Shares of San Diego-based Sequenom (SQNM) are sinking on huge trading volume.
The company shocked investors after the closing bell yesterday when it issued this press release announcing that its data couldn't be trusted.
Sequenom apparently discovered that a handful of employees "mishandled" the test results on the purported accuracy of its experimental diagnostic test for Down Syndrome. The test, which requires a simple blood draw, was designed for pregnant women to stave off or maybe even avoid risky amniocentesis. Many analysts thought it would be a runaway hit. Pregnant or child-bearing aged women I work with here at CNBC were excited. They'll have to wait.
I blogged about the test earlier this year when we featured SQNM's CEO in a live interview. Before that I talked to an extremely bullish healthcare investment fund manager at the JPMorgan Healthcare Conference who had a majority of his portfolio invested in SQNM. That firm, RA Capital, is still listed as the company's second biggest shareholder. That's probably not the case anymore. The stock had a huge run up last year on high hopes for the test, but it's giving it all back and more today.
There were skeptics and critics who were suspicious that all of the data had come out in company press releases and had not been published in peer-reviewed medical journals or presented at a scientific conference. But the bulls continued to carry the day.
The analyst downgrades and price target cuts on SQNM are rampant. But giving credit where credit is due, especially after I've called him out at least a couple of times for his switcheroo on Dendreon (DNDN) Jonathan Aschoff at Brean Murray Carret & Co. had a "Sell" rating on Sequenom before yesterday's news broke. He simply had to drop his price target today from 10 bucks down to two. BMC makes or made a market in SQNM.
And one more little thing. In good times, the PR folks for Sequenom were almost overzealous in their efforts to get me to cover the company. Yesterday and today, radio silence. Not even an email containing the press release announcing the bad news when it was issued yesterday. I was home and doing other things-of course, with my BlackBerry close at hand, though-when the news hit. But, thankfully a contact on the Thomson-Reuters biotech team was good enough to shoot me an email to make sure I saw it. In PR, you gotta handle the bad as well as the good.