360Dx Top 30 Ticks Down in August

NEW YORK – After multiple months of growth, the 360Dx Top 30 fell by more than 1 percent month over month in August, mirroring the broader market.

Last month, the Dow Jones Industrial Average and the Nasdaq fell 2 percent compared to July, while the Nasdaq Biotech Index declined a fraction of 1 percent.

The Top 30's highest gainers were Natera (+30 percent), Cue Health (+20 percent), and Castle Biosciences (+18 percent). The decliners were led by Invitae (-35 percent), DermTech (-29 percent), and Burning Rock Biotech (-24 percent).

Natera's stock price was bolstered last month by the announcement that its Prospera Lung allograft rejection monitoring test will receive coverage from the US Centers for Medicare and Medicaid Services' MolDx program for use in lung transplant surveillance.

The company also reported its quarterly financial results in August and significantly raised its 2023 revenue guidance as a result of strong test volume growth, promising clinical study data, and confidence that minimal residual disease testing will be included in National Comprehensive Cancer Network guidelines. The firm's Q2 revenues grew to $261.4 million compared to $198.2 million in the prior-year quarter and beat analysts' average estimates.

Cue Health faced a mixed bag in August, as the company this week received a letter from a shareholder calling on the firm to begin a strategic review and realign its cost structure to recover from the nosedive its stock has taken since going public in 2021.

Earlier in August, Cue reported that its Q2 revenues declined 89 percent year over year, although revenues came in at the high end of the firm's previously announced guidance. Revenues were $9.9 million in Q2 2023 compared to $87.7 million in the second quarter of 2022 and missed analysts' average estimates of $13.4 million.

BTIG analyst Mark Massaro wrote in a note to investors after Cue reported its financial results that potential authorizations from the US Food and Drug Administration for Cue's tests were not reflected in the company's low stock price. Massaro said he believes that the de novo approval of Cue's COVID-19 test in June "marks the first of several more full FDA authorizations for Cue," including for the firm's respiratory syncytial virus and influenza tests, both of which have been submitted to the agency.

At the beginning of last month, Cue announced it had received a $28 million contract from the US Department of Health and Human Services' Biomedical Advanced Research and Development Authority (BARDA) to develop a multiplex molecular respiratory test.

The other gainer, Castle Biosciences, only had one key piece of news in August. The firm reported at the beginning of the month that its second quarter 2023 revenues rose 44 percent year over year to $50.1 million, beating analysts' average estimate of $44.2 million. As a result, the company raised its full-year 2023 guidance.

Among the decliners, Invitae was also impacted by its financial results, reporting that its Q2 2023 revenues fell 12 percent after it eliminated non-core businesses and geographies that had contributed to Q2 2022 revenues. The firm also lowered its previously announced full-year revenue guidance.

In a note to investors after the earnings results were announced, Cowen analyst Dan Brennan wrote that Invitae "continues to make operational progress," but that with $1.4 billion in debt and a "less than differentiated test portfolio," as well as suspected pressure on its spending, "the path forward remains difficult."

Fellow decliner DermTech also reported a drop in Q2 2023 earnings, with revenues for the quarter falling 7 percent to $3.9 million but beating the consensus Wall Street estimate of $3.7 million. Its billable sample volume declined 5 percent as test revenues fell 14 percent.

Meantime, Burning Rock Biotech reported its second quarter financial results earlier this week, saying its Q2 2023 revenues rose 12 percent year over year to RMB 146.3 million ($20.2 million), although it saw a decrease in test volume.

*Bio-Techne paid a dividend of $.08 per share on August 17.

**Labcorp paid a dividend of $.72 per share on August 7.