a calculation

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compounding

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May 13, 2015, 9:18:58 AM5/13/15
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Hi All, I am curious what SQNM and ILMN each make from the joint licensing.  If someone if up to do the calculation, I think these are the components that go into it:

SQNM: royalty (X)
ILMN: royalty (Y) + instrument sales (long time cycles) + consumables (short time cycles)

I don't know if X=Y, and what ILMN may reasonably expect from the other parts of the deal (sequencers + consumables) for a typical new lab getting into the test.

Going forward, SQNM clearly needs a higher barrier for entry for new comers (patent protection seems the only way), greater premium for their biochemistry know-how, pricing power based on brand value (unlikely as the NIPT test is basically commoditized right now), and a surprising new platform technology that no one knows about as yet (I still hope for it but I don't think that they have the tech. chops for it).

The ILMN partnership looks to be more beneficial to ILMN than to SQNM.  Hopefully SQNM can cover some of the above elements with the liquid biopsy test.

compounding

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May 14, 2015, 11:34:56 AM5/14/15
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Just saw Marty Chilberg's clear analysis on Seeking Alpha http://tinyurl.com/lqu7xj7.  Thanks!

mchi...@comcast.net

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May 14, 2015, 9:09:23 PM5/14/15
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I don't know if you saw this blog.  It updated the mechanism for the IP pool revenue recognition in the quarter.  I thought I understood what the company said on the call but found some inconsistencies which led to a conversation with Carolyn to clarify

compounding

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May 15, 2015, 9:49:59 AM5/15/15
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Thanks for pointing that out, Marty.  I was initially disappointed in the earnings this quarter because I thought that they were all due to cost cutting.  

My understanding of this now is that the increasing in earnings this quarter is a real and creditable one, which happened due to the value realized from their IP.  I wonder if the initial dip and some recovery in the share price may be due to a similar confusion among others investors.

I also think SQNM will benefit from having you as a financial communications consultant during earnings time.  I hope that someone from the company is reading this and will think about it.

Mitchell Johnson

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May 15, 2015, 11:30:27 PM5/15/15
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Mast-I know you & Marty are extremely dialed in and i feel you have a cogent analysis...it's only a matter of time until shorts
lose control of what is a fundamentally changed company transitioning to a new paradigm IMO. Mitchell Reed
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