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360Dx Index Declines 4 Percent in February, Ending Streak of Gains

NEW YORK – Many diagnostics companies' stocks tumbled in February, following months of consistent increases since the end of 2020 as the 360Dx Index was down almost 4 percent month over month.

Of the 32 companies in the Index, 14 firms saw their share prices increase last month led by GenMark Diagnostics (+42 percent), Burning Rock Biotech (+19 percent), and Luminex (+16 percent). Meanwhile, 18 companies' stock prices fell, led by Quidel (-35 percent), Quotient Limited (-26 percent), and Invitae (-19 percent).

The Index's decrease contrasted the broader markets as the Dow Jones Industrial Average was up 3 percent. The Nasdaq was up nearly 1 percent month over month, while the Nasdaq Biotechnology Index fell 2 percent.

The index's decline follows a couple of solid months of growth, especially during January when the index rocketed up 10 percent to start the year.

GenMark's jump was likely the result of two major pieces of news during the month, namely its fourth quarter revenue announcement and rumors of an acquisition. The company's share price rose 27 percent in the middle of the month after a report from Bloomberg said the firm was working with a financial advisor on a potential sale, although the company declined to comment on the rumors. 

At the end of February, GenMark announced its fourth quarter revenues had risen 84 percent month over month due to sales of molecular tests for SARS-CoV-2, including its respiratory panel. On a call to discuss the results, CEO Scott Mendel said the firm expects demand for its respiratory panel to return to a more typical demand level in the spring and summer. Demand for the ePlex Respiratory Pathogen Panel 2 has driven a large portion of the company's current revenue, he added.

The reason for Burning Rock's stock price jump was unclear as it announced no significant news during February.

Like GenMark Diagnostics, Luminex's share price also rose on rumors of a possible acquisition and positive earnings results. Early in the month, the company announced its fourth quarter revenues had risen 23 percent month over month, although it noted its application for Emergency Use Authorization with the US Food and Drug Administration for its Verigene I COVID-19 standalone test had been deprioritized by the FDA. The decision came as the agency focuses on EUAs for at-home and point-of-care testing for SARS-CoV-2 to expand access to testing. However, the EUA submission for its NxTag RPP syndromic respiratory panel is on track, CEO Nachum Shamir said on a call to discuss the results.

Luminex also last month received $11.3 million in funding from the US Department of Health and Human Services' Biomedical Advanced Research and Development Authority to develop and validate a multiplex respiratory panel on its Aries systems for influenza A/B, respiratory syncytial virus, and SARS-CoV-2. The company said it will submit an EUA application for the test as soon as possible.

To round out its busy February, the company's shares rose as much as 16 percent last week after a report from Bloomberg that DiaSorin is evaluating a potential acquisition of Luminex, although neither company commented on the report.

Among the decliners, Quidel announced a more than fivefold revenue increase in the fourth quarter as a result of COVID-19 sales but accompanied the announcement with news that its submission to FDA for over-the-counter use of its QuickVue SARS-CoV-2 test has been delayed. The company is now submitting the test for a prescription use-only claim and plans to submit a finger-stick, point-of-care serology test on its Sofia analyzer before the end of the first quarter.

Upon rumors of a potential merger with Qiagen, CEO Doug Bryant said on the earnings call that the company has found most M&A options unsuitable. Quidel also announced last month that it plans to open a new manufacturing facility for its QuickVue products in the second half of 2021, which is expected to produce 600 million QuickVue SARS rapid antigen tests per year.

At the beginning of last month, Quotient Limited announced its fiscal third quarter revenues rose 11 percent due to the firm's Alba reagent business. The company announced that it has postponed submission of its expanded MosaiQ immunohematology microarray for CE marking to the second half of this year, partially as a result of pandemic-related business disruptions.

The firm also announced the appointment of Manuel Mendez as CEO beginning April 1 to replace current CEO Franz Walt, who is retiring.

Early in February, investment bank Oppenheimer downgraded Invitae to a Perform rating while seeking additional clarity on how the company would integrate its hereditary cancer and women's health business after it acquired ArcherDx last year. Oppenheimer analyst Kevin DeGeeter said in an investor note that the acquisition allows Invitae to expand into liquid biopsy and somatic cancer testing but added that Invitae has not made a strong case for expanding the business beyond pharma collaborations.

Despite being one of the few diagnostic companies without material revenues from SARS-CoV-2 testing, Invitae announced last month its fourth quarter 2020 revenues increased 51 percent year over year and exceeded Wall Street estimates. International test volume increased due to ArcherDx's presence outside the US, and growth in Invitae's base business also helped drive the company's revenue increase.