The Iconoclast Investor

One attractive genetic technology company–which I told you about a few times recently–is Sequenom (SQNM).  This little company earned a spot in Cabot Top Ten Report several times in recent months as it bucked the broad market’s downtrend, and it’s still holding up today.

Sequenom started out as designer and manufacturer of genetic analysis systems … and this business is growing.  The company pulled in revenues of $12.9 million from these systems in the second quarter.  But the big story is that Sequenom has developed a test for Down syndrome that is performed earlier than traditional amniocentesis, that is less invasive, and that is extremely accurate.

The size of the amniocentesis market, by the way, is approximately $2 billion!  If Sequenom gets a good part of this market by offering a better test, its revenues could go through the roof.

But it’s still performing tests on patients to prove the test’s accuracy. In the first 201 patients, the company’s test correctly identified all 10 cases of Down syndrome, while recording zero false positives.

And two weeks ago the company announced that of the next 219 patients, the company achieved 100% accuracy with no false positives and no false negatives.  Perfect.

The company expects to test between 3,000 and 5,000 samples before launching the test commercially in the middle of 2009.

Two weeks ago, I wrote, “The stock has been acting extremely well in the last three months, hovering in the low 20s as the market fell apart.  It’s a very promising pattern.  Short-term, however, the biggest factor is tomorrow’s analyst and investor briefing, in which the company might release information that moves the stock.”

And move the stock it did, boosting it from close of 20.41 on the previous day to a high of 29.14 on September 25.  Since then the horrible action of the broad market has helped pull the stock back down to its base again; it fell through its 50-day moving average at 22 today but found eager buyers under 21.

If you bought before the spike, have no fear; you should sit tight here.  And if you’re not on board–and you’ve got cash to spare–I suggest you consider a small investment here.  The long-term potential of genetic medicine, combined with this firm’s expertise, means it could go far in the years ahead.