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Why Sequenom Slid More Than 15% Today

By Brian Orelli, PhD - Sep 21, 2015 at 4:56PM

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Investors get spooked about a leadership change at the diagnostic test company.

What: Sequenom (NASDAQ: SQNM) fell more than 15% today after announcing that its president and CEO, William Welch, resigned to "pursue other interests." The diagnostic test company said that Dirk van den Boom will fill in the duties as the interim president and CEO.

So what: CEOs don't usually leave positions voluntarily if they believe their company has a lot of potential growth ahead of it. If Welch is leaving for a comparable job elsewhere -- or no job at all -- that could be a bad sign that the insider doesn't think highly of Sequenom's prospects.

But without knowing the full story, it's hard to assess how bad the CEO leaving might be. It's possible investors have nothing to worry about with this leadership change. Maybe Welch found his dream job. Maybe Welch's "resignation" was really a push out the door by the board because they didn't think he was leading Sequenom to its full potential and the company is better off without Welch.

Now what: van den Boom, the company's interim CEO, has plenty of experience at Sequenom, having started at the company in 1998. He served as Sequenom's chief scientific and strategy officer since June 2014, a role that he'll continue to hold while leading the company. Before that he was an EVP of research and development and chief technology officer.

It appears Sequenom is in capable hands, at least for the van den Boom's interim stint as CEO if not permanently. But today's decline is warranted because the leadership change creates uncertainty. Investors may be able to cut through some of that uncertainty when Sequenom discloses more information about Welch's departure, likely in a document filed with the SEC, or when they find out where Welch lands. Until then, buying or selling on the news doesn't make a whole lot of sense.

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