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CAPScall of the Week: Complete Genomics

Sean Williams
July 20, 2012

For years, satirical late-night TV host Stephen Colbert has been running a series on his show called "Better Know a District," which highlights one of the 435 U.S. districts and its congressional representative. While I am no Stephen Colbert, I am brutally inquisitive when it comes to the 5,000-plus listed companies on the U.S. stock exchanges.

That's why this week and every week from here on out, I'll make it a tradition to examine one seldom-followed company within the Motley Fool CAPS database and make a CAPScall of outperform or underperform on that company.

For this week's round of what I like to call "Better Know a Stock," I'd like to take a closer look at Complete Genomics (Nasdaq: GNOM  ) .

What Complete Genomics does
Complete Genomics is a life sciences company developing DNA sequencing technology to quickly and cost-effectively analyze DNA data. The main buzz surrounding Complete Genomics is its announcement that it has developed new genome sequencing technology, known as Long Fragment Read, which is significantly more accurate than what's currently available on the market and requires less DNA for analysis. Genome sequencers are vital to researchers as they allow for quicker turnaround times in studies. Also, as genome sequencing costs fall, research studies become cheaper and more feasible to run.

In Complete Genomics' latest quarter, the company noted revenue of $3.9 million, down from $6.8 million in the previous year, while expenses ballooned due to DNA sequencing technology development.

Whom it competes against
As you can imagine, competition among life sciences companies is fierce. Illumina (Nasdaq: ILMN  ) is currently suing Complete Genomics for allegedly infringing on a single method of sequencing a polynucleotide template. This lawsuit was filed at the same time that Roche was attempting its hostile takeover of Illumina (which Illumina successfully fended off).

Also, Life Technologies' (Nasdaq: LIFE  ) new Benchtop Ion Proton Sequencer is capable of sequencing the human genome in just one day, for the tidy sum of just $1,000. This significant reduction in time and cost could be a game-changer that puts its technology out of the reach of its competitors. Big pharmaceutical companies are starting to take notice of Life's superior technology, such as when GlaxoSmithKline (NYSE: