Sequenom Corp fka SQNM

[martych]

The short term reaction is not particularly surprising. This is a serious competitive threat so the days of 80+% market share appear numbered. I wouldn't come to the same conclusions about value or reimbursement however. The target price of $7 by some analysts is a 12 month target. This acquisition suggests that price may be too conservative, even without being acquired.

Say Verinata is able to go from <5% (per analysts surveys) to 20-25% in next 2 yrs. Big increase yes, but likely leaves 60-65%+ for SQNM with Ariosa, Natera and others fighting for remaining 10-20%. If 20% of the prenatal diagnostics market with strong IP is worth $350-450M, how much is 60% of the same market with similarly strong IP worth?

The comments about Verinata being an inferior test are something I don't subscribe to. I'm considering both tests similar. I also don't personally rely on IP to win. I'm personally leaning toward a preference to do a cross licensing with Illumina so we both are able to compete in market, not in courts. It would go a long ways towards locking out others with no compelling IP (Ariosa/Natera) and this market will easily support multiple players given it's size.

The key to me in achieving a price range in the $7+ range this year is 1) maintain testing ramp and share over 50% by Y/E, 2) Achieve coverage goal of 120m plus lives, 3) move to accrual basis for revenue recognition. If they do all 3, the comparable value of this deal would justify a very nice price point, well north of $7. However, lots of "ifs" there.