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GenomeWeb Index Tumbles 4 Percent in February as Broader Market Takes Toll on Life Science Firms

NEW YORK (GenomeWeb) – Reversing its 9 percent gain in January, the GenomeWeb Index followed the lead of the broader market in February, losing 4 percent.

The Index performed on par with the Dow Jones Industrial Average, which also lost 4 percent, and underperformed the Nasdaq, which lost only 2 percent. However, the GenomeWeb Index outperformed the Nasdaq Biotechnology Index, which lost 5 percent in February. Stock performances in the February GenomeWeb Index were largely negative as 21 of the 26 stocks saw losses and only five saw gains.

Foundation Medicine took the top spot with a 19 percent gain in February, while NeoGenomics Laboratories (+9 percent) and Bio-Rad (+4 percent) rounded out the top three gainers. The biggest loser in February was GenMark Diagnostics, which saw its shares decline 24 percent. GenMark had been the biggest winner in January with a 30 percent increase in stock price. Pacific Biosciences (-16 percent) and NanoString Technologies (-15 percent) rounded out the bottom three decliners.

Cowen initiated coverage of Foundation Medicine with an Outperform rating for its stock and a target price of $90 per share on Feb. 15. In a note to investors, analyst Doug Schenkel said that Foundation's clinical volumes are growing, and with the completion of a parallel review process that resulted in November in the approval of the FoundationOne CDx test by the US Food and Drug Administration and a preliminary national coverage determination by the Centers for Medicare and Medicaid Services, "momentum is likely to accelerate."

And earlier in the month, a study evaluating the combination of Bristol-Myers Squibb's immunotherapies Opdivo (nivolumab) and Yervoy (ipilimumab) seemed to support regulatory approval for the regimen as an option for lung cancer patients with a large number of tumor mutations that are identified by Foundation Medicine's next-generation sequencing companion diagnostic.

NeoGenomics reported that its fourth quarter revenues grew 12 percent, beating the analyst estimates. And Bio-Rad similarly reported positive earnings news, noting that its Q4 revenues grew almost 9 percent year over year, boosted by its life science segment.

GenMark, meanwhile, reported positive earnings news, but disappointed analysts when it lowered its guidance for placement of ePlex instruments in 2018. On a conference call, GenMark CEO Hany Massarany said that in 2018 he expects the firm will place 140 to 170 ePlex analyzers at an annuity per placement in the range of $100,000 to $120,000. The number was below Wall Street analysts' expectations, principally because of actions that the firm is taking to place under-utilized instruments in Europe in new sites that can more readily deploy them for routine clinical testing.

That left investors unimpressed and the day after the guidance was issued, GenMark's shares dipped as much as 18 percent.

"The net ePlex placement guidance was disappointing relative to consensus," Mark Massaro, an analyst with Canaccord Genuity, said in an interview with GenomeWeb. "Management is new in commercializing into Europe, and the European market has different nuances than the US market. So, [the 2018 guidance number for ePlex analyzers] has to do with the firm initially overestimating the ease of entering Europe."