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Rodman & Renshaw Upgrades Rating on Sequenom's Stock

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Investment firm Rodman & Renshaw has upgraded Sequenom's stock to "Market Perform" from "Market Underperform" following yesterday's publication by the San Diego-based firm of results on its non-invasive fetal trisomy 21 test.

According to a study published in the online edition of the American Journal of Obstetrics and Gynecology, the overall classification showed 100 percent sensitivity and 99.7 percent specificity.

In a research note, Elemer Piros, an analyst at Rodman & Renshaw, wrote, "The bottom line in our view is that the reported test performance appears to be commercially acceptable, which is why we believe that this announcement reduces the scientific risk associated with the T21 test."

While he upgraded Sequenom's stock, he did not place a new price target on the shares, saying he has concerns about the commercial value of the test. Rodman & Renshaw had earlier placed a $5 target on the stock.

While the study demonstrates the T21 test "appears to be clinically sufficient we believe that the overall throughput and costs of 'shotgun sequencing' may present a problem," he wrote. According to Sequenom's 4-plexing studies, Piros said, each sample analysis would take two days to complete on a sequencer.

Piros estimated that in order to scale up to process 500,000 to 1 million samples per year, about 1,000 sequencers would be required, costing between $500 million and $600 million. However, he noted that Sequenom "would not have to acquire all the capital equipment upfront, and could build-out the lab as demand grows."

In Friday morning trade on the Nasdaq, shares of Sequenom were up 1 percent at $7.29.

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