360Dx Top 30 Drops 11 Percent in April, Following Broader Market Trends

NEW YORK – The 360Dx Top 30 fell sharply month over month in April, reflecting concerns in the broader market over the Russian invasion of Ukraine and the rate of inflation. 

The Top 30 fell in line with the broader market as the Dow Jones Industrial Average fell 5 percent month over month from March, while the Nasdaq dropped 13 percent. The Nasdaq Biotech Index declined 10 percent.

The Top 30's companies with the lowest share price drop were Meridian Bioscience (-1 percent), Quest Diagnostics (-2 percent), and Abbott (-4 percent). The firms that saw the most significant price drops were Castle Biosciences (-50 percent), Dermtech (-42 percent), and Burning Rock Biotech (-41 percent).

Meridian's only key news last month was the announcement of its preliminary fiscal Q2 revenues, which are expected to rise by up to 33 percent when the firm releases the full results later this week. The company expects fiscal Q2 net revenues to be between $109 million and $113 million, compared to $85.3 million in Q2 2021. Diagnostics segment revenues are anticipated to be between $40 million and $42 million, a 25 percent to 32 percent increase from $31.9 million.

In a note to investors, investment bank William Blair's Brian Weinstein wrote after the announcement of the preliminary results that "the life sciences segment remains an outsized beneficiary of waves of COVID infections but is expected to see a sustained longer-term benefit from the deeper relationships and product innovation that the company has been able to bring forward of late." He added that "in diagnostics, we are still waiting for evidence that the pipeline products are having an impact in the market and can drive revenue growth out of the low- to mid-$30 million quarterly range we have seen over the last decade."

Quest Diagnostics, meantime, announced in April a 4 percent decline in its first quarter results resulting from the shrinking COVID-19 testing demand. Revenues fell to $2.61 billion from $2.72 billion, missing the consensus Wall Street estimate of $2.63 billion. Revenue from its base testing business grew 6 percent to $2.01 billion, while COVID-19 testing revenue dropped 28 percent to $599 million.

Abbott also announced Q1 earnings last month, reporting that its Diagnostics business saw growth of 32 percent year over year, while its overall revenues totaled $11.90 billion, up 14 percent from $10.46 billion in Q1 2021. Within the firm's Diagnostics segment, rapid diagnostic revenues increased 58 percent to $3.55 billion from $2.26 billion.

Among the major decliners, Castle Biosciences had one significant move during the month: its acquisition of AltheaDx for $65 million. The company specializes in mental health pharmacogenomic testing and markets a test called IDgenetix, which assesses pharmacogenomic loci associated with response to drugs prescribed for depression, anxiety, and other mental health conditions. The acquisition is expected to expand Castle's potential market reach to approximately $8 billion and could spark development of a larger mental health franchise for the company.

In a note to investors, SVB Leerink Analyst Puneet Souda wrote that although the acquisition "adds another diagnostics vertical for [Castle], the acquisition in our view is in a highly competitive market of pharmacogenomic testing … with other pharmacogenomic tests already on the market." He added that he finds it "challenging to see AltheaDx differentiating itself in the mental health market despite producing unique drug-drug interaction reports."

Kyle Mikson, an analyst for investment bank Canaccord Genuity, wrote in a separate note that the deal "enables Castle to enter an area of high unmet clinical need, albeit a completely new market distinct from its dermatology and gastrointestinal segments."

Castle Bio also announced at the end of April that it has expanded its US Federal Supply Schedule contract with the Veterans Health Administration to include coverage for all the company's skin cancer tests. The initial contract was only for the firm's DecisionDx-Melanoma test, but the expanded deal will cover four more tests: DecisionDx-SCC, DiffDx-Melanoma, MyPath Melanoma, and DecisionDx-CMSeq.

Neither Dermtech nor Burning Rock Biotech had major news last month, although their relatively low starting share prices at the start of the month may have exaggerated any further decline percentage-wise.

*Abbott paid a dividend of $.47 per share on April 13.

**Becton Dickinson announced a 1025:1000 stock split on April 1.

***PerkinElmer paid a dividend of $.07 per share on April 21.

****Quest Diagnostics paid a dividend of $.66 per share on April 5.