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Investing is sometimes like betting on horse races. You take all the information you can get, synthesize it as best you can, and figure out if the potential payoff outweighs the risks.
Unfortunately for investors in Sequenom (Nasdaq: SQNM ) , this company is like a horse running in two feet of mud, with blinders on, and a new jockey. Can it make it to the finish line? Maybe. Might it even win the race? Perhaps. But how do you handicap something like this? There's not enough information to make an informed decision.
What we do know is that the company cleaned house on Monday night. The president and CEO, Harry Stylli, and senior vice president of research and development, Elizabeth Dragon, were fired. Its chief financial officer, Paul Hawran, and Steve Owings, the vice president of commercial development for prenatal diagnostics, resigned.
The changes stem from the announcement in April of "employee mishandling of R&D test data and results" for its Down syndrome test. I've got no problems with heads rolling, and if the CEO needs to be fired for a lack of oversight, then so be it. The chairman of the board, Harry Hixson, who was formerly the chief operating officer of Amgen (Nasdaq: AMGN ) and also has some experience with diagnostic testing at Abbott Labs (NYSE: ABT ) , will take over as the interim CEO.
After the haircut yesterday, the company's shares closed about the same place they did when the scandal first broke last spring. Essentially, we're back where we started.
Despite rapid changes in the stock price, we never really left. Investors are still completely in the dark about what exactly "employee mishandling" really is. There's still an ongoing Securities and Exchange Commission investigation, so I guess it's understandable that the company might want to keep its mouth shut.
The bigger problem for investors is that they're equally in the dark about the path forward. No further timeline was given for getting the Down syndrome test to market, or even when we could expect initial test results. Beyond what the company has said earlier, that is, which hasn't been much.
Uncertainty can lead to outsized returns -- witness American International Group (NYSE: AIG ) and Bank of America (NYSE: BAC ) -- but with Sequenom, I've never been able to get a handle on exactly what the likelihood of those outsized returns might be. It's safe to assume that the company is worth north of $20 per share if -- and it's a big if -- the Down syndrome test turns out to work, but it's really difficult to determine how likely that is.
Call me a wimp if you will, but for that reason alone, I'll continue to sit this one out.