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Broader Markets Lift MDx/Omics Shares 8 Percent in October

NEW YORK (GenomeWeb) – Shares of firms operating in the molecular diagnostics and omics spaces reversed losses suffered in September as the GenomeWeb Daily News Index rose nearly 8 percent month over month in October.

Several firms in the MDx/omics arena saw sharp jumps in their share prices last month, led by Foundation Medicine, whose stock value increased more than 36 percent month over month, while Pacific Biosciences' share price was up almost 34 percent, and Genomic Health saw its share price rise 28 percent.

Overall, 18 of the 29 firms in the index saw gains month over month for October, while the decliners were led by Nanosphere (-23 percent) and Veracyte (-17 percent).

October was tumultuous for stocks in general, and the broader markets appeared to be headed for a decline for the month before rallying in the last week. The Dow Jones Industrial Average finished October up 2 percent month over month, while the Nasdaq Composite was up 3 percent. The Nasdaq Biotech Index was up nearly 9 percent sequentially.

October also continued a months-long trend of volatility among MDx/omics stocks — and the broader biotech market — and followed a 1 percent decline in the index in September, after it rose almost 3 percent in August.

Foundation Medicine's shares rose steadily throughout October and were helped by Priority Health's decision to start covering the firm's genomic profiling services for cancer, making the health plan the first in the country to provide such coverage. Also during the month, Foundation Medicine announced a licensing agreement with WuXi PharmaTech to offer Foundation Medicine's genomic profiling technology to companies conducting clinical trials in China.

Today, the Cambridge, Mass.-based company said that it is partnering with EmergingMed to offer clinical trial navigation services for healthcare providers and their patients who have received a Foundation Medicine tumor genomic profiling test.

Meanwhile, PacBio's shares received a boost after the company announced that its third quarter revenues rose 178 percent year over year and beat the average Wall Street estimates on the top and bottom line. The firm also increased its revenue estimate for full-year 2014 to $58 million from a previous range of $47 million to $48 million.

Genomic Health appeared to benefit from a study that said the firm's Oncotype DX Genomic Prostate Score assesses adverse pathology at the time of surgery and is an independent predictor of increases in prostate cancer antigen after surgery. Additionally, during the month the Centers for Medicare and Medicaid Services released its preliminary clinical fee schedule that said new current procedural terminology codes describing advanced genomic sequencing procedures will be priced through the gapfill process, while the National Comprehensive Cancer Network included two molecular diagnostic tests, Genomic Health's Oncotype DX Prostate Cancer and Myriad Genetics' Prolaris tests, in its most recent guidelines for the disease.

Other companies in the index that saw steep rises in their stock prices included GenMark Diagnostics (+27 percent), Exact Sciences (+24 percent), and Cepheid (+20 percent).

On the other end of the spectrum, Nanosphere's shares continued a prolonged tumble. During September its stock fell 32 percent, and in August it plummeted 45 percent. The October loss came despite 510(k) clearance from the US Food and Drug Administration for additional targets on its enteric pathogens MDx test. It also brought in an anticipated $18.4 million in net proceeds from a public offering of its shares.

During the month, Nanosphere also announced preliminary third quarter revenues of $3.7 million, which was above the consensus analyst estimate of $3.4 million. The Northbrook, Ill.-based company is scheduled to release its Q3 2014 financial results on Wednesday.

The firm's shares have also moved to the Nasdaq Capital Market from the Nasdaq Global Market. The Nasdaq Capital Market has lower listing requirements than the Nasdaq Global Market. In September, Nanosphere was warned by Nasdaq that the closing bid price on its shares had fallen below a minimum $1 per share price for the previous 30 days, putting the company at risk of getting delisted.

In the meantime, there were no obvious drivers for the drop in Veracyte's share price, which came on top of a 22 percent decline in September. During the middle of the month, the company held its investor day and said that it has several new diagnostic products slated for launch in the next two years.

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