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GenomeWeb Index Rises 5 Percent in 2015, Led by PacBio; Fluidigm Leads Decliners

NEW YORK (GenomeWeb) – The GenomeWeb Index rose nearly 5 percent in 2015, and although a majority of companies saw stock price gains year over year, many of those whose stocks fell saw a significant decline.

The index, which tracks the stock performance of 31 companies in the molecular diagnostics and omics tools space, outperformed the Dow Jones Industrial Average (down around 2 percent) in 2015, but was outperformed by the Nasdaq (up nearly 6 percent) and the Nasdaq Biotechnology Index (up nearly 12 percent). The GenomeWeb Index also fell well short of its 17 percent rise in 2014.

Overall, 21 companies in the index saw their shares rise in 2015, while 10 firms suffered year-over-year losses.

Pacific Biosciences was the biggest winner with its stock rising 67 percent year over year. The company's shares nearly doubled in October after it announced the launch of a new single-molecule sequencing system for half the price of its RS II system. Mount Sinai was one of the company's first customers for the new system while Roche was the largest. PacBio also received a $20 million milestone payment from Roche for fulfilling a developmental milestone related to a commercialization deal with the Swiss company.

Also boosting its stock, PacBio released a 2015 revenue forecast that was above expectations in October. The firm said it expects 2015 revenues to be between 50 percent and 55 percent greater than its 2014 revenues of $60.6 million.

Another big gainer in 2015 was Hologic, whose shares rose nearly 45 percent year over year. The company had a notably successful second half of the year: It was upgraded to Equal Weight from Underweight by Barclays based on improvement in 3D mammography instrument placements; reported 10 percent revenue growth in Q3; earned CE-IVD certification for its Aptima hepatitis C virus (HCV) Quant Dx assay in October; reported a 6 percent revenue increase in Q4; and acquired DiagnoCure's PCA3 prostate cancer biomarker assets just before Christmas.

Other big gainers in 2015 were Myriad Genetics (+27 percent), Meridian Biosciences (+25 percent), and Bruker (+24 percent).

The decliners, though they numbered fewer than the winners, lost big in 2015. They were led by Fluidigm (-68 percent), Exact Sciences (-66 percent), and Sequenom (-56 percent).

Fluidigm sank significantly in May and again in August after the company reported its Q1 and Q2 earnings. Though revenue grew 4 percent each quarter, it missed Wall Street estimates for both quarters and then significantly reduced its guidance for FY 2015 revenue. The company did see a share-price bump after reporting Q3 revenue in October, but it didn't regain the mid-$40s highs it saw in March.

Exact Sciences' stock fell a little bit throughout the year, but lost nearly half its value in one fell swoop in early October after the US Preventive Services Task Force issued draft recommendations suggesting the company's colon cancer screening test Cologuard be used as an alternative test rather than a recommended test. At the time, Goldman Sachs analyst Isaac Ro issued a note to investors stating that he viewed the draft language as a negative for Exact.

As for Sequenom, its shares have shown a pattern on volatility over the past few years. The company had a difficult 2013, when its share price declined 50 percent year over year, but seemed to have reversed its fortunes in 2014 when it became one of the year's big winners

But a series of negative headlines in 2015 has seen the company's shares go back down to 2013 levels. In May, Indian firm AceProbe sued Sequenom and Agena Bioscience over an alleged wrongful termination of a distribution agreement for the MassArray system. Sequenom argued that no such agreement existed, as it had sold its bioscience business (including the MassArray) to Agena in 2014.

In August, the company reported an 18 percent revenue drop in Q2 after two labs, including Quest Diagnostics, replaced its MaterniT21 Plus NIPT screen with their own in-house developed tests.

In September, Sequenom CEO Bill Welch resigned. The company then lowered its second-half 2015 revenue estimate, and its full-year revenue guidance to a range of 15 percent to 23 percent lower than its previous estimate of $150 million to $170 million. Two investment banks — William Blair and Jeffries — subsequently lowered their ratings of the company (to Market Perform from Outperform and to Hold from Buy, respectively), citing questions and fundamental concerns about the company's stability following Welch's departure and the lowered revenue estimates.

In November, the company reported a Q3 revenue drop of 21 percent, blaming the drop on a decline in the number of MaterniT21 Plus tests being performed. CEO Dirk van den Boom said there were an increasing number of labs developing their own tests based on patents licensed from Sequenom's patent pool agreement with Illumina, and that competition was increasing. He also said at the time that the company has not been good at expanding its presence in the average-risk market, despite having a separate test geared toward that population. Sequenom added it planned to shift its focus to the average-risk market and new products in reproductive health and oncology.

And finally, in December, the US Court of Appeals for the Federal Circuit denied Sequenom's request to reconsider the validity of a patent covering noninvasive prenatal DNA testing that was exclusively licensed to Sequenom and underlies MaterniT21 Plus. The US District Court for the Northern District of California had invalidated the patent in October 2013, and although Sequenom had appealed, the ruling was upheld.

Sequenom said that the decision would have "little business impact," since it has been operating under the invalidity ruling since October 2013 and because of its patent pool agreement with Illumina. However, it also said that it is considering a further appeal to the Supreme Court.