April 30, 2009 / 4:37 PM / 10 years ago

UPDATE 1-Sequenom shares plunge on Down Syndrome test delay

(Adds more analyst comments; updates stock movement)

By Esha Dey

BANGALORE, April 30 (Reuters) - Shares of Sequenom Inc SQNM.O sank nearly 80 percent to a two-year low on Thursday, a day after the maker of genetic tests said it would delay the launch of its much-awaited prenatal Down Syndrome test due to mishandling of data by certain employees.

The company said none of the research and development data could be relied upon and also delayed the launch of three other tests in order to review all test data. [ID:nBNG440128]

At least six brokerages downgraded the stock and said the event related to the test, SEQureDx, raises questions about the company’s credibility.

“I don’t believe the product will ever launch,” Brean Murray Carret and Co analyst Jonathan Aschoff said.

“We seriously doubt that a timeline can be put forth when all of the RNA and DNA data generated to date is now questionable,” he added.

Aschoff said although the company plans to launch the test upon publication of ongoing trial results in a peer-reviewed journal, he finds it “almost impossible to have faith in those results given the recent developments.”

Collins Stewart analyst Keay Nakae said, with data from the company’s research and development laboratory losing their value, there would be lesser interest in participating in the company’s clinical studies.

Any review will now be subject to a higher level of scrutiny and therefore will be more thorough and take longer to be signed off on before it can be published, Nakae added.

“We believe that under the most optimistic scenario, the test would not be launched until 2011,” he said, downgrading the stock to “sell.”

Brean Murray’s Aschoff, who called the Down Syndrome test the company’s “crown jewel,” does not think Thursday’s sell off was overdone.

Sequenom’s SEQureDx tests the DNA of a foetus from a mother’s blood in a non-invasive manner to see if the blood groups of the mother and the child are compatible.

This test was the company’s most promising source of revenue, which explains the downslide in the stock, Aschoff, who has a “sell” rating and a price target of $2 on the stock, said.

Shares of the company, which also reported a wider-than-expected quarterly loss, touched a low of $3.23 before paring some losses to trade down 74 percent at $3.85 in Thursday afternoon on Nasdaq. (Reporting by Esha Dey in Bangalore; Editing by Aradhana Aravindan)

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