Rumors Abound in SEQUENOM (SQNM)
Sequenom, Inc. (NASDAQ: SQNM) is trading much higher and on active volume this morning, although not on official news. Traders are attributing this to rumors of positive developments in the company’s troubled Down’s Syndrome test, SEQureDx. It is hard to trust the company because it has avoided being specific in just what was mishandled as well as what the remedies, if any, are going to be. All we have so far is a hope of a launch date in 2010, and that is going to be heavily dependent upon the data.
We originally expected a summer 2009 launch on this before the company came out disclosing inconsistencies, and that took out almost three-quarters of the value of the company’s stock overnight.
The trading in call options has been significant on the hopes of this. Here is the SEPT-2009 CALL OPTIONS trading alone after just over 1 hour since the open:
STRIKE Volume OpInt
$5.00. 1,439 14,976
$6.00. 7,771 10,405
$7.50. 4,742 16,525
$9.00. 1,915 5,011
$10.00 1,341 3,555
Shares are up about 11% at $5.90 this morning on 11 million shares as of 10:38 AM EST and the 52-week trading is $2.86 to $29.14.
Be advised that the average volume here is about 10.4 million shares. This is not the first round of rumors that has been out on this one, and it probably won’t be the last round of rumors on it.
This stock is a true coin toss. The company is on a cash burn rate rather than on an income rate, and it may have to raise cash to keep operations running normal too far beyond the end of this year and to fund much higher legal costs as a result of its Down’s test issues. If it turns out that the test results were not mishandled or that this is the next holy grail in detecting Down’s, then this stock will be back significantly higher.
Conversely, if this turns out to be all hype and not the next major test for Down’s then this stock will be a much smaller fraction of today’s prices… regardless of its old highs above $20.00.
JON C. OGG
