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CareDx, Myriad Genetics Shares Down, Natera Stock Up as 360Dx Index Flat for August

NEW YORK – The broader markets pulled the stocks of many diagnostics companies in August, while the 360Dx Index was essentially flat month over month. 

Out of the 27 companies in the index, 14 firms' stocks were down and 13 companies' share prices increased. Overall, the index mirrored the Dow Jones Industrial Average, which fell a fraction of 1 percent month over month, while the Nasdaq fell 2 percent and the Nasdaq Biotech Index fell 3 percent.

CareDx (-30 percent) saw the biggest decline in its stock price, followed by Meridian Bioscience (-23 percent), Myriad Genetics (-19 percent), and Opko Health (-13 percent). Natera (+19 percent) was the biggest gainer, with the next highest gains coming from Bio-Rad Laboratories (7 percent).

On the surface, much of the news was positive for CareDx in August. Early in the month, it announced its second quarter revenues rose 76 percent year over year. That was followed by a positive draft local coverage determination by Medicare administrative contractor Palmetto GBA for the firm's blood test AlloSure, which measures transplant injury via donor-derived cell-free DNA.

Last week, CareDx announced it acquired XynManagement, a software provider that tracks transplant quality and waitlists.

Despite the influx of positive news, CareDx's stocks took a steady downturn throughout the month, and there were no obvious reasons for the decline in its share value.

In contrast, Meridian Bioscience's stock decline coincides with disappointing quarterly results that came at the tail end of July when it announced a 6 percent dip in Q3 earnings. Its CEO also said that its diagnostics business could see continued softness through 2020.

Myriad Genetics' slide was also likely the result of a disappointing quarterly report, along with regulatory confusion surrounding its GeneSight pharmacogenetic test.

Although Myriad's fourth quarter revenues rose 11 percent year over year, the increase was less than Wall Street had estimated. Its projected FY2020 guidance was also below analysts' expectations, contributing to the downturn in share prices.

Another major source of trouble came from the US Food and Drug Administration, which recently announced increased oversight of pharmacogenetic tests that aren't approved by the FDA. The agency requested changes to Myriad's GeneSight test, which may also have impacted the company's share prices.

Opko Health also saw a decline in its stock price following the announcement that its second quarter revenues fell 14 percent year over year.

The only company with a double-digit gain in August was Natera, which reported second quarter earnings results that exceeded analyst estimates on the top and bottom lines, as well as potentially increased reimbursement.

Toward the beginning of the month, Natera said its Q2 revenues rose 18 percent year over year, thanks to increased sales of its Panorama noninvasive prenatal and Horizon carrier screening tests.

The firm also submitted its Signatera test for colorectal cancer to Palmetto GBA earlier this month, and the MAC released a draft LCD covering the test in patients with stage II/III colon cancer or stage IIA rectal cancer.  

Canaccord Genuity analyst Mark Massaro also noted a $5 million collaboration payment that Natera received from Beijing Genome Institute, and added that the company expects additional payments from the Chinese sequencing outfit. Natera also expects another major partnership with an unnamed firm, Massaro said.

"What is clear is that partners from all over the world want to partner with Natera given its highly proprietary massively multiplexed PCR platform technology, which has applications across pre-natal testing, cancer, and transplant," Massaro said in a research note.