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2017 Ends on Down Beat for Diagnostic Firms as Shares Retreat in December

NEW YORK (360Dx) – Shares of diagnostic firms ended 2017 on a down beat as the 360Dx Index fell nearly 3 percent month over month in December. 

Following a 7 percent month over month uptick in November, investors in diagnostics companies grew more bearish as 2017 came to an end, and 17 companies saw their share prices fall last month compared to November, while eight companies' stock prices ticked up. 

The index trailed the broader markets as the Dow Jones Industrial Average grew almost 2 percent month over month in December. The Nasdaq Composite was up a fraction of 1 percent, and the Nasdaq Biotech rose more than 1 percent. 

Pacing the decliners was Enzo Biochem, (-17 percent) followed by Bio-Rad Laboratories (-12 percent), Exact Sciences (-12 percent), and Accelerate Diagnostics (-11 percent). The gainers were led by Foundation Medicine (+28 percent), Quidel (+14 percent), and Genomic Health (+13 percent). 

There were no apparent reasons for Enzo's share price slide. Aside from reporting a 5 percent year-over-year increase in the company's fiscal first quarter revenues in early December, Enzo had little news last month. 

Similarly, there were no obvious drivers to Bio-Rad's decline last month, which pulled back some of the gains from a 23 percent jump in the company's stock price the prior month. It ended November by announcing a $250 million share repurchase program, then said in early December that it received CE-IVD marking on a droplet digital PCR assay for detecting BCR-ABL gene fusions.

Meanwhile, the only news from Exact Sciences was the signing of two loan agreements mid-month for more than $40 million.

Accelerate Diagnostics' shareholders have endured a topsy-turvy ride over the past several months, and December's tumble reversed a 49 percent month-over-month increase in its share price in November, which had improved upon a 12 percent fall in October. There were no obvious reasons for the December contraction, however. 

Among the gainers, Foundation Medicine ended November with positive news from the US Food and Drug Administration when it approved the company's next-generation sequencing-based genomic profiling test, Foundation One CDX. Additionally, the Centers for Medicare & Medicaid Services issued a preliminary national coverage determination for the test.

Immediately after the FDA and CMS actions were announced, Foundation Medicine's stock price rose 18 percent in one day and continued to climb throughout December. Officials also said that they anticipate the FDA and CMS decisions to boost reimbursements for Foundation One CDX from other payors. 

Quidel's stock, meantime, rose steadily throughout December and reached its peak the day after company officials provided an update on its acquisitions of Alere's Triage and BNP businesses, which were completed in October. Following the update, several analysts, including Canaccord's Mark Massaro and Raymond James' Nicholas Jansen increased their price target on Quidel's shares.

Late in December, Quidel received clearances from the FDA for its Group B Strep assay on the Solana molecular system, and its Group A Strep assay on the Sofia 2 fluorescent immunoassay analyzer.

For Genomic Health, the main catalyst to its stock price was a report from Bloomberg that the firm was exploring "options including a sale amid takeover interest," prompting a 19 percent rise in its stock price the day the report was published.

The company also announced early in December a deal with Janssen Pharmaceuticals to evaluate Genomic Health's Oncotype DX Genomic Prostate Score as a predictor of response to prostate cancer drugs in Janssen's pipeline. However, JP Morgan downgraded Genomic Health's shares to Underweight from a previous Neutral rating, citing sluggish coverage expansion of its prostate cancer test, and a "tepid" outlook for its core breast cancer testing business.