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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q





(Mark One)



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ending March 31, 2009



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

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 of incorporation or organization) |  | (I.R.S. Employer Identification Number)



|                                              |  |           
|--------------------------------------------- |  | ----------
|3595 John Hopkins Court San Diego, California |  | 92121     
|(Address of principal executive offices)      |  | (Zip Code)

Registrants telephone number, including area code: (858) 202-9000





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

Indicate by check
mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File 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 for such shorter period that the registrant was required to submit and post such files).     ̈  Yes     ̈  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a smaller reporting company. See definition of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (check one):



|                           |  |                      |  |                                              |  |                                   
|-------------------------- |  | -------------------- |  | -------------------------------------------- |  | ----------------------------------
|Large accelerated filer   ̈ |  | Accelerated filer  x |  | 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
Exchange Act).    Yes   ̈    No  x

The number of shares of the Registrants Common Stock outstanding as of April 14, 2009, was 61,134,052.









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SEQUENOM, INC.

INDEX



|                               |  |                                                                                                                |  |         
|------------------------------ |  | -------------------------------------------------------------------------------------------------------------- |  | --------
|                               |  |                                                                                                                |  | Page No.
|                               | 
|PART I - FINANCIAL INFORMATION |  |                                                                                                               
|                               |  |                                                                                                               
|Item 1.                        |  | Financial Statements                                                                                           |  | 3       
|                               |  |                                                                                                               
|                               |  | Condensed Consolidated Balance Sheets  as of March 31, 2009 (unaudited) and December 31, 2008                 |  | 3       
|                               |  |                                                                                                               
|                               |  | Condensed Consolidated Statements of Operations for the three months ended March 31, 2009 and 2008 (unaudited) |  | 4       
|                               |  |                                                                                                               
|                               |  | Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008 (unaudited) |  | 5       
|                               |  |                                                                                                               
|                               |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                 |  | 6       
|                               |  |                                                                                                               
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                          |  | 18      
|                               |  |                                                                                                               
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                     |  | 25      
|                               |  |                                                                                                               
|Item 4.                        |  | Controls and Procedures                                                                                        |  | 26      
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                                               
|                               |  |                                                                                                               
|Item 1.                        |  | Legal Proceedings                                                                                              |  | 27      
|                               |  |                                                                                                               
|Item 1A.                       |  | Risk Factors                                                                                                   |  | 28      
|                               |  |                                                                                                               
|Item 6.                        |  | Exhibits                                                                                                       |  | 44      



2



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PART I - FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

SEQUENOM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share information)



|                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | -------- | - | ---------------- | - | -------- | -
|                                                                                                                                                                             |  | March 31,2009 |          |   | December 31,2008 |  
|                                                                                                                                                                             |  | (Unaudited)   |          |   |                  |  
|Assets                                                                                                                                                                       |  |               |          |   |                  |   |          |  
|Current assets:                                                                                                                                                              |  |               |          |   |                  |   |          |  
|Cash and cash equivalents                                                                                                                                                    |  | $             | 51,229   |   |                  | $ | 68,338   |  
|Marketable securities                                                                                                                                                        |  |               | 30,000   |   |                  |   | 29,991   |  
|Restricted cash                                                                                                                                                              |  |               | 1,369    |   |                  |   | 1,371    |  
|Accounts receivable, net                                                                                                                                                     |  |               | 7,807    |   |                  |   | 10,642   |  
|Inventories, net                                                                                                                                                             |  |               | 10,565   |   |                  |   | 10,631   |  
|Other current assets and prepaid expenses                                                                                                                                    |  |               | 1,971    |   |                  |   | 1,311    |  
|                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Total current assets                                                                                                                                                         |  |               | 102,941  |   |                  |   | 122,284  |  
|Equipment and leasehold improvements, net                                                                                                                                    |  |               | 10,207   |   |                  |   | 9,195    |  
|Marketable securities                                                                                                                                                        |  |               | 5,748    |   |                  |   | 5,748    |  
|Goodwill                                                                                                                                                                     |  |               | 10,105   |   |                  |   | 2,398    |  
|Other assets                                                                                                                                                                 |  |               | 984      |   |                  |   | 859      |  
|                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Total assets                                                                                                                                                                 |  | $             | 129,985  |   |                  | $ | 140,484  |  
|                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Liabilities and stockholders equity                                                                                                                                         |  |               |          |   |                  |   |          |  
|Current liabilities:                                                                                                                                                         |  |               |          |   |                  |   |          |  
|Accounts payable                                                                                                                                                             |  | $             | 8,119    |   |                  | $ | 8,321    |  
|Accrued expenses                                                                                                                                                             |  |               | 6,527    |   |                  |   | 7,933    |  
|Accrued acquisition and integration costs                                                                                                                                    |  |               | 239      |   |                  |   | 237      |  
|Deferred revenue                                                                                                                                                             |  |               | 1,830    |   |                  |   | 1,444    |  
|Current portion asset-backed loan                                                                                                                                            |  |               | 663      |   |                  |   | 647      |  
|Current portion long-term debt                                                                                                                                               |  |               | 1,129    |   |                  |   |         |  
|Other current liabilities                                                                                                                                                    |  |               | 377      |   |                  |   | 456      |  
|                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Total current liabilities                                                                                                                                                    |  |               | 18,884   |   |                  |   | 19,038   |  
|Deferred revenue, less current portion                                                                                                                                       |  |               | 472      |   |                  |   | 454      |  
|Other long-term liabilities                                                                                                                                                  |  |               | 3,824    |   |                  |   | 3,958    |  
|Long-term portion asset-backed loan                                                                                                                                          |  |               | 401      |   |                  |   | 574      |  
|Long-term debt                                                                                                                                                               |  |               | 2,113    |   |                  |   |         |  
|Long-term accrued acquisition and integration costs                                                                                                                          |  |               | 186      |   |                  |   | 247      |  
|Commitments and contingencies                                                                                                                                                |  |               |          |   |                  |   |          |  
|Stockholders equity:                                                                                                                                                        |  |               |          |   |                  |   |          |  
|Convertible preferred stock, par value $0.001; 5,000,000 shares authorized, no shares issued or outstanding at March 31, 2009 and
December 31, 2008, respectively            |  |               |         |   |                  |   |         |  
|Common stock, par value $0.001; 185,000,000 shares authorized, 61,133,551 and 60,943,469 shares issued and outstanding at March 31, 2009
and December 31, 2008, respectively |  |               | 61       |   |                  |   | 61       |  
|Additional paid-in capital                                                                                                                                                   |  |               | 647,169  |   |                  |   | 641,098  |  
|Accumulated other comprehensive income                                                                                                                                       |  |               | 638      |   |                  |   | 1,328    |  
|Accumulated deficit                                                                                                                                                          |  |               | (543,763 | ) |                  |   | (526,274 | )
|                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Total stockholders equity                                                                                                                                                   |  |               | 104,105  |   |                  |   | 116,213  |  
|                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Total liabilities and stockholders equity                                                                                                                                   |  | $             | 129,985  |   |                  | $ | 140,484  |  
|                                                                                                                                                                             |  |               |          |   |                  |   |          |  

See accompanying notes.



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SEQUENOM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share
information)



|                                                       |  |                             |         |   |      |   |        |  
|------------------------------------------------------ |  | --------------------------- | ------- | - | ---- | - | ------ | -
|                                                       |  | Three months endedMarch 31, |        
|                                                       |  | 2009                        |         |   | 2008 |  
|                                                       |  | (Unaudited)                 |        
|Revenues:                                              |  |                             |         |   |      |   |        |  
|Consumables                                            |  | $                           | 4,722   |   |      | $ | 4,660  |  
|MassARRAY and product related                          |  |                             | 3,126   |   |      |   | 4,500  |  
|Services                                               |  |                             | 837     |   |      |   | 1,357  |  
|Research and other                                     |  |                             | 3       |   |      |   | 57     |  
|                                                       |  |                             |         |   |      |   |        |  
|Total revenues                                         |  |                             | 8,688   |   |      |   | 10,574 |  
|                                                       |  |                             |         |   |      |   |        |  
|Costs and expenses:                                    |  |                             |         |   |      |   |        |  
|Cost of consumables and products revenue               |  |                             | 2,386   |   |      |   | 3,519  |  
|Cost of services revenue                               |  |                             | 1,038   |   |      |   | 1,152  |  
|Research and development                               |  |                             | 8,780   |   |      |   | 4,885  |  
|Selling and marketing                                  |  |                             | 7,319   |   |      |   | 5,813  |  
|General and administrative                             |  |                             | 6,942   |   |      |   | 3,370  |  
|                                                       |  |                             |         |   |      |   |        |  
|Total costs and expenses                               |  |                             | 26,465  |   |      |   | 18,739 |  
|                                                       |  |                             |         |   |      |   |        |  
|Loss from operations                                   |  |                             | (17,777 | ) |      |   | (8,165 | )
|Interest income, net                                   |  |                             | 193     |   |      |   | 493    |  
|Loss on marketable securities                          |  |                             |        |   |      |   | (829   | )
|Other income (expense), net                            |  |                             | 115     |   |      |   | (111   | )
|                                                       |  |                             |         |   |      |   |        |  
|Loss before income taxes                               |  |                             | (17,469 | ) |      |   | (8,612 | )
|Income tax expense                                     |  |                             | (20     | ) |      |   | (14    | )
|                                                       |  |                             |         |   |      |   |        |  
|Net loss                                               |  | $                           | (17,489 | ) |      | $ | (8,626 | )
|                                                       |  |                             |         |   |      |   |        |  
|Net loss per common share, basic and diluted           |  | $                           | (0.29   | ) |      | $ | (0. 19 | )
|                                                       |  |                             |         |   |      |   |        |  
|Weighted average shares outstanding, basic and diluted |  |                             | 61,014  |   |      |   | 45,330 |  
|                                                       |  |                             |         |   |      |   |        |  

See accompanying notes.



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SEQUENOM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                            |  |                             |         |   |      |   |         |  
|--------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                            |  | Three months endedMarch 31, |        
|                                                                            |  | 2009                        |         |   | 2008 |  
|                                                                            |  | (Unaudited)                 |        
|Operating activities                                                        |  |                             |         |   |      |   |         |  
|Net loss                                                                    |  | $                           | (17,489 | ) |      | $ | (8,626  | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                             |         |   |      |   |         |  
|Share-based compensation                                                    |  |                             | 2,969   |   |      |   | 1,249   |  
|Depreciation and amortization                                               |  |                             | 1,348   |   |      |   | 551     |  
|Loss on marketable securities                                               |  |                             |        |   |      |   | 829     |  
|Deferred rent                                                               |  |                             | (134    | ) |      |   | (103    | )
|Bad debt expense                                                            |  |                             | (4      | ) |      |   | 128     |  
|Restricted stock                                                            |  |                             | 242     |   |      |   | 161     |  
|Other non-cash items                                                        |  |                             | 7       |   |      |   | 2       |  
|Changes in operating assets and liabilities:                                |  |                             |         |   |      |   |         |  
|Accounts receivable, net                                                    |  |                             | 2,150   |   |      |   | (384    | )
|Inventories, net                                                            |  |                             |        |   |      |   | (1,435  | )
|Other assets and prepaid expenses                                           |  |                             | (670    | ) |      |   | (141    | )
|Accounts payable and accrued expenses                                       |  |                             | (1,398  | ) |      |   | (2,139  | )
|Deferred revenue                                                            |  |                             | 448     |   |      |   | 674     |  
|Other liabilities                                                           |  |                             | (123    | ) |      |   | 143     |  
|                                                                            |  |                             |         |   |      |   |         |  
|Net cash used in operating activities                                       |  |                             | (12,654 | ) |      |   | (9,091  | )
|Investing activities                                                        |  |                             |         |   |      |   |         |  
|Purchases of equipment and leasehold improvements                           |  |                             | (2,792  | ) |      |   | (638    | )
|Cash paid for acquisition  SensiGen, LLC                                   |  |                             | (1,887  | ) |      |   |        |  
|Purchases of marketable securities                                          |  |                             | (98     | ) |      |   | (14,941 | )
|Sales of marketable securities                                              |  |                             |        |   |      |   | 24,217  |  
|Maturity of marketable securities                                           |  |                             |        |   |      |   | 12,683  |  
|Net change in restricted cash                                               |  |                             | 2       |   |      |   | (50     | )
|                                                                            |  |                             |         |   |      |   |         |  
|Net cash (used in) provided by investing activities                         |  |                             | (4,775  | ) |      |   | 21,271  |  
|Financing activities                                                        |  |                             |         |   |      |   |         |  
|Proceeds from exercise of stock options and ESPP purchases                  |  |                             | 750     |   |      |   | 289     |  
|Borrowings from asset-backed loan                                           |  |                             |        |   |      |   | 316     |  
|Repayments on asset-backed loan                                             |  |                             | (156    | ) |      |   | (129    | )
|                                                                            |  |                             |         |   |      |   |         |  
|Net cash provided by financing activities                                   |  |                             | 594     |   |      |   | 476     |  
|                                                                            |  |                             |         |   |      |   |         |  
|Net (decrease) increase in cash and cash equivalents                        |  |                             | (16,835 | ) |      |   | 12,656  |  
|Effect of exchange rate changes on cash and cash equivalents                |  |                             | (274    | ) |      |   | 135     |  
|Cash and cash equivalents at beginning of period                            |  |                             | 68,338  |   |      |   | 13,116  |  
|                                                                            |  |                             |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                  |  | $                           | 51,229  |   |      | $ | 25,907  |  
|                                                                            |  |                             |         |   |      |   |         |  

See accompanying notes.



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SEQUENOM, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Sequenom, Inc. have been prepared in accordance with U.S. generally accepted accounting
principles (GAAP) with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. generally accepted accounting principles (GAAP) for complete financial
statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of results for a full year. Certain
reclassifications have been made to the prior period amounts in order to conform to the current presentation.

The condensed consolidated balance sheet at
December 31, 2008 has been derived from the audited financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements.

These financial statements should be read in conjunction with the audited financial statements and disclosures included in our Annual Report on Form 10-K for the year
ended December 31, 2008, as filed with the Securities and Exchange Commission (SEC) on March 12, 2009.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. We regularly evaluate estimates and
assumptions related to inventory valuation and warranty liabilities, which affects cost of sales and gross margin; the allowance for doubtful accounts, which affects revenue recognition; our discounted cash flow analysis valuation model, which
affects the valuation of our auction rate securities (ARS); and the valuation of deferred income taxes, which affects income tax expense and benefit. We base our estimates and assumptions on historical experience and on various other factors that we
believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management considers many factors in
selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In
addition, other factors may affect estimates, including: expected business and operational change, sensitivity and volatility associated with the assumptions used in developing estimates and whether historical trends are expected to be
representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. The actual
results experienced by us may differ materially and adversely from managements estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Recent Accounting Pronouncements

In November 2008, the
Emerging Issues Task Force (EITF) issued Issue No. 08-7, Accounting for Defensive Intangible Assets (EITF 08-7). EITF 08-7 applies to all acquired intangible assets in which the acquirer does not intend to actively use the asset,
but intends to hold (lock up) the asset to prevent its competitors from obtaining access to the asset (a defensive asset), assets that the acquirer will never actually use, as well as assets that will be used by the acquirer during a transition
period when the intention of the acquirer is to discontinue the use of those assets. EITF 08-7 was effective January 1, 2009 and the impact of adoption on our consolidated financial statements will depend on the any intangible asset
acquisitions completed in future periods.

In June 2008, the Financial Accounting Standards Board (FASB) ratified the consensus reached by the EITF on EITF
No. 07-5, Determining Whether and Instrument (or Embedded Feature) is Indexed to an Entitys Own Stock (EITF 07-5). EITF 07-5 provides guidance for determining whether an equity-linked financial instrument, or embedded feature, is
indexed to an entitys own stock and was effective January 1, 2009. The adoption of EITF 07-5 did not have a material impact on our consolidated financial statements.

In April 2008, the FASB issued FASB Staff Position (FSP) Financial Accounting Standard (FAS) 142-3, Determination of the Useful Life of Intangible Assets (FSP 142-3). FSP 142-3 amends the factors that
should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under Statement of Financial Accounting Standards No. 142 Goodwill and Other Intangible Assets
(SFAS 142). This change is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R),
Business Combinations (SFAS 141(R)). FSP 142-3 was effective for our fiscal year beginning after December 15, 2008. The requirements for determining useful lives must be applied prospectively to intangible assets acquired after the
effective date and the disclosure requirements must be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. FSP 142-3 could have a material impact on the useful life determination of any intangible
asset acquisitions completed in future periods.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). This
statement establishes a common definition for fair value to be applied to GAAP requiring use of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. SFAS 157 is effective for
financial assets and financial liabilities for fiscal years beginning after November 15, 2007. Issued in February 2008, FSP 157-1 Application of FASB Statement No. 157 to FASB



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Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under
Statement 13, removed leasing transactions accounted for under SFAS No. 13 Accounting for Leases, as well as removed related guidance from the scope of SFAS 157. FSP 157-2 Partial Deferral of the Effective Date of
Statement 157 (FSP 157-2), deferred the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008. The implementation of SFAS 157 for financial assets and
financial liabilities, effective January 1, 2008, and the implementation of FSP 157-2 for our nonfinancial assets and nonfinancial liabilities on January 1, 2009, did not have a material impact on our consolidated financial statements. See
Note 4, Marketable Securities and Fair Value Measurements for further discussion of our financial assets.

In April 2009, the FASB issued
several pronouncements related to fair value measurement, recording and disclosure in financial reporting:



| | i) | FASB Staff Position FAS 157-4, Determining Whether a Market Is Not Active and a Transaction Is Not Distressed (FSP FAS 157-4). FSP FAS 157-4 provides
guidelines for making fair value measurements more consistent with the principles presented in SFAS 157. FSP FAS 157-4 provides additional authoritative guidance in determining whether a market is active or inactive, and whether a
transaction is distressed, is applicable to all assets and liabilities (i.e. financial and nonfinancial) and will require enhanced disclosures.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii) | FASB Staff Position FAS 115-2, FAS 124-2, and EITF 99-20-2, Recognition and Presentation of Other-Than-Temporary Impairments, (FSP FAS 115-2,
FAS 124-2, and EITF 99-20-2, respectively). FSP FAS 115-2, FAS 124-2, and EITF 99-20-2 provide additional guidance and greater clarity about the credit and noncredit component of an other-than-temporary impairment event and
to more effectively communicate when an other-than-temporary impairment event has occurred. This FSP applies to debt securities.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii) | FASB Staff Position FAS 107-1 and Accounting Principles Board (APB) 28-1, Interim Disclosures about Fair Value of Financial Instruments, (FSP FAS 107-1 and APB
28-1, respectively). FSP FAS 107-1 and APB 28-1, amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments in interim as well as in
annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in all interim financial statements.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

These standards are effective for periods ending after June 15, 2009. We are evaluating the impact that these standards will have on our consolidated financial
statements.

In December 2007, the FASB issued SFAS 141(R), which established principles and requirements for how the acquirer of a business
recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in an acquiree. SFAS 141(R) also provides guidance for recognizing and measuring the goodwill
acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) was effective for our fiscal year
beginning after December 15, 2008. Additionally in April 2009, the FASB issued FSP SFAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, (FSP SFAS
141(R)-1) to amend the provisions related to the initial recognition and measurement, subsequent measurement and disclosure of assets and liabilities arising from contingencies in a business combination under SFAS 141(R). Under the new guidance,
assets acquired and liabilities assumed in a business combination that arise from contingencies should be recognized at fair value on the acquisition date if fair value can be determined during the measurement period. If fair value cannot be
determined, companies should typically account for the acquired contingencies using existing guidance. The Company adopted FAS 141(R) and FSP SFAS 141(R)-1 on January 1, 2009. The impact of adopting SFAS 141(R) and FSP SFAS 141(R)-1
on our consolidated financial statements will depend on the economic terms of any future business combination transactions.

On January 1, 2008, we
adopted the provision SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159). SFAS 159 allows certain financial assets and liabilities to be recognized, at our election, at fair market value,
with any gains or losses for the period recorded in the statement of income. SFAS 159 includes available-for-sales securities in the assets eligible for this accounting treatment. Currently, we record the gains or losses for the period in
comprehensive income and in the equity section of the balance sheet. At this time, we have not elected to account for any available-for-sale securities using the provisions of SFAS 159.

On January 1, 2008, we adopted EITF Issue No. 07-1, Accounting for Collaborative Arrangements Related to the Development and Commercialization of Intellectual Property (EITF 07-1). Companies may
enter into arrangements with other companies to jointly develop, manufacture, distribute, and market a product. Often the activities associated with these arrangements are conducted by the



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collaborators without the creation of a separate legal entity (that is, the arrangement is operated as a virtual joint venture). The arrangements
generally provide that the collaborators will share, based on contractually defined calculations, the profits or losses from the associated activities. Periodically, the collaborators share financial information related to product revenues generated
(if any) and costs incurred that may trigger a sharing payment for the combined profits or losses. EITF 07-1 requires collaborators in such an arrangement to present the result of activities for which they act as the principal on a gross basis and
report any payments received from (made to) other collaborators based on other applicable GAAP or, in the absence of other applicable GAAP, based on analogy to authoritative accounting literature or a reasonable, rational, and consistently applied
accounting policy election. Since our collaborative arrangements do not incorporate such revenue- and cost-sharing arrangements, the adoption of EITF 07-1 did not have an impact on our consolidated financial statements.

In June 2007, the FASB ratified EITF No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and
Development Activities (EITF 07-3). EITF 07-3 requires that nonrefundable advance payments for goods and services that will be used or rendered in future research and development activities pursuant to executory contractual arrangements
be deferred and recognized as an expense in the period that the related goods are delivered or services are performed. We adopted EITF 07-3 as of January 1, 2008 and its adoption did not have a material impact on our consolidated financial
statements.

(2) Liquidity and Capital Resources

We
have a history of recurring losses from operations and have an accumulated deficit of $543.8 million as of March 31, 2009. Our capital requirements to sustain operations, including research and development projects, have been and will continue
to be significant. As of March 31, 2009, we had available cash, cash equivalents and current marketable securities totaling $81.2 million and working capital of $84.1 million. We also have approximately $5.7 million of ARS investments
classified as noncurrent assets at March 31, 2009.

(3) Acquisitions

Center for Molecular Medicine, LLC

On November 14, 2008, we completed our acquisition of certain assets
of the Center for Molecular Medicine, LLC (CMM). The assets are now part of our wholly owned subsidiary, the Sequenom Center for Molecular Medicine (SCMM). Under the terms of the asset purchase agreement, we paid to CMM $4.0 million for certain
assets related to CMMs business in advanced molecular pathology laboratory services relating to diagnostics, translational research and clinical trials, less all cash and cash equivalents. Ninety percent of the purchase price consisted of
187,794 shares of our common stock (valued at $3.6 million as of the acquisition closing date) and the remainder of the purchase price of $0.4 million was paid in cash, which was deposited into an escrow account. The escrow account will remain in
place for 18 months following the closing of the transaction to satisfy potential indemnification claims. The acquisition of CMM provides us with a laboratory that has the required accreditations and certifications already in place to process our
screening tests, which we anticipate commercializing during 2009. These factors have contributed to the purchase price for the acquisition of CMM, which resulted in the recognition of goodwill of approximately $3.0 million.

In connection with this acquisition, we completed a valuation study of the intangible assets acquired in order to allocate the purchase price in accordance with SFAS
141. We have allocated the excess purchase price over the fair value of net tangible assets and identifiable intangible assets acquired to goodwill. We believe the fair values assigned to the CMM assets acquired were based on reasonable assumptions,
as determined by management. The purchase price has been allocated as follows (in thousands):



|                              |  |   |      
|----------------------------- |  | - | -----
|Net tangible assets           |  | $ | 893  
|Identifiable intangible asset |  |   | 117  
|Goodwill                      |  |   | 2,990
|                              |  |   |      
|Total consideration           |  | $ | 4,000
|                              |  |   |      

No supplemental pro forma information is presented for the acquisition due to the immaterial effect of the
acquisition on our results of operations.

SensiGen, LLC

On February 27, 2009, we completed the acquisition of certain assets and assumption of certain liabilities of SensiGen, LLC (SensiGen). The assets are now part of our wholly owned subsidiary, SCMM. Under the terms of the asset purchase
agreement (the Agreement), we acquired certain assets related to SensiGens business in gene-based molecular diagnostic tests relating to cervical cancer, head and neck cancer, chronic kidney disease and lupus. We paid to SensiGen cash
consideration of approximately $1.6 million and issued common stock valued at $1.9 million (utilizing the minimum floor price of $20.94 per share in accordance with the Agreement). An additional $1.3 million could be payable to SensiGen upon the
completion of certain triggering events with either cash or shares of our common stock (priced at the average closing price of our common stock over the ten trading day period ending



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on the third trading day prior to the applicable triggering event for such payment). The acquisition of SensiGen provides us with intellectual property
related to certain molecular diagnostics for womens health and cancer. These factors have contributed to the purchase price for the acquisition of SensiGen, which resulted in the preliminary recognition of goodwill of approximately $7.1
million.

The total purchase consideration consisted of (in thousands, except share and per share data):



|                                                                                     |  |   |      
|------------------------------------------------------------------------------------ |  | - | -----
|Cash paid to SensiGen                                                                |  | $ | 1,547
|Sequenom common stock issued on the closing date (92,679 shares at $20.94 per share) |  |   | 1,941
|Assumed liabilities                                                                  |  |   | 3,242
|Write-off of preexisting receivables                                                 |  |   | 403  
|Write-off of loan advance                                                            |  |   | 340  
|                                                                                     |  |   |      
|Total purchase price                                                                 |  | $ | 7,473
|                                                                                     |  |   |      

In connection with this acquisition we have commenced a valuation study of the intangible assets acquired in order
to allocate the purchase price in accordance with SFAS 141(R). We have preliminarily allocated the excess purchase price over the fair value of net tangible assets and liabilities assumed to goodwill, as well as provided an estimate of the fair
value of the contingent consideration as of the closing date of the acquisition. We believe the preliminary fair values assigned to SensiGens assets acquired and contingent consideration were based on reasonable assumptions, as determined by
management. The purchase price has been initially allocated as follows (in thousands):



|                                       |  |   |      
|-------------------------------------- |  | - | -----
|Net tangible assets                    |  | $ | 358  
|Goodwill                               |  |   | 7,115
|                                       |  |   |      
|                                       |  |   | 7,473
|Fair value of contingent consideration |  |   | 157  
|                                       |  |   |      
|Total consideration                    |  | $ | 7,630
|                                       |  |   |      

We anticipate that the final fair value allocation of the purchase price will be completed during the second
quarter of 2009. No supplemental pro forma information is presented for the acquisition due to the immaterial effect of the acquisition on our results of operations.

(4) Marketable Securities and Fair Value Measurements

Marketable securities

We account for marketable securities in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities and have
determined the appropriate classification of marketable securities was available-for-sale at the time of purchase. As a result, at March 31, 2009 and December 31, 2008, all of our investments in marketable securities were
reported at fair value. Fair value is determined based on observable market quotes or valuation models using assessments of counterparty credit worthiness, credit default risk 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 of accumulated other comprehensive income in stockholders equity. We use the specific
identification method of determining the cost basis in computing realized and unrealized gains and losses on the sale of our available-for-sale securities.

Historically, we have invested in ARS, commercial paper of prime quality, certificates of deposit, guaranteed bankers acceptance and U.S. Government instruments, and by policy, limit the amount of credit exposure to any one issuer. In April
2008, we revised our investment policy to maintain our portfolio of cash equivalents and marketable securities in a variety of securities, including U.S. Government securities with ratings of AAA, and repurchase agreements collateralized by U.S.
Government securities with ratings of AAA at the time of acquisition. Our investment policy includes a minimum quality rating for all new investments, as well as limits the amount of credit exposure to only issuances from the U.S. Government. If an
investment we hold falls below this level, we research the reasons for the fall and determine if we should continue to hold the investment in order to minimize our exposure to market risk of the investment. At March 31, 2009 and
December 31, 2008, $9.4 million of principal was invested in ARS, respectively. The ARS held are private placement securities with various long-term nominal maturities with interest rates reset through a Dutch auction each month, except for one
ARS that resets every 92 days. The monthly auctions historically have provided a liquid market for these securities. The investments in ARS represent interests in collateralized debt obligations supported by insurance securitizations and other
structured credits, including corporate 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 investments held by us all had AAA/AA credit ratings at the time of purchase. With the liquidity issues experienced in global credit and capital markets, the $9.4 million ARS held by us at
March 31, 2009, have experienced multiple failed auctions as the amount of securities submitted for sale has exceeded the amount of purchase orders and we have been unable to liquidate these securities.



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The estimated market value of all ARS holdings at March 31, 2009, was approximately $5.7 million, which reflects a
$3.7 million adjustment to the principal value of $9.4 million. The $3.7 million adjustment consists of other-than-temporary impairment losses charged to operations during the years ended December 31, 2008 and 2007 of $2.6 million and $1.1
million, respectively. For the three months ended March 31, 2009, no other-than-temporary impairment losses were charged to operations. As of March 31, 2009, there are no accumulated unrealized losses in other comprehensive income related
to these ARS and any future other-than temporary impairments losses will be charged to operations, as incurred.

Fair Value Measurements

SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants on the measurement date. SFAS 157 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard
describes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or
liabilities. We have determined that our investments in money market accounts, certificates of deposit and U.S. Government securities meet the criteria for definition within the Level 1 hierarchy.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, 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 by observable market data for substantially the full term of the assets or liabilities.
We have determined that our investments in commercial paper 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 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 the Level 3 hierarchy.

The fair value of our investments in ARS instruments is estimated utilizing a discounted cash flow analysis valuation model as of March 31,
2009. This analysis considers, among other items, the collateralization underlying the security investments, the credit quality of the counterparty, the timing of expected future cash flows, the default risk underlying the security, discount
rates, the expected time until a successful auction and the overall capital market liquidity. These securities were also compared, when possible, to other observable market data with similar characteristics to the securities. Management has
reviewed the valuation input criteria utilized by our investment manager, which generally consists of the price of credit protection, information available on the trading of senior and subordinated securities and other debt in the market place for
comparable types of maturities, the current credit rating of the trust sponsor and/or bond insurer, as well as the ultimate maturity and the underlying collateral of the securities and have deemed them to be reasonable assumptions in determining
fair value. The valuation of our ARS investments is subject to uncertainties that are difficult to predict. Factors that may impact our valuation include 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 and the ongoing strength and quality of market credit and liquidity.

Based on the underlying assumptions utilized in our valuation of ARS and that our holdings of ARS are not required for operational purposes in 2009, we have classified
these investments as long-term on the Condensed Consolidated Balance Sheet at March 31, 2009 and December 31, 2008. Future valuation adjustments determined to be other-than-temporary will be recorded to operations, as incurred.

We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest
level of input that is significant to the fair value measurement. The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2009 (in thousands):



|                                    |  |       |        |         |   |         |  |         |     |  |   |      
|----------------------------------- |  | ----- | ------ | ------- | - | ------- |  | ------- | --- |  | - | -----
|Description                         |  | Total |        | Level 1 |   | Level 2 |  | Level 3
|Cash and cash equivalents           |  | $     | 51,229 |         | $ | 51,229  |  | $       |    |  | $ |     
|Marketable securities, current1     |  |       | 30,000 |         |   | 30,000  |  |         |    |  |   |     
|Restricted cash                     |  |       | 1,369  |         |   | 1,369   |  |         |    |  |   |     
|Marketable securities, non-current1 |  |       | 5,748  |         |   |        |  |         | 239 |  |   | 5,509
|                                    |  |       |        |         |   |         |  |         |     |  |   |      
|Total                               |  | $     | 88,346 |         | $ | 82,598  |  | $       | 239 |  | $ | 5,509
|                                    |  |       |        |         |   |         |  |         |     |  |   |      



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The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring
basis as of December 31, 2008 (in thousands):



|                                    |  |       |         |         |   |         |  |         |     |  |   |      
|----------------------------------- |  | ----- | ------- | ------- | - | ------- |  | ------- | --- |  | - | -----
|Description                         |  | Total |         | Level 1 |   | Level 2 |  | Level 3
|Cash and cash equivalents           |  | $     | 68,338  |         | $ | 68,338  |  | $       |    |  | $ |     
|Restricted cash                     |  |       | 1,371   |         |   | 1,371   |  |         |    |  |   |     
|Marketable securities, current1     |  |       | 29,991  |         |   | 29,991  |  |         |    |  |   |     
|Marketable securities, non-current1 |  |       | 5,748   |         |   |        |  |         | 239 |  |   | 5,509
|                                    |  |       |         |         |   |         |  |         |     |  |   |      
|Total                               |  | $     | 105,448 |         | $ | 99,700  |  | $       | 239 |  | $ | 5,509
|                                    |  |       |         |         |   |         |  |         |     |  |   |      



|1 | Gains or losses considered to be temporary are recorded to accumulated other comprehensive loss at each measurement date. Other than temporary losses are recorded to operations at
each measurement date.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The following table presents our assets measured at fair value on a recurring basis using significant unobservable inputs
(Level 3) as defined in SFAS 157 at March 31, 2009 (in thousands):



|                                                                                                                                         |  |                        |      
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | -----
|                                                                                                                                         |  | Auction RateSecurities
|Balance at December 31, 2008                                                                                                             |  | $                      | 5,509
|Transfers to Level 3                                                                                                                     |  |                        |     
|Total gains or losses:                                                                                                                   |  |                        |      
|Included in operations                                                                                                                   |  |                        |     
|Recognized gain or loss previously included in other comprehensive income                                                                |  |                        |     
|Included in other comprehensive loss                                                                                                     |  |                        |     
|Purchases and settlements, net                                                                                                           |  |                        |     
|                                                                                                                                         |  |                        |      
|Balance at March 31, 2009                                                                                                                |  | $                      | 5,509
|                                                                                                                                         |  |                        |      
|Gains or losses included in operations (or changes in net assets) for the period (above) relating to assets still held at March 31, 2009 |  |                        |      
|Total gains or losses for the period included in operations                                                                              |  | $                      |     
|                                                                                                                                         |  |                        |      
|Total change in unrealized gains or losses included in other comprehensive loss                                                          |  | $                      |     
|                                                                                                                                         |  |                        |      

(5) Comprehensive Loss

SFAS No. 130, Reporting Comprehensive Income (SFAS 130), requires reporting and displaying comprehensive income (loss) and its components, which, for us, includes net loss and unrealized gains and losses on
investments and foreign currency translation gains and losses. In accordance with SFAS 130, the accumulated balance of other comprehensive income (loss) is disclosed as a separate component of stockholders equity. A summary of our
comprehensive loss is as follows (in thousands):



|                                                                   |  |                             |         |   |      |   |        |  
|------------------------------------------------------------------ |  | --------------------------- | ------- | - | ---- | - | ------ | -
|                                                                   |  | Three months endedMarch 31, |        
|                                                                   |  | 2009                        |         |   | 2008 |  
|                                                                   |  | (Unaudited)                 |        
|Net loss                                                           |  | $                           | (17,489 | ) |      | $ | (8,626 | )
|Unrealized (loss) gain on available-for-sale marketable securities |  |                             | (89     | ) |      |   | 282    |  
|Foreign currency translation adjustments                           |  |                             | (601    | ) |      |   | 439    |  
|                                                                   |  |                             |         |   |      |   |        |  
|Comprehensive loss                                                 |  | $                           | (18,179 | ) |      | $ | (7,905 | )
|                                                                   |  |                             |         |   |      |   |        |  

(6) Net Loss Per Share

In accordance with SFAS No. 128, Earnings Per Share, basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net
loss per share is computed by dividing the net loss for the period by the weighted average number of common and common equivalent shares outstanding during the period. Common stock equivalents consisting of stock options, warrants and restricted
stock were not included in the computation of diluted net loss per share as their effect was anti-dilutive for both periods presented.

(7)
Stockholders Equity

On July 1, 2008, we closed an underwritten public offering of 5,500,000 shares of our common stock at $15.50 per share,
with the underwriters exercising their option to purchase an additional 825,000 shares on July 8, 2008. Including the additional shares, the offering resulted in aggregate net proceeds of approximately $91.8 million after deducting underwriting
discounts, commissions and estimated transaction expenses.

On March 3, 2009, our Board of Directors adopted a Share Purchase Rights Plan (the Rights
Plan). The terms of the Rights Plan provide for a dividend distribution of one preferred share purchase right (a Right) for each outstanding share of our common stock, par value $0.001 per share. Common shares that are newly issued after the record
date of March 20, 2009, also carry Rights.

The Rights have certain anti-takeover effects and will cause substantial dilution to a person or group
that attempts to acquire us on terms not approved by our Board of Directors. The Rights should not interfere with any merger or other business combination approved by the Board of Directors, since the Rights may be amended to permit such acquisition
or redeemed by us at $0.001 per Right prior to the earliest of (i) the time that a person or group has acquired beneficial ownership of 15% or more of our shares of common stock or (ii) the final expiration date, as defined by the Rights
Plan.



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(8) Share-Based Compensation

We maintain several share-based compensation plans for the grant of incentive stock options and non-qualified stock options to employees, consultants and non-employee directors. In accordance with the provisions of SFAS No. 123(R),
Share-Based Payment (SFAS 123(R)) the estimated fair value of share-based payments is measured at the grant date and is recognized as stock-based compensation expense over the employees requisite service period.

For the three months ended March 31, 2009 and 2008, we recorded $2.8 million and $1.2 million of compensation expense related to our share-based compensation
awards, respectively. The compensation expense related to our share-based compensation arrangements is recorded as components of research and development expenses ($0.8 million and $0.3 million), selling and marketing expenses ($0.8 million and $0.3
million) and general and administrative expenses ($1.2 million and $0.6 million) for the three months ended March 31, 2009 and 2008, respectively.

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 net operating loss carryforwards.

We account for options granted to non-employees in accordance with EITF No. 96-18, Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, and SFAS 123(R). The fair value of these options at the measurement dates was estimated using the Black-Scholes pricing model. Total stock-based compensation for
options granted to non-employees for the three months ended March 31, 2009 and 2008, was $176,000 and $28,000, respectively, and is included in research and development expenses ($49,000 and $7,000), in sales and marketing expenses ($127,000
and $21,000), and none in general and administrative expenses in the statements of operations for the three months ended March 31, 2009 and 2008, respectively.

Share-Based Compensation Plans

Stock Compensation Plans

On May 31, 2006, our stockholders approved our 2006 equity incentive plan (the 2006 Plan), as the successor to our 1999 stock option plan (the 1999 Plan). In
connection with the adoption of the 2006 Plan, we terminated the automatic annual increase feature under the 1999 Plan and resolved to cease to grant additional stock awards under the 1999 Plan following the effectiveness of the 2006 Plan. As of
March 31, 2009, the aggregate number of shares of common stock that may be issued under the 2006 Plan was 8,129,955 shares, plus the number of shares subject to any stock awards under the 1999 Plan that terminate or are forfeited or repurchased
and would otherwise have been returned to the share reserve under the 1999 Plan. In February 2009, our Board of Directors amended the 2006 Plan, subject to stockholders approval at our annual meeting of stockholders on May 12, 2009, to increase
the share reserve by 1.5 million shares.

Restricted Stock

On October 18, 2007, we granted 50,000 restricted stock units to an executive officer with a grant date fair value 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. At March 31, 2009, 17,671 of these restricted stock units have vested and 32,329 units remained outstanding and unvested.

On January 29, 2008, we granted 18,628 restricted stock awards and 20,974 restricted stock units to certain executive 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 on January 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 fair value of $20.00 per
share. 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. At March 31, 2009, all restricted stock units remained
outstanding and unvested.

On January 2, 2009, we granted 5,754 restricted stock awards to certain board members with a grant date fair value of
$20.58 per share, which vest quarterly over one year. At March 31, 2009, 1,438 of these restricted stock awards have vested and 4,316 awards remained outstanding and unvested.



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On February 9, 2009, we granted 7,234 and 8,673 restricted stock units to executive officers with a grant date fair
value of $17.60 per share, which vest monthly over 12 and 13 months, respectively. At March 31, 2009, all of these restricted stock units remained outstanding and unvested.

On February 17, 2009, we granted 5,552 restricted stock units to an executive officer with a grant date fair value of $16.38 per share, which vest monthly over 13 months. At March 31, 2009, all of these
restricted stock units remained outstanding and unvested.

Employee Stock Purchase Plan

In 1999, we adopted the 1999 Employee Stock Purchase Plan (the 1999 ESPP). As of March 31, 2009, we had reserved 991,138 shares of common stock for issuance under
the 1999 ESPP. During the term of the 1999 ESPP beginning in 2001, the amount of authorized shares available under the 1999 ESPP automatically increases each January 1st by an amount equal to 1% of the outstanding common stock on the last
trading day of the prior year, subject to an annual increase limitation of 166,666 shares. The 1999 ESPP provides for a series of concurrent offering periods, each with a maximum duration of 24 months. 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 that
commence on or after February 1, 2007. New offerings are for a duration of six months and consist of one purchase interval, but do not impose either an individual or all-participant limitation on the number of shares purchasable on a
purchase date, although the 1999 ESPP limits stock purchases to $25,000 per individual per calendar year. Participants had the option of: continuing under the current plan offering period until its expiration, or withdrawing from the current
offering prior to its expiration and enrolling in the new offering commencing on February 1, 2007. Those employees not electing to enroll in the new offering period continued under the then current offering until the 24 month offering period
expired. On July 31, 2008, the final 24 month offering period expired and all ESPP participants are now under six month offering periods. As of March 31, 2009, employees have contributed approximately $0.2 million to the current offering
of the 1999 ESPP, since the beginning of the offering period that commenced February 1, 2009. For the three months ended March 31, 2009 and 2008, we have recognized approximately $42,000 and $2,000, respectively, as share-based
compensation expense related to the 1999 ESPP Plan.

Warrants

In connection with the acquisition of Axiom Biotechnologies in 2002, we assumed an outstanding warrant to purchase 7,333 Axiom ordinary shares at an exercise price of $10.50, which was adjusted to become a warrant to purchase 1,535 shares
of our common stock at an exercise price of $50.19 per share. As of March 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 in September 2005, we issued to the landlord a warrant to purchase 50,000 shares of our common stock with an exercise price of $2.64 per
share. The warrant expires in October 2015. As of March 31, 2009, the warrant remained outstanding and exercisable.

In connection with the private
placement financing completed in June 2006, we issued to the investors warrants to purchase an aggregate of 11,999,999 shares of our common stock at an exercise price of $2.10 per share. These warrants contain anti-dilution provisions that adjust
the exercise price and number of shares subject to the warrants upon reorganization, mergers, stock splits and combinations, reclassifications of our common stock, stock dividends, or other issuances of our common stock at purchase prices less than
the warrants exercise price (other than certain exempt issuances, such as sales of common stock to our employees or conversions of convertible securities and options that were outstanding prior to the issuance of the warrants). During 2008,
investors exercised all remaining warrants of 11,301,499 in a series of cashless exercises to purchase 8,982,521 shares of our common stock. As of December 31, 2008, all of these warrants had been exercised.

Additionally, in connection with the June 2006 private placement financing, we issued to our placement agent a warrant to purchase 866,666 shares of our common stock at
an exercise price of $2.52 per share. This warrant contains anti-dilution provisions that adjust the exercise price and number of shares subject to the warrants upon reorganization, mergers, stock splits and combinations, reclassifications of our
common stock, or stock dividends, but not for other issuances of our common stock. During 2007, the placement agent transferred portions of the warrant to certain of its employees. During 2008, the placement agent and its transferees had exercised
warrants utilizing both cash and cashless exercises to purchase an aggregate of 110,781 shares of our common stock. As of March 31, 2009, 7,500 of these warrants remained outstanding and exercisable and expire in June 2011.



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Stock Options

The estimated fair value of each stock option award granted was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions for stock option grants for the three months
ended March 31, 2009 and 2008:



|                                                                |  |           |       |   |      |   |      |  
|--------------------------------------------------------------- |  | --------- | ----- | - | ---- | - | ---- | -
|                                                                |  | March 31, |      
|                                                                |  | 2009      |       |   | 2008 |  
|Risk free interest rates                                        |  |           | 2.9   | % |      |   | 4.1  | %
|Volatility                                                      |  |           | 87.6  | % |      |   | 80.0 | %
|Dividend yield                                                  |  |           | 0     | % |      |   | 0    | %
|Expected option term (years)                                    |  |           | 7.0   |   |      |   | 6.8  |  
|Weighted average fair value of stock option grants to employees |  | $         | 17.86 |   |      | $ | 6.23 |  

The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of
our employee stock options. The expected volatility is based on the historical volatility of our stock. We have not paid any dividends on common stock since our inception and do not anticipate paying dividends on our common stock in the foreseeable
future. The computation of the expected option term is based on a weighted-average calculation combining the average life of stock options that have already been exercised or cancelled with the estimated life of all unexercised stock options.

SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures
differ from those estimates. Pre-vesting forfeitures were estimated to be 10.4% based on historical experience over seven years. Our determination of fair value is affected by our stock price as well as a number of assumptions that require judgment.

A summary of the status of our stock option plans as of March 31, 2009, and of changes in stock options outstanding under the plans during the three
months ended March 31, 2009, is as follows:



|                                                 |  |                          |   |  |                                         |       |                                                    |     |                          |   |           
|------------------------------------------------ |  | ------------------------ | - |  | --------------------------------------- | ----- | -------------------------------------------------- | --- | ------------------------ | - | ----------
|Outstanding                                      |  | Shares Subjectto Options |   |  | WeightedAverage ExercisePrice per Share |       | WeightedAverageRemainingContractualTerm (in years) |     | AggregateIntrinsic Value
|Outstanding at December 31, 2008                 |  | 6,238,071                |   |  | $                                       | 7.70  |                                                    |     |                          |   |           
|Granted                                          |  | 1,231,871                |   |  |                                         | 22.96 |                                                    |     |                          |   |           
|Canceled                                         |  | (51,476                  | ) |  |                                         | 10.05 |                                                    |     |                          |   |           
|Exercised                                        |  | (50,850                  | ) |  |                                         | 4.98  |                                                    |     |                          |   |           
|                                                 |  |                          |   |  |                                         |       |                                                    |     |                          |   |           
|Outstanding at March 31, 2009                    |  | 7,367,616                |   |  | $                                       | 10.26 |                                                    | 7.9 |                          | $ | 50,700,558
|                                                 |  |                          |   |  |                                         |       |                                                    |     |                          |   |           
|Options vested and exercisable at March 31, 2009 |  | 3,302,886                |   |  | $                                       | 7.81  |                                                    | 6.8 |                          | $ | 30,111,649
|                                                 |  |                          |   |  |                                         |       |                                                    |     |                          |   |           

As of March 31, 2009, there was $30.3 million of unamortized compensation expense related to unvested
stock option awards, which is expected to be recognized over a remaining weighted-average vesting period of 2.7 years. Cash received from stock option exercises for the three months ended March 31, 2009 and 2008 was $255,000 and $43,000,
respectively. At March 31, 2009, there were 616,412 shares available for future option grants.

(9) Inventories

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



|                |  |               |        |                  |   |       
|--------------- |  | ------------- | ------ | ---------------- | - | ------
|                |  | March 31,2009 |        | December 31,2008
|                |  | (Unaudited)   |        | (Audited)       
|Raw materials   |  | $             | 4,854  |                  | $ | 7,560 
|Work in process |  |               | 1,440  |                  |   | 282   
|Finished goods  |  |               | 4,271  |                  |   | 2,789 
|                |  |               |        |                  |   |       
|Total           |  | $             | 10,565 |                  | $ | 10,631
|                |  |               |        |                  |   |       

Inventories are shown net of excess and obsolescence reserves of $2.0 million and $1.8 million at March 31,
2009 and December 31, 2008, respectively.

(10) Asset-backed Loan

On August 31, 2007, we signed an amendment to our existing asset-backed loan line that had previously expired. Under the terms of this amendment, we may elect to have individual minimum funding of $100,000 up to
an aggregate limit of $3.0 million through December 23, 2008. All borrowings are secured by the underlying financed equipment.



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As of March 31, 2009, we had an aggregate of $1.1 million outstanding on this asset-backed loan line relating to
four fundings with interest rates from 10.6% to 9.73% to be repaid in 36 monthly installments. Our right to borrow additional funds under this facility expired in December 2008.

(11) Acquisition and Integration Costs

As of March 31, 2009, we had approximately $0.4 million remaining in
accrued acquisition costs, relating to the acquisition of Gemini Genomics, plc in 2001. The remaining acquisition liability relates to facility exit costs.

The accrued acquisition cost activity in the three months ended March 31, 2009, was as follows (in thousands):



|                                                     |  |                            |     |             |   |     |                          |  |   |    
|---------------------------------------------------- |  | -------------------------- | --- | ----------- | - | --- | ------------------------ |  | - | ---
|                                                     |  | Balance atDecember 31,2008 |     | Deductions  |   |     | Balance atMarch 31, 2009
|                                                     |  | (Audited)                  |     | (Unaudited) |   |     | (Unaudited)             
|Costs to close facilities and exit lease commitments |  | $                          | 484 |             | $ | (59 | )                        |  | $ | 425

(12) Warranty Costs and Reserves

In accordance with FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45), we
provide a warranty provision related to the sales of our MassARRAY equipment based on our experience of returns and repairs required under the warranty period.

We generally provide a one-year warranty on our MassARRAY Compact system and related equipment. We establish an accrual for estimated warranty expenses associated with system sales based on historical amounts. This expense is recorded as a
component of cost of consumables and products revenue in the consolidated statement of operations.

Changes in our warranty liability during the three
months ended March 31, 2009, were as follows (in thousands):



|                                     |  |   |      |  
|------------------------------------ |  | - | ---- | -
|Balance as of December 31, 2008      |  | $ | 606  |  
|Reductions to liability requirements |  |   | (506 | )
|Repairs and replacements             |  |   | 145  |  
|                                     |  |   |      |  
|Balance as of March 31, 2009         |  | $ | 245  |  
|                                     |  |   |      |  

(13) Litigation

In November 2001, we and certain of our current or former officers and directors were named as defendants in a class action shareholder complaint filed by Collegeware USA in the U.S. District Court for the Southern District of New York (now
captioned In re Sequenom, Inc. IPO Securities Litigation) Case No. 01-CV-10831. Similar complaints were filed in the same District Court against hundreds of other public companies that conducted initial public offerings of their common stock in
the late 1990s and 2000. In the complaint, the plaintiffs allege that our underwriters, certain of our officers and directors and we violated the federal securities laws because our registration statement and prospectus contained
untrue statements of material fact or omitted material facts regarding the compensation to be received by and the stock allocation practices of the underwriters. The plaintiffs seek unspecified monetary damages and other relief. In October
2002, our officers and directors were dismissed without prejudice pursuant to a stipulated dismissal and tolling agreement with the plaintiffs. In February 2003, the District Court dismissed the claim against us brought under
Section 10(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act), without giving the plaintiffs leave to amend the complaint with respect to that claim. The District Court declined to dismiss the claim against us brought
under Section 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 settlement agreement with the plaintiffs. In February 2005, the District Court issued a decision
certifying a class action for settlement purposes and granting preliminary approval of the settlement subject to modification of certain bar orders contemplated by the settlement. In August 2005, the District Court reaffirmed class certification and
preliminary approval of the modified settlement. In February 2006, the District Court dismissed litigation filed against certain underwriters in connection with the claims to be assigned to the plaintiffs under the settlement. In April 2006,
the District Court held a final fairness hearing to determine whether to grant final approval of the settlement. In December 2006, the U.S. Court of Appeals for the Second Circuit vacated the District Courts decision certifying as class
actions the six lawsuits designated as focus cases. Thereafter the District Court ordered a stay of all proceedings in all of the lawsuits pending the outcome of plaintiffs petition to the Second Circuit for rehearing en
banc. In April 2007, the Second Circuit denied plaintiffs rehearing petition, but clarified that the plaintiffs may seek to certify a more limited class in the District Court. Accordingly, the settlement as originally negotiated was
terminated pursuant to stipulation and will not receive final approval. Plaintiffs filed amended complaints in the six focus cases in August 2007. Sequenom is not one of the focus case issuers. In September 2007, Sequenoms named officers and



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directors again extended the tolling agreement with the plaintiffs. Also in September 2007, the plaintiffs moved to certify the classes alleged in the focus
cases and to appoint class representatives and class counsel in those cases. The focus case issuers filed motions to dismiss the claims against them in November 2007 and an opposition to plaintiffs motion for class certification in December
2007. The District Court denied the motions to dismiss in March 2008. On October 2, 2008, the plaintiffs withdrew their class certification motion. On February 25, 2009, liaison counsel for plaintiffs informed the district court that a
settlement of the cases had been agreed to in principle, subject to formal approval by the parties and preliminary and final approval by the court. On April 2, 2009, the parties submitted a tentative settlement agreement to the court and moved
for preliminary approval thereof. If approved, the settlement would result in the dismissal of all claims against us and our officers and directors with prejudice, and our pro rata share of the settlement fund would be fully funded by insurance.

On June 5, 2008, we were named as a defendant in a complaint filed by plaintiffs Beckman Coulter Inc. and Orchid Cellmark Inc. in the United States
District Court for the Southern District of California. In the complaint, the plaintiffs allege that we are infringing three patents owned by Orchid Cellmark Inc. and licensed to Beckman Coulter Inc. by making and selling our iPLEX products and
teaching our customers how to use the products. The plaintiffs seek a permanent injunction enjoining us from further infringement, and unspecified monetary damages, including lost profits, enhanced damages pursuant to 35 U.S.C. § 284, costs,
attorneys fees and other relief as the court deems just and proper. On August 15, 2008, we filed an answer and counter claims against plaintiffs seeking declaratory judgments that the patents are not infringed and are invalid and/or
unenforceable. Discovery is currently in progress. We believe that the plaintiffs claims are without merit and will vigorously defend against the claims advanced in the complaint.

On October 30, 2008, we filed a patent infringement suit against Ibis Biosciences, Inc., formerly a subsidiary of Isis Pharmaceuticals, Inc. The complaint was served on the defendant in February 2009. Ibis has
been acquired by Abbott Molecular and has not yet responded to the complaint. The lawsuit was filed in the United States District Court for the District of Delaware. The lawsuit alleges that the sale or offer for sale of the Ibis T5000 Biosensor
System and related technology infringes three U.S. patents: 6,300,076, 6,500,621 and 7,419,787. We are seeking a permanent injunction enjoining the defendant from further infringement and monetary damages, including enhanced damages pursuant to 35
U.S.C. § 284, costs, attorneys fees and other relief as the court deems just and proper.

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

(14) Income Taxes

In July 2006 the FASB issued FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement
No. 109 (FIN 48), which clarifies the accounting for uncertainty in income taxes recognized in an entitys financial statements in accordance with SFAS 109 Accounting for Income Taxes, and prescribes a recognition
threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under FIN 48, the impact of an uncertain income tax position on the income tax return must be recognized at
the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, FIN 48
provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

We adopted the
provisions of FIN 48 on January 1, 2007. There were no unrecognized tax benefits as of the date of adoption and there are no unrecognized tax benefits included in the balance sheet at December 31, 2008 or March 31, 2009 that
would, if recognized, affect the effective tax rate.

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 March 31, 2009 and December 31, 2008, and have recognized no interest and/or penalties in the consolidated statement of operations for the three months ended
March 31, 2009, and the year ended December 31, 2008. Due to the existence of the valuation allowance, future changes in our unrecognized tax benefits will not impact our effective tax rate.

We are subject to taxation in the U.S., foreign and various state jurisdictions. Our tax years for 1994 and forward are subject to examination by the Federal and
California tax authorities due to the carryforward of unutilized net operating losses and research and development credits.

We completed a
Section 382/383 analysis regarding the limitation of net operating loss and research and development credit carryforwards in April 2008. Based on the conclusion of the Sections 382/383 study, we reduced our deferred tax assets and
valuation allowance on these assets by approximately $89.8 million to reflect this limitation. As of December 31, 2008, we have updated our unrecognized tax benefits under FIN 48 and due to the existence of the valuation allowance, future
changes in our unrecognized tax benefits will not impact our effective tax rate.



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At December 31, 2008, we had federal and state tax net operating loss carryforwards of approximately $74.7 million
and $74.7 million, respectively. The federal and state tax loss carryforwards are reduced by the Section 382 limitation. The federal tax loss carryforwards will begin to expire in 2021, unless previously utilized. Also at December 31,
2008, we had German net operating loss carryforwards of approximately $11.0 million, which may be carried forward indefinitely.

We also had federal
and California research and development tax credit carryforwards of approximately $1.8 million and $8.9 million, respectively as of December 31, 2008. The federal research and development credits have been reduced by the Section 383
limitation. The federal research and development tax credit carryforwards will begin to expire in 2011 unless previously utilized. The California research and development credit carryforward indefinitely.

(15) Subsequent Events

In April 2009, we formally approved and
implemented a cost cutting initiative in our genetic analysis business. This initiative includes a decrease in the genetic analysis workforce of approximately 30 employees that will result in an estimated charge of approximately $850,000 to be
recorded in the second quarter of 2009 in connection with one-time termination benefits and other related costs.

On April 29, 2009, we announced that
the expected launch of our Down syndrome test has been delayed due to the discovery of employee mishandling of research and development test data and results. Accordingly, we are no longer relying on our previously announced research and development
test data and results. Our Board of Directors has formed a special committee of independent directors to oversee an independent investigation of the employees activity related to the test data and results. The committee has engaged independent
counsel to assist the committee in the conduct of the investigation.

Beginning April 30, 2009 several complaints were filed in the U.S. District
Court for the Southern District of California against us and certain of our executive officers on behalf of certain purchasers of our common stock. The complaints include claims asserted under Section 10 of the Exchange Act and Sections 11 and
12(a)(2) of the Securities Act and have been brought as purported shareholder class actions. In general, the complaints allege that we and certain of our executive officers issued materially false and misleading statements regarding our Down
syndrome test under development, thereby artificially inflating the price of our common stock. The plaintiffs are seeking unspecified monetary damages and other relief. We will vigorously defend against the claims advanced.



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

All statements in this report that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. These forward-looking statements can generally be identified
as such 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, the negative 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. These forward-looking statements are or will be, as applicable, based largely on our expectations and projections about future events and
future trends affecting our business, and so are or will be, as applicable, subject to risks and uncertainties including but not limited to the risk factors discussed in this report, that could cause actual results to differ materially from those
anticipated in the forward-looking statements. We caution investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements. Our views
and the events, conditions and circumstances on which these future forward-looking statements are based, may change. All forward statements are qualified in their entirety by this cautionary statement and we undertake no obligation to revise or
update any such statements to reflect events or circumstances after the date hereof.

SEQUENOM®, SpectroCHIP®, iPLEX® , and MassARRAY® are registered trademarks and EpiTYPER, SEQureDx , MassCLEAVE, iSEQ and AttoSense are trademarks of Sequenom, Inc. This report 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, the words we,
us, our, and Sequenom refer to Sequenom, Inc. and its wholly owned subsidiaries on a consolidated basis, unless explicitly noted otherwise.

Overview

We are a diagnostic testing and genetics analysis company committed to providing products, services,
diagnostic testing, applications and genetic analysis products that translate the results of genomic science into solutions for biomedical research, translational research, molecular medicine applications, and agricultural, livestock, and other
areas of research. Our development and commercialization efforts in various diagnostic areas include noninvasive prenatal diagnostics, oncology, infectious diseases, and other disorders.



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Molecular Diagnostics and SEQureDx Technology

Molecular Diagnostics

We remain committed to
researching, developing and pursuing the commercialization of various noninvasive molecular diagnostic tests for prenatal genetic disorders and diseases, oncology, infectious diseases, and other diseases and disorders. 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 proprietary MassARRAY system; however, we may in the future employ other platforms with
our applications as may be more 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 diagnostic tests using our noninvasive, circulating cell-free fetal (ccff) nucleic acid based assay technology. This technology is noninvasive to the womb using a simple
maternal blood draw for prenatal diagnosis in order to provide more fundamental and reliable information about the fetus early in pregnancy. Our planned screening and diagnostic tests in areas of womens health, oncology, and infectious disease
are also noninvasive and are expected to use simple blood draws from patients rather than invasive procedures such as surgery.

Supporting our initiatives
in womens health, oncology and infectious disease we completed our acquisition of the complete AttoSense portfolio of gene-based molecular tests and related assets from SensiGen, LLC in February 2009. The acquisition includes highly-sensitive
and specific tests for the detection and monitoring of human papillomavirus (HPV) (the primary cause of cervical and head and neck cancers), systemic lupus erythematosus (Lupus), chronic kidney disease (CKD), inflammatory bowel disease (IBD) and
other tests, all of which utilize our proprietary MassARRAY platform.

Prenatal Diagnostics

Noninvasive prenatal diagnostic tests based on our foundational fetal nucleic acid analysis intellectual property are initially being developed on our MassARRAY platform
for chromosomal aneuploidies including Trisomy 21 (Down syndrome), Trisomy 18 (Edwards syndrome), and Trisomy 13 (Patau syndrome), Rhesus D genotyping and gender determination for sex-linked disorders. Through our Clinical Laboratory Improvement
Amendments (CLIA) licensed laboratory, the Sequenom Center for Molecular Medicine (SCMM), located in Grand Rapids, Michigan, we intend to develop, validate and commercialize laboratory developed tests (LDTs). This is a common approach used for most
molecular genetic tests. We have made substantial investments in our information technology infrastructure to enhance the capabilities of our CLIA laboratory to track samples and provide electronic ordering and reporting, and have put in place
sample collection and transportation systems that can be readily scaled. We are also pursuing relationships with payors that will support our pricing structure and reimbursement opportunities.

In April 2009, we announced that the expected launch of our Down syndrome test has been delayed due to the discovery of employee mishandling of research and development
(R&D) test data and results. Accordingly, we are unable to rely on the data and results from these R&D studies. We are currently re-evaluating our validation studies for our Down syndrome test. Subject to the outcome of our re-evaluation, we
currently expect to complete these validation studies before the end of 2009. The scope, structure and timing of these clinical studies are also being re-evaluated. We are also arranging for clinical studies to be conducted by third parties prior to
the launch of our Down syndrome test. We now intend to launch the Down syndrome test following publication in peer-reviewed journals of the results from these third party clinical studies.

Subject to the completion of a precautionary review of data for all of our tests under development, we still plan
to launch through our CLIA laboratory separate noninvasive prenatal screening LDT tests, as well as a carrier screening test for Cystic Fibrosis by the end of the fourth quarter of 2009. Concurrent with our LDT commercialization activities, we plan
to conduct the development, validation, and other activities necessary to file submissions with the Food and Drug Administration (FDA) seeking approval for selected diagnostic tests.

We plan to pursue development of other noninvasive prenatal tests which are relevant to diagnosing disorders or conditions such as thalassemias, cardiac disorders, congenital disorders and autism, and also pursue
development of tests for post-natal applications of interest. For example, in January 2009 we announced a collaboration with the Immune Tolerance Institute to develop an advanced newborn screening test for severe combined immunodeficiency (SCID), a
rare disease affecting newborns that can be treated effectively if diagnosed early. The test is based on the pioneering work of Jennifer Puck, M.D. of the University of California, San Francisco. A successful feasibility study was recently completed
demonstrating the adaptability of Dr. Pucks real time polymerase chain reaction (RT-PCR) screening assay for SCID diagnosis to our MassARRAY platform.

Genetic Analysis

Our proprietary MassARRAY system, comprised of hardware, software applications, consumable chips and reagents, is a high
performance (in speed, accuracy and cost efficiency) nucleic acid analysis platform that quantitatively and precisely measures genetic target material and variations. Our platform is widely accepted as a leading high-performance DNA analysis
platform for the fine



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mapping genotyping market and is gaining traction in newer developing markets, such as epigenomics and clinical microbiology. Our customers include premier
clinical research laboratories, bio-agriculture, bio-technology and pharmaceutical companies, academic institutions, various government agencies worldwide, as well as our CLIA certified lab, Sequenom Center for Molecular Medicine. To provide
customer support for our expanding user base and in an effort to maximize market penetration, we have established direct sales and support personnel serving North America, Europe, India, Australia and Asia, in addition to regional distribution
partners in France, Israel, Russia, Eastern Europe, South Korea, New Zealand, Singapore, Taiwan, Kuwait, Saudi Arabia and Turkey.

Our MassARRAY system
provides reliable results for a wide range of DNA/RNA analysis applications including single nucleotide polymorphism, or SNP, genotyping detection of mutations, analysis of copy number variants and other structural genome variations. In addition,
the system is valuable in providing quantitative gene expression analysis, quantitative methylation marker analysis, comparative sequence analysis of haploid organisms, SNP discovery, and oligonucleotide quality control. These applications are
provided through proprietary application software that operates on the MassARRAY platform and through the purchase of consumable chips and reagent kits. While the MassARRAY system is versatile across many applications, it is a robust and
cost-effective genotyping solution for fine mapping projects enabled through our iPLEX multiplexing assay reagents and chips which permits multiplexed SNP analysis using approximately the same amount of reagents and chip surface area as is used for
a single sample analysis.

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

During the first quarter of 2009, we experienced reduced demand for our MassARRAY systems as a result of the current economic environment and
we are uncertain whether demand for our products and services will further deteriorate in future periods as a result of the weak economy. As a result in part of this weaker demand, in April 2009, we formally approved and implemented a cost cutting
initiative in our genetic analysis business which is expected to result in an approximately $8 million decrease in costs in 2009 and an annualized reduction in costs of approximately $10 million. This initiative includes a decrease in the genetic
analysis workforce of approximately 30 employees that will result in an estimated charge of approximately $850,000 to be recorded in the second quarter of 2009 in connection with one-time termination benefits and other related costs.

Critical Accounting Policies and Estimates

Our condensed
consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates,
judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of
assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates, judgments or assumptions
and actual results, our financial statements will be affected. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our
reported financial results include the following:



| |  |  | Revenue recognition
| | - |  | -------------------



| |  |  | Accrued acquisition and integration costs
| | - |  | -----------------------------------------



| |  |  | Goodwill and impairment of long-lived assets
| | - |  | --------------------------------------------



| |  |  | Allowance for doubtful accounts
| | - |  | -------------------------------



| |  |  | Reserves for obsolete and slow-moving inventory
| | - |  | -----------------------------------------------



| |  |  | Warranty costs
| | - |  | --------------



| |  |  | Income taxes
| | - |  | ------------



| |  |  | Share-based compensation
| | - |  | ------------------------

In many cases, the
accounting treatment of a particular transaction is specifically dictated by GAAP and does not require managements judgment in its application. There are also areas in which managements judgment in selecting among available alternatives
would not produce a materially different result. Our senior management has reviewed these critical accounting policies and related disclosures with the Audit Committee of our Board of Directors.

During the first three months of 2009, there were no significant changes in our critical accounting policies and estimates. Please refer to Managements Discussion
and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our the year ended December 31, 2008 for a more complete discussion of our critical accounting
policies and estimates.



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Results of Operations for the Three Months Ended March 31, 2009 and 2008

Revenues

Total revenues for the three months ended March 31,
2009 decreased to $8.7 million from $10.6 million for the same period in 2008 and are comprised of product related sales and contract research services. Product related revenues are derived from sales of consumables including our SpectroCHIP
bioarray chips used with our iPLEX and other assays, MassARRAY systems, maintenance agreements, sales and licensing of our proprietary software, and license fees from end-users.

Consumables revenue was $4.7 million for both the three months ended March 31, 2009 and 2008. While our installed base of MassARRAY Compact systems has increased against the comparative period, fewer consumables
orders were placed as our customers in the biomedical research market slowed expenditures related to studies for general research purposes due to the current economic environment.

MassARRAY and other product related revenues were $3.1 million for the three months ended March 31, 2009, as compared to $4.5 million for the same period in 2008. The decrease of $1.4 million was due to a
reduction in MassARRAY system hardware sales to $2.4 million for the three months ended March 31, 2009 from $3.7 million for the same period in 2008 due to fewer system placements in the three months ended March 31, 2009. The decrease in
system hardware sales was attributable to the academic, pharmaceutical, and clinical research institutions slowing capital expenditure requirements associated with the current economic environment. Revenue from other product sales, including
MassARRAY system maintenance contracts, for the three months ended March 31, 2009 and 2008 were $0.7 million for each quarter.

We recorded services
revenue of $0.8 million for the three months ended March 31, 2009, as compared to $1.4 million for the comparative period in 2008. The decrease of $0.6 million is attributable to a general business decline in the commercial, clinical analysis
and the academic research markets compared to the prior period.

Research and other revenues, which consists of license and research grant payments, were
approximately $3,000 and $57,000 for the three months ended March 31, 2009 and 2008, respectively. The timing of research revenues depends upon our expenditures on grant research and our receipt of grant funding from sponsoring agencies. We
expect license and grant revenue to be minimal going forward.

Our revenues have historically fluctuated from period to period and likely will continue to
fluctuate substantially in the future based upon the unpredictable sales cycle for the MassARRAY system, general economic conditions, revenue recognition criteria, the overall acceptance and demand for our new and existing commercial products and
services, as well as the future adoption rates of our diagnostic assays. Additionally, in connection with our cost cutting initiative that commenced in April 2009, we expect services revenue to fluctuate as we move from smaller, low volume
agricultural research projects to larger pharmaceutical and oncology panels.

Cost of product and service revenues and gross margin

Cost of product revenues for the three months ended March 31, 2009 and 2008 were $2.4 million and $3.5 million, respectively. Gross margins on consumables and
product related sales for the three months ended March 31, 2009 were 70%, compared to 62% for the same period in 2008. Gross margins primarily increased due to fewer system placements during the current quarter as compared to same period in
2008, which historically sell at lower gross margins, offset by maintained consumable sales to the comparable period in 2008, which historically sell at higher average gross margins.

Cost of services revenue for the three months ended March 31, 2009 were $1.0 million compared to $1.2 million for the same period in 2008. Gross margins were negative during the current quarter due to fewer
genetic analysis research service contracts being completed in the three months ended March 31, 2009, as compared to the prior period in 2008, which resulted in the inability to absorb idle excess capacity and related expenses, primarily
associated with salaries and related personnel expenses. Gross margins on services revenue are dependent on the particular contract terms of the work undertaken in each quarter.

The Companys overall gross margin was 61% and 56% for the three months ended March 31, 2009 and 2008, respectively. When compared to the prior period, the increase in overall gross margin was attributable
to lower system and contract research revenues, which are sold at a lower margin than consumables. Consumables revenue remained flat during the first quarter of 2009 as compared to the first quarter of 2008, although margin improved due to the mix
of product related sales during the current period.

We believe that gross margin in future periods will be affected by, among other things, the selling
price for systems and consumables, consumable sales per MassARRAY system sold, the mix of product sales and the type of services, competitive conditions, sales volumes, discounts offered, sales through distributors, payor contracts for diagnostic
tests, the volume of diagnostic tests sold, the adoption rates of our diagnostic tests we commercialize, as well as the cost of goods sold, inventory reserves and obsolescence charges required and royalty payment obligations on in-licensed
technologies. Additionally, in connection with our cost cutting initiative commenced in April 2009, we expect services margins to fluctuate as we move from smaller, low volume agricultural research projects, which have historically had lower gross
margins on a project by project basis, to larger pharmaceutical and oncology panels, which generally have higher gross margins.



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Research and development expenses

Research and development expenses increased to $8.8 million for the three months ended March 31, 2009 from $4.9 million for the same period in 2008. These expenses consisted primarily of salaries and related
personnel expenses, product development costs, and expenses relating to work performed under research contracts.

The increase in research and development
expenses of $3.9 million for the three months ended March 31, 2009, as compared to the same period in 2008 primarily relates to increased headcount and related costs of $1.2 million, $0.6 million for higher share-based compensation charges,
increased operating supplies of $0.4 million primarily associated with our noninvasive prenatal diagnostic research and development, $0.7 million related to clinical trial costs associated with our Trisomies, RHD and Gender programs, $0.2 million in
higher licensing fees to support our diagnostic initiatives, $0.2 million of increased depreciation primarily associated with the acquisition of CMM in the fourth quarter of 2008, $0.1 million in higher consulting costs to support various research
and development projects and $0.4 million in higher allocated overhead charges for facilities, IT and other expenses due to higher headcount from that in the first quarter of 2008.

We expect our research and development expenses to increase in 2009 compared to 2008, as we increase our investment in the development of noninvasive prenatal nucleic acid based tests and as we continue to invest in
new products and applications for our MassARRAY platform.

Selling and marketing expenses

Selling and marketing expenses for the three months ended March 31, 2009 increased to $7.3 million, as compared to $5.8 million for the same period in 2008. These
expenses consisted 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 $1.5 million for sales and marketing expenses in the three months ended March 31, 2009 compared to the same period in 2008 primarily were related to increased
costs of $0.9 million for increased headcount and travel related expenses associated with building our sales force infrastructure for our noninvasive diagnostics business, $0.6 million for higher share-based compensation charges and $0.3 million of
advertising and public relations consulting expenses for sales and marketing projects associated with our noninvasive prenatal technology, offset by a decrease of $0.2 million in reduced sale and marketing expenses and positive adjustments to our
bad debt reserve.

We expect our sales and marketing headcount and associated expenses to increase in 2009 compared to 2008 as we strengthen our sales
force and continue building our commercial development team for our noninvasive prenatal diagnostic tests.

General and administrative expenses

General and administrative expenses for the three months ended March 31, 2009 were $6.9 million, as compared to $3.4 million for the same period in
2008. These expenses consisted 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 $3.5 million for the three months ended March 31, 2009 from the same period in 2008 was primarily due to $2.0 million of increased legal fees associated with on-going litigation,
as well as acquisition activities, $0.6 million for increased headcount and related expenses, $0.2 million of higher IT related and equipment expense, $0.2 million in increased audit and tax related expenses, $0.2 million of higher investor
relations fees associated with acquisition activity, $0.2 million of higher rent and communications expenses associated with our San Diego facilities and $0.5 million in higher share-based compensation charges, offset by increased allocation of
information technology department expenses to other functional departments of $0.5 million.

We expect general and administrative costs to increase in 2009
compared to 2008, as we build our infrastructure to support our anticipated growth, as well as continued increases in legal costs due to our ongoing and new litigation.

Interest income, net

Interest income, net, was $0.2 million for the three months ended March 31, 2009, as
compared to $0.5 million for the same period in 2008. While our cash, cash equivalents and marketable securities balances were higher in the current period, changes in our investment policy and the overall reduction in the rates of return in our
investment portfolio are attributable to the decrease of $0.3 million to the comparable period in 2008.



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Loss on marketable securities

No loss on marketable securities was recorded for the three months ended March 31, 2009, compared to $0.8 million for the comparable period in 2008. The recognized loss in the three months ended March 31, 2008, was due to an
other-than-temporary impairment on two of our investments in auction rate securities, as compared to the current period in which our analysis concluded no impairment had occurred during the three months ended March 31, 2009. If the credit
ratings of the security issuers deteriorate or if uncertainties in these markets continue and any decline in market value is determined to be other-than-temporary in our remaining auction rate security investments, we would be required to adjust the
carrying value of the investment through additional impairment charges.

Other income (expense), net

Other income (expense), net, was $0.1 million and $(0.1) million for the three months ended March 31, 2009 and 2008, respectively. The increase in interest income
(expense), net for the three month months ended March 31, 2009 was due to favorable realized foreign currency translations and miscellaneous other income items, offsetting interest expense associated with our asset-backed loan.

Liquidity and Capital Resources

As of March 31, 2009, cash,
cash equivalents and current marketable securities totaled $81.2 million, compared to $98.3 million at December 31, 2008. Our cash equivalents and current marketable securities are held in U.S. Government securities with ratings of AAA and
repurchase agreements collateralized by U.S. Government securities with ratings of AAA. As of March 31, 2009, we have $5.7 million of auction rate securities, which reflects a $3.7 million adjustment to the principal value of $9.4 million.
Additional discussion with respect to the risks and uncertainties associated with our auction rate securities is included in the Risk Factors in Item 1A of this report, in Quantitative and Qualitative Disclosures about Market
Risk in Item 3 of this report and in the notes to our condensed consolidated financial statements included elsewhere in this report.

We have a
history of recurring losses from operations and have an accumulated deficit of $543.8 million as of March 31, 2009. Our capital requirements to sustain operations, including research and development projects, have been and will continue to be
significant. As of March 31, 2009, we had working capital of $84.1 million.

On July 1, 2008, we closed an underwritten public offering of
5,500,000 shares of our common stock at $15.50 per share, with the underwriters exercising their option to purchase an additional 825,000 shares on July 8, 2008. Including the additional shares, the offering resulted in aggregate net proceeds
of approximately $91.8 million after deducting underwriting discounts, commissions and transaction expenses.

We consider the material drivers of our cash
flow to be sales volumes, working capital, inventory management and operating expenses. Our principal sources of liquidity are our cash, cash equivalents and marketable securities. Cash used in operations for the three months ended March 31,
2009, was $12.7 million, as compared to $9.1 million for the same period in 2008. The use of cash was primarily a result of the net loss of $17.5 million for the three months ended March 31, 2009, adjusted for non-cash items of depreciation and
amortization of $1.3 million, share-based compensation of $3.0 million, non-cash compensation charges related to vesting of restricted stock of $0.2 million, offset by a non-cash change in deferred rent of $0.1 million. The changes in our operating
assets and liabilities primarily consisted of a decrease in other current assets and prepaid expenses of $0.7 million, other liabilities of $0.1 million and accounts payable and accrued expenses of $1.4 million. These changes were offset by
increases in accounts receivable of $2.1 million and deferred revenue of $0.4 million. At our current and anticipated level of operating loss, we expect to continue to incur an operating cash outflow on a quarterly basis for the foreseeable future.

Investing activities, other than the changes in the purchase of marketable securities of $0.1 million, consisted of purchases for capital equipment that
used $2.8 million and the cash paid in connection with our acquisition of SensiGen, LLC of $1.9 million during the three months ended March 31, 2009.

Net cash provided by financing activities was $0.6 million for the three months ended March 31, 2009, as compared to cash provided by financing activities of $0.5 million for the same period in 2008. Financing activities during the
three months ended March 31, 2009, included the receipt of proceeds from the exercise of stock options and employee stock purchase plan purchases during the period of $0.8 million. Our cash used consisted of repayments on our asset-backed loan
of $0.2 million for the three months ended March 31, 2009.

Based on our current plans, we believe our cash, cash equivalents and current marketable
securities, will be sufficient to fund our operating expenses and capital requirements through 2010. However, the actual amount of funds that we will need will be determined by many factors, some of which are beyond our control, and we may need
funds sooner than currently anticipated. These factors include but are not limited to:



| |  |  | the size of our future operating losses;
| | - |  | ----------------------------------------



| |  |  | the level of our and our distributors success in selling our MassARRAY products and services and LDT services through SCMM;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



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| |  |  | 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 of earlier 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 ability to validate our diagnostic tests and the level of sensitivity and specificity of our diagnostic tests;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | our success in, and the expenses associated with, researching, developing and commercializing diagnostic products, alone or in collaboration with our partners, and
obtaining any required regulatory approval for those products;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the level of our success alone or in collaboration with our partners in launching and selling any diagnostic products and services;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | the extent of our research and development pursuits, including our level of investment in MassARRAY product research and development, and diagnostic assay and other
technology research and development;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | the level of our legal expenses, including those expenses associated with the independent investigation, intellectual property protection and those expenses and any
damages payments associated with litigation, including intellectual property litigation and securities related litigation;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | our ability to liquidate any ARS holdings;
| | - |  | ------------------------------------------



| |  |  | the level of our expenses associated with the audit of our consolidated financial statements as well as compliance 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 Down syndrome and other diagnostic tests or other factors may not support capital raising transactions. If we are unable to obtain
sufficient additional funds on a timely basis or on terms favorable to us, we may be required to cease or reduce further commercialization of our products, to cease or reduce certain research and development projects, to sell, license or otherwise
dispose of some or all of our technology or assets or business units or to merge all or a portion of our business with another entity. If we raise additional funds by selling shares of our capital stock, the ownership interest of our current
stockholders will be diluted.

At March 31, 2009, we had outstanding stand-by letters of credit with financial institutions totaling $1.1 million
related to our building and operating leases, which will remain in place until the expiration of the Newton, Massachusetts building lease agreement in December 2010.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Marketable Securities and Fair Value Measurements

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

We account for our marketable securities in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities, and originally classified these securities as available-for-sale. Consistent with our investment policy guidelines in effect when originally purchased, the auction rate security (ARS) investments held by us all had
AAA/AA credit ratings at the time of purchase. At March 31, 2009, $9.4 million of principal was invested in ARS. The ARS held are private placement securities with various long-term nominal maturities with interest rates reset through a Dutch
auction each month, except for one ARS that resets every 92 days. The monthly auctions historically have provided a liquid market for these securities. The investments in ARS represent interests in collateralized debt obligations supported by
insurance securitizations and other structured credits, including corporate bonds and to a lesser degree, pools of residential and commercial mortgages. With the liquidity issues experienced in global credit and capital markets, the ARS held at
March 31, 2009 have experienced multiple failed auctions as the amount of securities submitted for sale has exceeded the amount of purchase orders.

Due to changes in the underlying assumptions utilized in our discounted cash flow analyses and that our holdings of ARS are not required for operational purposes through 2010, we have classified all ARS investments of $5.7 million as
noncurrent assets on the condensed consolidated balance sheet at March 31, 2009. Although the ARS continue to pay interest according to their stated terms, based on changes in assumptions and input from our valuation models and an analysis of
other-than-temporary impairment factors, a recognized loss for other-than-temporary impairment losses of $2.6 million and $1.1 million were charged to operations during the years ended December 31, 2008 and 2007 , respectively. These recognized
losses did not have a material impact on our liquidity or financial flexibility. For the three months ended March 31, 2009, no other-than temporary impairment losses were charged to operations. Any future fluctuation in fair value related to
our ARS investments would be recorded as a charge to operations as appropriate.

Since there is a lack of observable market quotes on our investment
portfolio of marketable securities in ARS, we utilize valuation models including those that are based on expected cash flow streams and collateral values, including assessments of counterparty credit quality, default risk underlying the security,
discount rates and overall capital market liquidity. The valuation of our investment portfolio is subject to uncertainties that are difficult to predict. Factors that may impact our valuation include 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 ongoing strength and quality of market credit and liquidity. In the event we
need to access the ARS investments that are in an illiquid state, we will not be able to do so without the possible loss of principal, until a future auction for these investments is successful or they are redeemed by the issuer or they mature. The
market value of these securities may decline.



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Foreign currency rate fluctuations

We have foreign subsidiaries whose functional currencies are the Great British Pound (GBP), Japanese Yen (JPY), and the Euro (EUR). The subsidiaries accounts are translated from the relevant 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 expense accounts. The effects of translation are recorded as a
separate component of stockholders equity. Our subsidiaries conduct their business with customers in local currencies. Additionally, we occasionally invoice Australian customers in their local currency (AUD). Exchange gains and losses arising
from these transactions are recorded using the actual exchange differences on the date of the transaction. We have not taken any action to reduce our exposure to changes in foreign currency exchange rates, such as options or futures contracts, with
respect to transactions with our subsidiaries or transactions with our customers where the invoicing currency is not the U.S. dollar.

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



|                                  |     |                                                               |     |  |   |    
|--------------------------------- | --- | ------------------------------------------------------------- | --- |  | - | ---
|Functional currency of operations |     | As of March 31, 2009Net foreign monetary assets/(liabilities)
|                                  | AUD |                                                               | EUR
|                                  |     | ($ in millions)                                              
|USD                               |     | $                                                             | 1.2 |  | $ |   
|EUR                               |     | $                                                             |    |  | $ | 0.2

A movement of 10% in the U.S. dollar to AUD exchange rate would create an unrealized gain or loss of approximately
$80,000. A movement of 10% in the U.S. dollar to EUR exchange rate would create an unrealized gain or loss of approximately $22,000.

We had no off balance
sheet, or unrecognized, gains and losses in respect of financial instruments used as hedges at the beginning or end of the three month period ended March 31, 2009. We had no deferred gains or losses during the period covered.

Inflation

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



|Item 4. | Controls and Procedures
|------- | -----------------------

We have established and maintain
disclosure controls and procedures that are designed to ensure that we record, process, summarize, and report information we are required to disclose in our periodic reports filed with the Securities and Exchange Commission in the manner and within
the time periods specified in the Security and Exchange Commissions rules and forms. We also design our disclosure controls to ensure that the information is accumulated and communicated to our management, including the principal executive
officer and the principal financial officer, as appropriate to allow timely decisions regarding required disclosure. We also maintain internal controls and procedures that are designed to ensure that we comply with applicable laws and our
established financial policies. We design our internal controls to provide reasonable assurance that (1) our transactions are properly authorized; (2) our assets are safeguarded against unauthorized or improper use; and (3) our
transactions are properly recorded and reported in conformity with accounting principles generally accepted in the United States.

We have evaluated the
design and operation of our disclosure controls and procedures to determine whether they are effective in ensuring that the disclosure of required information is timely made in accordance with the Exchange Act and the rules and regulations of the
Securities and Exchange Commission. This evaluation was made under the supervision and with the participation of management, including our principal executive officer and principal financial officer as of March 31, 2009. Our management does not
expect that our disclosure controls or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems,
no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been 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. Additionally, controls can be circumvented by the individual 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 future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may
become inadequate because of changes in conditions, or the degree of compliance 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.



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On April 29, 2009, we announced that the expected launch of our Down syndrome test has been delayed due to the
discovery of employee mishandling of research and development test data and results. Accordingly, we are no longer relying on our previously announced research and development test data and results. As a result of this discovery, our board of
directors formed a special committee of independent directors to oversee an independent investigation of the employees activity related to the test data and results. The committee has engaged independent counsel to assist the committee in the
conduct of the investigation. Until this independent investigation is complete, we cannot be certain whether the results of the independent investigation will require us to make modifications to our disclosure controls and procedures and whether
there has been any deficiency in the design of our disclosure controls and procedures.

Our principal executive officer and principal financial officer
have concluded, based on their review, that our disclosure controls and procedures, as defined by Exchange Act Rules 13a-15(e) and 15d-15(e), were effective as of March 31, 2009, to ensure that information required to be disclosed by us in
reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.

An evaluation was also performed under the supervision and with the participation of our management, including our principal executive officer and principal financial
officer, of any change in our internal control over financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. That
evaluation did not identify any such change.

PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

In November 2001, we and certain of our current
or former officers and directors were named as defendants in a class action shareholder complaint filed by Collegeware USA in the U.S. District Court for the Southern District of New York (now captioned In re Sequenom, Inc. IPO Securities
Litigation) Case No. 01-CV-10831. Similar complaints were filed in the same District Court against hundreds of other public companies that conducted initial public offerings of their common stock in the late 1990s and 2000. In the complaint,
the plaintiffs allege that our underwriters, certain of our officers and directors and we violated the federal securities laws because our registration statement and prospectus contained untrue statements of material fact or
omitted material facts regarding the compensation to be received by and the stock allocation practices of the underwriters. The plaintiffs seek unspecified monetary damages and other relief. In October 2002, our officers and directors were
dismissed without prejudice pursuant to a stipulated dismissal and tolling agreement with the plaintiffs. In February 2003, the District Court dismissed the claim against us brought under Section 10(b) of the Securities Exchange Act of
1934, without giving the plaintiffs leave to amend the complaint with respect to that claim. The District Court declined to dismiss the claim against us brought under Section 11 of the Securities Act of 1933 (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 settlement agreement with the plaintiffs. In February 2005, the District Court issued a decision certifying a class action for settlement purposes and granting preliminary approval of the
settlement subject to modification of certain bar orders contemplated by the settlement. In August 2005, the District Court reaffirmed class certification and preliminary approval of the modified settlement. In February 2006, the District Court
dismissed litigation filed against certain underwriters in connection with the claims to be assigned to the plaintiffs under the settlement. In April 2006, the District Court held a final fairness hearing to determine whether to grant final
approval of the settlement. In December 2006, the U.S. Court of Appeals for the Second Circuit vacated the District Courts decision certifying as class actions the six lawsuits designated as focus cases. Thereafter the
District Court ordered a stay of all proceedings in all of the lawsuits pending the outcome of plaintiffs petition to the Second Circuit for rehearing en banc. In April 2007, the Second Circuit denied plaintiffs rehearing
petition, but clarified that the plaintiffs may seek to certify a more limited class in the District Court. Accordingly, the settlement as originally negotiated was terminated pursuant to stipulation and will not receive final approval. Plaintiffs
filed amended complaints in the six focus cases in August 2007. Sequenom is not one of the focus case issuers. In September 2007, Sequenoms named officers and directors again extended the tolling agreement with the plaintiffs. Also in
September 2007, the plaintiffs moved to certify the classes alleged in the focus cases and to appoint class representatives and class counsel in those cases. The focus case issuers filed motions to dismiss the claims against them in November 2007
and an opposition to plaintiffs motion for class certification in December 2007. The District Court denied the motions to dismiss in March 2008. On October 2, 2008, the plaintiffs withdrew their class certification motion. On
February 25, 2009, liaison counsel for plaintiffs informed the district court that a settlement of the cases had been agreed to in principle, subject to formal approval by the parties and preliminary and final approval by the court. On
April 2, 2009, the parties submitted a tentative settlement agreement to the court and moved for preliminary approval thereof. If approved, the settlement would result in the dismissal of all claims against us and our officers and directors
with prejudice, and our pro rata share of the settlement fund would be fully funded by insurance.

On June 5, 2008, we were named as a defendant in a
complaint filed by plaintiffs Beckman Coulter Inc. and Orchid Cellmark Inc. in the United States District Court for the Southern District of California. In the complaint, the plaintiffs allege that we are infringing three patents owned by Orchid
Cellmark Inc. and licensed to Beckman Coulter Inc. by making and selling our iPLEX products and teaching our customers how to use the products. The plaintiffs seek a permanent injunction enjoining us from further infringement, and unspecified
monetary damages, including lost profits, enhanced damages pursuant to 35 U.S.C. § 284, costs, attorneys fees and other relief as the court deems just and proper. On August 15, 2008, we filed an answer and counter claims against
plaintiffs seeking declaratory judgments that the patents are not infringed and are invalid and/or unenforceable. Discovery is currently in progress. We believe that the plaintiffs claims are without merit and will vigorously defend against
the claims advanced in the complaint.



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On October 30, 2008, we filed a patent infringement suit against Ibis Biosciences, Inc., formerly a subsidiary of
Isis Pharmaceuticals, Inc. The complaint was served on the defendant in February 2009. Ibis has been acquired by Abbott Molecular and has not yet responded to the complaint. The lawsuit was filed in the United States District Court for the District
of Delaware. The lawsuit alleges that the sale or offer for sale of the Ibis T5000 Biosensor System and related technology infringes three U.S. patents: 6,300,076, 6,500,621 and 7,419,787. We are seeking a permanent injunction enjoining the
defendant from further infringement and monetary damages, including enhanced damages pursuant to 35 U.S.C. § 284, costs, attorneys fees and other relief as the court deems just and proper.

Beginning April 30, 2009, several complaints were filed in the U.S. District Court for the Southern District of California against us and certain of our executive
officers on behalf of certain purchasers of our common stock. The complaints include claims asserted under Section 10 of the Exchange Act and Sections 11 and 12(a)(2) of the Securities Act and have been brought as purported shareholder class
actions. In general, the complaints allege that we and certain of our executive officers issued materially false and misleading statements regarding our Down syndrome test under development, thereby artificially inflating the price of our common
stock. The plaintiffs are seeking unspecified monetary damages and other relief. We will vigorously defend against the claims advanced.

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



|Item 1A. | Risk Factors
|-------- | ------------

Before deciding to invest in us or deciding to
maintain or increase your investment, you should carefully consider the risks described below, in addition to the other information contained in this report and in our other filings with the SEC. The risks and uncertainties described below and in
our other filings are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also 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 our common stock could decline and you may lose your investment. The risk factors in this report have been revised to
incorporate changes to our risk factors from those included in our annual report on Form 10-K for the year ended December 31, 2008. The risk factors set forth below with an asterisk (*) next to the title are new risk factors or risk
factors containing changes, including any material changes, from the risk factors previously disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the Securities and Exchange Commission.

*The mishandling of research and development (R&D) test data and results for our Down syndrome test could materially adversely
affect our business, financial condition and results of operations.

We have announced that we have delayed the expected launch of our Down syndrome
test due to the discovery of employee mishandling of R&D test data and results. We have also announced that we are no longer relying on the previously announced R&D test data and results. Our board of directors has appointed a special
committee of independent directors to oversee an independent investigation of the employees activities related to the test data and results. In connection with these events and the ongoing investigation, we will incur additional expenses that
we had not previously planned to incur, and we may face significant liabilities as a result of these events and investigation. These events and the investigation may affect us in a number of additional ways, such as diverting managements
attention from our business and hindering our ability to recruit and retain qualified personnel. The expenses of the investigation, any additional liabilities that we incur and any additional effects of the events and investigation each may have a
material adverse effect on our business, operating results or financial condition. We can give no assurance regarding the ultimate findings of the investigation or any remedial actions that may be taken in response to such findings.

We have also announced that in addition to the delay in the launch of our Down syndrome test, there will be delays in the launch of other diagnostic tests that we have
under development as we complete data reviews for these tests. The launch of any of our tests will require the completion of certain clinical development and commercialization activities and the expenditure of additional cash resources. We can give
no assurance that we will be able to successfully complete the clinical development of any test under development. While we believe that we have or can marshal the cash resources to complete clinical development and commercialization activities with
respect to each test, we can give no assurance that we will not have to reduce other expenditures or raise additional capital to do so or that we will be able to reduce our expenditures sufficiently or raise enough capital to complete clinical
development or commercialization for any test. Any failure to complete clinical 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 executive officers have been named as defendants in recently initiated securities class actions that could result in
substantial costs and divert managements attention.

We are aware of lawsuits in which we, and certain of our executive officers, have been
sued for alleged violations of federal securities laws related to alleged false and misleading statements regarding our Down syndrome test under development. We intend to engage in a vigorous defense of such claims. If we are not successful in our
defense of such claims, we could be forced to make significant payments to our stockholders and their lawyers, and such payments could have a material adverse effect on our business, operating results or financial condition if not covered by our
insurance carriers. Even if such claims are not successful, the litigation could result in substantial costs and divert managements attention and resources, which could have a material adverse effect on our business, operating results or
financial condition.



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*We have limited experience.

Many of our technologies, particularly our noninvasive prenatal and other molecular diagnostic technologies, are at an early stage of discovery and development. We continue to develop and commercialize new products
and create new applications for our products. We are also researching, developing and pursuing the commercialization of various noninvasive molecular diagnostic tests for prenatal genetic disorders and other diseases and disorders for use on our
MassARRAY platform and potentially other platforms and we have limited or no experience in these applications of our technology and operating in these markets. You should evaluate us in the context of the uncertainties and complexities affecting an
early stage company developing products and applications for the life science industries and experiencing the challenges associated with entering into new markets that are highly competitive. We may face setbacks in the development and
commercialization of our noninvasive prenatal and other molecular diagnostic tests and technologies. As a result of the discovery of employee mishandling of R&D test data and results we are unable to rely on certain prior studies and will need
to perform additional validation studies of our Down syndrome test prior to commercialization. We need to make significant investments to ensure our genetic analysis products and applications and our diagnostics tests perform properly and are
cost-effective, and we or our partners will likely need to apply for and obtain certain regulatory approvals to sell our products for diagnostic applications and it is uncertain whether such approvals will be granted. Even if we develop products for
commercial use and obtain all necessary regulatory approvals, we may not be able to develop products that are accepted in the genomic, diagnostic, noninvasive prenatal, clinical research, pharmaceutical, or other markets or the emerging field of
molecular medicine and that can be marketed and sold successfully.

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

We have committed significant
research and development resources to the development of research-use-only and diagnostic tests, particularly noninvasive prenatal tests, for use on our MassARRAY system and other platforms. Although our licensed partner launched the first
research-use-only test, a test for Rhesus D using a reverse transcription polymerase chain reaction (RT-PCR) platform in early 2008, there is no guarantee that our partner or we will successfully generate significant revenues from this or any other
tests for any use. We plan to launch through our CLIA laboratory a noninvasive prenatal screening LDT test for Rhesus D, a noninvasive prenatal screening LDT test for gender-linked disorders (our Fetalxyscreen) and a carrier screening test for Cystic Fibrosis before the end of 2009, and a noninvasive prenatal screening LDT test for trisomies (Trisomy 21 and potentially Trisomies 18
and 13) in early 2010 and to launch additional tests in the future. However, there is no guarantee that we will be able to successfully launch these or other diagnostic tests on the anticipated timelines or at all. We have no experience in
licensing, manufacturing, selling, marketing or distributing our SEQureDx technology, or diagnostic or other tests. If we, or our partners, are not able to successfully market or sell noninvasive prenatal research-use-only or diagnostic tests or
other tests we may develop for any reason, including the failure to obtain any required regulatory approvals, we will not generate any revenue from the sale of such tests. Even if we are able to develop noninvasive prenatal research-use-only or
diagnostic or other tests for sale in the marketplace, a number of factors could impact our ability to sell such tests or generate any significant revenue from the sale of such tests, including the following:



| |  |  | the outcome of the independent investigation;
| | - |  | ---------------------------------------------



| |  |  | reliance on SCMM and third-party CLIA-certified laboratories, which are subject to routine governmental oversight and inspections for continued operation pursuant
to CLIA, to process tests that we develop;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reliance on SCMM and third parties to manufacture any noninvasive prenatal research-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 sale of our diagnostic tests through SCMM or a third-party
CLIA-certified laboratory, including establishing adequate laboratory space, information technology infrastructure, sample collection and tracking systems, electronic ordering and reporting systems and other infrastructure and hiring adequate
laboratory and other personnel;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the availability of adequate study samples for validation studies for any diagnostic tests we develop, the success of such validation studies and our ability to
publish study results in peer-reviewed journals;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the availability of alternative and competing tests or products and technological innovations or other advances in medicine that cause our technologies to be less
competitive;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | compliance with federal, state and foreign regulations governing laboratory testing and the sale and marketing 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;
| | - |  | --------------------------------------------------------------------------------------------



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| |  |  | 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 changes in laws regulating laboratory testing and/or device
manufacturers and any laws regulating prenatal testing;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the extent and success of our sales and marketing efforts and ability to drive adoption of our diagnostic tests;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | --------------------------------------------------------------------------



| |  |  | general changes or developments in the market for womens and/or prenatal health diagnostics, or diagnostics in general;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | ethical and legal issues concerning the appropriate use of the information resulting from noninvasive prenatal diagnostic tests or other tests;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the refusal by women to undergo such tests for moral, religious or other reasons, or based on perceptions about the safety or reliability of such tests;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to promote and protect our SEQureDx brand and technology; and
| | - |  | -------------------------------------------------------------------------



| |  |  | intellectual property rights held by others or others infringing our intellectual property rights.
| | - |  | --------------------------------------------------------------------------------------------------

*We will need additional capital to support our growth, which will result in additional dilution to our stockholders.

Our business will require additional investment that we have not yet secured. As of March 31, 2009, we had available cash and cash equivalents and marketable
securities of approximately $81.2 million.

We believe our cash and cash equivalents will be sufficient to fund our operating expenses and capital
requirements through 2010. The actual amount of funds that we will need will be determined by many factors, some of which are beyond our control, and we may need funds sooner than currently anticipated. These factors include but are not limited to:



| |  |  | the size of our future operating losses;
| | - |  | ----------------------------------------



| |  |  | the level of our and our distributors success in selling our MassARRAY products and services;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | 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 of earlier 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 ability to validate our diagnostic tests and the level of sensitivity and specificity of our diagnostic tests;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | our success in, and the expenses associated with, researching, developing and commercializing diagnostic products, alone or in collaboration with our partners, and
obtaining any required regulatory approval for those products;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the level of our success alone or in collaboration with our partners in launching and selling any diagnostic products and services;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | the extent of our research and development pursuits, including our level of investment in MassARRAY product research and development, and diagnostic assay and other
technology research and development;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | the level of our legal expenses, including those expenses associated with the independent investigation, intellectual property protection, securities class actions
and those expenses and any damages payments associated with litigation;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | our ability to liquidate any ARS holdings;
| | - |  | ------------------------------------------



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| |  |  | the level of our expenses associated with the audit of our consolidated financial statements as well as compliance 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 Down syndrome and other diagnostic tests or other factors may not support capital raising transactions. In addition, our ability
to raise additional capital may depend upon obtaining shareholder approval. There can be no assurance that we will be able to obtain shareholder approval if it is necessary. If we are unable to obtain sufficient additional funds on a timely basis or
on terms favorable to us, we may be required to cease or reduce further commercialization of our products, to cease or reduce certain research and development projects, to sell, license or otherwise dispose of some or all of our technology or assets
or business units or to merge all or a portion of our business with another entity. If we raise additional funds by selling shares of our capital stock, the ownership interest of our current stockholders will be diluted.

*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 and our distributors success in selling, and changes in the demand for, our products and services including our MassARRAY Compact platform and iPLEX
multiplex genotyping application and other applications and related consumables, and demand for products and services for genotyping, DNA methylation (epigenetic analysis) and QGE (gene expression analysis) applications;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our success in selling genetic analysis contract research services;
| | - |  | -------------------------------------------------------------------



| |  |  | our success in depleting or reducing current product inventories in view of new or upcoming product introductions;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | the pricing of our products and services and those of our competitors;
| | - |  | ----------------------------------------------------------------------



| |  |  | variations in the timing of payments from customers and collaborative partners and the recognition of these payments as revenues;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | the timing and cost of any new product or service offerings by us;
| | - |  | ------------------------------------------------------------------



| |  |  | our ability to develop new applications and products, such as noninvasive prenatal or other diagnostic assays and other diagnostic technologies, the success of such
applications and products, and our ability to improve current products to increase demand for such products;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the potential need to acquire licenses to new technology, including genetic markers that may be useful in diagnostic applications, or to use our technology in new
markets, which could require us to pay unanticipated 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 to our noninvasive prenatal technologies;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the cost, quality and availability of our consumable chips, also known as SpectroCHIP bioarrays, oligonucleotides, DNA samples, tissue samples, reagents and related
components and technologies;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | material developments in our customer and supplier relationships including our ability to successfully transition to new technologies to successfully maintain our
relationships with our customers and suppliers;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | expenses related to, and the results of the independent investigation, litigation or any other legal proceedings.
| | - |  | -----------------------------------------------------------------------------------------------------------------

Further, our revenues and operating results are difficult to predict because they depend on the number, timing, and type of MassARRAY system placements that we make
during the year, the number, timing, and types of software licensed or sold, and the quantity and timing of consumables sales for the installed base of systems and the number, timing and type of contract research services agreements that we enter
into. Changes in the relative mix of our MassARRAY system and consumables sales and service agreements can have a significant impact on our gross margin, as consumable sales and service agreements typically have margins significantly different than
MassARRAY system sales. Our revenues and operating results are also difficult to predict because they depend upon the activities of our distributors. We experienced reduced demand for our MassARRAY systems during the first quarter of 2009 as a
result of the current economic environment and are uncertain whether demand for our products and services will further deteriorate in future periods as a result of the weak economy. The absence of or delay in generating revenues could cause
significant variations in our operating results from year to year and could result in increased operating losses.

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

*A reduction in revenues from sales of MassARRAY products would harm our
business.

The demand for MassARRAY systems and consumables and contract research services has declined over time, and any continued or further
decline in demand will further reduce our total revenues. We expect that sales of MassARRAY systems and consumables will account for most of our total revenues through at least the remainder of the year and perhaps thereafter, unless and until
our noninvasive prenatal laboratory developed tests are launched, if at all, and revenues from those tests are generated and increase over time, if at all. The following 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 fiscal policies that negatively impact customer buying decisions;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | competition from other products and service providers or failure of our products or applications or services; and
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | negative publicity or evaluations, particularly with respect to product warranty and repair and troubleshooting services provided to existing customers, with
respect to enabling or performing , or with respect to litigation matters or developments or events in our prenatal diagnostic and other programs.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

*Our revenues are subject to the risks faced by biotechnology and diagnostic companies, pharmaceutical companies, and governmental and other research institutions.

We expect that our revenues for at least the remainder of the year and perhaps thereafter, unless and until our noninvasive prenatal laboratory developed tests are
launched, if at all, and revenues from those tests are generated and increase over time, if at all, will be derived primarily from MassARRAY system products provided to academic institutions and other research institutions.

Our operating results could fluctuate substantially due to reductions and delays in research and development expenditures 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 licensed laboratories 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 fund operations and supply products and services to customers.
| | - |  | -----------------------------------------------------------------------------------------------



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None of these factors are within our control. We have broadened the markets to which we sell our products and
applications and continue to develop new applications and products for use in new markets. We are targeting customers in clinical research and clinical marker validation, the emerging field of molecular medicine, genetic service laboratories, and
animal testing laboratories and diagnostic testing markets. We have limited or no experience operating in these potential markets and, as a result, may be unable to develop products and applications that allow us to penetrate these markets or
successfully generate any revenue from sales in these markets. We will have limited ability to forecast future demand for our existing and any new products and applications in these markets.

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

Sales of our consumable chips and other consumables for the MassARRAY system are an important source of revenue. Revenues from MassARRAY consumables totaled approximately
54% of our total revenues for the three months ended March 31, 2009, compared to 41% of our total revenues for the three months ended March 31, 2008. Factors which may limit the use of our consumable chips and other consumables or
otherwise adversely affect our 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;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the extent to which customers increase multiplexing levels using the iPLEX Gold or any next generation 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 our consumables;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | the training of customer personnel;
| | - |  | -----------------------------------



| |  |  | the acceptance of our technology by our customers;
| | - |  | --------------------------------------------------



| |  |  | any negative publicity with respect to ongoing litigation matters or developments or events in our prenatal diagnostic and other programs;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 MassARRAY system and our ability to maintain such relationships.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------

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

We plan to validate LDT assays and commercialize them through SCMM, our CLIA-licensed laboratory located in Grand Rapids, Michigan. We only recently acquired SCMM in 2008
and as a result have little experience operating a CLIA-licensed laboratory. Because there is substantial distance between SCMM and us, we may have logistical and operational challenges in effectively managing and operating SCMM. If we are unable to
successfully transfer our diagnostic technology and tests to SCMM for validation or if SCMM is unable to successfully validate any LDT or other tests that we intend to commercialize through SCMM, we may not be able to successfully commercialize such
tests on the anticipated timelines or at all. Although we have invested substantially in SCMMs infrastructure, it is possible that we may not have adequate infrastructure in place for the commercial launch and sale of any diagnostic tests that
we develop through SCMM. Our ability to successfully develop and commercialize diagnostic tests will depend on our ability to successfully operate SCMM and obtain and maintain required regulatory approvals.

SCMM as a clinical laboratory is subject to CLIA, which is designed to ensure the quality and reliability of clinical laboratories by mandating specific standards in the
areas of personnel qualifications, administration and participation in proficiency testing, patient test management, quality control, quality assurance 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 as significant fines and/or criminal penalties. SCMM is also subject to regulation of laboratory operations under state clinical
laboratory laws. State clinical laboratory laws may require that laboratories and/or laboratory personnel meet certain qualifications, specify certain quality controls or require maintenance of certain records. Certain states, including Florida,
Maryland, New York,



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Pennsylvania and Rhode Island, each require that you obtain licenses to test specimens from patients residing in those states and additional states may
require similar licenses in the future. If we are unable to obtain licenses from these states or there is delay in obtaining such licenses, we will not be able to process any samples from patients located in those states until we have obtained the
requisite licenses. Potential sanctions for violation of these statutes and regulations include significant fines and the suspension or loss of various licenses, certificates and authorizations, which could adversely affect our business and results
of operations.

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

Products that we or our collaborators develop in the molecular medicine, diagnostic, noninvasive prenatal diagnostic, or other markets, depending on their intended use,
may be regulated as medical devices by the FDA and comparable agencies of other countries and require either premarket approval, or PMA, or 510(k) clearance from the FDA, prior to marketing. The 510(k) clearance process usually takes from three to
six months from submission, but can take significantly longer. The PMA process is much more costly, lengthy, uncertain, and generally takes from nine months to one year or longer from submission. In addition, commercialization of any diagnostic or
other product that our licensees or collaborators or we develop would depend upon successful completion of preclinical testing and clinical trials. Preclinical testing and clinical trials are long, expensive, and uncertain processes, and we do not
know whether we, our licensees, or any of our collaborators, would be permitted or able to undertake clinical trials of any potential products. It may take us or our licensees or collaborators many years to complete any such testing, and failure
could occur at any stage. Preliminary results of studies or trials do not necessarily predict final results, and acceptable results in early studies or trials may not be repeated in later studies or trials. A number of companies in the diagnostics
industry, including biotechnology companies, have suffered significant setbacks in clinical trials, even after promising results in earlier trials. Delays or rejections of potential products may be encountered based on changes in regulatory policy
for product approval during the period of product development and regulatory agency review. If our projects reach clinical trials, we or our licensees or collaborators could decide to discontinue development of any or all of these projects at any
time for commercial, scientific, or other reasons.



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We initially plan to validate assays and commercialize them in the form of laboratory developed tests (LDTs) through SCMM
or a third-party CLIA-certified laboratory. Although LDT testing is currently solely under the purview of CMS and 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 of genetic testing and LDTs, and the laws and regulations may undergo change in the near future. Although we have no current plans to utilize in our LDT strategy analyte specific
reagents (ASRs) or In Vitro Diagnostic Multivariate Index Assay (IVDMIAs), which have been the focus of recent reforms and enforcement actions by the FDA, we cannot predict the extent of the FDAs future regulation and policies with respect to
LDTs. Concurrently with our LDT commercialization activities, we plan to conduct the development, validation, and other activities necessary to file submissions with the FDA seeking approval for selected diagnostic tests. If we are unable to
successfully launch any diagnostic tests as LDTs or if we are otherwise required to obtain FDA premarket clearance or approval prior to commercializing any diagnostic tests, our ability to generate revenue from the sale of such tests may be delayed
and we may never be able to generate significant revenues from sales of diagnostic products.

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

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

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

In October 2005, we entered into an exclusive license to noninvasive prenatal diagnostic rights (United States Patent No. 6,258,540 and foreign equivalents) with ISIS which we amended in October 2006 and in November 2007 to also
include exclusive rights to intellectual property for noninvasive prenatal gender determination testing for social and lifestyle purposes. We intend to use the rights that we acquired under the license to develop noninvasive prenatal nucleic acid
based tests, including gender determination tests. If there is any dispute between us and ISIS regarding our rights under the license agreement, or we do not achieve certain commercial launch milestones, in a timely manner, or IBIS does not agree to
extend commercial launch milestones, particularly for aneuploidy products or tests in view of our delayed launch for Down syndrome, our ability to exclusively commercialize these diagnostic tests may be adversely affected and could delay or
completely terminate our product development and commercialization efforts for these diagnostic tests.

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

Development of diagnostic or other products by us, our licensees, or our collaborators including assays, are subject to risks of failure inherent in the development and
commercial viability of any such product, such as demand 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 regulatory approval;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | be difficult or impossible to manufacture on a commercial scale;
| | - |  | ----------------------------------------------------------------



| |  |  | be uneconomical to market;
| | - |  | --------------------------



| |  |  | fail to be successfully commercialized if adequate reimbursement from government health administration authorities, private health insurers, and other organizations
for the costs of these products is unavailable;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | be impossible to commercialize because they infringe on the proprietary rights of others or compete with 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 develop diagnostic or other products using our technology, products,
services, or discoveries, we may rely on that licensee 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 milestone payments, royalties, or other payments we may be entitled to under the terms of the licensing or collaboration



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agreement. If we are unable to successfully achieve milestones or our partners fail to develop successful products, we will not earn the revenues
contemplated and we may also lose exclusive (as in the case of our license agreement with Isis Innovation Ltd, or ISIS, under which we in-license our fundamental noninvasive prenatal diagnostic technology) or non-exclusive license rights to
intellectual property that are required to commercialize such products. Our agreements may allow our partners significant discretion in electing whether to pursue any of these activities. We cannot control the amount and timing of resources our
partners may devote to our programs or potential products. As a result, we cannot be certain that our partners will choose to develop or commercialize any 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 may suffer 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 intellectual property rights.

Our success will depend on our ability to obtain and protect patents on our technology,
to protect our trade secrets, and to maintain our rights to licensed intellectual property or technologies. Our patent applications or those of our licensors may not result in the issue of patents in the United States or other countries. Our patents
or those of our licensors may not afford meaningful protection for our technology and products. Others may challenge our patents or those of our licensors in litigation or by proceedings such as interference, oppositions and reexaminations, as is
the case with the appeal pending before the European Patent Office with respect to the patent rights that we in-licensed from ISIS for prenatal diagnostics (United States Patent No. 6,258,540 and European Patent No. 994963), and as a
result, our patents or those of our licensors could be narrowed or invalidated or become unenforceable. Competitors may develop products similar to ours that do not conflict with our 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 patents or license agreements, which could reduce sales of our consumables or reduce or remove our
noninvasive prenatal and other diagnostic commercialization opportunities. To protect or enforce our patent rights, we may initiate interference proceedings, oppositions, reexaminations or litigation against others. However, these activities 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 highly uncertain and involves complex legal and
factual questions that are often the subject of litigation. No consistent policy has emerged from the U.S. Patent and Trademark Office, the offices of foreign countries or the courts regarding the breadth of claims allowed or the degree of
protection afforded under biotechnology patents. There is a substantial backlog of biotechnology patent applications at the U.S. Patent and Trademark Office and of the equivalent 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 we rely are invalid could adversely affect our business.

From time to time, companies have asserted, and may again assert, patent,
copyright and other intellectual proprietary rights against our products or products using our technologies. These claims have resulted and may in the future result in lawsuits being brought against us. For example, we are named as a defendant in a
lawsuit brought by Beckman Coulter Inc. and Orchid Cellmark Inc. In this lawsuit, Beckman Coulter and Orchid Cellmark have alleged that by making and selling our iPLEX products and teaching our customers how to use these products, we are infringing,
contributing, and inducing others to infringe three patents owned by Orchid Cellmark. We may not prevail in this litigation or any future lawsuits alleging patent infringement given the complex technical issues and inherent uncertainties in
intellectual property litigation. If any of our products, technologies or activities, in particular our iPLEX products from which we derive a substantial portion of our revenues, were found to infringe on another companys intellectual property
rights, we could be subject to an injunction that would force the removal of our products from the market or we could be required to redesign our products, which could be costly. We could also be ordered to pay damages or other compensation,
including punitive damages and attorneys fees to such other company. A negative outcome in any such litigation could also severely disrupt the sales of our marketed products to our customers or their customers, which in turn could harm our
relationships with our customers, our market share and and/or product revenues. Even if we are ultimately successful in defending any intellectual property litigation, such litigation is expensive and time consuming to address, will divert our
managements attention from our business and may harm our reputation.

Other companies or entities also may commence actions seeking to establish the
invalidity of our patents. In the event that one or more of our patents are challenged, a court may invalidate the patent(s) or determine that the patent(s) is not enforceable, which could harm our competitive position. For example, we recently
filed a patent infringement lawsuit against defendant Ibis Biosciences, Inc., which has been acquired by Abbott Molecular, in the United States District Court for the District of Delaware. We believe that the sale and offer for sale of Ibis products
and technology infringes three Sequenom patents related to nucleic acid analysis by mass spectrometry. We are seeking a permanent injunction enjoining defendant from further infringement and monetary damages. Defendant may challenge the validity of
our patents as part of the lawsuit. If one or more of our patents are invalidated, or if the scope of the claims in any of these patents is limited by a court decision, we could lose certain market exclusivity afforded by patents owned or
in-licensed by us and potential competitors could more easily bring products to the market that directly compete with our own. Such adverse decisions may negatively impact our revenues.



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

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

Due to the manner in which many customers in our target markets allocate and spend their budgeted funds for acquisition of our products, a large percentage of our sales
are booked at the end of each quarterly accounting period. Because of this timing of our sales, we may not be able to reliably predict order volumes and our quarterly revenues. A sales delay of only a few days may significantly impact our
quarter-to-quarter comparisons. If our quarterly revenues fall below the expectations of securities analysts and investors, our stock price may decline. Similarly, if we are unable to ship our customer orders on time, or if extended 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 market demand for our products may decline.

Before using the MassARRAY system, customers must
prepare samples by following several steps that are subject to human error, including DNA isolation and DNA amplification. If DNA samples are not prepared appropriately, or the proposed assays are too complex, the MassARRAY system may not generate a
reading or a correct reading. If our customers experience these difficulties, they might achieve lower throughput levels than specified for the system. If our customers are unable to generate expected levels of throughput, they might not continue to
purchase our consumables, they could express their discontent with our products to others, or they could collaborate with others to jointly benefit from the use of our products. Any or all of these actions would reduce the overall market demand for
our products. From time to time, we have experienced customer complaints regarding 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 effort with no assurance of successfully selling our products or services.

The sales cycles for our MassARRAY system products are typically lengthy. Our sales and licensing efforts require the effective demonstration of the benefits, value, and
differentiation and validation of our products and services, and significant education and training of multiple personnel and departments within a customer organization. We may be required to negotiate agreements containing terms unique to each
prospective customer or licensee which would lengthen the sales cycle. We may expend substantial funds and management effort with no assurance that we will sell our products or services. In addition, this lengthy sales cycle makes it more difficult
for us to accurately forecast revenue in future periods and may cause revenues and operating results to vary significantly in such periods.



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

A number of potential applications of our MassARRAY technology, including research-use-only and diagnostic applications for noninvasive prenatal
and other molecular testing, may require significant enhancements in our core technology or the in-licensing of intellectual property rights or technologies. 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 expression analysis, epigenetic analysis or iPLEX multiplexing, do not achieve a significant level of market acceptance, our business, financial condition and results of operations could be
seriously harmed. Achieving market acceptance will depend on many factors, including demonstrating to customers that our technology and products are cost competitive or superior to other technologies and products that are available now or that may
become available in the future. We believe that our revenue growth and profitability will substantially depend on our ability to overcome significant technological challenges and successfully introduce our newly developed products, applications, and
services into the marketplace.

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

We partially assemble the MassARRAY system and partially manufacture our consumable chips and
MassARRAY kits. To date, we have only produced these products in moderate quantities. We may not be able to maintain acceptable quality standards as we continue or ramp up production. For example, we have experienced crystallized matrix on some of
our chips, which has interfered with chip performance. To achieve anticipated customer demand levels, we will need to scale-up our production capability and maintain adequate levels of inventory while manufacturing our products at a reasonable cost.
We may not be able to produce sufficient quantities to meet market demand or manufacture our product at a reasonable cost. If we cannot achieve the required level and quality of production, we may need to outsource production or rely on licensing
and other arrangements with third parties. This reliance could reduce our gross margins and expose us to the risks inherent in relying on others. We might not be able to successfully outsource our production or enter into licensing or other
arrangements with these third parties, which would adversely affect our business.

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

We rely on outside vendors to supply certain products and the components and
materials used in our products. Some of these products, components and materials are obtained from a single supplier or a limited group of suppliers. Our MassARRAY system is comprised of several components, of which the following are currently
obtained from a single supplier: Bruker Daltonics, Inc. supplies replacement components for our mass spectrometers, PSI, Inc. supplies our chips, Majer Precision Engineering, Inc. supplies the pins for the pin-tools and Paragon Medsystems LLC and
Thermo Fischer Matrix who supply our nano dispenser liquid handling devices.

Our consumables also include components provided by sole suppliers, New
England Biolabs, Epicentre, BioRad, and USB. In the event of any adverse developments with these vendors, our product supply may be interrupted, which would have an adverse impact on our business. In the past, we have experienced quality problems
with and delays in receiving components used to produce our consumable chips, problems with laser reliability in our mass spectrometers supplied by Bruker and lengthy delays in obtaining lasers for replacement, problems with matrix crystallization
on our chips, and also had technical difficulties with our pin-tool nanoliter dispenser device. We have also experienced software and operational difficulties with our MassARRAY Compact system. Our reliance on outside vendors generally and a sole or
a limited group of suppliers in particular involves several risks, including:



| |  |  | the inability to obtain an adequate supply of properly functioning, required products, components, and materials due to capacity constraints, product defects, a
discontinuance of a product by a supplier, or other 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 some of our resources, which would hinder
our gene discovery outlicensing efforts and our diagnostic product development efforts.

We have attempted to ensure that all clinical data and
genetic and other biological samples that we receive from our subsidiaries and our clinical collaborators have been collected from volunteers who have provided our collaborators or us with appropriate consents for the data and samples provided for
purposes which extend to include commercial diagnostic product development activities. We have attempted to ensure that data and samples that have been collected by our clinical collaborators are provided to us on an anonymous basis. We have also
attempted to ensure that the volunteers from whom our data and samples are collected do not retain or have conferred on them any proprietary or commercial rights to the data or any discoveries derived from them. Our clinical collaborators are based
in a number of different countries, and, to a large extent, we rely upon our clinical collaborators for appropriate compliance with the voluntary consents provided and with local law and regulation. That our data and samples come from and are
collected by entities based in different countries results in complex legal questions regarding the adequacy of consents and the status of genetic material under a large number of different legal systems. The consents obtained in any particular
country could be challenged in the future, and those consents could prove invalid, unlawful or otherwise inadequate for our purposes. Any findings against us, or our clinical collaborators, could deny us access to or force us to stop using some of
our clinical or genetic resources, which would hinder our diagnostic product development efforts. We could become involved in legal challenges, which could consume a substantial proportion of our management and financial resources.



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If we cannot obtain licenses to patented SNPs and genes, we could 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
nucleotide polymorphism, or SNP, and gene discoveries and their related associations and functions. If certain SNPs and genes are patented, we will need to obtain rights to those SNPs and genes to develop, use, and sell related assays and other
types of products or services utilizing such SNPs and genes. Required licenses may not be available on commercially acceptable terms. If we were to fail to obtain licenses to certain patented SNPs and genes, we might never achieve significant
revenue from our diagnostic product development.

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

Some of the products we hope to develop involve new and unproven approaches or involve applications in markets that we are only beginning to explore. They are based on
the assumption that information about genes and SNPs may help scientists better understand conditions or complex disease processes. Scientists generally have a limited understanding of the role of genes and SNPs in diseases, and few products based
on gene discoveries have been developed. We cannot be certain that genetic information will play a key role in the development of diagnostics or other products in the future, or that any genetic-based findings would be accepted by 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 develop diagnostics or other products, the
demand for our products, applications, and services will be reduced and our business will be harmed.

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

We form research collaborations and licensing arrangements with collaborators to operate our business successfully. To succeed, we
will have to maintain our existing relationships and establish additional collaborations and licensing arrangements. Our current strategy includes pursuing partnering opportunities with larger companies interested in or involved in the development
of pharmaceutical and diagnostic products to potentially advance our disease gene discoveries and related targets toward drug or diagnostic development. Our strategy also includes obtaining licenses to third-party intellectual property rights and
technologies, such as our exclusive license to noninvasive prenatal analysis rights that we acquired from ISIS (United States Patent No. 6,258,540 and foreign equivalents), to potentially expand our product portfolio 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 Down syndrome, we risk losing our exclusive license rights from ISIS. We cannot be sure that we will be able to
establish any additional research collaborations, licensing arrangements, or other partnerships necessary to develop and commercialize products or that we can do so on terms favorable to us. If we are unable to establish these collaborations or
licensing arrangements, we may not be able 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 are not successful or we are not able to manage multiple collaborations successfully, our programs will suffer and we may never generate any revenue from sales of products based on licensed rights or technologies or under
these collaborative or licensing arrangements. If we increase the number of collaborations or licensing agreements, it will become more difficult to manage the various relationships successfully and the potential for conflicts among the
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 resulting from
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 collaboration with others, our revenue and profitability prospects could be substantially harmed.

Our business strategy includes, in part, the development of noninvasive prenatal diagnostic and other products in collaboration with others, or utilizing the technology of others, and we intend to obtain commercialization or royalty rights
to those products or technologies. If we are unable to obtain such rights, or are unable to do so on favorable financial terms, our revenue and profitability prospects could be substantially harmed. To date, we have initiated limited activities
towards commercializing products developed in collaboration 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 to develop or obtain, or commercialization may be financially unattractive based upon the revenue-sharing terms offered by potential licensors or provided for in the relevant agreement.



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

Genetic testing, including gender determination and Trisomy 21 (Down syndrome) testing, has raised ethical issues
regarding privacy and the appropriate uses of the resulting information. For these reasons, governmental authorities may limit or otherwise regulate the use of genetic testing or prohibit testing for genetic predisposition to certain conditions,
particularly for those that have no known cure. Such concerns may lead individuals to refuse to use genetics tests even if permitted. Any of these scenarios could reduce the potential markets for our products and services, 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 otherwise terminated or modified, the termination or modification of such agreements could result in our loss of access to critical components and could delay or suspend our commercialization efforts.

We have sourced or licensed components of our technology from other parties. For example, Bruker Daltonics supplies our replacement components for mass spectrometers,
PSI, Inc. supplies our chips and Majer Precision Engineering supplies the pins for our present nanodispenser (pin-tool) product, and New England Biolabs, Epicentre and USB supply us with reagents used with our consumables. Our failure to maintain
continued supply of such components, particularly in the case of sole suppliers, or the right to use these components would seriously harm our business, financial condition, and results of operations. As a result, in the event that demand for our
products declines or does not meet our forecasts, we could have excess inventory or increased expenses or our margins could decrease which could have an adverse impact on our financial condition and business. In the event of any adverse developments
with these vendors, our product supply may be interrupted, which would have an adverse impact on our business. Changes to or termination of our agreements or inability to renew our agreements with these parties or enter into new agreements with
other suppliers could result in the loss of access to these aspects of our technology or other intellectual property rights or technologies that we may acquire from time to time and could impair, delay, or suspend our commercialization efforts.
While we negotiate for agreement periods or notice of termination periods that provide us reasonable periods of time to secure alternative supplies, and require that such agreements may not be terminated without advance notice arbitrarily or without
good reason, such as uncured breach or insolvency, such provisions may not provide us with adequate time to secure alternative supplies, provide us with access to alternative technologies on commercially acceptable terms, or otherwise provide us
with adequate protection.

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

We may acquire additional businesses or technologies, or enter into other strategic
transactions. For example, in November 2008, we completed the acquisition of the Center for Molecular Medicine, a CLIA licensed laboratory facility and in February 2009 we completed the acquisition of substantially all of the assets of SensiGen,
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 to staff any new or expanded operations;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the impairment of relationships with key customers of acquired businesses due to changes in management and ownership of the acquired businesses;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the inability to sublease on financially acceptable terms excess leased space or terminate lease obligations 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 the integration of any acquired businesses;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the exposure to unknown liabilities;
| | - |  | ------------------------------------



| |  |  | higher than expected acquisition and integration expenses that would cause our quarterly and annual operating 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 difficult and 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 would disrupt our business and divert managements time and
attention.
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We may also attempt to acquire businesses or technologies or attempt to enter into strategic transactions that we are
unable to complete. For example, in January 2009, we launched an exchange offer to acquire EXACT Sciences Corporation, but were not able to complete the transaction prior to EXACT Sciences selling and licensing a substantial portion of its assets
and intellectual property to a third party. If we are unable to complete such 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 and operations.

*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 broad range of companies in
the United States and other countries that are engaged in the development and production of products, applications, services, and strategies to analyze genetic information and strategies to develop and commercialize diagnostic, noninvasive prenatal
diagnostic, and other products for customers in the clinical research 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 have greater name recognition than we do.
Several companies are currently making or developing products that compete with our products. Our competitors may develop or market technologies or products that are more effective or commercially attractive than our current or future products, or
that may render our technologies or products obsolete. Our recent announcement of the delay in the expected launch of our Down syndrome test due to the discovery of employee mishandling of R&D test data and results may adversely affect our
competitive position and the market acceptance of any tests that we may commercialize.

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

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

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

The success of our business will depend on our ability to identify,
attract, hire, train, retain, maintain, and motivate highly skilled personnel, particularly sales, scientific, medical, and technical personnel, for our future success. Competition for highly skilled personnel is intense, and we might not succeed in
attracting and retaining these employees. If we cannot attract and retain the personnel we require, we would not be able to expand our business as rapidly as we intend. In particular, if we lose any key member of our management team, we may not be
able to find suitable replacements and our business may be harmed as a result. We recently reduced headcount in our genetic analysis business and we also recently announced the discovery of employee mishandling of R&D test data and results and
we, and certain of our executive officers, have been named as defendants in several complaints filed in the U.S. District Court for the Southern District of California alleging violations of securities laws. These events may adversely affect our
ability to retain key employees. If we lose key employees or if our management team is not able to effectively manage us through these events, our business, financial condition, and results of operations may be adversely affected. We do not carry
key person insurance covering any of our officers or other employees.

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

Evolution in our business has placed and may continue to
place a significant strain on our personnel, facilities, management systems, and resources. We will need to continue to improve our operational and financial systems and managerial controls and procedures and train and manage our workforce. We will
have to maintain close coordination among our various departments. If we fail to effectively manage the evolution of our business and the transition to also being a provider of diagnostic products as well as the significant restructuring changes and
other significant events that we have experienced, our ability to pursue business opportunities, expand our business, and sell our products and applications in new markets may be adversely affected.



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*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 58% of our sales were made outside of the United
States during the three months ended March 31, 2009, compared to 56% for the three months ended March 31, 2008. A successful international effort will require us to develop relationships with international customers and collaborators,
including distributors. We may not be able to identify, attract, retain, or maintain suitable international customers or collaborators. Expansion into international markets will require us to establish and grow foreign operations, hire additional
personnel to run these operations, and maintain good relations with our foreign customers and collaborators or distributors. International operations also 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;
| | - |  | ----------------------------------------------------------



| |  |  | licenses, tariffs, and other trade barriers;
| | - |  | --------------------------------------------



| |  |  | political and economic instability and possible country-based boycotts;
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| |  |  | 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 and regulations relating to the import or export of high
technology products. We cannot predict whether tariffs or restrictions upon the importation or exportation of our products will be implemented by the United States or other countries.

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 also have laboratories. We also have laboratory facilities in
Grand Rapids, Michigan. Damage to our facilities due to war, fire, natural disaster, power loss, communications failure, terrorism, unauthorized entry, or other events could prevent us from conducting our business for an indefinite period, could
result in a loss of important data or cause us to cease development and production of our products. We cannot be certain that our limited insurance to protect against business interruption would be adequate or would continue to be available to us on
commercially reasonable terms, or at all.

Responding to claims relating to improper handling, storage or disposal of hazardous
chemicals, and radioactive and biological materials which we use could be time consuming and costly.

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

*We 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 will increase as we and our partners and collaborators prepare to commercialize research-use-only or other types of molecular tests, including LDTs and diagnostics for prenatal and other applications. We have
product and general liability insurance that covers us against specific product liability and other claims up to an annual aggregate limit of $15.0 million and $2.0 million, respectively. Any claim in excess of our insurance coverage would have to
be paid out of our cash reserves, which would have a detrimental effect on our financial condition. It is difficult to determine whether we have obtained sufficient insurance to cover potential claims. Also, we cannot assure you that we can or will
maintain our insurance policies on commercially acceptable terms, or at all.



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*Negative conditions in the global credit markets may impair the liquidity and value of a portion
of our investment portfolio.

As of March 31, 2009, our marketable securities classified as noncurrent consist of $9.4 million of ARS
issued primarily by municipalities and insurance companies that have experienced failed auctions due to lack of liquidity at the time their interest rates were to reset, which have been reduced by impairment charges of approximately $3.7 million
reflecting the change in market value. The recent negative conditions in the global credit markets and the financial services industry have prevented some investors from liquidating their holdings, including their holdings of ARS. As a result,
certain of these types of securities are not fully liquid and we could be required to hold them until they are redeemed by the issuer or to maturity. In the event we need to access the funds that are in an illiquid state, we will not be able to do
so without a loss of principal until a future auction on these investments is successful, the securities are redeemed by the issuer or they mature. Although the ARS have continued to pay interest according to their stated terms, based on valuation
models and an analysis of other-than-temporary impairment factors, recognized losses of approximately $2.6 million and $1.1 million were recorded for the years ended December 31, 2008 and 2007, respectively, reflecting the portion of ARS
holdings that we have concluded have an other-than-temporary decline in value. No impairment was recognized based on our analysis of other-than-temporary impairment factors for the three months ended March 31, 2009. If the credit ratings of the
security issuers deteriorate or if uncertainties in these markets continue and any decline in market value is determined to be other-than-temporary, we would be required to further adjust the carrying value of the investment through an impairment
charge, which could negatively affect our financial condition, cash flow and reported earnings. There is no guarantee that we will be able to liquidate our remaining ARS or might have to incur further recognized losses. It is possible that our ARS
investments may be subject to credit rating downgrades, which could also affect the value of the securities and any ability we may have to liquidate these securities in the future.

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

Current domestic and global economic conditions are uncertain and have continued to be volatile and deteriorate over the past several months. The recent turmoil in the
economic environment in many parts of the world may continue to put pressure on global economic conditions. Our revenues and operating results may be affected by uncertain or changing economic and market conditions, including the recent crisis in
the credit markets and financial services industry and general conditions in the global capital markets. If global economic and market conditions, or economic conditions in the United States or other key markets, remain uncertain or persist, spread,
or deteriorate further, we may experience material impacts on our business, operating results, and financial condition.

Our cash
asset-backed loan line are maintained with financial institutions which given the current financial crisis may not be fully insured or available.

We maintain significant amounts of cash and cash equivalents at financial institutions that are in excess of federally insured limits. Given the current instability of the financial services industry, there is no guarantee that we will not
experience losses on our cash deposits or that our asset-backed loan line will be available for borrowing, or that we will be able to obtain future lines of credit.

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

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



| |  |  | actual or anticipated variations in quarterly and annual operating results;
| | - |  | ---------------------------------------------------------------------------



| |  |  | announcements of technological innovations, valuation test and clinical study results, and research and development progress or setbacks by us or our competitors;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our success in entering into, and the success in performing under, licensing and product development and commercialization agreements with others;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our success in and the expenses associated with researching, developing and commercializing diagnostic products, alone or in collaboration with our partners and
obtaining any required regulatory approval for those products and services;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the status of litigation against us and certain of our executive officers, or that we are pursuing against others;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | the status and findings of the ongoing independent investigation being overseen by a special committee of independent directors;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 companies in particular, have experienced extreme price and volume fluctuations that may have been unrelated or
disproportionate to the operating performance of the listed companies. There have been dramatic fluctuations in the market prices of securities of biotechnology companies. These price fluctuations may be rapid and severe and may leave investors
little time to react. Broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. Sharp drops in the market price of our common stock expose us to securities class-action
litigation. Following the announcement that we have delayed the expected launch of our Down syndrome test due to the discovery of employee mishandling of R&D test data and results our stock price closed at $3.62 on April 30, 2009. We have
subsequently been named as defendants in various lawsuits alleging violations of federal securities laws related to alleged false and misleading statements regarding our Down syndrome test under development. Such litigation could result in
substantial expenses and other liabilities and a diversion of managements attention and resources, which would seriously harm our business, financial condition, and results of operations.



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##### Table of Contents

|Item 6. | Exhibits
|------- | --------



|(a) | Exhibits
|--- | --------



|              |  |                                                                                                                           
|------------- |  | --------------------------------------------------------------------------------------------------------------------------
|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 Transfer and Trust Company, LLC.    
|              | 
|4.3 (3)       |  | Form of Right Certificate.                                                                                                
|              | 
|10.1 (4)      |  | Amended and Restated Change in Control Severance Benefit Plan.                                                            
|              | 
|31.1          |  | Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a).                          
|              | 
|31.2          |  | Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a).                      
|              | 
|32.1          |  | 18 U.S.C. Section 1350 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|              | 
|32.2          |  | 18 U.S.C. Section 1350 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



|* | 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 filed June 6, 2006.
|--- | --------------------------------------------------------------------------------------------



|(2) | Incorporated by reference to the Registrants Current Report on Form 8-K filed December 7, 2007.
|--- | ------------------------------------------------------------------------------------------------



|(3) | Incorporated by reference to the Registrants Current Report on Form 8-K filed March 4, 2009
|--- | --------------------------------------------------------------------------------------------



|(4) | Incorporated by reference to the Registrants Annual Report on Form 10-K for the year ended December 31, 2008.
|--- | --------------------------------------------------------------------------------------------------------------



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##### Table of Contents

SIGNATURE

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



|                    |  |  |  |                |  |                 |  |                        
|------------------- |  |  |  | -------------- |  | --------------- |  | -----------------------
|                    |  |  |  | Sequenom, Inc.
|                    |  |  | 
|Dated: May 11, 2009 |  |  |  | By:            |  | /s/ PAUL HAWRAN
|                    |  |  |  |                |  |                 |  | Paul Hawran            
|                    |  |  |  |                |  |                 |  | Chief Financial Officer



45