NEW YORK (GenomeWeb) – After six straight months of gains, the GenomeWeb Index dropped sharply in October, losing more than 9 percent as it mimicked the woes of the wider market.
The index underperformed the Dow Jones Industrial Average, which lost 5 percent, but was in line with the Nasdaq, which also lost 9 percent, and outperformed the Nasdaq Biotechnology Index, which lost almost 15 percent. Stock performance in the October GenomeWeb Index was overwhelmingly negative as 24 of the 28 stocks saw losses and only four saw gains.
Veracyte — which had been September's biggest decliner with a 25 percent share drop — took the top spot for gainers in October with a 56 percent increase in share price. NeoGenomics Laboratories (+20 percent) and Meridian Bioscience (+9 percent) rounded out the top three performers.
The biggest loser in October was GenMark Diagnostics, which saw its shares decline 27 percent. GenMark had also occupied a place in the top three decliners list in September. Enzo Biochem (-19 percent) and Quanterix (-18 percent) completed the list of bottom-three performers. Quanterix had led the winners in September with a 28 percent increase in share price.
Though positive earnings news wasn't enough to stave off the negative pressures of the wider market, it did benefit some companies in October. Veracyte reported earlier this week that its third quarter revenues rose 34 percent year over year, as its genomic testing volume rose 23 percent during the same period. The company beat analysts' average estimates on the top and bottom lines and increased its revenue guidance for the full year.
In a note to investors after the release of the earnings, William Blair analyst Brian Weinstein wrote, "We are encouraged by Veracyte's scientific innovation and see potential for upside from the company's emerging lung franchise. As a result of these factors, along with what we see as a reasonable valuation of 2.9 times our updated 2019 revenue target of about $112 million, we recommend purchase of this innovative and under-owned company."
NeoGenomics' shares also saw a lift from its earnings news — the company reported a 17 percent year-over-year increase in Q3 revenues, beating the consensus Wall Street estimate. The firm also said it improved its revenue-per-test metric by evaluating areas where it is being underpaid for testing and improving its billing system to avoid reimbursement denials.
The market also reacted positively to NeoGenomics' agreement earlier this month to acquire clinical oncology laboratory Genoptix for $125 million in cash and 1 million shares of NeoGenomics' stock. The deal is anticipated to add $85 million in revenue and break-even EBITDA in the first year, along with $25 million of cost synergies over time, and will expand NeoGenomics' position in the oncology and hematology space.
Meanwhile, GenMark's shares declined steadily throughout October, despite both its submission for US Food and Drug Administration clearance for its ePlex Blood Culture Identification Gram-Negative (BCID-GN) and ePlex Blood Culture Identification Fungal Pathogen (BCID-FP) panels earlier this month, and its positive Q3 earnings news earlier this week.
GenMark reported that its Q3 revenues rose 36 percent year over year, driven in part by placement of its ePlex analyzers. The company beat analyst expectations for revenues and reported loss per share in line with expectations. Further, GenMark noted that it placed 45 new ePlex analyzers in the third quarter, expanding the global installed base to 312 instruments, and noted that its performance in Q3 was also driven by demand for its respiratory pathogen test cartridges.
The firm has now completed submissions for all three of its ePlex molecular multiplex panels designed for the diagnosis and management of bloodstream infections that can lead to sepsis, having applied to the FDA for clearance of its ePlex Blood Culture ID – Gram Positive (BCID-GP) panel in June.
In a research note, Canaccord Genuity analyst Mark Massaro pointed out that GenMark's share price is down about 40 percent over the past eight weeks despite strong execution this year, adding that he believes the firm is oversold and undervalued. "We continue to believe that a multi-billion-dollar market opportunity awaits [GenMark]," he wrote.
The drop in Enzo Biochem's shares, however, seemed to stem directly from its fourth quarter earnings report. The company said earlier this month that its Q4 revenues fell 13 percent year over year, thanks mostly to a previously reported account loss, as well as to lower insurance reimbursement payments and shifts away from high-value genetic testing in the prior year. Enzo also reported that full-year 2018 revenues fell 3 percent compared to 2017.