Sequenom (SQNM) is a stock that came public at $26 a share in March 2000, right at the peak of the tech and biotech bubble, based on the excitement around the possibilities from sequencing the human genome. It shot straight up to $171. A year later it was under $10, and six years after that it as trading around at $4.50.

But unlike many of their peers, it looks like Sequenom will make genetic sequencing pay off. Their prenatal Down syndrome product is non-invasive and would replace amniocentesis. There is an alternative method of looking for Down syndrome that we did earlier this year for our little girl who was born last Thursday, which combines an ultrasound scan to look for an abnormally thin neck on the fetus plus a blood test. While it is safer than amnio, it is expensive because it requires an experienced radiologist to interpret the scans.

Sequenom's prenatal screening tests are designed to be more accurate than other tests as well as noninvasive -- about 275,000 women a year are falsely diagnosed as being at risk for carrying a child with Down syndrome, and then put through more invasive tests. The company will do a cystic fibrosis test next, and they can grow to a substantial size just in these two indications.

How is it that Sequenom has been so successful in the aftermath of the tech and biotech crash? Sequenom went into the contract research business. They developed their own tools for more accurate and quicker genetic analytical work, and then marketed the tool as their MassARRAY product. They now have 200 customers, including 14 new ones that were added in the September quarter. Sales grew from $19.4 million in 2005 to $28.5 million in 2006, and I am looking for $40 million in 2007. I expect them to beat $55 million in 2008. So while the company is still losing money as they research and develop their prenatal diagnostic tests, they have trimmed the losses from $26.5 million in 2005 to $17.6 million in 2006 and around $13 million in 2007. They should be down in single digits, around $7 million to $8 million, in 2008.

Sequenom also did a $30 million private placement in the September quarter, and that cash should carry them through to profitability. Once the first two prenatal tests are approved, they can use the cash flow to address a huge array of other disorders with non-invasive tests, both within and beyond the prenatal markets. And they have finished early work on a test for genetic material from malignant cells to diagnose cancer before any tumor can be detected. Because we all have some cancer cells circulating in our bodies all the time, this test will have to be sensitive but not too sensitive.

So Sequenom came back from the near-dead after the tech crash with the help of good management that focused the new genetic science on practical diagnostic opportunities that have a shorter path to approval than drugs. I'm expecting good news from their Down syndrome program to drive the stock higher.