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NanoString Leads January GenomeWeb Index as News From JP Morgan Conference Bolsters Stocks

NEW YORK (GenomeWeb) – After a disastrous December in which it dropped more than 11 percent, the GenomeWeb Index rebounded in January, gaining more than 11 percent.

The index outperformed the Dow Jones Industrial Average and the Nasdaq, which gained more than 7 percent and nearly 10 percent, respectively, but underperformed the Nasdaq Biotechnology Index, which gained more than 13 percent. Individual stock performance in the January GenomeWeb Index was mostly positive as 25 of the 30 stocks saw gains and only five saw losses.

NanoString Technologies took the top spot for gainers with a 50 percent increase in share price. Veracyte (+45 percent) and Exact Sciences (+43 percent) rounded out the top three performers. Veracyte was the only company whose stock rose in the December index — it gained 3 percent last month.

The biggest loser in January was Illumina, followed closely by Pacific Biosciences, which both saw their shares decline nearly 7 percent. Meridian Bioscience (-6 percent) completed the list of bottom-three performers.

Many of the top-performing stocks this month received a boost from news they shared at the JP Morgan Healthcare conference in San Francisco. NanoString CEO Brad Gray told conference attendees that the company was on target to launch GeoMx, its Digital Spatial Profiler that analyzes proteins and RNA within their spatial context, at the American Association of Cancer Research meeting in March.

He also said that NanoString would present customer data from samples the firm has run internally on the sequencing-by-hybridization technology it has been developing at the Advances in Genome Biology and Technology meeting in February.

NanoString's stock also rose when the firm reported that its preliminary financial results for the fourth quarter and fiscal year ended Dec. 31, 2018 are expected to beat its previously stated guidance, as well as the consensus Wall Street estimates. The company expects total revenue for the fourth quarter of 2018 to be approximately $30 million, which would beat the previous guidance of a range of $28 million to $29 million and the consensus Wall Street estimate of $28.6 million.

Veracyte, meanwhile, recognized an estimated $90.5 million in 2018 revenues, according to CEO Bonnie Anderson, and recently signed a deal with Johnson & Johnson Innovation to develop a nasal swab test that uses RNA sequencing for early lung cancer detection, as well as the second generation of Veracyte's Percepta genomic classifier. Johnson & Johnson will have access to the sequence data generated as part of the collaboration in order to develop its own targeted therapeutics. As part of the deal, J&J will pay Veracyte $5 million upfront and up to $15 million in milestone payments.

Exact Sciences also reported in January that its preliminary fourth quarter revenues are expected to beat the consensus Wall Street estimate. The firm said revenues rose 64 percent year over year thanks to 66 percent growth in the number of completed Cologuard colorectal cancer diagnostic tests during the quarter.

During his presentation at the JP Morgan conference, Exact CEO Kevin Conroy reiterated previous statements that the company is aiming to expand the label for Cologuard testing to include people aged 45 to 49 who are at average risk for colorectal cancer, which would increase the market opportunity for the test by a potential $4 billion.

The firm is exploring and has identified molecular biomarkers for indications other than colorectal cancer, including liver cancer, and would eventually like to develop a universal cancer panel, he added. Exact is also exploring the development of tests that use blood for screening in addition to the stool samples already used for Cologuard.

Illumina's decline comes despite a largely positive Q4 earnings report in which the firm said revenues rose 11 percent to $867 million and beat analysts' average estimate of $863.5 million. However, adjusted net income for the quarter was $1.32 per share, falling short of analysts' average estimate of $1.36 per share.

Further, on a conference call with analysts to discuss the earnings, CEO Francis deSouza said that the firm plans to reduce the costs of two of its lower-throughput NovaSeq flow cells, the S1 and S2, by 25 percent and 10 percent, respectively, in order to drive adoption of the system in smaller labs. The firm sold around 315 NovaSeq instruments in 2018, fewer than the 330 to 350 it had previously anticipated. Illumina launched NovaSeq in 2017 and has so far sold around 600 instruments. However, nearly 75 percent of its HiSeq customers still have not yet ordered a NovaSeq.

PacBio's stock dropped after the European Patent Office revoked a patent held by the company. The patent, which related to a method for converting a double-stranded DNA fragment into a circle by adding hairpin linkers at the ends, was challenged in court by Oxford Nanopore. The companies are still involved in patent litigation in the US, where PacBio has sued Oxford Nanopore for infringing several of its patents.

Editor's Note: Starting this month, Enzo Biochem will be removed from the GenomeWeb Index, due to its market cap having fallen below the index's minimum threshold of $250 million for several months. The GenomeWeb Index this month will add Guardant Health and Twist Bioscience, and will reintroduce Fluidigm, which have market caps of $3.43 billion, $654.5 million, and $421.2 million, respectively.