When Sequenom (NASDAQ:SQNM) was welcoming analysts and shareholders who are “interested in discussing the results for the first quarter of 2011,” the firm’s CEO was quite aware that most attendees were, in fact, much more interested in the progress of the firm’s plans for the non-invasive prenatal tests, especially the Down Syndrome test. Shareholders, he knew, are interested in reading the future of Sequenom Center for Molecular Medicine (CMM). As a matter of fact, that’s what investors in development-stage biotech firms and small firms generating poor revenues firms on the road to realizing their dreams should look for i.e., the firm’s technologies and programs. In the case of Sequenom, its success in bringing non-invasive predictive prenatal tests to the market, especially, the promised Down Syndrome test, is a game changer that could either make this firm or break it. Meeting or exceeding expectations and promises of controlling expenses even if they lead to 25% reduction in losses, would be of minimal or no impact at all when the fate of the test is officially declared.
That’s why, after a short statement about the firm’s improvement in handling its revenues, Sequenom’s chairman and chief executive officer Dr. Harry Hixson went straightforward into telling us that Sequenom’s CMM has completed testing on the samples to evaluate the performance of the Trisomy 21, or T21, laboratory developed test (LDT). The CMM did it well before the end of the second quarter, ahead of schedule. He said that the company is on track to complete the study by the end of the second quarter.
This is real good news with no devil likely to surface anywhere in the detailed answers to analysts’ pointed questions. During the conference call this time, the analysts looked relaxed and comfortable, rather than defiant and skeptical like they were during previous meetings. Dr. Hixson added, “The principle investigators of the coordinating center at Women and Infants Hospital, who are responsible for study design and management of samples and analysis are preparing a manuscript covering the results of this study and will submit it for publication upon its completion. We expect to announce the results of the study following the publication, which is expected sometime later this year.”
As if he has recognized that investors and analysts wished to have a more specific date about the test launch, Dr Hixson said while answering a question from an analyst, “ We are firmly on track to launch the Trisomy 21 LDT by the end of 2011, or early 2012.”
That was it. Finally, a date. Dr. Hixson has definitely succeeded in cutting the head of skepticism serpent. Nothing more can he do, though, to protect the gullible who overlook serious and sincere announcements while listening to misleading tutors.
Dr. Hixson reminded us of Dr. Dennis Low, Sequenom’s collaborator who published an article in the January edition of the British Medical Journal about a study utilizing circulating cell-free fetal DNA isolated from maternal plasma. Nobody we know about has forgotten Dr. Law, his research, results, or the published article, which stirred our enthusiasm about the future of non-invasive prenatal laboratory diagnostic testing at the hands of Sequenom. The good news to tell was about Sequenom concluding an agreement with the Chinese University of Hong Kong where Dr. Dennis Low conducts his research. Upon this agreement, Sequenom has secured the worldwide rights (excluding Hong Kong) to intellectual property of prenatal diagnostics, prognostics and analysis for research and commercial purposes. The license agreement includes fetal whole genome sequencing and other breakthrough analysis procedures.
This is, indeed, great news that answered investors’ concerns about the future of Sequenom Center for Molecular Medicine. More comforting news about the future of this CMM is the validation of Sequenom’s test for the assessment of the risk of developing choroidal neovascular age-related macular degeneration (AMD). A manuscript about this test was accepted for publication in the June issue of Human Genomics. This was last week news. Today’s great news was in Dr. Hixson’s announcement that the date of the commercial launch of this test is May 9, 2011.
So, more than ever before, we felt so comfortable to learn that the noninvasive Down Syndrome test will, indeed, be on the market in the next 6 to 7 months and that the AMD test will be marketed in a couple of days. More important is that the agreement with China will tremendously increase the capability of Sequenom to create more and more non-invasive prenatal tests that realize its big dreams.
We are optimistic for Sequenom and much less concerned about Sequenom’s backbone, i.e., its Center of Molecular Medicine.
How high could the stock go?
Our first target is $12. This number is expected to jump up as the approximate date of the Down syndrome test launch nears. We will not talk about the how high the stock price would go following the launch until we see how far high the stock would have reached prior to the launch. At that time, we would have also gathered more knowledge about the market capacity, the test price, the percentage of the physicians who would be willing to prescribe it to their pregnant clients instead of the invasive amniocentesis test that has been validated on thousands of pregnant women.
All we can say now is that Sequenom is on the right track.
We own this stock and we long Sequenom.