Updated from 1 p.m. EDT

Investors Thursday were selling biotech stocks owned by two hedge funds that took highly concentrated positions in Sequenom ( SQNM) on fears that they may be forced to liquidate their other holdings.

Ridgeback Capital Investments of New York and Boston-based RA Capital Management are owners of 17.4% and 9.7% of Sequenom, respectively, according to SEC records.

Shares of the San Diego-based company plunged 75% Thursday after the company said clinical data supporting its prenatal genetic test for Down syndrome was unreliable to due "employee mishandling" of test data.

According to SEC filings, almost 92% of Ridgeback's portfolio is invested in Sequenom; while RA Capital also had an outsized chunk of its portfolio -- about 50% -- invested in the company.

Worries that stinging losses from such a highly concentrated bet on a single company in serious trouble have investors broadly selling other biotech stocks owned by the two funds.

Ridgeback's biotech portfolio includes Acorda Therapeutics ( ACOR), Chelsea Therapeutics ( CHTP), Incyte ( INCY) and Poniard Pharmaceuticals ( PARD).

RA Capital's other top positions include Pharmasset ( VRUS), Ardea Biosciences ( RDEA), AMAG Pharmaceuticals ( AMAG) and Vertex Pharmaceuticals ( VRTX).

RA Capital's portfolio manager Peter Kolchinksy, reached for comment by phone, said, "We know what's publicly available about Sequenom, and we're not going to comment beyond that."

A phone message left for Wayne Holman, portfolio manager at Ridgeback and an acolyte of hedge fund legend Steve Cohen, has not been returned.

Kolchinsky, who earned a Ph.D. in virology from Harvard University before jumping into the hedge fund world, is known in Wall Street's biotech investment circles as an ardent proponent of Sequenom and its genetic testing technology.

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