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Natera, Foundation Medicine Lead Dx Stocks Higher in June

NEW YORK (360Dx) – The 360Dx Index in June climbed 5 percent compared to May, marking the third month in a row of growth for the index, following a 3 percent month-over-month improvement in April and a 7 percent increase in May.

In total, 15 companies' share prices rose last month, paced by Natera (+61 percent), Foundation Medicine (+38 percent), and Genomic Health (+26 percent). Among the 25 companies in the index, share prices of Enzo Biochem (-20 percent), GenMark Diagnostics (-13 percent), and Oxford Immunotec (-11 percent) declined the most.

The index beat the broader markets month over month, as the Dow Jones Industrial Average was down nearly 1 percent, the Nasdaq Composite was up 1 percent, and the Nasdaq Biotech was up 1 percent.  

Natera's price surge in June was driven by its plans to enter the transplant rejection testing market. It is targeting the launch of a clinical test in 2019 to detect acute rejection in kidney transplantation, a $2 billion market. Meanwhile, the total addressable market for its cancer testing products is around $11 billion, according to Canaccord Genuity analyst Mark Massaro. He said in a research note last week that the recent rise of Natera's stock "marks the beginning of investors appreciating [its] assay content beyond pre-natal testing."

Foundation Medicine's stock price surged on the news that Roche will acquire the remainder of its shares for $2.4 billion in cash. Roche already owned about 57 percent of Foundation's outstanding common stock, following a tender offer in 2015.

Genomic Health's stock skyrocketed early in June after a study in the New England Journal of Medicine answered a question about how doctors should interpret and act upon an intermediate result from the firm's Oncotype DX breast cancer risk test.

Cowen analyst Doug Schenkel in a note to investors said that the study "solidifies the utility of Oncotype in women with early-stage breast cancer," and it could drive increased ordering of the breast cancer risk test.

Pacing the decliners, Enzo Biochem's share price fell in June after it announced that that its third quarter revenues fell 5 percent year over year. The firm cited a few issues that resulted in the decline in sales: a medical practice it served decided to internalize its genetic ordering, costing Enzo around $1.9 million; adverse weather; and the loss of an unnamed commercial insurance payor.

There were no clear drivers of GenMark's share price decline. Toward the end of June, the firm said it had applied to the US Food and Drug Administration for clearance of its ePlex Blood Culture ID – Gram Positive (BCID-GP) panel, the first of three blood culture panels being developed on the ePlex molecular sample-to-answer system for the diagnosis and management of bloodstream infections that can lead to sepsis.

Canaccord Genuity's Massaro said in a research note that the investment bank is positive on GenMark following the FDA submission. However, he noted that "we continue to await a decision from Palmetto GBA’s 'non-coverage' draft local coverage decision on syndromic respiratory and [gastrointestinal] test panels." If the LCD were to go final, Massaro anticipates that around 10 to 20 percent of GenMark's customer base could see reimbursement cuts, he said.

Oxford Immunotec's shares were down despite the firm announcing the presentation of data from studies at the American Transplant Congress, showing that its T-Spot.CMV test accurately predicts post-kidney transplant CMV infection.