I've been fairly hard on Sequenom -- rightfully so, given its history. Clearly, a test that can detect Down syndrome using maternal blood is a lot safer than an amniocentesis. But to convert doctors, the sensitivity and specificity of the test have to be high enough to justify its use. Unfortunately, we don't have that data yet.
It's safe to assume that Sequenom's executives have seen it, though. The trial was completed a couple of months ago, and they're just waiting for the principal investigators to get the data written up and accepted into a scientific journal.
You can look at the deal with Illumina in one of two ways: Either the company is confident that the data will support sales of the test, or management is going with the if-you-build-it-they-will-come model, which works better for fictional baseball fields than for medical products. The size of the deal might have given some clues as to which one was more likely, but the financial terms of the agreement weren't disclosed.
The two companies plan to move the test toward regulatory approval, which should give investors confidence that the data might be fairly positive. Sequenom can sell the test without FDA approval as long as it's running the test in-house, but if it were to gain in popularity, Sequenom would want diagnostics companies with broader reach, such as Laboratory Corporation of America
Let's call yesterday's announcement mildly positive for Sequenom, but I'm still taking an if-you-publish-it-I'll-consider-investing attitude.
Interested in keeping track of Sequenom as it launches it develops its Down syndrome test? Add it to My Watchlist, which will help you keep track of all our Foolish analysis on Sequenom.