as other screening and diagnostic tests, the uncertainty regarding the results of ongoing litigation matters,the investigations by the SEC, NASDAQ, the Office of the U.S. Attorney for the Southern District of Californiaand the FBI or other factors may not support capital raising transactions. In addition, our ability to raiseadditional capital may depend upon obtaining shareholder approval. There can be no assurance that we will beable to obtain shareholder approval if it is necessary. If we are unable to obtain sufficient additional funds on atimely basis or on terms favorable to us, we may be required to cease or reduce further commercialization of ourproducts, to cease or reduce certain research and development projects, to sell, license or otherwise dispose ofsome or all of our technology or assets or business units, to merge all or a portion of our business with anotherentity or we may not be able to continue as a going concern. If we raise additional funds by selling shares of ourcapital stock (or otherwise issue shares of our capital stock or rights to acquire share of our capital stock), theownership interest of our current stockholders will be diluted.

Uncertainty regarding our Trisomy 21 test and other planned tests could materially adversely affect ourbusiness, financial condition and results of operations.

We have announced that previously announced test data and results for our noninvasive prenatal test forTrisomy 21 cannot be relied upon. As a result, the launch of the test did not occur. While we are continuing ourresearch and development program for the test, we are unable to provide guidance on the timetable forcompleting this program or for the potential commercialization of the test. In addition to mass-spectrometry-based approaches, one approach that we are exploring for a Trisomy 21 test is a nucleic acid sequencing-basedapproach. We have limited experience developing and no experience commercializing sequencing-basedtechnology and would need to rely on collaborative partners and/or sequencing technology provided by others inorder to commercialize a test utilizing sequencing. The launch of the test will require the completion of certainclinical development and commercialization activities, including the efforts of collaborative partners on whichwe rely, and the expenditure of additional cash resources. We can give no assurance that we will be able tosuccessfully complete the clinical development of this test or that we will be able to maintain the collaborative

16

relationships that are essential to our clinical development efforts. We also can give no assurance that we will beable to reduce our expenditures sufficiently or otherwise mitigate the risks associated with our business to raiseenough capital to complete clinical development or commercialization for this test. Clinical development requireslarge numbers of patient samples and we may not be able to collect a sufficient number of samples in a timelymanner to complete clinical development for a Trisomy 21 or any other planned molecular diagnostictest. Failure by us to collect a sufficient number of samples in a timely manner could prevent or significantlydelay our ability to research, develop, complete clinical development and validation, and launch, any of ourplanned tests. Any failure to complete clinical development or commercialization of our Trisomy 21 test, as wellas other planned screening and diagnostic tests could have a material adverse effect on our business, operatingresults or financial condition.

The launch of any of our diagnostic tests under development will require the completion of certain clinicaldevelopment and commercialization activities and the expenditure of additional cash resources. We can give noassurance that we will be able to successfully complete the clinical development of any test under developmentor that we will have sufficient cash resources to do so. Other than mass-spectrometry-based and PCR-basedapproaches, we have limited experience working with alternative platforms and would need to rely oncollaborative partners and/or technology provided by other parties in order to commercialize a test utilizing suchalternative platforms. We can give no assurance that we will be able to reduce our expenditures sufficiently orraise enough capital to complete clinical development or commercialization for any test. Any failure to completeclinical development or commercialization of a test could have a material adverse effect on our business,operating results or financial condition.

We and certain of our former and current executive officers and directors have been named as defendantsin litigation that could result in substantial costs, divert management’s attention and otherwise result indilution to our stockholders.

We and certain of our current and former executive officers, have been sued for alleged violations of federalsecurities laws related to alleged false and misleading statements regarding our Trisomy 21 test underdevelopment. We have been engaged in a vigorous defense of such claims. On January 26, 2010, the U.S.District Court for the Southern District of California entered an order preliminarily approving a stipulation ofsettlement reached in our class action securities lawsuits related to alleged violations of federal securities lawsconsolidated under the caption In re Sequenom Inc. Securities Litigation. Even though a settlement has beenpreliminarily approved by the court, there is no guarantee that final approval of the settlement will be granted. Ifa final settlement of the claims is not approved and we are not successful in our defense of such claims, we couldbe forced to make significant payments to or otherwise enter into less favorable settlement arrangements with theclass action plaintiffs and their lawyers in connection with such class action securities lawsuits. Even if we areable to settle the class action securities lawsuits, there are several other lawsuits and claims, including state andfederal shareholder derivative actions that have not been settled. Although we intend to continue to vigorouslydefend such lawsuits and claims, there is no guarantee that we will be successful and we may be have to paydamages awards or otherwise may enter into settlement arrangements in connection with such other lawsuits andclaims. Any such payments or settlement arrangements could have a material adverse effect on our business,operating results or financial condition. In connection with the pending settlement of class action lawsuits, iffinally approved, we will be issuing shares of our common stock and may in the future be required to issueadditional shares of our common stock or other securities convertible into or exchangeable for our common stockin connection with future settlements, which would result in dilution to our stockholders. Even if the pendingclaims are not successful, the litigation could result in substantial costs and significant adverse impact on ourreputation and divert management’s attention and resources, which could have a material adverse effect on ourbusiness, operating results or financial condition.

We are the subject of an investigation by the SEC and have been contacted by representatives of NASDAQ,the Office of the U.S. Attorney for the Southern District of California and the FBI, each of which couldadversely affect our reputation, business prospects, operating results, or financial condition.

In June 2009, we received written notification that the staff of the SEC has initiated an investigation relatingto our April 29, 2009 announcement regarding our Trisomy 21 test under development. As part of this

17

investigation, the SEC staff is also requiring us to produce information with respect to our announcementsrelating to our offer to acquire EXACT Sciences, Inc. in January 2009. We intend to continue to cooperate fullywith the SEC on its investigation. Following our announcement on September 28, 2009 regarding the completionof the independent investigation by the special committee of our board of directors, representatives of NASDAQ,the Office of the U.S. Attorney for the Southern District of California and the FBI separately contacted us toinquire about our announcement. We intend to continue to cooperate fully with NASDAQ, the U.S. Attorney andthe FBI. We cannot predict the duration, scope or outcome of the investigations by the SEC, NASDAQ, the U.S.Attorney and the FBI. If these matters continue for a prolonged period of time, it may have an adverse impact onour reputation, business prospects, operating results or financial condition regardless of the ultimate outcome ofthese matters. In the event that the investigations by the SEC, NASDAQ, the U.S. Attorney or the FBI leads toaction against us, any current or former officer or director, our reputation, business prospects, operating results orfinancial condition may be adversely impacted. These matters may result in the incurrence of significant legalexpenses and the diversion of management’s attention from our business, and are likely to have a negative effecton employee morale.

We have limited experience.

Our noninvasive prenatal and other molecular diagnostic tests are at an early stage of discovery anddevelopment or have just recently been launched. We continue to develop and commercialize new products andcreate new applications for our products. We are also researching, developing and pursuing thecommercialization of additional noninvasive molecular diagnostic tests for prenatal genetic disorders and otherdiseases and disorders for use on our MassARRAY platform and potentially other platforms, and we have limitedor no experience in these applications of our technology and operating and selling in these markets. Other thanmass-spectrometry-based approaches, we have limited experience developing and no experiencecommercializing sequencing-based technology and would need to rely on collaborative partners and/orsequencing technology provided by others in order to commercialize a test utilizing sequencing. Among otherrisks, using an alternative platform provided by another party presents potential manufacturing supply andreliability, FDA regulatory compliance and design control, and intellectual property infringement risks. Youshould evaluate us in the context of the uncertainties and complexities affecting an early stage companydeveloping products and applications for the life science industries and experiencing the challenges associatedwith entering into new markets that are highly competitive. Based on our limited experience, in developing newproducts and applications, we may not effectively execute on or focus our research and development efforts,properly model new opportunities to ensure appropriate resource allocation, create products that are appropriatelydeveloped to meet customer needs, perform adequate and timely validation testing of such products andapplications, ensure appropriate communication between different departments responsible forcommercialization activities, implement effective product launch or sales strategies, effectively design andmanufacture products that achieve commercial success, or take other actions that ultimately lead to commercialsuccess of any new products or applications that we develop. We may face setbacks in the development andcommercialization of our noninvasive prenatal and other molecular diagnostic tests and technologies. Aspreviously announced, we are no longer relying on prior studies related to our Trisomy 21 test. We need to makesignificant investments to ensure our genetic analysis products and applications and our diagnostics tests performproperly and are cost-effective, and we or our partners will likely need to apply for and obtain certain regulatoryapprovals to sell our products for diagnostic applications and it is uncertain whether such approvals will begranted. Even if we develop products for commercial use and obtain all necessary regulatory approvals, we maynot be able to develop products that are accepted or satisfy customers in the genomic, diagnostic, noninvasiveprenatal, clinical research, pharmaceutical, or other markets or the emerging field of molecular medicine and thatcan be marketed and sold successfully.

We may not be able to generate significant revenue from noninvasive prenatal diagnostic tests or any othertests we may develop.

Our business is substantially dependant on our ability to develop and launch our research-use-only,screening and diagnostic tests. We have committed significant research and development resources to thedevelopment of research-use-only and diagnostic tests, particularly noninvasive prenatal tests, for use on our

18

MassARRAY system and other platforms. There is no guarantee that we will successfully generate significantrevenues from any tests that we have launched or plan to launch in the future. In September 2009, we launched acarrier screening LDT for cystic fibrosis through our CAP/CLIA certified laboratory. In early 2010 we launchednoninvasive prenatal LDTs for Rhesus D and fetal sex determination through our laboratory. We also plan topursue the development and launch of a noninvasive prenatal screening LDT for Trisomy 21, a molecular LDTfor assessment of risk for developing age-related macular degeneration, and additional tests in the future.However, there is no guarantee that we will be able to successfully launch these or other diagnostic tests onanticipated timelines or at all. We have limited experience in licensing, manufacturing, selling, marketing ordistributing our SEQureDx technology, or diagnostic or other tests. If we, or our partners, are not able tosuccessfully market or sell noninvasive prenatal research-use-only or diagnostic tests or other tests we maydevelop for any reason, including the failure to obtain any required regulatory approvals, we will not generateany revenue from the sale of such tests. Even if we are able to develop noninvasive prenatal research-use-only ordiagnostic or other tests for sale in the marketplace, a number of factors could impact our ability to sell such testsor generate any significant revenue from the sale of such tests, including the following:

• the outcome of the pending lawsuits, SEC investigation and the investigations by NASDAQ, the Officeof the U.S. Attorney for the Southern District of California and the FBI;

• our ability to successfully implement the remedial measures recommended by the special committeefollowing our independent investigation and the effectiveness of those measures and to continue toimplement appropriate controls and risk management measures;

• the availability of adequate study samples for validation studies for any diagnostic tests we develop;

• reliance on Sequenom CMM and third-party CLIA certified laboratories, which are subject to routinegovernmental oversight and inspections for continued operation pursuant to CLIA, to process tests thatwe develop;

• reliance on Sequenom CMM and third parties to manufacture any noninvasive prenatalresearch-use-only or diagnostic or other tests that we may develop;

• our ability to establish and maintain adequate infrastructure to support the commercial launch and saleof our diagnostic tests through Sequenom CMM or a third-party CLIA certified laboratory, includingestablishing adequate laboratory space, information technology infrastructure, sample collection andtracking systems, electronic ordering and reporting systems and other infrastructure and hiring adequatelaboratory and other personnel;

• the success of the validation studies for our diagnostic tests under development and our ability topublish study results in peer-reviewed journals;

• the availability of alternative and competing tests or products and technological innovations or otheradvances in medicine that cause our technologies to be less competitive;

• compliance with federal, state and foreign regulations governing laboratory testing and the sale andmarketing of research-use-only or diagnostic or other tests, including noninvasive prenatal tests;

• the accuracy rates of such tests, including rates of false-negatives and/or false-positives;

• concerns regarding the safety or effectiveness or clinical utility of noninvasive prenatal or other tests;

• changes in the regulatory environment affecting health care and health care providers, including changesin laws regulating laboratory testing and/or device manufacturers and any laws regulating prenataltesting;

• the extent and success of our sales and marketing efforts and ability to drive adoption of our diagnostictests;

• coverage and reimbursement levels by government payors and private insurers;

• the level of physician and customer adoption of any diagnostic tests we develop;

• pricing pressures and changes in third-party payor reimbursement policies;

19

• general changes or developments in the market for women’s and/or prenatal health diagnostics, ordiagnostics in general;

• ethical and legal issues concerning the appropriate use of the information resulting from noninvasiveprenatal diagnostic tests or other tests;

• the refusal by women to undergo such tests for moral, religious or other reasons, or based on perceptionsabout the safety or reliability of such tests;

• our ability to provide effective customer support;

• our ability to promote and protect our SEQureDx brand and technology and our other brands andtechnologies; and

• intellectual property rights held by others or others infringing our intellectual property rights.

Our operating results may fluctuate significantly.

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

• our ability to manage costs and expenses and effectively implement our business strategy;

• our ability to raise additional capital and continue as a going concern;

• our and our distributors’ success in marketing and selling, and changes in the demand for, our productsand services including our MassARRAY platform and iPLEX multiplex genotyping application andother applications and related consumables, and demand for products and services for genotyping, DNAmethylation (epigenetic analysis) and QGE (gene expression analysis) applications;

• our success in selling our cystic fibrosis carrier screening, Rhesus D genotyping, and Fetalxy sexdetermination tests, the level of reimbursement we receive and our collections for those tests;

• our success in depleting or reducing current product inventories in view of new or upcoming productintroductions and our success in transitioning to our next generation MassARRAY system and massspectrometer;

• the pricing of our products and services and those of our competitors;

• our success in collecting payments from customers;

• our success in responding to customer complaints effectively and managing relationships with ourcustomers, variations in the timing of payments from customers and collaborative partners and therecognition of these payments as revenues;

• the timing and cost of any new product or service offerings by us;

• our ability to identify and develop in a cost-efficient manner new applications and products, such asnoninvasive prenatal or other diagnostic assays and other diagnostic technologies, the success of suchapplications and products, and our ability to improve current products to increase demand for suchproducts;

• the potential need to acquire licenses to new technology, including genetic markers that may be useful indiagnostic applications, or to use our technology in new markets, which could require us to payunanticipated license fees and royalties in connection with licenses we may need to acquire;

• our research and development progress and how rapidly we are able to achieve technical milestones,including the milestone of sufficient fetal DNA enrichment and/or RNA based solutions with respect toour noninvasive prenatal technologies;

• the cost, quality and availability of our next generation MassARRAY system and mass spectrometer,consumable chips, also known as SpectroCHIP bioarrays, oligonucleotides, DNA samples, tissuesamples, reagents and related components and technologies;

20

• material developments in our customer and supplier relationships including our ability to successfullytransition to new technologies to successfully maintain our relationships with our customers andsuppliers;

• our ability to clinically validate any potential noninvasive prenatal or other diagnostic related productsand obtain regulatory approval of any potential diagnostic products; and

• expenses and the payment of any damage awards or settlement amounts related to the pending lawsuits,the investigations by the SEC, NASDAQ, the Office of the U.S. Attorney for the Southern District ofCalifornia and the FBI.

Further, our revenues and operating results are difficult to predict because our diagnostic tests have onlyrecently been launched and we do not have sufficient history to forecast revenues reliably for those tests, and alsobecause our revenues and operating results depend on the number, timing, and type of MassARRAY systemplacements that we make during the year and the quantity and timing of consumables sales for the installed baseof systems. Changes in the relative mix of our MassARRAY system and consumables sales, as well as serviceagreements can have a significant impact on our gross margin, as consumable sales and service agreementstypically have margins significantly different than MassARRAY system sales. Our international revenues andoperating results are also difficult to predict because they depend upon the activities of our distributors. Weexperienced reduced demand for our MassARRAY systems during 2009 as a result of the current economicenvironment and are uncertain whether demand for our products and services will further deteriorate in futureperiods as a result of the weak economy or other factors. The absence of or delay in generating revenues couldcause significant variations in our operating results from year to year and could result in increased operatinglosses.

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 inany 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 products would harm our business.

The demand for MassARRAY systems declined in 2009 compared to 2008 and any continued or furtherdecline in demand will further reduce our total revenues. We expect that sales of MassARRAY systems andconsumables will account for most of our total revenues throughout 2010 and perhaps thereafter, unless and untilour noninvasive prenatal or other laboratory developed tests begin to generate significant revenues. Thefollowing factors, among others, would further reduce the demand for MassARRAY products and services:

• continued unstable, weak, or deteriorating economic conditions and fiscal policies or changes in fiscalpolicies that negatively impact customer buying decisions;

• uncertainty about our ability to continue as a going concern and supply products and services tocustomers;

• competition from other products and service providers or failure of our products or applications orservices; and

• negative publicity or evaluations, particularly with respect to product warranty and repair andtroubleshooting services provided to existing customers, with respect to enabling or performing, or withrespect to the independent investigation, the investigations by the SEC, NASDAQ, the Office of theU.S. Attorney for the Southern District of California and the FBI, ongoing litigation matters ordevelopments or events in our prenatal diagnostic and other programs.

Our revenues are subject to risks faced by our customers and potential customers.

We expect that our revenues throughout 2010 and perhaps thereafter, unless and until our noninvasiveprenatal and/or other laboratory developed tests begin to generate significant revenues, will be derived primarilyfrom MassARRAY system products provided to academic institutions and other research institutions.

21

Our operating results could fluctuate substantially due to reductions and delays in research and developmentexpenditures by these customers. These reductions and delays could result from factors such as:

• changes in economic conditions and possible country-based boycotts;

• changes in government programs that provide funding;

• changes in the regulatory environment affecting health care and health care providers, and, for example,recent draft FDA guidance which, if effected, may impose additional restrictions on CLIA certifiedlaboratories performing laboratory diagnostic tests;

• pricing pressures and reimbursement policies;

• market-driven pressures on companies to consolidate and reduce costs;

• other factors affecting research and development spending; and

• uncertainty about our ability to continue as a going concern and fund operations and supply productsand services to customers.

None of these factors are within our control. We have broadened the markets to which we sell our productsand applications and continue to develop new applications and products for use in new markets. We are targetingcustomers in clinical research and clinical marker validation, the emerging field of molecular medicine, geneticservice laboratories, and animal testing laboratories and diagnostic testing markets. We have limited or noexperience operating in certain of these potential markets and, as a result, may be unable to develop products andapplications that allow us to penetrate these markets or successfully generate any revenue from sales in thesemarkets. We will have limited ability to forecast future demand for our existing and any new products andapplications in these markets.

We depend on sales of our consumable chips and other MassARRAY consumables for a significant portionof our revenues.

Sales of our consumable chips and other consumables for the MassARRAY system are an important sourceof revenue. Revenues from MassARRAY consumables totaled approximately 54% of our total revenues for theyear ended December 31, 2009, compared to 41% of our total revenues for the year ended December 31, 2008.Factors which may limit the use of our consumable chips and other consumables or otherwise adversely affectour revenues from consumables include:

• the extent of our customers’ level of utilization of their MassARRAY systems;

• our ability to provide timely repair services and our ability to secure replacement parts, such as lasers,for our MassARRAY systems and our ability to successfully transition to our next generationMassARRAY system and mass spectrometer;

• the extent to which customers increase multiplexing levels using iPLEX applications;

• the availability and adoption of new technologies and applications provided by our competitors;

• failure to sell additional MassARRAY systems;

• the termination of contracts with or adverse developments in our relations with suppliers of ourconsumables;

• the training of customer personnel;

• the acceptance of our technology by our customers;

• any negative publicity with respect to ongoing litigation matters, our independent investigation, the SECinvestigations, the investigations by NASDAQ, the Office of the U.S. Attorney for the Southern Districtof California and the FBI or developments or events in our prenatal diagnostic and other programs;

• uncertainty about our ability to continue as a going concern and fund operations and supply productsand services to customers;

22

• the ability to maintain necessary quality standards and specifications for our SpectroCHIP products; and

• our inability to transition to new suppliers for components for our next generation MassARRAY systemand mass spectrometer and our ability to maintain such relationships.

We only recently acquired our CLIA certified laboratory and have limited experience operating a diagnosticlaboratory. Our ability to successfully develop and commercialize diagnostic tests will depend on our abilityto successfully operate our CLIA certified laboratory and obtain and maintain required regulatoryapprovals.

We have validated three LDT assays and commercialized them through Sequenom CMM, our CLIAcertified laboratory located in Grand Rapids, Michigan. We acquired Sequenom CMM in 2008 and as a resulthave limited experience operating a CLIA certified laboratory. Because there is substantial distance betweenSequenom CMM and us, we may have logistical and operational challenges in effectively managing andoperating Sequenom CMM. For future tests, if we are unable to successfully transfer our diagnostic technologyand tests to Sequenom CMM for validation or if Sequenom CMM is unable to successfully validate any LDT orother tests that we intend to commercialize through Sequenom CMM, we may not be able to successfullycommercialize such tests on the anticipated timelines or at all. Although we have invested substantially inSequenom CMM’s infrastructure, it is possible that we may not have adequate infrastructure in place to meetdemand for our currently launched tests or for the commercial launch and sale of future diagnostic tests that wedevelop through Sequenom CMM. Our ability to successfully develop and commercialize diagnostic tests willdepend on our ability to successfully operate Sequenom CMM and obtain and maintain required regulatoryapprovals.

Sequenom CMM as a clinical laboratory is subject to CLIA, which is designed to ensure the quality andreliability of clinical laboratories by mandating specific standards in the areas of personnel qualifications,administration and participation in proficiency testing, patient test management, quality control, qualityassurance and inspections. The sanction for failure to comply with CLIA requirements may be suspension,revocation or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business, as well assignificant fines and/or criminal penalties. Sequenom CMM is also subject to regulation of laboratory operationsunder state clinical laboratory laws. State clinical laboratory laws may require that laboratories and/or laboratorypersonnel meet certain qualifications, specify certain quality controls or require maintenance of certain records.Certain states, including Florida, Maryland, New York, Pennsylvania and Rhode Island, each requires thatlaboratories obtain licenses to test specimens from patients residing in those states and additional states mayrequire similar licenses in the future. If we are unable to obtain and maintain a license from New York, or areunable to maintain licenses from the other states, we will not be able to process any samples from patientslocated in those states. Potential sanctions for violation of these statutes and regulations include significant finesand the suspension or loss of various licenses, certificates and authorizations, which could adversely affect ourbusiness and results of operations.

We may not successfully obtain regulatory approval of any noninvasive prenatal or other diagnostic productor other product which we or our licensing or collaborative partners develop and we may not be able tosuccessfully partner with CLIA certified laboratories with respect to diagnostic products.

Products that we or our collaborators develop in the molecular medicine, diagnostic, noninvasive prenataldiagnostic, or other markets, depending on their intended use, may be regulated as medical devices by the FDAand comparable agencies of other countries and require either PMA or 510(k) clearance from the FDA, prior tomarketing. The 510(k) clearance process usually takes from three to six months from submission, but can takesignificantly longer. The PMA process is much more costly, lengthy, uncertain, and generally takes from ninemonths to one year or longer from submission. In addition, commercialization of any diagnostic or other productthat our licensees or collaborators or we develop would depend upon successful completion of preclinical testingand clinical trials. Preclinical testing and clinical trials are long, expensive, and uncertain processes, and we donot know whether we, our licensees, or any of our collaborators, would be permitted or able to undertake clinical

23

trials of any potential products. It may take us or our licensees or collaborators many years to complete any suchtesting, and failure could occur at any stage. Preliminary results of studies or trials do not necessarily predict finalresults, and acceptable results in early studies or trials may not be repeated in later studies or trials. A number ofcompanies in the diagnostics industry, including biotechnology companies, have suffered significant setbacks inclinical trials, even after promising results in earlier trials. Delays or rejections of potential products may beencountered based on changes in regulatory policy for product approval during the period of productdevelopment and regulatory agency review. If our projects reach clinical trials, we or our licensees orcollaborators could decide to discontinue development of any or all of these projects at any time for commercial,scientific, or other reasons.

We initially plan to validate assays and commercialize them in the form of LDTs through Sequenom CMMor a third-party CLIA certified laboratory. Although LDT testing is currently solely under the purview of CMSand state agencies who provide oversight of the safe and effective use of LDTs, the FDA and the U.S.Department of Health and Human Services have been reviewing their approach to regulation in the area ofgenetic testing and LDTs, and the laws and regulations may undergo change in the near future. Although we haveno current plans to utilize in our LDT strategy ASRs or IVDMIAs, which have been the focus of recent reformsand enforcement actions by the FDA, we cannot predict the extent of the FDA’s future regulation and policieswith respect to LDTs in general or our diagnostic tests in particular. We plan to conduct the development,validation, and other activities necessary to file submissions with the FDA seeking approval for selecteddiagnostic tests. If we are unable to successfully launch any diagnostic tests as LDTs or if we are otherwiserequired to obtain FDA premarket clearance or approval prior to commercializing any diagnostic tests, our abilityto generate revenue from the sale of such tests may be delayed and we may never be able to generate significantrevenues from sales of diagnostic products.

The results of preclinical studies and completed clinical trials are not necessarily predictive of futureresults, and our current diagnostic product candidates may not have favorable results in later studies ortrials.

To date, long-term safety and efficacy have not yet been demonstrated in clinical trials for any of ourdiagnostic product candidates. Favorable results in our early studies or trials may not be repeated in later studiesor trials that will be required to obtain either PMA or 510(k) clearance from the FDA prior to marketing any ofour product candidates. Our product candidates, including any diagnostic or other tests we develop, may fail todemonstrate positive results in clinical trials despite having progressed through earlier-stage studies or trials. Thelimited results that we have obtained for our prenatal diagnostic tests may not predict results from studies inlarger numbers of subjects drawn from more diverse populations over a longer period of time. Unfavorableresults from ongoing preclinical studies or clinical trials could result in delays, modifications or abandonment ofongoing or future clinical trials, or abandonment of a product development program. Preclinical and clinicalresults or other study results are frequently susceptible to varying interpretations that may delay, limit or preventregulatory approvals or commercialization.

Because we exclusively licensed our noninvasive prenatal diagnostic and gender determination testingrights from Isis any dispute with Isis may adversely affect our ability to develop and commercializediagnostic tests based on these licensed rights.

In October 2005, we entered into an exclusive license to noninvasive prenatal diagnostic rights (UnitedStates Patent No. 6,258,540 and foreign equivalents) with Isis, which we amended in October 2006 and inNovember 2007 to also include exclusive rights to intellectual property for noninvasive prenatal genderdetermination testing for social and lifestyle purposes. On November 3, 2009, we entered into a third amendmentto modify certain time-based commercial launch milestones relating to aneuploidy and other products. Inexchange for this modification, we agreed to make an immediate one-time payment of $1,000,000, increaseroyalty payments under the agreement during the final 12 months of the patent term and increase the specifiedminimum royalty amounts. We are using and intend to continue to use the rights that we acquired under thelicense to develop and commercialize noninvasive prenatal nucleic acid based tests, including gender

24

determination tests. If there is any dispute between us and Isis regarding our rights under the license agreement,or we do not achieve the commercial launch milestones, as modified, in a timely manner, our ability toexclusively commercialize these diagnostic tests may be adversely affected and could delay or completelyterminate our product development and commercialization efforts for these diagnostic tests.

We and our licensees and collaborators may not be successful in developing or commercializing diagnosticproducts, diagnostic assays including noninvasive prenatal diagnostic products, or other products using ourproducts, services, or discoveries.

Development of diagnostic or other products by us, our licensees, or our collaborators including assays, aresubject to risks of failure inherent in the development and commercial viability of any such product, such asdemand for such product. These risks further include the possibility that such product would:

• be found to be ineffective, unreliable, or otherwise inadequate or otherwise fail to receive regulatoryapproval;

• be difficult or impossible to manufacture on a commercial scale;

• be uneconomical to market or otherwise not be effectively marketed;

• fail to be successfully commercialized if adequate reimbursement from government healthadministration authorities, private health insurers, and other organizations for the costs of these productsis unavailable;

• be impossible to commercialize because they infringe on the proprietary rights of others or competewith products marketed by others that are superior; or

• fail to be commercialized prior to the successful marketing of similar products by competitors.

If a licensee discovers or develops diagnostic products or we or a collaborator discover or developdiagnostic or other products using our technology, products, services, or discoveries, we may rely on thatlicensee or collaborator (hereafter referred to as “partner”) for product development, regulatory approval,manufacturing, and marketing of those products before we can realize revenue and some or all of the milestonepayments, royalties, or other payments we may be entitled to under the terms of the licensing or collaborationagreement. If we are unable to successfully achieve milestones or our partners fail to develop successfulproducts, we will not earn the revenues contemplated and we may also lose exclusive (as in the case of ourlicense agreement with Isis, under which we in-license our fundamental noninvasive prenatal diagnostictechnology) or non-exclusive license rights to intellectual property that are required to commercialize suchproducts. Our agreements may allow our partners significant discretion in electing whether to pursue any of theseactivities. We cannot control the amount and timing of resources our partners may devote to our programs orpotential products. As a result, we cannot be certain that our partners will choose to develop or commercializeany products or will be successful in doing so. In addition, if a partner is involved in a business combination,such as a merger or acquisition, or changes its business focus, its performance under its agreement with us maysuffer and, as a result, we may not generate any revenues or only limited revenues from the royalty, milestone,and similar payment provisions contained in our agreement with that partner.

Our ability to compete in the market may decline if we lose or do not obtain some of our intellectualproperty rights.

Our success will depend on our ability to obtain and protect patents on our technology, to protect our tradesecrets, and to maintain our rights to licensed intellectual property or technologies. Our patent applications orthose of our licensors may not result in the issue of patents in the United States or other countries. Our patents orthose of our licensors may not afford meaningful protection for our technology and products. Others maychallenge our patents or those of our licensors in litigation or by proceedings such as interference, oppositionsand reexaminations, as is the case with the appeal pending before the European Patent Office with respect to thepatent rights that we in-licensed from Isis for prenatal diagnostics (United States Patent No. 6,258,540 andEuropean Patent No. 994963), and as a result, our patents or those of our licensors could be narrowed or

25

invalidated or become unenforceable. Competitors may develop products similar to ours that do not conflict withour patents or patent rights. Others may develop noninvasive prenatal tests or other diagnostic tests or products,technologies or methods in violation of our patents or those of our licensors, or by operating around our patentsor license agreements, which could reduce sales of our consumables or reduce or remove our noninvasiveprenatal and other diagnostic commercialization opportunities. To protect or enforce our patent rights, we mayinitiate interference proceedings, oppositions, reexaminations or litigation against others. However, theseactivities are expensive, take significant time and divert management’s attention from other business concerns.We may not prevail in these activities. The patent position of biotechnology companies generally is highlyuncertain and involves complex legal and factual questions that are often the subject of litigation. No consistentpolicy has emerged from the U.S. Patent and Trademark Office, the offices of foreign countries or the courtsregarding the breadth of claims allowed or the degree of protection afforded under biotechnology patents. Thereis a substantial backlog of biotechnology patent applications at the U.S. Patent and Trademark Office and of theequivalent offices around the world and the approval or rejection of patent applications may take several years.

Claims by other companies that we infringe their intellectual property rights or that patents on which werely are invalid could adversely affect our business.

From time to time, companies have asserted, and may again assert, patent, copyright and other intellectualproprietary rights against our products or products using our technologies. These claims have resulted and may inthe future result in lawsuits being brought against us. We may not prevail in any lawsuits alleging patentinfringement given the complex technical issues and inherent uncertainties in intellectual property litigation. Ifany of our products, technologies or activities, in particular our iPLEX products and our MassARRAY systemand mass spectrometer (including our planned next-generation MassARRAY system and mass spectrometer),from which we derive a substantial portion of our revenues, were found to infringe on another company’sintellectual property rights, we could be subject to an injunction that would force the removal of our productsfrom the market or we could be required to redesign our products, which could be costly. We could also beordered to pay damages or other compensation, including punitive damages and attorneys’ fees to such othercompany. A negative outcome in any such litigation could also severely disrupt the sales of our marketedproducts to our customers or their customers, which in turn could harm our relationships with our customers, ourmarket share and and/or product revenues. Even if we are ultimately successful in defending any intellectualproperty litigation, such litigation is expensive and time consuming to address, will divert our management’sattention from our business and may harm our reputation.

Other companies or entities also may commence actions seeking to establish the invalidity of our patents. Inthe event that one or more of our patents are challenged, a court may invalidate the patent(s) or determine that thepatent(s) is not enforceable, which could harm our competitive position. If one or more of our patents areinvalidated or found to be unenforceable, or if the scope of the claims in any of these patents is limited by a courtdecision, we could lose certain market exclusivity afforded by patents owned or in-licensed by us and potentialcompetitors could more easily bring products to the market that directly compete with our own. Such adversedecisions may negatively impact our revenues.

The rights we rely upon to protect the intellectual property underlying our products may not be adequate,which could enable others to use our technology and reduce our ability to compete with them.

We require our employees, consultants, advisors, and collaborators to execute confidentiality agreementsand in certain cases, assignment or license agreements. We cannot guarantee that these agreements will provideus with adequate intellectual property ownership or protection against improper or unauthorized use or disclosureof confidential information or inventions. In some situations, these agreements may conflict with or be subject tothe rights of others with whom our employees, consultants, advisors, or collaborators have prior employment orconsulting relationships. In some situations, as is the case with our employees in Germany, these types ofagreements or relationships are subject to foreign law, which provides us with less favorable rights or treatmentthan under U.S. law. Others may gain access to our inventions, trade secrets or independently developsubstantially equivalent proprietary materials, products, information, and techniques.

26

We have a history of generating a large percentage of our revenue at the end of each quarterly accountingperiod.

Due to the manner in which many customers in our target markets allocate and spend their budgeted fundsfor acquisition of our products, a large percentage of our sales are booked at the end of each quarterly accountingperiod. Because of this timing of our sales, we may not be able to reliably predict order volumes and ourquarterly revenues. A sales delay of only a few days may significantly impact our quarter-to-quartercomparisons. If our quarterly or year-end revenues fall below the expectations of securities analysts andinvestors, our stock price may decline. Similarly, if we are unable to ship our customer orders on time, or ifextended payment terms are required, there could be a material adverse effect on revenues for a given quarter.

If our customers are unable to adequately prepare samples for our MassARRAY system, the overall marketdemand for our products may decline.

Before using the MassARRAY system, customers must prepare samples by following several steps that aresubject to human error, including DNA isolation and DNA amplification. If DNA samples are not preparedappropriately, or the proposed assays are too complex, the MassARRAY system may not generate a reading or acorrect reading. If our customers experience these difficulties, they might achieve lower throughput levels thanspecified for the system. If our customers are unable to generate expected levels of throughput, they might notcontinue to purchase our consumables, they could express their discontent with our products to others, or theycould collaborate with others to jointly benefit from the use of our products. Any or all of these actions wouldreduce the overall market demand for our products. From time to time, we have experienced customer complaintsregarding data quality and difficulty in processing more complex assays.

The sales cycles for our products are lengthy, and we may expend substantial funds and management effortwith no assurance of successfully selling our products or services.

The sales cycles for our MassARRAY system products are typically lengthy. Our sales and licensing effortsrequire the effective demonstration of the benefits, value, and differentiation and validation of our products andservices, and significant education and training of multiple personnel and departments within a customerorganization. We may be required to negotiate agreements containing terms unique to each prospective customeror licensee which would lengthen the sales cycle. We may expend substantial funds and management effort withno assurance that we will sell our products or services. In addition, this lengthy sales cycle makes it moredifficult for us to accurately forecast revenue in future periods and may cause revenues and operating results tovary significantly in such periods.

We may not be able to successfully adapt or maintain our products for commercial applications.

A number of potential applications of our MassARRAY technology, including research-use-only anddiagnostic applications for noninvasive prenatal and other molecular testing, may require significantenhancements in our core technology or the in-licensing of intellectual property rights or technologies. Inconnection with developing new products and applications, we may not effectively deploy our research anddevelopment efforts in a cost-efficient manner or otherwise in a manner that leads to the successfulcommercialization and scale-up of such products and applications. If we are unable to complete the development,introduction, or scale-up of any product, or if any of our products or applications, such as gene expressionanalysis, epigenetic analysis or iPLEX multiplexing, do not achieve a significant level of market acceptance, ourbusiness, financial condition and results of operations could be seriously harmed. Achieving market acceptancewill depend on many factors, including demonstrating to customers that our technology and products are costcompetitive or superior to other technologies and products that are available now or that may become available inthe future. We believe that our revenue growth and profitability will substantially depend on our ability toovercome significant technological and other challenges and successfully introduce our newly developedproducts, applications, and services into the marketplace.

27

We have limited commercial production capability and experience and may encounter production problemsor delays, which could result in lower revenue.

We partially assemble the MassARRAY system and partially manufacture our consumable chips andMassARRAY kits. During 2010 we plan to transition to a next-generation MassARRAY system and massspectrometer which will require more outsourcing of component manufacturing and more internal assembly. Todate, we have only produced our current products in moderate quantities. We may not be able to maintainacceptable quality standards as we transition to the next-generation MassARRAY system and mass spectrometerand ramp up production. To achieve anticipated customer demand levels, we will need to transition and scale-upour production capability and maintain adequate levels of inventory while manufacturing our products at areasonable cost. We may not be able to produce sufficient quantities to meet market demand or manufacture ourproduct at a reasonable cost. If we cannot achieve the required level and quality of production, we may need toabandon or reduce our internal efforts and fully outsource production or rely on licensing and other arrangementswith third parties. This reliance could reduce our gross margins and expose us to the risks inherent in relying onothers. We might not be able to successfully outsource our production or enter into licensing or otherarrangements with these third parties, which would adversely affect our business. Also, from time to time wehave experienced quality issues on some of our chips. We may not be able to maintain acceptable qualitystandards for production of our chips, which could harm our business and result in lower revenue.

We depend on third-party products and services and limited sources of supply to develop and manufactureour products.

We rely on outside vendors to supply certain products and the components and materials used in ourproducts. Many of these products, components and materials are obtained from a single supplier or a limitedgroup of suppliers and some have lead-times of several months. Our planned next-generation MassARRAYsystem and mass spectrometer is comprised of numerous components each provided to us from a single sourceand some of which have lead times of several months. Regarding other elements of our MassARRAY system, wealso have sole suppliers for our chips, our pins for our nanodispenser and our liquid handling device.

Our consumables also include components provided by sole suppliers. In the event of any adversedevelopments with these vendors, our product supply may be interrupted and obtaining substitute componentscould be difficult and/or require us to re-design our products and assays which would have an adverse impact onour business. In the past, we have experienced quality problems with and delays in receiving components used toproduce our consumable chips, quality issues with our chips, and also had technical difficulties with our pin-toolnanoliter dispenser device. We have also experienced software and operational difficulties with ourMassARRAY system. Our reliance on outside vendors generally and a sole or a limited group of suppliers inparticular involves several risks, including:

• the inability to obtain an adequate supply of properly functioning, required products, components, andmaterials due to capacity constraints, product defects, a discontinuance of a product by a supplier, orother supply constraints;

• reduced control over quality and pricing of products, components, and materials; and

• delays and long lead times in receiving products, components, or materials from vendors.

If the validity of the consents from volunteers were to be challenged, we could be forced to stop using someof our resources, which would hinder our gene discovery outlicensing efforts and our diagnostic productdevelopment efforts.

We have attempted to ensure that all clinical data and genetic and other biological samples that we receivefrom our subsidiaries and our clinical collaborators have been collected from volunteers who have provided ourcollaborators or us with appropriate consents for the data and samples provided for purposes which extend toinclude commercial diagnostic product development activities. We have attempted to ensure that data andsamples that have been collected by our clinical collaborators are provided to us on an anonymous basis. Wehave also attempted to ensure that the volunteers from whom our data and samples are collected do not retain or

28

have conferred on them any proprietary or commercial rights to the data or any discoveries derived from them.Our clinical collaborators are based in a number of different countries, and, to a large extent, we rely upon ourclinical collaborators for appropriate compliance with the voluntary consents provided and with local law andregulation. That our data and samples come from and are collected by entities based in different countries resultsin complex legal questions regarding the adequacy of consents and the status of genetic material under a largenumber of different legal systems. The consents obtained in any particular country could be challenged in thefuture, and those consents could prove invalid, unlawful or otherwise inadequate for our purposes. Any findingsagainst us, or our clinical collaborators, could deny us access to or force us to stop using some of our clinical orgenetic resources, which would hinder our diagnostic product development efforts. We could become involved inlegal challenges, which could consume a substantial proportion of our management and financial resources.

If we cannot obtain licenses to patented SNPs and genes relevant to our diagnostic areas of interest, wecould be prevented from obtaining significant revenue or becoming profitable.

The U.S. Patent and Trademark Office has issued and continues to issue patents claiming single SNP andgene discoveries and their related associations and functions. If certain SNPs and genes are patented, we willneed to obtain rights to those SNPs and genes to develop, use, and sell related assays and other types of productsor services utilizing such SNPs and genes. Required licenses may not be available on commercially acceptableterms. If we were to fail to obtain licenses to certain patented SNPs and genes, we might never achievesignificant revenue from our diagnostic product development.

If the medical relevance of SNPs is not demonstrated or is not recognized by others, we may have lessdemand for our products and services and may have less opportunity to enter into diagnostic productdevelopment and commercialization collaborations with others.

Some of the products we hope to develop involve new and unproven approaches or involve applications inmarkets that we are only beginning to explore. They are based on the assumption that information about genesand SNPs may help scientists better understand conditions or complex disease processes. Scientists generallyhave a limited understanding of the role of genes and SNPs in diseases, and few products based on genediscoveries have been developed. We cannot be certain that genetic information will play a key role in thedevelopment of diagnostics or other products in the future, or that any genetic-based findings would be acceptedby diagnostic, pharmaceutical, or biotechnology companies or by any other potential market or industry segment.If we or our customers or collaborators are unable to generate valuable information that can be used to developdiagnostics or other products, the demand for our products, applications, and services will be reduced and ourbusiness will be harmed.

We may not be able to form and maintain the collaborative relationships or the rights to third-partyintellectual property and technologies that our business strategy requires and such relationships may lead todisputes over technology rights or product revenue, royalties, or other payments.

We form research collaborations and licensing arrangements with collaborators to operate our businesssuccessfully. To succeed, we will have to maintain our existing relationships and establish additionalcollaborations and licensing arrangements. Our current strategy includes pursuing partnering opportunities withlarger companies interested in or involved in the development of pharmaceutical and diagnostic products. Ourstrategy also includes obtaining licenses to third-party intellectual property rights and technologies, such as ourexclusive license to noninvasive prenatal analysis rights that we acquired from Isis (United States PatentNo. 6,258,540 and foreign equivalents) and other rights we have acquired for the use of fetal nucleic acidsobtained from maternal urine for noninvasive prenatal diagnostics and to pursue development of a molecularLDT for assessment of risk for developing age-related macular degeneration, to potentially expand our productportfolio and generate additional sources of revenue. If we do not achieve certain milestones in a timely manner,particularly with respect to our planned test for Trisomy 21, we risk losing our exclusive license rights from Isisand may also lose rights under our other licenses if we do not adequately pursue commercialization in the mannerspecified in those licenses. Disputes may also arise in connection with these collaborations and licensingarrangements, which may result in liability to us or may result in the loss of acquired technology that may

29

adversely affect our business. For example, as described under Item 3 of this report, we are currently engaged inlitigation with Xenomics regarding our rights under the license agreement and are being sued for substantialdamages.

We cannot be sure that we will be able to establish any additional research collaborations, licensingarrangements, or other partnerships necessary to develop and commercialize products or that we can do so onterms favorable to us. If we are unable to establish these collaborations or licensing arrangements, we may not beable to successfully develop any diagnostic or other products or applications and generate any milestone, royalty,or other revenue from sales of these products or applications. If our collaborations or licensing arrangements arenot successful or we are not able to manage multiple collaborations successfully, our programs will suffer and wemay never generate any revenue from sales of products based on licensed rights or technologies or under thesecollaborative or licensing arrangements. If we increase the number of collaborations or licensing agreements, itwill become more difficult to manage the various relationships successfully and the potential for conflicts amongthe collaborators and licensees or licensors will increase. Conflicts with our collaborators, licensees or licensors,or other factors may lead to disputes over technology or intellectual property rights or product revenue, royalties,or other payments, which may adversely affect our business.

In addition, our government grants provide the government certain license rights to inventions resultingfrom funded work. Our business could be harmed if the government exercises those rights.

If we do not succeed in obtaining development and marketing rights for products developed in collaborationwith others, our revenue and profitability prospects could be substantially harmed.

Our business strategy includes, in part, the development of noninvasive prenatal diagnostic and otherproducts in collaboration with others, or utilizing the technology of others, and we intend to obtaincommercialization or royalty rights to those products or technologies. If we are unable to obtain such rights, orare unable to do so on favorable financial terms, our revenue and profitability prospects could be substantiallyharmed. To date, we have initiated limited activities towards commercializing products developed incollaboration with, or utilizing the technology of, others. Even if we obtain commercialization rights,commercialization of products may require resources that we do not currently possess and may not be able todevelop or obtain, or commercialization may be financially unattractive based upon the revenue-sharing termsoffered by potential licensors or provided for in the relevant agreement.

Ethical, privacy, or other concerns about the use of genetic information could reduce demand for ourproducts and services.

Genetic testing, including gender determination and Trisomy 21 testing, has raised ethical issues regardingprivacy and the appropriate uses of the resulting information. For these reasons, governmental authorities maylimit or otherwise regulate the use of genetic testing or prohibit testing for genetic predisposition to certainconditions, particularly for those that have no known cure. Such concerns may lead individuals to refuse to usegenetics tests even if permitted. Any of these scenarios could reduce the potential markets for our products andservices, which would seriously harm our business, financial condition, and results of operations.

If we breach any of the terms of our license or supply agreements, or these agreements are otherwiseterminated or modified, the termination or modification of such agreements could result in our loss ofaccess to critical components and could delay or suspend our commercialization efforts.

We have sourced or licensed components of our technology from other parties. Our failure to maintaincontinued supply of such components, particularly in the case of sole suppliers, or the right to use thesecomponents would seriously harm our business, financial condition, and results of operations. As a result, in theevent that demand for our products declines or does not meet our forecasts, we could have excess inventory orincreased expenses or our margins could decrease which could have an adverse impact on our financial condition

30

and business. In the event of any adverse developments with these vendors, our product supply may beinterrupted, which would have an adverse impact on our business. Changes to or termination of our agreementsor inability to renew our agreements with these parties or enter into new agreements with other suppliers couldresult in the loss of access to these aspects of our technology or other intellectual property rights or technologiesthat we may acquire from time to time and could impair, delay, or suspend our commercialization efforts. Whilewe negotiate for agreement periods or notice of termination periods that provide us reasonable periods of time tosecure alternative supplies, and require that such agreements may not be terminated without advance noticearbitrarily or without good reason, such as uncured breach or insolvency, these negotiations are oftenunsuccessful or such provisions may not provide us with adequate time to secure alternative supplies, provide uswith access to alternative technologies on commercially acceptable terms, or otherwise provide us with adequateprotection.

We may not successfully integrate acquired businesses and may not successfully complete the acquisition ofbusinesses or technologies that we desire to acquire.

We may acquire additional businesses or technologies, or enter into other strategic transactions. Forexample, in November 2008, we completed the acquisition of the Center for Molecular Medicine, LLC, a CLIAcertified laboratory facility and in February 2009 we completed the acquisition of substantially all of the assets ofSensiGen, LLC.

Managing these and future acquisitions entails numerous operational and financial risks, including:

• the inability to retain key employees of any acquired businesses or hire enough qualified personnel tostaff any new or expanded operations;

• the impairment of relationships with key customers of acquired businesses due to changes inmanagement and ownership of the acquired businesses;

• the inability to sublease on financially acceptable terms excess leased space or terminate leaseobligations of acquired businesses that are not necessary or useful for the operation of our business;

• the exposure to federal, state, local and foreign tax liabilities in connection with any acquisition or theintegration of any acquired businesses;

• the exposure to unknown liabilities or disputes with the former stakeholders or management oremployees of acquired businesses;

• higher than expected acquisition and integration expenses that would cause our quarterly and annualoperating results to fluctuate;

• increased amortization expenses if an acquisition results in significant intangible assets;

• combining the operations and personnel of acquired businesses with our own, which would be difficultand costly;

• disputes over rights to acquired technologies or with licensors or licensees of those technologies; and

• integrating or completing the development and application of any acquired technologies, which woulddisrupt our business and divert management’s time and attention.

We may also attempt to acquire businesses or technologies or attempt to enter into strategic transactions thatwe are unable to complete. For example, in January 2009, we launched an exchange offer to acquire EXACTSciences Corporation, but were not able to complete the transaction prior to EXACT Sciences selling andlicensing a substantial portion of its assets and intellectual property to a third party. If we are unable to completesuch transactions, we may expend substantial resources and ultimately not successfully complete the transaction.Such transactions may also distract management and result in other adverse effects on our business andoperations. These transactions may also involve the issuance of shares of our capital stock, which may result indilution to our stockholders.

31

We may not be able to successfully compete in the biotechnology and diagnostic industries.

The biotechnology and diagnostic industries are highly competitive. We expect to compete with a broadrange of companies in the United States and other countries that are engaged in the development and productionof products, applications, services, and strategies to analyze genetic information and strategies to develop andcommercialize diagnostic, noninvasive prenatal diagnostic, and other products for customers in the clinicalresearch and clinical marker validation and molecular medicine fields as well as diagnostic service laboratories,animal testing and food safety labs, and customers in other markets. They include:

• biotechnology, pharmaceutical, diagnostic, chemical, and other companies;

• academic and scientific institutions;

• governmental agencies; and

• public and private research organizations.

Many of our competitors have much greater financial, technical, research, marketing, sales, distribution,service, and other resources than we do. Our competitors may offer broader product lines and services and havegreater name recognition than we do. Several companies are currently making or developing products thatcompete with our products. Our competitors may develop or market technologies or products that are moreeffective or commercially attractive than our current or future products, or that may render our technologies orproducts obsolete. Our announcement in 2009 of the delay in the expected launch of our Trisomy 21 test, as wellas the announcement of the independent investigation, the investigations by the SEC, NASDAQ, the Office ofthe U.S. Attorney for the Southern District of California and the FBI, and pending litigation may adversely affectour competitive position and the market acceptance of any tests that we may commercialize and may affect ourability to maintain and recruit key personnel.

We may potentially compete with our customers, which may adversely affect our business.

We have sold MassARRAY systems worldwide to pharmaceutical and biotechnology companies, academicresearch centers, and government laboratories. Some of our customers use our DNA analysis products to performcontract research services, or to perform genetics studies on their own disease populations for potentialdiagnostic and drug target identification in the same or similar manner as we have done. Although there are manypotential contract research services opportunities and disease areas and diagnostic applications, our customersmay seek service work or develop diagnostic assays or may target diseases areas that may overlap with those thatwe have chosen to pursue. In such cases we may potentially compete against our customers. Competition fromour customers may adversely affect our services business or our ability to successfully commercialize diagnosticproducts.

If we cannot attract and retain highly-skilled personnel, our growth might not proceed as rapidly as weintend and our business may be adversely affected.

The success of our business will depend on our ability to identify, attract, hire, train, retain, maintain, andmotivate highly skilled personnel, particularly sales, scientific, medical, and technical personnel, for our futuresuccess. Competition for highly skilled personnel is intense, and we might not succeed in attracting and retainingthese employees. If we cannot attract and retain the personnel we require, we would not be able to expand ourbusiness as rapidly as we intend. Our announcement in 2009 of the delay in the expected launch of our Trisomy21 test and subsequent announcements may have affected our ability to maintain and recruit key personnel.Following the completion of the investigation by the special committee of our board of directors in 2009, anumber of our senior officers and members of the research and development program for our Trisomy 21 test leftour company. We asked two of our directors, Harry F. Hixson, Jr. and Ronald M. Lindsay, to serve our companyas chief executive officer and interim senior vice president of research and development, respectively, andappointed Paul V. Maier as our interim chief financial officer effective November 10, 2009. When we seek tohire personnel to fill these positions on a permanent basis, we can give no assurance that we will be able to hire

32

qualified replacements for the positions that we need to fill, and there may be significant costs associated withthe recruiting, hiring and retention of officers and employees for the open positions. The announcement of theresults of the investigation and the departure of the officers and employees has had negative effect on employeemorale. If we lose additional key employees, scientists, physician collaborators or if our management team is notable to effectively manage us through these events, our business, financial condition, and results of operationsmay be adversely affected. We do not carry “key person” insurance covering any of our officers or otheremployees.

If we do not effectively manage our business as it evolves, it could affect our ability to pursue opportunitiesand expand our business.

Evolution in our business, particularly our attempted transition to developing and commercializingmolecular diagnostic tests, has placed and may continue to place a significant strain on our personnel, facilities,management systems, information technology infrastructure, disclosure controls, internal controls and resources.In 2009, we began implementing the remedial measures recommended by the special committee of our board ofdirectors following its independent investigation, including:

• new disclosure controls and procedures, changes in our organizational and reporting structure, enhancedtraining in ethics and scientific processes for our employees;

• new procedures for the conduct of research and development and clinical studies;

• increased roles and responsibilities for independent third parties;

• new procedures for the storage and management of samples for testing; and

• creation of a science committee of our board of directors to oversee our research and developmentstrategy and activities.

In connection with entering into a stipulation of settlement with respect to the class action securities lawsuitsrelated to alleged violations of federal securities laws, we also agreed to adopt or continue our implementation ofchanges and additions to certain corporate governance policies, protocols and practices. While we feel that theremedial measures recommended by the special committee and the other changes we have implemented havemade our disclosure controls and procedures more effective, any controls and procedures, no matter how welldesigned and operated, can provide only reasonable assurance of achieving the desired control objectives and noevaluation of controls and procedures can provide absolute assurance that all control issues have been detected.We will need to continue to improve our operational and financial systems and managerial controls andprocedures and train and manage our workforce and transition our business to execute on the commercializationof molecular diagnostic tests. If we fail to effectively manage the evolution of our business and the transition toalso being a provider of diagnostic products, including the effective implementation these remedial measures andadditional changes to our corporate governance policies, protocols and practices, or fail to take other necessaryaction to maintain close coordination among our various departments, our ability to execute on our business plan,rebuild credibility, pursue business opportunities, expand our business, and sell our products and applications innew markets may be adversely affected.

Certain of our molecular diagnostic tests may not be eligible for reimbursement by payors which may limitthe demand for these tests by physicians and their patients. We may incur additional financial risk related tocollections and reimbursement in connection with the commercialization of our molecular diagnostic tests.

In September 2009, we commercially launched our carrier screening LDT for cystic fibrosis, and in early2010 we launched our noninvasive Rhesus D genotyping and Fetalxy sex determination LDTs, and we intend tocontinue launching additional molecular diagnostic tests in the future. Because these tests have only recentlybeen launched, demand for and reimbursement by payors of these tests, in particular the cystic fibrosis carrierscreening and Rhesus D genotyping tests, is uncertain. The Fetalxy sex determination test is paid for directly bythe patient and is not eligible for reimbursement by payors because it is not a medically necessary test. Because

33

certain of the molecular diagnostic tests we have launched or intend to launch may not be medically necessary ormay otherwise not be subject to reimbursement by payors, it is difficult to know how much demand there will befor such tests by physicians and their patients. We generally bill third-party payors for our tests and pursuecase-by-case reimbursement where policies are not in place for a particular test but we have very limitedexperience in billing and pursuing reimbursement and payment for molecular diagnostic tests. As a result of thislack of experience and uncertainty with respect to reimbursement, we may also face an increased risk in ourcollection efforts, including potential write-offs of doubtful accounts and long collection cycles for accountsreceivable related to our diagnostic tests, which could adversely affect our business, results of operations andfinancial condition.

We must be in compliance with security and privacy regulations under the Health Insurance Portability andAccountability Act of 1996, or HIPAA, and other state regulations, which may increase our operationalcosts.

The HIPAA privacy and security regulations establish comprehensive federal standards with respect to theuses and disclosures of protected health information, or PHI, by health plans and healthcare providers, in additionto setting standards to protect the confidentiality, integrity and availability of electronic PHI. The regulationsestablish a complex regulatory framework on a variety of subjects, including:

• the circumstances under which uses and disclosures of PHI are permitted or required without a specificauthorization by the patient, including but not limited to treatment purposes, to obtain payments forservices and healthcare operations activities;

• a patient’s rights to access, amend and receive an accounting of certain disclosures of PHI;

• the content of notices of privacy practices for PHI; and

• administrative, technical and physical safeguards required of entities that use or receive PHIelectronically.

In September 2009, we commercially launched our carrier screening test for cystic fibrosis, and intend tocontinue launching additional diagnostic tests in the future. As we launch additional commercial diagnostic tests,we must continue to implement policies and procedures related to compliance with the HIPAA privacy andsecurity regulations, as required by law, which may increase our operational costs. Furthermore, the privacy andsecurity regulations provide for significant fines and other penalties for wrongful use or disclosure of PHI,including potential civil and criminal fines and penalties. Although the HIPAA statute and regulations do notexpressly provide for a private right of damages, we also could incur damages under state laws to private partiesfor the wrongful use or disclosure of confidential health information or other private personal information.

We are subject to risks associated with our foreign operations.

We expect that a significant portion of our sales will continue to be made outside the United States.Approximately 53% of our sales were made outside of the United States during the year ended December 31,2009, compared to 50% for the year ended December 31, 2008. A successful international effort will require usto develop relationships with international customers and collaborators, including distributors. We may not beable to identify, attract, retain, or maintain suitable international customers or collaborators. Expansion intointernational markets will require us to establish and grow foreign operations, hire additional personnel to runthese operations, and maintain good relations with our foreign customers and collaborators or distributors.International operations including many of the same risks to our business that affect our domestic operations, butalso involve a number of risks not typically present in domestic operations, including:

• currency fluctuation risks;

• changes in regulatory requirements;

• costs and risks of deploying systems in foreign countries;

34

• licenses, tariffs, and other trade barriers;

• political and economic instability and possible country-based boycotts;

• difficulties in staffing and managing foreign operations;

• potentially adverse tax consequences;

• the burden of complying with a wide variety of complex foreign laws and treaties; and

• different rules, regulations, and policies governing intellectual property protection and enforcement.

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

If our production and laboratory facilities are damaged, our business would be seriously harmed.

Our only production facility for genetic analysis products is located in San Diego, California, where we alsohave laboratories. We also have laboratory facilities in Grand Rapids, Michigan. Damage to our facilities due towar, fire, natural disaster, power loss, communications failure, terrorism, unauthorized entry, or other eventscould prevent us from conducting our business for an indefinite period, could result in a loss of important data orcause us to cease development and production of our products. We cannot be certain that our limited insurance toprotect against business interruption would be adequate or would continue to be available to us on commerciallyreasonable terms, or at all.

Responding to claims relating to improper handling, storage or disposal of hazardous chemicals, andradioactive 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, as well as biologicalmaterials that have the potential to transmit disease. The risk of accidental contamination or injury from thesematerials cannot be completely eliminated. If an accident with these substances occurs, we could be liable forany damages that result, which could seriously harm our business. Additionally, an accident could damage ourresearch and manufacturing facilities and operations, resulting in delays and increased costs. Such damage andany expense resulting from delays, disruptions, or any claims may not be covered by our insurance policies.

We may not have adequate insurance if we become subject to product liability or other claims.

Our business exposes us to potential product liability and other types of claims and our exposure willincrease as we and our partners and collaborators prepare to commercialize research-use-only or other types ofmolecular tests, including LDTs and diagnostics for prenatal and other applications. We have product and generalliability insurance that covers us against specific product liability and other claims up to an annual aggregatelimit of $20.0 million and $2.0 million, respectively. Any claim in excess of our insurance coverage would haveto be paid out of our cash reserves, which would have a detrimental effect on our financial condition. It isdifficult to determine whether we have obtained sufficient insurance to cover potential claims. Also, we cannotassure you that we can or will maintain our insurance policies on commercially acceptable terms, or at all.

The uncertainty of the current economic and political conditions could harm our revenues and operatingresults.

Current domestic and global economic conditions are uncertain and have continued to be volatile over thepast year. The recent turmoil in the economic environment in many parts of the world may continue to putpressure on global economic conditions. Our revenues and operating results may be affected by uncertain or

35

changing economic and market conditions, including the recent crisis in the credit markets and financial servicesindustry and general conditions in the global capital markets. If global economic and market conditions, oreconomic conditions in the United States or other key markets, remain uncertain or persist, spread, or deterioratefurther, we may experience material impacts on our business, operating results, and financial condition.

Our stock price has been and may continue to be volatile, and your investment could suffer a decline invalue.

The trading price of our common stock has been volatile and could be subject to wide fluctuations in pricein response to various factors, many of which are beyond our control, including but not limited to:

• our ability to raise additional capital and continue as a going concern;

• actual or anticipated variations in quarterly and annual operating results;

• announcements of technological innovations, research and development progress or setbacks by us orour competitors, and product launches;

• our success in entering into, and the success in performing under, licensing and product developmentand commercialization agreements with others;

• our success in and the expenses associated with researching, developing and commercializing diagnosticproducts, alone or in collaboration with our partners and obtaining any required regulatory approval forthose products and services;

• the status of litigation against us and certain of our former executive officers and directors;

• the dilution from any issuance of securities in connection with the settlement of litigation;

• our ability to successfully implement the remedial measures recommended by the special committeefollowing our independent investigation and the effectiveness of those measures;

• the status, duration, scope and outcome of the SEC investigation that has been initiated following ourApril 2009 announcement regarding our Trisomy 21 test and the investigations by NASDAQ, the Officeof the U.S. Attorney for the Southern District of California and the FBI following our September 28,2009 announcement regarding the completion of our independent investigation;

• securities analysts’ earnings projections or securities analysts’ recommendations; and

• general market conditions, including the recent crisis in global financial markets.

The stock market in general, and The NASDAQ Global Market and the market for life sciences companiesin particular, have experienced extreme price and volume fluctuations that may have been unrelated ordisproportionate to the operating performance of the listed companies. There have been dramatic fluctuations inthe market prices of securities of biotechnology companies. These price fluctuations may be rapid and severe andmay leave investors little time to react. Broad market and industry factors may seriously harm the market price ofour common stock, regardless of our operating performance. Sharp drops in the market price of our commonstock expose us to securities class-action litigation. We have subsequently been named as defendants in variouslawsuits alleging violations of federal securities laws related to alleged false and misleading statements regardingour Trisomy 21 test under development and are the subject of investigations by the SEC, NASDAQ, the Office ofthe U.S. Attorney for the Southern District of California and the FBI. Such litigation and investigations couldresult in substantial expenses and other liabilities, substantial dilution to our stockholders and a diversion ofmanagement’s attention and resources, which would seriously harm our business, financial condition, and resultsof operations.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

36

Item 2. PROPERTIES

We are headquartered in San Diego, California, with wholly-owned subsidiaries located in Hamburg,Germany, Cambridge, England, Hong Kong, Grand Rapids, Michigan and Tokyo, Japan. We also have offices inQueensland, Australia and Beijing, China. Collectively, we lease approximately 135,000 square feet under leasesthat expire at various dates through September 2015, each of which contains laboratory, office, manufacturing, orstorage facilities.

The San Diego site is our company headquarters and houses our selling, general, and administrative offices,research and development facilities and manufacturing operations. The site in Hamburg, Germany, is used tosupport sales and distribution in Europe. The site in Hong Kong is used for sales and support activities performedin Asia. The site in Cambridge, England is used for sales and support activities performed in Europe. The site inGrand Rapids, Michigan, houses our CLIA laboratory, Sequenom Center for Molecular Medicine, LLC. The sitein Tokyo, Japan, is used for sales and support activities performed in Japan. We believe our facilities areadequate for our current needs.

Item 3. LEGAL PROCEEDINGS

In November 2001, we and certain of our current or former officers and directors were named as defendantsin a class action shareholder complaint filed by Collegeware USA in the U.S. District Court for the SouthernDistrict of New York (now captioned In re Sequenom, Inc. IPO Securities Litigation) Case No. 01-CV-10831. Inthe complaint, the plaintiffs allege that our underwriters, certain of our officers and directors and we violated thefederal securities laws because our registration statement and prospectus contained untrue statements of materialfact or omitted material facts regarding the compensation to be received by and the stock allocation practices ofthe underwriters. The plaintiffs seek unspecified monetary damages and other relief. Similar complaints werefiled in the same District Court against hundreds of other public companies that conducted initial public offeringsof their common stock in the late 1990s and 2000 (the IPO Cases).

In October 2002, our officers and directors were dismissed without prejudice pursuant to a stipulateddismissal and tolling agreement with the plaintiffs. In February 2003, the District Court dismissed the claimagainst us brought under Section 10(b) of the Exchange Act, without giving the plaintiffs leave to amend thecomplaint with respect to that claim. The District Court declined to dismiss the claim against us brought underSection 11 of the Securities Act of 1933, as amended (the Securities Act).

In September 2003, pursuant to the authorization of a special litigation committee of our board of directors,we approved in principle a settlement offer by the plaintiffs. In September 2004, we entered into a settlementagreement with the plaintiffs. In February 2005, the District Court issued a decision certifying a class action forsettlement purposes and granting preliminary approval of the settlement subject to modification of certain barorders contemplated by the settlement. In August 2005, the District Court reaffirmed class certification andpreliminary approval of the modified settlement. In December 2006, the U.S. Court of Appeals for the SecondCircuit vacated the District Court’s decision certifying as class actions the six lawsuits designated as “focuscases.” Thereafter the District Court ordered a stay of all proceedings in all of the lawsuits pending the outcomeof plaintiffs’ petition to the Second Circuit for rehearing en banc. In April 2007, the Second Circuit deniedplaintiffs’ rehearing petition, but clarified that the plaintiffs may seek to certify a more limited class in theDistrict Court. Accordingly, the settlement as originally negotiated was terminated pursuant to stipulation andwill not receive final approval.

In February 2009, liaison counsel for plaintiffs informed the District Court that a new settlement of all IPOCases had been agreed to in principle, subject to formal approval by the parties and preliminary and finalapproval by the District Court. In April 2009, the parties submitted a tentative settlement agreement to theDistrict Court and moved for preliminary approval thereof. In June 2009, the District Court granted preliminaryapproval of the tentative settlement and ordered that notice of the settlement be published and mailed to classmembers. In September2009, the District Court held a final fairness hearing. On October 6, 2009, the District

37

Court certified the settlement class in each IPO Case and granted final approval to the settlement. On or aboutOctober 23, 2009, three shareholders filed a Petition for Permission to Appeal Class Certification Order,asserting that the District Court’s certification of the settlement classes violates the Second Circuit’s earlier classcertification decisions in the IPO Cases. Beginning on October 29, 2009, a number of shareholders also fileddirect appeals, objecting to final approval of the settlement. Similar petitions and direct appeals may be filed byother shareholders. If the settlement is affirmed on appeal, the settlement will become effective and will result inthe dismissal of all claims against us and our officers and directors with prejudice, and our pro rata share of thesettlement fund will be fully funded by insurance.

In October 2008, we filed a patent infringement suit against Ibis Biosciences, Inc. (IBIS), formerly asubsidiary of Isis Pharmaceuticals, Inc. The complaint was served on the defendant in February 2009. IBIS hasbeen acquired by Abbott Molecular. The lawsuit was filed in the U.S. District Court for the District of Delaware.The lawsuit alleged that the sale or offer for sale of the IBIS T5000 Biosensor System and related technologyinfringes three U.S. patents: 6,300,076, 6,500,621 and 7,419,787. Defendant has filed an answer andcounterclaims against us seeking declaratory judgments that the patents are not infringed and are invalid and/orunenforceable. We sought a permanent injunction enjoining the defendant from further infringement andmonetary damages, including enhanced damages pursuant to 35 U.S.C. § 284, costs, attorneys’ fees and otherrelief as the court deems just and proper. On October 22, 2009, we and IBIS entered into a non-exclusive licenseand settlement agreement and the court dismissed with prejudice all claims and counterclaims in the lawsuit.Pursuant to the terms of the agreement, we have agreed to grant IBIS and its affiliates a non-exclusive licenseunder the three mass spectrometry-based patents involved in the lawsuit and certain pending mass-spectrometry-based applications and foreign counterparts to manufacture, use, practice, sell, offer to sell, and import productsand methods protected by the licensed patents. As part of the agreement, we have also agreed to dismiss thelitigation with prejudice and have granted IBIS, and its affiliates, immunity from suit for patent infringement forpast, present or future damages related to the IBIS T5000 Biosensor System and T6000 System. Pursuant to theagreement, IBIS paid us $1.0 million.

In April 2009, we announced that the expected launch of our test for Trisomy 21 (Down syndrome) hadbeen delayed and that we were no longer relying on our previously announced test data and results for that test.We also announced that our Board of Directors had formed a special committee of independent directors tooversee an independent investigation of activity related to the test data and results and that the committee hadengaged independent counsel to assist the committee in the conduct of the investigation. In September 2009, weannounced that the committee’s investigation had been completed. Based on the committee’s work andrecommendations, the independent directors concluded that as a result of our attempted transition fromresearching potential molecular diagnostic tests to developing and commercializing those tests, we failed to putin place adequate protocols and controls for the conduct of studies in the Trisomy 21 program at our company.Certain of our employees also failed to provide adequate supervision. In the absence of such protocols, controlsand supervision, the test data and results in our Trisomy 21 program included inadequately substantiated claims,inconsistencies and errors. Due to deficiencies in our disclosure controls and procedures, in a number ofinstances such test data and results were reported to the public in our press releases and other public statements.At the recommendation of the special committee, our Board of Directors began implementing a number ofremedial measures including:

• new disclosure controls and procedures;

• changes in our organizational and reporting structure;

• enhanced training in ethics and scientific processes for our employees;

• new procedures for the conduct of research and development and clinical studies, including increasedroles and responsibilities for independent third parties;

• new procedures for the storage and management of samples for testing; and

• creation of a science committee of our board of directors to oversee our research and developmentstrategy and activities.

38

We also terminated the employment of our president and chief executive officer, Harry Stylli, Ph.D., andour senior vice president of research and development, Elizabeth Dragon, Ph.D., effective immediately. Inconnection with the termination of Dr. Stylli’s employment, Dr. Stylli resigned as a director. We also obtainedthe resignation of our chief financial officer, Paul Hawran. We also terminated the employment of three otheremployees and obtained the resignation of one other officer. While each of these officers and employees deniedwrongdoing, the committee’s investigation raised serious concerns, resulting in a loss of confidence by theindependent directors in the personnel involved.

Our board of directors appointed our chairman of the board, Harry F. Hixson, Jr., Ph.D., to serve as ourchief executive officer. Our board of directors appointed Ronald M. Lindsay, Ph.D., one of our directors, to serveas our interim senior vice president of research and development. Our board of directors appointed Paul V. Maieras our interim chief financial officer effective November 10, 2009. Our controller, Justin J. File, served as ourprincipal financial and accounting officer until the effective date of Mr. Maier’s appointment as interim chieffinancial officer.

Following our April 2009 announcement, several complaints were filed in the U.S. District Court for theSouthern District of California against us and certain of our current and former officers and directors on behalf ofcertain purchasers of our common stock. The complaints include claims asserted under Sections 10 and 20(a) ofthe Exchange Act and Sections 11 and 12(a)(2) of the Securities Act and have been brought as shareholder classactions. In general, the complaints allege that we and certain of our officers and directors violated federalsecurities laws by making materially false and misleading statements regarding our Trisomy 21 test underdevelopment, thereby artificially inflating the price of our common stock. The plaintiffs seek unspecifiedmonetary damages and other relief. On September 1, 2009, the complaints were consolidated under the caption Inre Sequenom, Inc. Securities Litigation, S.D. Cal. Case No. 09-CV-0921 LAB (WMc) and a lead plaintiff wasappointed. On December 24, 2009, we entered into a stipulation of settlement with the lead plaintiff on behalf ofthe plaintiffs’ class which, if approved by the District Court, will resolve this action. Pursuant to the terms of thestipulation, we have agreed to pay $14 million, which will be funded by insurance proceeds. We have also agreedto issue to the plaintiffs’ class a number of shares of our common stock equal to 9.95% of our total sharesoutstanding at the time of determination, subject to certain limitations. We have also agreed to adopt or continueour implementation of changes and additions to certain corporate governance policies, protocols and practices.The court preliminarily approved the settlement on January 26, 2010. The court has scheduled a final settlementapproval hearing on May 3, 2010.

In May 2009, a shareholder derivative complaint was filed in the Superior Court of California for theCounty of San Diego against certain of our current and former directors and officers. Thereafter, a number ofsimilar actions, also styled as shareholder derivative suits, were filed in state court and have been consolidated ina single court. On July 1, 2009, the first of three shareholder derivative suits were filed in the U.S. District Courtfor the Southern District of California. The federal shareholder derivative actions have been consolidated beforea single court under the caption In re Sequenom, Inc. Derivative Litigation, S.D. Cal. Case No. 09-CV-1341 LAB(WMc) and plaintiffs filed a single consolidated complaint. A separate federal derivative compliant, Ries, et al. v.Stylii, et al, case no. 09-CV-2517 LAB (WMc), was filed thereafter and it has been coordinated with theconsolidated federal derivative action. The state and federal shareholder derivative actions are hereinaftercollectively referred to as the “Derivative Actions.” The complaints in the Derivative Actions allege breaches offiduciary duties by the defendants and other violations of law. In general, the complaints allege that our directorsand certain of our officers caused or allowed for the dissemination of materially false and misleading statementsregarding our Trisomy 21 test under development, thereby artificially inflating the price of our common stock.The plaintiffs are seeking unspecified monetary damages and other relief, including reforms and improvementsto our corporate governance and internal procedures. We have not yet responded to the Derivative Actions, butwill vigorously defend against the claims advanced.

In June 2009, we received written notification that the Enforcement staff of the SEC has initiated aninvestigation following our April 2009 announcement regarding our Trisomy 21 test under development.Following our September 2009 announcement, members of the special committee and its independent counsel

39

met with the SEC staff in connection with its investigation. As part of this investigation, the SEC staff has alsorequired us to produce information with respect to our announcement relating to our offer to acquire EXACTSciences, Inc. in January 2009. We intend to continue to cooperate fully with the SEC in this matter.

In July 2009, an attorney who claims to represent certain stockholders who were issued an aggregate of71,836 shares of our common stock when we acquired the assets of SensiGen in February 2009 sent us a letterclaiming that we had breached our representations and warranties made in the asset purchase agreement andalleging that his clients had suffered approximately $1.3 million in damages as a result. On December 23, 2009,we entered into a stipulation of settlement with these stockholders. Pursuant to the terms of the settlement, inconsideration of the stockholders’ release of claims, we issued an aggregate of 367,547 shares of our commonstock to such stockholders.

Following our September 2009 announcement, representatives of the Office of the U.S. Attorney for theSouthern District of California contacted us to inquire about the announcement. We have met withrepresentatives of the U.S. Attorney and the Federal Bureau of Investigation (FBI) in connection with theirinvestigations. We intend to continue to cooperate fully with the U.S. Attorney and the FBI in this matter.

Following our September 2009 announcement, representatives of NASDAQ also contacted us to inquireabout the announcement. We have met with representatives from NASDAQ in connection with theirinvestigation and we intend to continue to cooperate fully with NASDAQ in this matter in the event thatNASDAQ has any further inquiries.

On October 28, 2009, plaintiff Xenomics, Inc. filed a complaint in the Supreme Court of the of the State ofNew York naming us as the defendant. In the complaint, the plaintiff alleges that due to materially false andmisleading statements regarding our Trisomy 21 test under development, we have breached the licenseagreement entered into by the parties on October 29, 2008, which provides us with exclusively licensed patentrights for the use of fetal nucleic acids obtained from maternal urine, and that the plaintiff has suffered damagesas a result. The plaintiff is seeking equitable relief and $300 million in damages. On December 15, 2009, weremoved the case to the U.S. District Court for the Southern District of New York. On February 22, 2010, wefiled a motion in the federal district court to, among other things, dismiss or stay the action in light of the factthat the License Agreement between the parties specifically provides that if Xenomics seeks to resolve a disputearising under the agreement, it must do so by commencing an arbitration in San Diego. The district court hasdirected that the motion be fully briefed by March 26, 2010. Regardless of the forum in which the dispute isultimately heard, we intend to vigorously defend against the claims advanced.

Legal expenses aggregating approximately $0.7 million relating to our insured legal expenses have beensubmitted directly to third party insurance carriers for reimbursement, but for which we are ultimately liable.Therefore, as of December 31, 2009, we have not accrued for these expenses in the accompanying consolidatedfinancial statements. Should these expenses not be paid by our third party insurance carriers, we will be requiredto incur these expenses directly.

In addition, from time to time, we may be involved in litigation relating to claims arising out of ouroperations in the normal course of business.

Because of the uncertainties related to the incurrence, amount and range of loss on any pending litigation,investigation, inquiry or claim, management is currently unable to predict the ultimate outcome of any litigation,investigation, inquiry or claim, determine whether a liability has been incurred or make an estimate of thereasonably possible liability that could result from an unfavorable outcome. An adverse ruling or outcome in anylawsuit involving us could materially affect our business, liquidity, consolidated financial position or results ofoperations ability to sell one or more of our products or could result in additional competition. In view of theunpredictable nature of such matters, we cannot provide any assurances regarding the outcome of any litigation,investigation, inquiry or claim to which we are a party or the impact on us of an adverse ruling of such matters.

Item 4. (REMOVED AND RESERVED)

40

PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERMATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a) Our common stock is traded on The NASDAQ Global Market under the symbol “SQNM.” Thefollowing tables set forth the high and low sales prices for the Company’s common stock as reported on TheNASDAQ Global Market for the periods indicated.

High Low

Year Ended December 31, 2009:Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.49 $ 2.76Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.61 3.23Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.27 2.93First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.54 12.68

Year Ended December 31, 2008:Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26.72 $12.71Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.76 16.28Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.96 5.07First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.40 5.06

There were approximately 165 holders of record of our common stock as of February 18, 2010. We have notpaid any cash dividends to date and do not anticipate any being paid in the foreseeable future.

41

Performance Measurement Comparison*

The following graph compares the cumulative total stockholder return on our common stock betweenDecember 31, 2004 and December 31, 2009 with the cumulative total return of (i) the NASDAQ CompositeIndex (NASDAQ Index) and (ii) the NASDAQ Biotechnology Index (the NASDAQ Biotech Index), over thesame period. This graph assumes the investment of $100.00 on December 31, 2004 in common stock, theNASDAQ Index and the NASDAQ Biotech Index, and assumes the reinvestment of any dividends.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*Among Sequenom, Inc., The NASDAQ Composite Index

And The NASDAQ Biotechnology Index

$0

$100

$200

$300

$400

$500

$700

$600

12/04 3/05 6/05 9/05 12/05 3/06 6/06 9/06 12/06 3/07 6/07 9/07 12/07 3/08 6/08 9/08 12/08 3/09 6/09 9/09 12/09

Sequenom, Inc. NASDAQ Composite NASDAQ Biotechnology

*$100 invested on 12/31/04 in stock or index, including reinvestment of dividends.Fiscal year ending December 31.

* This Section is not “soliciting material” is not deemed “filed” with the SEC and is not to be incorporated byreference in any of our filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 whethermade before or after the date hereof without regard to any general incorporation language in any such filing.

42

Item 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data is derived from our audited consolidated financialstatements and should be read in conjunction with the consolidated financial statements and the notes to suchstatements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”included elsewhere in this report. Historical results are not necessarily indicative of the results to be expected inthe future.

Years ended December 31,

2009 2008 2007 2006 2005

(In thousands, except per share data)

Consolidated statements of operations dataRevenues:

Consumables, MassARRAY and other productrelated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,533 $ 42,259 $ 37,365 $ 27,051 $ 19,070

Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,209 4,817 3,524 1,023 —Diagnostic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 — — — —Research and other . . . . . . . . . . . . . . . . . . . . . . . . . 27 73 113 422 351

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . 37,863 47,149 41,002 28,496 19,421Costs and expenses:

Cost of consumables, product, diagnostic andservices revenue . . . . . . . . . . . . . . . . . . . . . . . . . 14,570 19,590 18,077 11,887 10,370

Research and development . . . . . . . . . . . . . . . . . . . 37,454 27,455 14,352 11,939 11,930Selling and marketing, general and

administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,972 42,735 31,148 22,425 22,382Restructuring and long-lived asset impairment

charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,589 — — 10 593Amortization of acquired intangibles . . . . . . . . . . . — — — 1,511 2,014

Total costs and expenses . . . . . . . . . . . . . . . . . 108,585 89,780 63,577 47,772 47,289

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . (70,722) (42,631) (22,575) (19,276) (27,868)Other income (expense):

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442 1,592 1,781 906 633Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . (261) (139) (17) (20) (325)Loss on marketable securities . . . . . . . . . . . . . . . . . (1,914) (2,584) (1,071) — —Other income (expense), net . . . . . . . . . . . . . . . . . . 1,560 (181) (101) 191 94

Loss before income taxes . . . . . . . . . . . . . . . . . . . . . . . . (70,895) (43,943) (21,983) (18,199) (27,466)Income (expense) tax benefit . . . . . . . . . . . . . . . . . . . . . (117) (211) — 622 929

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (71,012) $(44,154) $(21,983) $(17,577) $(26,537)

Net loss per share, basic and diluted . . . . . . . . . . . . . . . . $ (1.16) $ (0.83) $ (0.57) $ (0.71) $ (2.00)

Weighted average shares outstanding, basic anddiluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,171 53,129 38,865 24,842 13,276

As of December 31,

2009 2008 2007 2006 2005

(In thousands)

Consolidated balance sheet dataCash, cash equivalents, marketable securities and restricted

cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $44,100 $ 99,700 $52,150 $26,330 $ 8,678Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,473 103,246 52,690 23,651 5,403Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,645 140,484 76,046 39,881 24,436Total long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . 5,226 4,779 5,744 3,525 1,363Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . 63,658 116,213 54,265 25,450 11,743

43

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

Overview


Our proprietary MassARRAY system, comprised of hardware, software applications, consumable chips andreagents, is a high performance (in speed, accuracy and cost efficiency) nucleic acid analysis platform thatquantitatively and precisely measures genetic target material and variations. Our platform is widely accepted as aleading high-performance DNA analysis platform for the fine mapping genotyping market and continues to gaintraction for newer applications, such as agricultural-biotechnology and clinical research. Our customers includepremier clinical research laboratories, bio-agriculture, bio-technology and pharmaceutical companies, academicinstitutions, and various government agencies worldwide. To provide customer support for our expanding userbase and in an effort to maximize market penetration, we have established direct sales and support personnelserving North America, Europe and Asia, in addition to distribution partners in several major countriesthroughout the world.

We are researching, developing and pursuing the commercialization of various noninvasive moleculardiagnostic tests for prenatal genetic disorders and diseases, women’s health related disorders and diseases,age-related macular degeneration diagnostics, oncology, infectious diseases, and other diseases and disorders. Wehave branded our diagnostic technology for prenatal diagnostics under the trademark SEQureDx. Our efforts inmolecular diagnostics are focused on noninvasive diagnostics currently using our proprietary MassARRAY system;however, we may in the future employ other instrumentation platforms with our diagnostic applications as may bemore suitable on a case-by-case basis considering optimum test performance and commercialization factors.

Currently, we are primarily focused on developing and commercializing prenatal screening and diagnostictests using our foundational, patent protected, noninvasive, circulating cell-free fetal (ccff) nucleic acid basedassay technology. This technology uses a simple maternal blood draw (meaning noninvasive compared toinvasive procedures such as amniocentesis, chorionic villus sampling, or surgery) for a prenatal diagnosis or riskassessment in order to provide reliable information about the status of the fetus early in pregnancy. In early 2010we launched noninvasive Rhesus D genotyping and Fetalxy sex determination laboratory developed tests (LDTs)using this patented ccff technology which we in-license from Isis Innovation Limited (Isis). We also launched, inSeptember 2009, a noninvasive molecular based cystic fibrosis carrier screening LDT. These tests have all beenlaunched through our College of American Pathology (CAP) accredited and Clinical Laboratory ImprovementAmendments (CLIA) certified laboratory, Sequenom Center for Molecular Medicine, LLC, located in GrandRapids, Michigan. Most molecular genetic tests are LDTs.

We have made substantial investments in our information technology infrastructure to enhance thecapabilities of our laboratory to track samples and provide electronic ordering and reporting, and have put inplace sample collection and transportation logistics that can be readily scaled. We are entering into contracts withthird party payors to establish pricing for our tests and provide reimbursement. We also plan to conduct thedevelopment, validation, and other activities necessary to file submissions with the Food and DrugAdministration (FDA) seeking approval for selected diagnostic tests. Revenues from our cystic fibrosis test werenot significant from September through the end of 2009.

Our MassARRAY system provides reliable results for a wide range of DNA/RNA analysis applicationsincluding single nucleotide polymorphism (SNP) genotyping detection of mutations, analysis of copy numbervariants and other structural genome variations. In addition, the system provides quantitative gene expression

44

analysis, quantitative DNA methylation analysis, comparative sequence analysis of haploid organisms, SNPdiscovery, and oligonucleotide quality control. These applications are provided through proprietary applicationsoftware that operates on the MassARRAY platform and through the purchase of consumable chips and reagentsets. While the MassARRAY system is versatile across many applications, it is a robust and cost-effectivegenotyping solution for fine mapping projects enabled through our iPLEX multiplexing assay, which permitsmultiplexed SNP analysis using approximately the same amount of reagents and chip surface area as is used for asingle locus/SNP analysis.

We have targeted customers conducting quality genotyping and performing fine mapping studies, candidategene studies, comparative sequencing, gene expression analysis, and epigenetic analysis in the molecularmedicine market. Epigenetic analysis is an important part of cancer and other research areas. DNA methylationanalysis is the most frequently studied epigenetic change, and examines changes in the presence or absence ofmethyl groups in specific areas of the DNA.

We are targeting customers for our genetic analysis technology and products across four segments:biomedical research and molecular medicine; oncology and translational research; clinical research, public healthinitiatives, biodefense and agriculture. We believe the market and opportunities for growth for fine mappinggenotyping are increasing as more researchers are completing their larger genomic studies such as whole genomescans. Epigenetic analysis is an emerging market that, along with gene expression analysis, is increasingly beingutilized by researchers in conjunction with genotyping to attempt to fully understand genetic cause and effect.

As of December 31, 2009, our revenues consisted of sales of MassARRAY hardware, software,consumables, maintenance agreements, diagnostic testing and from services contracts through our geneticanalysis contract research services business. The impact of our product offerings and contract research servicesbusiness on future revenues, margins, expenses, and cash flows remains uncertain and depends on many factorsas described in Item 1A of this report under the caption “Risk Factors.”

Expected revenues from our launched molecular tests (cystic fibrosis carrier screen, Rhesus D genotyping,and Fetalxy sex determination tests) are uncertain and difficult to predict. These tests have only recently beenlaunched, demand for and acceptance of these tests by physicians and their patients is uncertain, and the level ofreimbursement (applicable to the cystic fibrosis carrier screen and Rhesus D genotyping tests) is also uncertain.The Fetalxy sex determination test is paid for directly by the patient and is not subject to reimbursement becauseit is not a medically necessary test. As a result, our entitlement to, and the timing and amounts of, any revenuesfrom molecular diagnostic products are uncertain and difficult to predict at this early point in time following theirlaunch. Such revenues are uncertain and also depend on many factors as described in Item 1A of this report underthe caption “Risk Factors.”

We have a history of recurring losses from operations and have an accumulated deficit of $597.3 million asof December 31, 2009 and management expects to incur further losses for the foreseeable future. Our capitalrequirements to sustain operations, including research and development projects, have been and will continue tobe significant. As of December 31, 2009, we had available cash and cash equivalents and current marketablesecurities totaling $42.7 million and working capital of $45.5 million, which based on our current projectionswill not be sufficient to fund our obligations through the end of the third quarter of 2010 if we continue spendingat our current levels. Therefore, we plan to pursue raising additional debt and/or equity financing through privateor public offerings, but we cannot assure you that such financing or transaction will be available on acceptableterms, or at all. The uncertainty of this situation raises substantial doubt about our ability to continue as a goingconcern. The accompanying consolidated financial statements do not include any adjustments that might resultfrom the failure to continue as a going concern.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in theUnited States requires management to make estimates and assumptions in certain circumstances that affectamounts reported in the accompanying consolidated financial statements and related notes. Certain of these

45

accounting policies that we believe are the most critical to our investors’ understanding of our financial resultsand conditions are discussed below. Our significant accounting policies are more fully described in Note 2 to ourConsolidated Financial Statements included elsewhere in this report. In preparing these financial statements,management uses its judgment to determine the appropriate assumptions to be used in the determination ofcertain estimates. Management considers many factors in selecting appropriate financial accounting policies andcontrols and in developing the estimates and assumptions that are used in the preparation of the consolidatedfinancial statements. Management must apply significant judgment in this process. The estimation process oftenmay yield a range of potentially reasonable estimates of the ultimate future outcomes and management mustselect an assessment that falls within the range of reasonable estimates. The application of these accountingpolicies involves the exercise of judgment and use of estimates and assumptions as to future uncertainties and, asa result, actual results could differ from these estimates.

Revenue Recognition

We recognize revenue for consumables, MassARRAY and other product related sales in accordance withcurrent accounting rules, when persuasive evidence of an arrangement exists, delivery has occurred or serviceshave been rendered, the price is fixed and determinable, and collectability is reasonably assured. Additionally,for MassARRAY system sales, the arrangement consideration is allocated among the separate units of accountingbased on their relative fair values. The separate units of accounting are typically the system and software itselfand maintenance contracts sold at the time of the system sale. Revenue is deferred for fees received beforeearned. Revenues from sales of consumables are recognized generally upon shipment and transfer of title to thecustomer. Revenue from sales of MassARRAY systems with general standard payment terms of 60 days or lessare recognized upon shipment and transfer of title to the customer or when all revenue recognition criteria aremet. Revenues from the sale or licensing of our proprietary software are recognized upon transfer of title to thecustomer or the duration of the software license. We recognize revenue on maintenance services for ongoingcustomer support over the maintenance period. Revenues from genetic services are recognized at the completionof key stages in the performance of the service, which is generally delivery of SNP assay information. Grantrevenue is recorded as the research expenses relating to the grants are incurred, provided that the amountsreceived are not refundable if the research is not successful. Amounts received that are refundable if the researchis not successful would be recorded as deferred revenue and recognized as revenue upon the grantor’s acceptanceof the success of the research results.

Diagnostic revenues from our carrier screening test for cystic fibrosis, which was commercially launched inSeptember 2009, have been recognized on a cash basis due to the limited number of contracts or agreements wehave with third-party payors and our limited collections experience. We generally bill third-party payors upongeneration and delivery of a report to the physician. As such, we take assignment of benefits and risk ofcollection with the third-party payor. We usually bill the patient directly for amounts not covered by theirinsurance carrier in the form of co-pays and deductibles, but only after multiple requests for full payment havebeen denied or only partially paid by the insurance carrier. Some payors may not cover our carrier screening testfor cystic fibrosis, as ordered by the physician, under their reimbursement policies. Consequently, we pursuecase-by-case reimbursement where policies are not in place.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requiresmanagement to make certain estimates and assumptions that affect the reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities at the date of the financial statements and the reported amountsof revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates are as follows:

• Goodwill and impairment of long-lived assets. The purchase price allocation for acquisitions requiresextensive use of accounting estimates and judgments to allocate the purchase price to the identifiabletangible and intangible assets acquired and liabilities assumed based on their respective fair values.

46

Additionally, we must determine whether an acquired entity is considered to be a business or a set of netassets, because a portion of the purchase price can only be allocated to goodwill in a businesscombination. Goodwill and intangible assets deemed to have indefinite lives are not amortized, but aresubject to annual impairment tests. The amounts and useful lives assigned to other intangible assetsimpact future amortization. Determining the fair values and useful lives of intangible assets requires theuse of estimates and the exercise of judgment. These judgments can significantly affect our netoperating results.

• We periodically re-evaluate the original assumptions and rationale utilized in the establishment of thecarrying value and estimated lives of our goodwill and long-lived assets. The criteria used for theseevaluations include management’s estimate of the asset’s continuing ability to generate income fromoperations and positive cash flows in future periods as well as the strategic significance of anyintangible assets in our business objectives. If assets are considered to be impaired, the impairmentrecognized is the amount by which the carrying value of the assets exceeds the fair value of the assets.No impairment of long-lived assets was recorded in 2009, 2008 or 2007. Intangible assets totaled $1.2million, net of accumulated amortization, at December 31, 2009.

• Allowance for Doubtful Accounts. We maintain an allowance for doubtful accounts for estimated lossesresulting from the inability of our customers to make required payments. We evaluate the collectabilityof our accounts receivable balance based on a combination of factors. We regularly analyze customeraccounts, review the length of time receivables are outstanding and review the historical loss rates. If thefinancial condition of our customers were to deteriorate, additional allowances could be required.

• Reserves for obsolete and slow-moving inventory. We operate in an industry characterized by rapidimprovements and changes to technology and products. The introduction of new products by us or ourcompetitors can result in our inventory being rendered obsolete or requiring us to sell items at a discountto cost. We estimate the recoverability of our inventory by reference to our internal estimates of futuredemands and product life cycles. If we incorrectly forecast demand for our products or inadequatelymanage the introduction of new product lines, we could materially impact our financial statements byhaving excess inventory on hand. Our future estimates are subjective and could be incorrect. During2009, slow-moving inventory reserves of $0.1 million were charged against cost of goods sold and thetotal reserve was $1.9 million at December 31, 2009.

• Income taxes. Our provision for income taxes is computed using the asset and liability method, underwhich deferred tax assets and liabilities are recognized for the expected future tax consequences oftemporary differences between the financial reporting and tax bases of assets and liabilities, and for theexpected future tax benefit to be derived from tax loss and credit carryforwards. Deferred tax assets andliabilities are determined using the enacted tax rates in effect for the years in which those tax assets areexpected to be realized. A valuation allowance is established when it is more likely than not the futurerealization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for avaluation allowance is performed on a jurisdiction by jurisdiction basis, and includes a review of allavailable positive and negative evidence. As of December 31, 2009, we maintain a valuation allowanceagainst our U.S. and foreign deferred tax assets that we concluded have not met the “more likely thannot” threshold.

We recognize excess tax benefits associated with share-based compensation to stockholders’ equity onlywhen realized. When assessing whether excess tax benefits relating to share-based compensation havebeen realized, we follow the with-and-without approach, excluding any indirect effects of the excess taxdeductions. Under this approach, excess tax benefits related to share-based compensation are notdeemed to be realized until after the utilization of all other tax benefits available to us.

We recognize the impact of a tax position in our financial statements only if that position is more likelythan not of being sustained upon examination by taxing authorities, based on the technical merits of theposition. Any interest and penalties related to uncertain tax positions will be reflected in income taxexpense.

47

• Stock based compensation. Stock based compensation cost is estimated at the grant date based on theaward’s fair-value as calculated by the Black-Scholes option pricing model (BSM) and is recognized asexpense over the requisite service period. The BSM model requires various highly judgmental assumptionsincluding volatility, forfeiture rates, and expected option life. If any of these assumptions used in the BSMmodel change significantly, stock-based compensation expense may differ materially in the future fromthat recorded in the current period.

Recent Accounting Pronouncements

As of July 1, 2009, the Financial Accounting Standards Board (FASB) formally approved the FASBAccounting Standards Codification (Codification) as the single source of authoritative U.S. accounting andreporting standards, other than guidance issued by the SEC. At that time, the Codification superseded all then-existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literaturenot included in the Codification became non-authoritative. The Codification is effective for interim and annualperiods ending after September 15, 2009. We adopted the provisions of the Codification in the third quarter of 2009.The adoption did not have a material impact on our consolidated financial statements.

In May 2009, the FASB issued authoritative guidance that establishes general standards of accounting for anddisclosure of events that occur after the balance sheet date but before financial statements are issued or are availableto be issued. This guidance became effective for interim periods and fiscal years ending after June 15, 2009. Weadopted the provisions of this guidance in the second quarter of 2009. The adoption of this guidance did not have amaterial impact on our consolidated financial statements.

In April 2009, the FASB issued authoritative guidance that requires publicly traded companies to include intheir interim financial reports certain disclosures about the carrying value and fair value of financial instrumentspreviously required only in annual financial statements and to disclose changes in significant assumptions used tocalculate the fair value of financial instruments. This guidance became effective for all interim reporting periodsending after June 15, 2009, with early adoption permitted for interim reporting periods ending after March 15,2009. We adopted the provisions of this guidance in the second quarter of 2009. The adoption of this guidancedid not have a material impact on our consolidated financial statements. In December 2007, the FASB issuedauthoritative guidance that significantly changes the accounting and reporting requirements for businesscombination transactions, including capitalization of in-process research and development assets and expensingacquisition costs as incurred. This guidance became effective for business combination transactions occurring infiscal years beginning after December 15, 2008. We adopted the provisions of this guidance in the first quarter of2009. The adoption did not have a material impact on our 2009 consolidated financial statements.

In November 2008, the FASB issued authoritative guidance that clarifies how to account for acquiredintangible assets subsequent to initial measurement in situations in which an entity does not intend to actively usethe assets but intends to hold the asset to prevent others from obtaining access to the asset (a defensive intangibleasset), except for intangible assets that are used in research and development activities. This guidance requires that adefensive intangible asset be accounted for as a separate unit of accounting and assigned a useful life that reflectsthe entity’s consumption of the expected benefits related to that asset. This guidance became effective for intangibleassets acquired on or after December 15, 2008. We adopted the provisions of this guidance in the first quarter of2009. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In June 2008, the FASB issued authoritative guidance that clarifies the criteria for determining whether certainfinancial instruments should be classified as derivative instruments or equity instruments. The guidance becameeffective for years beginning after December 15, 2008. We adopted the provisions of the guidance in the firstquarter of 2009. The adoption did not have a material impact on our consolidated financial statements.

In April 2008, the FASB issued authoritative guidance that amends the guidance for estimating the useful livesof recognized intangible assets and requires additional disclosure related to renewing or extending the useful lives of

48

recognized intangible assets. This guidance became effective for fiscal years and interim periods beginning afterDecember 15, 2008. We adopted the provisions of this guidance in the first quarter of 2009. The adoption of thisguidance did not have a material impact on our consolidated financial statements.

In December 2007, the FASB issued authoritative guidance that defines collaborative arrangements andrequires that transactions with third parties that do not participate in the arrangement be reported in the appropriateincome statement line items pursuant to existing authoritative accounting literature. In accordance with thisguidance, income statement classification of payments made between participants of a collaborative arrangement isto be based on other applicable authoritative accounting literature. If the payments are not within the scope oranalogy of other authoritative accounting literature, a reasonable, rational and consistent accounting policy is to beelected. This guidance became effective for fiscal years beginning after December 15, 2008 and was to be applied asa change in accounting principle to all prior periods retrospectively for all collaborative arrangements existing as ofthe effective date. We adopted the provisions of this guidance in the first quarter of 2009. The adoption of thisguidance did not have a material impact on our consolidated financial statements.

Results of OperationsYears ended December 31, 2009 and 2008

Revenues

Total revenues were $37.9 million and $47.1 million for the years ended December 31, 2009 and 2008,respectively. MassARRAY and other product related revenues are derived from the sale of MassARRAY systems,consumables, sales and licensing of our proprietary software, maintenance contracts, and license fees fromend-users. Diagnostic revenues are from the sale of our carrier screening LDT for cystic fibrosis and consisted ofcash collected from tests performed through December 31, 2009.

Consumable sales increased to $20.5 million in 2009 from $19.5 million in 2008. The increase in 2009compared to 2008 was primarily due to increased consumables orders from our customers in the biomedicalresearch and agricultural biology markets.

MassARRAY and other product related revenue decreased to $15.0 million in 2009 from $22.7 million in2008. The decrease of $7.7 million was primarily due to a decrease in MassARRAY system hardware andsoftware revenue to $10.7 million in 2009 from $19.5 million in 2008, which was attributable to fewer systemplacements during the year ended December 31, 2009. Revenue from other product sales, includingMassARRAY system maintenance contracts, license fees and royalties for the years ended December 31, 2009and 2008 was $4.3 million and $3.2 million, respectively. Maintenance revenue increased by approximately $1.1million in 2009, as compared to 2008 due to higher service contracts in effect over our installed base.

We recorded genetic analysis service revenues of $2.2 million for the year ended December 31, 2009,compared to $4.8 million in service revenues for the year ended December 31, 2008. The decrease from 2008 isattributable to our cost cutting initiative that commenced in April 2009, which refocused our genetic analysisservice business on fewer, higher margin studies and projects. We expect genetic analysis service revenues to beminimal going forward

We recognized diagnostic revenue of $94,000 and $0 for the years ended December 31, 2009 and 2008,respectively. Diagnostic revenue is currently generated only from our carrier screening test for cystic fibrosis,which we commercialized in September 2009. Diagnostic revenue is recognized upon cash collection aspayments are received. Diagnostic revenue going forward is uncertain and difficult to predict due to the lack ofhistorical sales trends associated with our recent commercial launch of this test.

Research and other revenue was $27,000 for the year ended December 31, 2009, compared to $73,000 forthe year ended December 31, 2008. The timing of research revenues depends upon our expenditures on grantresearch and the receipt of the grant funding from the sponsoring agencies. We expect research revenue to beminimal going forward.

Domestic and non-U.S. revenues were $18.0 million and $19.8 million for the year ended December 31,2009, respectively, and $23.8 million and $23.3 million for the year ended December 31, 2008, respectively.

49

The following table presents revenue for each reportable segment for the year ended December 31, 2009.Prior to 2009, all revenue was derived from our Genetic Analysis operations.

(In thousands)

Revenues:Molecular Diagnostics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94Genetic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,769

$37,863

Our revenues have historically fluctuated from period to period and likely will continue to fluctuatesubstantially in the future based upon the unpredictable sales cycle for the MassARRAY system, generaleconomic conditions, revenue recognition criteria, the overall acceptance and demand for our new and existingcommercial products and services, as well as the adoption rates of our cystic fibrosis carrier screening assay,Rhesus D genotyping assay, Fetalxy sex determination assay and future assays.

Costs of Consumables and Products, Services and Diagnostic Revenues and Gross Margins

Cost of consumables products revenues were $12.0 million and $15.1 million and gross margins were 66%and 64% for the years ended December 31, 2009 and 2008, respectively. The increase in gross margin forproduct revenues in 2009 compared to 2008 is attributable to increased consumable sales that generally havehigher average gross margins compared to systems sales and is also due to fewer system placements, whichhistorically sell at lower gross margins.

Cost of service revenues were $2.2 million and $4.5 million and gross margins were 1% and 7% for theyears ended December 31, 2009 and 2008, respectively. Gross margins decreased compared to the prior year dueto the completion of remaining unfavorable, low volume contracts. Gross margins on contract research serviceshave been dependent on particular contract terms of the work undertaken, as well as the particular market inwhich the services are being performed, the size of the projects and the pricing terms.

Cost of diagnostic revenues are recognized at the completion of testing and were $0.4 million and $0 andgross margins were (338%) and 0% for the years ended December 31, 2009 and 2008, respectively. Gross marginon diagnostic tests are primarily affected by test volumes and overall reimbursement for the amount paid per test.

Our overall gross margins were 62% and 58% for the years ended December 31, 2009 and 2008,respectively. The increase in overall gross margin in 2009 is attributable to lower system and contract researchrevenues, which are sold at a lower margin than consumables. The increase in consumables revenue during 2009,as compared to 2008, also contributed to the improved margin.

We believe that gross margin in future periods will be affected by, among other things, the selling price forsystems and consumables, consumable sales per MassARRAY system sold, the mix of product sales and the typeof services, competitive conditions, sales volumes, discounts offered, sales through distributors, as well as thecost of goods sold, inventory reserves and obsolescence charges required and royalty payment obligations onin-licensed technologies. Our gross margin will also be affected by the adoption rates of our diagnostic LDTs wecommercialize, the payor and other contracts we may enter into for laboratory developed or diagnostic tests andthe volume of tests sold.

Research and Development Expenses

Research and development costs were $37.5 million and $27.5 million for the years ended December 31,2009 and 2008, respectively. These expenses consist primarily of salaries and related personnel expenses,improvements to our existing products, clinical sample and related operations, validation of products underdevelopment and expenses relating to work performed under research contracts.

50

The increase in research and development expenses of $10.0 million for 2009 compared to 2008 primarilyresulted from increased headcount and related costs of $3.0 million associated with increased investment in ourdiagnostic development, an increase of $3.8 million for clinical trial costs associated with our prenatal diagnostic,molecular diagnostic and genetic analysis programs, headcount based overhead allocation expense related to ourinformation technology and facilities departments of $1.8 million, share-based compensation expense of $2.2million, as well as higher depreciation of $1.0 million associated with capital expenditures and our acquisition ofSensiGen, LLC in February 2009, higher facilities operations expenses of $0.3 million and office expenses of$0.2 million related to higher freight and postage associated with sample collection activity with our clinicalprograms. These increases were offset by a decrease of $2.3 million in collaboration costs associated withvarious research and development projects and related licensing activities.

The following table presents a reconciliation of research and development expenses for each reportablesegment for the year ended December 31, 2009.

Research and development expenses (in thousands):

Molecular Diagnostics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,935Genetic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,587

Total segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,522Share based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,835Indirect overhead (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,898Allocated and absorbed costs (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,199

Total research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $37,454

(1) Indirect overhead consists of expenses related to the following departments, which are unallocated to ouroperating segments for performance assessment by our chief operating decision maker: quality, regulatory,chief science officer and research and development collaborations (licensing costs).

(2) Allocated costs consist of costs from the following departments, which are unallocated to our operatingsegments for performance assessment by our chief operating decision maker: human resources, informationtechnology and facilities. Absorbed costs relate to costs incurred that are absorbed into cost of sales.

We expect our research and development expenses to increase in 2010 compared to 2009, as we continue toexpand our investment in the development of noninvasive prenatal nucleic acid based tests, including a potentialTrisomy 21 LDT, and other noninvasive tests such as a potential LDT for age-related macular degeneration andas we continue to invest in new products and applications for our MassARRAY platform.

Sales and Marketing Expenses

Sales and marketing costs were $26.8 million and $24.3 million for the years ended December 31, 2009 and2008, respectively. These expenses consist primarily of salaries and related expenses for sales and marketing,customer support, and business development personnel and their related department expenses.

The increase in selling and marketing expenses of $2.5 million for 2009 compared to 2008 primarilyresulted from increased headcount and related costs of $1.1 million associated with building our marketing andcontract sales force infrastructure for our noninvasive diagnostics business, $1.4 million for higher share-basedcompensation expense and $0.2 million related to increased travel, postage and freight charges and other generaloperating expenses as compared to 2008. These increases were offset by a decrease of $0.2 million in marketingexpenses associated with our genetic analysis and diagnostic operations by reducing external consultant costs.

51

The following table presents a reconciliation of sales and marketing expenses for each reportable segmentfor the year ended December 31, 2009.

Sales and marketing expenses (in thousands):

Molecular Diagnostics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,780Genetic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,644

Total segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,424Share based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,590Indirect overhead (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,819Allocated and absorbed costs (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,012

Total research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,845

(1) Indirect overhead consists of expenses related to the following departments, which are unallocated to ouroperating segments for performance assessment by our chief operating decision maker: businessdevelopment and European sales administration.


We expect our sales and marketing expenses to remain higher in 2010 compared to 2009, due to ourincreased headcount and related expenditures as we strengthen our sales force and build our marketing andcommercial development teams for our molecular diagnostic tests.

General and Administrative Expenses

General and administrative costs were $28.1 million and $18.4 million for the years ended December 31,2009 and 2008, respectively. These expenses consist primarily of salaries and related expenses for legal, finance,and human resource personnel, and their related department expenses. General and administrative costs are notallocated to our business segments for performance assessment by our chief operating decision maker.

The increase in general and administrative expenses of $9.7 million for 2009 compared to 2008 primarilyresulted from increased legal expense of $6.4 million associated with litigation, the independent investigationconducted by the Special Committee of our Board of Directors and the share-based payment related to thesettlement of SensiGen, LLC’s claim against us, share-based compensation of $1.0 million, $0.9 million forincreased headcount and related expenses, $1.0 million of higher rent, taxes and communications expensesassociated with our San Diego facilities and $0.4 million in increased investor relations consulting, audit and taxrelated expenses.

We expect general and administrative costs to increase in 2010 compared to 2009, as we build ourinfrastructure in order to support our anticipated growth and due to expected continued legal costs related toongoing investigations and litigation.

Restructuring and long-lived asset impairment charge

Restructuring and long-lived asset impairment charges were $1.6 million for the year ended December 31,2009. These charges were associated with our April 2009 reduction in workforce, which included the closure ofour leased facility in Boston, Massachusetts, the closure of our office located in New Delhi, India, as well as adecrease in our genetic analysis workforce primarily associated with our genetic analysis services business.These charges consist of one-time terminations benefits, office closure expenses and other related costs. Therewere no comparative charges for the year ended December 31, 2008.

52

Interest Income

Interest income was $0.4 million and $1.6 million for the years ended December 31, 2009 and 2008,respectively. The decrease in 2009 compared to 2008 was attributable to a reduction of our cash, cash equivalentsand marketable securities balances in the current period, as well as changes in our investment policy in the prioryear that resulted in the overall reduction in the rates of return in our investment portfolio.

Loss on Marketable Securities

Loss on marketable securities was $1.9 million and $2.6 million for the years ended December 31, 2009 and2008, respectively. The loss for the year ended December 31, 2009, was due to the sale of five auction ratesecurity investments, which resulted in a realized loss of $0.8 million, as well as an other-than-temporaryimpairment in our remaining investments in auction rate securities of $1.1 million. Two of our four remaininginvestments in auction rate securities were subsequently sold in January 2010, with the realized loss of $0.7million having been included within the $1.1 million recognized for the year ended December 31, 2009.

Interest Expense

Interest expense was $0.3 million and $0.1 million for the years ended December 31, 2009 and 2008,respectively. The increase in 2009 compared to 2008 is due to payments on our capital lease and debt obligationsobtained in 2009, as well as continued payments on our asset-backed loans.

Other Income (Expense), net

Other income (expense), net was $1.6 million and ($181,000) for the years ended December 31, 2009 and2008, respectively. The increase in 2009 primarily relates to a $1.0 million payment we received related to thesettlement of our patent infringement lawsuit against Ibis Biosciences, Inc., favorable realized foreign currencytranslations and the receipt of a research and development tax credit from the U.S. Government of $0.3 million.

Income Tax Expense

Income tax expense was $117,000 and $211,000 for the year ended December 31, 2009 and 2008,respectively. Income tax expense in both periods was primarily due to statutory tax liabilities resulting from ourforeign operations.

Years ended December 31, 2008 and 2007

Revenues

Total revenues were $47.1 million and $41.0 million for the years ended December 31, 2008 and 2007,respectively. MassARRAY and other product related revenues are derived from the sale of MassARRAYsystems, consumables, sales and licensing of our proprietary software, maintenance contracts, and license feesfrom end-users.

Consumable sales increased to $19.5 million in 2008 from $16.5 million in 2007. The increase in 2008compared to 2007 was a result of an increase in our installed base of MassARRAY Compact systems as well asincreased demand for our iPLEX genotyping assay.

MassARRAY and other product related revenue increased to $22.7 million in 2008 from $20.8 million in2007. The increase of $1.9 million was primarily due to an increase in MassARRAY system hardware andsoftware revenue to $19.5 million in 2008 from $18.4 million in 2007, which was attributable to an increase inour selling price during 2008. Revenue from other product sales, including MassARRAY system maintenancecontracts, license fees and royalties for the years ended December 31, 2008 and 2007 was $3.2 million and $2.5million, respectively. Maintenance revenue increased by approximately $0.7 million from the comparative perioddue to higher service contracts in effect over our installed base.

53

We recorded genetic analysis service revenues of $4.8 million for the year ended December 31, 2008,compared to $3.5 million in service revenues for the year ended December 31, 2007. The increase from 2007 isattributable to growth in our contract research service business primarily in the commercial, clinical analysis andthe academic research markets.

Research and other revenue was $0.1 million in 2008 and $0.1 million 2007. The timing of researchrevenues depends upon our expenditures on grant research and the receipt of the grant funding from thesponsoring agencies.

Domestic and non-U.S. revenues were $23.8 million and $23.3 million, respectively, for the year endedDecember 31, 2008, and $22.2 million and $18.8 million, respectively, for the year ended December 31, 2007.

Costs of Consumables and Products, Services and Diagnostic Revenues and Gross Margins

Cost of product revenues were $15.1 million and $14.6 million and gross margins were 64% and 61% forthe years ended December 31, 2008 and 2007, respectively. The increase in gross margin for product revenues in2008 compared to 2007 is attributable to increased consumable sales that generally have higher average grossmargins compared to systems sales, along with a favorable mix of new systems at higher selling prices withadditional software at higher margins.

Cost of service revenues were $4.5 million and $3.5 million and gross margins were 7.0% and 1.2% for theyears ended December 31, 2008 and 2007, respectively. Our genetic analysis contract research service businessincurred higher expenses, primarily in salaries and related personnel expenses, as operations increased in scale toaccommodate a higher volume of research contracts. Gross margins on contract research service revenues aredependent on the particular market the services are being performed, the size of the projects and the pricingterms.

Our overall gross margins were 58% and 56% for the years ended December 31, 2008 and 2007,respectively. The increase in overall gross margin in 2008 is attributable to increased consumables sales at ahigher gross margin, a higher average selling price for new system sales and higher margins in contract researchservices due to a higher volume of activity.

Research and Development Expenses

Research and development costs were $27.5 million and $14.4 million for the years ended December 31,2008 and 2007, respectively. These expenses consist primarily of salaries and related personnel expenses,improvements to our existing products, validation of products under development, and expenses relating to workperformed under research contracts.

The increase in research and development expenses of $13.1 million for 2008 compared to 2007 primarilyresulted from increased headcount and travel costs of $3.8 million, operating supplies of $2.8 million, clinicalsample collection, consulting and collaboration costs of $2.9 million related to our noninvasive prenataltechnology development, headcount based overhead allocation expense of $2.5 million, share-basedcompensation expense of $1.1 million, as well as depreciation and office expenses of $1.0 million. Theseincreases were offset by $1.0 million in the absorption of research and development expenses to cost of servicerevenue.

Sales and Marketing Expenses

Sales and marketing costs were $24.3 million and $17.0 million for the years ended December 31, 2008 and2007, respectively. These expenses consist primarily of salaries and related expenses for sales and marketing,customer support, and business development personnel and their related department expenses.

54

The increase in selling and marketing expenses of $7.3 million for 2008 compared to 2007 primarilyresulted from increased headcount and travel of $3.1 million, $1.6 million for higher share-based compensationexpense, $0.9 million for higher headcount-based overhead allocation charges, $0.4 million for higheradvertising, trade shows and public relations expenses, $0.3 million of consultant expenses for sales andmarketing projects associated with diagnostic operations, $0.3 million in bad debt expense related to accountsreceivable write-offs, $0.3 million for higher operating supplies, $0.3 million for higher office operatingexpenses and $0.1 million for higher sales bonus compensation.

General and Administrative Expenses

General and administrative costs were $18.4 million and $14.1 million for the years ended December 31,2008 and 2007, respectively. These expenses consist primarily of salaries and related expenses for legal, finance,and human resource personnel, and their related department expenses.

The increase in general and administrative expenses of $4.3 million for 2008 compared to 2007 primarilyresulted from increased legal expense of $2.9 million related to ongoing litigation, share-based compensation of$1.6 million, headcount and travel expense of $1.4 million, audit and tax related fees and expenses of $0.9million, information technology expenses of $0.8 million for computers and software licenses, consultantexpenses of $0.3 million and depreciation and other office expenses of $0.3 million. These increases werepartially offset by reduced headcount-based overhead allocation of $3.3 million as well as higher absorption ofoverhead costs of $0.6 million.

Interest Income

Interest income was $1.6 million in 2008 compared to $1.8 million in 2007. The decrease in 2008 comparedto 2007 was due to a change in our investment policy, which restricted our marketable securities investmentsexclusively to U.S. Government backed financial instruments that yield a lower overall return compared to ourprior investment portfolio, despite higher cash balances following our public offering in July 2008.

Loss on Marketable Securities

Loss on marketable securities was $2.6 million in 2008 compared to $1.1 million in 2007. The recognizedloss was due to an other-than-temporary impairment in our investments in auction rate securities. The increase inrecognized losses in 2008 compared to 2007 is due to additional declines in the market value of these auction ratesecurities due to ongoing difficulties in global credit markets.

Interest Expense

Interest expense was $139,000 and $17,000 for 2008 and 2007, respectively. The increase in 2008 comparedto 2007 is due to higher balances on our asset-backed loan commencing in September 2007.

Income Tax Expense

Income tax expense of $211,000 for the year ended December 31, 2008 was primarily due to statutory taxliabilities resulting from our foreign operations. There was no comparable income tax expense for the year endedDecember 31, 2007.

Liquidity and Capital Resources

As of December 31, 2009, cash, cash equivalents and current marketable securities totaled $42.7 million,compared to $98.3 million at December 31, 2008. Our cash equivalents and current marketable securities are heldin U.S. Government securities with ratings of AAA and repurchase agreements collateralized by U.S.Government securities with ratings of AAA.

55

As of December 31, 2009, we had $0.5 million of auction rate securities, which reflects a $3.8 millionadjustment to the principal value of $4.3 million. Additional discussion with respect to the risks and uncertaintiesassociated with our auction rate securities is included in “Quantitative and Qualitative Disclosures about MarketRisk” in Item 7A of this report and in the notes to our consolidated financial statements included elsewhere inthis report.

We have a history of recurring losses from operations and had an accumulated deficit of $597.3 million asof December 31, 2009. Our capital requirements to sustain operations, including research and developmentprojects, have been and will continue to be significant. As of December 31, 2009 and 2008, we had workingcapital of $45.5 million and $103.2 million, respectively.

On July 1, 2008, we closed an underwritten public offering of our common stock totaling 5,500,000 sharesof our common stock at $15.50 per share, with the underwriters exercising their option to purchase an additional825,000 shares on July 8, 2008. Including the additional shares, the offering resulted in aggregate net proceeds ofapproximately $91.8 million after deducting underwriting discounts, commissions and estimated transactionexpenses.

During 2007, we closed a $20.0 million registered direct offering of our common stock to several new andexisting investors, as well as a $30.5 million private placement of our common stock. Under the terms of theregistered direct offering we issued and sold 6,666,666 shares of our common stock at $3.00 per share, withaggregate net proceeds of approximately $18.3 million after deducting placement agents’ fees and transactionexpenses. Under the terms of the private placement we issued and sold 3,383,335 shares of our common stock at$9.00 per share, with aggregate net proceeds of approximately $28.1 million after deducting placement agents’fees and estimated transaction expenses.

We consider the material drivers of our cash flow to be sales volumes, working capital, inventorymanagement and operating expenses. Our principal sources of liquidity are our cash, cash equivalents and currentmarketable securities. Cash used in operations for the year ended December 31, 2009 was $48.7 millioncompared to $34.6 million for the year ended December 31, 2008. Our use of cash was primarily a result of thenet loss of $71.0 million for the year ended December 31, 2009, increased by $1.3 million from other currentassets and prepaid expenses, $0.6 million in deferred rent, $1.7 million from lower accounts payable and accruedexpense balances, $0.7 million of lower other longer-term liabilities and an adjustment to our bad debt provisionresulting in a benefit of $0.1 million due to recoveries of previously reserved balances. Cash usages wereprimarily offset by non-cash adjustments for stock-based compensation of $11.8 million, depreciation andamortization of $5.2 million, losses on our auction rate securities of $1.9 million, restricted stock charges of $0.5million, a loss on disposals of fixed assets of $0.2 million, a fair value adjustment to our contingent considerationpayable related to our acquisition of SensiGen, LLC of $0.5 million, as well as a settlement payment made in ourcommon stock of $1.5 million to certain shareholders of SensiGen, LLC. Additionally, cash usages wereprimarily offset by operating asset and liability changes of $1.9 million from lower accounts receivable and $2.9million from lower inventory balances representing our efforts to maximize working capital and an increase inour deferred revenue balance of $0.3 million primarily associated with an increase in the sale of maintenancecontracts from the prior year. At our current and anticipated level of operating loss, we expect to continue toincur an operating cash outflow for the next several years.

Investing activities, other than the net changes in our current marketable securities and restricted cash thatprovided $18.1 million, consisted of purchases for capital equipment, leasehold improvements and intangibleassets that used $8.7 million in cash during the year ended December 31, 2009, compared to $4.9 million and$3.5 million for the same periods in 2008 and 2007, respectively. Additionally, we paid $2.0 million in cashrelated to our acquisition of Sensigen, LLC that closed in February 2009.

Net cash provided by financing activities was $0.2 million during the year ended December 31, 2009.Financing activities during the year ended December 31, 2009, included $1.9 million from the exercise of stockoptions and from employee contributions under our employee stock purchase plan, offset by approximately $1.6million in payments on our long-term debt and $0.1 million on our capital lease obligation.

56

The following table summarized our contractual obligations as of December 31, 2009 (in thousands):

Contractual obligations TotalLess Than

1 Year 1-3 YearsAfter 3Years

Open purchase orders . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,002 $ 5,002 $ — $ —Long-term debt obligation . . . . . . . . . . . . . . . . . . . . . . . 3,157 1,320 1,522 315Collaborations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,948 5,142 2,966 15,840Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,431 7,041 15,505 7,885

Total contractual obligations . . . . . . . . . . . . . . . . . . . . . $62,538 $18,505 $19,993 $24,040

Future operating lease commitments for leases have not been reduced by future minimum sublease rentals tobe received through December 2010 aggregating $0.3 million. Open purchase orders are primarily for inventoryitems and research and development supplies. Collaborations primarily consist of agreements with institutions toconduct sponsored research and clinical study agreements.

In September 2005, we entered into an amendment to our lease for our corporate headquarters in San Diego.The lease amendment provides for the deferral of approximately $3.2 million of the monthly rent payments byreducing the monthly payments through September 30, 2007 and increasing the aggregate monthly payments bythe deferred amount for the remaining term of the lease, from October 1, 2007 to September 30, 2015. The totalobligation under the lease remains unchanged. The contractual obligation table above reflects the deferral ofthese rent payments.

Long-term debt obligations include the associated interest payable on these borrowings. Other commitmentsand contingencies that may result in contractual obligations to pay are described in the notes to our consolidatedfinancial statements included elsewhere in this report.

Based on our current plans, we believe our cash, cash equivalents and current marketable securities will notbe sufficient to fund our obligations through the third quarter of 2010 if we continue spending at our currentlevels. The actual amount of funds that we will need will be determined by many factors, some of which arebeyond our control, and we may need funds sooner than currently anticipated. These factors include but are notlimited to:

• the size of our future operating losses;

• the level of our and our distributors’ success in selling our MassARRAY products and services and LDTservices through Sequenom CMM;

• the terms and conditions of sales contracts, including extended payment terms;

• our ability to introduce and sell new products and services and successfully reduce inventory levels ofearlier products;

• the level of our selling, general and administrative expenses;

• the extent of our investment in diagnostic technology, including prenatal genetic analysis technology,molecular diagnostics and noninvasive prenatal diagnostic technology, development, commercialization,and regulatory approval;

• our success in, and the expenses associated with, researching, developing and commercializingdiagnostic products, alone or in collaboration with our partners, and obtaining any required regulatoryapproval for those products;

• the level of our success alone or in collaboration with our partners in launching and selling anydiagnostic products and services;

57

• the extent of our research and development pursuits, including our level of investment in MassARRAYproduct research and development, and diagnostic assay and other technology research anddevelopment;

• the extent to which we enter into, maintain, and derive revenues from licensing agreements, includingagreements to out-license our noninvasive prenatal analysis technology, research and othercollaborations, joint ventures and other business arrangements;

• the level of our legal expenses, including those expenses associated with security class actions,intellectual property protection and those expenses and any damages or settlement payments associatedwith litigation or on-going investigations by government agencies;

• the extent to which we acquire, and our success in integrating, technologies or companies;

• the level of our expenses associated with the audit of our consolidated financial statements as well ascompliance with other corporate governance and regulatory developments or initiatives; and

• regulatory changes and technological developments in our markets.

At December 31, 2009, we had outstanding stand-by letters of credit with financial institutions totaling$1.4 million related to our building, operating leases and customer guarantees. The letter of credit related to ourNewton, Massachusetts building lease agreement will remain in place until its expiration in December 2010.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Marketable Securities

The primary objective of our investment activities is to preserve principal while at the same timemaximizing the income we receive from our investments without significantly increasing risk. Some of thesecurities that we invest in may have market risk. This means that a change in prevailing interest rates may causethe fair value of the principal amount of the investment to fluctuate. For example, if we hold a security that wasissued with a fixed interest rate at the then-prevailing rate and interest rates later rise, the fair value of theprincipal amount of our investment will probably decline. To minimize this risk in the future, we revised ourinvestment policy in April 2008 to maintain our portfolio of cash equivalents and marketable securities in avariety of securities, including U.S. Government securities with ratings of AAA, and repurchase agreementscollateralized by U.S. Government securities with ratings of AAA. Our investment policy includes a minimumquality rating for all new investments, as well as limits the amount of credit exposure to only issuances from theU.S. Government. If an investment we hold falls below this level, we research the reasons for the fall anddetermine if we should continue to hold the investment in order to minimize our exposure to market risk of theinvestment.

The appropriate classification of marketable securities is determined at the time of purchase and reevaluatedas of each balance sheet date. Based on this determination, as of December 31, 2009 and 2008, all of ourinvestments in marketable securities were classified as available for sale and were reported at fair value. Wemeasure fair value based on the prices that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date. Fair value is determined based onobservable market quotes or valuation models using assessments of counterparty credit worthiness, credit defaultrisk or underlying security and overall capital market liquidity. Declines in fair value that are considered other-than-temporary are charged to operations and those that are considered temporary are reported as a component ofaccumulated other comprehensive income in stockholders’ equity. We use the specific identification method ofdetermining the cost basis in computing realized and unrealized gains and losses on the sale of ouravailable-for-sale securities.

Consistent with our investment policy guidelines in effect when originally purchased, the auction ratesecurity (ARS) investments held by us all had AAA/AA credit ratings at the time of purchase. At December 31,

58

2009, $4.3 million of principal was invested in ARS. The ARS held are private placement securities with variouslong-term nominal maturities with interest rates reset through a Dutch auction each month. The monthly auctionshistorically have provided a liquid market for these securities. The investments in ARS represent interests incollateralized debt obligations supported by insurance securitizations and other structured credits, includingcorporate bonds and to a lesser degree, pools of residential and commercial mortgages. With the liquidity issuesexperienced in global credit and capital markets, the ARS held at December 31, 2009 had experienced multiplefailed auctions as the amount of securities submitted for sale exceeded the amount of purchase orders.

Although the majority of our ARS continue to pay interest according to their stated terms, based onvaluation models and an analysis of other-than-temporary impairment factors, we recognized a loss ofapproximately $1.1 million and $2.6 million for the years ending December 31, 2009 and 2008, respectively,which reflects the portion of ARS holdings that we have concluded have an other-than-temporary decline invalue. During the fourth quarter of 2009, our management determined that it was no longer our intent to hold theremaining ARS to maturity and to actively pursue liquidation of our remaining ARS in the secondary market. Asa result of this decision, during the fourth quarter of 2009 we sold ARS with an estimated fair value of $4.1million, which resulted in a net realized loss of approximately $0.8 million for a total loss on our ARS of $1.9million for the year ended December 31, 2009. As of December 31, 2009, our remaining ARS have a principalvalue of $4.3 million and an estimated fair market value of $0.5 million. Subsequent to year end, ARS with aprincipal value of $1.3 million and an estimated fair value of $0.5 million at December 31, 2009, were sold. Theproceeds for these ARS were equal to their estimated fair value as of December 31, 2009. Our other remainingARS with a principal value of $3.0 million have an estimated fair value of $0 as of December 31, 2009.

Since there is a lack of observable market quotes on our investment portfolio of marketable securities inARS, we utilize valuation models including those that are based on expected cash flow streams and collateralvalues, including assessments of counterparty credit quality, default risk underlying the security, discount rates,overall capital market liquidity and our overall intent and ability to liquidate our ARS. The valuation of ourinvestment portfolio is subject to uncertainties that are difficult to predict. Factors that may impact our valuationinclude changes to credit ratings of the securities as well as to the underlying assets supporting those securities,rates of default of the underlying assets, underlying collateral value, discount rates, counterparty risk and ongoingstrength and quality of market credit and liquidity. In the event we need to access the ARS investments that are inan illiquid state, we will not be able to do so without the possible loss of principal, until a future auction for theseinvestments is successful or they are redeemed by the issuer or they mature. The market value of these securitiesmay decline.

Foreign currency rate fluctuations

We have foreign subsidiaries whose functional currencies are the Great British Pound (GBP), the JapaneseYen (Yen), the Indian Rupee (INR) and the Euro (EUR). The subsidiaries’ accounts are translated from therelevant functional currency to the U.S. 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 expenseaccounts. The effects of translation are recorded as a separate component of stockholders’ equity. Oursubsidiaries conduct their business with customers in local currencies. Additionally, we occasionally invoiceAustralian customers in their local currency. Exchange gains and losses arising from these transactions arerecorded using the actual exchange differences on the date of the transaction. We have not taken any action toreduce our exposure to changes in foreign currency exchange rates, such as options or futures contracts, withrespect to transactions with our subsidiaries or transactions with our customers where the invoicing currency isnot the U.S. dollar.

59

The table below sets forth our currency exposure (i.e., those transactional exposures that give rise to the netcurrency gains and losses recognized in the income and expenditure account) on our net monetary assets andliabilities. These exposures consist of our monetary assets and liabilities that are not denominated in thefunctional currency used by us or our subsidiary having the asset or liability.

Functional currency of operations

As of December 31, 2009Net foreign monetary assets/(liabilities)

AUS dollars Euro

($ in millions)

USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.9 $2.5

A movement of 10% in the U.S. dollar to Australian dollar exchange rate would create an unrealized gain orloss of approximately $85,000. A movement of 10% in the U.S. dollar to EUR exchange rate would create anunrealized gain or loss of approximately $252,000. We had no off balance sheet, or unrecognized, gains andlosses in respect of financial instruments used as hedges at the beginning or end of the year ended December 31,2009. We had no deferred gains or losses during the years ended December 31, 2009, 2008 or 2007.

Inflation

We do not believe that inflation has had a material adverse impact on our business or operating resultsduring the periods presented.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements and the reports of Ernst & Young LLP, our independent registeredpublic accounting firm, are included in this report on Pages F-l through F-37.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

On April 29, 2009, we announced that the expected launch of our noninvasive prenatal test for Trisomy 21had been delayed and that we were no longer relying on our previously announced test data and results for thattest. We also announced that our board of directors had formed a special committee of independent directors tooversee an independent investigation and that the committee had engaged independent counsel to assist thecommittee in the conduct of the investigation. The investigation was completed in September 2009. Based on thespecial committee’s work and recommendations, the independent members of our board of directors concludedthat as a result of our attempted transition from researching potential molecular diagnostic tests to developing andcommercializing those tests, we failed to put in place adequate protocols and controls for the conduct of studiesin the Trisomy 21 program at our company. Certain employees also failed to provide adequate supervision. In theabsence of such protocols, controls and supervision, the test data and results in our Trisomy 21 program includedinadequately substantiated claims, inconsistencies and errors. Due to deficiencies in our disclosure controls andprocedures, in a number of instances such test data and results were reported to the public in our press releasesand other public statements.

At the recommendation of the special committee, in 2009 our board of directors began implementing,among other things, new disclosure controls and procedures. Our new enhanced disclosure controls andprocedures have been designed to ensure that we record, process, summarize, and report information we arerequired to disclose in our periodic reports filed with the SEC in the manner and within the time periods specifiedin the SEC’s rules and forms. Our new enhanced disclosure controls and procedures are also designed to ensure

60

that the information is accumulated and communicated to our management, including the principal executiveofficer and the principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervisionand with the participation of our management, including our principal executive officer and principal financialofficer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end ofthe year covered by this report. Based on the foregoing, our principal executive officer and principal financialofficer concluded that our disclosure controls and procedures were effective as of December 31, 2009 to ensurethat (a) the information required to be disclosed by us in the reports that we file or submit under the ExchangeAct is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules andforms, and (b) such information is accumulated and communicated to our management, including our principalexecutive officer and principal financial officers, or persons performing similar functions, as appropriate to allowtimely decisions regarding required disclosure.

Our management does not expect that even our recently enhanced disclosure controls or our internalcontrols will prevent all error and all fraud. A control system, no matter how well conceived, implemented andoperated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.The design of a control system must reflect the fact that there are resource constraints, and the benefits ofcontrols must be considered relative to their costs. Because of the inherent limitations in all control systems, noevaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, havebeen detected. These inherent limitations include the realities that judgments in decision-making can be faulty,and that breakdowns can occur because of a simple error or mistake. Controls can be circumvented by theindividual acts of some persons, by collusion of two or more people, or by management override of the control.The design of any system of controls also is based in part upon certain assumptions about the likelihood of futureevents, and there can be no assurance that any design will succeed in achieving its stated goals under all potentialfuture conditions. Over time, controls may become inadequate because of changes in conditions, or the degree ofcompliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Management’s Report on Internal Control Over Financial Reporting

Internal control over financial reporting refers to the process designed by, or under the supervision of, ourChief Executive Officer and Interim Chief Financial Officer, and effected by our board of directors, managementand other personnel, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accountingprinciples, and includes those policies and procedures that:

(1) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of our assets;

(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that our receipts andexpenditures are being made only in accordance with authorization of our management and directors; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,use or disposition of our assets that could have a material effect on the financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reportingobjectives because of its inherent limitations. Internal control over financial reporting is a process that involveshuman diligence and compliance and is subject to lapses in judgment and breakdowns resulting from humanfailures. Internal control over financial reporting also can be circumvented by collusion or improper managementoverride. Because of such limitations, there is a risk that material misstatements may not be prevented or detectedon a timely basis by internal control over financial reporting. However, these inherent limitations are known

61

features of the financial reporting process. Therefore, it is possible to design into the process safeguards toreduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequateinternal control over financial reporting for the company, as defined in Exchange Act Rules 13a-15(f).

Management has used the framework set forth in the report entitled Internal Control-Integrated Frameworkpublished by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, toevaluate the effectiveness of our internal control over financial reporting as of December 31, 2009. Based on ourassessment, management, including our Chief Executive Officer and Interim Chief Financial Officer has concludedthat our internal controls over financial reporting were effective as of December 31, 2009. The effectiveness of ourinternal control over financial reporting as of December 31, 2009 has been audited by Ernst & Young LLP, anindependent registered public accounting firm, as stated in their report which is included herein.

Changes in Internal Control Over Financial Reporting

An evaluation was also performed under the supervision and with the participation of our management,including our Chief Executive Officer and Interim Chief Financial Officer, of any change in our internal controlover financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonablylikely to materially affect, our internal control over financial reporting. That evaluation did not identify any changein our internal control over financial reporting that occurred during our latest fiscal quarter and that has materiallyaffected, or is reasonably likely to materially affect, our internal control over financial reporting.

62

Report of Independent Registered Public Accounting Firmon Internal Control Over Financial Reporting

The Board of Directors and Stockholders of Sequenom, Inc.

We have audited Sequenom, Inc.’s internal control over financial reporting as of December 31, 2009, basedon criteria established in Internal Control—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (the COSO criteria). Sequenom, Inc.’s management is responsiblefor maintaining effective internal control over financial reporting, and for its assessment of the effectiveness ofinternal control over financial reporting included in the accompanying Management’s Report on Internal Controlover Financial Reporting. Our responsibility is to express an opinion on the company’s internal control overfinancial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting OversightBoard (United States). Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether effective internal control over financial reporting was maintained in all material respects. Ouraudit included obtaining an understanding of internal control over financial reporting, assessing the risk that amaterial weakness exists, testing and evaluating the design and operating effectiveness of internal control basedon the assessed risk, and performing such other procedures as we considered necessary in the circumstances. Webelieve that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A company’s internal control over financial reportingincludes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financial statements in accordancewith generally accepted accounting principles, and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of thecompany’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detectmisstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk thatcontrols may become inadequate because of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.

In our opinion, Sequenom, Inc. maintained, in all material respects, effective internal control over financialreporting as of December 31, 2009, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States), the consolidated balance sheets of Sequenom, Inc. as of December 31, 2009 and 2008, and therelated consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years inthe period ended December 31, 2009 of Sequenom, Inc. and our report dated March 15, 2010 expressed anunqualified opinion thereon.

/s/ ERNST & YOUNG LLP

San Diego, CaliforniaMarch 15, 2010

63

Item 9B. OTHER INFORMATION

On March 13, 2010, we entered into an employment agreement with Harry F. Hixson, Jr. Ph.D., formalizingthe terms of our arrangement with Dr. Hixson for his service as our chief executive officer as previouslydisclosed by us in Current Reports filed with the SEC on September 28, 2009, October 7, 2009 and October 26,2009.

Pursuant to the terms of the employment agreement, Dr. Hixson’s annual salary for service as our chiefexecutive officer has been set at $475,000 and the target level for Dr. Hixson’s annual bonus is set at 50% of hisbase salary. For his service as our chief executive officer, on October 21, 2009 Dr. Hixson was granted pursuantto our 2006 Equity Incentive Plan two stock options, each with an exercise price per share equal to $3.39, whichwas the fair market value of our common stock on the date of grant. The first is an option to purchase 187,500shares, vesting in 12 equal monthly installments from September 28, 2009 so long as Dr. Hixson provides serviceto us. The second is an option to purchase 187,500 shares, vesting in 12 equal monthly installments beginningSeptember 28, 2010 so long as Dr. Hixson is serving as our chief executive officer. Dr. Hixson was alsopromised an additional stock option to be granted on or after September 28, 2010. This additional stock optionwill have an exercise price equal to the fair market value of our common stock on the date of grant and will befor a number of shares equal to the difference between 187,500 and the number determined by multiplying thefully diluted shares outstanding on the date of grant by the percentage that 187,500 shares represented of the fullydiluted shares outstanding on October 21, 2009. Pursuant to the terms of the employment agreement, Dr. Hixsonwas also granted restricted stock units covering 225,000 shares, which will vest upon the achievement of specificperformance-based milestones established by our board of directors, consistent with those established for all ofour employees.

If Dr. Hixson’s employment is terminated by us, or by Dr. Hixson upon giving four weeks advanced notice,Dr. Hixson is entitled to continued health benefits for 90 days from the termination date and a proration of anytarget bonus determined to be appropriate after completion of the entire target bonus year.

The description of the employment agreement set forth above is qualified in its entirety by reference to theactual terms of the employment agreement, which is filed as an exhibit to this annual report on Form 10-K.

64

PART III

Certain information required by Part III is omitted from this report because we will file with the Securitiesand Exchange Commission a definitive proxy statement within 120 days after the end of our fiscal year for ourannual meeting of stockholder (Proxy Statement), and the information included in the Proxy Statement isincorporated herein by reference.

Item 10. DIRECTORS, AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is incorporated by reference to our Proxy Statement under the heading“Election of Directors.” Information regarding executive officers is set forth in Item 1 of Part I of this report andis incorporated herein by reference.

We have adopted a code of business conduct and ethics for directors, officers (including our principalexecutive, financial and accounting officers) and all employees, which we refer to as our Code of BusinessConduct and Ethics. The Code of Business Conduct and Ethics is available on our website athttp://www.sequenom.com. Stockholders may request a free copy of our Code of Business Conduct and Ethicsfrom:

Sequenom, Inc.Attention: Investor Relations3595 John Hopkins CourtSan Diego, CA 92121-1331(858) 202-9000

If we make any substantive amendments to the code of business conduct and ethics or grant any waiverfrom a provision of the code to any executive officer or director, we will promptly disclose the nature of theamendment or waiver on our website. We will promptly disclose on our website (i) the nature of any amendmentto the policy that applies to our principal executive officer, principal financial officer, principal accountingofficer or controller, or persons performing similar functions and (ii) the nature of any waiver, including animplicit waiver, from a provision of the policy that is granted to one of these specified individuals, the name ofsuch person who is granted the waiver and the date of the waiver.

Section 16(a) Beneficial Ownership Reporting Compliance

Item 405 of Regulation S-K calls for disclosure of any known late filing or failure by an insider to file areport required by Section 16 of the Exchange Act. This disclosure is incorporated by reference from theinformation in the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” in the ProxyStatement.

Item 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference from the information in the sectionentitled “Executive Compensation” in the Proxy Statement.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated herein by reference from the information in thesections entitled “Security Ownership of Certain Beneficial Owners and Management” and “SecuritiesAuthorized for Issuance under Equity Compensation Plans” in the Proxy Statement.

65

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTORINDEPENDENCE

The information required by this item is incorporated herein by reference from the information in thesections entitled “Certain Transactions” and “Independence of the Board of Directors” in the Proxy Statement.

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated herein by reference from the information in the sectionentitled “Principal Accountant Fees and Services” in the Proxy Statement.

66

PART IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements

The financial statements of Sequenom, Inc. are included herein as required under Item 8 of thisreport. See Index to Financial Statements on page F-l.

(a)(2) Financial Statement Schedules

Schedule II—Valuation and Qualifying Accounts. The other financial statement schedules have beenomitted because they are either not required, not applicable, or the information is otherwise included.

(3) Exhibits

The exhibits listed below are required by Item 601 of Regulation S-K. Each management contract orcompensatory plan or arrangement required to be filed as an exhibit to this report has beenidentified.

ExhibitNumber Description of Document

3.1(1) Restated Certificate of Incorporation of the Registrant.

3.2(2) Restated bylaws of Registrant, as amended.

3.3(3) Registrant’s Certificate of Designation of Series A Junior Participating Preferred Stock.

4.1(1) Specimen common stock certificate.

4.2(3) Rights Agreement dated as of March 3, 2009, between the Registrant and American Stock Transferand Trust Company, LLC.

4.3(3) Form of Right Certificate.

10.1(4) Form of Warrant Agreement between the Registrant and holders of the Series C Preferred Stockwarrants.

10.2(1) Form of Indemnification Agreement between the Registrant and each of its officers and directors.

10.3(4)# 1994 Stock Plan.

10.4(4)# 1994 Stock Plan Form of Non-Qualified Stock Option Grant.

10.5(4)# 1994 Stock Plan Form of Incentive Stock Option Grant.

10.6(4)# 1994 Stock Plan Form of Stock Restriction Agreement.

10.7(4)# 1998 Stock Option/Stock Issuance Plan.

10.8(4)# 1998 Stock Option/Stock Issuance Plan Form of Notice of Grant of Stock Option.

10.9(4)# 1998 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.

10.10(4)# 1998 Stock Option/Stock Issuance Plan Form of Stock Purchase Agreement.

10.11(4)# 1998 Stock Option/Stock Issuance Plan Form of Stock Issuance Agreement.

10.12(5)# 1999 Stock Incentive Plan, as amended.

10.13(4)# 1999 Stock Incentive Plan Form of Notice of Grant of Stock Option.

10.14(4)# 1999 Stock Incentive Plan Form of Stock Option Agreement.

10.15(6)# 1999 Employee Stock Purchase Plan, as amended.

10.16(7)# 2006 Equity Incentive Plan, as amended.

10.17(1)# 2006 Equity Incentive Plan Form of Stock Option Grant Notice.

10.18(1)# 2006 Equity Incentive Plan Form of Stock Option Agreement.

67


10.19(8)# 2006 Equity Incentive Plan Form of Notice of Exercise.

10.20(9)# 2006 Equity Incentive Plan Form of Restricted Stock Unit Award Grant Notice.

10.21(9)# 2006 Equity Incentive Plan Form of Restricted Stock Unit Award Agreement.

10.22(10) Business Loan Agreement, dated March 3, 2000, between the Registrant and Union Bank ofCalifornia.

10.23(11) Building Lease Agreement, dated March 29, 2000, between the Registrant and TPSC IV LLC.

10.24(12)# Employment Agreement, dated September 15, 2005, by and between Registrant and Charles Cantor,Ph.D.

10.25(13)# Form of Medical Expense Reimbursement Exec-U-Care Plan.

10.26(14)# Employment Agreement, dated July 19, 2004, by and between the Registrant and Clarke Neumann.

10.27(15)* Diagnostic Platform Benchmarking Study and Evaluation Agreement, dated October 25, 2004, byand between the Registrant and Siemens AG.

10.28(15)# Form of Stock Issuance Agreement under 1999 Stock Incentive Plan.

10.29(16) Amendment Number One to Lease dated March 29, 2000, by and between the Registrant and TPSCIV LLC dated September 9, 2005.

10.30(16) Common Stock Warrant, dated September 9, 2005, issued to Kwacker, Ltd.

10.31(16)# Employment Agreement Amendment, dated September 12, 2005, by and between the Registrant andDr. Charles R. Cantor.

10.32(17)* Exclusive License of Technology Agreement, dated October 14, 2005, by and between the Registrantand ISIS Innovation Limited.

10.33(18) Amended and Restated Securities Purchase Agreement, dated March 30, 2006, by and among theRegistrant, ComVest Investment Partners II LLC, LB I Group Inc., Pequot Private Equity Fund IV,L.P. and Siemens Venture Capital GmbH.

10.34(18) Form of Warrant issued pursuant to the Amended and Restated Securities Purchase Agreement datedMarch 30, 2006.

10.35(19)# Letter agreement dated April 6, 2006, by and between the Registrant and John E. Lucas.

10.36(1) Registration Rights Agreement dated June 6, 2006 by and between the Registrant, ComVestInvestment Partners II LLC, LB I Group Inc., Pequot Private Equity Fund IV, L.P. and SiemensVenture Capital GmbH.

10.37(20)* Amendment to Exclusive License of Technology Agreement dated October 19, 2006, by andbetween the Registrant and ISIS Innovation Limited.

10.38(20)* Supply Agreement dated November 3, 2006, by and between the Registrant and BrukerDaltonics Inc.

10.39(21)# Form of Restricted Stock Bonus Grant Notice under 2006 Equity Incentive Plan.

10.40(21)# Form of Restricted Stock Bonus Agreement under 2006 Equity Incentive Plan.

10.41(22)* Collaboration and License Agreement dated January 24, 2007, between the Registrant and LenetixMedical Screening Laboratory, Inc.

10.42(23) Placement Agency Agreement dated April 25, 2007, between the Registrant and Lehman BrothersInc.

10.43(24) Letter agreement dated June 25, 2007, by and between the Registrant and Kathleen Wiltsey.

10.44(24) Letter agreement dated July 2, 2007, by and between the Registrant and Richard Alan Lerner, M.D.

68


10.45(25) Form of Purchase Agreement, dated October 25, 2007, by and between the Registrant and the variouspurchasers of shares of the Registrant’s common stock.

10.46(26)* Amendment to Exclusive License of Technology Agreement dated November 5, 2007, by andbetween the Registrant and ISIS Innovation, Limited.

10.47(27)# Non-Employee Director Compensation Policy.

10.48(27)# Amended and Restated Change in Control Severance Benefit Plan.

10.49(27)# Deferred Compensation Plan, as amended.

10.50# New-Hire Equity Incentive Plan.

10.51* Amendment to Exclusive License of Technology Agreement dated November 3, 2009, by andbetween the Registrant and ISIS Innovation Limited.

10.52* License Agreement dated February 4, 2010, by and between the Registrant and Optherion, Inc.

10.53# Agreement dated March 13, 2010 by and between the Registrant and Harry F. Hixson, Jr., Ph.D.

10.54# Letter agreement dated October 21, 2010 by and between the Registrant and Paul V. Maier.

21.1 Subsidiaries of the Registrant.

23.1 Consent of Independent Registered Public Accounting Firm.

31.1 Certification of Principal Executive Officer pursuant to Rule13a-14(a) and Rule 15d-14(a) of theSecurities and Exchange Act, as amended.

31.2 Certification of Principal Financial Officer pursuant to Rule13a-14(a) and Rule 15d-14(a) of theSecurities and Exchange Act, as amended.

32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section906 of the Sarbanes-Oxley Act of 2002.

# Management contract or compensatory plan.* Certain confidential portions of this Exhibit have been omitted pursuant to a request for confidential

treatment. Omitted portions have been filed separately with the Securities and Exchange Commission.(1) Incorporated by reference to the Registrant’s Current Report on Form 8-K (No. 000-29101) filed June 6,

2006.(2) Incorporated by reference to the Registrant’s Current Report on Form 8-K (No. 000-29101) filed

January 15, 2010.(3) Incorporated by reference to the Registrant’s Current Report on Form 8-K (No. 000-29101) filed March 4,

2009.(4) Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (No. 333-91665), as

amended.(5) Incorporated by reference to the Registrant’s Annual Report on Form 10-K (No. 000-29101) for the year

ended December 31, 2006.(6) Incorporated by reference to the Registrant’s Current Report on Form 8-K (No. 000-29101) filed

February 1, 2010.(7) Incorporated by reference to the Registrant’s Current Report on Form 8-K (No. 000-29101) filed June 2,

2008.(8) Incorporated by reference to the Registrant’s Current Report on Form 8-K (No. 000-29101) filed June 6,

2006.(9) Incorporated by reference to the Registrant’s Registration Statement on Form S-8 (No. 333-152230) filed

July 10, 2008.

69

(10) Incorporated by reference to the Registrant’s Annual Report on Form 10-K (No. 000-29101) for the yearended December 31, 1999.

(11) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (No. 000-29101) for thequarter ended March 31, 2000.

(12) Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (No. 333-91665), asamended, which exhibit is hereby supplemented with an additional Schedule A filed with the Registrant’sAnnual Report on Form 10-K (No. 000-29101) for the year ended December 31, 2000.



(15) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (No. 000-29101) for thequarter ended September 30, 2004.

(16) Incorporated by reference to the Registrant’s Current Report on Form 8-K (No. 000-29101) filedSeptember 14, 2005.


(18) Incorporated by reference to the Registrant’s Current Report on Form 8-K (No. 000-29101) filed April 3,2006.



(21) Incorporated by reference to the Registrant’s Current Report on Form 8-K (No. 000-29101) filedJanuary 24, 2007.

(22) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (No. 000-29101) for thequarter ended March 31, 2007.


(24) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (No. 000-29101) for thequarter ended June 30, 2007.

(25) Incorporated by reference to the Registrant’s Current Report on Form 8-K (No. 000-29101) filedOctober 26, 2007.



70

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registranthas duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 15, 2010

SEQUENOM, INC.

By: /S/ HARRY F. HIXSON, JR., PH.D.Harry F. Hixson, Jr., Ph.D.

Chief Executive Officer

POWER OF ATTORNEY

Know all men by these presents, that each person whose signature appears below constitutes and appointsHarry F. Hixson and Paul V. Maier, and each of them, as his attorneys-in-fact and agents, each with power ofsubstitution in any and all capacities, to sign any amendments to this annual report on Form 10-K, and to file thesame with exhibits thereto, and other documents in connection therewith, with the Securities and ExchangeCommission, hereby ratifying and confirming all that the attorney-in-fact or his substitute or substitutes may door cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below bythe following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature Title Date

/s/ HARRY F. HIXSON, JR., PH.D.Harry F. Hixson, Jr., Ph.D.

Chief Executive Officer and Chairman ofthe Board of Directors (PrincipalExecutive Officer)

March 15, 2010

/s/ PAUL V. MAIER

Paul V. Maier

Interim Chief Financial Officer (PrincipalFinancial and Accounting Officer)

March 15, 2010

/s/ CHARLES R. CANTOR, PH.D.Charles R. Cantor, Ph.D.

Chief Scientific Officer and Director March 15, 2010

/s/ ERNST-GUNTER AFTING, PH.D., M.D.Ernst-Gunter Afting, Ph.D., M.D.

Director March 15, 2010

/s/ KENNETH F. BUECHLER, PH.D.Kenneth F. Buechler, Ph.D.


/s/ JOHN A. FAZIO

John A. Fazio


/s/ RICHARD A. LERNER, M.D.Richard A. Lerner, M.D.


/s/ RONALD M. LINDSAY, PH.D.Ronald M. Lindsay, Ph.D.

Interim Senior Vice President of Researchand Development and Director

March 15, 2010

/s/ DAVID PENDARVIS

David Pendarvis


/s/ KATHLEEN M. WILTSEY

Kathleen M. Wiltsey


71

SEQUENOM, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

Consolidated Balance Sheets as of December 31, 2009 and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3

Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007 . . . . . . . . . F-4

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2009, 2008 and2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007 . . . . . . . . . F-6

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders ofSequenom, Inc.

We have audited the accompanying consolidated balance sheets of Sequenom, Inc. as of December 31, 2009and 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for eachof the three years in the period ended December 31, 2009. Our audits also included the financial statementschedule listed in the Index at Item 15(a)(2). These financial statements and schedule are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements based on ouraudits.

We conducted our audits in accordance with the standards of the Public Company Accounting OversightBoard (United States). Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by management, as well as evaluatingthe overall financial statement presentation. We believe that our audits provide a reasonable basis for ouropinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Sequenom, Inc. at December 31, 2009 and 2008, and the consolidated resultsof its operations and its cash flows for each of the three years in the period ended December 31, 2009, inconformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that Sequenom, Inc. will continue as agoing concern. As more fully described in Note 2, the Company has incurred recurring operating losses and doesnot have sufficient working capital to fund operations through 2010. This condition raises substantial doubt aboutthe Company’s ability to continue as a going concern. Management’s plans in regard to this matter is alsodescribed in Note 2. The 2009 financial statements do not include any adjustments to reflect the possible futureeffects on the recoverability and classification of assets or the amounts and classification of liabilities that mayresult from the outcome of this uncertainty.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States), Sequenom, Inc.’s internal control over financial reporting as of December 31, 2009, based oncriteria established in Internal Control-Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission and our report dated March 15, 2010 expressed an unqualifiedopinion thereon.

/s/ ERNST & YOUNG LLP


F-2

SEQUENOM, INC.

CONSOLIDATED BALANCE SHEETS(In thousands, except share and per share information)

December 31,

2009 2008

AssetsCurrent assets:

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,919 $ 68,338Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,762 29,991Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,419 1,371Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,510 10,642Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,722 10,631Other current assets and prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,598 1,311

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,930 122,284Equipment and leasehold improvements, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,811 9,195Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,172 114Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,007 2,398Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 5,748Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 725 745

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 86,645 $ 140,484

Liabilities and stockholders’ equityCurrent liabilities:

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,064 $ 8,321Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,202 8,626Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,871 1,444Current portion of debt and obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,320 647

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,457 19,038

Deferred revenue, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304 454Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,389 4,205Long-term portion of debt and obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,837 574Commitments and contingenciesStockholders’ equity:

Convertible preferred stock, par value $0.001; authorized shares—5,000,000, noshares issued or outstanding at December 31, 2009 or 2008, respectively. . . . . . . — —

Common stock, par value $0.001; authorized shares—185,000,000, issued andoutstanding shares 61,988,473 and 60,943,469 at December 31, 2009 and 2008,respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 61

Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 659,798 641,098Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,084 1,328Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (597,286) (526,274)

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,658 116,213

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 86,645 $ 140,484

See accompanying notes.

F-3

SEQUENOM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share information)

Year ended December 31,

2009 2008 2007

Revenues:Consumables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,534 $ 19,535 $ 16,530MassARRAY and other product related . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,999 22,724 20,835Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,209 4,817 3,524Diagnostic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 — —Research and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 73 113

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,863 47,149 41,002

Costs and expenses:Cost of consumables and products revenue . . . . . . . . . . . . . . . . . . . . . . . . . 11,980 15,109 14,594Cost of services revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,178 4,481 3,483Cost of diagnostic revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412 — —Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,454 27,455 14,352Selling and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,845 24,299 17,015General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,127 18,436 14,133Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,589 — —

Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,585 89,780 63,577

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (70,722) (42,631) (22,575)Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442 1,592 1,781Loss on marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,914) (2,584) (1,071)Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (261) (139) (17)Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,560 (181) (101)

Loss before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (70,895) (43,943) (21,983)Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (117) (211) —

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (71,012) $(44,154) $(21,983)

Net loss per share, basic and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1.16) $ (0.83) $ (0.57)

Weighted average shares outstanding, basic and diluted . . . . . . . . . . . . . . . . . . 61,171 53,129 38,865


F-4

SEQUENOM, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(In thousands, except share information)

Common Stock AdditionalPaid-InCapital

OtherComprehensive

IncomeAccumulated

Deficit

TotalStockholders’

EquityShares Amount

Balance at December 31, 2006 . . . 33,439,634 $ 33 $484,898 $ 656 $(460,137) $ 25,450Net loss . . . . . . . . . . . . . . . . . . . . . — — — — (21,983) (21,983)

Unrealized loss onavailable-for-salesecurities . . . . . . . . . . . . . . . . — — — (804) — (804)

Translation adjustment . . . . . . . — — — 467 — 467

Comprehensive loss . . . . . . . . . — — — — — (22,320)Share-based compensation . . . . — — 3,058 — — 3,058Exercise of stock options . . . . . 165,536 — 446 — — 446Exercise of warrants . . . . . . . . . 1,197,012 1 1,255 — — 1,256Purchases under Employee

Stock Purchase Plan . . . . . . . 36,473 — 102 — — 102Issuance of common stock, net

of issuance costs . . . . . . . . . . 10,050,001 10 46,263 — — 46,273

Balance at December 31, 2007 . . . 44,888,656 $ 44 $536,022 $ 319 $(482,120) $ 54,265Net loss . . . . . . . . . . . . . . . . . . . — — — — (44,154) (44,154)Unrealized gain on

available-for-salesecurities . . . . . . . . . . . . . . . . — — — 898 — 898

Translation adjustment . . . . . . . — — — 111 — 111

Comprehensive loss . . . . . . . . . — — — — — (43,145)Share-based compensation . . . . — — 7,276 — — 7,276Exercise of stock options and

restricted stock . . . . . . . . . . . 340,936 1 1,718 — — 1,719Exercise of warrants . . . . . . . . . 9,093,302 9 139 — — 148Purchases under Employee


of issuance costs . . . . . . . . . . 6,512,794 7 95,375 — — 95,382

Balance at December 31, 2008 . . . 60,943,469 $ 61 $641,098 $1,328 $(526,274) $116,213Net loss . . . . . . . . . . . . . . . . . . . — — — — (71,012) (71,012)Unrealized gain on

available-for-salesecurities . . . . . . . . . . . . . . . . — — — 2 — 2

Translation adjustment . . . . . . . — — — (246) — (246)

Comprehensive loss . . . . . . . . . — — — — — (71,256)Share-based compensation . . . . — — 11,814 — — 11,814Exercise of stock options and

restricted stock . . . . . . . . . . . 503,377 1 2,664 — — 2,665Purchases under Employee


of issuance costs . . . . . . . . . . 460,226 — 3,462 — — 3,462

Balance at December 31, 2009 . . . 61,988,473 $ 62 $659,798 $1,084 $(597,286) $ 63,658

F-5

SEQUENOM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)

Year ended December 31,

2009 2008 2007

Operating activitiesNet loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(71,012) $(44,154) $(21,983)Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,814 7,276 3,058Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,201 2,893 1,940Loss on marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,914 2,584 1,071Loss on disposal of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 232 —Settlement of SensiGen, LLC claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,522 — —Contingent consideration fair value adjustment . . . . . . . . . . . . . . . . . . . . . . 514 — —Bad debt expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (139) 400 142Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455 161 —Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (569) (442) 1,631Other non-cash items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 41 462Changes in operating assets and liabilities:

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,892 (115) (6,044)Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,923 (6,492) (1,565)Other current assets and prepaid expenses . . . . . . . . . . . . . . . . . . . . . . (1,280) (212) (396)Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (56) (107)Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . (1,733) 2,471 4,975Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267 686 (554)Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (691) 111 (52)

Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48,708) (34,616) (17,422)

Investing activitiesPurchase of equipment, leasehold improvements, and intangible assets . . . . . . . (8,699) (4,878) (3,513)Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (49) (41) 75Acquisition of CMM, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (400) —Acquisition of SensiGen, LLC, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . (2,017) — —Purchases of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,297) (44,483) (70,781)Sales of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,363 24,012 (47,648)Maturities of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000 21,683 5,621

Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . 7,301 (4,107) (20,950)

Financing activitiesRepayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,576) (637) (70)Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 610 1,318Payments on capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (80) — —Proceeds from issuance of common stock, net of issuance costs . . . . . . . . . . . . — 91,782 46,273Proceeds from exercise of warrants, stock options and ESPP purchases . . . . . . 1,905 2,011 1,803

Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 93,766 49,324

Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . (41,158) 55,043 10,952Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . (261) 179 232Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . 68,338 13,116 1,932

Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,919 $ 68,338 $ 13,116

Supplemental disclosure of cash flow information:Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 247 $ 134 $ 12

Supplemental disclosure of non cash investing activities:Equipment purchased under capital lease obligation . . . . . . . . . . . . . . . . . . . . . . $ 366 $ — $ —Common stock issued for acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 3,600 $ —


F-6

SEQUENOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009

1. Nature of the Business


2. Summary of Significant Accounting Policies and Significant Accounts

Basis of Presentation and Consolidation

The accompanying consolidated financial statements have been prepared in conformity with U.S. generallyaccepted accounting principles (GAAP) and include the accounts of Sequenom, Inc. and our wholly-ownedsubsidiaries located in the United States, Germany, the United Kingdom, Japan, India and Hong Kong. Allsignificant intercompany accounts and transactions are eliminated in consolidation. Our consolidated financialstatements have been prepared on a going concern basis, which contemplates the realization of assets and thesettlement of liabilities and commitments in the normal course of business. Through December 31, 2009, we hadaccumulated losses of approximately $597.3 million. Management expects to incur further losses for theforeseeable future. We believe based on our current projections that our cash, cash equivalents and marketablesecurities at December 31, 2009 will not be sufficient to fund our obligations through the third quarter of 2010and intend to pursue raising additional capital during 2010. Until we can generate sufficient levels of cash fromour operations, we expect to continue to finance future cash needs primarily through proceeds from equity ordebt financings, loans and/or collaborative agreements with partners in order to be able to sustain our operationsuntil we can achieve profitability and positive cash flows, if ever.

We plan to seek additional debt and/or equity financing through private or public offerings, but we cannotassure you that such financing or transaction will be available on acceptable terms, or at all. The uncertainty ofthis situation raises substantial doubt about our ability to continue as a going concern. The accompanyingconsolidated financial statements do not include any adjustments relating to the recoverability and classificationof assets or the amount and classification of liabilities that might result from the outcome of this uncertainty.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requiresus to make certain estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. Actual results could differ from those estimates.

Goodwill and Purchased Intangible Assets

Goodwill is recorded when the consideration paid for an acquisition exceeds the fair value of the identifiednet tangible and intangible assets acquired. The allocation of purchase price for acquisitions requires extensiveuse of accounting estimates and judgments to allocate the purchase price to the identifiable tangible andintangible assets acquired and liabilities assumed based on their respective fair values. Additionally, we mustdetermine whether an acquired entity is considered to be a business or a set of net assets, because a portion of thepurchase price can only be allocated to goodwill in a business combination. Goodwill and intangible assets

F-7

SEQUENOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2009

deemed to have indefinite lives are not amortized, but are subject to annual impairment tests. The amounts anduseful lives assigned to other intangible assets, such as lab accreditations, patent rights and licenses, requires theuse of estimates and the exercise of judgment. These judgments can significantly affect our net operating results.As of December 31, 2009 and 2008, we have goodwill recorded of $10.0 million and $2.4 million, respectively.

We annually evaluate our goodwill and purchased intangibles at the reporting unit level during the fourthquarter each fiscal year or more frequently if we believe indicators of impairment are present. Goodwill andcertain intangible assets are assessed for impairment using fair value measurement techniques. Specifically,goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test isused to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount,including goodwill. Goodwill is allocated to reporting units based upon the type of products under developmentby the acquired company, which initially generated the goodwill. If the fair value of a reporting unit exceeds itscarrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairmenttest is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of thegoodwill impairment test is performed to measure the amount of impairment loss. The second step of thegoodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carryingamount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value ofthat goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value ofgoodwill is determined in the same manner as the amount of goodwill recognized in a business combination.That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including anyunrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fairvalue of the reporting unit was the purchase price paid to acquire the reporting unit. The fair value is determinedusing a combination of the discounted cash flow analysis as well as market comparisons. The determination offair values requires management to make significant judgment and estimates.

We periodically re-evaluate the original assumptions and rationale utilized in the establishment of thecarrying value and estimated lives of our long-lived assets. The criteria used for these evaluations includemanagement’s estimate of the asset’s continuing ability to generate income from operations and positive cashflows in future periods as well as the strategic significance of any intangible assets in our business objectives. Ifassets are considered to be impaired, the impairment recognized is the amount by which the carrying value of theassets exceeds the fair value of the assets.

Reserves for Obsolete and Slow-moving Inventory

We operate in an industry characterized by rapid improvements and changes to our technology andproducts. The introduction of new products by us or our competitors can result in our inventory being renderedobsolete or requiring us to sell items at a discount. We estimate the recoverability of our inventory by referenceto our internal estimates of future demands and product life cycles. If we incorrectly forecast demand for ourproducts or inadequately manage the introduction of new product lines, we could materially impact ourconsolidated financial statements by having excess inventory on hand. Our future estimates are subjective andcould be incorrect. During 2009, slow-moving and obsolete inventory reserves of $0.1 million were chargedagainst cost of goods sold and the total reserve was $1.9 million and $1.8 million at December 31, 2009 and2008, respectively.

Shipping and Handling Costs

Shipping and handling costs are included within cost of product revenue on the statement of operations.

F-8

SEQUENOM, INC.


December 31, 2009

Cash and Cash Equivalents

Cash equivalents consist of short-term, highly liquid investments with original maturities of three months orless when purchased.

Marketable Securities

The classification of marketable securities is determined by management at the time of purchase andreevaluated as of each balance sheet date. As of December 31, 2009 and 2008, all of our investments inmarketable securities were classified as available for sale and were reported at fair value. We measure fair valuebased on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants at the measurement date. Fair value is determined based on observable marketquotes or valuation models using assessments of counterparty credit worthiness, credit default risk or underlyingsecurity and overall capital market liquidity. Declines in fair value that are considered other-than-temporary arecharged to operations and those that are considered temporary are reported as a component of accumulated othercomprehensive income (loss) in stockholders’ equity. We use the specific identification method of determiningthe cost basis in computing realized and unrealized gains and losses on the sale of our available-for-salesecurities.

Historically, we have invested in auction rate securities (ARS), commercial paper of prime quality,certificates of deposit, guaranteed bankers acceptance and U.S. Government instruments, and by policy, limit theamount of credit exposure to any one issuer. In April 2008, we revised our investment policy to maintain ourportfolio of cash equivalents and marketable securities in a variety of securities, including U.S. Governmentsecurities with ratings of AAA, and repurchase agreements collateralized by U.S. Government securities withratings of AAA at the time of acquisition. Our investment policy includes a minimum quality rating for all newinvestments, as well as limits the amount of credit exposure to only issuances from the U.S. Government. If aninvestment we hold falls below this level, we research the reasons for the fall and determine if we shouldcontinue to hold the investment in order to minimize our exposure to market risk of the investment. AtDecember 31, 2009 and 2008, $4.3 million and $9.4 million of principal was invested in ARS, respectively. TheARS held are private placement securities with various long-term nominal maturities with interest rates resetthrough a Dutch auction each month, except for one ARS that resets every 92 days. The monthly auctionshistorically have provided a liquid market for these securities. The investments in ARS represent interests incollateralized debt obligations supported by insurance securitizations and other structured credits, includingcorporate bonds and to a lesser degree, pools of residential and commercial mortgages.

Consistent with our investment policy guidelines in affect when originally purchased, the ARS investmentsheld by us all had AAA/AA credit ratings at the time of purchase. With the liquidity issues experienced in globalcredit and capital markets, the $4.3 million ARS held by us at December 31, 2009, had experienced multiplefailed auctions as the amount of securities submitted for sale has exceeded the amount of purchase orders and wehave been unable to liquidate these securities. Subsequent to year end, $1.3 million of our remaining ARS with afair value of $0.5 million as of December 31, 2009, were sold. The proceeds for these ARS were equal to theirestimated fair value as of December 31, 2009. See footnote 5 “Marketable Securities and Fair ValueMeasurements” for further discussion.

Restricted Cash

Restricted cash and investments of $1.4 million as of December 31, 2009 and 2008 are held in interestbearing cash accounts with restrictions on withdrawal, in support of certain borrowing agreements and stand-byletters of credit.

F-9

SEQUENOM, INC.


December 31, 2009

Concentration of Risks

We grant credit generally on an unsecured basis to customers throughout North America, Europe, and Asia.We establish an allowance for doubtful accounts based upon factors surrounding the credit risk of specificcustomers, historical trends, and other information. To reduce credit risk, certain sales are secured by letters ofcredit from commercial banks. The regional concentration of accounts receivables were as follows:

RegionDecember 31,

2009

Percent ofreceivable

balanceDecember 31,

2008

Percent ofreceivable

balance

(In thousands)

Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,921 34% $ 3,624 34%Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,906 23% 3,467 33%North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,683 43% 3,551 33%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,510 100% $10,642 100%

Our Asia-based major distributors represented $8.7 million and $10.1 million, or 23% and 24%, of our totalproduct revenues during the year ended December 31, 2009 and 2008, respectively. At December 31, 2009, nocustomer had a year end accounts receivable balance greater than 10% of the total balance outstanding and nocustomer represented more than 10% of total world-wide revenue for the year ended December 31, 2009.

Our products incorporate components that are available from only one or a limited number of suppliers.Many of these components are manufactured with lead times, which can be significant. Shortages of variousessential materials could occur due to interruption of supply. If we were unable to procure certain suchcomponents from suppliers or sub-contractors, it could affect our ability to meet demand for our products, whichwould have an adverse effect upon our results.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market value (net realizable value). Thecomponents of inventories were as follows:

December 31,

2009 2008

(In thousands)

Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,657 $ 7,560Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 282Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,054 2,789

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,722 $10,631

Inventories are shown net of excess and obsolescence reserves of $1.9 million and $1.8 million atDecember 31, 2009 and 2008, respectively.

Equipment and Leasehold Improvements

Equipment is stated at cost and depreciated using the straight-line method over the estimated useful lives ofthe assets (generally 3 to 5 years). Leasehold improvements are amortized using the straight-line method over the

F-10

SEQUENOM, INC.


December 31, 2009

estimated useful life of the improvement or the remaining term of the lease, whichever is shorter. The maximumestimated useful life of any leasehold improvement is 15 years from the completion of the improvement.Maintenance and repairs are charged to operations as incurred. When assets are sold, or otherwise disposed of,the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included inoperating expense.

Equipment and leasehold improvements and related accumulated depreciation and amortization were as follows:

December 31,

2009 2008

(In thousands)

Laboratory equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,610 $ 18,793Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,092 4,537Office furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,980 7,670

37,682 31,000Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . (25,871) (21,805)

$ 11,811 $ 9,195

Depreciation expense for the years ended December 31, 2009, 2008 and 2007 was $5.1 million, $2.8 million,and $1.7 million, respectively, and includes $92,000 of depreciation on equipment under capital lease.

Intangible Assets

Intangible assets consisted of the following:

December 31, 2009 December 31, 2008

WeightedAverage

Life

GrossCarryingAmount

AccumulatedAmortization

GrossCarryingAmount

AccumulatedAmortization

(In thousands)

Clinical data collections . . . . . . . . . . . . . . . 5 $13,552 $(13,552) $13,552 $(13,552)Purchased patent rights and licenses . . . . . . 3 5,621 (4,539) 4,449 (4,449)Lab accreditation . . . . . . . . . . . . . . . . . . . . . 5 117 (27) 117 (3)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,290 $(18,118) $18,118 $(18,004)

Intangible assets are amortized using the straight-line method over their estimated useful lives. Amortizationof intangible assets for the years ended December 31, 2009, 2008 and 2007 was $0.1 million, $0.1 million, and$0.3 million, respectively.

The following table is a schedule of future estimated amortization expense at December 31, 2009:

(in thousands)

2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3912011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3912012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3362013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,172

F-11

SEQUENOM, INC.


December 31, 2009

Warranty Cost and Reserves

We provide a warranty provision related to the sales of our MassARRAY equipment based on ourexperience of returns and repairs required under the warranty period.

We generally provide a one-year warranty on our MassARRAY system and related equipment. We establishan accrual for estimated warranty expenses associated with system sales based on historical amounts. Thisexpense is recorded as a component of cost of product revenue.

Changes in our warranty liability during the three years ended December 31, 2009 are as follows (inthousands):

Balance as of December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 680Additions charged to cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314Repairs and replacements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (468)

Balance as of December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 526Additions charged to cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385Repairs and replacements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (305)

Balance as of December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 606Additions charged to cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199Repairs, replacements and reduction in liability requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . (630)

Balance as of December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 175

Fair Value of Financial Instruments

Financial instruments, including cash and cash equivalents, accounts receivable, accounts payable andaccrued liabilities, are carried at cost, which management believes approximates fair value because of the short-term maturity of these instruments. The fair value of our asset-backed loan approximated carrying value becausethe terms are equivalent to borrowing rates currently available to us for debt with similar terms and maturities.

Accounts Receivable

Trade accounts receivable are recorded at net invoice values. We consider receivables past due based on thecontractual payment terms. We review our exposure to amounts receivable and reserve specific amounts ifcollectability is no longer reasonably assured. We also reserve a percentage of our trade receivable balance basedon collection history. We re-evaluate such reserves on a regular basis and adjust our reserves as needed. Amountsdetermined to be uncollectible are charged or written off against the reserve.

Revenue Recognition

Revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred orservices have been rendered, the price is fixed and determinable and collectability is reasonably assured. Inregard to MassARRAY system sales, the arrangement consideration is allocated among the separate units ofaccounting based on their relative fair values. The separate units of accounting are typically the system andsoftware itself and maintenance contracts sold at the time of the system sale. Revenue is deferred for feesreceived before earned. Revenues from sales of consumables are recognized generally upon shipment andtransfer of title to the customer. Revenue from sales of MassARRAY systems with standard payment terms of net

F-12

SEQUENOM, INC.


December 31, 2009

90 days or less are recognized upon shipment and transfer of title to the customer or when all revenue recognitioncriteria are met. Our contracts do not contain refund or cancellation clauses. Revenues from the sale or licensingof our proprietary software are recognized upon transfer of title to the customer. We recognize revenue onmaintenance services for ongoing customer support over the maintenance period. Revenues from genetic servicesare recognized at the completion of key stages in the performance of the service, which is generally delivery ofsingle nucleotide polymorphism (SNP) assay information. Grant revenue is recorded as the research expensesrelating to the grants are incurred, provided that the amounts received are not refundable if the research is notsuccessful. Amounts received that are refundable if the research is not successful would be recorded as deferredrevenue and recognized as revenue upon the grantor’s acceptance of the success of the research results.

Diagnostic revenues from our carrier screening test for cystic fibrosis, which was commercially launched inSeptember 2009, have been recognized on a cash basis due to the limited number of contract or agreements withthird-party payors and limited collections experience. We generally bill third-party payors upon generation anddelivery of a report to the physician. As such, we take assignment of benefits and risk of collection with the third-party payor. We usually bill the patient directly for amounts not covered by their insurance carrier in the form ofco-pays and deductibles, but only after multiple requests for full payment have been denied or only partially paidby the insurance carrier. Some payors may not cover our carrier screening test for cystic fibrosis, as ordered bythe physician, under their reimbursement policies. Consequently, we pursue case-by-case reimbursement wherepolicies are not in place.

Research and Development Costs

Research and development costs are expensed as incurred. These costs include personnel expenses, feespaid to collaborators, laboratory supplies, facilities, miscellaneous expenses and allocation of corporate costs.These expenses are incurred during proprietary research and development activities, as well as providing servicesunder collaborative research agreements.

Foreign Currency Translation and Transactions

The financial statements of our German, United Kingdom, India, and Japan subsidiaries are measured using,respectively, the Euro (EUR), Great British pound (GBP), the Indian Rupee (INR) and the Japanese Yen (JPY),as the functional currency. Assets and liabilities of these subsidiaries are translated at the rates of exchange at thebalance sheet date. Income and expense items are translated at the average daily rate of exchange during thereporting period. Resulting remeasurement gains or losses are recognized as a component of othercomprehensive income (loss). Transactions denominated in currencies other than the local currency are recordedbased on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result intransaction gains and losses, which are reflected in income as unrealized (based on period-end translations) orrealized upon settlement of the transaction. Transaction gains or losses were not material for the years endedDecember 31, 2009, 2008 and 2007.

Income Taxes

Our provision for income taxes is computed using the asset and liability method, under which deferred taxassets and liabilities are recognized for the expected future tax consequences of temporary differences betweenthe financial reporting and tax bases of assets and liabilities, and for the expected future tax benefit to be derivedfrom tax loss and credit carryforwards. Deferred tax assets and liabilities are determined using the enacted taxrates in effect for the years in which those tax assets are expected to be realized. A valuation allowance isestablished when it is more likely than not the future realization of all or some of the deferred tax assets will not

F-13

SEQUENOM, INC.


December 31, 2009

be achieved. The evaluation of the need for a valuation allowance is performed on a jurisdiction by jurisdictionbasis, and includes a review of all available positive and negative evidence. As of December 31, 2009 and 2008,we maintain a valuation allowance against U.S. and foreign deferred tax assets that we concluded have not metthe “more likely than not” threshold. Changes in the valuation allowance when they are recognized in theprovision for income taxes are included as a component of the estimated annual effective tax rate.

We recognize excess tax benefits associated with share-based compensation to stockholders’ equity onlywhen realized. When assessing whether excess tax benefits relating to share-based compensation have beenrealized, we follow the with-and-without approach, excluding any indirect effects of the excess tax deductions.Under this approach, excess tax benefits related to share-based compensation are not deemed to be realized untilafter the utilization of all other tax benefits available to us.

We recognize the impact of a tax position in our financial statements only if that position is more likely thannot of being sustained upon examination by taxing authorities, based on the technical merits of the position. Anyinterest and penalties related to uncertain tax positions will be reflected in income tax expense.

Stock-based Compensation

Share based compensation cost is measured at grant date based on the estimated fair value of the awardusing the Black-Scholes option pricing model and the portion that is ultimately expected to vest and isrecognized as expense over the requisite service period for all share based awards granted, modified or cancelled.Our net loss for the years ended December 31, 2009, 2008 and 2007, included the following compensationexpense related to our share based compensation awards:

(In thousands)2009 2008 2007

Research and development expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,562 $1,306 $ 521Selling and marketing expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,239 1,430 601General and administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,498 3,396 1,936

$11,299 $6,132 $3,058

Cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized foroptions exercised (excess tax benefits) are classified as cash inflows from financing activities and cash outflowsfrom operating activities. Due to our net loss position, no tax benefits have been recognized in the consolidatedstatements of cash flows.

We have not recognized, and do not expect to recognize in the near future, any tax benefit related to stock-based compensation cost as a result of the full valuation allowance of our net deferred tax assets and our netoperating loss carryforwards.

The fair value of options granted to non-employees is estimated at the measurement date using the Black-Scholes option pricing model. Total stock-based compensation for options granted to non-employees for the yearended December 31, 2009, 2008, and 2007, was $273,000, $731,000 and $128,000, respectively. Stock-basedcompensation for options granted to non-employees is included in general and administrative, research anddevelopment and selling and marketing expenses in the statement of operations for the year ended December 31,2009, 2008 and 2007 totaling $1,000, $0 and $39,000; $59,000, $181,000 and $24,000; and $213,000, $550,000and $65,000, respectively.

F-14

SEQUENOM, INC.


December 31, 2009

Comprehensive Income (Loss)

Comprehensive income (loss) and its components, which include net loss, unrealized gains and losses on ouravailable-for-sale marketable securities and foreign currency translation gains and losses, are disclosed as aseparate component of stockholders’ equity.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss for the period by the weighted average numberof common shares outstanding during the period. Diluted net loss per share is computed by dividing the net lossfor the period by the weighted average number of common and common equivalent shares outstanding during theperiod. Common stock equivalents consisting of exercisable stock options of 3,507,803, warrants of 59,035 andrestricted stock of 59,001 were not included in the computation of diluted net loss per share as their effect wasanti-dilutive for all periods presented.

Recent Accounting Pronouncements

As of July 1, 2009, the Financial Accounting Standards Board (FASB) formally approved the FASBAccounting Standards Codification (Codification) as the single source of authoritative U.S. accounting andreporting standards, other than guidance issued by the SEC. At that time, the Codification superseded all then-existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accountingliterature not included in the Codification became non-authoritative. The Codification is effective for interim andannual periods ending after September 15, 2009. We adopted the provisions of the Codification in the thirdquarter of 2009. The adoption did not have a material impact on our consolidated financial statements.

In May 2009, the FASB issued authoritative guidance that establishes general standards of accounting forand disclosure of events that occur after the balance sheet date but before financial statements are issued or areavailable to be issued. This guidance became effective for interim periods and fiscal years ending after June 15,2009. We adopted the provisions of this guidance in the second quarter of 2009. The adoption of this guidancedid not have a material impact on our consolidated financial statements.

In April 2009, the FASB issued authoritative guidance that requires publicly traded companies to include intheir interim financial reports certain disclosures about the carrying value and fair value of financial instrumentspreviously required only in annual financial statements and to disclose changes in significant assumptions used tocalculate the fair value of financial instruments. This guidance became effective for all interim reporting periodsending after June 15, 2009, with early adoption permitted for interim reporting periods ending after March 15,2009. We adopted the provisions of this guidance in the second quarter of 2009. The adoption of this guidancedid not have a material impact on our consolidated financial statements. In December 2007, the FASB issuedauthoritative guidance that significantly changes the accounting and reporting requirements for businesscombination transactions, including capitalization of in-process research and development assets and expensingacquisition costs as incurred. This guidance became effective for business combination transactions occurring infiscal years beginning after December 15, 2008. We adopted the provisions of this guidance in the first quarter of2009. The adoption did not have a material impact on our 2009 consolidated financial statements.

F-15

SEQUENOM, INC.


December 31, 2009

In November 2008, the FASB issued authoritative guidance that clarifies how to account for acquiredintangible assets subsequent to initial measurement in situations in which an entity does not intend to actively usethe assets but intends to hold the asset to prevent others from obtaining access to the asset (a defensive intangibleasset), except for intangible assets that are used in research and development activities. This guidance requiresthat a defensive intangible asset be accounted for as a separate unit of accounting and assigned a useful life thatreflects the entity’s consumption of the expected benefits related to that asset. This guidance became effective forintangible assets acquired on or after December 15, 2008. We adopted the provisions of this guidance in the firstquarter of 2009. The adoption of this guidance did not have a material impact on our consolidated financialstatements.

In June 2008, the FASB issued authoritative guidance that clarifies the criteria for determining whethercertain financial instruments should be classified as derivative instruments or equity instruments. The guidancebecame effective for years beginning after December 15, 2008. We adopted the provisions of the guidance in thefirst quarter of 2009. The adoption did not have a material impact on our consolidated financial statements.

In April 2008, the FASB issued authoritative guidance that amends the guidance for estimating the usefullives of recognized intangible assets and requires additional disclosure related to renewing or extending theuseful lives of recognized intangible assets. This guidance became effective for fiscal years and interim periodsbeginning after December 15, 2008. We adopted the provisions of this guidance in the first quarter of 2009. Theadoption of this guidance did not have a material impact on our consolidated financial statements.

In December 2007, the FASB issued authoritative guidance that defines collaborative arrangements andrequires that transactions with third parties that do not participate in the arrangement be reported in theappropriate income statement line items pursuant to existing authoritative accounting literature. In accordancewith this guidance, income statement classification of payments made between participants of a collaborativearrangement is to be based on other applicable authoritative accounting literature. If the payments are not withinthe scope or analogy of other authoritative accounting literature, a reasonable, rational and consistent accountingpolicy is to be elected. This guidance became effective for fiscal years beginning after December 15, 2008 andwas to be applied as a change in accounting principle to all prior periods retrospectively for all collaborativearrangements existing as of the effective date. We adopted the provisions of this guidance in the first quarter of2009. The adoption of this guidance did not have a material impact on our consolidated financial statements.

3. Acquisitions

Center for Molecular Medicine, LLC

On November 14, 2008, we completed a tax free acquisition of certain assets of the Center for MolecularMedicine, LLC (CMM). The assets are now part of our wholly-owned subsidiary, the Sequenom Center forMolecular Medicine, LLC (Sequenom CMM). Under the terms of the asset purchase agreement, we paid toCMM $4.0 million for certain assets related to CMM’s business in advanced molecular pathology laboratoryservices relating to diagnostics, translational research and clinical trials, less all cash and cash equivalents. Ninetypercent of the purchase price consisted of 187,794 shares of our common stock (valued at $3.6 million as of theacquisition closing date) and the remainder of the purchase price of $0.4 million was paid in cash, which wasdeposited into an escrow account. The escrow account will remain in place for 18 months following the closingof the transaction to satisfy potential indemnification claims. The acquisition of CMM provides us with alaboratory that has the required accreditations and certifications already in place to develop and marketlaboratory developed tests and have contributed to the purchase price for the acquisition of CMM, which resultedin the recognition of goodwill of approximately $3.0 million.

F-16

SEQUENOM, INC.


December 31, 2009

In connection with this acquisition, we completed a valuation study of the intangible assets acquired in orderto allocate the purchase price. We have allocated the excess purchase price over the fair value of net tangibleassets and identifiable intangible assets acquired to goodwill. We believe the fair values assigned to the CMMassets acquired were based on reasonable assumptions, as determined by management. The purchase price hasbeen allocated as follows (in thousands):

Net tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 893Identifiable intangible asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,990

Total consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,000

SensiGen, LLC

On February 27, 2009, we completed a taxable acquisition of certain assets and assumption of certainliabilities of SensiGen, LLC (SensiGen). The assets are now part of our wholly-owned subsidiary, SequenomCMM. Under the terms of the asset purchase agreement (the Agreement), we acquired certain assets related toSensiGen’s business in gene-based molecular diagnostic tests relating to cervical cancer, head and neck cancer,chronic kidney disease and lupus. We paid SensiGen cash consideration of approximately $1.9 million, whichincluded a loan advance of $340,000, and issued common stock valued at $1.9 million (utilizing the minimumfloor price of $20.94 per share in accordance with the Agreement). An additional $1.3 million is contingentlypayable to SensiGen upon the completion of certain triggering events with either cash or shares of our commonstock (priced at the average closing price of our common stock over the ten trading day period ending on thethird trading day prior to the applicable triggering event for such payment). In June 2009 we satisfied one of thetriggering events related to the Agreement with a cash payment of $130,000. This triggering event had previouslybeen recorded at a fair value of $130,000 during our initial fair value measurement of contingent considerationassociated with the allocation of purchase price. After the payment of this triggering event, our remaining fairvalue of contingent consideration in the allocation of purchase price at the date of closing is $27,000. InDecember 2009, we entered into stipulations with certain stockholders of SensiGen for their release of claimsagainst us related to the acquisition in exchange for the issuance of an aggregate 367,547 shares of our commonstock. The issuance of these additional shares was charged to operations for the year ended December 31, 2009,and was valued at approximately $1.5 million as of the date of share delivery.

The acquisition of the SensiGen assets provides us with intellectual property related to certain moleculardiagnostics for women’s health and cancer and have contributed to the purchase price for the acquisition ofSensiGen, which resulted in the recognition of goodwill of approximately $7.0 million.

The total purchase consideration, excluding potential contingent consideration fair values, consisted of (inthousands, except share and per share data):

Cash paid to SensiGen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,887Sequenom common stock issued on the closing date (92,679 shares at $20.94 per share) . . . . 1,941Assumed liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,242Write-off of preexisting receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403

Total purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,473

In connection with this acquisition we completed a valuation study of the intangible assets acquired in orderto allocate the purchase price. We have allocated the excess purchase price over the fair value of net tangible

F-17

SEQUENOM, INC.


December 31, 2009

assets and liabilities assumed to goodwill, as well as provided an estimate of the fair value of the contingentconsideration as of the closing date of the acquisition. We believe the fair values assigned to SensiGen’s assetsacquired and contingent consideration were based on reasonable assumptions, as determined by management.The purchase price has been allocated as follows (in thousands):

Net tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 613Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,860

7,473Fair value of contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Total consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,630

At each reporting date, we re-measure the contingent consideration liability at fair value, until thecontingency is resolved with the changes in fair value recognized as a charge to operations in the current period.This analysis, which includes a probability assessment regarding the likelihood of payment and a discountedpresent value factor, concluded that the fair value of the remaining contingently payable triggering events basedon currently available information was $541,000 as of December 31, 2009, as compared to the $27,000remaining accrued contingent liability discussed above. The increase in our contingent consideration liability of$514,000 was recognized as a component of research and development ($260,000) and general andadministrative expenses ($254,000), respectively. Subsequent to year end, we paid $520,000 in cash to satisfythese triggering events.

4. Restructuring

In April 2009, we announced that we reduced our genetic analysis employee workforce in accordance withour initiative to reduce costs and restructure our workforce. Severance related charges are included in therestructuring charges in the accompanying consolidated statement of operations for the year ended December 31,2009.

The beginning balance for facilities costs prior to the April 2009 reduction in workforce consisted of a $0.4million in accrued facility exit costs associated with exiting our lease commitments for the Boston,Massachusetts facility. This facility was initially leased in conjunction with the acquisition of Gemini Genomics,plc in 2001.

The reduction in workforce included the closure of our leased facility near Boston, Massachusetts, withlease expiration on December 31, 2010, as well as the closure of our office located in New Delhi, India duringthe second quarter of 2009.

The following table summarizes the activity and balance of accrued restructuring charges included inaccrued expenses in the consolidated balance sheet through December 31, 2009 associated with the April 2009reduction in workforce (in thousands):

DescriptionEmployeeRelated Facilities Other Total

Balance at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . $ — $ 484 $ — $ 484Accrued restructuring charges . . . . . . . . . . . . . . . . . . . . . . . 605 553 460 1,618Fixed asset retirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (96) (96)Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (605) (502) (309) (1,416)

Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . $ — $ 535 $ 55 $ 590

F-18

SEQUENOM, INC.


December 31, 2009

5. Marketable Securities and Fair Value Measurements

Marketable securities

The estimated fair market value of our ARS holdings at December 31, 2009, was $0.5 million and reflects a$3.8 million adjustment to the principal value of $4.3 million. The $3.8 million adjustment includes a $1.1million other-than-temporary impairment loss charged to operations for the year ended December 31, 2009. Theestimated fair market value of all ARS holdings at December 31, 2008, was approximately $5.7 million, whichreflects a $3.7 million adjustment to the principal value of $9.4 million. Other-than-temporary impairment lossescharged to operations related to our ARS during the years ended December 31, 2008 and 2007 were $2.6 millionand $1.1 million, respectively. As of December 31, 2009, there are no accumulated unrealized losses in othercomprehensive income related to these ARS. As of December 31, 2009, our ARS investments have contractualmaturity dates ranging from 2011 to 2028.

Although the majority of our ARS continue to pay interest according to their stated terms, based onvaluation models and an analysis of other-than-temporary impairment factors, we recognized a loss ofapproximately $1.1 million and $2.6 million for the years ending December 31, 2009 and 2008, respectively,which reflects the portion of ARS holdings that we have concluded have an other-than-temporary decline invalue. During the fourth quarter of 2009, our management determined that it was no longer our intent to hold theremaining ARS to maturity and to actively pursue liquidation of our remaining ARS in the secondary market. Asa result of this decision, during the fourth quarter of 2009 we sold ARS with an estimated fair value of $4.1million, which resulted in a net realized loss of approximately $0.8 million for a total loss on our ARS of $1.9million for the year ended December 31, 2009. As of December 31, 2009, our remaining ARS have a principalvalue of $4.3 million and an estimated fair market value of $0.5 million. Subsequent to year end, ARS with aprincipal value of $1.3 million and an estimated fair value of $0.5 million at December 31, 2009, were sold. Theproceeds for these ARS were equal to their estimated fair value as of December 31, 2009. Our other remainingARS with a principal value of $3.0 million have an estimated fair value of $0 as of December 31, 2009.

Approximately $1.0 million of the recorded loss for the year ended December 31, 2008, represented thereclassification of previously recorded unrealized losses in other comprehensive income and that we have nowconcluded have an other-than-temporary decline in value. At December 31, 2007, we had recorded an unrealizedloss of approximately $0.8 million in accumulated other comprehensive income as a reduction in stockholders’equity, reflecting adjustments to ARS holdings that we had concluded have a temporary decline in value. During2008, the adjustments previously recorded to other comprehensive income at December 31, 2007, have beenrecognized as an other-than-temporary decline in value and are included within the $2.6 million of loss onmarketable securities for the year ended December 31, 2008. During 2008, we reclassified our remaining ARSinvestments to non-current marketable securities available for sale. The $0.5 million of ARS sold subsequent toyear end are presented as current marketable securities as of December 31, 2009.

Fair Value Measurements

SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liabilityin an orderly transaction between market participants on the measurement date. SFAS 157 also establishes a fairvalue hierarchy that requires an entity to maximize the use of observable inputs and minimize the use ofunobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used tomeasure fair value:

Level 1—Quoted prices in active markets for identical assets or liabilities. We have determined that ourinvestments in money market accounts, certificates of deposit and U.S. Government securities meet thecriteria for definition within the Level 1 hierarchy.

F-19

SEQUENOM, INC.


December 31, 2009

Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset orliability, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities;quoted prices in markets that are not active; or other inputs that are observable or can be corroborated byobservable market data for substantially the full term of the assets or liabilities. We have determined that ourinvestments in commercial paper and ARS that were sold subsequent to year end with moderate secondarymarket activity meet the criteria for definition within the Level 2 hierarchy.

Level 3—Unobservable inputs that are supported by little or no market activity and that with anestimated fair value of $0 at December 31, 2009 are significant to the fair value of the assets or liabilities.We have determined that our investments in ARS meet the criteria for definition within Level 3 hierarchy.

The fair values of our investments in ARS instruments of $0 are estimated utilizing a discounted cash flowanalysis valuation model as of December 31, 2009. This analysis considers, among other items, the collateralunderlying the security investments, the credit quality of the counterparty, the timing of expected future cashflows, the default risk underlying the security, discount rates, the expected time until a successful auction and theoverall capital market liquidity. These securities were also compared, when possible, to other observable marketdata with similar characteristics to the securities. Management has also reviewed the valuation input criteria,which generally consists of the price of credit protection, information available on the trading of senior andsubordinated securities and other debt in the market place for comparable types of maturities, the current creditrating of the trust sponsor and/or bond insurer, as well as the ultimate maturity and the underlying collateral ofthe securities and have deemed them to be reasonable assumptions in determining fair value. The valuation of ourARS investments is subject to uncertainties that are difficult to predict. Factors that may impact our valuationinclude changes to credit ratings of the securities, as well as to the underlying assets supporting those securities,rates of credit default of the underlying assets, underlying collateral value, discount rates, counterparty risk andthe ongoing strength and quality of market credit and liquidity.

We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilitiesare classified in their entirety based on the lowest level of input that is significant to the fair value measurement.All of the available for sale securities have a contractual maturity at December 31, 2009 of one year or less. Thefollowing table sets forth our financial assets and liabilities that were accounted for at fair value on a recurringbasis as of December 31, 2009:

Description Total Level 1 Level 2 Level 3

(in thousands)

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,941 $14,941 $— $—Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,419 1,419 — —Marketable securities, current1 . . . . . . . . . . . . . . . . . . . . . . . 15,762 15,291 471 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $32,122 $31,651 $471 $—

1 Gains or losses considered to be temporary are recorded to other comprehensive income (loss) at eachmeasurement date. Other than temporary losses are recorded to operations at each measurement date.

F-20

SEQUENOM, INC.


December 31, 2009

The following table presents our assets measured at fair value on a recurring basis using significantunobservable inputs (Level 3) as defined in SFAS 157 at December 31, 2009:

Level 3Auction Rate

Securities

(in thousands)Balance at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,509Transfers from Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (471)Total losses:

Included in operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,993)Recognized loss previously included in other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . —Included in other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Purchases and settlements, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,045)

Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ —

Losses included in operations (or changes in net assets) for the period relating to assets still held atDecember 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Total net losses for the year ended December 31, 2009, included in operations . . . . . . . . . . . . . . . . . . . . . . . . . $(1,914)

Total change in unrealized losses included in other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . $ —

6. Segment Reporting

At December 31, 2009, we reevaluated our segment reporting in light of changes to our managementstructure, internal performance reporting and incentive compensation plans that became effective in 2009. Priorto 2009, our business had been reported as a single segment with operating performance measured as a singleunit and management incentive plans that were based on total life sciences segment performance. With changesduring the current year, we are now reporting results for two life sciences segments, Molecular Diagnostics andGenetic Analysis.

Description of the types of products and services from which each reportable segment derives its revenues

We operate two primary business segments, Molecular Diagnostics and Genetic Analysis. MolecularDiagnostics researches, develops and commercializes noninvasive molecular diagnostic tests for prenatal geneticdisorders and diseases, oncology, infectious diseases, and other diseases and disorders. Genetic Analysis designs,markets and provides maintenance services for our proprietary MassARRAY system, comprised of hardware,software applications, consumable chips and reagents which are marketed to premier clinical researchlaboratories, bio-agriculture, bio-technology and pharmaceutical companies.

Revenue for Molecular Diagnostics is generated from customers located within the United States. Revenuefor Genetic Analysis is generated from customers and/or distributors located in North America, Europe and Asia.

Measurement of segment profit or loss and segment assets

We evaluate performance and allocate resources based on total segment revenue, operating expenses andoperating profit or loss exclusive of general and administrative expenses, other indirect overhead costs andrestructuring charges, which are not allocated to our segments for performance assessment by our chief operatingdecision maker. No evaluation of segment performance or allocation of resources is done in consideration ofsegment assets. The accounting policies of the reportable segments are the same as those described in thesummary of significant accounting policies. Intersegment revenues and transfers are immaterial.

Unallocated expenses for research and development and sales and marketing expenses consist of sharebased compensation, indirect overhead expenses and allocated and absorbed costs. Unallocated operating lossconsists of general and administrative expenses, share based compensation, indirect overhead expenses andunabsorbed costs.

F-21

SEQUENOM, INC.


December 31, 2009

Factors management used to identify our reportable segments

Our reportable segments are business units that offer different products and services and are each managedseparately. Operating results for each segment are reported separately to senior management to make decisions asto the allocation of resources and to assess performance.

Operating segment financial data is as follows as of December 31, 2009:

(In thousands)Revenues:

Molecular Diagnostics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94Genetic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,769

$ 37,863

Research and development expenses:Molecular Diagnostics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,935Genetic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,587Share based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,835Indirect overhead (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,898Allocated and absorbed costs (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,199

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,454

Sales and marketing expenses:Molecular Diagnostics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,780Genetic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,644Share based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,590Indirect overhead (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,819Allocated and absorbed costs (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,012

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,845

Operating (loss) income:Molecular Diagnostics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(27,033)Genetic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,379Unallocated (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48,068)

$(70,722)

(1) Indirect overhead consists of expenses related to the following departments, which are unallocated to ouroperating segments for performance assessment by our chief operating decision maker: quality, regulatory,chief science officer and research and development collaborations (licensing costs).


(3) Indirect overhead consists of expenses related to the following departments, which are unallocated to ouroperating segments for performance assessment by our chief operating decision maker: businessdevelopment and European sales administration.


(5) Unallocated costs consist of those reconciling items for research and development and sales and marketingexpenses, as well as general and administrative expenses, which are unallocated to our operating segmentfor performance assessment by our chief operating decision maker.

F-22

SEQUENOM, INC.


December 31, 2009

7. Debt and Obligations

Asset-backed Loan

On August 31, 2007, we signed an amendment to our existing asset-backed loan line that had previouslyexpired. Under the terms of this amendment, we may elect to have individual minimum fundings of $100,000 upto an aggregate limit of $3.0 million through December 23, 2008. All borrowings are secured by the underlyingfinanced equipment.

As of December 31, 2009, we had an aggregate $0.6 million outstanding on this asset-backed loan linerelating to four fundings with interest rates from 10.6% to 9.73%. Payments are to be repaid in 36 monthlyinstallments with final payments dates ranging from April 2010 to May 2011. Our rights to borrow funds underthis facility expired in December 2008.

Debt

In connection with our acquisition of SensiGen in February 2009, we assumed two loans with the MichiganEconomic Development Corporation with an aggregate balance at the closing date of approximately $3.2 million.The first loan of approximately $0.3 million has a stated interest rate of 1% with all payments deferred untilMarch 2013. Commencing March 2013, principal payments of approximately $3,000 are due monthly throughMarch 2018, at which time a final balloon payment of approximately $161,000 is due. The second loan ofapproximately $2.9 million has a stated interest rate of 7% with monthly principal payments of approximately$68,000 through September 2012. As of December 31, 2009, we had an aggregate of $2.3 million outstanding onthese loans. Both loans are collateralized by all of Sequenom CMM’s tangible and intangible property and rightsin which a security interest or lien may be taken.

The following is a schedule of future maturities on our asset-back loans and debt at December 31, 2009:

Year Ending December 31, Payments

(In thousands)

2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,2052011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7442012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6222013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260

$2,886

Capital Lease

In the second quarter of 2009, we entered into a 36 month capital lease arrangement for new phoneequipment, which was capitalized with office furniture and equipment at an aggregate balance of approximately$366,000.

F-23

SEQUENOM, INC.


December 31, 2009

The following is a schedule of minimum future rental payments on non-cancelable capital leases atDecember 31, 2009:

Year Ending December 31, Payments

(In thousands)

2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1312011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1312012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Total minimum payments required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296Less: amount representing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25)

Present value of net minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $271

8. Commitments and Contingencies

Building Leases

We lease facilities in the United States, Germany, China, United Kingdom and Japan. In total, we leasespace in 10 buildings under leases that expire at various dates through September 2015. Total rent expense underthese leases was approximately $5.4 million, $5.0 million and $5.0 million in 2009, 2008 and 2007, respectively.

In September 2005, we entered into an amendment to our lease for our corporate headquarters in San Diego.The lease amendment provides for the deferral of approximately $3.2 million of the monthly rent payments byreducing the monthly payments during the period commencing October 1, 2005 and ending September 30, 2007and increasing the aggregate monthly payments by the deferred amount for the remaining term of the lease, fromOctober 1, 2007 to September 30, 2015. The total obligation under the lease remains unchanged. Rent expense iscalculated on a straight-line basis. In connection with the lease amendment, we issued our landlord a warrant topurchase 50,000 shares of our common stock with an exercise price of $2.64 per share. The warrants areexercisable and have a ten year term. The fair value of the warrants, calculated using the Black-Scholes optionpricing model, was recorded as prepaid rent and is being amortized as rent expense over the remaining life of thelease.

The following is a schedule of future minimum lease payments under non-cancelable operating leasecommitments at December 31, 2009:

Year Ending December 31,Operating

Leases

(In thousands)

2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,0412011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,8512012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,3412013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,3132014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,456Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,429

$30,431

The above operating leases expire at various dates through 2015. Certain leases contain extension, return, orrenewal provisions for two years at existing lease rates and/or purchase options. Future operating leasecommitments for leases have not been reduced by future minimum sublease rentals aggregating $0.3 million.

F-24

SEQUENOM, INC.


December 31, 2009

Letters of Credit

At December 31, 2009, we had outstanding stand-by letters of credit with financial institutions totaling$1.4 million related to our building, operating leases and customer guarantees. The letter of credit related to ourNewton, Massachusetts building lease agreement will remain in place until its expiration in December 2010.

Collaboration, Development and Licensing Agreements

In October 2005 we acquired exclusive rights in certain countries, including the United States,United Kingdom and other countries in Europe and elsewhere, to noninvasive prenatal diagnostic intellectualproperty from Isis Innovation Ltd. (ISIS), the technology transfer company of the University of Oxford. Theintellectual property covers noninvasive prenatal genetic diagnostic testing on fetal nucleic acids derived fromplasma or serum on any platform including mass spectrometry and real time polymerase chain reactionamplification platforms. In October 2006 and November 2007 we entered into additional related agreements withother entities, as well as amendments to the ISIS agreement that expanded the licensed applications and territory.Under the terms of this agreement and its amendments, we have paid up-front fees totaling $0.8 million and arerequired to pay up to approximately $0.5 million in aggregate milestone payments upon the achievement ofinitial sales or tests performed of various products or the issuance of a patent, as well as royalties on productsales.

In November 2009, we entered into a third amendment to the Isis Agreement pursuant to which Isis agreedto a modification of certain time-based commercial launch milestones relating to aneuploidy and other products.In exchange for this modification, we agreed to make an immediate one-time payment of $1,000,000, increaseroyalty payments under the agreement during the final 12 months of the patent term and increase the specifiedminimum royalty amounts.

We have entered into various license agreements since 1996 allowing us to utilize certain patents rights. Ifthese patents are used in connection with a commercial product sale, we will pay royalties based on a percentageof the related product revenues. During the years ended December 31, 2009, 2008, and 2007, the amount ofroyalties incurred in connection primarily with product sales was $0.1 million, $0.1 million, and $0.1 million,respectively.

Litigation

In November 2001, we and certain of our current or former officers and directors were named as defendantsin a class action shareholder complaint filed by Collegeware USA in the U.S. District Court for the SouthernDistrict of New York (now captioned In re Sequenom, Inc. IPO Securities Litigation) Case No. 01-CV-10831. Inthe complaint, the plaintiffs allege that our underwriters, certain of our officers and directors and we violated thefederal securities laws because our registration statement and prospectus contained untrue statements of materialfact or omitted material facts regarding the compensation to be received by and the stock allocation practices ofthe underwriters. The plaintiffs seek unspecified monetary damages and other relief. Similar complaints werefiled in the same District Court against hundreds of other public companies that conducted initial public offeringsof their common stock in the late 1990s and 2000 (the IPO Cases).

In October 2002, our officers and directors were dismissed without prejudice pursuant to a stipulateddismissal and tolling agreement with the plaintiffs. In February 2003, the District Court dismissed the claimagainst us brought under Section 10(b) of the Exchange Act, without giving the plaintiffs leave to amend thecomplaint with respect to that claim. The District Court declined to dismiss the claim against us brought underSection 11 of the Securities Act of 1933, as amended (the Securities Act).

F-25

SEQUENOM, INC.


December 31, 2009

In September 2003, pursuant to the authorization of a special litigation committee of our board of directors,we approved in principle a settlement offer by the plaintiffs. In September 2004, we entered into a settlementagreement with the plaintiffs. In February 2005, the District Court issued a decision certifying a class action forsettlement purposes and granting preliminary approval of the settlement subject to modification of certain barorders contemplated by the settlement. In August 2005, the District Court reaffirmed class certification andpreliminary approval of the modified settlement. In December 2006, the U.S. Court of Appeals for the SecondCircuit vacated the District Court’s decision certifying as class actions the six lawsuits designated as “focuscases.” Thereafter the District Court ordered a stay of all proceedings in all of the lawsuits pending the outcomeof plaintiffs’ petition to the Second Circuit for rehearing en banc. In April 2007, the Second Circuit deniedplaintiffs’ rehearing petition, but clarified that the plaintiffs may seek to certify a more limited class in theDistrict Court. Accordingly, the settlement as originally negotiated was terminated pursuant to stipulation andwill not receive final approval.

In February 2009, liaison counsel for plaintiffs informed the District Court that a new settlement of all IPOCases had been agreed to in principle, subject to formal approval by the parties and preliminary and finalapproval by the District Court. In April 2009, the parties submitted a tentative settlement agreement to theDistrict Court and moved for preliminary approval thereof. In June 2009, the District Court granted preliminaryapproval of the tentative settlement and ordered that notice of the settlement be published and mailed to classmembers. In September 2009, the District Court held a final fairness hearing. On October 6, 2009, the DistrictCourt certified the settlement class in each IPO Case and granted final approval to the settlement. On or aboutOctober 23, 2009, three shareholders filed a Petition for Permission To Appeal Class Certification Order,asserting that the District Court’s certification of the settlement classes violates the Second Circuit’s earlier classcertification decisions in the IPO Cases. Beginning on October 29, 2009, a number of shareholders also fileddirect appeals, objecting to final approval of the settlement. Similar petitions and direct appeals may be filed byother shareholders. If the settlement is affirmed on appeal, the settlement will become effective and will result inthe dismissal of all claims against us and our officers and directors with prejudice, and our pro rata share of thesettlement fund will be fully funded by insurance.

In October 2008, we filed a patent infringement suit against Ibis Biosciences, Inc. (IBIS), formerly asubsidiary of Isis Pharmaceuticals, Inc. The complaint was served on the defendant in February 2009. IBIS hasbeen acquired by Abbott Molecular. The lawsuit was filed in the U.S. District Court for the District of Delaware.The lawsuit alleged that the sale or offer for sale of the IBIS T5000 Biosensor System and related technologyinfringes three U.S. patents: 6,300,076, 6,500,621 and 7,419,787. Defendant has filed an answer andcounterclaims against us seeking declaratory judgments that the patents are not infringed and are invalid and/orunenforceable. We sought a permanent injunction enjoining the defendant from further infringement andmonetary damages, including enhanced damages pursuant to 35 U.S.C. § 284, costs, attorneys’ fees and otherrelief as the court deems just and proper. On October 22, 2009, we and IBIS entered into a non-exclusive licenseand settlement agreement and the court dismissed with prejudice all claims and counterclaims in the lawsuit.Pursuant to the terms of the agreement, we have agreed to grant IBIS and its affiliates a non-exclusive licenseunder the three mass spectrometry-based patents involved in the lawsuit and certain pending mass-spectrometry-based applications and foreign counterparts to manufacture, use, practice, sell, offer to sell, and import productsand methods protected by the licensed patents. As part of the agreement, we have also agreed to dismiss thelitigation with prejudice and have granted IBIS, and its affiliates, immunity from suit for patent infringement forpast, present or future damages related to the IBIS T5000 Biosensor System and T6000 System. Pursuant to theagreement, IBIS paid us $1.0 million.

In April 2009, we announced that the expected launch of our test for Trisomy 21 (Down syndrome) hadbeen delayed and that we were no longer relying on our previously announced test data and results for that test.

F-26

SEQUENOM, INC.


December 31, 2009

We also announced that our Board of Directors had formed a special committee of independent directors tooversee an independent investigation of activity related to the test data and results and that the committee hadengaged independent counsel to assist the committee in the conduct of the investigation. In September 2009, weannounced that the committee’s investigation had been completed. Based on the committee’s work andrecommendations, the independent directors concluded that as a result of our attempted transition fromresearching potential molecular diagnostic tests to developing and commercializing those tests, we failed to putin place adequate protocols and controls for the conduct of studies in the Trisomy 21 program at our company.Certain of our employees also failed to provide adequate supervision. In the absence of such protocols, controlsand supervision, the test data and results in our Trisomy 21 program included inadequately substantiated claims,inconsistencies and errors. Due to deficiencies in our disclosure controls and procedures, in a number ofinstances such test data and results were reported to the public in our press releases and other public statements.We also terminated the employment of our president and chief executive officer, Harry Stylli, Ph.D., and oursenior vice president of research and development, Elizabeth Dragon, Ph.D., effective immediately. Inconnection with the termination of Dr. Stylli’s employment, Dr. Stylli resigned as a director. We also obtainedthe resignation of our chief financial officer, Paul Hawran. We also terminated the employment of three otheremployees and obtained the resignation of one other officer. While each of these officers and employees deniedwrongdoing, the committee’s investigation raised serious concerns, resulting in a loss of confidence by theindependent directors in the personnel involved.

Our board of directors appointed our chairman of the board, Harry F. Hixson, Jr., Ph.D., to serve as ourchief executive officer. Our board of directors appointed Ronald M. Lindsay, Ph.D., one of our directors, to serveas our interim senior vice president of research and development. Our board of directors appointed Paul V. Maieras our interim chief financial officer effective November 10, 2009. Our controller, Justin J. File, served as ourprincipal financial and accounting officer until Mr. Maier’s appointment as interim chief financial officer.

Following our April 2009 announcement, several complaints were filed in the U.S. District Court for theSouthern District of California against us and certain of our current and former officers and directors on behalf ofcertain purchasers of our common stock. The complaints include claims asserted under Sections 10 and 20(a) ofthe Exchange Act and Sections 11 and 12(a)(2) of the Securities Act and have been brought as shareholder classactions. In general, the complaints allege that we and certain of our officers and directors violated federalsecurities laws by making materially false and misleading statements regarding our Trisomy 21 test underdevelopment, thereby artificially inflating the price of our common stock. The plaintiffs seek unspecifiedmonetary damages and other relief. On September 1, 2009, the complaints were consolidated under the caption Inre Sequenom, Inc. Securities Litigation, S.D. Cal. Case No. 09-CV-0921 LAB (WMc) and a lead plaintiff wasappointed. On December 24, 2009, we entered into a stipulation of settlement with the lead plaintiff on behalf ofthe plaintiffs’ class, which if approved by the District Court, will resolve this action. Pursuant to the terms of thestipulation, we have agreed to pay $14 million, which will be funded by insurance proceeds. We have also agreedto issue to the plaintiffs’ class a number of shares of our common stock equal to 9.95% of our total sharesoutstanding at the time of determination, subject to certain limitations. We have also agreed to adopt or continueour implementation of changes and additions to certain corporate governance policies, protocols and practices.The court preliminarily approved the settlement on January 26, 2010. The court has scheduled a final settlementapproval hearing on May 3, 2010.

In May 2009, a shareholder derivative complaint was filed in the Superior Court of California for theCounty of San Diego against certain of our current and former directors and officers. Thereafter, a number ofsimilar actions, also styled as shareholder derivative suits, were filed in state court and have been consolidated ina single court. On July 1, 2009, the first of three shareholder derivative suits were filed in the U.S. District Courtfor the Southern District of California. The federal shareholder derivative actions have been consolidated before

F-27

SEQUENOM, INC.


December 31, 2009

a single court under the caption In re Sequenom, Inc. Derivative Litigation, S.D. Cal. Case No. 09-CV-1341 LAB(WMc) and plaintiffs filed a single consolidated complaint. A separate federal derivative compliant, Ries, et al. v.Stylii, et al, case no. 09-CV-2517 LAB (WMc), was filed thereafter and it has been coordinated with theconsolidated federal derivative action. The state and federal shareholder derivative actions are hereinaftercollectively referred to as the “Derivative Actions.” The complaints in the Derivative Actions allege breaches offiduciary duties by the defendants and other violations of law. In general, the complaints allege that our directorsand certain of our officers caused or allowed for the dissemination of materially false and misleading statementsregarding our Trisomy 21 test under development, thereby artificially inflating the price of our common stock.The plaintiffs are seeking unspecified monetary damages and other relief, including reforms and improvementsto our corporate governance and internal procedures. We have not yet responded to the Derivative Actions, butwill vigorously defend against the claims advanced.

In June 2009, we received written notification that the Enforcement staff of the SEC has initiated aninvestigation following our April 2009 announcement regarding our Trisomy 21 test under development.Following our September 2009 announcement, members of the special committee and its independent counselmet with the SEC staff in connection with its investigation. As part of this investigation, the SEC staff has alsorequired us to produce information with respect to our announcement relating to our offer to acquire EXACTSciences, Inc. in January 2009. We intend to continue to cooperate fully with the SEC in this matter.

In July 2009, an attorney who claims to represent certain stockholders who were issued an aggregate of71,836 shares of our common stock when we acquired the assets of SensiGen in February 2009 sent us a letterclaiming that we had breached our representations and warranties made in the asset purchase agreement andalleging that his clients had suffered approximately $1.3 million in damages as a result. On December 23, 2009,we entered into a stipulation of settlement with these stockholders. Pursuant to the terms of the settlement, inconsideration of the stockholders’ release of claims, we issued an aggregate of 367,547 shares of our commonstock to such stockholders.

Following our September 2009 announcement, representatives of the Office of the U.S. Attorney for theSouthern District of California contacted us to inquire about the announcement. We have met withrepresentatives of the U.S. Attorney and the Federal Bureau of Investigation (FBI) in connection with theirinvestigations. We intend to continue to cooperate fully with the U.S. Attorney and the FBI in this matter.

Following our September 2009 announcement, representatives of NASDAQ also contacted us to inquireabout the announcement. We have met with representatives from NASDAQ in connection with theirinvestigation and we intend to continue to cooperate fully with NASDAQ in this matter in the event thatNASDAQ has any further inquiries.

On October 28, 2009, plaintiff Xenomics, Inc. filed a complaint in the Supreme Court of the of the State ofNew York naming us as the defendant. In the complaint, the plaintiff alleges that due to materially false andmisleading statements regarding our Trisomy 21 test under development, we have breached the licenseagreement entered into by the parties on October 29, 2008, which provides us with exclusively licensed patentrights for the use of fetal nucleic acids obtained from maternal urine, and that the plaintiff has suffered damagesas a result. The plaintiff is seeking equitable relief and $300 million in damages. On December 15, 2009, weremoved the case to the U.S. District Court for the Southern District of New York. On February 22, 2010, wefiled a motion in the federal district court to, among other things, dismiss or stay the action in light of the factthat the License Agreement between the parties specifically provides that if Xenomics seeks to resolve a disputearising under the agreement, it must do so by commencing an arbitration in San Diego. The district court hasdirected that the motion be fully briefed by March 26, 2010. Regardless of the forum in which the dispute isultimately heard, we intend to vigorously defend against the claims advanced.

F-28

SEQUENOM, INC.


December 31, 2009

Legal expenses aggregating approximately $0.7 million relating to our insured legal expenses have beensubmitted directly to third party insurance carriers for reimbursement, but for which we are ultimately liable.Therefore, as of December 31, 2009, we have not accrued for these expenses in the accompanying consolidatedfinancial statements. Should these expenses not be paid by our third party insurance carriers, we will be requiredto incur these expenses directly.

In addition, from time to time, we may be involved in litigation relating to claims arising out of ouroperations in the normal course of business.

Because of the uncertainties related to the incurrence, amount and range of loss on any pending litigation,investigation, inquiry or claim, management is currently unable to predict the ultimate outcome of any litigation,investigation, inquiry or claim, determine whether a liability has been incurred or make an estimate of thereasonably possible liability that could result from an unfavorable outcome. An adverse ruling or outcome in anylawsuit involving us could materially affect our business, liquidity, consolidated financial position or results ofoperations ability to sell one or more of our products or could result in additional competition. In view of theunpredictable nature of such matters, we cannot provide any assurances regarding the outcome of any litigation,investigation, inquiry or claim to which we are a party or the impact on us of an adverse ruling of such matters.

9. Related Party Transactions

We had the following transactions with parties related to certain of our Board members:

• Boston University. Dr. Charles Cantor is our Chief Scientific Officer, a member of our Board and waspreviously the chair and professor of the department of biomedical engineering and biophysics, andDirector of the Center for Advanced Biotechnology at Boston University. We recorded product revenuefor MassARRAY hardware and consumables, totaling $0.1 million, $0.1 million, and $0.1 million, inthe years ended December 31, 2009, 2008 and 2007, respectively. We have agreements with BostonUniversity in which Dr. Cantor participates under which we paid $0.4 million, $0.9 million, and $0.4million, in the years ended December 31, 2009, 2008 and 2007 respectively.

• University of California, San Diego. Dr. Cantor is adjunct professor in the department of bioengineeringat the University of California, San Diego (UCSD). We recorded product revenue for MassARRAYhardware and consumables, totaling $3,300, $24,000 and $2,000 in the years ended December 31, 2009,2008 and 2007, respectively. We have agreements with UCSD under which we paid $56,600, $9,800and $0, in the years ended December 31, 2009, 2008 and 2007, respectively.

• Dr. Richard Lerner is a member of our Board of Directors and is President of The Scripps ResearchInstitute (Scripps). For the years ended December 31, 2009, 2008, and 2007, we have recorded productrevenue for MassARRAY hardware and consumables totaling approximately $35,200, $30,000 and$318,000, respectively. We have agreements with Scripps under which we paid $61,300, $14,700 and$0, in the years ended December 31, 2009, 2008 and 2007, respectively.

At December 31, 2009, we had the following receivable and payable balances with the following relatedparties:

Related party Receivables Payables

(in thousands)Boston University . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 47 $ 42Scripps Research Institute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2UCSD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 26

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 49 $ 70

F-29

SEQUENOM, INC.


December 31, 2009

At December 31, 2008, we had the following receivable and payable balances with the following relatedparties:

Related party Receivables Payables

(in thousands)Boston University . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5 $ 90Scripps Research Institute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 —UCSD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18 $ 90

10. Stockholders’ Equity

On July 1, 2008, we closed an underwritten public offering of our common stock totaling 5,500,000 sharesof our common stock at $15.50 per share, with the underwriters exercising their option to purchase an additional825,000 shares on July 8, 2008. Including the additional shares, the offering resulted in aggregate net proceeds ofapproximately $91.8 million after deducting underwriting discounts, commissions and estimated transactionexpenses.

During 2007, we closed a $20.0 million registered direct offering of our common stock to several new andexisting investors, as well as a $30.5 million private placement of our common stock. Under the terms of theregistered direct offering we issued and sold 6,666,666 shares of our common stock at $3.00 per share, withaggregate net proceeds of approximately $18.3 million after deducting placement agents’ fees and transactionexpenses. Under the terms of the private placement we issued and sold 3,383,335 shares of our common stock at$9.00 per share, with aggregate net proceeds of approximately $28.1 million after deducting placement agents’fees and estimated transaction expenses.

Stock Compensation Plans

On May 31, 2006, the stockholders approved our 2006 equity incentive plan (the 2006 plan), as thesuccessor to our 1999 stock option plan (the 1999 plan). In connection with the adoption of the 2006 plan, weterminated the automatic annual increase feature under the 1999 plan and resolved to cease to grant additionalstock awards under the 1999 plan following the effectiveness of the 2006 plan. The aggregate number of sharesof common stock that may be issued under the 2006 plan is 7,701,290, plus the number of shares subject to anystock awards under the 1999 plan that terminate or are forfeited or repurchased and would otherwise have beenreturned to the share reserve under the 1999 plan.

Stock Options

The estimated fair value of each stock option award granted was determined on the date of grant using theBlack-Scholes option pricing model with the following weighted-average assumptions for stock option grantsduring the years ended December 31, 2009, 2008 and 2007:

2009 2008 2007

Risk free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.81% 3.17% 4.51%Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% 87% 82%Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0% 0% 0%Expected option life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0 6.6 6.4Weighted average fair value of stock option grants to employees . . . . . . . . $11.17 $8.81 $4.09

F-30

SEQUENOM, INC.


December 31, 2009

The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected termof our employee stock options. The expected volatility is based on the historical volatility of our stock. We havenot paid any dividends on common stock since our inception and do not anticipate paying dividends on commonstock in the foreseeable future. The computation of the expected option life assumption is based on a weighted-average calculation combining the average historical exercise activity with the estimated life of all unexercisedstock options.

Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periodsif actual forfeitures differ from those estimates. Pre-vesting forfeitures were estimated to be 11.7% based onhistorical experience. Our determination of fair value is affected by our stock price as well as a number ofassumptions that require judgment. Changes in forfeiture estimates impact compensation cost in the period inwhich the change in estimate occurs.

A summary of the status of our stock option plans as of December 31, 2009 and of changes in stock optionsoutstanding under the plans during the years ended December 31, 2009, 2008 and 2007 is as follows:

OutstandingShares Subject

to Options

WeightedAverage

Exercise Priceper Share

WeightedAverage

RemainingContractual

Term(in years)

AggregateIntrinsic

Value

Outstanding at December 31, 2006 . . . . . 3,285,783 $ 6.45Granted . . . . . . . . . . . . . . . . . . . . . . . . . . 2,232,976 5.38Canceled . . . . . . . . . . . . . . . . . . . . . . . . . (270,452) 5.20Exercised . . . . . . . . . . . . . . . . . . . . . . . . . (168,071) 2.98

Outstanding at December 31, 2007 . . . . . 5,080,236 $ 6.16Granted . . . . . . . . . . . . . . . . . . . . . . . . . . 1,705,652 11.63Canceled . . . . . . . . . . . . . . . . . . . . . . . . . (265,892) 6.73Exercised . . . . . . . . . . . . . . . . . . . . . . . . . (281,925) 4.55

Outstanding at December 31, 2008 . . . . . 6,238,071 $ 7.70Granted . . . . . . . . . . . . . . . . . . . . . . . . . . 2,263,091 14.09Canceled . . . . . . . . . . . . . . . . . . . . . . . . . (1,848,852) 10.73Exercised . . . . . . . . . . . . . . . . . . . . . . . . . (479,503) 2.38

Outstanding at December 31, 2009 . . . . . 6,172,807 $ 9.55 6.44 $3,656,718

Options vested and exercisable atDecember 31, 2009 . . . . . . . . . . . . . . . 3,507,803 $ 8.61 4.73 $2,910,320

The aggregate intrinsic value of stock options exercised in 2009, 2008 and 2007 was $2.7 million, $4.9million and $1.1 million, respectively. As of December 31, 2009, there was $22.9 million of unamortizedcompensation cost related to unvested stock option awards, which is expected to be recognized over a remainingweighted-average vesting period of 2.1 years. Cash received from stock option exercises for the years endedDecember 31, 2009 and 2008 was $1.1 million and $1.3 million, respectively. At December 31, 2009, 199,932shares were available for future option grants.

F-31

SEQUENOM, INC.


December 31, 2009

Restricted Stock

On October 18, 2007, we granted 50,000 restricted stock units to an executive officer with a grant date fairvalue of $11.04. These units vest over 4 years, with 13/48th of the units vesting 13 months after the grant date,and the remaining units vesting in equal monthly installments, thereafter. During 2009, 23,929 of these restrictedstock units vested and the remaining 26,071 have been cancelled.

On January 29, 2008, we granted 18,628 restricted stock awards and 20,974 restricted stock units to certainexecutive officers and employees with a weighted average grant date fair value of $8.16 per share. During 2008,restricted stock awards totaling 1,781 were cancelled. The remaining 16,847 restricted stock awards vested onJanuary 29, 2009 and the 20,974 restricted stock units vested on February 28, 2009.

On July 17, 2008, we granted 55,555 restricted stock units to an executive officer with a grant date fairvalue of $20.00 per share. These units vest over 4 years, with 13/48th of the units vesting 13 months after thegrant date, and the remaining units vesting in equal monthly installments, thereafter. During 2009, 16,159 ofthese restricted stock units vested and the remaining 39,396 have been cancelled.

On February 9, 2009, we granted 15,907 restricted stock units to certain executive officers with a grant datefair value of $17.60 per share, of which 7,234 vest after 12 months and 8,673 vest over 13 months, respectively.During 2009, 5,978 of these restricted stock units were cancelled and the remaining 9,929 restricted stock unitsare outstanding and unvested.

On February 17, 2009, we granted 5,552 restricted stock units to an executive officer with a grant date fairvalue of $16.38 per share, which vest after 13 months. During 2009, all of these restricted stock units werecancelled.

The cancellation of the restricted stock units referred to in the above paragraphs were related to thedeparture of certain former executive officers as disclosed in our current report on Form 8-K, filed with the SECon September 28, 2009.

On January 2, 2009, we granted 5,754 restricted stock awards to certain of our board members with a grantdate fair value of $20.58 per share, which vest quarterly over one year. During 2009, 5,069 of these restrictedstock awards vested and 685 restricted stock awards were cancelled.

On October 20, 2009, we granted 26,000 restricted stock units to two employees with a grant date fair valueof $3.38 per share. The restricted units are tied to the successful achievement of performance criteria to be metby June 30, 2010. As of December 31, 2009, all of these restricted units were unvested and outstanding.

Also on October 20, 2009, we granted 25,000 restricted stock units to a certain executive officer with a grantdate value of $3.38 per shares and vest equally over four quarters from the grant date. As of December 31, 2009,all of these restricted units were unvested and outstanding.

On December 17, 2009, we granted 1,209,600 restricted units to our employees with a grant date fair valueof $3.86 per share. The restricted units vest over four years and are tied to the successful achievement of variousperformance criteria. As of December 31, 2009, all of these restricted units were unvested and outstanding.

F-32

SEQUENOM, INC.


December 31, 2009

Employee Stock Purchase Plan

In 1999, we adopted the 1999 Employee Stock Purchase Plan (the 1999 ESPP). As of December 31, 2009,we had reserved 936,902 shares of common stock for issuance under the 1999 ESPP. Beginning in 2001, theamount of authorized shares available under the 1999 ESPP automatically increased each January 1st by anamount equal to 1% of the outstanding common stock on the last trading day of the prior year, subject to anannual increase limitation of 166,666 shares. Subsequent to yearend, the 1999 ESPP was amended to remove theautomatic annual increase provision, as well as placing a per employee share limit of 10,000 shares per offeringperiod. The 1999 ESPP provides for a series of concurrent offering periods, each with a maximum duration of 24months. Shares are purchased semi-annually at 85% of the lower of the beginning or end of the period price.

In October 2006, our Board of Directors approved a change to all offerings under the 1999 ESPP thatcommence on or after February 1, 2007. New offerings are for a duration of six months and consist of onepurchase interval, but do not impose either an individual or all-participant limitation on the number of sharespurchasable on a purchase date, although the 1999 ESPP limits stock purchases to $25,000 per individual percalendar year. Participants had the option of: continuing under the current plan offering period until itsexpiration, or withdrawing from the current offering prior to its expiration and enrolling in the new offeringcommencing on February 1, 2007. Those employees not electing to enroll in the new offering period continuedunder the then current offering until the 24 month offering period expires. On July 31, 2008, the final 24 monthoffering period expired and all ESPP participants are now under six month offering periods. As of December 31,2009, employees have contributed approximately $0.3 million to the current offering of the 1999 ESPP since thebeginning of the offering period that commenced August 1, 2009. For the year ended December 31, 2009 and2008, we have recognized approximately $243,000 and $360,000, respectively, as share-based compensationexpense related to the 1999 ESPP Plan.

Warrants

In connection with the acquisition of Axiom Biotechnologies in 2002, we assumed an outstanding warrantto purchase 7,333 Axiom ordinary shares at an exercise price of $10.50, which was adjusted to become a warrantto purchase 1,535 shares of our common stock at an exercise price of $50.19 per share. As of December 31,2009, this warrant has not been exercised and expires in December 2011.

In connection with an amendment to our lease for our corporate headquarters in San Diego, California inSeptember 2005, we issued to the landlord a warrant to purchase 50,000 shares of our common stock with anexercise price of $2.64 per share. The warrant expires in October 2015. As of December 31, 2009, the warrantremains outstanding and exercisable.

In connection with the private placement financing completed in June 2006, we issued to the investorswarrants to purchase an aggregate of 11,999,999 shares of our common stock at an exercise price of $2.10 pershare. These warrants contained anti-dilution provisions that adjusted the exercise price and number of sharessubject to the warrants upon reorganization, mergers, stock splits and combinations, reclassifications of ourcommon stock, stock dividends, or other issuances of our common stock at purchase prices less than thewarrants’ exercise price (other than certain exempt issuances, such as sales of common stock to our employees orconversions of convertible securities and options that were outstanding prior to the issuance of the warrants).During 2008, investors exercised all remaining warrants to purchase an aggregate of 11,301,499 shares of ourcommon stock in a series of cashless exercises, which resulted in the purchase of 8,982,521 shares of ourcommon stock. No warrants remain unexercised with the investor group from our private placement completed inJune 2006.

F-33

SEQUENOM, INC.


December 31, 2009

Additionally in connection with the June 2006 private placement financing, we issued to our placementagent a warrant to purchase 866,666 shares of our common stock at an exercise price of $2.52 per share. Thiswarrant contains anti-dilution provisions that adjust the exercise price and number of shares subject to thewarrants upon reorganization, mergers, stock splits and combinations, reclassifications of our common stock, orstock dividends, but not for other issuances of our common stock. During 2007 the placement agent transferredportions of the warrant to certain of its employees. During 2008, the placement agent and its transferees hadexercised warrants in both cash and cashless exercises to purchase an aggregate of 110,781 shares of ourcommon stock. As of December 31, 2009, warrants to purchase an aggregate of 7,500 shares remainedoutstanding and exercisable and expire in June 2011.

11. Income Taxes

The Company recognizes the impact of an uncertain income tax position on our income tax return at thelargest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. Anuncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.

There are no unrecognized tax benefits included in the consolidated balance sheets at December 31, 2009and 2008.

Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense.We had no accrual for interest and penalties on our balance sheets at December 31, 2009 and 2008 and haverecognized no interest and/or penalties in the statement of operations for the year ended December 31, 2009.

We are subject to taxation in the U.S., foreign and various state jurisdictions. Our tax years for 1995 andforward are subject to examination by the Federal and California tax authorities due to the carryforward ofunutilized net operating losses and research and development credits.

We completed a Section 382/383 analysis regarding the limitation of net operating loss and research anddevelopment credit carryforwards in April 2008. We are currently in the process of updating the Section 382/383analysis and we are removing our federal and state net operating losses and research and development creditsfrom the deferred table until this analysis is complete. As of December 31, 2009, we do not have anyunrecognized tax benefits. Due to the existence of the valuation allowance, future changes in our unrecognizedtax benefits will not impact our effective tax rate.

The reconciliation of income tax computed at the Federal statutory tax rate to the expense for income taxesis as follows:

December 31,

2009 2008 2007

(In thousands)

Tax at statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(24,805) $(15,380) $ (7,694)State taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . (2,910) (2,525) (1,263)Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . (30,458) 29,532 (108,313)Change in state rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,724 — —Credits and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,566 (11,416) 117,270

$ 117 $ 211 $ —

F-34

SEQUENOM, INC.


December 31, 2009

The 2009 and 2008 income tax expense of $117,000 and $211,000 are comprised of foreign current anddeferred taxes.

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts ofassets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significantcomponents of our deferred tax assets and liabilities are shown below. A full valuation allowance has beenrecorded, as realization of such assets is uncertain.

December 31,

2009 2008

(In thousands)

Deferred tax assets:Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,161 $ 32,221Capitalized research expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,260 11,387Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,605 683Stock options (FAS123r) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,243 1,384Accruals and reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,655 6,715Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490 (98)

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,414 52,292Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22,414) (52,292)

Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ —

At December 31, 2009, we have federal and state tax net operating loss carryforwards of approximately $132.8million and $133.4 million, respectively. The federal tax loss carryforwards will begin to expire in 2025, unlesspreviously utilized. The state tax loss carryforwards will begin to expire in 2010, unless previously utilized.

We also have German net operating loss carryforwards of approximately $10.6 million, which may becarried forward indefinitely. We have discontinued operations in the United Kingdom (U.K.) and therefore,removed our U.K. net operating loss carryforwards of $35.6 million from our deferred tax schedule as ofDecember 31, 2007.

We also have federal and California research and development tax credit carryforwards of approximately$2.5 million and $9.7 million, respectively. The federal research and development credits have been reduced bythe Section 383 limitation. The federal research and development tax credit carryforwards will begin to expire in2026 unless previously utilized. The California research and development credit carryforward indefinitely.

In February 2009, the California legislature enacted 2009-2010 budget legislation containing variousCalifornia tax law changes, including an election to apply a single sales factor apportionment formula for taxableyears beginning on or after January 1, 2011. The Company anticipates not making the election, reflectinganticipated losses for the foreseeable future.

12. Savings and Pension Plans

We have a 401(k) savings plan covering most United States employees. In the United Kingdom we makecontributions to defined contribution pension plans. Under these plans, individual employees may makecontributions to the plan, which can be matched by us in an amount determined by the Board of Directors or asdetermined by local statutes. We made no matching contributions in 2009, 2008 and 2007.

F-35

SEQUENOM, INC.


December 31, 2009

13. Geographic Information

We have wholly-owned subsidiaries located in Germany, the United Kingdom, India, Hong Kong and Japanand have customer and vendor relationships worldwide. The following table presents information about us bygeographic area. There were no material amounts of transfers between geographic areas. Included in theconsolidated balance sheets and consolidated statements of operations are the following domestic and foreigncomponents at December 31, 2009, 2008 and 2007:

December 31,

2009 2008 2007

(In thousands)

Current assets:United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54,891 $111,717 $ 59,992Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,290 6,911 6,313Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,749 3,656 2,087

$ 62,930 $122,284 $ 68,392

Equipment and leasehold improvements, net:United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,306 $ 8,655 $ 5,559Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 433 276Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243 107 124

$ 11,811 $ 9,195 $ 5,959

Long-term assets:United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,632 $ 8,928 $ 1,695Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204 77 —Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 — —

$ 11,904 $ 9,005 $ 1,695

Total assets:United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 77,829 $129,300 $ 67,245Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,756 7,421 6,590Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,060 3,763 2,211

$ 86,645 $140,484 $ 76,046

Revenues:United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,020 $ 23,806 $ 22,243Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,150 13,272 10,821Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,693 10,071 7,938

$ 37,863 $ 47,149 $ 41,002

Net loss:United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(52,644) $ (21,256) $(12,690)Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 748 (6,856) (2,527)Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,116) (16,042) (6,766)

$(71,012) $ (44,154) $(21,983)

F-36

SEQUENOM, INC.


December 31, 2009

14. Selected Quarterly Financial Data (unaudited)

FirstQuarter

SecondQuarter

ThirdQuarter

FourthQuarter

TotalYear

(In thousands, except share information)

2009Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,688 $ 9,168 $ 9,220 $ 10,787 $ 37,863Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,264 6,042 6,542 5,445 23,293Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,489) (20,246) (14,875) (18,402) (71,012)Net loss per share, basic and fully diluted . . . . . . . . . . . . $ (0.29) $ (0.33) $ (0.24) $ (0.30) $ (1.16)Shares used in calculated per share amounts, historical,

basic and fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . 61,014 61,138 61,211 61,313 61,171

2008Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,574 $ 12,845 $ 11,570 $ 12,160 $ 47,149Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,903 7,383 7,042 7,231 27,559Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,626) (9,743) (10,371) (15,414) (44154)Net loss per share, basic and fully diluted . . . . . . . . . . . . $ (0.19) $ (0.21) $ (0.18) $ (0.25) $ (0.83)Shares used in calculated per share amounts, historical,

basic and fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . 45,330 47,147 59,115 60,775 53,129

15. Subsequent Events

In February 2010, our wholly-owned subsidiary Sequenom CMM signed a worldwide licensing agreementwith Optherion, Inc., for the rights to develop and commercialize diagnostic tests to predict geneticpredisposition to late stage age-related macular degeneration (AMD). Under the terms of the licensingagreement, in the event that the first commercial sale of a licensed product in the United States has not occurredon or before January 31, 2011, we will pay Optherion a non-creditable license maintenance fee equal to $260,000per year. The license maintenance fee will be pro-rated for any period less than a full year before the firstcommercial sale of a licensed product in the United States. Following the first commercial sale of a licensedproduct in the United States, we will no longer be required to pay the license maintenance fee, but instead wewill pay Optherion a minimum royalty payment each year during the term of the agreement ranging between$260,000 and $270,000 per year and such minimum payment shall be creditable against any royalties due basedupon licensed product sales. We have also agreed to make payments to Optherion upon the achievement ofspecified development, regulatory and commercial milestones, and during the life of the patent claims licensedunder the agreement, royalties on the cumulative worldwide annual net sales of products successfully developedand commercialized covered by the patent claims and know-how licensed under the agreement. We also agreed,upon entry into the agreement, to reimburse Optherion for its prior patent related costs and expenses in theamount of $1,071,651. We may terminate the agreement for any reason upon 90 days prior written notice,provided that if notice of termination is delivered prior to the first anniversary of the effective date of theagreement, we are required to pay Optherion a non-creditable termination fee of $2,000,000. In the event that theagreement expires pursuant to its terms, we will retain the licenses and sublicenses granted under the agreementas fully paid and royalty free, subject to certain specified limitations.

F-37

Schedule II—SEQUENOM, INC.

Valuation and Qualifying Accounts($ in thousands)

Description

Balance atBeginningof Period

Charged toCosts andExpenses Deductions

Balance atEnd ofPeriod

Year ended December 31, 2009:Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . $ 405 $ (145) $ 19 $ 241Reserve for obsolete or excess inventory . . . . . . . . . . . . . . . . . 1,809 2,468 2,359(1) 1,918

Year ended December 31, 2008:Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . $ 186 $ 281 $ 62 $ 405Reserve for obsolete or excess inventory . . . . . . . . . . . . . . . . . 1,089 1,180 460(1) 1,809

Year ended December 31, 2007:Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . $ 117 $ 143 $ 74 $ 186Reserve for obsolete or excess inventory . . . . . . . . . . . . . . . . . 1,082 185 178(1) 1,089

(1) Write off of obsolete or excess inventory

F-38

Exhibit 10.50

SEQUENOM, INC.

NEW-HIRE EQUITY INCENTIVE PLAN

1. GENERAL. (a) General Purpose. The Company, by means of the Plan, seeks to retain the services of persons not previously an employee

or director of the Company, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the Company within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.

(b) Eligible Award Recipients. The persons eligible to receive Stock Awards are persons entering into employment with the Company or an Affiliate, as further specified in Section 4.

(c) Available Awards. The Plan provides for the grant of the following Stock Awards: (i) Options, (ii) Restricted Stock Awards, (iii) Restricted Stock Unit Awards, (iv) Stock Appreciation Rights, and (v) Other Stock Awards.

2. ADMINISTRATION. (a) Administration by Board. The Board shall administer the Plan unless and until the Board delegates administration of the

Plan to a Committee or Committees, as provided in Section 2(c).

(b) Powers of Board. The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

(i) To determine from time to time (A) which of the persons eligible under the Plan shall be granted Awards; (B) when and how each Award shall be granted; (C) what type or combination of types of Award shall be granted; (D) the provisions of each Award granted (which need not be identical), including the time or times when a person shall be permitted to receive cash or Common Stock pursuant to a Stock Award; and (E) the number of shares of Common Stock with respect to which a Stock Award shall be granted to each such person.

(ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan or Award fully effective.

(iii) To settle all controversies regarding the Plan and Awards granted under it.

1.

(iv) To accelerate the time at which a Stock Award may first be exercised or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Award stating the time at which it may first be exercised or the time during which it will vest.

(v) To suspend or terminate the Plan at any time. Suspension or termination of the Plan shall not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant.

(vi) To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, relating to certain nonqualified deferred compensation under 409A of the Code and/or to bring the Plan or Stock Awards granted under the Plan into compliance therewith, subject to the limitations, if any, of applicable law. Except as provided above, rights under any Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing.

(vii) To approve forms of Stock Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms more favorable than previously provided in the Stock Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that, the rights under any Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing. Notwithstanding the foregoing, subject to the limitations of applicable law, if any, and without the affected Participant’s consent, the Board may amend the terms of any one or more Awards if necessary to bring the Award into compliance with Code Section 409A and the related guidance thereunder.

(viii) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Awards.

(ix) To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by individuals who are foreign nationals or employed outside the United States.

(c) Delegation to Committee. (i) General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If

administration of the Plan is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.

2.

(ii) Rule 16b-3 Compliance. In the sole discretion of the Board, the Committee may consist solely of two or more Non-Employee Directors, in accordance with Rule 16b-3. In addition, the Board or the Committee, in its sole discretion, may delegate to a Committee of Directors who need not be Non-Employee Directors the authority to grant Stock Awards to eligible persons who are not then subject to Section 16 of the Exchange Act.

(d) Delegation to an Officer. The Board may delegate to one or more Officers the authority to do one or both of the following (i) designate individuals who are not Officers to be recipients of Options (and, to the extent permitted by applicable law, other Stock Awards) and the terms thereof, and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such individuals; provided, however, that the Board resolutions regarding such delegation shall specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant a Stock Award to himself or herself. Notwithstanding anything to the contrary in this Section 2(d), the Board may not delegate to an Officer authority to determine the Fair Market Value of the Common Stock pursuant to Section 13(s)(ii) below.

(e) Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons.

3. SHARES SUBJECT TO THE PLAN. (a) Share Reserve. Subject to the provisions of Section 9 relating to adjustments upon changes in stock, the aggregate number

of shares of Common Stock that may be issued pursuant to Stock Awards after the Effective Date shall not exceed, in the aggregate, the sum of (i) one hundred fifty thousand (150,000) shares (the “Share Reserve”). For clarity, the limitation in this subsection 3(a) is a limitation in the number of shares of Common Stock that may be issued pursuant to the Plan. Accordingly, this subsection 3(a) does not limit the granting of Stock Awards except as provided in subsection 7(a). Shares may be issued in connection with a merger or acquisition as permitted by NASD Rule 4350(i)(1)(A)(iii) or, if applicable, NYSE Listed Company Manual Section 303A.08, or AMEX Company Guide Section 711 and such issuance shall not reduce the number of shares available for issuance under the Plan. Furthermore, if a Stock Award (i) expires or otherwise terminates without having been exercised in full or (ii) is settled in cash (i.e., the holder of the Stock Award receives cash rather than stock), such expiration, termination or settlement shall not reduce (or otherwise offset) the number of shares of the Common Stock that may be issued pursuant to the Plan.

(b) Reversion of Shares to the Share Reserve. If any shares of common stock issued pursuant to a Stock Award are forfeited back to the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares which are forfeited shall revert to and again become available for issuance under the Plan. Also, any shares reacquired by the Company pursuant to subsection 8(g) or as consideration for the exercise of an Option shall again become available for issuance under the Plan.

3.

(c) Source of Shares. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the market or otherwise.

4. ELIGIBILITY. Stock Awards may be granted only to persons not previously an Employee or Director of the Company, or following a bona fide

period of non-employment, as an inducement material to the individual’s entering into employment with the Company or an Affiliate within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules. In addition, notwithstanding any other provision of the Plan to the contrary, all Stock Awards must be granted either by a majority of the Company’s independent directors or by a committee comprised of a majority of independent directors within the meaning of Rule 5605(a)(2) of the NASDAQ Listing Rules.

5. OPTION PROVISIONS. Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The

provisions of separate Options need not be identical; provided, however, that each Option Agreement shall include (through incorporation of provisions hereof by reference in the Option Agreement or otherwise) the substance of each of the following provisions:

(a) Term. No Option shall be exercisable after the expiration of ten (10) years from the date of its grant or such shorter period specified in the Option Agreement.

(b) Exercise Price. The exercise price of each Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Option may be granted with an exercise price lower than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option if such Option is granted pursuant to an assumption or substitution for another option in a manner consistent with the provisions of Section 424(a) of the Code.

(c) Consideration. The purchase price of Common Stock acquired pursuant to the exercise of an Option shall be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. The Board shall have the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to utilize a particular method of payment. The methods of payment permitted by this Section 5(c) are:

(i) by cash, check, bank draft or money order payable to the Company;

(ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds;

4.

(iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;

(iv) by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issued upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that the Company shall accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued; provided, further, that shares of Common Stock will no longer be outstanding under an Option and will not be exercisable thereafter to the extent that (A) shares are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations; or

(v) in any other form of legal consideration that may be acceptable to the Board.

(d) Transferability of Options. The Board may, in its sole discretion, impose such limitations on the transferability of Options as the Board shall determine. In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options shall apply:

(i) Restrictions on Transfer. An Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder; provided, however, that the Board may, in its sole discretion, permit transfer of the Option in a manner consistent with applicable tax and securities laws upon the Optionholder’s request.

(ii) Domestic Relations Orders. Notwithstanding the foregoing, an Option may be transferred pursuant to a domestic relations order.

(iii) Beneficiary Designation. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form provided by or otherwise satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

(e) Vesting Generally. The total number of shares of Common Stock subject to an Option may vest and therefore become exercisable in periodic installments that may or may not be equal. The Option may be subject to such other terms and conditions on the time or times when it may or may not be exercised as the Board may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this Section 5(e) are subject to any Option provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised.

5.

(f) Termination of Continuous Service. Except as otherwise provided in the applicable Option Agreement or other agreement between the Optionholder and the Company, in the event that an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination of Continuous Service) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder’s Continuous Service (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate.

(g) Extension of Termination Date. An Optionholder’s Option Agreement may provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service (other than upon the Optionholder’s death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the applicable period of time after the termination of the Optionholder’s Continuous Service during which the exercise of the Option would not be in violation of such registration requirements, or (ii) the expiration of the term of the Option as set forth in the Option Agreement.

(h) Disability of Optionholder. In the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination of Continuous Service (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate.

(i) Death of Optionholder. In the event that (i) an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death, or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder’s Continuous Service for a reason other than death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionholder’s death, but only within the period ending on the earlier of (i) the date twelve (12) months following the date of death (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, after the Optionholder’s death, the Option is not exercised within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate.

(j) Non-Exempt Employees. No Option granted to an individual that is a non-exempt employee for purposes of the Fair Labor Standards Act shall be first exercisable for any shares of Common Stock until at least six months following the date of grant of the Option. The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option will be exempt from his or her regular rate of pay.

6.

6. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS. (a) Restricted Stock Awards. Each Restricted Stock Award Agreement shall be in such form and shall contain such terms and

conditions as the Board shall deem appropriate. To the extent consistent with the Company’s Bylaws, at the Board’s election, shares of Common Stock may be (x) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapse; or (y) evidenced by a certificate, which certificate shall be held in such form and manner as determined by the Board. The terms and conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Award Agreements need not be identical, provided, however, that each Restricted Stock Award Agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

(i) Consideration. A Restricted Stock Award may be awarded in consideration for (A) past or future services actually or to be rendered to the Company or an Affiliate, or (B) any other form of legal consideration that may be acceptable to the Board in its sole discretion and permissible under applicable law.

(ii) Vesting. Shares of Common Stock awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the Board.

(iii) Termination of Participant’s Continuous Service. In the event a Participant’s Continuous Service terminates, the Company may receive via a forfeiture condition, any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination of Continuous Service under the terms of the Restricted Stock Award Agreement.

(iv) Transferability. Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board shall determine in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted Stock Award Agreement.

(b) Restricted Stock Unit Awards. Each Restricted Stock Unit Award Agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of Restricted Stock Unit Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Unit Award Agreements need not be identical, provided, however, that each Restricted Stock Unit Award Agreement shall include (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions:

(i) Consideration. At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to be paid (if any) by the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of legal consideration that may be acceptable to the Board in its sole discretion and permissible under applicable law.

7.

(ii) Vesting. At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions or conditions to the vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.

(iii) Payment. A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.

(iv) Additional Restrictions. At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Restricted Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.

(v) Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock Unit Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock Unit Award in such manner as determined by the Board. Any additional shares covered by the Restricted Stock Unit Award credited by reason of such dividend equivalents will be subject to all the terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they relate.

(vi) Termination of Participant’s Continuous Service. Except as otherwise provided in the applicable Restricted Stock Unit Award Agreement, such portion of the Restricted Stock Unit Award that has not vested will be forfeited upon the Participant’s termination of Continuous Service.

(vii) Compliance with Section 409A of the Code. Notwithstanding anything to the contrary set forth herein, any Restricted Stock Unit Award granted under the Plan that is not exempt from the requirements of Section 409A of the Code shall contain such provisions so that such Restricted Stock Unit Award will comply with the requirements of Section 409A of the Code. Such restrictions, if any, shall be determined by the Board and contained in the Restricted Stock Unit Award Agreement evidencing such Restricted Stock Unit Award. For example, such restrictions may include, without limitation, a requirement that any Common Stock that is to be issued in a year following the year in which the Restricted Stock Unit Award vests must be issued in accordance with a fixed pre-determined schedule.

(c) Stock Appreciation Rights. Each Stock Appreciation Right Agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. Stock Appreciation Rights may be granted as stand-alone Stock Awards or in tandem with other Stock Awards. The terms and conditions of Stock Appreciation Right Agreements may change from time to time, and the terms and conditions of separate Stock Appreciation Right Agreements need not be identical; provided, however, that each Stock Appreciation Right Agreement shall include (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions:

(i) Term. No Stock Appreciation Right shall be exercisable after the expiration of ten (10) years from the date of its grant or such shorter period specified in the Stock Appreciation Right Agreement.

8.

(ii) Strike Price. Each Stock Appreciation Right will be denominated in shares of Common Stock equivalents. The strike price of each Stock Appreciation Right shall not be less than one hundred percent (100%) of the Fair Market Value of the Common Stock equivalents subject to the Stock Appreciation Right on the date of grant.

(iii) Calculation of Appreciation. The appreciation distribution payable on the exercise of a Stock Appreciation Right will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the Stock Appreciation Right) of a number of shares of Common Stock equal to the number of share of Common Stock equivalents in which the Participant is vested under such Stock Appreciation Right, and with respect to which the Participant is exercising the Stock Appreciation Right on such date, over (B) the strike price that will be determined by the Board at the time of grant of the Stock Appreciation Right.

(iv) Vesting. At the time of the grant of a Stock Appreciation Right, the Board may impose such restrictions or conditions to the vesting of such Stock Appreciation Right as it, in its sole discretion, deems appropriate.

(v) Exercise. To exercise any outstanding Stock Appreciation Right, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right.

(vi) Payment. The appreciation distribution in respect to a Stock Appreciation Right may be paid in Common Stock, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right.

(vii) Termination of Continuous Service. In the event that a Participant’s Continuous Service terminates, the Participant may exercise his or her Stock Appreciation Right (to the extent that the Participant was entitled to exercise such Stock Appreciation Right as of the date of termination) but only within such period of time ending on the earlier of (A) the date three (3) months following the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the Stock Appreciation Right Agreement), or (B) the expiration of the term of the Stock Appreciation Right as set forth in the Stock Appreciation Right Agreement. If, after termination, the Participant does not exercise his or her Stock Appreciation Right within the time specified herein or in the Stock Appreciation Right Agreement (as applicable), the Stock Appreciation Right shall terminate.

9.

(viii) Compliance with Section 409A of the Code. Notwithstanding anything to the contrary set forth herein, any Stock Appreciation Rights granted under the Plan that are not exempt from the requirements of Section 409A of the Code shall contain such provisions so that such Stock Appreciation Rights will comply with the requirements of Section 409A of the Code. Such restrictions, if any, shall be determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right. For example, such restrictions may include, without limitation, a requirement that a Stock Appreciation Right that is to be paid wholly or partly in cash must be exercised and paid in accordance with a fixed pre-determined schedule.

(d) Other Stock Awards. Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock may be granted either alone or in addition to Stock Awards provided for under Section 5 and the preceding provisions of this Section 6. Subject to the provisions of the Plan, the Board shall have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions of such Other Stock Awards.

7. COVENANTS OF THE COMPANY. (a) Availability of Shares. During the terms of the Stock Awards, the Company shall keep available at all times the number of

shares of Common Stock reasonably required to satisfy such Stock Awards.

(b) Securities Law Compliance. The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained.

(c) No Obligation to Notify. The Company shall have no duty or obligation to any holder of a Stock Award to advise such holder as to the time or manner of exercising such Stock Award. Furthermore, the Company shall have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of a Stock Award or a possible period in which the Stock Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of a Stock Award to the holder of such Stock Award.

8. MISCELLANEOUS. (a) Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Stock

Awards shall constitute general funds of the Company.

10.

(b) Corporate Action Constituting Grant of Stock Awards. Corporate action constituting a grant by the Company of a Stock Award to any Participant shall be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Stock Award is communicated to, or actually received or accepted by, the Participant.

(c) Stockholder Rights. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Stock Award unless and until such Participant has exercised the Stock Award pursuant to its terms and the Participant shall not be deemed to be a stockholder of record until the issuance of the Common Stock pursuant to such exercise has been entered into the books and records of the Company.

(d) No Employment or Other Service Rights. Nothing in the Plan, any Stock Award Agreement or other instrument executed thereunder or in connection with any Award granted pursuant to the Plan shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.

(e) Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (x) the issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (y) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.

(f) Withholding Obligations. Unless prohibited by the terms of a Stock Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to an Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Award; (iii) withholding cash from an Award settled in cash; or (iv) by such other method as may be set forth in the Stock Award Agreement.

11.

(g) Electronic Delivery. Any reference herein to a “written” agreement or document shall include any agreement or document delivered electronically or posted on the Company’s intranet.

(h) Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still an Employee. The Board is authorized to make deferrals of Stock Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of employment or retirement, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.

(i) Compliance with 409A. To the extent that the Board determines that any Award granted under the Plan is subject to Section 409A of the Code, the Stock Award Agreement evidencing such Award shall incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code. To the extent applicable, the Plan and Stock Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued or amended after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Board determines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the Board may adopt such amendments to the Plan and the applicable Stock Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Board determines are necessary or appropriate to (1) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (2) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance.

9. ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS. (a) Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board shall appropriately adjust: (i) the class

(es) and maximum number of securities subject to the Plan pursuant to Section 3(a) and (ii) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive.

12.

(b) Dissolution or Liquidation. Except as otherwise provided in the Stock Award Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to the Company’s right of repurchase) shall terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase option may be repurchased by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service, provided, however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion.

(c) Corporate Transaction. The following provisions shall apply to Stock Awards in the event of a Corporate Transaction unless otherwise provided in the instrument evidencing the Stock Award or any other written agreement between the Company or any Affiliate and the holder of the Stock Award or unless otherwise expressly provided by the Board at the time of grant of a Stock Award.

(i) Stock Awards May Be Assumed. Except as otherwise stated in the Stock Award Agreement, in the event of a Corporate Transaction, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all Stock Awards outstanding under the Plan or may substitute similar stock awards for Stock Awards outstanding under the Plan (including but not limited to, awards to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to Stock Awards may be assigned by the Company to the successor of the Company (or the successor’s parent company, if any), in connection with such Corporate Transaction. A surviving corporation or acquiring corporation (or its parent) may choose to assume or continue only a portion of a Stock Award or substitute a similar stock award for only a portion of a Stock Award. The terms of any assumption, continuation or substitution shall be set by the Board in accordance with the provisions of Section 2.

(ii) Stock Awards Held by Current Participants. Except as otherwise stated in the Stock Award Agreement, in the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by Participants whose Continuous Service has not terminated prior to the effective time of the Corporate Transaction (referred to as the “Current Participants”), the vesting of such Stock Awards (and, if applicable, the time at which such Stock Awards may be exercised) shall (contingent upon the effectiveness of the Corporate Transaction) be accelerated in full to a date prior to the effective time of such Corporate Transaction as the Board shall determine (or, if the Board shall not determine such a date, to the date that is five (5) days prior to the effective time of the Corporate Transaction), and such Stock Awards shall terminate if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and any reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall lapse (contingent upon the effectiveness of the Corporate Transaction).

13.

(iii) Stock Awards Held by Persons other than Current Participants. Except as otherwise stated in the Stock Award Agreement, in the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by persons other than Current Participants, the vesting of such Stock Awards (and, if applicable, the time at which such Stock Award may be exercised) shall not be accelerated and such Stock Awards (other than a Stock Award consisting of vested and outstanding shares of Common Stock not subject to the Company’s right of repurchase) shall terminate if not exercised (if applicable) prior to the effective time of the Corporate Transaction; provided, however, that any reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall not terminate and may continue to be exercised notwithstanding the Corporate Transaction.

(iv) Payment for Stock Awards in Lieu of Exercise. Notwithstanding the foregoing, in the event a Stock Award will terminate if not exercised prior to the effective time of a Corporate Transaction, the Board may provide, in its sole discretion, that the holder of any Stock Award that is not exercised prior to such effective time will receive a payment, in such form as may be determined by the Board, equal in value to the excess, if any, of (A) the value of the property the holder of the Stock Award would have received upon the exercise of the Stock Award, over (B) any exercise price payable by such holder in connection with such exercise.

(d) Change in Control. A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration shall occur.

10. TERMINATION OR SUSPENSION OF THE PLAN. (a) Plan Term. The Board may suspend or terminate the Plan at any time. No Awards may be granted under the Plan while the

Plan is suspended or after it is terminated.

(b) No Impairment of Rights. Termination of the Plan shall not impair rights and obligations under any Award granted while the Plan is in effect except with the written consent of the affected Participant.

11. EFFECTIVE DATE OF PLAN. This Plan shall become effective on the Effective Date.

12. CHOICE OF LAW. The law of the State of California shall govern all questions concerning the construction, validity and interpretation of this Plan,

without regard to such state’s conflict of laws rules.

14.

13. DEFINITIONS. As used in the Plan, the definitions contained in this Section 13 shall apply to the capitalized terms indicated below:

(a) “Affiliate” means, at the time of determination, any “parent” or “subsidiary” as such terms are defined in Rule 405 of the Securities Act. The Board shall have the authority to determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition.

(b) “Board” means the Board of Directors of the Company.

(c) “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company. Notwithstanding the foregoing, the conversion of any convertible securities of the Company shall not be treated as a transaction “without receipt of consideration” by the Company.

(d) “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

(i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction . Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person from the Company in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities or (B) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur;

(ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction;

15.

(iii) the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company shall otherwise occur, except for a liquidation into a parent corporation;

(iv) there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; or

(v) individuals who are Directors on the date this Plan is adopted by the Board (collectively, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Directors; (provided, however, that if the election (or nomination for election) of any new Director was approved or recommended by a majority vote of the members of the Incumbent Board then still in office or by a majority vote of a committee comprised of such members, such new member shall, for purposes of this Plan, be considered a member of the Incumbent Board).

For Clarity, the term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company.

Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply.

The Board may, in its sole discretion and without Participant consent, amend the definition of Change in Control to conform to the definition of Change of Control under Section 409A of the Code, as amended, and the Treasury Department or Internal Revenue Service Regulations or Guidance issued thereunder.

(e) “Code” means the Internal Revenue Code of 1986, as amended.

(f) “Committee” means a committee of one (1) or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c) and which is comprised of a majority of independent directors within the meaning of Rule 5605(a)(2) of the NASDAQ Listing Rules.

(g) “Common Stock” means the common stock of the Company.

(h) “Company” means Sequenom, Inc., a Delaware corporation.

16.

(i) “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, shall not cause a Director to be considered a “Consultant” for purposes of the Plan.

(j) “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, shall not terminate a Participant’s Continuous Service. For example, a change in status from an Employee of the Company to a Consultant to an Affiliate or to a Director shall not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.

(k) “Corporate Transaction” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

(i) a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;

(ii) a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the Company;

(iii) the consummation of a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

(iv) the consummation of a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

(l) “Director” means a member of the Board.

(m) “Disability” means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, as provided in Section 22(e)(3) and 409A(a)(2)(c)(i) of the Code.

17.

(n) “Effective Date” means the effective date of this Plan document, which is [February 9, 2010], the date the Board approved the Plan.

(o) “Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services, shall not cause a Director to be considered an “Employee” for purposes of the Plan.

(p) “Entity” means a corporation, partnership, limited liability company or other entity.

(q) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(r) “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date of the Plan as set forth in Section 11, is the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities.

(s) “Fair Market Value” means, as of any date, the value of the Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable. Unless otherwise provided by the Board, if there is no closing sales price (or closing bid if no sales were reported) for the Common Stock on the date of determination, then the Fair Market Value shall be the closing selling price (or closing bid if no sales were reported) on the last preceding date for which such quotation exists.

(ii) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined by the Board in good faith.

(t) “Non-Employee Director” means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.

18.

(u) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(v) “Option” means an option to purchase shares of Common Stock granted pursuant to the Plan that is not intended to qualify as an incentive stock option under Section 422 of the Code and the regulations promulgated thereunder.

(w) “Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.

(x) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if permitted under the terms of this Plan, such other person who holds an outstanding Option.

(y) “Other Stock Award” means an award based in whole or in part by reference to the Common Stock which is granted pursuant to the terms and conditions of Section 6(c)(viii).

(z) “Other Stock Award Agreement” means a written agreement between the Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement shall be subject to the terms and conditions of the Plan.

(aa) “Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

(bb) “Participant” means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award.

(cc) “Plan” means this Sequenom, Inc. New-Hire Equity Incentive Plan.

(dd) “Restricted Stock Award” means an award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(a).

(ee) “Restricted Stock Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement shall be subject to the terms and conditions of the Plan.

(ff) “Restricted Stock Unit Award” means a right to receive shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(b).

19.

(gg) “Restricted Stock Unit Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award Agreement shall be subject to the terms and conditions of the Plan.

(hh) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

(ii) “Securities Act” means the Securities Act of 1933, as amended.

(jj) “Stock Appreciation Right” means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 6(c).

(kk) “Stock Appreciation Right Agreement” means a written agreement between the Company and a holder of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement shall be subject to the terms and conditions of the Plan.

(ll) “Stock Award” or “Award” means any right to receive Common Stock granted under the Plan, including an Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation Right or any Other Stock Award.

(mm) “Stock Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.

(nn) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%).

20.

Exhibit 10.51

***Text Omitted and Filed Separately with the Securities and Exchange Commission.Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

DATED 3rd November 2009

ISIS INNOVATION LIMITED

AND

SEQUENOM, INC.

THIRD AMENDMENT AGREEMENT

THIS THIRD AMENDMENT AGREEMENT is made on 3rd November, 2009 (The “Third Amendment Agreement Effective Date”).

BETWEEN:

BACKGROUND:

AGREEMENT:

Except as otherwise provided in this Third Amendment Agreement, words and expressions used in this Agreement have the same meaning as in the Licence.

In consideration of the waiver, release and discharge given by the Licensor in clause 4 below, the Licensee enters into the covenants in this Third Amendment Agreement and the Licensee shall pay to the Licensor the sum of one million US dollars (USD 1,000,000) by wire transfer within […***…] of the Third Amendment Agreement Effective Date. The sum is expressed as being exclusive of VAT which if applicable shall be paid at the prevailing rate in force.

2

*** Confidential Treatment Requested

(1) ISIS INNOVATION LIMITED (company number 2199542) whose registered office is at University Offices, Wellington Square, Oxford OX1 2JD, England (the “Licensor”); and

(2) SEQUENOM, INC., a Delaware Corporation, whose principal place of business is at 3595 John Hopkins Court, San Diego, CA 92121-1331, USA (the “Licensee”).

a) The Licensor granted a license of certain patents, patent applications and associated know-how relating to non-invasive pre-natal diagnosis to the Licensee on 14 October 2005 accompanied by a Development Plan Agreement made on the same date and this license was amended by two subsequent amendment agreements entered into respectively on 19 October 2006 and 5 November 2007 (together the “Licence”).

b) The Licensee has failed to achieve certain development and commercial Milestones as originally contemplated by the

parties.

c) The Licensor has decided to waive and release the Licensee from the development and commercial Milestones and the

parties have agreed to further amend the Licence in accordance with the provisons set out below.

1. Interpretation

2. Payment

With effect on and from the Third Amendment Agreement Effective Date the following amendments are made to the Licence:

“The Licensee will pay to the Licensor a royalty equal to the Royalty Rate on all Net Sales of Licensed Products. Royalty payments under this clause 8.2 shall be made by Licensee to Licensor within […***…] of the expiration of each Licence Year during the Agreement save that in respect of Royalties payable in respect of the final twelve (12) months of this Agreement (calculated in accordance with clause 11.1) (“Final Twelve Months”) in consideration for the benefits that Licensee is receiving under this Third Amendment Agreement, Licensee agrees that it shall pay to the Licensor a royalty equal to […***…], on Net Sales of Licensed Products occurring during the Final Twelve Months.”

“The Licensee must use its reasonable endeavors throughout the duration of the Licence to develop, exploit and Market the Licensed Technology to maximize the financial return for both parties.”

“The Licensee undertakes to:

3


3. Amendment of the Licence

(a) Clause 8.2 shall be deleted in its entirety and replaced with the following:

(b) Clause 9 shall be deleted in its entirety and replaced with the following clause:

(c) Clause 11.4 shall be deleted in its entirety and replaced with the following clause:

11.4.1 […***…]; and

11.4.2 […***…]; and

11.4.3 […***…]; provided that if the Licensee shall be in breach of this provision 11.4.3, then the Licensor […***…], convert the Licence into a non-exclusive licence in respect of […***…] only and for the avoidance of doubt, the exclusivity of the other indications shall remain unaffected by Licensor’s rights under this clause 11.4.3.

11.4.4 […***…]; provided that if the Licensee shall be in breach of any of its obligations in this clause 11.4.4, then the Licensor […***…] convert the Licence into a non-exclusive licence in respect of […***…] only and for the avoidance of doubt, the exclusivity of the other indications shall remain unaffected by this clause 11.4.4

11.4.5 […***…]; provided that if the Licensee shall be in breach of any of its obligations in this clause 11.4.5, then the Licensor […***…] convert the Licence into a non-exclusive licence in respect of […***…] only and for the avoidance of doubt, the exclusivity of the other indications shall remain unaffected by this clause 11.4.5

Minimum Sum (clause 8.4):

Milestones and Milestone Fee (clause 8.6):

The Licensor hereby irrevocably waives, releases and discharges the Licensee from and against any and all claims and causes including the Licensor’s rights to damages, rights to terminate the Licence or to convert the Licence from exclusive to a non-exclusive basis arising as a result of Licensee’s past performance under the Licence up to and including the Third Amendment Agreement Effective Date relating to the Licensee’s failure to achieve certain developmental and commercial Milestones as originally contemplated by the parties.

English Law governs this Third Amendment Agreement, and the parties submit to the exclusive jurisdiction of the English Courts for the resolution of any dispute which may arise out of or in connection with this Agreement save for injunctive relief which may be sought in any court of competent jurisdiction.

4


(d) Schedule 2 of the Licence shall be amended by deleting The “Minimum Sum” and “Milestones and Milestone Fee”

tables and replacing these with the following:

Licence Year Minimum Sum

1 (year ending 1 January 2007) $[…***…]2 (year ending 1 January 2008) $[…***…]3 (year ending 1 January 2009) $[…***…]4 (year ending 1 January 2010) $[…***…]5 (year ending 1 January 2011) $[…***…]6 (year ending 1 January 2012) $[…***…]7 (year ending 1 January 2013) $[…***…]8 (year ending 1 January 2014) $[…***…]Each year thereafter $[…***…]

Milestone Milestone Fee

A First commercial […***…] $[…***…]B First commercial […***…] $[…***…]C First commercial […***…] $[…***…]D First commercial […***…] $[…***…]E First commercial […***…] $[…***…]F Any other commercial […***…] using the Licensed Technology $[…***…]H The grant of […***…] $[…***…]

4. Waiver

5. Governing Law

AS WITNESS this agreement has been executed by the duly authorized representatives of the parties, respectively, the date(s) written below. SIGNED for and on behalf of SIGNED for and on behalf ofISIS INNOVATION LIMITED: SEQUENOM, INC.:

NAME: Linda A. Naylor NAME: Harry F. Hixson, Jr. POSITION: Head of Technology Transfer Group POSITION: CEOSIGNATURE: /s/ Linda A. Naylor SIGNATURE: /s/ Harry F. Hixson, Jr. DATE: November 3, 2009 DATE: November 3, 2009

Exhibit 10.52

***Text Omitted and Filed Separately with the Securities and Exchange Commission.

Confidential Treatment Requested Under 17 C.F.R. Sections 200.80(b)(4)

and 240.24b-2.

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (the “Agreement”) is entered into as of February 4, 2010 (the “Effective Date”) by and between SEQUENOM, INC., a Delaware corporation (“Sequenom”), having a place of business at 3595 John Hopkins Court, San Diego, California 92121, and OPTHERION, INC., a Delaware corporation (“Optherion”), having a place of business at 555 Long Wharf Drive, 11 Floor, New Haven, Connecticut 06511.

RECITALS

WHEREAS, Optherion has developed certain expertise and acquired proprietary rights related to Licensed Products (as defined below);

WHEREAS, Sequenom is engaged in the research, development and commercialization of products related to diagnostic testing and genetic analysis; and

WHEREAS, Optherion desires to grant, and Sequenom desires to accept, a license to Sequenom with regard to Licensed Products on the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Definitions 1.1 “Affiliate” shall mean any entity controlled by, controlling, or under common control with a party hereto. For the purposes

of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as used with respect to a party shall mean the possession, directly or indirectly, of more than 50% of the outstanding voting securities of a corporation or comparable equity interest in any other type of entity, or the power otherwise to govern the financial and the operating policies or to appoint the management of such entity.

1.2 “[…***…] Licensed Product” shall mean any product or part thereof or service in the Field (as defined in the […***…] Agreement), the manufacture, use or sale of which would infringe any one of the issued, unexpired claim(s) or any one of the pending claim(s) contained in the […***…] Patents in any country.

1.3 “[…***…] Patents” shall mean the patent rights listed on Schedule 1 attached hereto.

***Confidential Treatment Requested Sequenom-Optherion License Agreement – Confidential

th

1.4 “[…***…] Licensed Product” shall mean any product, process or method the composition of matter, manufacture, use or sale of which is covered by a Valid Claim of the […***…] Patents; provided, however, that if and to the extent Optherion’s license with respect to the Secondary Licensed Product (as defined in the […***…] Agreement) under the […***…] Agreement terminates as provided in Section 4.1 of the […***…] Agreement, “[…***…] Licensed Product” shall not include such Secondary Licensed Product. For purposes of the definition of […***…] Licensed Product, “Valid Claim” shall mean (i) an issued claim of an unexpired patent that has not been withdrawn, canceled or disclaimed, or held invalid or unenforceable by a court of competent jurisdiction in an unappealed or unappealable decision, or (ii) a claim of a patent application which has not been pending for more than six (6) years from the earlier of (A) the date of the first substantive office action for claims filed in the United States or (B) from the date of the first regional or national phase Examiner’s report for claims was filed outside of the United States and, in the case of (A) and (B), there have been reasonable efforts to advance to issuance of a patent prior to the final deadlines prescribed by the relevant patent offices. For the avoidance of doubt, for the purposes of the definition “Valid Claim” used in this definition of […***…] Licensed Product, “substantive office action” or “Examiner’s report” means any communication from an applicable patent office that examines the patentability of a claim and does not include (i) any and all correspondence received during the PCT stage, including but not limited to the international search report, (ii) general correspondence from a patent office, i.e. correspondence where the patentability of a claim is not examined on its merits, and/or (iii) an office action or Examiner’s report that is solely a restriction requirement or a notification of lack of unity of invention.


1.6 “Calendar Quarter” shall mean each respective period of three consecutive months ending on March 31, June 30, September 30 and December 31.

1.7 “Calendar Year” shall mean a Calendar Year, beginning on January 1 and ending on December 31.

1.8 “[…***…] Licensed Product” shall mean any product, process or service or part thereof the discovery, development, manufacture, use, sale, offering for sale, importation, exportation, distribution, rental or lease of which is Covered By a Valid Claim in the […***…] Patents in any country worldwide. For purposes of this definition of […***…] Licensed Product, (a) “Covered By” shall mean (i) infringes, in the case of a claim in an issued patent, or (ii) would infringe the claim if it existed in an issued patent, in the case of a claim in a pending application; and (b) “Valid Claim” shall mean (i) a claim of an issued unexpired patent that has not been withdrawn, canceled or disclaimed and which has not been held unpatentable, invalid or unenforceable by an unappealed or unappealable decision by a court or agency of competent jurisdiction, or (ii) a claim of a patent application in the […***…] Patents for which there has been reasonable consistent activity to advance to issuance of a patent.


***Confidential Treatment Requested Sequenom-Optherion License Agreement – Confidential 2

1.10 “[…***…] Licensed Product” shall mean (a) any process that would, absent the sublicense granted herein under the […***…] Agreement, infringe any one of the issued, valid, enforceable, unexpired claim(s) or any one of the pending claim(s) contained in the […***…] Patents in any country; and/or (b) any product or part thereof in the Field (as defined in the […***…] Agreement), (i) the manufacture, use, import, or sale of which would infringe, absent the sublicense granted herein under the […***…] Agreement, any one of the issued, unexpired claim(s) or any one of the pending claim(s) contained in the […***…] Patents in any country, (ii) the manufacture or use of which uses a process described in Section 1.10(a) above, or (iii) is a process described in Section 1.10(a) above. For purposes of this Section 1.10, a claim of any issued, unexpired […***…] Patent shall be presumed to be valid unless and until it has been held to be invalid by a final judgment of a court of competent jurisdiction from which no appeal can be or is taken.


1.12 “[…***…] Licensed Product” shall mean (a) any process that would, absent the sublicense granted herein under the […***…] Agreement, infringe any one of the issued, valid, enforceable, unexpired claim(s) or any one of the pending claim(s) contained in the […***…] Patents in any country; and/or (b) any product or part thereof in the Field (as defined in the […***…] Agreement), (i) the manufacture, use, import, or sale of which would infringe, absent the sublicense granted herein under the […***…] Agreement, any one of the issued, unexpired claim(s) or any one of the pending claim(s) contained in the […***…] Patents in any country, (ii) the manufacture or use of which uses a process described in Section 1.12(a) above, or (iii) is a process described in Section 1.12(a) above. For purposes of this Section 1.12, a claim of any issued, unexpired […***…] Patent shall be presumed to be valid unless and until it has been held to be invalid by a final judgment of a court of competent jurisdiction from which no appeal can be or is taken.


1.14 “CLIA” shall mean the Clinical Laboratory Improvement Amendments of 1988, as amended now and in the future.

1.15 “[…***…]” shall mean the […***…].

1.16 “Commercially Reasonable Efforts” (i) shall mean those efforts consistent with the exercise of customary scientific and business practices as applied in the diagnostic testing and genetic analysis industries in a particular jurisdiction for development and commercialization activities conducted with respect to other products of similar potential and market size in such jurisdiction, or (ii) shall have the meaning set forth below for purposes of the Licensed Product under the applicable In-License Agreement:

(a) for purposes of […***…] Licensed Products and […***…] Licensed Products, “Commercially Reasonable Efforts” shall mean reasonably diligent efforts and resources consistent with practices commonly used in […***…]


(b) for purposes of […***…] Licensed Products, “Commercially Reasonable Efforts” shall mean commercially reasonable best efforts consistent with sound and reasonable business practice and judgment;

(c) for purposes of […***…] Licensed Products, “Commercially Reasonable Efforts” shall mean commercially reasonable efforts; and

(d) for purposes of […***…] Licensed Products, “Commercially Reasonable Efforts” shall mean reasonable commercial efforts.

1.17 “Companion Diagnostic” shall have the meaning provided in Section 3.3(b).

1.18 “Companion Diagnostic Notice” shall have the meaning provided in Section 3.3(b).

1.19 “[…***…]” shall mean […***…].

1.20 “Confidential Information” shall have the meaning provided in Section 8.1.

1.21 “Control” shall mean, with respect to any Information, Patents or other intellectual property rights, possession by a party of the right, power and authority (whether by ownership, license or otherwise, but without taking into account any rights granted under the terms of this Agreement) to grant access to, to grant use of, or to grant a license or a sublicense to such Information, Patents or intellectual property rights without violating the terms of any agreement or other arrangement with any Third Party.

1.22 “[…***…]” shall mean […***…].

1.23 “FDA” shall mean the U.S. Food and Drug Administration and any successor thereto.

1.24 “Field” shall mean any and all diagnostic (which includes prognostic) uses for research, laboratory developed tests or in vitro diagnostic tests markets, for use with any and all types of technology platforms. For the avoidance of doubt, the “Field” excludes all therapeutic uses and, in the case of any […***…] Licensed Product, also excludes any and all fields, uses and applications of protein components of the human complement system and activation fragments thereof in blood plasma.

1.25 “First Commercial Sale” shall mean, with respect to a Licensed Product, the first sale by Sequenom, a Sequenom Affiliate or their respective sublicensee for end use or consumption of such Licensed Product in a country in accordance with all applicable laws, rules and regulations.


1.26 “GAAP” shall mean generally accepted accounting principles in the United States, or internationally, as appropriate, consistently applied and shall mean the international financial reporting standards (“IFRS”) at such time as IFRS becomes the generally accepted accounting standard and applicable laws require that a party use IFRS.

1.27 “Information” shall mean all tangible and intangible techniques, technology, practices, trade secrets, information, ideas, inventions (whether patentable or not), discoveries, concepts, practices, procedures, processes, methods, methodologies, designs, knowledge, know-how, trade secrets, skill, experience, materials, designs, drawings, computer programs, documents, apparatus, clinical and regulatory strategies, regulatory documentation, information and submissions pertaining to, or made in association with, regulatory filings, results and data, including clinical data, analytical and quality control data, manufacturing data and descriptions, patent data, market data, financial data or descriptions, in written, electronic or other form, now known or hereafter developed.

1.28 “In-License Agreement” means any of the […***…] Agreement, […***…] Agreement, […***…] Agreement, […***…] Agreement or […***…] Agreement.

1.29 “Licensed Product” shall mean any of the […***…] Licensed Product, […***…] Licensed Product, […***…] Licensed Product, […***…] Licensed Product, and/or […***…] Licensed Product.

1.30 “[…***…]” shall have the meaning provided in […***…].

1.31 “Losses” shall have the meaning provided in Section 10.1.

1.32 “[…***…]” shall mean […***…].

1.33 “[…***…]” shall mean […***…].

1.34 “Net Sales” shall mean the gross invoice price of any and all Licensed Products sold by Sequenom, Sequenom Affiliates and their respective sublicensees and included in reported net sales under GAAP to independent Third Parties, after deducting the following sales allowances and expenses directly related to gross sales of the Licensed Product under GAAP, if not previously deducted, from the amount invoiced: (a) trade, contractual, quantity and/or cash discounts, allowances or rebates, in each case to the extent reasonable and customary; (b) amounts actually paid for Third Party transportation, insurance, handling or shipping charges to purchasers, but solely to the extent not invoiced to or collected from a Third Party; and (c) any tax, tariff, duty or government charge (including any sales, value added, excise or similar tax or government charge, but excluding any income tax) levied on the sale, transportation or delivery of any Licensed Product. Sequenom shall make periodic adjustments of the amounts described to its initial accruals of such amounts applied in a prior Calendar Quarter to reflect amounts actually incurred or taken by Sequenom or Sequenom Affiliates; provided, however, that Sequenom and Sequenom Affiliates shall use the same accrual that it uses for its own financial accounting purposes, and that it shall account for reserves and allowances for Licensed Products in a manner consistent with its methods for establishing reserves and allowances for other similar diagnostic products.


1.35 “Optherion Affiliate” shall mean (a) any entity that is an Affiliate of Optherion as of the Effective Date and is listed on Schedule 13, and (b) any entity that becomes an Affiliate of Optherion after the Effective Date and that Optherion adds to Schedule 13 by written notice to Sequenom (which notice shall contain the written agreement from such Affiliate that it agrees to be an “Optherion Affiliate” hereunder), in either case only so long as such entity is an Affiliate of Optherion.

1.36 “Optherion Indemnitee” shall have the meaning provided in Section 10.2.

1.37 “Optherion Know-How” shall mean non-Patent Information, other than financial information, not included in the Optherion Patents that Optherion or any Optherion Affiliate Controls on the Effective Date or during the Term, which Information is necessary or useful to practice, develop, make, have made, use, offer for sale, sell, import and export a Licensed Product in the Field […***…]. For clarification, the Optherion Know-How includes all Information in the Field under which Optherion has been granted rights pursuant to the In-License Agreements.

1.38 “Optherion Patents” shall mean, collectively, (a) the […***…] Patents, (b) the […***…] Patents, (c) the […***…] Patents, (d) the […***…] Patents, and (e) the […***…] Patents. For clarification, the Optherion Patents include all Patents in the Field under which Optherion has been granted rights pursuant to the In-License Agreements, other than those with respect to which Optherion has specifically terminated its rights (and has notified Sequenom in writing of such termination) prior to the Effective Date (which terminated Patents are not included in Schedules 1 thru 5 hereto).

1.39 “Optherion Technology” shall mean the Optherion Patents and the Optherion Know-How.

1.40 “Optherion Therapeutic Product” shall have the meaning provided in Section 3.3(a).

1.41 “Patents” shall mean (a) all patents, certificates of invention, applications for certificates of invention, priority patent filings and patent applications, together with (b) any renewal, division, continuation (in whole or in part), or request for continued examination of any of such patents, certificates of invention and patent applications, and any all patents or certificates of invention issuing thereon, and any and all reissues, reexaminations, extensions, divisions, renewals, substitutions, confirmations, registrations, revalidations, revisions, and additions of or to any of the foregoing, and any foreign counterparts of any of the foregoing and any other patents and patent applications claiming priority back to any of the foregoing.

1.42 “[…***…]” shall mean […***…].

1.43 “[…***…]” shall mean […***…].

1.44 “Royalty Allocation” shall have the meaning provided in Section 4.3.

1.45 “Royalty Floor” shall have the meaning provided in Section 4.5(a).


1.46 “[…***…] Plan” shall have the meaning provided in Section 3.3(a).

1.47 “Sequenom Affiliate” shall mean (a) any entity that is an Affiliate of Sequenom as of the Effective Date and is listed on Schedule 14, and (b) any entity that becomes an Affiliate of Sequenom after the Effective Date and that Sequenom adds to Schedule 14 by written notice to Optherion (which notice shall contain the written agreement from such Affiliate that it agrees to be a “Sequenom Affiliate” hereunder), in either case only so long as such entity is an Affiliate of Sequenom.

1.48 “Sequenom Assay Patents” shall have the meaning provided in Section 3.3(b)(iii).

1.49 “Sequenom Companion Diagnostic Blocking Patents” shall have the meaning provided in Section 3.3(b)(ii).

1.50 “Sequenom Indemnitee” shall have the meaning provided in Section 10.1.

1.51 “Sequenom Licensed Product Blocking Patents” shall have the meaning provided in Section 9.3(d)(i).

1.52 “Sequenom Technology Patents” shall have the meaning provided in Section 9.3(d)(ii).

1.53 “Term” shall have the meaning provided in Section 9.1.

1.54 “Third Party” shall mean any entity other than Optherion or Sequenom or an Affiliate of Optherion or Sequenom.

1.55 “Third Party License” shall have the meaning provided in Section 4.5(a).

1.56 “[…***…]” shall mean the […***…].

1.57 “[…***…] Agreement” shall mean that certain Exclusive License Agreement, dated […***…], among Optherion, […***…].

1.58 “[…***…]” shall mean the […***…].

1.59 “[…***…] Agreement” shall mean that certain Exclusive License Agreement, dated […***…], between Optherion and […***…].

1.60 “[…***…] Agreement” shall mean that certain License Agreement, dated […***…], between Optherion and […***…], with […***…] executing on behalf of itself and […***…], as amended on […***…].

1.61 “[…***…] Agreement” shall mean that certain Exclusive License Agreement, dated […***…], among Optherion, […***…], as amended on […***…].

1.62 “United States” means the fifty states comprising the United States of America, including its territories and possessions and the District of Columbia.


1.63 “[…***…]” shall mean the […***…].

1.64 “[…***…]” Agreement” shall mean that certain Exclusive License Agreement, dated […***…], between Optherion and […***…], as amended on […***…].

1.65 “Upstream Licensor” shall mean each of […***…].

1.66 “U.S. Sale Date” shall have the meaning provided in Section 4.1(a).

1.67 “Valid Claim” shall mean:

(a) with respect to Optherion Patents, except as otherwise expressly provided in the definitions of […***…] Licensed Product and […***…] Licensed Product, (i) a claim of an unexpired and issued patent included in the Optherion Patents which has not been withdrawn, disclaimed, cancelled or superseded (or if cancelled or superseded, has been reinstated) or been revoked, held invalid, or otherwise declared unenforceable or not allowable by a tribunal or patent authority of competent jurisdiction over such claim in such country in a decision which is unappealable or not appealed; or (ii) a claim of a pending application included in the Optherion Patents; and

(b) with respect to Patents Controlled by Sequenom or a Sequenom Affiliate, as used in Section 3.3(b) or 9.3(d), (i) a claim of an unexpired and issued patent included in such Patents which has not been withdrawn, disclaimed, cancelled or superseded (or if cancelled or superseded, has been reinstated) or been revoked, held invalid, or otherwise declared unenforceable or not allowable by a tribunal or patent authority of competent jurisdiction over such claim in such country in a decision which is unappealable or not appealed; or (ii) a claim of a pending application included in such Patents.

1.68 “[…***…]” shall mean […***…].

2. Grant of Rights 2.1 Grant of Rights to Sequenom. Subject to the terms and conditions of this Agreement, including Section 2.3, Optherion

hereby grants to Sequenom and Sequenom Affiliates an exclusive (even as to Optherion and its Affiliates), worldwide, royalty-bearing license and sublicense, with the right to sublicense in accordance with Section 2.2, under the Optherion Technology: (a) except with respect to the sublicense granted under the […***…] Agreement and the sublicense granted under the […***…] Agreement, to make, have made, use, sell, have sold and import Licensed Products in the Field; (b) with respect to the sublicense granted under the […***…] Agreement, to make, have made, use and sell Licensed Products in the Field; and (c) with respect to the sublicense granted under the […***…] Agreement, to research, develop, use, have used, make, have made, import or have imported, export or have exported, offer for sale or have offered for sale, and/or sell or have sold Licensed Products in the Field. Subject to the terms and conditions of this Agreement (including Section 2.4, Section 3.3 and Section 8), the license and sublicense granted under this Section 2.1 shall include the right to use the Optherion Know-How for making regulatory filings for, or and marketing of, Licensed Products in the Field, it being understood that, subject to the terms of this Agreement, Sequenom shall have the exclusive right of access and right of reference to, and the exclusive right to use and incorporate, all such Optherion Know-How in Sequenom’s applications for regulatory approvals of Licensed Products in the Field. Within 21 days after the Effective Date, Optherion shall provide to Sequenom in electronic format all Optherion Technology existing as of the Effective Date listed on Schedule 15 attached hereto, and from time to time thereafter during the Term, upon specific detailed written request from Sequenom, Optherion shall use commercially reasonable efforts to disclose to Sequenom all Optherion Technology not previously disclosed to Sequenom, in each case at Sequenom’s expense with Sequenom’s prior written authorization, in order to allow Sequenom to exercise fully the licenses and sublicenses granted to Sequenom under this Section 2.1.


2.2 Sublicensing. Subject to the other provisions of this Agreement, including, without limitation, Section 2.3, Sequenom (or a Sequenom Affiliate) shall have the right to sublicense (with the right to further sublicense) the rights granted to it under Section 2.1 without approval of Optherion or any Upstream Licensor in connection with the development or commercialization of a Licensed Product in any country or territory […***…] in the event that Sequenom reasonably believes that Sequenom does not have an adequate presence to satisfy regulatory and legal requirements to develop and commercialize a Licensed Product on its own in such country. Sequenom will ensure that each sublicense by Sequenom of rights granted to it under Section 2.1 includes obligations and restrictions on the sublicensee at least as restrictive as the obligations imposed on Sequenom under this Agreement, excluding any economic term, which may be freely negotiated between Sequenom and the sublicensee. Within 20 days after execution or receipt thereof, as applicable, Sequenom shall provide Optherion with a full and complete copy of each sublicense agreement regarding the sublicense of rights granted under Section 2.1, provided that Sequenom may redact any confidential information contained therein that is not necessary to disclose to ensure compliance with this Agreement or any applicable In-License Agreement. For clarification, all obligations and restrictions with respect to sublicenses granted by Sequenom pursuant to this Section 2.2 shall apply to further sublicenses granted by sublicensees of Sequenom and Sequenom Affiliates. Sequenom shall be liable to Optherion hereunder for acts or omissions by its sublicensees that constitute a material breach of this Agreement.


2.3 In-License Agreement. Sequenom acknowledges that it has received a copy of each In-License Agreement and that certain of the rights granted by Optherion to Sequenom under this Agreement are subject to the applicable terms and conditions and further limitations of each In-License Agreement, including, without limitation, Articles 2, 4.5, 7, 8, 9, 10 and 15 of the […***…] Agreement (which provisions shall be binding upon Sequenom, Sequenom Affiliates and their respective sublicensees as if they were parties to the […***…] Agreement) and Sections 3.3, 3.6, 3.7, 3.8, 3.9, 4.1, 4.5, 5.9, 5.10, 8, 9.2, 11 and 12.2 of the […***…] Agreement, and Section 8.2 of the […***…] Agreement, all of which Sequenom agrees to comply with to the same extent that Optherion is bound thereby. […***…]. Additionally, Sequenom agrees to comply directly with the obligations set forth in the In-License Agreements that relate to the Field and arise as a direct result of or relate to the activities of Sequenom, Sequenom Affiliates and/or their respective sublicensees under this Agreement, and Optherion shall comply directly with any obligations of Optherion set forth in the In-License Agreements other than those to be complied with directly by Sequenom as expressly set forth in this Agreement. […***…]. In the event of any default or breach by Optherion under the applicable In-License Agreement that is reasonably likely to materially and adversely affect Sequenom’s rights under this Agreement (including any default or breach of an obligation to make payment to any Upstream Licensor), Optherion shall immediately notify Sequenom thereof. In the event of any such default or breach under an In-License Agreement, if Optherion has not confirmed to Sequenom in writing that Optherion has cured such default or breach no later than 10 days prior to the expiration of the cure period under the applicable In-License Agreement, Sequenom shall have the right, but not the obligation, to take such actions as reasonably necessary or appropriate to cure such default or breach, and Optherion shall promptly reimburse Sequenom for Sequenom’s reasonable out-of-pocket expenses, and any payments made by Sequenom to the applicable Upstream Licensor, in connection therewith; provided that Optherion shall not be required to pay to Sequenom an amount in excess of the amount that Optherion would have paid had it cured the breach directly. Optherion shall not amend, modify or supplement any In-License Agreement with respect to the Field or any other terms that would otherwise affect the rights and/or obligations of Sequenom under this Agreement without the prior written consent of Sequenom, such consent not to be unreasonably withheld or delayed. Any amendment to any of the In-License Agreements made in accordance with this Agreement shall be deemed to be included as part of such In-License Agreement for all purposes of this Agreement. To the extent of Sequenom’s interests under this Agreement, Optherion shall not exercise any right under the In-License Agreements except consistent with the terms hereof without the prior written consent of Sequenom, such consent not to be unreasonably withheld or delayed. Optherion further agrees, at Sequenom’s expense, to take all lawful steps reasonably necessary or requested by Sequenom to permit Sequenom to exercise and enforce Optherion’s rights under the In-License Agreements to the extent of Sequenom’s interests under this Agreement. In the event of termination of any In-License Agreement, Sequenom may convert the sublicense granted under Section 2.1 with respect to such In-License Agreement into a direct license from the Upstream Licensor, subject to the terms and conditions of the applicable In-License Agreement.

2.4 Retained Rights; No Implied Licenses. Optherion reserves and retains (a) all rights to the Optherion Technology for all uses outside the Field, (b) the right to use the Optherion Technology to the extent necessary or desirable for Optherion’s and/or Optherion Affiliate(s)’ and/or their respective sublicensee(s)’ internal research and development regarding Optherion’s and/or Optherion Affiliate(s)’ and/or their respective sublicensee(s)’ related therapeutic products, and (c) as set forth in Section 3.3(b)(i) below. Sequenom acknowledges that (a) certain of the rights to Optherion Know-How licensed to Optherion under the […***…] Agreement and the […***…] Agreement are licensed to Optherion on a non-exclusive basis, and (b) the rights granted to Sequenom pursuant to the In-License Agreements remain subject to various reservations of rights by or on behalf of the Upstream Licensor, including with respect to non-commercial research and educational purposes and the United States government pursuant to 35 U.S.C. §200, et seq. in accordance with the terms and conditions of the applicable In-License Agreement and applicable law. Additionally, Sequenom acknowledges and agrees that the licenses granted to Optherion pursuant to the […***…] Agreement are non-exclusive grants. No right or license under any Patents or Information of either party is granted or shall be granted by implication. All such rights or licenses are or shall be granted only as expressly provided in the terms of this Agreement.


3. Development and Commercialization of Licensed Products

3.1 Development and Commercialization Responsibilities Generally. Sequenom (itself or together with Sequenom Affiliates and their respective sublicensees) shall control, and be solely responsible for, at its own expense, the development (including all preclinical and clinical trials), manufacture, registration, marketing and commercialization of Licensed Products in the Field. Without limiting the foregoing, upon written request Optherion shall provide Sequenom with reasonable assistance in obtaining any clinical samples necessary for the development and commercialization of Licensed Products in the Field, at Sequenom’s expense. Sequenom has separately provided to Optherion on the Effective Date a preliminary development plan for the initial Licensed Product in the Field to be developed by Sequenom, which plan may be updated by Sequenom from time to time if Sequenom believes, in its good faith judgment, that changes are needed in order to improve Sequenom’s ability to develop and commercialize Licensed Products in the Field. Sequenom shall provide an updated copy of such plan to Optherion on […***…] and thereafter […***…] during the Term; provided that such obligation shall terminate when Optherion is no longer obligated to provide such plan under any In-License Agreement.

3.2 Commercially Reasonable Efforts; In-License Agreements. Subject to Section 9.2(d)(ii) below, Sequenom (itself or together with Sequenom Affiliates and their respective sublicensees) shall use Commercially Reasonable Efforts to develop, produce, manufacture, market and sell Licensed Products, including each of an […***…] Licensed Product, […***…] Licensed Product, […***…] Licensed Product, […***…] Licensed Product and […***…] Licensed Product, in the Field (in the case of an […***…] Licensed Product as soon as possible and, after bringing such […***…] Licensed Product to market, to continue active, diligent, marketing efforts for the […***…] Licensed Product throughout the term of this Agreement). In particular and without limitation of Sequenom’s obligation to use such Commercially Reasonable Efforts, Sequenom shall achieve the following milestone targets with respect to a Licensed Product (it being understood and agreed that, subject to Section 9.2(d)(ii) below, such Licensed Product shall include each of an […***…] Licensed Product, a […***…] Licensed Product, a […***…] Licensed Product, a […***…] Licensed Product and a […***…] Licensed Product):

(a) […***…];

(b) […***…];

(c) […***…]; and

(d) […***…];


provided, however, that, with respect to the milestone targets set forth in Section 3.2(c) and (d), in the event Sequenom reasonably believes, and Optherion agrees in good faith, such agreement not to be unreasonably withheld or delayed, that it would not be profitable for Sequenom to pursue such milestone targets for a Licensed Product that is a […***…], Sequenom shall provide written notice thereof to Optherion at least […***…] prior to the applicable target date, and the parties shall thereafter negotiate in good faith regarding appropriate substitute milestones relating to such a Licensed Product that is an […***…]. In the event that Optherion reasonably believes that such substitute milestone(s) would result in a breach under, limit or reduce Optherion’s rights under, or increase Optherion’s obligations (excluding any increased payment obligation if Sequenom agrees to make such increased payment) pursuant to, any In-License Agreement, Optherion will discuss the proposed substitute milestone(s) with the applicable Upstream Licensor and request that the applicable Upstream Licensor modify the In-License Agreement so that such substituted milestone(s) does not result in such breach, limitation or reduction in rights or increase in obligations; provided that, if the Upstream Licensor does not agree to so amend the In-License Agreement, Optherion will not be obligated to agree to such substitute milestone(s).

The parties acknowledge that all of the milestone targets set forth in Section 3.2(a), (b), (c) and (d) are contingent on applicable laws, rules and regulations (including any regulations promulgated by the FDA or any other regulatory agency) not differing materially and adversely from the laws, rules and regulations on the Effective Date (including, for example, regulations for allowance of laboratory developed tests in CLIA laboratories). Accordingly, notwithstanding anything to the contrary in this Section 3.2, in the event that Sequenom reasonably believes, and Optherion agrees in good faith, such agreement not to be unreasonably withheld or delayed, that any of the milestone targets set forth in Section 3.2(a), (b), (c) and (d) is not reasonably achievable because of any material and adverse change of any such applicable law, rule or regulation during the Term, then the time period for achievement of the applicable milestone target may be reasonably extended […***…]. If, in connection with any such extension of the time period for achievement of the milestone targets set forth in Section 3.2(a), (b), (c) or (d), Optherion desires or is obligated to make a due diligence extension payment under any In-License Agreement, Optherion shall promptly (and in any event no fewer than 10 business days before any due date) notify Sequenom thereof, and Sequenom shall pay such amount(s) to Optherion on the earlier to occur of (i) 30 days after receipt by Sequenom of such notification, or (ii) five business days prior to the date(s) that Optherion must make such payment(s) under the applicable In-License Agreement. Notwithstanding any of the foregoing, in the event that Optherion reasonably believes that any such extension of the time period for achievement of the milestone targets set forth in Section 3.2(a), (b), (c) or (d) would result in a breach under, limit or reduce Optherion’s rights under, or increase Optherion’s obligations (excluding any increased payment obligation if Sequenom agrees to make such increased payment) pursuant to, any In-License Agreement, Optherion will discuss the proposed extension with the applicable Upstream Licensor and request that the applicable Upstream Licensor modify the In-License Agreement so that such extension does not result in such breach, limitation or reduction in rights or increase in obligations; provided that, if the Upstream Licensor does not agree to so amend the In-License Agreement, Optherion will not be obligated to agree to such extension.


3.3 Companion Diagnostics. (a) […***…] Support. Subject to Optherion providing to Sequenom a detailed description of Optherion’s requirements

and instructions with respect thereto, Sequenom shall conduct the activities with respect to the development of a Licensed Product(s) that would be a […***…] for use with a therapeutic product(s) of Optherion being developed by Optherion or an Optherion Affiliate(s) and/or their respective sublicensee(s) (an “Optherion Therapeutic Product”) in accordance with the […***…] plan agreed upon in writing by the parties (“[…***…] Plan”). In connection therewith, Sequenom shall perform all activities under the […***…] Plan, using Commercially Reasonable Efforts to do so with the same degree of care that Sequenom uses to perform its own internal research and development activities, shall meet the timelines of implementation associated with the […***…] Plan or as otherwise agreed by the parties in writing, and shall ensure a commercially reasonable turnaround of results back to Optherion after samples are received during the individual phases. The division of costs relating to the activities to be performed by the parties pursuant to the […***…] Plan shall be agreed upon by the parties and set forth therein.

(b) Companion Diagnostic. If, at any time during the Term, Optherion and/or an Optherion Affiliate(s) and/or their respective sublicensee(s) desires to develop a Licensed Product that is a companion diagnostic for an Optherion Therapeutic Product, which companion diagnostic would either be marketed as a laboratory developed test under CLIA regulations or its successor regulations or foreign counterparts or be submitted for FDA approval or other regulatory approval (a “Companion Diagnostic”), Optherion shall provide written notice thereof to Sequenom (a “Companion Diagnostic Notice”), and following receipt by Sequenom thereof, Sequenom and Optherion shall negotiate in good faith regarding the terms pursuant to which Sequenom may undertake the development and registration of such Companion Diagnostic for Optherion and/or an Optherion Affiliate(s) and/or their respective sublicensee(s); provided, however, that neither party shall be obligated to proceed with such activities unless and until they enter into a separate written agreement with respect to such activities. If Sequenom comes to the conclusion that it is unable to develop and register such Companion Diagnostic or the parties are unable to agree upon commercially reasonable terms within […***…] of Sequenom’s receipt of a Companion Diagnostic Notice, then the following shall apply:

(i) Optherion and the Optherion Affiliates shall […***…];

(ii) In the event that, as of such date or thereafter, on a country-by-country basis, Sequenom and/or any Sequenom Affiliate(s) […***…], Sequenom hereby agrees that, from and after such date, […***…]; and

(iii) The parties hereby agree, upon written request by Optherion, to […***…]. For clarification, in no event shall this clause (iii) be interpreted to […***…].

(c) Progress Regarding Therapeutics. Within […***…] after the Effective Date and no later than […***…] after the end of each Calendar Quarter ending on June 30 and December 31 thereafter, Optherion shall provide to Sequenom a written report describing the status of Optherion’s therapeutic development programs, including any timelines with respect to such development, solely to the extent relevant to Sequenom’s obligations under this Section 3.3.

3.4 U.S. Manufacturing. Sequenom agrees, understands and acknowledges that, in accordance with the In-License Agreements and the rights sublicensed thereunder, Licensed Products for sale in the United States may be required to be, and shall be, manufactured substantially in the United States, including Puerto Rico, unless a waiver under 35 U.S.C. §204 or then applicable law is obtained from the appropriate US government agencies under the requirements of the applicable In-License Agreement with respect thereto. If requested by Sequenom and at Sequenom’s expense, (a) the parties agree to use reasonable efforts to obtain such a waiver as promptly as practicable, and (b) each party agrees to provide reasonable cooperation to the other party in connection therewith.


3.5 Reporting. (a) Progress Reports. No later than […***…] after the end of each Calendar Year following the Effective Date,

Sequenom shall provide to Optherion a written progress report describing progress on development and/or commercialization of Licensed Products in the Field during such Calendar Year, including, without limitation, a summary of Sequenom’s progress and problems to date in its development and/or commercialization of the Licensed Products (including a description of regulatory approvals, manufacturing, sublicensing, market and sales), and an estimated forecast and schedule of major events required to market the Licensed Products and, if progress differs from that previously anticipated in any such report, an explanation of the reasons for the difference and a proposed modified forecast and schedule, in each case with a sufficient level of detail to allow Optherion to ascertain whether Sequenom is in compliance with its obligations under this Agreement and in forms suitable for Optherion to deliver same directly to the Upstream Licensor (e.g, several separate reports) as required by the applicable In-License Agreement, and Optherion may so deliver such reports to the Upstream Licensor. Sequenom shall also provide any reasonable additional data in Sequenom’s possession or Control required by an Upstream Licensor to evaluate Sequenom’s performance.

(b) CLIA Validation. Sequenom shall provide Optherion with prompt written notice when Sequenom believes that it has completed CLIA validation with respect to a Licensed Product.

(c) […***…]. Subject to Section 9.2(d)(ii) and Section 6.1: (i) Sequenom shall promptly notify Optherion if at any time Sequenom (A) […***…] or (B) […***…]; and (ii) in the event that Sequenom decides not to exploit a particular Optherion Patent Right, Optherion shall have the right to terminate this Agreement and/or the applicable portion thereof relating to such Optherion Patent Right (provided that a decision not to exploit Optherion Patent Rights referenced in Section 9.2(d)(ii) shall entitle Optherion to terminate only the applicable portion of this Agreement relating to such Optherion Patent Rights, but not this Agreement in its entirety).

(d) Certain Sales. Sequenom shall report to Optherion the date of first sale of a […***…] Licensed Product and […***…] Licensed Product in […***…] within […***…] of occurrence. Sequenom shall report to Optherion the date of First Commercial Sale (as defined in the […***…] Agreement) of a […***…] Licensed Product within […***…] of occurrence thereof.

(e) Analytic Validation. Sequenom shall provide Optherion with prompt written notice when Sequenom believes that it has completed analytical validation for a genetic test for AMD comprising a […***…] Licensed Product. Sequenom or a Sequenom Affiliate has achieved CLIA certification of a CLIA laboratory.


3.6 Debarment. Sequenom represents, warrants and covenants that (a) it has not been debarred, or convicted of a crime for which it can be debarred, under the U.S. Generic Drug Enforcement Act of 1992, 21 U.S.C. Sections 335(a) and (b), as amended (“GDEA”), and (b) has not used and shall not use the services of any person or entity debarred, or convicted of a crime for which such person or entity can be debarred, under the GDEA in any capacity in connection with any of any activities performed pursuant to Section 3.3 of this Agreement. Sequenom shall notify Optherion immediately in writing in the event that Sequenom becomes aware of or receives notice of the debarment (or of any action or threat of action that could lead to debarment) of itself or any such person or entity.

4. Fees and Payments 4.1 Certain Fees.

(a) License Maintenance Fee - Prior to First Commercial Sale in the United States. If the First Commercial Sale of a Licensed Product in the Field in the United States has not occurred on or before January 31, 2011 (the “U.S. Sale Date”), Sequenom shall pay to Optherion a non-creditable license maintenance fee equal to US$260,000 within 30 days after the U.S. Sale Date and each subsequent anniversary of the U.S. Sale Date prior to First Commercial Sale of a Licensed Product in the Field in the United States during the Term, such amount to be pro-rated for any 12-month period during which First Commercial Sale of a Licensed Product in the Field in the United States occurs. In no event shall any payments be due by Sequenom under this Section 4.1(a) with respect to periods following First Commercial Sale of a Licensed Product in the United States. For the avoidance of doubt, it is understood and agreed that Sequenom shall be required to pay the First Commercial Sale milestone payment when achieved as specified in the applicable Schedule, regardless of its payment of license maintenance fees or other license fees.

(b) Minimum Royalty - After First Commercial Sale in the United States. Following the First Commercial Sale of a Licensed Product in the Field in the United States, during the Term, Sequenom shall pay Optherion a minimum royalty equal to the following amounts, provided that such First Commercial Sale has occurred prior to the applicable date:

(i) US$260,000 within […***…] after January 1, 2011;

(ii) US$265,000 within […***…] after January 1, 2012; and

(iii) US$270,000 within […***…] after January 1, 2013 and each subsequent January 1 during the Term.

(c) Fees Credited Against Royalties. Any payments made by Sequenom pursuant to Section 4.1(b) (but not, for the avoidance of doubt, Section 4.1(a)) shall be credited against any royalties due by Sequenom under Section 4.3 for sales of Licensed Products during the Calendar Year in which such payment is due under Section 4.1(b) and against any royalties due by Sequenom under Section 4.3 for sales of Licensed Products during the subsequent Calendar Year only. For clarification, in no event shall Sequenom be obligated to pay under both Section 4.1(a) and Section 4.1(b) for any given time period.


st

For purposes of allocation of the amounts paid pursuant to this Section 4.1 among various In-License Agreements, the allocations set forth on Schedule 11 shall apply.

4.2 Milestone Payments. Subject to Section 4.6, Sequenom shall pay to Optherion each of the […***…] milestone payments set forth on Part 1 of each of Schedule 6, Schedule 7, Schedule 8, Schedule 9 and Schedule 10 attached hereto promptly upon the first occurrence of each of the events set forth on each such Schedule for each Licensed Product in the Field (whether such milestone is achieved by Sequenom or a Sequenom Affiliate or a sublicensee of Sequenom or a Sequenom Affiliate). Sequenom shall provide Optherion with prompt written notice of such occurrence. Such payments shall be due upon the applicable dates set forth on the applicable Schedule.

4.3 Royalties. Subject to Sections 4.5 and 4.6, Sequenom shall pay royalties on cumulative worldwide annual Net Sales of Sequenom and Sequenom Affiliates (but not its sublicensees) at a total rate of […***…]%, which includes all royalties on such Net Sales due and payable pursuant to the In-License Agreements. Such royalties shall be allocated to sublicenses of the Optherion Patents as set forth on Part 2 of Schedule 6, Schedule 7, Schedule 8, Schedule 9 and Schedule 10 attached hereto (each a “Royalty Allocation”). Notwithstanding the foregoing, as provided in each of the […***…] Agreement, the […***…] Agreement and the […***…] Agreement, during any period in which any […***…] Licensed Product, […***…] Licensed Product or […***…] Licensed Product, as applicable, is not covered by a Valid Claim within the […***…] Patents, […***…] Patents or […***…] Patents, respectively, in any country, the royalties due to Optherion for sales of such […***…] Licensed Product, […***…] Licensed Product and/or […***…] Licensed Product in such country pursuant to Part 2 of Schedule 6, Schedule 7 and/or Schedule 10, as applicable, shall not be owed to the extent that Optherion does not owe such royalties to the applicable Upstream Licensor under the applicable In-License Agreement. Sequenom’s obligation to pay royalties under this Section 4.3 shall, in the case of any Licensed Product, in any country, end upon the date of termination of all obligations of Optherion to make royalty payments under the applicable In-License Agreements. Royalty payments under this Section 4.3 shall be due […***…] following the end of the applicable Calendar Quarter.

4.4 Sublicensing Fees. In the event that Sequenom or a Sequenom Affiliate grants a sublicense of the rights granted to it under this Agreement:

(a) With regard to royalties paid to Sequenom or a Sequenom Affiliate on Net Sales of Licensed Products by such sublicensee: (i) […***…], and (ii) […***…]; and

(b) Sequenom shall pay to Optherion […***…] of any […***…] received by Sequenom or a Sequenom Affiliate from such sublicensee as consideration for the sublicense of Optherion Technology, excluding […***…].

Such payments under this Section 4.4 shall be due […***…] following the end of the applicable Calendar Quarter. […***…]


4.5 Royalty Credit. (a) Dominating Patents. In the event that Sequenom or any Sequenom Affiliate(s), as applicable, considers it

reasonably necessary to obtain a license to any intellectual property rights of a Third Party (a “Third Party License”) […***…] in order to avoid infringing such Third Party’s intellectual property rights in the course of the manufacture, use, offer for sale, sale or importation of a Licensed Product, Sequenom or such Sequenom Affiliate may obtain a Third Party License and […***…]% of any payment made to such Third Party under such Third Party License during any Calendar Year shall be credited against the royalties due to Optherion under this Agreement during such Calendar Year; provided, however, that (a) […***…]; and (b) subject to Section 4.6 and subject to any limitations or royalty floors specified in the applicable In-License Agreement, in no event may the aggregate royalty owed by Sequenom to Optherion with respect to any Licensed Product under Section 4.3 be reduced below […***…]% (the “Royalty Floor”); provided that, if Sequenom terminates the sublicenses granted to it by Optherion under the […***…] Agreement and/or the […***…] Agreement pursuant Section 9.2(d)(ii), then the Royalty Floor shall be reduced to […***…]% in the case of such termination with respect to one such In-License Agreement and to […***…]% in the case of such termination with respect to both such In-License Agreements.

(b) Additional Markers. In the event that Sequenom or any Sequenom Affiliate(s), as applicable, proposes to add new diagnostic marker(s) that improve the sensitivity and/or specificity of a Licensed Product and, in connection therewith, it would be necessary for Sequenom or such Sequenom Affiliate(s) to obtain a license to any intellectual property rights of a Third Party not otherwise constituting a Third Party License, then Sequenom may notify Optherion thereof in writing, in which case Optherion shall use commercially reasonable efforts to negotiate an amendment to the In-License Agreements (and corresponding amendments to this Agreement that provide for sharing by Sequenom and Optherion of any reductions in payments under the In-License Agreements) in order to make the addition of such marker(s) commercially and otherwise desirable to Optherion and Sequenom.

(c) Credit for Infringement Litigation Expenses Under In License Agreements. In addition, to the extent that Sequenom brings the infringement action pursuant to Section 6.2, to the extent that Optherion’s obligation to pay royalties on Net Sales of a Licensed Product under the […***…] Agreement and/or the […***…] Agreement is reduced by the amount of the expenses and costs of an infringement action with respect to the […***…] Patents and/or the […***…] Patents, as provided and subject to any limitations or royalty floors specified in the applicable In-License Agreement, then the total […***…]% royalty rate set forth in Section 4.3 shall be reduced by the amount of such royalty credit or reduction specified in such In-License Agreements.


4.6 Payments Under In-License Agreement; Effect of Termination of In-License Agreement. Except as expressly provided in this Agreement, Optherion shall be solely responsible for the payment of all payments due under the In-License Agreements as a result of activities under this Agreement. To the extent that Optherion’s obligation to pay milestone payments and/or royalties on Net Sales of a Licensed Product in any country to any Upstream Licensor under any In-License Agreement terminates under the terms of such In-License Agreement because such In-License Agreement is terminated, then (a) with respect to milestones, if a milestone payment owed by Sequenom with respect such In-License Agreement corresponds directly to a milestone owed by Optherion to the applicable Upstream Licensor, then such milestone payment payable by Sequenom to Optherion shall be reduced solely by the amount of the milestone payments under such In-License Agreement that Optherion is no longer obligated to pay (but not by the amount in excess of such amount that Optherion is no longer obligated to pay, which shall still be due and payable by Sequenom to Optherion), and the milestone payments set forth in Schedule 6, Schedule 7, Schedule 8, Schedule 9, and/or Schedule 10, as applicable, shall be adjusted to reflect such reduction; and (b) with respect to royalties, the total […***…]% royalty rate set forth in Section 4.3 for sales of such Licensed Product in such country and the Royalty Floor under Section 4.5(a) shall be reduced by the corresponding royalty allocated to such In-License Agreement under the Royalty Allocation, and the royalties set forth in Schedule 6, Schedule 7, Schedule 8, Schedule 9, and/or Schedule 10, as applicable, shall be deemed modified to remove the royalty payments with respect to such In-License Agreement.

5. Payment; Records; Audits 5.1 Payment; Reports. Each payment due under Section 4.3 or Section 4.4 shall be accompanied by a report of (a) in the case

of 4.3 and 4.4(a), Net Sales in sufficient detail to permit confirmation of the accuracy of the payment made, including, on a country-by-country basis, the Net Sales of Licensed Products, and the exchange rates used, and (b) in the case of 4.4(b), an itemization of all non-royalty sublicensing consideration and all exclusions therefrom. Sequenom shall keep, and shall cause the Sequenom Affiliates and their respective sublicensees to keep, complete and accurate records pertaining to the sale or other disposition of Licensed Products in the Field and in the case of Sequenom and the Sequenom Affiliates payments received as contemplated under Section 4.4 in sufficient detail to permit Optherion to confirm the accuracy of all payments due hereunder. Each such report shall be certified as correct to the knowledge of an officer of Sequenom.

5.2 Exchange Rate; Manner and Place of Payment. All payments to Optherion hereunder shall be payable in U.S. dollars. When conversion of payments from any foreign currency is required, such conversion shall be at an exchange rate equal to the weighted average of the rates of exchange for the currency of the country from which the payments are payable as published by The Wall Street Journal, Western U.S. Edition, for the Calendar Quarter in which such sales were made. All payments owed to Optherion under this Agreement shall be made by wire transfer in immediately available funds to a bank and account designated in writing by Optherion, unless otherwise specified in writing by Optherion.

5.3 Income Tax Withholding. Optherion will pay any and all income taxes levied on account of Optherion’s income arising from payments made by Sequenom to it under this Agreement. If any taxes are required to be withheld by Sequenom, Sequenom will (a) deduct such taxes from the payment made to Optherion, (b) timely pay the taxes to the proper taxing authority, (c) send proof of payment to Optherion and certify its receipt by the taxing authority within 30 days following such payment, and (d) provide Optherion with any reasonable assistance deemed necessary or desirable by Optherion in connection with Optherion receiving reimbursement or credit with respect thereto from the applicable governing taxing authorities.


5.4 Audits. During the Term and for a period of […***…] years thereafter (or longer to the extent required by any In-License Agreement), Sequenom shall keep (and shall cause Sequenom Affiliates and their respective sublicensees to keep) complete and accurate records pertaining to the sale or other disposition of Licensed Products in the Field in sufficient detail to permit Optherion or its designee to confirm the accuracy of all payments due hereunder and to report to the Upstream Licensor in accordance with the terms of the In-License Agreements. Optherion shall have the right to cause an independent, certified public accountant reasonably acceptable to Sequenom to audit such records to confirm Net Sales and payments for a period covering not more than the three years preceding the date the applicable payment was made. Such audits may be exercised during normal business hours upon a minimum of 20 days prior written notice to Sequenom, but no more frequently than once per year. Prompt adjustments shall be made by the parties to reflect the results of such audit. Optherion shall bear the full cost of such audit unless such audit discloses an underpayment by Sequenom of more than […***…]% of the amount of royalty payments due as provided in this Agreement (or such lesser amount in the case that Optherion is required to bear such costs pursuant to the applicable In-License Agreement), in which case, Sequenom shall bear all reasonable costs of such audit and shall promptly remit to Optherion the amount of any underpayment. Without limiting the foregoing and in addition thereto, Sequenom shall be subject to the audit provisions of the applicable In-License Agreement with regard to payments by Sequenom under such In-License Agreement pursuant to this Agreement.

6. Intellectual Property Matters 6.1 Patent Prosecution and Maintenance. Sequenom acknowledges and agrees that, under the In-License Agreements, the

Upstream Licensors have retained the first, if not the sole, right to file, prosecute and maintain Patents included in the Optherion Patents. As between Optherion and Sequenom, but subject to the other provisions of this Section 6.1, Sequenom shall have the right to direct the filing, prosecution and maintenance of the Optherion Patents in the Field (including direct communication with Optherion’s outside patent counsel doing such filing, prosecution or maintenance, subject to execution of appropriate documentation, as reasonably requested by Optherion, to preserve Optherion’s attorney-client privilege, and provided that Sequenom shall bear the cost of such patent counsel’s legal fees and expenses) only to the extent Optherion has such rights under the applicable In-License Agreement […***…]. Each party shall keep the other informed of progress with regard to the prosecution and maintenance of the Optherion Patents in the Field, shall provide the other with copies of official actions, amendments and responses with respect to such prosecution and maintenance, and shall cooperate with the Upstream Licensors in connection therewith to the extent required by the applicable In-License Agreements. If Sequenom determines that it desires not to file an application (for example, in a specific country) or to discontinue any prosecution or maintenance of any Optherion Patents in any country, it shall notify Optherion thereof and, if requested by Optherion, consult with Optherion in connection therewith. In making such determination, Sequenom shall consider in good faith the impact, if any, that the applicable Optherion Patent(s) would have on the economic value of Licensed Products and whether the applicable Optherion Patent(s) constitute “core” technology with respect to applicable family of Optherion Patents. If Sequenom decides not to file or does not pursue prosecution or maintenance of any Optherion Patents in any country, to the extent Sequenom has such rights under this Section 6.1, it shall provide Optherion with written notice thereof and, after the expiration of the applicable notice period that Optherion must provide to the Upstream Licensor under the applicable In-License Agreement, Sequenom shall immediately be deemed to surrender its rights and license with respect to the specific Optherion Patent(s) in the specific country or countries in which it has decided not to file, not to pursue or not to maintain such Optherion Patent(s) to Optherion, and Optherion shall thereafter have the right to exercise all of Optherion’s rights under the applicable In-License Agreement with respect to the filing, prosecution and maintenance of such specific Optherion Patent(s) at Optherion’s own expense and otherwise without any further notice or reporting obligation to Sequenom. Subject to the immediately preceding sentence, as between Optherion and Sequenom, Sequenom shall be responsible for all fees associated with filing, prosecuting and maintaining the Optherion Patents that Optherion would otherwise be responsible for under the In-License Agreements, provided, however, that if at any point during the Term Optherion is refunded any of these fees previously paid by Sequenom under the […***…] Agreement, Optherion will promptly refund Sequenom the exact amount received by Optherion. On the Effective Date, Sequenom will reimburse Optherion a total amount of US$1,071,650.73 for costs and expenses actually incurred by Optherion prior to the Effective Date in connection with the filing, prosecution and maintenance of the Optherion Patents in the Field prior to the Effective Date. […***…]. Optherion shall promptly provide to Sequenom, or cause the applicable Upstream Licensor to provide to Sequenom, all information and notices regarding filing, prosecution and maintenance of the Optherion Patents that such Upstream Licensor provides to Optherion under the applicable In-License Agreement.


6.2 Infringement by Third Parties. Sequenom shall have the right to enforce and defend the Optherion Patents in the Field only to the extent of Optherion’s rights under the applicable In-License Agreements with respect thereto. In the event Sequenom does not commence an enforcement and/or defense action pursuant this Section 6.2 within […***…] after Sequenom first notifies Optherion or Optherion first notifies Sequenom of potential infringement of the Optherion Patents (or of the filing of a declaratory judgment action, in the case of defense actions), Optherion shall be entitled to bring and prosecute such an action at its own expense. Upon the written request of the party bringing the action, to the extent required by law the other party shall agree to be named as a nominal party to such action. Except as otherwise agreed by the parties as part of a cost-sharing arrangement, any recovery obtained by either party in connection with or as a result of any action contemplated by Section 6.2, whether by settlement or otherwise, shall be distributed in order as follows: (a) each of Optherion and Sequenom, as well as any Upstream Licensor involved in such action, will be reimbursed for its respective reasonable out-of-pocket costs and expenses incurred in connection with the action to the extent not previously credited against royalties due under an In-License Agreement as permitted therein; (b) […***…]; (c) […***…]; and (d) […***…]. Neither party shall have the right to settle any patent infringement action under this Section 6.2 in a manner that diminishes the rights or interests of the other party without the written consent of such other party, which consent shall not be unreasonably withheld or delayed.

6.3 Infringement of Third Party Rights. Each party shall promptly notify the other in writing of any allegation by a Third Party that the activities of either party contemplated by this Agreement infringe or may infringe the intellectual property rights of such Third Party. Optherion shall have the sole right to control any defense of any such claim involving alleged infringement of Third Party rights by Optherion’s activities, at its own expense and by counsel of its own choice, and Sequenom shall have the right, at its own expense, to be represented in any such action by counsel of its own choice. Sequenom shall have the sole right to control any defense of any such claim involving alleged infringement of Third Party rights by Sequenom’s activities at its own expense and by counsel of its own choice, and Optherion shall have the right, at its own expense, to be represented in any such action by counsel of its own choice. Neither party shall have the right to settle any patent infringement litigation under this Section 6.3 in a manner that diminishes the rights or interests of the other party without the written consent of such other party, which consent shall not be unreasonably withheld or delayed.


6.4 Marking. To the extent required by any applicable In-License Agreement, Licensed Products shall be marked, including with the patent numbers of issued patents within the Optherion Technology that cover such Licensed Products or, if applicable, marked to indicate “patent pending” status, each to the extent permitted by law.

7. Representations and Warranties; Disclaimer 7.1 Mutual Representations and Warranties. Each party represents and warrants to the other that: (a) it is duly organized and

validly existing under the laws of its jurisdiction of incorporation or formation, and has full corporate or other power and authority to enter into this Agreement and to carry out the provisions hereof; (b) it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person or persons executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate or partnership action; and (c) this Agreement is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any material agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

7.2 Optherion Representations and Warranties. Optherion represents and warrants to Sequenom that, as of the Effective Date:

(a) the Optherion Technology is owned by Optherion or licensed to Optherion pursuant to the In-License Agreements;

(b) Optherion does not own or Control any Patents or Know-How necessary or useful for the manufacture, use, sale, offer for sale or importation of any product, service or process in the Field for detection of any gene or genes implicated for age-related macular degeneration other than the Optherion Technology except pursuant to (i) the non-exclusive License Agreement dated […***…] by and between Optherion and […***…], and (ii) the non-exclusive License Agreement dated […***…] by and between Optherion, […***…];

(c) […***…];

(d) (i) Optherion has complied with the requirements of the […***…], and (ii) […***…];

(e) Optherion has the right, power and authority to grant the license and sublicenses contemplated under this Agreement;


(f) Optherion has provided Sequenom a true and complete copy of each In-License Agreement (with certain confidential information redacted), and, to the best of Optherion’s actual knowledge, each In-License Agreement is in full force and effect in accordance with its respective terms;

(g) Optherion is in compliance in all material respects with its obligations under the In-License Agreements and, to the best of Optherion’s actual knowledge, (i) no Upstream Licensor has breached its respective In-License Agreement in any material respect, and (ii) there is no basis for termination of any of the In-License Agreements;

(h) Except as set forth in the In-License Agreements, to the best of Optherion’s actual knowledge, there is no royalty or other license payment obligations to any Third Party with respect to the development, manufacture, use, offer for sale, sale or importation of Licensed Products in the Field;

(i) To Optherion’s actual knowledge […***…] no issued claim in any Patents owned by a third party blocks commercial exploitation of the Optherion Technology of […***…], and Optherion has not received any written notice, and is not aware of any threat or claim, that the practice of the Optherion Technology to develop or commercialize the Licensed Products in the Field infringes or misappropriates any alleged rights of any Third Party;

(j) To Optherion’s actual knowledge, (A) the issued Optherion Patents in existence on the Effective Date are not invalid or unenforceable, and (B) Optherion is not aware of any issued Patents owned or controlled by a Third Party with a claim, or of any published application having a specification which would support a claim owned or controlled by a Third Party, that would block commercial exploitation of the Optherion Technology of correlating detected SNPs or haplotypes in the genome of presenting patients to risk of development or prognosis of AMD […***…] and

(k) Optherion has not received written notice concerning the institution or possible institution of any interference, reexamination, reissue, revocation or nullification proceeding involving any issued Optherion Patents.

7.3 Optherion Covenant. Optherion covenants and agrees that it shall not […***…], without the prior written consent of Sequenom.

7.4 Mutual Disclaimer. Except as expressly set forth herein, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE, THE TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS PROVIDED HEREUNDER (INCLUDING, WITHOUT LIMITATION, THE OPTHERION TECHNOLOGY) ARE PROVIDED “AS IS” AND EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH RESPECT THERETO. Without limiting the generality of the foregoing, each party expressly does not warrant the success of any Licensed Product or the safety or usefulness for any purpose of the technology (including, without limitation, the Optherion Technology) it provides hereunder.


7.5 Limitation of Liability. NEITHER PARTY NOR ITS AFFILIATES SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY OR ITS AFFILIATES ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE OR SUBLICENSE GRANTED HEREUNDER; provided, however, that this Section 7.5 shall not be construed to limit (a) either party’s indemnification obligations under Section 10 with respect to amounts paid to Third Party claimants for Third Party claims, or (b) either party’s remedies for breach by the other party of the obligations set forth in Section 8.

8. Confidentiality 8.1 Confidential Information. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by

the parties, the parties agree that, during the Term and for five years thereafter, the receiving party shall keep confidential and shall not publish or otherwise disclose and shall not use for any purpose other than as expressly provided for in this Agreement any Information furnished to it by the other party pursuant to this Agreement (collectively, “Confidential Information”). Each party may use such Confidential Information only to the extent required to accomplish the purposes of this Agreement. Each party will use at least the same standard of care as it uses to protect proprietary or confidential information of its own (but no less than reasonable care) to ensure that its employees, agents, consultants and other representatives do not disclose or make any unauthorized use of the Confidential Information. Each party will promptly notify the other upon discovery of any unauthorized use or disclosure of the Confidential Information. For the avoidance of doubt, the Optherion Technology and the terms of the In-License Agreements constitute Confidential Information of Optherion.

8.2 Exceptions. Confidential Information shall not include any information which the receiving party can prove by competent written evidence: (a) is now, or hereafter becomes, through no act or failure to act on the part of the receiving party, generally known or available; (b) is known by the receiving party at the time of receiving such information, as evidenced by its records; (c) is hereafter furnished to the receiving party by a Third Party, as a matter of right and without restriction on disclosure; (d) is independently discovered or developed by the receiving party without the use of Confidential Information belonging to the disclosing party; or (e) is the subject of a written permission to disclose provided by the disclosing party.

8.3 Authorized Disclosure. Each party may disclose Confidential Information belonging to the other party to the extent such disclosure is reasonably necessary in the following instances:

(a) prosecuting or defending litigation as permitted by this Agreement;

(b) complying with applicable court orders or governmental regulations; and

(c) in the case of Sequenom, on a need-to-know basis, in conducting development and/or commercialization activities in accordance with the licenses and sublicenses granted hereunder; provided that the recipient of such Confidential Information agrees to be bound by similar terms of confidentiality and non-use at least equivalent in scope to those set forth in this Section 8; Sequenom-Optherion License Agreement – Confidential 23

(d) in the case of Optherion, disclosure to the Upstream Licensors to the extent required to comply with the In-License Agreements; and

(e) disclosure to Affiliates, sublicensees (and potential sublicensees), employees, consultants and agents in connection with performance of activities contemplated by this Agreement or to other Third Parties in connection with due diligence or similar investigations by such Third Parties, including disclosure to current or potential Third Party lenders or investors in confidential financing documents (or to maintain compliance with agreements with such lenders or investors), provided, in each case, that any such Affiliate, sublicensee, employee, consultant, agent or Third Party agrees to be bound by similar terms of confidentiality and non-use at least equivalent in scope to those set forth in this Section 8.

Notwithstanding the foregoing, in the event a party is required to make a disclosure of the other party’s Confidential Information pursuant to Section 8.3(a) or (b), it will, except where impracticable, give reasonable advance notice to the other party of such disclosure and use efforts to secure confidential treatment of such information at least as diligent as such party would use to protect its own confidential information, but in no event less than reasonable efforts. In any event, the parties agree to take all reasonable action to avoid disclosure of Confidential Information hereunder. The parties will consult with each other on the provisions of this Agreement to be redacted in any filings made by the parties with the Securities and Exchange Commission or as otherwise required by applicable laws, rules or regulations, and agree that any provisions of this Agreement that are so redacted shall be considered the Confidential Information of both parties.

8.4 Prior Nondisclosure Agreement. As of the Effective Date, the terms of this Section 8 shall supersede any prior non-disclosure, secrecy or confidentiality agreement between the parties dealing with the subject of this Agreement, including the Confidentiality Agreement, dated May 26, 2009. Any information disclosed under such prior agreements shall be deemed Confidential Information disclosed under this Agreement.

8.5 Names of Upstream Licensors. To the extent required under any In-License Agreement, Sequenom will not use the name or insignia of any Upstream Licensor, or any adaptation thereof or the name of any of the faculty and staff thereof, in any advertising, promotional or sales literature without the prior written approval of Optherion (and of the applicable Upstream Licensor, which Optherion will request to the extent required) unless required by applicable laws, rules or regulations.

9. Term and Termination 9.1 Term. The term of this Agreement (the “Term”) shall commence on the Effective Date and continue in each country until

the expiration of the obligation to make payments under Section 4.3 in such country, unless earlier terminated in accordance with Section 9.2. After the expiration of this Agreement, on a country-by-country basis, Sequenom will retain the licenses and sublicenses granted under Section 2.1, except that such licenses and sublicenses shall be fully paid-up and royalty-free, to the extent permitted under the applicable In-License Agreement in the case of Optherion Technology licensed to Optherion pursuant to such In-License Agreement. Sequenom-Optherion License Agreement – Confidential 24

9.2 Termination. (a) Termination for Cause. A party shall have the right to terminate this Agreement as follows:

(i) upon written notice to the other party upon or after the bankruptcy, dissolution or winding up of such other party, or the making or seeking to make or arrange an assignment for the benefit of creditors of such other party, or the initiation of proceedings in voluntary or involuntary bankruptcy, which proceeding or action remains undismissed or unstayed for a period of more than […***…];

(ii) upon written notice to the other party upon or after the breach of any payment obligation under this Agreement if the breaching party has not cured such breach within the 10-business day period following receipt of written notice of termination by the non-breaching party; or

(iii) upon written notice to the other party upon or after the breach of any material provision of this Agreement by such other party (except for any payment breach, which shall be governed by Section 9.2(a)(ii)) if the breaching party has not cured such breach within the 60-day period following written notice of termination by the non-breaching party (provided that such cure period shall not apply with respect to failure to achieve milestone targets by the applicable dates).

(b) Termination for Failure to Obtain Replacement Insurance Coverage Following Cancellation, Non-Renewal or Material Adverse Change in Existing Insurance Coverage. Optherion may terminate this Agreement upon written notice to Sequenom if Sequenom does not obtain replacement insurance providing comparable coverage within fifteen (15) days after providing written notice to Optherion regarding the cancellation, non-renewal or material adverse change in Sequenom’s insurance coverage as set forth in Section 10.4(b), unless Sequenom obtains such replacement insurance providing comparable coverage retroactive to the date of cancellation, non-renewal or material adverse change.

(c) Termination for Patent Challenge or Suspension. (i) Optherion may terminate this Agreement upon written notice to Sequenom if Sequenom or any of its Affiliates or

any of its or their respective sublicensees, or any entity or person acting directly on any of their behalf and direction with their knowledge, (A) challenges or causes to be challenged the validity or enforceability of the […***…] Patent Rights or the […***…] ownership of the […***…] Patents anywhere in the world, (B) initiates, or elects to participate (i.e. is not named as a party thereto by circumstance outside of its reasonable control) as a named-party in any formal legal challenge brought before a court or governmental body of competent jurisdiction to the validity or enforceability of any […***…] Patent including, without limitation, by (1) filing a declaratory judgment action in which any […***…] Patent is alleged to be invalid or unenforceable; (2) citing prior art pursuant to 35 U.S.C. § 301, filing a request for re-examination of any […***…] Patent pursuant to 35 U.S.C. § 302 and/or § 311 or provoking or becoming a direct and material party to an interference with an application for any Licensed Patent pursuant to 35 U.S.C. § 135; or (3) filing or commencing any re-examination, opposition, cancellation, nullity or similar proceedings against any […***…] Patent in any country; or (C) initiates any legal proceeding in a court of competent jurisdiction challenging the validity or enforceability of any of the […***…] Patents.


(ii) Optherion may terminate this Agreement or a portion hereof pursuant to Section 3.5(c) upon written notice to Sequenom.

(d) Termination without Cause. (i) Sequenom shall have the right to terminate this Agreement for any reason or no reason upon 90 days’ prior

written notice to Optherion. If Sequenom provides such notice to Optherion prior to the first anniversary of the Effective Date, Sequenom shall pay to Optherion, on the date it provides such notice, a non-creditable termination fee of US$2,000,000. For purposes of allocation of the termination fee among various In-License Agreements, the allocations set forth on Schedule 12 shall apply.

(ii) […***…].

9.3 Effect of Termination; Surviving Obligations. (a) Effect of Termination. Upon termination of this Agreement:

(i) all rights under the license and sublicense granted by Optherion to Sequenom under Section 2.1 shall automatically terminate and revert to Optherion; and

(ii) to the extent it is legally able to do so, Optherion shall offer to Sequenom’s sublicensees a license on the terms provided herein and subject to any further limitations set forth in the applicable sublicense agreement (including the same ongoing financial terms between such sublicensee and Sequenom), if such sublicensee is able to provide to Optherion written notice that the sublicensee: (A) reaffirms the terms and conditions of this Agreement as it relates to the rights the sublicensee has been granted under the sublicense; (B) agrees to abide by all of the terms and conditions of this Agreement applicable to such sublicensee and to discharge directly all pertinent obligations of Sequenom which Sequenom is obligated hereunder to discharge; (C) acknowledges that Optherion shall have no obligations to the sublicensee other than its obligations set forth in this Agreement with regard to Sequenom; (D) […***…]; and (E) is not in breach of its sublicense.

(b) Surviving Obligations. Expiration or termination of this Agreement shall not relieve the parties of any obligation accruing prior to such expiration or termination or any of Sequenom’s reporting obligations with respect to periods prior to such expiration or termination. Except as otherwise provided herein, the provisions of Sections 1, 2.3, 3.3(b)(ii) and (iii), 5.4 (for the period specified therein), 7.4, 7.5, 8, 9.3, 9.4, 9.5, 9.6, 10 and 11 shall survive the expiration or termination of this Agreement.


(c) Return of Confidential Information. Within 30 days following the expiration or termination of this Agreement, each party shall deliver to the other party any and all Confidential Information of such other party in its possession.

(d) Certain Termination Rights. Upon termination of this Agreement other than by Sequenom pursuant to Section 9.2(a) the following shall apply:

(i) In the event that, as of the effective date of such termination, on a country-by-country basis, Sequenom or any Sequenom Affiliate […***…], Sequenom hereby agrees that, from and after the effective date of such termination, […***…]; and

(ii) The parties hereby agree, upon written request by Optherion, to […***…]. For clarification, in no event shall this clause (ii) be interpreted to […***…].

9.4 Exercise of Right to Terminate. The use by either party hereto of a termination right provided for under this Agreement shall not give rise to the payment of damages or any other form of compensation or relief to the other party with respect thereto.

9.5 Damages; Relief. Subject to Section 9.4 above, termination of this Agreement shall not preclude either party from claiming any other damages, compensation or relief that it may be entitled to upon such termination.

9.6 Rights in Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by either party to the other party are, and will otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code. The parties agree that the parties, as licensees of such rights under this Agreement, will retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code. The parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either party under the U.S. Bankruptcy Code, the party hereto that is not a party to such proceeding will be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property […***…], and same, if not already in their possession, will be promptly delivered to them (a) upon any such commencement of a bankruptcy proceeding upon their written request therefor, unless the party subject to such proceeding elects to continue to perform all of its obligations under this Agreement, or (b) if not delivered under subsection (a) above, following the rejection of this Agreement by or on behalf of the party subject to such proceeding upon written request therefor by the non-subject party.

10. Indemnification 10.1 Indemnification by Optherion. Optherion hereby agrees to save, defend and hold Sequenom and its Affiliates and their

respective directors, officers, employees, agents, successors and assigns (each, a “Sequenom Indemnitee”) harmless from and against any and all demands, liabilities, expenses and/or losses, including reasonable legal expense and attorneys’ fees and expenses of litigation (collectively, “Losses”) to which any Sequenom Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any Third Party to the extent such Losses arise directly or indirectly out of: (a) the breach by Optherion or an Optherion Affiliate of any material warranty, representation, covenant or agreement made by Optherion or an Optherion Affiliate in this Agreement; or (b) the negligence or willful misconduct of Optherion or an Optherion Affiliate or any beneficiary of the rights granted by Sequenom under Sections 3.3(b) or 9.3(d), except, in each case, to the extent such Losses result from the negligence or willful misconduct of any Sequenom Indemnitee or the breach by Sequenom of any material warranty, representation, covenant or agreement made by Sequenom in this Agreement.


10.2 Indemnification by Sequenom.

(a) Of Optherion. Sequenom hereby agrees to save, defend and hold Optherion and its Affiliates and their respective directors, officers, employees, agents, successors and assigns (each, an “Optherion Indemnitee”) harmless from and against any and all Losses to which any Optherion Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any Third Party to the extent such Losses arise directly or indirectly out of: (i) the development, testing, manufacture, production, use, handling, storage, promotion, advertisement of, sale, lease or other disposition or consumption of any Licensed Product in the Field by Sequenom or any of its Affiliates or any of its or their respective sublicensees or by any vendors or Third Parties with regard to Licensed Products of Sequenom, its Affiliates or any of its or their respective sublicensees (including (A) any product liability or other claim of any kind related to use by a Third Party of a Licensed Product that was manufactured, sold or otherwise disposed of by Sequenom or any of its Affiliates or any of its or their respective sublicensees or by any vendors or Third Parties on behalf of Sequenom or any of its Affiliates or any of its or their respective sublicensees and/or the practice by Sequenom or any if its Affiliates or any of its or their respective sublicensees or any of its or their respective representatives of the Optherion Patents; (B) a claim by a Third Party that the design, composition, manufacture, use, sale or other disposition of any Licensed Product that was manufactured, sold or otherwise disposed of by Sequenom or any of its Affiliates or any of its or their respective sublicensees or by any vendors or Third Parties with regard to Licensed Products of Sequenom or any of its Affiliates or any of its or their respective sublicensees infringes or violates any patent, copyright, trade secret, trademark or other intellectual property right of such Third Party; and (C) a claim resulting from clinical trials or studies conducted by or on behalf of Sequenom, its Affiliates, or any of its or their respective sublicensees, assignees or vendors or Third Parties relating to the Optherion Technology, such as claims by or on behalf of a human subjects of any such trial or study); (ii) the breach by Sequenom or any Sequenom Affiliate of any material warranty, representation, covenant or agreement made by Sequenom or a Sequenom Affiliate in this Agreement; (iii) the negligence or willful misconduct of Sequenom or any of its Affiliates or any of its or their respective sublicensees; or (iv) any obligation of Optherion to indemnify the Upstream Licensors under the […***…] Agreement, the […***…] Agreement or the […***…] Agreement as a result of the violation by Sequenom or its Affiliates or any of its or their respective sublicensees of United States laws and regulations controlling the export of commodities and technical data with respect to Optherion Technology sublicensed to Sequenom pursuant to such In-License Agreement; except, in each case, to the extent such Losses result from the negligence or willful misconduct of any Optherion Indemnitee or the breach by Optherion of any material warranty, representation, covenant or agreement made by Optherion in this Agreement.


(b) Of […***…]. Sequenom hereby agrees to indemnify, hold harmless and defend […***…] and their respective current and former directors, governing board members, trustees, officers, faculty, medical and professional staff, employees, students, Affiliates (for purposes of this paragraph, as defined in the […***…] Agreement) and agents and their respective successors, heirs and assigns (collectively, the “[…***…] Indemnitees”) against any liability, damage, loss or expense (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon the […***…] Indemnitees or any of them in connection with any Third Party claims, suits, actions, demands or judgments arising out of (i) any theory of product liability (including but not limited to actions in the form of tort, warranty, or strict liability) concerning the practice by Sequenom, its Affiliates and/or any of its or their respective sublicensees of any […***…] Patents or the development, manufacture, use or sale by Sequenom, its Affiliates and/or any of its or their respective sublicensees of any […***…] Licensed Products developed, manufactured, used or sold by Sequenom, its Affiliates and/or any of its or their respective sublicensees; (ii) the negligence or willful misconduct of Sequenom, its Affiliates and/or any of its or their respective sublicensees; or (iii) the breach by Sequenom or any Sequenom Affiliate of any term of the […***…] Agreement expressly assumed by Sequenom under Section 2.3 of this Agreement. Sequenom will not be responsible for the indemnification or defense of the […***…] Indemnitees to the extent that any of the above claims is caused by the negligence or willful misconduct of any […***…] Indemnitee or any Optherion Indemnitee.

(c) Of […***…]. Sequenom shall indemnify, defend and hold […***…], its trustees, officers, employees and Affiliates (for purposes of this paragraph, as defined in the […***…] Agreement) (collectively, the “[…***…] Indemnitees”) harmless against all third party claims and expenses, including legal expenses and reasonable attorneys’ fees, except for claims based on a […***…] Indemnitee’s or Optherion Indemnitee’s gross negligence or willful misconduct, arising out of the death of or injury to any person or persons or out of any damage to property or the environment, and against any other third party claim, proceeding, demand, expense and liability of any kind whatsoever resulting from: (i) the production, manufacture, sale, use, lease, consumption or advertisement of the […***…] Licensed Products hereunder, (ii) the practice of the […***…] Patents by Sequenom, its Affiliates and/or any of its or their respective sublicensees or any of its or their respective representatives; (iii) arising from any obligation of Sequenom or any Sequenom Affiliate under any term of the […***…] Agreement expressly assumed by Sequenom or a Sequenom Affiliate under this Agreement; or (iv) any order for costs that may be made against the […***…] pursuant to an action brought by Sequenom described in Section 7.2 of the […***…] Agreement.

10.3 Control of Defense. Any entity entitled to indemnification under Section 10.1 or Section 10.2(a) shall give notice to the indemnifying party of any Losses that may be subject to indemnification, promptly after learning of such Losses, and the indemnifying party shall assume the defense of such Losses with counsel reasonably satisfactory to the indemnified party. If such defense is assumed by the indemnifying party with counsel so selected, the indemnifying party will not be subject to any liability for any settlement of such Losses made by the indemnified party without its consent (but such consent will not be unreasonably withheld or delayed), and will not be obligated to pay the fees and expenses of any separate counsel retained by the indemnified party with respect to such Losses. For indemnification claims under Section 10.2(b) or Section 10.2(c), the applicable provisions regarding the process of indemnification in the […***…] Agreement or the […***…] Agreement, respectively, shall apply.


10.4 Insurance. (a) Optherion. Optherion shall comply with the insurance requirements set forth in the In-License Agreements and, in

addition, shall, at its own expense, maintain insurance appropriate for its activities and obligations under this Agreement in an amount consistent with industry standards during the Term.

(b) Sequenom. Sequenom shall comply, and will cause Sequenom Affiliates and their respective sublicensees to comply, at all times, through insurance or self-insurance, with all statutory workers’ compensation and employers’ liability requirements covering any and all employees and consultants of Sequenom or Sequenom Affiliates or their respective sublicensees, as the case may be, with respect to activities performed under this Agreement. In addition to the foregoing, Sequenom shall maintain, and shall cause its Affiliates and their respective sublicensees to maintain, (a) during the Term and […***…], Comprehensive General Liability Insurance (including broad form contractual liability coverage for Sequenom’s indemnification obligations under this Agreement), and (b) commencing immediately prior to earlier of the First Commercial Sale or the first time a Licensed Product is being tested or used in or with humans, and continuing during the Term and […***…], Products Liability Insurance with reputable and financially secure insurance carrier(s) to cover the activities of Sequenom, its Affiliates and their respective sublicensees hereunder, as the case may be. Such insurance shall provide minimum aggregate and per incident limits of liability of […***…] Dollars ($[…***…]) (provided that until thirty (30) days prior to any testing of a Licensed Product in humans by Sequenom, its Affiliates or their sublicensee(s) in any clinical trials, such minimum aggregate limits shall be […***…] Dollars ($[…***…]), shall include Optherion and the Upstream Licensors as additional insureds and shall be written to cover claims incurred, discovered, manifested, or made during or after the expiration of this Agreement and should be placed with carriers with ratings of at least A VIII or better as rated by A.M. Best. Within five (5) business days after the Effective Date and from time to time upon request of Optherion, Sequenom shall promptly furnish, and shall cause its Affiliates and its and their respective sublicensees to furnish, to Optherion a Certificate of Insurance evidencing primary coverage and additional insured requirements. Sequenom shall provide Optherion fifteen (15) days prior written notice of cancellation, non-renewal or material adverse change thereof. All such insurance shall be primary coverage and any insurance obtained by Optherion or any of the Upstream Licensors in its discretion shall be deemed to be excess and noncontributory. The minimum amounts of insurance coverage required under this Section 10.4(b) shall not be construed to create a limit of Sequenom’s liability with respect to its indemnification under this Agreement.

11. General Provisions 11.1 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the

State of New York, without reference to its conflicts of law principles with the exception of sections 5-1401 and 5-1402 of New York General Obligations Law.


11.2 Entire Agreement; Modification. This Agreement is both a final expression of the parties’ agreement and a complete and exclusive statement with respect to all of its terms. This Agreement supersedes all prior and contemporaneous agreements and communications, whether oral, written or otherwise, concerning any and all matters contained herein. This Agreement may only be modified or supplemented in a writing expressly stated for such purpose and signed by the parties to this Agreement.

11.3 Relationship Between the Parties. The parties’ relationship, as established by this Agreement, is solely that of independent contractors. This Agreement does not create any partnership, joint venture or similar business relationship between the parties. Neither party is a legal representative of the other party, and neither party can assume or create any obligation, representation, warranty or guarantee, express or implied, on behalf of the other party for any purpose whatsoever.

11.4 Non-Waiver. The failure of a party to insist upon strict performance of any provision of this Agreement or to exercise any right arising out of this Agreement shall neither impair that provision or right nor constitute a waiver of that provision or right, in whole or in part, in that instance or in any other instance. Any waiver by a party of a particular provision or right shall be in writing, shall be as to a particular matter and, if applicable, for a particular period of time and shall be signed by such party.

11.5 Assignment. Except as expressly provided hereunder, neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by either party without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed; provided, however, that either party may assign this Agreement and its rights and obligations hereunder without the other party’s consent:

(i) in connection with the transfer or sale of all or substantially all of the business of such party in the Field to a Third Party, whether by merger, sale of stock, sale of assets or otherwise, provided that in the event of a transaction (whether this Agreement is actually assigned or is assumed by the acquiring party by operation of law (e.g., in the context of a reverse triangular merger)), intellectual property rights of the acquiring party in such transaction (if other than one of the parties to this Agreement) shall not be included in the intellectual property rights licensed under this Agreement; or

(ii) to an Affiliate; provided that the assigning party shall remain liable and responsible to the non-assigning party hereto for the performance and observance of all such duties and obligations by such Affiliate (including that Sequenom shall continue to be bound by the provisions of Sections 3.3(b) and 9.3(d) of this Agreement, notwithstanding such assignment or other transfer to an Affiliate of Sequenom);

so long as, in the case of (i) and (ii), the transferee agrees in writing to be bound by the terms hereof to the same extent as the transferring party.

The rights and obligations of the parties under this Agreement (including, without limitation, Sections 2.1, 3.3(b)(ii) and Section 9.3(d)(i)) shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties. Any assignment or other transfer not in accordance with this Section 11.5 shall be void. Sequenom-Optherion License Agreement – Confidential 31

[…***…].

11.6 No Third Party Beneficiaries. This Agreement is neither expressly nor impliedly made for the benefit of any party other than those executing it and, to the extent of the sublicense under the applicable In-License Agreement, each Upstream Licensor.

11.7 Severability. If, for any reason, any part of this Agreement is adjudicated invalid, unenforceable or illegal by a court of competent jurisdiction, such adjudication shall not affect or impair, in whole or in part, the validity, enforceability or legality of any remaining portions of this Agreement. All remaining portions shall remain in full force and effect as if the original Agreement had been executed without the invalidated, unenforceable or illegal part.

11.8 Notices. Any notice to be given under this Agreement must be in writing and delivered either in person, by any method of mail (postage prepaid) requiring return receipt, or by overnight courier or facsimile confirmed thereafter by any of the foregoing, to the party to be notified at its address(es) given below, or at any address such party has previously designated by prior written notice to the other. Notice shall be deemed sufficiently given for all purposes upon the earliest of: (a) the date of actual receipt; (b) if mailed, five days after the date of postmark; or (c) if delivered by overnight courier, the next business day the overnight courier regularly makes deliveries.

If to Sequenom, notices must be addressed to:

Sequenom, Inc. 3595 John Hopkins Court San Diego, California 92121 Attention: Chief Executive Officer Telephone: (858) 202-9000 Facsimile: (858) 202-9001

If to Optherion, notices must be addressed to:

Optherion, Inc. 555 Long Wharf Drive, 11 Floor New Haven, Connecticut 06511 Attention: President and CEO Telephone: (203) 781-0072 Facsimile: (203) 492-0299

with a copy to:

Sills Cummis & Gross P.C. One Riverfront Plaza Newark, New Jersey 07102 Facsimile: (973) 643-6500 Attn: Ira A. Rosenberg, Esq.

***Confidential Treatment Requested

Sequenom-Optherion License Agreement – Confidential 32

th

11.9 Force Majeure. Each party shall be excused from liability for the failure or delay in performance of any obligation under this Agreement (other than payment of amounts due) by reason of any event beyond such party’s reasonable control, including acts of God, fire, flood, explosion, earthquake, or other natural forces, war, civil unrest, accident, destruction or other casualty, any lack or failure of transportation facilities or any other event similar to those enumerated above. Such excuse from liability shall be effective only to the extent and duration of the event(s) causing the failure or delay in performance and provided that the party has not caused such event(s) to occur. Notice of a party’s failure or delay in performance due to force majeure must be given to the other party within 10 days after its occurrence. Any delivery dates under this Agreement that have been affected by force majeure shall be tolled for the duration of such force majeure. In no event shall any party be required to prevent or settle any labor disturbance or dispute. Notwithstanding the foregoing, should the event(s) of force majeure suffered by a party extend beyond a three-month period, the other party may then terminate this Agreement by written notice to the non-performing party, with the consequences of such termination as set forth in Sections 9.3, 9.4 and 9.5. Notwithstanding the foregoing, the parties acknowledge that similar provisions with respect to force majeure are not included in every In-License Agreement and that, to the extent not so provided, the provisions of this Section 11.9 shall not apply.

11.10 Interpretation. (a) Captions and Headings. The captions and headings of clauses contained in this Agreement preceding the text of the

articles, sections, subsections and paragraphs hereof are inserted solely for convenience and ease of reference only and shall not constitute any part of this Agreement, or have any effect on its interpretation or construction.

(b) Singular and Plural; Interpretation of Other Terms. All references in this Agreement to the singular shall include the plural where applicable, and all references to gender shall include both genders and the neuter. Use of the word “including” in this Agreement shall be deemed to be followed by the phrase “without limitation” or like expression and shall not be construed to limit any general statement which it follows to the specific or similar items or matters immediately following it. Each accounting term used herein that is not specifically defined herein shall have the meaning given to it under GAAP consistently applied, but only to the extent consistent with its usage and the other definitions in this Agreement.

(c) Articles, Sections and Subsections. Unless otherwise specified, references in this Agreement to any article shall include all sections, subsections, and paragraphs in such article; references in this Agreement to any section shall include all subsections and paragraphs in such sections; and references in this Agreement to any subsection shall include all paragraphs in such subsection.

(d) Days. All references to days in this Agreement shall mean calendar days, unless otherwise specified.

(e) Ambiguities. Ambiguities and uncertainties in this Agreement, if any, shall not be interpreted against either party, irrespective of which party may be deemed to have caused the ambiguity or uncertainty to exist. Sequenom-Optherion License Agreement – Confidential 33

(f) English Language. This Agreement has been prepared in the English language and the English language shall control its interpretation. In addition, all notices required or permitted to be given hereunder, and all written, electronic, oral or other communications between the parties regarding this Agreement shall be in the English language.

11.11 Counterparts; PDF and Facsimile. This Agreement may be executed in two counterparts, each of which shall be deemed an original document, and both of which, together with this writing, shall be deemed one instrument. This Agreement may be executed and delivered by PDF electronic or facsimile and upon such delivery the PDF electronic of facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party.

[Remainder of this page intentionally left blank.] Sequenom-Optherion License Agreement – Confidential 34

IN WITNESS WHEREOF, the parties hereto have duly executed this LICENSE AGREEMENT as of the Effective Date.

SIGNATURE PAGE TO LICENSE AGREEMENT

OPTHERION, INC. SEQUENOM, INC.

By: /s/ Colin J. Foster By: /s/ Harry F. Hixson, Jr., Ph.D. Name: Colin J. Foster Name: Harry F. Hixson, Jr., Ph.D. Title: President and Chief Executive Officer Title: Chief Executive Officer

SEQUENOM-OPTHERION LICENSE AGREEMENT – CONFIDENTIAL

SCHEDULE 1 […***…] Patents

All patent rights represented by or issuing from:

(a) the United States and foreign issued patents and patent applications listed below;

(b) all patent applications filed in any jurisdiction corresponding to or claiming priority from the patents and/or patent applications referred to in the foregoing clause (a);

(c) all divisionals and continuations of the patent applications referred to in the foregoing clauses (a) and (b);

(d) all patents issuing from the patent applications referred to in the foregoing clauses (a), (b) and (c);

(e) all reissues, re-examination certificates, registrations, confirmations, extensions, substitutions, renewals and supplementary protection certificates of the patents and/or patent applications referred to in the foregoing clauses (a), (b), (c) and (d); and

(f) all foreign counterparts of the patents and patent applications referred to in the foregoing clauses (a), (b), (c), (d) and (e).


Docket No. Application No. Country Filing Date Title Status

[...***...]





(c) all divisionals, continuations and continuations-in-part (to the extent owned or co-owned and controlled by any of […***…]) of the patent applications referred to in the foregoing clauses (a) and (b);

(d) all patents issuing from the patent applications referred to in the foregoing clauses (a), (b) and (c);

(e) all reissues, re-examination certificates, registrations, confirmations, extensions, substitutions, renewals and supplementary protection certificates of the patent and/or patent applications referred to in the foregoing clauses (a), (b), (c) and (d); and

(f) all foreign counterparts of the patents and patent applications referred to in the foregoing clauses (a), (b), (c), (d) and (e).


Country Type Serial Number

Publication Number Filing Date Status UNIVERSITY CASE

NUMBER

[...***...]



All intellectual property rights represented by or issuing from:



(c) all divisionals and continuations of the patent applications referred to in the foregoing clauses (a) and (b);

(d) continuations-in-part of the patent applications referred to in the foregoing clauses (a), (b) and (c) but only where such claims are directed to inventions disclosed in the manner provided in the first paragraph of 35 U.S.C. Section 112 in the United States patent applications listed below, and such claims in any patents issuing from such continuation-in-part applications;

(e) all patents issuing from the patent applications referred to in the foregoing clauses (a), (b), (c) and (d);

(f) all reissues, re-examination certificates, registrations, confirmations, extensions, substitutions, renewals and supplementary protection certificates of the patent and/or patent applications referred to in the foregoing clauses (a), (b), (c), (d) and (e); and

(g) all foreign counterparts of the patents and patent applications referred to in the foregoing clauses (a), (b), (c), (d), (e) and (f).


DOCKET # SERIAL NO. FILED TITLE (INVENTORS)

CASE STATUS/ACTION

DUE COMMENTS

[...***...]



A. […***…] PATENT RIGHTS: All intellectual property rights represented by or issuing from:

(a) the United States and foreign issued patents and patent applications listed in section 1 below;

(b) the invention disclosures listed in section 1 below and any patents and patent applications that are filed or issue therefrom, except for those listed section 2 below;

(c) all patent applications filed in any jurisdiction corresponding to or claiming priority from the patents and/or patent applications referred to in the foregoing Sections (a) and (b), except for those listed in section 2 below;

(d) all divisionals, continuations and continuations-in-part of the patent applications referred to in the foregoing Sections (a), (b) and (c), except for those listed in section 2 below;

(e) all patents issuing from the patent applications referred to in the foregoing Sections (a), (b), (c) and (d), except for those listed in section 2 below;

(f) all reissues, re-examination certificates, registrations, confirmations, extensions, substitutions, renewals, amendments and supplementary protection certificates of the patent and/or patent applications referred to in the foregoing Sections (a) through (e), except for those listed in section 2 below; and

(g) all foreign counterparts of the patents and patent applications referred to in the foregoing Sections (a) through (f), except for those listed in section 2 below.

Section 1. The following patents and patent applications shall constitute […***…] Patent Rights

Section 2. The following patents and patent applications shall be excluded from […***…] Patent Rights



[...***...]


[...***...]


B. […***…] PATENT RIGHTS: All intellectual property rights represented by or issuing from:


(b) the invention disclosures listed below and any patents and patent applications that are filed or issue therefrom;

(c) all patent applications filed in any jurisdiction corresponding to or claiming priority from the patents and/or patent applications referred to in the foregoing Sections (a) and (b);

(d) all divisionals, continuations and continuations-in-part of the patent applications referred to in the foregoing Sections (a), (b) and (c);

(e) all patents issuing from the patent applications referred to in the foregoing Sections (a), (b), (c) and (d);

(f) all reissues, re-examination certificates, registrations, confirmations, extensions, substitutions, renewals, amendments and supplementary protection certificates of the patent and/or patent applications referred to in the foregoing Sections (a) through (e); and

(g) all foreign counterparts of the patents and patent applications referred to in the foregoing Sections (a) through (f)



[...***...]



All intellectual property rights represented by or issuing from:

(a) the United States and foreign issued patents and patent applications listed in section 1 below;

(b) the invention disclosures listed in section 1 below and any patents and patent applications that are filed or issue therefrom, except for those listed in section 2 below;

(c) all patent applications filed in any jurisdiction corresponding to or claiming priority from the patents and/or patent applications referred to in the foregoing Sections (a) and (b), except for those listed in section 2 below;

(d) all divisionals, continuations and continuations-in-part of the patent applications referred to in the foregoing Sections (a), (b) and (c), except for those listed in section 2 below;

(e) all patents issuing from the patent applications referred to in the foregoing Sections (a), (b), (c) and (d), except for those listed in section 2 below;

(f) all reissues, re-examination certificates, registrations, confirmations, extensions, substitutions, renewals, amendments and supplementary protection certificates of the patent and/or patent applications referred to in the foregoing Sections (a) through (e), except for those listed in section 2 below; and

(g) all foreign counterparts of the patents and patent applications referred to in the foregoing Sections (a) through (f), except for those listed in section 2 below.

Section 1. The following patents and patent applications shall constitute […***…] Patent Rights

Section 2. The following patents and patent applications shall be excluded from […***…] Patent Rights



[...***...]


[...***...]


SCHEDULE 6 Milestones and Royalty Payments Under […***…] Agreement

The following milestone and royalty payments are payable in consideration of the sublicense granted under the […***…] Patents.

Part 1: Development, Patents and Cumulative Sales Milestones

Each of the above milestone payments shall be

Part 2: Royalty payable by Sequenom to Optherion under Section 4 allocated to […***…] Patents […***…] percent ([…***…]%) of Net Sales


Milestone Event Milestone Payment

1. […***…] US$[…***…]2. […***…] US$[…***…]3. […***…] US$[…***…]4. […***…] US$[…***…]5. First time that cumulative gross revenue of a Licensed Product is at least US$[…***…] US$[…***…]6. First time that cumulative gross revenue of a Licensed Product is at least US$[…***…] US$[…***…]7. First time that cumulative gross revenue of a Licensed Product is at least US$[…***…] US$[…***…]

• payable only once for the first achievement of such milestone event, regardless of how many times such milestone event is

achieved. • due to Optherion within […***…] following the first occurrence of each milestone event.


Attachment A to Schedule 6

[…***…]


SCHEDULE 7 Milestones and Royalty Payments Under

[…***…] Agreement







1. [...***...] US$[…***…]2. [...***...] US$[…***…]3. [...***...] US$[…***…]


achieved. • due to Optherion within […***…] following the first occurrence of each milestone event.








Notes: […***…]



1. […***…] US$[…***…]2. […***…] US$[…***…]3. […***…] US$[…***…]4. […***…] US$[…***…]5. First time that cumulative gross revenue of a Licensed Product is at least US$[…***…] US$[…***…]6. First time that cumulative gross revenue of a Licensed Product is at least US$[…***…] US$[…***…]7. First time that cumulative gross revenue of a Licensed Product is at least US$[…***…] US$[…***…]


achieved. • due to Optherion within […***…] following the first occurrence of each of the milestone event.


Attachment B to Schedule 8

Claim Set […***…]








[…***…]


[…***…]



1. […***…] US$[…***…]2. […***…] US$[…***…]3. […***…] US$[…***…]4. First achievement of annual Net Sales of at least US$[…***…] of a Licensed Product US$[…***…]5. First achievement annual Net Sales of at least US$[…***…] of a Licensed Product US$[…***…]


achieved.

• due to Optherion within […***…] following the first occurrence of each milestone event (except as specifically provided

above).





Part 1. Development, Patents and Cumulative Sales Milestones


[…***…]

Part 2: Royalty payable by Sequenom to Optherion under Section 4 allocated to […***…] Patents […***…] percent ([…***…]%) of Net Sales […***…]



1. Upfront Payment US$[…***…]2. Past Patent Cost Reimbursement US$[…***…]3. […***…] US$[…***…]4. […***…] US$[…***…]


achieved.

• due to Optherion within […***…] following the first occurrence of each milestone event (except that the Upfront Payment

and Past Patents Reimbursement are due on the Effective Date of this Agreement).


SCHEDULE 11

[…***…]


SCHEDULE 12 […***…]



SCHEDULE 13 OPTHERION AFFILIATES

None Sequenom-Optherion License Agreement – Confidential 51

SCHEDULE 14 SEQUENOM AFFILIATES

Sequenom Center for Molecular Medicine Sequenom-Optherion License Agreement – Confidential 52

SCHEDULE 15

List of Technology Materials to be transferred:


Document Description File name […***…]


SCHEDULE 16

Optherion, […***…], hereby sets forth the following patent documents:


Serial No./ Patent No. Country Title Assignee Filing Date

[…***…]


Exhibit 10.53

This Employment Agreement (this “Agreement”) is entered into between Sequenom, Inc. a Delaware corporation (the “Company”) and Harry F. Hixson, Jr. Ph.D. (“Employee”), on March, 13, 2010. In consideration of, and as a condition of Employee’s employment by the Company, and of the compensation to be paid to Employee by the Company, and in recognition of the fact that Employee will have access to the Company’s confidential, proprietary, and trade secret information, the Company and Employee agrees to the terms and conditions set forth in this Agreement as follows:

1. Employment. Director. 1.1 Employment. Effective as of September 28, 2009, Employee will be employed by the Company as its Chief Executive

Officer. Employee agrees that Employee’s employment with the Company is on an at-will basis, is for no specified term and may be terminated by the Company at any time, with or without Cause, and with or without notice. Employee may terminate employment with the Company at any time for any reason upon written notice as provided in Section 9 of this Agreement. Employee understands and agrees that the nature of Employee’s employment relationship with the Company cannot be changed or modified except by a written agreement signed by the Lead Director of the Board of Directors of the Company (the “Board”).

1.2 Director. This Agreement is intended only to cover the terms and conditions of Employee’s employment with the Company. The extent and terms of Employee’s service as a member and Chairman of the Board of Directors are not affected by this Agreement.

1.3 Duties of Employee. Employee shall report to the Board. Employee shall have overall responsibility for the management, direction, and operations of the Company. Employee shall perform such other duties and have such other responsibilities as may be assigned to Employee from time to time by the Board.

2. Loyalty. As long as Employee is employed by the Company, Employee shall devote full time and efforts to the Company and shall not, without the Company’s prior express written consent, engage directly or indirectly in any employment, consulting or business activity other than for the Company. Notwithstanding the foregoing, the Company agrees that Employee may continue to provide services as an employee of BrainCells Inc. through December 31, 2010, as a member of the board of directors of Arena Pharmaceuticals, Infinity Pharmaceuticals, NovaBay Pharmaceuticals, and BrainCells Inc., and as a member of the San Diego Opera Board of Directors and the Board of Directors of the San Diego-Imperial Council, Boy Scouts of America; provided that such outside services do not in Sequenom’s judgment interfere with Employee’s obligation to provide full time service to Sequenom as an executive and director. Employee may not accept any additional director, employment, consultant or other outside service, or any extension of any existing service, without seeking and obtaining approval from the Compensation Committee after providing the chair with all material information regarding the proposed new or extended service. Employee will refer to the Company all genetic analysis and molecular diagnostic corporate opportunities Employee learns of as a result of service as an employee of the Company.

3. Compensation and Benefits. 3.1 Salary. Employee’s annual base salary shall be $475,000, less standard deductions and withholdings, payable in

accordance with the Company’s standard payroll policy. Such base salary may be increased, subject to approval by the Compensation Committee of the Board.

3.2 Bonus. Employee shall be eligible for an annual performance bonus of up to 50% of Employee’s applicable annual base salary (the “Target Bonus”), less standard deductions and withholdings. The amount of the bonus, if any, will be determined by the Company’s and Employee’s performance against specific measurable corporate and personal goals established annually by the Compensation Committee of the Board. The Target Bonus shall be paid during the first quarter of the calendar year that follows the calendar year for which it was earned. For 2009, Employee shall receive a pro-rated annual bonus of $59,375 provided he is serving as Chief Executive as of December 31, 2009.

3.3 Stock Options. On October 21, 2009, the Company granted to Employee two stock options to purchase an aggregate of375,000 shares of the common stock of the Company, $0.001 par value per share (the “Common Stock”). The exercise price for both stock options was equal to the fair market value of the Common Stock on October 21, 2009, as determined by the Board. Both stock options have a 10 year term and become exercisable or “vest” in 12 equal monthly installments, in the case of the first option to purchase 187,500 shares of Common Stock, commencing on September 28, 2009 and for so long as Employee continues to provide services to the Company as an employee, director or consultant and, in the case of the second option to purchase 187,500 shares of Common Stock, commencing on September 28, 2010 and for so long as Employee serves as Chief Executive Officer. Employee will be permitted to exercise both stock options for up to one year following termination of his employment or services by the Company (but in any event no later than the end of the maximum permitted term of the options). The other terms and conditions of the stock options are as set forth in the individual stock option agreements, which shall be the Company’s standard form of option agreement and consistent with its 2006 Equity Incentive Plan (the “Equity Incentive Plan”).

3.4 Contingent Stock Option. On or as soon as practicable after September 28, 2010, the Company shall grant to Employee pursuant to the Equity Incentive Plan an additional stock option to purchase that number of shares of Common Stock equal to the difference between 187,500 and the number determined by multiplying the fully diluted shares of the Company outstanding on the grant date by the percentage that 187,500 shares represented of the fully diluted shares of the Company outstanding on October 21, 2009. Such additional stock option, if granted, shall have an exercise price equal to the fair market value of the Common Stock on the grant date, as determined by the Board. Such additional stock option, if granted, shall have a 10 year term and shall be fully vested on the grant date. In addition, Employee will be permitted to exercise such stock option for up to one year following termination of his employment or services by the Company (but in any event no later than the end of the maximum permitted term of the option). The other terms and conditions of the stock option shall be governed by the Equity Incentive Plan and the individual stock option agreement.

3.5 Restricted Stock Award. Employee was granted restricted stock units (“RSUs”) covering 225,000 shares of Common Stock, which shall vest upon the achievement of specific performance-based milestones established by the Board, consistent with those established for other employees of the Company. The RSUs shall continue to vest for so long as Employee continues to provide services to the Company as an employee, director or consultant. The other terms and conditions of such RSUs shall be governed by the Equity Incentive Plan and the individual restricted stock unit agreement or such other documentation as shall be approved and adopted by the Board to evidence such RSUs.

3.6 Change in Control Plan. Employee shall be an eligible “Participant” in the Company’s Change in Control Severance Benefit Plan (the “Change in Control Plan”).

3.7. Other Benefits. Employee shall be entitled to participate in such employee benefit plans and to receive such other fringe benefits as are customarily afforded the Company’s employees and executives. Employee understands that, except when prohibited by applicable law, the Company’s employee benefit plans and fringe benefits, including the Equity Incentive Plan, may be amended, enlarged, diminished or terminated by the Company from time to time, in its sole discretion.

3.8 Expense Reimbursement. Upon submission of itemized expense statements in the manner specified by the Company, the Company will pay Employee’s reasonable travel and other reasonable business expenses incurred by Employee in the furtherance of and in connection with Employee’s employment hereunder, provided that Employee submits receipts or other documentation for such expenses no later than ninety (90) days after incurring such expenses. The Company shall reimburse all such eligible expenses promptly, but in no event later than ninety (90) after receiving such documentation.

4. Employee’s Performance. 4.1 Rules, Procedures and Standards. Employee shall use best efforts to perform assigned duties diligently, loyally,

conscientiously, and with reasonable skill, and shall comply with all rules, procedures and standards promulgated from time to time by the Company. Among such rules, procedures and standards are those governing ethical and other professional standards for dealing with customers, government agencies, vendors, competitors, consultants, fellow employees, and the public-at-large; security provisions designed to protect the Company’s property and the personal security of the Company’s employees; rules respecting attendance, punctuality, and hours of work; and, rules and procedures designed to protect the confidentiality of the Company’s proprietary and trade secret information. The Company agrees to make reasonable efforts to inform Employee of such rules, standards and procedures as are in effect from time to time.

4.2 Employee Handbook. The employment relationship between the Company and Employee shall be governed by the policies and practices established by the Company and the Board. Employee will acknowledge in writing that he has read the Company’s Employee Handbook, which will govern the terms and conditions of his employment with the Company, along with this Agreement. In the event that the terms of this Agreement differ from or are in conflict with the Company’s policies or practices or the Company’s Employee Handbook, this Agreement shall control.

4.3 Additional Representations. Employee hereby represents and warrants that (i) Employee has the full right to enter into this Agreement and perform the services required of hereunder, without any restriction whatsoever, and (ii) in the course of performing services hereunder, Employee will not violate the terms or conditions of any agreement between Employee and any third party. It is the understanding of both the Company and Employee that Employee shall not divulge to the Company or any of its subsidiaries any confidential information or trade secrets belonging to others, including Employee’s former employers, nor shall the Company or any of its affiliates seek to elicit from Employee any such information. Consistent with the foregoing, Employee shall not provide to the Company or any of its affiliates, and the Company and its affiliates shall not request, any documents or copies of documents containing such information.

5. The Company’s Management Rights. The Company retains its full management prerogatives and discretion to manage and direct its business affairs, including the adoption, amendment or modification of research, development, production or marketing decisions as it sees fit, notwithstanding any individual interest in, or expectation, Employee may have regarding a particular business program or product.

6. Nondisclosure of Confidential, Proprietary or Trade Secret Information. As a condition of continued employment, Employee agrees to continue to abide by the Proprietary Information and Inventions Agreement previously entered into in conjunction with the Prior Agreement (the “Inventions Agreement”). The termination of employment shall not release Employee from Employee’s obligations under the Inventions Agreement or as established by applicable laws or the Company’s policies.

7. No Solicitation of Customers or Employees. Employee acknowledges that the Company has invested substantial time, effort and expense in compiling its confidential, proprietary and trade secret information and in assembling its present staff of personnel. In order to protect the business value of the Company’s confidential, proprietary and trade secret information, during Employee’s employment with the Company and for one year immediately following the termination of that employment with the Company:

(a) Employee agrees that information regarding all customers and all prospective customers of the Company, including information about customer personnel, technical needs and preferences, financial matters and future plans, of which Employee learns during Employee’s employment with the Company, may constitute “Proprietary Information” of the Company as defined in the Inventions Agreement.

(b) Employee agrees not to, directly or indirectly, induce or solicit any of the Company’s employees to leave their employment with the Company.

8. Return of Property. Upon the termination of Employee’s employment with the Company or at any other time upon request of the Company, Employee shall promptly return any and all customer or prospective customer lists, other customer or prospective customer information or related materials, formulas, computer data and programs, specifications, drawings, blueprints, data storage devices, reproductions, sketches, notes, memoranda, reports, records, proposals, business plans, or copies of them, other documents, materials, tools, equipment, and all other property belonging to the Company or its customers which Employee then possesses. Employee further agrees, that upon termination of his employment, Employee shall not take any documents or data of any description containing or pertaining to the Company’s Proprietary Information or Inventions, as those terms are defined in the Inventions Agreement. Upon leaving the Company’s employment, Employee agrees to sign a Termination Certificate confirming that Employee has complied with the requirements of this Section 8 and that Employee is aware that certain restrictions imposed by this Agreement continue after termination of Employee’s employment. Employee further understands that Employee’s continuing obligations under the Inventions Agreement will continue even if Employee does not sign a Termination Certificate.

9. Termination. Employment under this agreement is terminable at the will of the Board, with or without cause or notice, or by Employee upon giving the Board four weeks advanced notice of his resignation of employment.

10. Payment after Termination.

10.1 Effect of Termination. Following termination of Employee’s employment, all payments and benefits provided to Employee under this Agreement shall cease as of the date of such termination, except as otherwise provided herein.

10.2 Payment upon Termination. In the event Employee’s employment is terminated by the Company or by Employee pursuant to Section 9, Employee shall receive the following payments and rights upon termination:

(a) Accrued but unpaid salary;

(b) Accrued but unused vacation pay;

(c) If Employee elects continued coverage under COBRA, Company will pay Employee’s health insurance premiums for Employee and Employee’s family for a period of 90 days from the effective date of Employee’s termination of employment with the Company, to the same extent the Company paid those premiums at the time of termination.

(d) A proration of any Target Bonus determined by the Company to be appropriate for Employee after completion of the entire Target Bonus year, prorated in the discretion of the company taking into account the period of Employee’s service during the computation period and the contributions made by the Employee to achieving Target Bonus objectives.

10.3. Relationship to Other Agreements. Unless modified herein, any rights Employee has under the Company’s Amended and Restated Change in Control Severance Benefit Plan or Equity Incentive Plan are not affected by this Agreement.

10.4. Consulting After Termination. In the event Employee continues to be a member of the Company’s Board of Directors after the time Employee’s employment as Chief Executive Officer is terminated by the Company or by Employee pursuant to Section 9, and the Company shall have need for consultation and services from Employee during a transition period beyond the normal duties of a member of the Board of Directors, Company and Employee may agree to a contract for continued service by Employee as a consultant to the Company to perform such services, at a per diem rate equal to a proration of employee’s last salary with the Company. The amount and duration of the requested consulting services rests in the sole discretion of the Company.

11. Arbitration. The Company and Employee agree that any controversy or claim arising out of or relating to this Agreement or the Company’s employment of Employee (including, but not limited to claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the California Fair Employment and Housing Act, the California Labor Code, the California Constitution or any other federal, state or local statutes or common law) or any dispute arising out of the interpretation or application of this Agreement that the Company and Employee are unable to resolve shall be finally resolved and settled exclusively by arbitration in San Diego, California by a single arbitrator who is mutually selected by the Company and Employee. If the Company and Employee cannot agree upon an arbitrator, then each party shall choose its own independent representative and those independent representatives shall in turn choose the single arbitrator within 30 days of the date of the selection of the first independent representative.

12. Miscellaneous. 12.1 Entire Agreement. This Agreement together with the Inventions Agreement and the Employee Handbook represent

the Company’s and Employee’s entire understanding with respect to the subject matter contained herein and therein and supersedes the Prior Agreement and all other previous understandings, written or oral between the Company and Employee concerning the subject matters of this Agreement, the Inventions Agreement and the Employee Handbook. This Agreement may be amended or modified only with the signed written consent of both the Company and Employee. No oral waiver, amendment or modification shall be effective under any circumstances whatsoever.

12.2 Survival. The Inventions Agreement and Sections 7, 8, 9, 11, 12, 13 and 14 of this Agreement shall remain in effect after the termination of Employee’s employment by the Company, regardless of the reason the employment relationship ends.

12.3 Assignment and Binding Effect. This Agreement shall be binding upon and inure to the benefit of Employee and Employee’s heirs, executors, personal representatives, assigns, administrators and legal representatives. Because of the unique and personal nature of Employee’s duties under this Agreement, neither this Agreement nor any rights or obligations under this Agreement shall be assignable by Employee. This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns and legal representatives.

12.4 Severability. Should any provisions of this Agreement be held by a court of law to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby.

12.5 Injunctive Relief. Employee recognizes that money damages alone would not adequately compensate the Company in event of any breach by Employee of Section 6, 7 or 8 or any provision of the Inventions Agreement. Therefore, Employee agrees that, in addition to all other remedies available to the Company at law, in equity, or otherwise, the Company shall be entitled to seek injunctive relief to restrain any breach of said Sections and to enforce the provisions hereof, without showing or proving any actual damage to the Company or posting any bond.

12.6 Non-Waiver. No failure by either party to insist upon strict compliance with any of the terms, covenants, or conditions hereof, and no delay or omission by either party in exercising any right under this Agreement, will operate as a waiver of such terms, covenants, conditions or rights. A waiver or consent given by a party on any one occasion is effective only in that instance and will not be construed as a bar to or waiver of any right on any other occasion.

12.7 Governing Law. Venue. This Agreement shall be governed in all respects by the laws of the United States of America and by the laws of the State of California. The parties agree that the venue for any dispute under this Agreement will be San Diego California, whether in a court of law or before an arbitrator, as provided herein. The Company and Employee severally recognize and consent to the jurisdiction over each of them by the courts of the state of California.

12.8 Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of receipt; (iii) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (iv) by certified or registered mail, return receipt requested, upon verification of receipt. Notices to Employee shall be sent to the last known address in the Company’s records or such other address as Employee may specify in writing. Notices to the Company shall be sent to the Company’s Chief Financial Officer or to such other representative of the Company as the Company may specify in writing.

12.9 Advertising Waiver. Employee agrees to permit the Company and its affiliates, and persons or other organizations authorized by the Company or any of its affiliates, to use, publish and distribute advertising or sales promotional literature concerning the products or services of the Company or any of its affiliates, or the machinery and equipment used in the provision thereof, in which Employee’s name or pictures of Employee taken in the course of Employee’s provision of services to the Company or any of its affiliates, appear. Employee hereby waives and releases any claim or right Employee may otherwise have arising out of such use, publication or distribution.

12.10 Attorneys’ Fees. The Company agrees to reimburse Employee for up to $8,000 in attorneys’ fees incurred by Employee regarding preparation of this Agreement.

BY PLACING THEIR SIGNATURES HEREUNDER, EMPLOYEE AND THE COMPANY ACKNOWLEDGE THAT THEY HAVE READ ALL THE PROVISIONS OF THIS AGREEMENT AND THAT THEY AGREE TO ALL OF ITS TERMS.

EMPLOYEE:

Date: March 13, 2010

/s/ Harry F. Hixson, Jr., Harry F. Hixson, Jr. Ph.D.

Date: March 13, 2010 SEQUENOM, INC.

By: /s/ Richard A. Lerner, M.D. Richard A. Lerner, M.D. Lead Director of the Board of Directors

Exhibit 10.54

October 21, 2009

Mr. Paul Maier PO Box 5000 PMB 449 Rancho Santa Fe, California 92067

Dear Paul:

Sequenom, Inc. is pleased to confirm its offer to employ you as interim Chief Financial Officer reporting to Harry Hixson, Chairman and CEO. Your start date as an employee will be November 10, 2009. You will begin work as a consultant October 20. We anticipate this assignment to last approximately one year. Your base compensation for this position and as a consultant will be at the rate of $26,250 per month (which annualizes to $315,000).

You will be eligible for participation in the Sequenom, Inc. 2010 Executive Bonus Plan. The target bonus opportunity is up to 30% of your actual base pay from your date of hire until the assignment is ended or through 2010 if you are still employed. The opportunity is based upon the Company’s and your achievement of significant, measurable goals for 2010. Goals and compensation are subject to approval by the Compensation Committee of the Board of Directors. The Plan is operated at the sole discretion of the Company and is subject to review, modification, or revocation at any time.

The Compensation Committee of the Board of Directors has approved that you be granted 25,000 restricted stock units on the date you commence consulting with Sequenom. Vesting shall occur at the rate of 25% per three months with full vesting in twelve months.

You will also be eligible to participate in Sequenom’s Nonqualified Deferred Compensation Plan. A copy of the Plan is attached.

As a regular, full-time employee you are eligible to participate in the employee benefit plans, which Sequenom, Inc. offers to its employees. Descriptions of the benefits plans currently being offered will be made available to you. These plans may, from time to time, be amended or terminated with or without prior notice. This includes directors’ and officers’ insurance paid for by the Company.

Enclosed for your review and signature is a “Proprietary Information and Inventions Agreement”. In making this offer, Sequenom understands that you are not under any obligation to any former employer or person, firm, or corporation, which would prevent, limit or impair in any way the performance by you of your duties as an employee of Sequenom, Inc.

Sequenom and you anticipate this interim CFO assignment to last approximately one year. Sequenom will provide written notice of the end of the assignment no less than 90 days prior to the anticipated end date. If Sequenom wishes to end your agreement before one year and without a notice period, you will be eligible for up to 90 days pay, the amount equal to the time for which you have not received notice. If you engage in gross negligence or misconduct you will be terminated immediately without any further compensation. Likewise, you are required to give no less than 90 days notice of your intention to leave this assignment unless the Company has not remained current it its obligations or engages in or asks you to engage in or ignore conduct in conflict with the Company’s Code of Ethics and Conduct or in violation of the law or public policy. This agreement will terminate immediately upon your death or disability. For purposes of this offer, disability will be as defined by the CEO or the Company’s Board of Directors acting in good faith.

This offer is contingent upon successful completion of references checks and a background investigation, which may include civil and criminal court records, education, credentials, identity, social security number, previous employment and driving records.

Please indicate your acceptance of this offer by signing and dating this letter and returning it to me.

Sincerely,

/s/ Alisa Judge Alisa JudgeVice President, Human Resources

Agreed: /s/ Paul Maier Date: 10/21/09 Paul Maier

Exhibit 21.1

SUBSIDIARIES OF THE REGISTRANT

Sequenom — Gemini, Ltd. England and WalesGemini Genomics, (UK) Ltd. England and WalesGemini Genomics, Ltd. England and WalesSequenom GmbH GermanySequenom K.K. JapanSequenom Hong Kong, Ltd Hong KongSequenom Biosciences (India) Pvt. Ltd IndiaSequenom Center for Molecular Medicine, LLC United States

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-152230,333-134906, 333-125456, 333-112322, 333-102769, 333-99629, 333-90778, 333-69706, 333-67332 and333-95797) and Form S-3 (Nos. 333-151837, 333-147146, 333-135015 and 333-112323) of Sequenom, Inc. andin the related Prospectuses of our reports dated March 15, 2010, with respect to the consolidated financialstatements and schedule of Sequenom, Inc., and the effectiveness of internal control over financial reporting ofSequenom, Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2009.

/s/ Ernst & Young LLP


Exhibit 31.1

CERTIFICATION

I, Harry F. Hixson, Jr., certify that:

1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2009 of Sequenom,Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact oromit to state a material fact necessary to make the statements made, in light of the circumstances under whichsuch statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annualreport, fairly present in all material respects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer(s) and I am responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internalcontrol over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant andhave:

a) designed such disclosure controls and procedures, or caused such disclosure controls and proceduresto be designed under our supervision, to ensure that material information relating to the registrant, includingits consolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this annual report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented inthis annual report our conclusions about the effectiveness of the disclosure controls and procedures, as ofthe end of the period covered by this annual report based on such evaluation; and

d) disclosed in this annual report any change in the registrant’s internal control over financial reportingthat occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in thecase of this annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’sboard of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal controlover financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.

Date: March 15, 2010 /S/ HARRY F. HIXSON, JR.Harry F. Hixson, Jr.

Chief Executive Officer(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

I, Paul V. Maier, certify that:

1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2009 of Sequenom,Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact oromit to state a material fact necessary to make the statements made, in light of the circumstances under whichsuch statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annualreport, fairly present in all material respects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internalcontrol over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:

a) designed such disclosure controls and procedures, or caused such disclosure controls and proceduresto be designed under our supervision, to ensure that material information relating to the registrant, includingits consolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this annual report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented inthis annual report our conclusions about the effectiveness of the disclosure controls and procedures, as ofthe end of the period covered by this annual report based on such evaluation; and

d) disclosed in this annual report any change in the registrant’s internal control over financial reportingthat occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in thecase of this annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’sboard of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal controlover financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.

Date: March 15, 2010 /S/ PAUL V. MAIER

Paul V. MaierChief Financial Officer

(Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.§ 1350, as adopted), Harry F. HixsonJr., Chief Executive Officer of Sequenom, Inc. (the “Company”), hereby certify that, to the best of hisknowledge:

1. The Company’s Annual Report on Form 10-K for the period ended December 31, 2009, to whichthis Certification is attached as Exhibit 32 (the “Annual Report”) fully complies with the requirements ofsection 13(a) or section 15(d), as applicable, of the Securities Exchange Act of 1934, and

2. The information contained in the Annual Report fairly presents, in all material respects, the financialcondition of the Company at the end of the period covered by the Annual Report, and the results ofoperations of the Company for the period covered by the Annual report.

A signed original of this written statement required by Section 906 has been provided to the Company andwill be retained by the Company and furnished to the Securities and Exchange Commission (“SEC”) or its staffupon request.

This certification accompanies the Form 10-K to which it relates, is not deemed filed with the SEC and isnot to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended,or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the AnnualReport), irrespective of any general incorporation language contained in such filing.

IN WITNESS WHEREOF, the undersigned has set his hand hereto as of the 15th day of March, 2010.

/S/ HARRY F. HIXSON JR.Harry F. Hixson Jr.

Chief Executive Officer(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.§ 1350, as adopted), Paul V. Maier,Principal Financial and Accounting Officer of Sequenom, Inc. (the “Company”), hereby certify that, to the bestof his knowledge:

1. The Company’s Annual Report on Form 10-K for the period ended December 31, 2009, to whichthis Certification is attached as Exhibit 32 (the “Annual Report”) fully complies with the requirements ofsection 13(a) or section 15(d), as applicable, of the Securities Exchange Act of 1934, and

2. The information contained in the Annual Report fairly presents, in all material respects, the financialcondition of the Company at the end of the period covered by the Annual Report, and the results ofoperations of the Company for the period covered by the Annual report.

A signed original of this written statement required by Section 906 has been provided to the Company andwill be retained by the Company and furnished to the Securities and Exchange Commission (“SEC”) or its staffupon request.

This certification accompanies the Form 10-K to which it relates, is not deemed filed with the SEC and isnot to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended,or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the AnnualReport), irrespective of any general incorporation language contained in such filing.

IN WITNESS WHEREOF, the undersigned has set his hand hereto as of the 15th day of March, 2010.

/S/ PAUL V. MAIER

Paul V. MaierChief Financial Officer

(Principal Financial and Accounting Officer)

Forward-Looking StatementsExcept for the historical information contained herein, the matters set forth in this Annual Report contain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding Sequenom’s focus and positioning, the pending approval of the settlement of the federal securities class action lawsuit, Sequenom’s research and development programs, including its plans for developing, commercializing and launching tests for Down syndrome and AMD as well as the possibility of entering into partnerships to fund other programs, Sequenom’s investment plans, its plans to establish additional CLIA-certified laboratory sites, the potential benefits of Sequenom’s MassARRAY Analyzer 4, and Sequenom’s opportunities. 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 Sequenom’s ability to develop and commercialize new technologies and products, particularly new technologies such as genetic analysis platforms, noninvasive prenatal diagnostics and laboratory developed tests, reliance upon the collaborative efforts of other parties, Sequenom’s ability to manage its existing cash resources or raise additional cash resources, competition, intellectual property protection and intellectual property rights of others, government regulation particularly with respect to diagnostic products and laboratory developed tests, obtaining or maintaining regulatory approvals, the ongoing litigation and investigations and other risks detailed in Sequenom’s Annual Report on Form 10-K for the year ended December 31, 2009 and other documents subsequently filed with or furnished to the Securities and Exchange Commission. These forward-looking statements are based on current information that may change and the reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. 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 report..

Copyright 2010 Sequenom, Inc. All rights reserved. Sequenom®, Sequenom® Center for Molecular Medicine®, SEQureDx™, SensiGene™, and MassARRAY® are trademarks of Sequenom, Inc.

Corporate OfficersHarry F. Hixson, Jr. Ph.D.Chairman of the Board &Chief Executive Officer

Allan Bombard, M.D.Chief Medical Officer

Charles Cantor, Ph.D.Chief Scientific Officer

Alisa JudgeVice President, Human Resources

Ronald Lindsay, Ph.D.Interim Senior Vice President, R&D

Paul MaierInterim Chief Financial Officer

Shawn MarcellVice President, Molecular Diagnostics

Michael MonkoSenior Vice President, Sales & Marketing

Larry MyersVice President, Operations

Clarke NeumannVice President & General Counsel

Gary RiordanVice President, Regulatory Affairs & Quality

Board of DirectorsHarry F. Hixson, Jr. Ph.D.Chairman of the Board

Ernst-Gunter Afting, Ph.D., M.D.

Kenneth Buechler, Ph.D.

Charles Cantor, Ph.D.

John Fazio

Richard Lerner, M.D.

Ronald Lindsay, Ph.D.

David Pendarvis

Kathleen Wiltsey

InquiriesSequenom, Inc.3595 John Hopkins CourtSan Diego, CA 92121Telephone: +1 (858) 202-9000Fax: +1 (858) 202-9001

Investor InformationIan Clements, Ph.D.Telephone: +1 (858) 202-9000Email: [email protected]

Corporate CounselCooley Godward Kronish, LLPSan Diego, CA

AuditorsErnst & Young, LLPSan Diego, CA

Transfer AgentAmerican Stock Transfer and Trust Company59 Maiden LanePlaza LevelNew York, NY 10038Telephone: +1 (718) 921-8282http://www.amstock.com

Sequenom, Inc.3595 John Hopkins CourtSan Diego, CA 92121www.sequenom.com

improving healthcare through revolutionary ... - annual report · about sequenom, inc. sequenom,...

Documents