GenomeWeb Top 40 Drops 3 Percent in 2024, Reflecting Larger Life Science Struggles in Stock Market

NEW YORK – A basket of publicly traded stocks of molecular diagnostics and omics companies tracked by GenomeWeb was down in 2024, reflecting the weakness of the biotech sector compared to the broader market.

Overall, the GenomeWeb Top 40 was down 3 percent year over year in 2024. That marked a slight improvement over 2023, in which the Top 40 dropped 7 percent, but lagged well behind the broader market, which saw the Dow Jones Industrial Average rise 13 percent year over year and the Nasdaq rise 29 percent. The Nasdaq Biotech Index, meanwhile, more closely tracked the fortunes of the Top 40, declining 1 percent year over year. Of the 40 firms tracked by GenomeWeb, 15 saw their stock prices rise year over year and 25 saw their shares fall in value.

The year's top performer was genetic testing firm Natera, which saw its shares more than double (up 153 percent) year over year. The company notched strong sales throughout 2024, starting with its Q1 financial results in which it reported a 52 percent year-over-year jump in revenue, prompting the company to raise its full-year 2024 revenue guidance. The strong performance continued in Q2 and Q3 in which Natera posted, respectively, a 58 percent rise and a 64 percent rise in revenue.

Natera's oncology testing sales were particularly strong with the company noting an uptick in use of its Signatera minimal residual disease (MRD) assay. In February, the company received coverage from the Centers for Medicare & Medicaid Services for the use of Signatera in ovarian cancer in the adjuvant and surveillance settings and breast cancer in the neoadjuvant setting.

Also on the MRD front, Natera won a permanent injunction against NeoGenomics Labs' RaDaR assay in its US patent infringement case against the company. Issued by the District Court for the Middle District of North Carolina, the order enjoins NeoGenomics from "making, using, selling, or offering for sale in the United States" the RaDaR assay and any assay or other product "not more than colorably different" from the RaDaR assay. Exceptions to this injunction include research and development projects, as well as clinical trials begun before Jan. 10, 2024, and instances where patients were tested using the assay before that date.

Meanwhile, Guardant's false advertising case against Natera went the other direction with a jury for the case in November awarding Guardant $292.5 million in damages.

In a December note to investors, TD Cowen analyst Dan Brennan raised the bank's price target for the company's stock to $195, noting that it "has separated itself from peers with sales growth, margin expansion, and [cash flow] generation."

CareDx posted the second-largest rise in stock price in 2024 with shares up 78 percent year over year.

The company benefited from clarifications by CMS regarding billing article changes the agency made in March 2023 to solid organ transplant test coverage. Those changes had roiled CareDx's business as it raised concerns that they could limit coverage of such testing. In February, CMS clarified the billing article changes, noting that transplant rejection tests "remain available to patients when medically necessary and ordered by a physician" and when billed in accordance with the local coverage determination (LCD).

Clarification in hand, CareDx posted solid sales growth throughout the year. After reporting a 7 percent year-over-year decline in revenue in Q1, the company reported a 31 percent rise in Q2 and a 23 percent rise in Q3.

In May, investment bank Craig-Hallum upgraded its rating of CareDx to Buy with a price target of $15. In a note to investors, Craig-Hallum analyst Bill Bonello wrote that while "for the past 12 months, [CareDx] has been almost uninvestable," the company's strong financial position as well as the possibility of restored CMS coverage for kidney transplant surveillance testing made it attractive. Bonello also cited CareDx's new CEO John Hanna, who took over the position in April.

CareDx was also cleared in 2024 in a False Claims Act investigation that the US Department of Justice had opened in 2021 into its kidney testing and phlebotomy services in response to a complaint filed by a former employee. The DOJ closed the investigation in October having found no wrongdoing and declining to take further action.

In May, Natera asked for an injunction against CareDx in the two firms' ongoing patent suit; however, CareDx maintained that it no longer uses the process covered by the patent in dispute and that the suit therefore "does not impact CareDx's business or ability to continue providing transplant patients with AlloSure or AlloMap" tests.

Veracyte posted the third-largest rise in stock price in 2024 with shares up 44 percent year over year.

At the beginning of the year, Veracyte acquired MRD firm C2i Genomics for up to $95 million, allowing it to move into this fast-growing market.

The company also saw continued growth of its more established offerings — the Decipher prostate cancer test and Afirma thyroid nodule classifier. In Q1, the company reported year-over-year revenue growth of 17 percent, largely driven by sales of these tests. Its Q2 revenue was up 27 percent year over year as both Decipher Prostate and Afirma set new quarterly volume records. Revenue was up 29 percent year over year in Q3 as Veracyte reported data from the VANDAAM clinical trial showing that Decipher Prostate is equally effective at identifying aggressive prostate cancer in African American men.

In October, investment bank UBS initiated coverage of Veracyte with a Buy rating and a $43 price target. In a note to investors, analyst Lu Li, said the bank expects "durable growth" from the company's core tests and sees "long-term growth potential" in its MRD business.

Equity research firm Wolfe Research initiated coverage of Veracyte in November with an Outperform rating and a $50 price target. Wolfe analyst Doug Schenkel called the company "close to best-in-class in lab diagnostics."

Ginkgo Bioworks posted the largest decline in 2024 with its shares down 85 percent year over year.

The company has been severely impacted by the ramp down of COVID-19 testing, which contributed to a 53 percent year-over-year decline in Q1 revenue. Other parts of its business also declined, however, including its cell engineering business, which saw revenue drop 18 percent in Q1.

Those trends continued throughout the year, as revenue declined 30 percent year over year in Q2 and recurring revenue (excluding $45 million in noncash deferred revenue tied to the end of a collaboration with now-defunct Motif Foodworks) was down 21 percent year over year in Q3.

In a statement accompanying the release of Ginkgo's Q1 financial results, the company said it aimed to reduce labor expenses by at least 25 percent and reduce annualized run rate operating expenses by $200 million by mid-2025.

In May, investment bank BTIG downgraded Ginkgo shares to a Sell rating with a price target of $.50. In a note to investors, analyst Mark Massaro cited consecutive "tough" quarters, impending layoffs, and lowered guidance.

In June, Ginkgo announced plans to lay off more than a third of its workforce. In August, it executed a 1-for-40 reverse stock split, reducing the number of the company's outstanding common shares to about 51.4 million from approximately 2.05 billion.

23andMe posted the second-largest decline in stock price in 2024 with shares down 82 percent.

The company had a rocky start to the year, reporting at the end of 2023 a data breach impacting roughly 6.9 million users. In February, it reported a 33 percent year-over-year decline in fiscal Q3 2024 revenue driven largely by lower research service revenue following the end of an exclusive collaboration with GlaxoSmithKline and a drop in sales of Personal Genome Service kits.

In the wake of these developments, CEO Anne Wojcicki said in April that she was considering a proposal to take the company private by acquiring the outstanding shares she did not yet own, and in August, she submitted a proposal to purchase outstanding shares at $.40 per share.

A special committee of 23andMe's board of directors rejected this proposal, noting that it provided no premium to the company's share price. In September, the independent directors of 23andMe's board, including members of the special committee resigned, citing an ongoing lack of progress from Wojcicki in her effort to submit an improved proposal to take the company private.

In their letter of resignation, board members Roelof Botha, Patrick Chung, Sandra Hernández, Neal Mohan, Valerie Montgomery Rice, Richard Scheller, and Peter Taylor wrote that because of differences in questions of "strategic direction" and due to Wojcicki's concentrated voting power, they believed that shareholder interests would best be met by their immediate resignation rather than carrying on under a "protracted and distracting difference of view" with Wojcicki.

At the end of September, Wojcicki filed a statement with the US Securities and Exchange Commission saying she was no longer open to third-party takeover proposals for the company.

Meanwhile, 23andMe's business woes continued. In September, the company agreed to pay $30 million to settle a class action lawsuit over the 2023 data breach. In November, it announced plans to lay off roughly 40 percent of its workforce and end its therapeutics programs. It also reported a 12 percent year-over-year decline in Q2 fiscal year 2025 revenue.

Pacific Biosciences posted the third-largest decline in stock price in 2024 with shares down 81 percent year over year.

The firm started the year on an optimistic note, reporting in January preliminary Q4 2023 revenue of $58.4 million, more than double its Q4 2022 revenue, driven by strong sales of its Revio sequencer.

In April, however, the firm reported flat preliminary Q1 2024 revenue and lowered its full-year 2024 guidance for revenue and instrument placements, triggering a 40 percent drop in share price.

The company also had a disappointing Q2, posting a 24 percent year-over-year decline in revenue and a 51 percent year-over-year drop in instrument sales, which CEO Christian Henry attributed to a "difficult macro backdrop and elongated customer purchasing cycle."

For Q3 2024, PacBio reported a 28 percent year-over-year decline in revenue and said that it expected to miss its previously stated fourth quarter and full-year revenue guidance. In a statement accompanying the release, Henry cited the recent launch of the company's Sprq chemistry for its Revio system and its Vega long-read benchtop sequencer as potential sales drivers in 2025.

In a November note to investors, TD Cowen's Brennan said the bank sees "a much better year unfolding" for PacBio in 2025 driven by growth in the long-read sequencing market and launches including the Sprq chemistry and Vega system. The bank raised its price target for PacBio shares from $2.50 to $4.00.