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Showing posts with label Sequenom. Show all posts
Showing posts with label Sequenom. Show all posts
Wednesday, June 20, 2012
Investopedia: Want A High-Yield Healthcare Stock? Look To Canada
Canada doesn't factor into discussions about healthcare very often
outside of its national single-payer system. Nevertheless, investors
looking for rich dividend payers in healthcare have to be willing to go
the extra mile, and Canada rewards that search. While CML HealthCare (TSE:C.CLC)
is not the easiest stock for American investors to buy or follow, the
rich 8% yield, strong margins and growth potential make it worth the
effort to consider.
Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.
To read more, please follow this link:
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To read more, please follow this link:
http://stocks.investopedia.
Tuesday, July 5, 2011
Investopedia: Immucor Passes Its Last Test
Perhaps moreso than in any other industry, there are companies in medical technology that just seem destined to eventually get bought out. A leading player in immunohematology, Immucor (Nasdaq:BLUD) was a very good example of this type of company and the Immucor announced on Tuesday morning that it had accepted a bid from private equity group TPG Capital.
The Terms of the Deal
Immucor shareholders are going to get $27 in cash for each of their shares, a 30% premium to the stock price on Friday but still shy of the stock's all-time high in 2007 of $39.96. At this price, Immucor is going out at a reasonable price/sales multiple (a common metric for med-tech deals) and the company does not seem to be leaving much cash on the table with respect to a discounted cash flow model. (Valuing firms in this sector can seem like a black art, but there is a systematic way to pin a price on potential. For more, see Using DCF In Biotech Valuation.)
Not that it will matter much to the selling shareholders, but this deal further extends TPG Capital's involvement in the health care sector. Arguably more known for involvement in deals for companies like Neiman Marcus, Univision and TXU, TPG has investment interests in other significant health care companies like Biomet, Quintiles and Surgical Care Affiliates.
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Wednesday, September 29, 2010
Companies With Big MDx Dreams
This is a relatively unusual quiet period in medical technology, as there are so few emerging sectors that are really capturing attention and drawing high stock multiples. One of the areas that still is drawing attention, however, is molecular diagnostics. A subset of the lucrative multi-billion dollar diagnostics market, molecular diagnostics focuses on the use of modern life sciences technology to use genomic and/or proteomic expression information to diagnose or predict disease. (Find an investment that will give your portfolio a shot in the arm. To learn more, check out A Checklist For Successful Medical Technology Investment.)
Molecular diagnostics (often abbreviated as MDx) has garnered a lot of hope, enthusiasm, and more recently, disappointment. Although many of the leaders in this space are some of the large companies investors might expect (Roche (Nasdaq:RHHBY), et al), there are several small companies that could give risk-seeking investors an interesting play on the space.
Please follow the link for the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Small-Companies-With-Big-MDx-Dreams-CRA-EXAS-GHDX-NSPH-SQNM-LMNX-CPHD0929.aspx
Molecular diagnostics (often abbreviated as MDx) has garnered a lot of hope, enthusiasm, and more recently, disappointment. Although many of the leaders in this space are some of the large companies investors might expect (Roche (Nasdaq:RHHBY), et al), there are several small companies that could give risk-seeking investors an interesting play on the space.
Please follow the link for the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Small-Companies-With-Big-MDx-Dreams-CRA-EXAS-GHDX-NSPH-SQNM-LMNX-CPHD0929.aspx
Tuesday, September 21, 2010
Sequenom Back On Track?
At a UBS presentation the other day, Sequenom (Nasdaq: SQNM) confirmed that it was basically on track with the timeline that the company has been talking about for its trisomy 21 (Down Syndrome) pre-natal test.
According to the plan, the company hopes to launch a lab-derived test (LDT) test in late 2011 (fourth quarter), with a PMA filing in the second half of 2012. Along the way, the company says it expects to submit clinical data for publication in the third or fourth quarter of 2011, which should mean that the data is in print well before the FDA filing. Data from a 450-person validation test should be available around the end of the quarter, with the large-scale pivotal study following thereafter.
This company has had a helluva time over the past couple of years, with a scandal regarding the prior trisomy 21 test data costing the company its CEO, CFO, credibility, time, and money. It does appear, though, that the company's fundamental underlying technology does work and there was always a real market opportunity waiting for the right product/technology.
Sequenom is developing this test to run on the Illumina (Nasdaq: ILMN) HiSeq platform, as sequencing has been shown to be the better approach. Why Illumina's platform instead of Life Technologies' (Nasdaq: LIFE) SOLiD? Just look at the market share ... Illumina is clearly winning the sequencing market share battle today and it looks like the HiSeq is the better "box"
While it might sound like marketing a test to run only on a $700,000 piece of equipment (for the most basic model) is a profit-limiting decision, that likely will not be the case. I've seen a few analyst models that suggest that running the machine at full capacity will produce a gross profit break even in just 23 days of testing.
All in all, this trisomy 21 test could have a market potential of around $1 billion on the basis of high-risk pregnancies and reflex testing for lower-risk pregnancies. That's assuming very solid market penetration and reimbursement, but the limitations of alternative approaches reduce those risks somewhat. Given that Myriad Genetics (Nasdaq: MYGN) manages to pull over $3,300 from managed care groups for its BRCA test, it seems pretty credible that SQNM can charge at least $1,500 for the test (especially since invasive pre-natal tests cost $1,500 and up).
Keep in mind, too, that these tests are exceptionally lucrative - assuming just average manufacturing capabilities, SQNM should be able to produce gross margins in the 60's or 70's.
Does that make SQNM a good buy now? Well, even allowing for all of the garbage in SQNM's past, this looks like a pretty interesting test and one that should be less initially controversial than Myriad's BRCA test. By the same token, I would not rule out the risk of what I would call "social controversy" here.
The reality is that while some parents may use the results of this test to prepare for a child with special needs, others will elect to terminate the pregnancy upon learning the results. It does not seem unreasonable, then, to think that this test is going to be a flashpoint in that debate and a target of activists. That could create some complications for doctors who wish to offer the test, but it likely is something that can be worked around - at the bottom line, if the test works people are going to find a way to get access to it.
So, buy the stock here? I dunno ... maybe? My model says a fair price is somewhere around $8.50 to $9 a share ... certainly a higher level than today's price, but not a great amount of upside for a story that still carries some risk. On a dip, it would be more interesting but there are just too many other cheap names to reach too far for this one.
Quick update - Although I neglected to mention it in the original post, I had modeled the company doing a capital raise of about $125M (equity) when I originally did the valuation analysis. So, the shelf filing after the close today doesn't change anything for my analysis. The company needs to raise capital and the stock is at a price where doing so won't be punishing.
According to the plan, the company hopes to launch a lab-derived test (LDT) test in late 2011 (fourth quarter), with a PMA filing in the second half of 2012. Along the way, the company says it expects to submit clinical data for publication in the third or fourth quarter of 2011, which should mean that the data is in print well before the FDA filing. Data from a 450-person validation test should be available around the end of the quarter, with the large-scale pivotal study following thereafter.
This company has had a helluva time over the past couple of years, with a scandal regarding the prior trisomy 21 test data costing the company its CEO, CFO, credibility, time, and money. It does appear, though, that the company's fundamental underlying technology does work and there was always a real market opportunity waiting for the right product/technology.
Sequenom is developing this test to run on the Illumina (Nasdaq: ILMN) HiSeq platform, as sequencing has been shown to be the better approach. Why Illumina's platform instead of Life Technologies' (Nasdaq: LIFE) SOLiD? Just look at the market share ... Illumina is clearly winning the sequencing market share battle today and it looks like the HiSeq is the better "box"
While it might sound like marketing a test to run only on a $700,000 piece of equipment (for the most basic model) is a profit-limiting decision, that likely will not be the case. I've seen a few analyst models that suggest that running the machine at full capacity will produce a gross profit break even in just 23 days of testing.
All in all, this trisomy 21 test could have a market potential of around $1 billion on the basis of high-risk pregnancies and reflex testing for lower-risk pregnancies. That's assuming very solid market penetration and reimbursement, but the limitations of alternative approaches reduce those risks somewhat. Given that Myriad Genetics (Nasdaq: MYGN) manages to pull over $3,300 from managed care groups for its BRCA test, it seems pretty credible that SQNM can charge at least $1,500 for the test (especially since invasive pre-natal tests cost $1,500 and up).
Keep in mind, too, that these tests are exceptionally lucrative - assuming just average manufacturing capabilities, SQNM should be able to produce gross margins in the 60's or 70's.
Does that make SQNM a good buy now? Well, even allowing for all of the garbage in SQNM's past, this looks like a pretty interesting test and one that should be less initially controversial than Myriad's BRCA test. By the same token, I would not rule out the risk of what I would call "social controversy" here.
The reality is that while some parents may use the results of this test to prepare for a child with special needs, others will elect to terminate the pregnancy upon learning the results. It does not seem unreasonable, then, to think that this test is going to be a flashpoint in that debate and a target of activists. That could create some complications for doctors who wish to offer the test, but it likely is something that can be worked around - at the bottom line, if the test works people are going to find a way to get access to it.
So, buy the stock here? I dunno ... maybe? My model says a fair price is somewhere around $8.50 to $9 a share ... certainly a higher level than today's price, but not a great amount of upside for a story that still carries some risk. On a dip, it would be more interesting but there are just too many other cheap names to reach too far for this one.
Quick update - Although I neglected to mention it in the original post, I had modeled the company doing a capital raise of about $125M (equity) when I originally did the valuation analysis. So, the shelf filing after the close today doesn't change anything for my analysis. The company needs to raise capital and the stock is at a price where doing so won't be punishing.
Thursday, June 17, 2010
Bringing Biotech To The Barnyard
Human genomics and genetic analysis gets a great deal of attention from investors and journalists. That attention is well-deserved, as a single cancer drug can be worth as much as $100,000 per year per patient. Clearly, that provides ample incentive for major drug companies to invest heavily in genomic equipment in the hopes of developing more effective drugs.
By no means is it just a pharmaceutical opportunity, either. Myriad Genetics (Nasdaq:MYGN) has built an attractive niche in gene-based cancer diagnostics, and larger players like Abbott Labs are also delving deep into molecular and genome-based diagnostics.
But why should people have all the fun? The cattle industry alone is worth about $80 billion a year in theUnited States
You can read the full piece at:
http://stocks.investopedia.
By no means is it just a pharmaceutical opportunity, either. Myriad Genetics (Nasdaq:MYGN) has built an attractive niche in gene-based cancer diagnostics, and larger players like Abbott Labs are also delving deep into molecular and genome-based diagnostics.
But why should people have all the fun? The cattle industry alone is worth about $80 billion a year in the
You can read the full piece at:
http://stocks.investopedia.
Wednesday, May 12, 2010
A Private Deal For Sequenom
Interesting little deal today in the diagnostics space.
Sequenom (SQNM) announced a private placement of 12.4M shares at a price of $4.15/sh ($51.6M total). The company definitely needs the cash to continue its R&D program, and the size of this deal should calm the funding fears for a while.Still, I can't help but notice that the investors in this deal demanded a pretty substantial discount to the prevailing stock price - nearly a 25% haircut to today's opening price.
To me, that seems like a pretty fair discount given the concerns and controversy around this company. There are plenty of places where you can read about the details, but the gist of it is that a major scandal hit the company last year; costing most of the sr. mgmt their jobs, costing the company several lawsuits, and throwing into question whether or not the company's lead test even works. On top of that, I'm still under the impression that the owner of the underlying technology (who had extended SQNM a license) wants out of that agreement.
So, in other words, this is a $340M market cap company trading basically on the hope that their test for Down's Syndrome works (but where the past data is all but useless because of the possibility of deliberate bias in prior studies) and that they still have the rights to develop and market it. Given all that, then, a 25% discount is not an unreasonable margin of safety.
On a more positive note, the company gave pretty clear guidance last week regarding the development timeline for this test, with test optimization expected to be over by the end of Q3'10, testing of samples conducted in the fourth quarter, and commercial launch by the end of 2011.Now, maybe I'm reading too much into this, but doesn't this sound a bit like "back to the drawing board?" If they're having to go back to test optimization, that suggests to me that there were at least a few significant flaws in the old test. Whether that completely invalidates the old promise or not, I do not know. Unfortunately, I don't think anybody outside the company knows either, so it's basically an exercise of faith at this point.
I happen to think that the baseline technology the company is using is pretty sound, and I think there's some real market potential for this test. But with so many other options to chose from, and options that offer "clean" stories, I just don't see the need to take the risk here right now.
Sequenom (SQNM) announced a private placement of 12.4M shares at a price of $4.15/sh ($51.6M total). The company definitely needs the cash to continue its R&D program, and the size of this deal should calm the funding fears for a while.Still, I can't help but notice that the investors in this deal demanded a pretty substantial discount to the prevailing stock price - nearly a 25% haircut to today's opening price.
To me, that seems like a pretty fair discount given the concerns and controversy around this company. There are plenty of places where you can read about the details, but the gist of it is that a major scandal hit the company last year; costing most of the sr. mgmt their jobs, costing the company several lawsuits, and throwing into question whether or not the company's lead test even works. On top of that, I'm still under the impression that the owner of the underlying technology (who had extended SQNM a license) wants out of that agreement.
So, in other words, this is a $340M market cap company trading basically on the hope that their test for Down's Syndrome works (but where the past data is all but useless because of the possibility of deliberate bias in prior studies) and that they still have the rights to develop and market it. Given all that, then, a 25% discount is not an unreasonable margin of safety.
On a more positive note, the company gave pretty clear guidance last week regarding the development timeline for this test, with test optimization expected to be over by the end of Q3'10, testing of samples conducted in the fourth quarter, and commercial launch by the end of 2011.Now, maybe I'm reading too much into this, but doesn't this sound a bit like "back to the drawing board?" If they're having to go back to test optimization, that suggests to me that there were at least a few significant flaws in the old test. Whether that completely invalidates the old promise or not, I do not know. Unfortunately, I don't think anybody outside the company knows either, so it's basically an exercise of faith at this point.
I happen to think that the baseline technology the company is using is pretty sound, and I think there's some real market potential for this test. But with so many other options to chose from, and options that offer "clean" stories, I just don't see the need to take the risk here right now.
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