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Diagnostic Firms' Stocks Continue Rollercoaster Ride as 360Dx Index Bounces Back 5 Percent

NEW YORK – The 360Dx Index bounced back in September after a slight decrease the month before, led partly by positive news surrounding COVID-19 testing. 

For the month, the index rose 5 percent, following a 6 percent decline in August.

In contrast, the broader market dipped slightly, as the Dow Jones Industrial Average fell 2 percent compared to August and the Nasdaq decreased 5 percent last month. The Nasdaq Biotechnology Index fell a fraction of 1 percent month over month.

The 360Dx Index's largest gainers in September were Fulgent Genetics (+35 percent) and Exact Sciences (+35 percent), followed by Quidel (+25 percent) and Invitae (+24 percent). The decliners were led by NantHealth (-26 percent) and Oxford Immunotec (-14 percent).  

A new addition to the 360Dx Index after going public last year, Fulgent Genetics' rise was driven largely by positive COVID-19 news, including an announcement at the beginning of September that the firm had inked a contract with New York City Health and Hospitals to provide back-to-school COVID-19 testing for NYC schools and a deal to provide RT-PCR testing for managing drive-through testing in Florida's Miami-Dade County. Both announcements were accompanied by double-digit share price increases for the firm.  

A note from Kevin DeGeeter at Oppenheimer in light of the New York City contract said Fulgent "is positioned as the potential best-in-class provider based on turnaround time and ease of ordering," but added that near-term laboratory capacity constraints could result in vulnerabilities in the supply chain, since Fulgent only has labs in Houston and Los Angeles. 

Fulgent also was selected by the Utah Department of Health last month to provide RT-PCR tests for the state's COVID-19 testing initiative. At the end of September, the firm signed an equity distribution agreement with investment bank Piper Sandler to sell up to $125 million of its common stock.

Exact Sciences' skyrocketing share price was accompanied by one key piece of news this month that led to a 27 percent stock rise in one day – the presentation of new data on its pan-cancer liquid biopsy test. The test, which identifies esophageal, liver, lung, ovarian, pancreatic, and stomach cancers, showed overall sensitivity of 86 percent, with specificity of 95 percent in initial results. The test is being developed in partnership with the Mayo Clinic.

Max Masucci, an analyst with Canaccord Genuity, said in a note that the initial data from Exact Sciences was promising and added that the firm's "built-out infrastructure" in sales and IT would allow it to enter the multi-cancer screening space "with a head start on several fronts." 

Quidel had little news last month, but likely benefitted from the continuing conversation surrounding antigen testing for COVID-19. The company was the first to receive Emergency Use Authorization from the US Food and Drug Administration for a SARS-CoV-2 rapid antigen test in May and it has been in use since. A study from Becton Dickinson early last month found its rapid antigen test and Quidel's have comparable sensitivity.

In an analyst note from the beginning of the month, Brian Weinstein at William Blair noted Quidel's stock had been sensitive to announcements of antigen tests from other companies, including Abbott and Roche, but said the company pointed out that "there will still be a need for more tests." Weinstein added that Quidel can't meet the global demand alone and "is selling everything it can kit," which will likely continue for some time.

An FDA study assessed limits of detection for the company's PCR assay, finding it had an limit of detection of 540,000 nucleic acid amplification test-detectable units per milliliter. Quidel also noted last month it is developing a multiplexed flu and SARS-CoV-2 antigen test for its Sofia immunoassay platform that it hopes to have ready in time for this respiratory season. The firm has submitted the test to the FDA for EUA and Weinstein said authorization is expected soon.   

Invitae's only news last month was the launch of a study to improve understanding of how current germline genetic testing guidelines facilitate identification of variants that can impact care in prostate cancer patients. The firm began enrolling patients with prostate cancer who both met and didn't meet the current guidelines to track  whether access to genetic information changes their treatment and care recommendations . Invitae is also currently in the process of a $1.4 billion merger with ArcherDx, announced earlier this summer.

NantHealth had minimal news to explain its decrease last month. The firm rolled out a series of application programming Interfaces to allow providers to connect more easily with payors via its NaviNet Open Platform.

Meanwhile, Oxford Immunotec's main news last month was the announcement of a Public Health England study to evaluate the firm's test that measures T-cell response to the SARS-CoV-2 infection. Results for the study are expected in the coming weeks, and positive outcomes could clear the way for Oxford Immunotec to submit its test for regulatory approval to the FDA and for CE marking.

Unrelated to the coronavirus, Oxford Immunotec also received clearance from the FDA to amend the pediatric age limitation for its T-Spot.TB tuberculosis test to include patients two years of age and older. 

In addition to Fulgent, Genetron Holdings, Burning Rock Biotech, and Quotient have been added to the 360Dx Index starting in September.