SEQUENOM's Share Gains: News or Noise? (SQNM)

June 9, 2009 · Filed Under R&D, genomics, stem cells 

SEQUENOM, Inc. (NASDAQ: SQNM) was the stock star of the day. We won’t bother telling you about the past problems in recent weeks from the company. The company has not released any new news since the end of April after it gave earnings and announced a delay in the launch of SEQureDx Trisomy 21 test due to employee mishandling of R&D data.  The exponential volume surge today was due to rumors that the company was close to some remedies of the woes from that employee mishandling of R&D data.

Based upon the company’s potential Holy Grail test for detecting Downs Syndrome in early pregnancy and because of the key needs in detecting other pre-birth abnormalities in babies, we personally have hopes that there is at least some truth to these rumors out there.  But rumors are rumors, and we are skeptical of all unfounded reports.  So we put in a call into the company’s investor relations department, and placed calls into the outside investor relations firm and the outside media relations firm.

We also have the company listed as one of the corporate sponsors of the Genomic Tools & Technologies Summit taking place currently in San Francisco.  So far no data has been seen from the company out of that conference and we have also not heard back from the sponsors about any imminent data or buzz.

The only thing we have so far to hang our hats on is from the outside investor relations firm and as far as they knew at the time there was not any imminent release of data on this matter.  Does that mean that there will not or cannot be any data forthcoming?  Absolutely not.  But it does at least bring some questions up about how solid some rumors are.  The more current short interest data will not be available until tonight or tomorrow, but even after the drop the short interest in SEQUENOM was over 10.4 million shares as of both May 15 and April 30.

The only official SEQUENOM news of late, at least so far, has been news of class action suits going after the company for misrepresentations and shareholder losses.  The June-2009 options were extremely active today.  We saw over 55,000 options contracts trade in the $4 to $10 strike price options for the June 2009 expirations.  Those expire on June 19. That is representative of either hope or expectation of a very large move in the next 8 trading days.

Again, we are still without any official comment from the company itself.  We only have one of three related parties which has spoken to the notion that no news is imminent, and we want to stress that this does not mean no fresh or imminent news could be coming out.

This stock rose by 58% to $5.30, so the buzz needs to at some point be substantiated as the 53.6 million shares is representative of 10-times normal trading volume.    It is rare that rumors can run a stock this much without some word from the company.  What happened for the stock to get to this is equally rare.

JON C. OGG
June 9, 2009

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