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Another Disappointing Year for Omics, MDx Stocks as GenomeWeb Top 40 Drops 7 Percent in 2023

Stock Market

This story has been updated to correct the Dec. 31, 2022 share price of Danaher. With this correction, the GenomeWeb Top 40 was down 7 percent year over year in 2023.

NEW YORK – Stocks of molecular diagnostics and omics companies were down in 2023, lagging well behind the broader market.

Overall, the GenomeWeb Top 40 was down 7 percent year over year in 2023. Compared to 2022, in which the Top 40 plummeted by 34 percent, that might almost feel like a win were it not for the considerably stronger performance of the overall market, which saw the Dow Jones Industrial Average rise 14 percent year over year, the Nasdaq rise 43 percent, and the Nasdaq Biotech Index rise 4 percent. Among companies in the Top 40, 25 saw their stock prices decline year over year, 14 saw their stock prices rise, and one was flat.

The year's top performer was Quanterix, which saw its shares rise 97 percent year over year. The company enjoyed the fruits of a restructuring and redevelopment program it launched in 2022 to streamline and scale its assay production capabilities. According to comments made by President and CEO Masoud Toloue during a call following release of the firm's Q3 2023 financial results, this effort was "expected to be substantially complete by year-end, with assays rolling off our new scalable production platform in January."

In Q3 2023, Quanterix posted revenues of $31.3 million, up 18 percent from $26.6 million in Q3 2022 and beating the consensus Wall Street estimate of $27.6 million.

Quanterix also made headway in its emerging clinical business during 2023. In October, it launched its LucentAD p-Tau 217 LDT, a blood-based test for assessing brain amyloid pathology in patients suspected of having Alzheimer's disease. Toloue said the company plans to submit the test to the US Food and Drug Administration "within the next several quarters."

It also inked an agreement with Johnson and Johnson to develop research-use-only Simoa phosphorylated-tau 217 immunoassay kits and laboratory-developed tests using Johnson and Johnson's p-tau 217 antibodies and assay designs.

In a November note to investors, TD Cowen analyst Dan Brennan said that the rise in the company's stock price reflected its improved performance but noted that there remained "numerous potential drivers" that could be "catalysts for upside ahead." The bank maintained its Market Perform rating and upped its price target from $24 to $26.

NeoGenomics Laboratories posted the second-largest rise in stock price in 2023 with shares up 75 percent year over year.

The company reported in February that it had reorganized its business segments to reduce spending and improve execution, integrating Inivata and replacing its separate clinical services and pharma services segments with a clinical services division and an advanced diagnostics division.

The reorganization appears to have helped as following the release of its Q3 2023 financial results in November, NeoGenomics raised its full-year revenue guidance to a range of $585 million to $592 million, up from $565 million to $575 million.

During 2023, the company also received Centers for Medicare & Medicaid Services (CMS) coverage for use of its minimal residual disease assay Radar for cancer recurrence detection and monitoring in patients with breast cancer. This win was dampened, however, by a preliminary injunction issued at the end of the year as part of Natera's patent infringement lawsuit against NeoGenomics and its Radar assay. The order, issued by the US District Court for the Middle District of North Carolina, bars the "making, using, selling, or offering for sale in the US" of the assay. The order also prohibits NeoGenomics from promoting or advertising it. NeoGenomics may continue to offer the assay for existing patients and for clinical trials, research studies, and projects already in process.

Following the ruling, NeoGenomics' stock, which had been trading in the $20 range, dropped and closed the year at $16.18. In a note to investors, TD Cowen's Brennan said the bank was lowering its price target to $19 from $22.

Natera posted the third-largest rise in stock price with shares up 56 percent year over year.

In addition to the preliminary injunction the company won against NeoGenomics, it won $19.4 million in damages in a patent lawsuit against Invitae and ArcherDx as well as an injunction against those companies preventing them from using products containing material patented by Natera.

Natera also prevailed in its dispute with CareDx, in which that company alleged Natera had engaged in unfair competition against it, with the US District Court for the District of Delaware finding that while both companies engaged in instances of false advertising, CareDx was not entitled to any damages related to that claim.

Additionally, the US District Court for the District of Delaware denied CareDx's motion for summary judgement on two patents held by Natera as part of an ongoing infringement lawsuit.

Natera also saw success on the reimbursement front during 2023, receiving CMS coverage for use of its Signatera molecular residual disease test in breast cancer patients as well as coverage from Blue Shield of California and Blue Cross and Blue Shield of Louisiana for Signatera across multiple cancer indications. It also received Medicare coverage for its Prospera Lung allograft rejection monitoring platform.

In October, Natera and Foundation Medicine launched the jointly developed FoundationOne Tracker personalized circulating tumor DNA (ctDNA) monitoring assay with Medicare coverage.

The company did face potential headwinds, however, from a Palmetto MolDx update of its reimbursement guidance for molecular tests assessing rejection risk in solid organs. The new guidance is more restrictive with regard to appropriate use of such tests and testing frequency.

In Q3 2023, Natera posted one of its best quarters for Signatera sales on record with that part of its business up 85 percent year over year. The company also raised its full-year 2023 guidance to between $1.04 billion and $1.05 billion from a previous range of $1.02 billion to $1.04 billion.

In a December note to investors, TD Cowen's Brennan highlighted Natera as a "Best Idea 2024," noting its strong position in the MRD market and reproductive health. The bank maintained its Outperform rating and raised its price target from $82 to $87.

Cue Health posted the largest drop in stock price in 2023 with its share price down 92 percent.

The company has struggled to find its footing as demand for COVID-19 testing continues to wane. In January, it launched a cost-reduction plan that resulted in the layoffs of 388 employees. It laid off another 326 employees in May. In August, investment management firm Tarsadia Investments sent a letter to the company saying that it had "failed to adapt to a rapidly changing post-COVID reality" and encouraged the company to begin investigating strategic alternatives, realign its costs, and enhance its board of directors.

In November, Cue reported that its Q3 2023 revenues were down 75 percent year over year but noted that it has three new tests under review at the FDA: a combination COVID-19 and influenza test, an influenza test, and a respiratory syncytial virus test. It said that once these tests receive FDA approval, it is ready to launch them and manufacture them on its automated production line without significant additional capital investment.

NanoString posted the second-largest decline in stock price in 2023 with shares down 91 percent year over year. The company's struggles were largely driven by its losses in patent infringement disputes with 10x Genomics. In November, 10x won a $31 million verdict against NanoString after a Delaware jury found the latter firm's GeoMx Digital Spatial Profiler infringed seven patents held by 10x, exclusively licensed from Prognosys Biosciences. 10x also said that in post-trial proceedings it intends to seek royalties on sales of GeoMx products since Oct. 13, treble damages and attorneys' fees, and a permanent injunction barring the manufacture, use, and sale of GeoMx products in the US.

This defeat followed a preliminary injunction 10x won in the European Unified Patent Court that will prevent NanoString Technologies from selling its CosMx high-resolution spatial biology platform and associated RNA detection reagents in Europe.

Following the Delaware verdict, NanoString withdrew its full-year 2023 and Q4 financial guidance. TD Cowen downgraded shares of NanoString to Market Perform, citing the legal risk to its spatial genomics product portfolio, a large debt balance, and increased competition. 

Bionano Genomics posted the third-largest decline in stock price with shares down 87 percent year over year.

The company was in cost-cutting mode for much of the year, laying off around 60 employees in October, which followed the reduction of roughly 7 percent of its workforce in May.

Bionano also announced following the October layoffs that it planned to reduce facility costs and discretionary spending unrelated to headcount and projected that these initiatives would reduce annual operating expenses by roughly $31.6 million starting in 2024. The company also at that time priced an $80.0 million financing in convertible notes and warrants.

In November, Bionano reported Q3 revenues of $9.3 million, up 29 percent from $7.2 million the year before and beating the consensus Wall Street estimate of $9.1 million. The company reiterated its revenue guidance of $35.0 million to $38.0 million.

In a note to investors following release of the company's Q3 financial results, BTIG analyst Mark Massaro reiterated the bank's Buy rating on Bionano but lowered its priced target to $6 from $10, noting that the firm showed encouraging "growth trends" but could be affected by headwinds impacting the life science tools space more generally.

The GenomeWeb Top 40 will be updated with new entries next month. We reconfigure the list at the beginning of each year based on market cap and only consider firms for this list that trade common stock on one of the major US stock exchanges.

GenomeWeb Top 40        
Company Ticker 31-Dec-23 31-Dec-22 % change
Adaptive Biotechnologies ADPT 4.90 7.64 -35.86
Agilent Technologies A 139.03 149.65 -7.10
Akoya Biosciences AKYA 4.88 9.57 -49.01
Becton Dickinson BDX 243.83 254.30 -4.12
Bionano Genomics BNGO 1.89 14.60 -87.05
Bio-Rad Laboratories BIO 322.89 420.49 -23.21
Bio-Techne TECH 77.16 82.88 -6.90
Bruker BRKR 73.48 68.35 7.51
Burning Rock Biotech BNR 0.93 2.25 -58.67
CareDx CDNA 12.00 11.41 5.17
Castle Biosciences CSTL 21.58 23.54 -8.33
Cue Health HLTH 0.16 2.07 -92.27
Danaher DHR 231.34 235.30 -1.68
Exact Sciences EXAS 73.98 49.51 49.42
Fulgent Genetics FLGT 28.91 29.78 -2.92
Ginkgo Bioworks DNA 1.69 1.69 0.00
Guardant Health GH 27.05 27.20 -0.55
Hologic HOLX 71.45 74.81 -4.49
Illumina ILMN 139.24 202.20 -31.14
Invitae NVTA 0.63 1.86 -66.13
Myriad Genetics MYGN 19.14 14.51 31.91
NanoString Technologies NSTG 0.75 7.97 -90.59
Natera NTRA 62.64 40.17 55.94
NeoGenomics Laboratories NEO 16.18 9.24 75.11
Olink OLK 25.11 25.38 -1.06
Pacific Biosciences PACB 9.81 8.18 19.93
Personalis PSNL 2.10 1.98 6.06
Qiagen QGEN 43.43 49.87 -12.91
Quanterix QTRX 27.34 13.85 97.40
Quantum-Si QSI 2.01 1.83 9.84
QuidelOrtho QDEL 73.70 85.67 -13.97
Revvity PKI 109.31 140.22 -22.04
Seer SEER 1.94 5.80 -66.55
SomaLogic SLGC 2.53 2.51 0.80
Thermo Fisher Scientific TMO 530.79 550.69 -3.61
Twist Bioscience TWST 36.86 23.81 54.81
Veracyte VCYT 27.51 23.73 15.93
Waters WAT 329.23 342.58 -3.90
23andMe ME 0.91 2.16 -57.87
10x Genomics TXG 55.96 36.44 53.57
GenomeWeb Top 40 Average   71.36 76.39 -6.59