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Diagnostics Firms' Stocks Turn Negative as 360Dx Index Slips 6 Percent in August

NEW YORK – For the first time since the start of the coronavirus pandemic, the 360Dx Index declined in August, as many diagnostics firms saw a decline in their share prices, bucking an upward trend in the broader markets.

For the month, the index slipped 6 percent, following a 13 percent jump in in July. 

In contrast, the broader market continued its steady upward climb, as the Dow Jones Industrial Average rose nearly 8 percent compared to July and the Nasdaq increased almost 10 percent in August. The Nasdaq Biotech Index also ticked up by nearly 1 percent month over month.

The 360Dx Index's largest gainers in August were Natera (+33 percent), Invitae (+20 percent), and Castle Biosciences (+18 percent). The decliners were led by Meridian Bioscience (-42 percent), Quidel (-38 percent), and Opko Health (-37 percent). 

Natera's increase came following a positive earnings report early in the month and was boosted by the change in guidelines from the American College of Obstetricians and Gynecologists regarding non-invasive prenatal tests. The organization expanded its guidance to recommend prenatal aneuploidy screening to all pregnant people, regardless of age or risk factors. Previously the organization only recommended it for patients 35 and older with known risk factors. Natera is a major player in the NIPT space with its Panorama test, but has had difficulty convincing private insurers to provide broad coverage for the test.    

Natera also announced last week its Signatera personalized circulating tumor DNA test for molecular residual disease assessment received the CE mark. It also unveiled a collaboration with Mass General Cancer Center of Massachusetts General Hospital on an early-stage breast cancer clinical trial.

Invitae had a relatively quiet August, announcing a decline in revenues at the beginning of the month that still beat the Wall Street consensus estimate. It may also have benefitted from the ACOG decision as the company provides NIPT services also. 

Doug Schenkel, an analyst at investment bank Cowen, wrote in a research note that the company's reproductive health testing had remained resilient throughout the quarter, and germline testing volumes were rebounding.

Invitae is currently in the process of a $1.4 billion merger with ArcherDx, announced in June.  

Castle Biosciences' only news last month was an 18 percent increase in second quarter revenues, due partially to recent improvements in DecisionDx-Melanoma orders, which had taken a hit at the beginning of the COVID-19 pandemic. According to an analyst note from Sung Ji Nam at BTIG, Castle Bio is still planning on launching two new products this year – DecisionDx – SCC and a test for suspicious pigmented lesions. 

Despite a 75 percent increase in fiscal Q3 revenues announced at the beginning of August, Meridian's share price dropped along with many other diagnostics companies' last week as Abbott received Emergency Use Authorization from the US Food and Drug Administration for its rapid antigen SARS-CoV-2 test. Meridian's significant revenue jump was led by spikes in reagent product revenues, the firm said. Brian Weinstein, an analyst at William Blair, said in an analyst note that Meridian's increase in fiscal 2020 guidance was lower than expected based on the results, and noted that "we are unclear as to why the sequential decrease would be so severe given we had thought heightened demand for these products should persist for at least several quarters."  

Quidel had some highs and lows last month, as well. On the upside, the governors of six states announced they would buy a combined 3 million rapid antigen tests from Quidel and Becton Dickinson, and the US Department of Health and Human Services said it would use the Defense Protection Act to accelerate acquisition of antigen tests for nursing homes and contracted with the two companies to provide those tests.   

However, the US District Court for the Southern District of California denied Quidel's request for damages in a false advertising lawsuit against Siemens Healthineers, and Quidel's share price saw a drop after Abbott's antigen EUA announcement, as well. Quidel was the first company to receive EUA for a rapid SARS-CoV-2 antigen test in May. CEO and President of Quidel Douglas Bryant said at a Piper Sandler meeting that the entry of another antigen test was welcome and didn't change any of Quidel's manufacturing or development plans.  

Opko Health also had a quiet month in August. The only news was the agreement that GeneDx, a subsidiary of Opko's BioReference Laboratories, signed to offer genomic services to neonatal intensive care units associated with Pediatrix Medical Group. The firm also took a hit as a result of Abbott's EUA announcement.