A Sale May Be Sequenom's Only Option

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SAN DIEGO, Calif. (TheStreet) -- Some thoughts on Sequenom(SQNM Quote) after last night's sacking of top management and the closing of its investigation into the data fabrication scandal of its prenatal genetic test for Down syndrome.

Sequenom shares tanked Monday night to around $3, so in the topsy-turvy logic of Wall Street, does this make the stock a buy now? It's not a preposterous idea if you believe that someone, somehow, will one day figure out how to make a prenatal genetic Down's syndrome test work right.

The company does have a solid portfolio of intellectual property and patents around prenatal genetic testing which is probably equal in value to the company's share price today. As long as Sequenom doesn't lose access to this intellectual property (not necessarily a guarantee), the company should be able to turn itself around, even if it takes a lot longer than expected.

At this point, the best hope for Sequenom may be a sale of the entire company. Diagnostic powerhouses like Roche, Abbott Labs(ABT Quote), or Johnson & Johnson(JNJ Quote) could easily afford to gobble up Sequenom and then take their time to develop prenatal genetic tests correctly:

I don't see an easy road for Sequenom if the company decided to go it alone. Cash is not an immediate concern but it will be in about a year, and I have a hard time envisioning a scenario by which investors willingly finance this company without a clear understanding of what happened last April and more visibility into what lies ahead.

The firings of CEO Harry Stylli and research and development chief Elizabeth Dragon, among others, was a much-needed move by Sequenom's board of directors in order to begin cleaning up this mess.

Sequenom reiterated in strong, simple terms Monday night that the old data that the company once claimed validated its Down syndrome test cannot be relied upon any longer.