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Promising Coronavirus Vaccine News Leads to Share-Price Slide for Bevy of Dx Companies

NEW YORK ─  Shares of several in vitro diagnostic companies plummeted on Monday following an announcement that a vaccine developed by Pfizer and BioNTech demonstrated 90 percent efficacy in a clinical study at protecting people from COVID-19.

Shares of Quidel, Fulgent Genetics, Fluidigm, Meridian Bioscience, and GenMark Diagnostics were among those that slid sharply after the vaccine announcement.

At the end of the trading day on Monday, Quidel's shares were down 28 percent to $203.66; Fulgent Genetics was down more than 22 percent to $31.01; Fluidigm by more than 20 percent to $6.01; GenMark by more than 10 percent to $12.36; Chembio Diagnostics by more than 13 percent to $4.11; and Meridian Bioscience by more than 15 percent to $15.73.

Among other SARS-CoV-2 test developers, PerkinElmer's stock price dropped more than 9 percent to $128.09, Danaher's shares slid about 5 percent to $233.78, and Thermo Fisher Scientific's shares fell 8 percent to $484.99.

One outlier was Becton Dickinson whose stock price grew more than 1 percent to $240.21.

Pfizer and BioNTech said in a statement on Monday that in an early analysis of their clinical trial the vaccine "demonstrated evidence of efficacy against COVID-19 in participants without prior evidence of SARS-CoV-2 infection."

The companies said that they plan to ask the US Food and Drug Administration for Emergency Use Authorization of the vaccine later this month after collecting safety data, and anticipate producing up to 50 million doses in 2020 and up to 1.3 billion doses in 2021.

"In terms of implications for diagnostics companies, sooner vaccine availability obviously translates into a shorter duration of testing tailwinds, and we continue to see downside risk for companies that are over-levered to COVID-19 testing," such as GenMark, Luminex, OraSure Technologies, and Quidel, Tycho Peterson, an analyst at JP Morgan, said in a research note.

Other analysts believe that investors may have overreacted. Brian Weinstein, an analyst at William Blair, said in a research note on Monday that "there is likely to be an overreaction to the downside on these stocks today as investors take the news as being an instant panacea and one that eliminates the need for any COVID-19 testing."

Although the prospect of a vaccine is "unequivocally positive … we still believe there is a lot of testing that will need to be done in the future," he added.

Piper Sandler analyst Steven Mah said in a research note that he believes the sell-off is an overreaction and "presents a buying opportunity for highly differentiated testing companies," such as Quidel, Fulgent Genetics, Fluidigm, Luminex, and Meridian Bioscience.

Mah said that the investment bank expects that large-scale population testing, contact tracing, and effective quarantining policies will accelerate and "be needed for the next few years to safely return to normal even with a highly effective vaccine."

He noted that many of the companies he listed "already have long-term COVID-19 testing contracts which underscore the utility of COVID-19 testing to healthcare providers."

Peterson said that for diversified companies such as Hologic, whose share price was down almost 9 percent to $68.35 at the close of the market on Monday, "positive vaccine updates should bode well for the base business recovery … offsetting a potential impact on testing tailwinds."

Fulgent Genetics Chairman and CEO Ming Hsieh said during a conference call to discuss the company's Q3 financial results on Monday that he welcomes the news associated with the development of a vaccine. Vaccines are adding additional requirements for antibody testing, he said, "creating a new opportunity for Fulgent Genetics in this space. I do not believe that COVID-19 will go away easily."