NEW YORK – Folllowing on share price increases for most firms in April, positive earnings results and the continuing need for coronavirus products led to further growth in May.
The 8 percent month-over-month increase for the 360Dx Index comes after a sharp 22-percent increase in April. Continuing positive financial results, as well as revenue from SARS-CoV-2 diagnostic tests and products, contributed to the rise. The two months of increase come after two months of significant decline in the index, due to a decrease in non-coronavirus-related testing, as well as a decline in the broader market.
The general market has also continued its recovery, as the Dow Jones Industrial Average rose 4 percent compared to April and the Nasdaq increased 7 percent in May. The Nasdaq Biotech Index also rose 8 percent month over month.
The 360Dx Index's largest gainers during May were Meridian Bioscience (+29 percent), CareDx (+27 percent), and Quidel (+26 percent). The three major decliners were GenMark Diagnostics (-24 percent), Accelerate Diagnostics (-23 percent), and Luminex (-14 percent).
Meridian's share price gain can be attributed to the positive fiscal second quarter earnings it reported in May. Revenue for the company increased 14 percent, largely due to increases in its life science segment from SARS-CoV-2 products and molecular reagents. The company also increased its fiscal year 2020 guidance, in a reversal from most other firms that have withdrawn their guidance due to the pandemic. After the earnings report, investment bank William Blair upgraded Meridian's shares to an Outperform rating, which analyst Brian Weinstein said in a note was driven by the expectation that Meridian's role providing reagents for multiple SARS-CoV-2 tests would likely be a multiyear benefit to the company's cash flow and profitability.
At the end of April, CareDx announced a 48 percent increase in revenues during the first quarter, mostly due to a significant increase in testing services revenues, which likely had an impact on CareDx's May share price gain. Brandon Couillard from Jefferies said in an analyst note that the company is navigating the pandemic environment "better than most of its speciality Dx peers." He also noted that the company's RemoTraC at-home testing program has helped increase its testing volumes significantly. He further noted in a separate research note that transplant volumes are nearly back at the levels they were before the pandemic.
The firm also announced multiple partnerships during the month, including one with Weill Cornell Medicine to develop and commercialize UroMap, the company's urine-based gene expression test for acute cellular rejection in kidney transplant recipients. Later in May, CareDx and Veracyte announced an agreement to make CareDx the exclusive worldwide commercialization partner for solid organ transplant rejection tests on Veracyte's nCounter Flex Analysis platform. CareDx also received CE marking for its AlloSeq Tx 17 HLA typing product to match transplant donor organs to recipients with hybrid capture technology.
Quidel also had positive financial results, with Q1 revenues increasing 18 percent due to high influenza testing revenue. The firm also received the first Emergency Use Authorization from the US Food and Drug Administration for a protein-based SARS-CoV-2 antigen test. The company's extractionless PCR test also received EUA and the CE mark.
GenMark's decline comes after a sharp share-price increase in April, although there's no clear reason for the firm's decline this month. GenMark's first quarter revenues were up 80 percent year over year thanks to the sales growth of its ePlex molecular diagnostics analyzer and its SARS-CoV-2 test. The firm also priced a $70 million public offering of its common stock, the funds from which will be used for general corporate purposes and capital expenditures.
However, a recent comparison evaluation from Northwell Health in New York found GenMark's ePlex SARS-CoV-2 test had a higher limit of detection and was outperformed by Hologic and DiaSorin's assays in clinical correlation.
The reason for Accelerate's share price decline is unclear, considering it reported a 27 percent rise in Q1 revenues. The company said it has been sharpening its sales and marketing strategies to build a business for its Pheno ID-AST rapid bacterial identification and antimicrobial susceptibility testing system. William Blair's Weinstein wrote in an analyst note that the company is in a difficult position due to its customers' sole focus on COVID-19 testing, but that once the pandemic has subsided the company will be in a better position.
Luminex's decline is also unclear since the firm had a 10 percent revenue increase in the first quarter due to molecular diagnostics revenue growth from increasing demand for respiratory products due to the COVID-19 pandemic. The company also announced a $260 million senior note offering, the proceeds of which would pay the cost of convertible-note hedge transactions and provide working capital.