Sequenom Inc., a San Diego company with no sales whose gene technology is used to treat diseases such as cancer and diabetes, tripled in its first day of trading Tuesday, giving the company a market value of $1.81 billion.
Investors also snapped up initial public offerings from Turnstone Systems Inc. and Quantum Effect Devices Inc., sending the California companies' stocks up sharply.
Sequenom rocketed $53.25 to close at $79.25 on Nasdaq as 8.2 million shares changed hands. The company sold 5.25 million shares at $26 each Monday, raising $136.5 million.
Biotechnology has become a hot item on Wall Street in recent months. The Nasdaq biotech stock index doubled last year, and, even with a recent correction, it has risen 18% further this year.
Sequenom's debut shows that "the group is still very hot" even after the pullback in biotech stocks in late January. Some investors are betting that biotech stocks will experience the sustained popularity that many Internet stocks have in recent years, said Stephen Flaks, whose $100-million hedge fund, based in Scottsdale, Ariz., invests primarily in biotech stocks.
Sequenom analyzes gene variations, known as SNPs, to develop drugs and perform clinical trials. SNPs affect predisposition to disease and responses to drugs. The company describes itself as a leader in the field of "industrial genomics," or the use of the knowledge of DNA variations to improve health, agriculture and livestock.
The Sequenom IPO "clearly shows there's a lot of appetite for these genomics stories," said Paul Boni, an analyst with Punk, Ziegel & Co. Indeed, the market value of all publicly traded genomics companies now is "about half the [$124-billion] market cap of America Online," he said.
Investor interest makes it likely investment bankers will bring more IPOs and secondary stock offerings by companies like Sequenom this year, he said.
As for the day's other California IPOs, Mountain View-based Turnstone Systems is a maker of equipment and software to facilitate installation of high-speed online connections. Its shares jumped $68 to $97 on Nasdaq.
Quantum Effect Devices is a Santa Clara-based company that develops embedded microprocessors for routers, network computers, set-top boxes and other equipment. Its shares surged $40.50 to $56.50 on Nasdaq.
Investors also bid up shares of Impsat Fiber Networks, an Argentine company building a communications grid in Latin America. On its first trading day, the stock rose $12 to close at $29 on Nasdaq.