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.

As manager of RA Capital, Kolchinksy would organize and hold his own investment idea dinners for other buy-side managers, using the time to give elaborate and detailed presentations on Sequenom's behalf.

During a question-and-answer session at a Sequenom investor meeting held in New York City in September 2008, Kolchinksy grabbed a microphone from Sequenom CEO Harry Stylli to answer a question from another investor.

It is not known whether Sequenom's fall will cause either Ridgeback or RA to liquidate their other biotech holdings in order to raise capital, but investors Thursday were selling some of the funds' other stocks regardless.

Ardea is down 14.2%, Vertex dropped 3.7%, and Pharmasset was off 10.3% in recent trading.

Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.