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Piper Jaffray Upgrades Sequenom to Overweight

NEW YORK (GenomeWeb News) – Piper Jaffray today upgraded Sequenom to Overweight, noting recent decisions by payors that non-invasive prenatal diagnostic testing is medically necessary under certain circumstances.

In a research note, analyst William Quirk targeted Sequenom's stock at $6.50 per share.

In recent months, several payors, including Aetna and Wellpoint have issued medical policy decision supporting tests such as Sequenom's MaterniT21 Plus test. While the decisions don't explicitly say that the insurers will begin covering such tests, they suggest coverage may be forthcoming.

Quirk noted the development, saying "All in, our private payer checks found favorable reimbursement decisions covering 90 million covered lives" for MaterniT21 Plus.

As of the end of 2012, only regional payors were covering Sequenom's test, and its management has targeted signing three national payors for MaterniT21 Plus as a goal for 2013. Any decision by payors to cover NIPD tests would include tests by Sequenom's competitors, but Quirk said that the San Diego-based company's first-mover status and its expanding sales force "create a sustainable advantage." He added, "[W]e are anticipating a steady flow of favorable coverage decisions going forward."

Other firms with NIPD tests on the market include Ariosa Diagnostics, Illumina-owned Verinata Health, and Natera.

Quirk increased the number of test accessions for MaterniT21 Plus to 151,000 in 2013, up from an earlier estimate of 129,000. Sequenom has a goal of at least 150,000 test accessions during the year, though CEO Harry Hixson said at an investor's conference earlier this year that 200,000 tests are achievable.

In afternoon trading on the Nasdaq, shares of Sequenom were up 6 percent to $4.35.