Stock Preacher

Sequenom Inc. (NASDAQ: SQNM)

Sequenom Inc. (SQNM) focuses on providing of products, services, diagnostic testing, applications and genetic analysis products that translate genomic science into solutions for biomedical research, translational research, molecular medicine, and agricultural and livestock applications. Its development and commercialization efforts in various diagnostic areas include non-invasive prenatal diagnostics, oncology, infectious diseases and other disorders. The Company offers its MassARRAY® system for various DNA/RNA analysis applications, including single nucleotide polymorphism (SNP), genotyping detection of mutations, analysis of copy number variants, and other structural genome variations, as well as quantitative gene expression analysis, quantitative methylation marker analysis, comparative sequence analysis of haploid organisms, SNP discovery and oligonucleotide quality control. SQNM has exclusively licensed intellectual property rights for the development and commercialization of non-invasive prenatal genetic tests for use with the MassARRAY® system and other platforms.

Founded in 1994, the Company is headquartered in San Diego, California.

Source: Reuters.com, SEC Filings, FY ending December

Financial Summary

For the quarter ended June 30, 2009, SQNM reported revenue of $9.2 million, compared with $12.8 million for the second quarter of 2008. The decrease from the comparable period last year was primarily due to softness in capital expenditure in the bioresearch market, resulting in lower sales of MassARRAY® systems. Net loss for the second quarter of 2009 came in at $20.2 million, or $0.33 per share, compared with $9.7 million, or $0.21 per share, for the second quarter of 2008.

As of June 30, 2009, the Company had total cash, cash equivalents and short- and long-term marketable securities of $69.3 million and $7.5 million in accounts receivable.

For the its 2009 financial guidance, the Company expects a consolidated net loss of approximately $65 million, which includes approximately $12 million in non-cash FAS 123R expenses, and cash burn of approximately $52 to $57 million, attributable to increased legal expenses, and increased expenses associated with the ramp up of the Company’s diagnostics efforts.

FINANCIAL STRENGTH

Source: Reuters.com

Analyst Consensus

This is the consensus forecast among 9 polled investment analysts.

Source: FinancialTimes.com
CONSENSUS ESTIMATES ANALYSIS

Source: Reuters.com

Investment Highlights

Overview

SQNM is an innovator in DNA detection technology. The Company is committed to providing the best genetic analysis products that translate the results of genomic science into solutions for molecular diagnostics, biomedical research, translational research and molecular medicine applications. The Company has developed the MassARRAY sequencing system, which is used to analyze variations in DNA called single nucleotide polymorphisms (SNPs). This technology allows a direct mass measurement of nucleic acids, providing unparalleled precision and quantification. The Company is developing a comprehensive portfolio of prenatal test methods by combining the versatility of the MassARRAY system with the Company’s SEQureDx technology, which enables the detection of circulating cell-free fetal nucleic acids in a maternal blood sample. The Company is also developing tests for oncology, infectious diseases and other disorders.

Recent News

Shares of SQNM took a dip last week on words that results for its highly anticipated blood test for Down syndrome had been mishandled. In a regulatory filing late Monday, the Company stated, “We are no longer relying on, and the public should no longer rely on, any of our previously announced test data and results for our noninvasive prenatal test for Down syndrome.”

Reacting negatively, Zarak Khurshid of Caris & Co. cuts his price target on the stock from $3 to 50 cents. “We feel this is one of the worst possible outcomes from the investigation and investors continue to be in the dark,” Khurshid wrote in a note to clients. Raghuram Selvaraju of Hapoalim Securities downgraded SQNM to a sell rating following the news. “If the firm cannot demonstrate that its noninvasive prenatal diagnostics platform is commercially viable, we believe it will be hard to justify value for either its intellectual property or the existing molecular analytics business, which is cash flow-neutral at best,” the analyst wrote in a report.

The Company terminated several of its top executives following the news. The Company terminated president and CEO Harry Stylli, Ph.D., and Elizabeth Dragon, Ph.D, the senior vice president of research and development. Dr. Stylli also stepped down from the board of directors, as required by his contract.

Despite the bad news, SQNM continues to believe in the science underlying the test, which is estimated to have one of the largest markets, according to Ian Clements, PhD, SQNM’s head of corporate communications. The Trisomy 21 test monitors fetal DNA circulating in the mother’s blood to detect trisomy-21, the cause of Down syndrome. According to the Company, the release of fetal material into maternal circulation has been validated by a number of academic laboratories and potential competitors as well as the Company. The Company said it continues to believe that this fetal material, including nucleic acids, will provide important information about the genetic makeup of the fetus and that this information may become the basis for new diagnostic tests. Looking forward, the Company intends to continue its research and development program for the test.

“What we are willing to say as an organization, is that those tests continue to move forward; we are developing and on track,” says Clements, in a report published on dotmed.com.

Following the completion of the independent investigation, a special committee board of directors has begun implementing a number of remedial measures, including:

-New disclosure controls and procedures;

-Changes in the Company’s organizational and reporting structure;

-Enhanced training in ethics and scientific processes for the Company’s employees;

-New procedures for the conduct of research and development and clinical studies, including increased roles and responsibilities for independent third parties;

-New procedures for the storage and management of samples for testing; and

-Creation of a science committee of the Company’s board of directors to oversee its research and development strategy and activities.

Technical Analysis

Source: http://stockcharts.com/h-sc/ui

Moving Average

SQNM is below its 13-day moving average. This bearish sign is even more significant because the moving average is also trending lower.

MACD

The MACD for SQNM currently indicates a strong bearish signal for two reasons. First, the MACD is below the signal line, a 9-day moving average. Second, the MACD is below the critical level of 0, which implies that the underlying moving averages are trending lower.

Bollinger Bands

SQNM’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, SQNM is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

Source: http://www.scottrade.com

Comparative Analysis

Source: Yahoo! Finance, Analyst Estimates.

Insider Trading Activity

NET SHARE PURCHASE ACTIVITY

Data provided by Thomson Financial

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