Sequenom (SQNM) Results Good; Limit Order Hit

I will edit this piece later in the day as I have not been online during the market hours so I'm catching up, but the Sequenom (SQNM) test results from last night were very good with only 1 false positive on the next 400+ sample size. I did not get a chance to listen to the conference call (will do that this weekend) but since I did not want to make an outsized bet heading into a "major news event" I had a limit order waiting at $21.75 which hit this morning (stock fell to $20 in fact)

• Sequenom, Inc. (NASDAQ:SQNM - News) today announced new positive data from the prospective clinical studies using the Company’s noninvasive SEQureDx™ technology, enabling the detection of fetal aneuploidy from maternal blood.
  
• The data presented today consist of 459 new, high prevalence samples from the prospective, blinded studies performed at Sequenom, bringing the total number of samples studied to 858. Based on the results from the total study samples, including samples as early as 8 weeks of pregnancy, the Sequenom SEQureDx RNA-based technology demonstrated a 100% positive predictive value (PPV) and a 99.9% negative predictive value (NPV).
• The SEQureDx technology achieved a better than 99% detection rate, with less than a 1% false positive rate. The current standard of care, screening tests, perform at less than a 99% detection rate; however, statistically, if these screening tests could perform at a 99% detection rate, their false positive rate would be in the 10% to 25% range.

There is a lot of interesting talk of a next generation platform as well.

This was one of the "generals" that had been going sideways and now it's been hit, so I prefer to buy on the hit than chase. I am only up to a 2.2% stake (from about a 1.2% position) - simply because I do not trust this market, but it's currently the largest long position. The 50 day moving average is in the $20.70s area so I'd like to see that hold... if stock price breaks below I'll most likely cut back and wait for strength to re-emerge. Or buy down there in the $17s.

Again, this is more of a late 2009-2010/11 play so valuing it today is quite arbitrary. This is why I am going to let the price action dictate the short term positioning.... "net present value" is not so easy with this one. But I do not see anything to change the thesis and in fact, I thought this was a very good outcome.

Adam Feuerstein from TheStreet.com has his take here.

EDIT 3 PM: Mike Huckman also has a story here, with video below - first time I've seen Huckman talk Sequenom (the stock is rebounding nicely this afternoon)

But after CEO Harry Stylli appeared "First on CNBC" on "Squawk on the Street" this morning and called the stock move an overreaction the shares began to trim their losses on pretty heavy volume.

And Mr. Stylli has some support from at least a couple of analysts.

Bruce Cranna at Leerink Swann, which specializes in healthcare stocks, writes in a research note to clients, "We do not expect the detection of a false positive to be problematic, as any result that tests positive will confirm diagnosis with an invasive procedure." And Dr. Sean Lavin at Lazard uses a phrase that gets thrown around a lot in the title of his note, "New paradigm in prenatal testing introduced." He goes on to say, "Sequenom's presentation last night demonstrated, essentially, that its tests should gain rapid adoption...." Lazard and Leerink have banked SQNM and make a market in the stock.

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(return to original post) As I thought through yesterday, it was a lot of the laggards that rallied - the portfolio was hit not only with some of the short exposure working against us, but really outside of some tiny long positions in financials/housing/commodities almost everything else we owned went sideways. This was the same thing I noticed in the back half of last week and why I thought the oversold stocks would perform better in the short term.

I still believe before this round of correction washes out, the Generals need to be shot - many seem to be weakening. Now that the worst of breed has worked off its oversold condition the setup for a "everyone down" type of correction increases. Not saying that will happen - guessing the near term is a fool's game since it's all based on hope & government interventions - but we have a much better set up now for everything to sell off together. I still believe that retest of S&P 750 remains in our future, no matter what interventions they spring on us.

I don't want to over commit yet on the long side but now have some of the proper short exposure so on the next downfall I can begin buying more aggressively. Remaining patient.

Long Sequenom in fund and personal account