NEW YORK (GenomeWeb) – After a dismal October in which it dropped 9 percent, the GenomeWeb Index regained its momentum in November, gaining more than 4 percent.
The index outperformed the Dow Jones Industrial Average and the Nasdaq, which gained nearly 2 percent and less than 1 percent, respectively, but slightly underperformed the Nasdaq Biotechnology Index, which gained almost 5 percent. Stock performance in the November GenomeWeb Index was mostly positive as 18 of the 28 stocks saw gains and 10 saw losses.
Pacific Biosciences took the top spot for gainers in November with a 76 percent increase in share price. Meridian Bioscience (+17 percent) and Hologic (+ 14 percent) rounded out the top three performers. This is Meridian's second month in a row in the list of top-three performers.
The biggest loser in October was Myriad Genetics, which saw its shares decline 28 percent. Natera (-21 percent) and Veracyte (-18 percent) completed the list of bottom-three performers. Veracyte had led the winners in October with a 56 percent increase in share price and had been September's biggest decliner with a 25 percent share drop.
PacBio rocketed to the top spot in November's Index after Illumina announced that it planned to acquire the firm for $1.2 billion in cash, representing a 71 percent premium over PacBio's 30 trading-day volume weighted average share price as of the market close on Oct. 31. Illumina said that PacBio's long-read sequencing technology will complement its own short-read sequencing platforms and will allow it to provide integrated workflows and innovations that bring together the best of both technologies.
Although some researchers expressed concerns about the impact of reduced competition, most customers appeared optimistic that the acquisition would spur development of PacBio's single-molecule sequencing technology.
The surge in Meridian's share price in November came on the heels of its positive earnings news. The company reported early in the month that its fourth quarter revenues rose 7 percent year over year, and that its fiscal 2018 revenues rose 6 percent. The company also beat Wall Street analyst estimates for its top and bottom lines in Q4 and 2018.
The company also held its first-ever conference call to recap its earnings, during which new CEO Jack Kenny announced a series of strategic business changes, including a plan to drive growth through directing profits to R&D projects rather than paying a locked-in dividend. Investment analysts were optimistic about the leadership change, noting that the culture shift at the company may ultimately make the firm a better competitor in the diagnostics space.
Hologic, meanwhile, also reported positive earnings news in November. The company said its fiscal fourth quarter revenues rose 1 percent, driven in part by growth in its breast health and molecular diagnostics businesses. Fiscal 2018 revenues rose 5 percent year over year, the firm added.
On the side of the decliners in November, Myriad saw its shares fall despite reporting a 13 percent increase in fiscal Q1 revenues after its total revenues fell shy of the analyst's average estimate. The firm was also forced to revise its annual revenue guidance for FY 2019 after CFO Bryan Riggsbee said Q1 GeneSight and prenatal testing revenues lagged largely because of requirements from Medicare for additional documentation and doctors' attestations related to the indications for use on the test request form.
"While we are actively working with physicians to meet these new requirements, we are assuming it would take a few quarters to achieve compliance," Riggsbee said during an earnings call with analysts. "Until then, samples without this documentation will not be submitted for reimbursement."
A second issue had to do with revenues from Counsyl, which Myriad acquired over the summer to enter the prenatal testing space. During the quarter, Counsyl contributed $30 million to revenues, which was flat year-over-year. Riggsbee noted that while prenatal volume growth was in line with expectations in Q1, revenues were lower than expected because of an out-of-network status from UnitedHealthcare.
Natera also saw its shares drop this month despite a seemingly positive earnings report. Though the company said its Q3 2018 revenues rose 17 percent, it missed the analysts' average estimates for both the top and bottom lines and was forced to narrow its 2018 revenue guidance.
During a conference call with analysts, CEO Matt Rabinowitz noted that Q3 revenues were negatively impacted by delays in reporting samples in late September, which the firm estimated cost it $1.2 million in revenues. In addition, he said there have also been delays in recognizing revenue from its cord blood and oncology businesses.