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Stocks of Diagnostics Firms Retreat 3 Percent in March

NEW YORK (360Dx) – March was another down month for many diagnostics firms' stocks as the 360Dx Index slumped more than 3 percent month over month.

The index's March doldrums followed a slow February when it was down 3 percent compared to January. Of the 25 firms in the index, 17 saw their shares fall last month, paced by Invitae (-29 percent), Enzo Biochem (-13 percent), and Accelerate Diagnostics (-13 percent). GenMark Diagnostics led the gainers (+32 percent), followed by Quidel (+19 percent), and Oxford Immunotec (+14 percent).

The index beat the Dow Jones Industrial Average, which was down almost 4 percent month over month, and was even with the Nasdaq Composite, which was down about 3 percent. The Nasdaq Biotech shrank 1 percent compared to February.

Invitae's share-price drop was precipitated by its announcement on March 26 of a $50 million public offering of its stock. The day following the news, the company's share price plummeted 23 percent and continued sliding for the remainder of the month.

Enzo's March drop spilled over from February when its stock price tumbled 14 percent month over month. Mid-March the company reported a 3 percent increase in its second quarter revenues, which failed to impress investors. Leading into the announcement, Enzo's stock value climbed 14 percent through the middle of the month, but following the earnings results its share price dropped 24 percent.

Accelerate Diagnostics' share-price decline occurred despite a lack of any obvious drivers and followed a 9 percent contraction in February. Late in March, the company said that it would offer $150 million in senior convertible notes due in 2023.

GenMark, meantime, rebounded from a sluggish February when it paced the index's decliners. During that month, its stock price was down 24 percent month over month after it announced a 7 percent increase in revenues but guided to lower-than-expected placements of its ePlex analyzers.

Despite the disappointing guidance, several investment banks continued to be bullish about the company's prospects, particularly in the longer term.

In an investment note, Brian Weinstein of William Blair wrote, "We still have confidence in the long-term market potential for ePlex, the impressive workflow it offers customers relative to its competitors, and what is still a belief in the management pedigree. Although the litany of headwinds [has] been (and remain) somewhat frustrating, we believe the demand for ePlex remains real, which means improved financial and stock price performance should eventually come."

Quidel had several positive developments in March and began the month by announcing its Sofia Lyme FIA test was cleared by the US Food and Drug Administration to run on the Sofia 2 Fluorescent Immunoassay Analyzer. Also, early in the month, investment bank Raymond James upgraded shares of Quidel to a Strong Buy rating from a previous Outperform rating.

Lastly, Oxford Immunotec recovered from a sluggish February, when its stock value was trimmed 6 percent month over month, driven by Q4 financial results that fell short of the consensus Wall Street estimate, and the company's expectation that it would shut down a project to develop a babesia blood-donor screening assay because of a letter from the FDA noting additional clinical testing was needed. 

About a week after disclosing those plans, though, the agency approved Oxford Immunotec's assay for detecting antibodies to Babesia microti in human plasma samples. It was unclear, however, whether the company would continue with its Babesia blood-donor screening assay project following the FDA approval.