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Typical of the irony in this market, after buying a large swath of Sequenom (SQNM) Monday at $21, in after hours comes news of "competition" (i.e. a study of 18 patients). Details found here.

  • Researchers led by Stephen Quake of Stanford University in California created a way to look for the extra chromosomes that cause Down's and similar birth detects in the tiny amounts of fetal DNA that circulate in the mother's blood.
  • Quake's team demonstrated the accuracy of the new genetic test in a small study involving 18 women.
  • Quake said the new test could be widely available in two or three years, and could become a routine prenatal test of a baby's health. Quake said the next step is a larger study involving hundreds of women. Stanford University has filed a patent on the test and two companies are negotiating for the licensing rights, Quake said. He said he is has been hired as a consultant for both companies, which he declined to identify.
  • San Diego-based Sequenom Inc (SQNM) is also working on a Down's syndrome blood test using a different approach.

Nothing easy in this market, eh? What I do like is a management who is responsive and within hours

Sequenom

had a full response which

can be found here

. (Of course it is biased since it comes from Sequenom but it's pretty straightforward.) The company has been busy buying intellectual property rights over the past 6-18 months, to build a fortress around its 'technology' but the market shoots first, and asks questions later.



In assessing the state of the market for the next few quarters, I want to find companies with low debt, very little exposure to the economy, and a potential customer base with deep pockets, providing essential services - that has nothing to do with "global growth". This limits the candidates if you are looking for "growth" - but

Sequenom

is one. So despite being a company that, in between news flow, could trade randomly I am adding more here in the lower $20s range to make this a

6.2%

stake. Less positions and higher concentrations will lead to more volatility for the fund, but it is what it is. I don't know if this is a viable competition or not, but even if it is, Sequenom will be to market by end of 2009 to mid 2010, whereas this new product is at its baby steps. Based on the licensing agreements that look to be required it will not only not lack first mover advantage, it will cost significantly more. We'll know by 2013 if it's a viable threat I suppose.



Disclosure: Author is long Sequenom in fund and personal account.

Source: Sequenom Down on Threat of Competition