Who Sold Sequenom Last Week and Why?

| About: Sequenom, Inc. (SQNM)

Sequenom’s (NASDAQ:SQNM) recent stock decline looked as if a program was set for selling SQNM as soon as the financial results were announced. The point is that the firm’s financial results had nothing to do with SQNM's price move, neither during the rally that took the stock up from a mid one-digit price to over $25, nor during the stock plummeting from around $15 in April to less than $4 overnight. So, it does not make sense that, all of a sudden, the financial results would have such a huge negative impact on the stock.

The reason for the rally was investors’ enthusiasm about the firm’s non-invasive prenatal program, especially the expected launch of non-invasive test for Down syndrome. On the other hand, the reason for the stock losses that followed was the skepticism towards the program when news announced that some employees mishandled the R&D Down syndrome test data and results and were under investigation. This incident led investors to become skeptical towards the firm’s prenatal program.

The recent rebounding in the stock occurred as investors began to regain confidence that Seque-nom will, indeed, be capable of putting several prenatal non-invasive tests on the market, including the Down syndrome test. This is what Sequenom has confirmed time and time again from the day the mishandling of the data was announced until now.

Besides the prenatal program, recently, results from a study published by the University of Michigan demonstrate that thanks to using Sequenom MassARRAY system, its scientists were capable of detecting the presence of high-risk human papillomavirus (HPV) in women in nearly half (46.7%) of those who tested negative with the standard of care conventional test. HPV causes cervical cancer in women. As a matter of fact, around 9,000 American women are diagnosed with cervical cancer each year despite regular cervical screening with the current test. The results of the MassARRAY test will be published in the September 2009 edition of Journal of Virological Methods. The assay used in this study is exclusively licensed by Sequenom.

Sequenom technology, SEQureDx™, is a revolutionary approach to genetic screening. Rather resorting to amniocentesis, i.e., entering the uterus to sample the amniotic fluid surrounding the baby, SEQureDx Technology extracts DNA material safely and comfortably from the blood of the mother. It is a simple process where SEQureDx™ utilizes circulating fetal DNA in the pregnant women’s blood to examine the fetus’ genetic status. This effective screening does not entail the risks associated with disturbing the amniotic fluid that surrounds the baby in the uterus.

In addition to Down syndrome, Sequenom’s SEQureDx Technology promises detecting a number of other genetic defects. An example is the analysis of fetal RhD. RhD disease that occurs when the blood of an expectant mother is incompatible with her unborn child. RhD incompatibility affects approximately one in one thousand live born infants and can lead to jaundice, anemia, brain damage, heart failure and death. Many other possibilities for Sequeom’s non-invasive tests are being studied.

Sequenom’s technological capabilities and its revolutionary approach to genetic screening is the reason for investors’ enthusiasm for the firm, not its current finances before it puts its tests on the market. As a matter of fact, nothing in its most recent financial statement is so bad as to result in a sell off.

We appreciate this firm’s technologies and believe its prenatal program will put breakthrough tests in the hands of physicians who wish it would be available.

Disclosure: Long SQNM