Why Sequenom Inc. Shares Surged

Is this meaningful or just another movement?

Jun 16, 2014 at 12:55PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Sequenom (NASDAQ:SQNM) are trading roughly 10% higher today following news that the life sciences company has gained pre-market clearance from the FDA to market its IMPACT genotyping test. Sequenom is also collaborating with Quest Diagnostics (NYSE:DGX) to expand patient access to Sequenom's flagship MaterniT21 prenatal test.

So what: The IMPACT Dx Factor V Leiden and Factor II Genotyping Test, which was developed for in-vitro use to detect thrombophilia (an increased risk of blood clots) and is intended to run on the IMPACT Dx system, obtained pre-market 510(k) clearance this morning. Sequenom recently sold its bioscience segment to privately held Agena Bioscience, and this means that the clearance will transfer to Agena, in exchange for a $2 million payment. Agena now bears full responsibility for commercializing the test once all further regulatory hurdles are cleared.

The bigger news of the day appears to be that the much-larger Quest Diagnostics will offer nationwide access to the MaterniT21 test for chromosomal abnormality, and will also license Sequenom's patents to develop its own noninvasive prenatal tests for launch next year. Since Quest operates over 2,200 service centers in the United States and offers diagnostic services to roughly half of the country's physicians and hospitals, this will certainly help Sequenom expand its market quickly and without a massive self-funded marketing expenditure. The precise terms of the deal have not been disclosed.

Now what: News of the IMPACT clearance is probably irrelevant to Sequenom's future, as $2 million is barely 1% of the company's trailing 12-month revenue. However, expanded access to MaterniT21 is a big deal, especially if it helps the never-profitable Sequenom drive revenue higher with minimal additional overhead costs in marketing or customer service. However, since Sequenom has had ongoing difficulties achieving profitability despite strong revenue growth, I'd do more research -- and possibly wait to see the full terms of this agreement -- before calling this news a buy signal.

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need to Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

Alex Planes has no position in any stocks mentioned. The Motley Fool recommends Quest Diagnostics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information