NEW YORK – Declines in traditional testing and diagnostic usage in light of the coronavirus pandemic, along with continued depression in the general stock market, led to decreases in most companies' share prices and a 7 percent month-over-month drop in the 360Dx Index in March.
This is the second straight month of decline, after a 6 percent drop for the index in February. Of the 28 companies in the index, six companies' stocks were up month over month in March, while 22 companies' share prices decreased.
For the second month in a row, the index had a better month than the Dow Jones Industrial Average, which fell 14 percent compared to February, and the Nasdaq, which declined 10 percent in March. The Nasdaq Biotech Index had a slightly better month, falling 5 percent month over month.
The index's largest gainer was Quidel (+27 percent), followed by GenMark Diagnostics (+18 percent). The gains were based on their receiving Emergency Use Authorizations from the US Food and Drug Administration for SARS-CoV-2 diagnostic assays. Accelerate Diagnostics (-34 percent), Invitae (-33 percent), NantHealth (-30 percent), and Oxford Immunotec (-30 percent) led the decliners.
Quidel's share price rose after the company announced its Lyra SARS-CoV-2 assay received an EUA from the FDA in the middle of the month and continued to rise after the test received an expanded EUA a week later, allowing it to be used with additional thermocyclers. Jack Meehan from Barclays also said in an analyst note that he believes Quidel will exceed the firm's initial revenue expectations for the first quarter by potentially 7 percent. Meehan also noted that the company is developing two other tests for SARS-CoV-2, a Sofia rapid assay and a serology assay to find out who has already been exposed to the virus.
GenMark Diagnostics' share price increase was also accompanied by an EUA from the FDA for the company's ePlex SARS-CoV-2 test, which is used on GenMark's sample-to-answer ePlex system. In a research note, Canaccord Genuity's Max Masucci said paranoia surrounding the coronavirus pandemic could also boost demand for the company's respiratory panel. Earlier in the month, the company also reported positive fourth-quarter earnings, with revenues rising 40 percent to $27.2 million, up from $19.4 million in the year-ago quarter. The share price increase was also likely due to the company's announcement on its earnings call that it had shipped research-use-only SARS-CoV-2 test kits to its distributor in Hong Kong.
Among the decliners, there's no obvious reason for Accelerate Diagnostics' significant drop-off, although continued depression in the stock market likely contributed to the company's steady share price decline throughout the month.
Invitae's only major news this month was its announcement that it is acquiring YouScript, Genelex, and Diploid. YouScript offers a clinical decision support platform that helps clinicians manage patients' medications in the context of genetic test results, and Genelex is a pharmacogenetic testing firm. Diploid has an artificial intelligence software that diagnoses genetic disorders from clinical data.
Continuing uncertainty surrounding the regulatory environment for PGx testing could explain the company's declining share prices after the announcement. An analyst note from Tycho Peterson at JP Morgan noted that near-term revenue contributions from the three companies are expected to be minimal and the deals add $5 million to $10 million of incremental cash burn in 2020, although he added the long-term outlook was positive.
After two consecutive months leading the 360Dx Index, NantHealth's share prices took a hit in March, despite a relatively quiet month. The only news from the company was its proposed $16.5 million settlement with shareholders in a class-action lawsuit from 2017. The company is paying to resolve claims about allegedly misleading statements by executives and directors regarding demand for the firm's services leading up to its initial public offering in 2016. Under the settlement, NantHealth hasn't admitted any wrongdoing.
Oxford Immunotec's share price decrease comes despite its positive earnings report at the beginning of March, where its fourth-quarter revenues rose 18 percent year-over-year to $18.1 million, beating analysts' estimate of $17.1 million. Oxford Immunotec CEO and Founder Peter Wrighton-Smith also said the company was closer to developing new applications for the interferon gamma release assay technology that enables its T-spot.TB tests, thanks to two new studies supporting clinical utility for the technology in measuring the human immune response to cytomegalovirus infections.
