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360Dx Index Rises 20 Percent in 2021

NEW YORK – Even as the COVID-19 pandemic began showing signs of becoming manageable in 2021 and testing demand declined compared to a year ago, the stock prices of diagnostics firms generally remained robust during the past year.

For 2021, the 360Dx Index grew by 20 percent year over year and slightly outpaced the Dow Jones Industrial Average, which grew by 19 percent in 2021. Meanwhile, the Nasdaq Biotech Index was down by 1 percent in 2021, and the Nasdaq Composite was up 21 percent in 2021.

The index's gain came on top of 2020's 31 percent year-over-year growth.

Of the 29 companies in the index, 15 saw their stock prices improve compared to 2020, while 14 saw their share values retreat. The major gainers included Fulgent Genetics (+93 percent), Bio-Techne (+63 percent), and Laboratory Corporation of America (+54 percent). The main decliners were Invitae (-63 percent), Burning Rock Biotech (-59 percent), and Genetron Health (-56 percent).

Fulgent and Labcorp's boosts were due to continued demand for COVID-19 testing, particularly in the latter half of the year as the Delta and Omicron variants resulted in surges in the number of cases. Invitae, Burning Rock, and Genetron, meanwhile, all operate outside of the COVID-19 space.

In the first quarter of 2021, Fulgent saw its revenues soar to $359.4 million from $7.8 million in Q1 2020 on the back of high COVID-19 testing demand, while next-generation sequencing-based revenues more than doubled. Fulgent said it delivered approximately 3.8 million billable tests during the quarter and saw demand for its RT-PCR-based COVID-19 tests, and rising NGS test volumes for COVID and non-COVID testing.

The firm also inked a contract from the US Centers for Disease Control and Prevention in March for up to $47 million to sequence random positive SARS-CoV-2 samples on an ongoing basis as part of a national surveillance project.

The growth path continued throughout 2021 as the firm's revenues grew ninefold year over year in Q2 2021, although revenues and test volumes were sequentially lower compared to Q1 2021. Revenues for Q3 2021 increased on a sequential as well as year-over-year basis and reached $227.9 million, exceeding the company's quarterly guidance for both core and COVID-19 revenues.

Along with its expanding COVID-19 testing business, Fulgent aimed to expand its oncology offerings and core business. In 2021, Fulgent acquired cancer testing lab CSI Laboratories and partnered with Helio Health to commercialize Helio's liquid biopsy tests in North America, with an initial focus on a liver cancer test that launched in December 2021.

Meanwhile, although Bio-Techne didn't see the same explosive growth as Fulgent, its share price and revenues increased steadily throughout the year, driven by positive regulatory and reimbursement news, as well as significant acquisitions in the molecular diagnostic space.

In its fiscal second quarter, the firm's revenues rose 21 percent year over year, driven by record organic growth in its Protein Sciences and Diagnostics and Genomics segments. During the quarter, Bio-Techne was awarded a contract by Humana for coverage of the firm's ExoDx Prostate test and received CE marking for the assay.

Also during its fiscal second quarter, Bio-Techne acquired molecular diagnostics firm Asuragen for up to $320 million, which Bio-Techne said would contribute testing products for applications it didn't previously have a presence in and would provide expertise to take new diagnostic tests through regulatory approvals.

Meantime, Bio-Techne's saw robust revenue growth throughout the year — its Q3 revenues were up 25 percent year over year, Q4 revenues grew 47 percent, and fiscal Q1 revenues rose 26 percent.

Labcorp saw significant COVID-19 testing demand in the first half of the year that helped contribute to its 54 percent share price increase over the past year. Early in 2021, Labcorp inked a deal with Walgreens to sell its Pixel by Labcorp COVID-19 PCR home collection kits over the counter in up to 6,000 stores across the US.

Its Q1 revenues were up 47 percent year over year, with COVID-19 testing volumes contributing 33 percent to organic revenue growth. Q2 revenues were up 39 percent, with test volumes up 40 percent, although the increase in test volumes was largely due to base testing. Q3 revenues, meanwhile, were up only 4 percent, with baseline testing offsetting a decline in COVID-19 testing. However, with the rise of the Omicron variant and a surge in testing demand at the end of the year, its COVID-19 testing business is likely to increase significantly again.

In October, the firm's combination COVID-19 and influenza A/B home collection kit received Emergency Use Authorization from the US Food and Drug Administration.

Labcorp also took additional steps throughout the year to bolster its share price, announcing in March that its board was reviewing the company's capital allocation structure to improve its stock price and hiring Goldman Sachs to support the review process. In December, the firm announced the results of that review, saying it would initiate a quarterly dividend and repurchase shares of its stock to improve shareholder returns.

The company made two major acquisitions in 2021, purchasing some of Myriad Genetics' operating assets and intellectual property — namely its Vectra rheumatoid arthritis test — for $150 million and buying Personal Genome Diagnostics at the end of December for up to $575 million.

The PGDx acquisition is expected to expand Labcorp's NGS genomic profiling capabilities and add to its existing liquid biopsy assets, providing kit-based options that will allow hospitals and laboratories to run tests internally, Labcorp said in a statement.

Bumpy ride

On the side of the decliners, Invitae had a bumpy year. While it began 2021 by raising approximately $460 million in an underwritten public offering of nearly 7.2 million shares of common stock, investment bank Oppenheimer downgraded the firm to a Perform rating in an attempt to gain clarity on the integration of its hereditary cancer and women's health business in light of the company's acquisition of ArcherDx in 2020.

In April, Invitae announced it was acquiring software and lab solutions company Genosity for $200 million to accelerate the development and market launch of its somatic and germline oncology test offerings. The same month, it announced a $1.15 billion investment from a group of investors that it would use for growth initiatives. And in May, the company said its Q1 revenues had grown 61 percent year over year, driven by higher testing volumes and exceeding the Wall Street estimate.

However, the rest of the year was impacted by legal matters and a missed regulatory milestone resulting in a multimillion-dollar write-off. In May, Invitae sued Natera for allegedly infringing on its patent for a DNA sequencing assembly technique, seeking damages and an order enjoining Natera from infringing its patent. It later filed a second lawsuit for patent infringement against Natera, citing two patents granted in October for DNA sequence assembly.

And in August, Invitae noted in its 10-Q filing with the US Securities and Exchange Commission that its subsidiary ArcherDx had failed to meet an acquisition-related regulatory milestone, requiring Invitae to write off a $262.5 million liability. The milestone required ArcherDx to gain FDA approval or clearance of Stratafide, its pan-cancer test to gauge therapeutically actionable biomarkers in cancer patients' tissue or blood samples, by March 31, 2022.

Other key news from Invitae this year was the company's acquisition of consumer health technology firm Ciitizen in September for $325 million with the goal of making it easier for patients to gather their genomic and clinical information. In addition, Medicare Administrative Contractor Palmetto GBA finalized coverage for minimal residual disease testing, which could provide reimbursement for certain Invitae tests.

Among the other major decliners, both Burning Rock and Genetron saw a sharp year-over-year drop in share prices due to comparatively low stock prices in 2020, which heightened their declines on a percentage point basis.

Burning Rock saw revenue increases throughout the year compared to 2020, with Q1 revenues up 58 percent, Q2 revenues up 19 percent, and Q3 revenues up 2 percent, driven by its in-hospital testing revenue.

In 2021, the company also began a large-scale study to validate its 22-cancer early detection and screening test, which is expected to return first results by the end of 2023. Burning Rock also said it is validating its minimal residual disease test in lung cancer, which it plans to launch alongside two other assays in 2022.

Burning Rock also inked multiple companion diagnostics deals throughout the year: one with Abbisko Therapeutics for the pharma firm's ABSK091, a small molecule FGFR inhibitor; one with Impact Therapeutics for the company's anti-DNA damage repair therapies, starting with its PARP inhibitor senaparib; and one with Merck for its oral MET inhibitor tepotinib (Tepmetko).

Genetron's 2021 was characterized by a score of deals for its cancer assays, as well as some key regulatory milestones. In the first week of January 2021, Genetron entered an exclusive strategic partnership with Chia Tai Tianqing Pharmaceutical Group to comarket and copromote Genetron's HCCscreen liver cancer test in hospitals across China. In May, the company announced two separate deals for its lung and liver cancer products: a strategic partnership with Siemens Healthineers to broaden the use of Genetron's S5 sequencing platform and eight-gene lung cancer assay in Chinese hospitals; and an agreement with Chinese online healthcare firm JD Health to create marketing and educational activities for HCCscreen.

At the end of July, the firm announced it would work with Guizhou Province's Dafang County authorities to lead an early screening program for liver cancer using its HCCscreen test, and in August Genetron teamed up with Yikon Genomics, allowing Yikon to use Genetron's S5 sequencing platform for reproductive health applications in China. Genetron also announced a deal with Jiangsu Fosun Pharmaceutical Sales to commercialize its minimal residual disease test Seq-MRD in China, as well as a deal with NeoGenomics to help drug developers synchronize global clinical drug trials.

On the companion diagnostics side, Genetron partnered with Impact Therapeutics to develop assays for the pharmaceutical company's synthetic lethal inhibitors, including PARP inhibitors. The firm also entered a collaboration agreement with AstraZeneca R&D to jointly develop NGS-based tumor-informed minimal residual disease tests for various solid tumor types that the pharma company will use in locally conducted drug studies.

Genetron also had a couple of regulatory wins in 2021: The firm received CE marking for its eight-gene lung cancer sequencing assay in July and for its Onco PanScan genomic profiling test in November.

Note: PerkinElmer was added to the index in September 2021.

360Dx Index        
$ Ticker 31-Dec-21 31-12-20 Percent Change
Abbott* ABT 140.73 109.49 28.53
Accelerate Diagnostics AXDX 5.22 7.58 -31.13
Adaptive Biotechnologies ADPT 28.06 59.13 -52.55
Becton Dickinson** BDX 251.48 250.22 0.50
Bio-Rad BIO 755.57 582.94 29.61
Bio-Techne*** TECH 517.34 317.55 62.92
Burning Rock Biotech BNR 9.53 23.10 -58.74
CareDx CDNA 45.48 72.45 -37.23
Castle Biosciences CSTL 42.87 67.15 -36.16
Danaher**** DHR 329.01 222.14 48.11
Exact Sciences EXAS 77.83 132.49 -41.26
Fulgent Genetics FLGT 100.59 52.10 93.07
Genetron  GTH 6.10 14.00 -56.43
Guardant Health GH 100.02 128.88 -22.39
Hologic HOLX 76.56 72.83 5.12
Invitae NVTA 15.27 41.81 -63.48
LabCorp LH 314.21 203.55 54.37
Meridian Bioscience VIVO 20.40 18.69 9.15
Myriad Genetics MYGN 27.60 19.77 39.61
Natera NTRA 93.39 99.52 -6.16
NeoGenomics NEO 34.12 53.84 -36.63
Opko Health OPK 4.81 3.95 21.77
PerkinElmer***** PKI 201.06 143.24 40.37
Qiagen QGEN 55.58 52.85 5.17
Quest Diagnostics****** DGX 173.01 119.17 45.18
Quidel QDEL 134.99 179.65 -24.86
Quotient QTNT 2.59 5.21 -50.29
Thermo Fisher Scientific******* TMO 667.24 465.78 43.25
Veracyte VCYT 41.20 48.94 -15.82
360Dx Index Average   147.31 123.04 19.73

*Abbott paid $1.80 in dividends to shareholders in 2021

**BD paid $3.36 in dividends to shareholders in 2021

***Bio-Techne paid $1.28 in dividends to shareholders in 2021

****Danaher paid $.84 in dividends to shareholders in 2021

*****PerkinElmer paid $.28 in dividends to shareholders in 2021

******Quest Diagnostics paid $2.42 in dividends to shareholders in 2021

*******Thermo Fisher paid $1.04 in dividends to shareholders in 2021