GenomeWeb Top 40 Plummets 14 Percent in February as Government Spending Concerns Loom

NEW YORK – Stocks of the omics and molecular diagnostics companies tracked by the GenomeWeb Top 40 fell 14 percent in February, suffering a significantly deeper decline than the broader market.

The Dow Jones Industrial Average fell 2 percent while the Nasdaq fell 4 percent. The Nasdaq Biotech Index declined by less than 1 percent. Of the 40 firms tracked by GenomeWeb, 38 saw their stock prices fall month over month and 2 saw their shares rise in value.

During the month, a number of firms noted concerns that uncertainty around US government spending and support of academic grants could negatively impact their sales.

Of the two winners, Adaptive Biotechnologies posted the largest gain in February as its shares rose 7 percent month over month. During the month, the company reported Q4 2024 revenue of $40.1 million, up 31 percent year over year. The company also delivered a record number of 20,945 ClonoSeq tests in Q4, a 34 percent increase over Q4 2023.

In a note to investors, JP Morgan analyst Rachel Vatnsdal noted the "continued strength" in ClonoSeq sales in clinical testing and pharma and raised the bank's price target for Adaptive shares from $8 to $9 while maintaining its Overweight rating.

Sophia Genetics was the other Top 40 firm to see its stock price make gains in February as its shares rose 5 percent. The company did not report any news that appeared to drive the rise in price.

Ginkgo Bioworks posted the largest decline in February, with its stock price down 38 percent month over month. Ginkgo has struggled throughout the post-pandemic era as it has grappled with declines in COVID-19 testing. Its most recent dip is due in part to the uncertainty over government funding and government contracts following the Trump administration's moves to cut or freeze spending across the federal government, including at the National Institutes of Health (NIH).

During a conference call following release of Ginkgo's Q4 and full year 2024 results, CFO Mark Dmytruk said that government spending accounted for roughly $20 million of its cell engineering revenue in 2024 and essentially all of its biosecurity business, which the company projected to have revenues of around $50 million in 2025.

"Government has been a source of growth for us … in 2024 and was expected to be a source of further growth in 2025," Dmytruk said. "However, given current uncertainties in this area, we are baking that risk into the low end of our guidance."

Gingko said it expects total revenue in 2025 to be in the range of $160 million to $180 million, which is down from $227.0 million in 2024 and below the consensus Wall Street estimate of $204.0 million. In a note to investors, BTIG analyst Mark Massaro reiterated the bank's Sell rating and $6 price target for Ginkgo's stock.

Maravia LifeSciences posted the second largest decline in February, as its shares fell 35 percent month over month. The company's stock dropped sharply on Feb. 25 after it announced it was postponing its Q4 and full year 2024 earnings call, which had been scheduled for that day. The company said it needed additional time to assess "a potential non-cash impairment charge related to goodwill associated with its previous acquisition of Alphazyme," as well as to assess a revenue recognition error that led to roughly $3.9 million being recorded in Q2 2024 when it should have recorded in Q3. Maravia also said it needed additional time to assess the effectiveness of its controls over its financial reporting and to determine if any remediation is needed. Maravia shares closed at $3.14 on Feb. 25 following this disclosure. It had closed at $4.01 the previous day.

Illumina posted the third largest decline in February as its shares fell 33 percent month over month. The sequencing giant faced a number of headwinds during the month, starting with the Feb. 3 announcement by the Chinese Ministry of Commerce that it had put Illumina on a list of "unreliable entities," raising the possibility that it could face sanctions that could impair its ability to do business in that country.

Later that week, the company released its Q4 and full-year 2024 financial results, posting a 1 percent rise in Q4 revenues and a 2 percent decline in full-year core revenues. The company also projected full-year 2025 reported core revenue in the range of $4.28 billion to $4.4 billion with adjusted EPS in the range of $4.50 to $4.65, thought it noted that the guidance did not reflect any impact of the Chinese Ministry of Commerce action.

Illumina's business also faces exposure to US government spending cuts and freezes announced this month by the Trump administration, including NIH's recent move to cap indirect costs supported by NIH grants at 15 percent.

Further adding to the company's difficulties, Roche said this month that it plans to launch a nanopore sequencing platform in 2026, bringing a potentially large new competitor to the sequencing market.

During the month, TD Cowen analyst Dan Brennan downgraded Illumina's rating to "Hold," noting that the China situation, possible decreases in NIH funding, and growing competition in the sequencing space factored into the downgrade.

Barclays downgraded Illumina shares to Underweight, with analyst Luke Sergott similarly citing China and the possibility of competition from Roche as challenges.