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Q2 Results, Biotech Market Weakness Weigh on Stocks of Genomic Tools, MDx Firms in August

NEW YORK – The GenomeWeb Index fell 1.8 percent in August, as biotech stocks stumbled amid wider market losses.

The index slightly underperformed the Dow Jones Industrial Average, which lost 1.7 percent, but outperformed the Nasdaq and the Nasdaq Biotechnology Index, which fell nearly 3 percent each. Individual stock performance in the GenomeWeb Index was mixed as 18 of the 30 stocks saw losses and 12 saw gains.

The biggest loser in August was Fluidigm, which saw its shares decline nearly 53 percent. CareDx (-30 percent) and Meridian Bioscience (-23 percent) rounded out the list of bottom-three performers.

Natera took the top spot for gainers with a 19 percent increase in share price. Bio-Rad Laboratories and Quidel also made the list of top three performers in August, each with a 7 percent increase in share price.

Fluidigm's shares sank after the company reported its second quarter earnings on Aug. 1. Despite reporting a 7 percent increase in revenues, the company missed Wall Street's top-line estimate and provided soft third quarter guidance on continued weakness in its microfluidics product sales.

"The key takeaway is that we do not see a structural problem, and microfluidics is the challenged area," Fluidigm President and CEO Chris Linthwaite said on a conference call with analysts following the release of the earnings. "A few mass cytometry systems pushed out into the second half of the year, some linked to funding delays, but that funnel is on the whole very deep. Our microfluidics business was weak. But the drivers were not new."

CareDx shares ticked up after the company reported a 76 percent increase in second quarter revenues early in August, but the stock fell significantly a few days later when two law firms announced they were investigating potential claims against the company on behalf of its investors.

The firms of Bragar Eagel & Squire and Bernstein Liebhard said they are investigating potential securities fraud claims on behalf of CareDx shareholders because of allegations that the company and its executives may have issued materially misleading information to investors. The firms are basing their investigations on a report issued in June by Kerrisdale Capital Management, which claimed that the company's AlloSure organ transplant diagnostic test is "fundamentally incapable of identifying the most common type of kidney rejection."

Meridian's shares also sank on negative earnings news. The company reported on July 31 that overall fiscal Q3 revenues fell 6 percent year over year with a 9 percent decline in diagnostics business, driven primarily by a 21 percent decline in molecular diagnostics.

In spite of the company's recent acquisition of GenePOC in an effort to fortify its diagnostics business, Meridian CEO Jack Kenny told analysts that it could be more than a year before that business reverses its slide, and that there is "no quick fix" for the erosion of diagnostics revenues Meridian has been experiencing.

Natera was the only company to see its stock rise by double digits in August. The company reported an 18 percent increase in Q2 revenues, driven by sales of its Panorama noninvasive prenatal and Horizon carrier screening tests as well as a milestone and development payment by BGI. The firm also said it plans to forge ahead with its Signatera circulating tumor DNA minimal residual disease test and its Prospera transplant assessment assay.

Quidel's shares rose after it reported a 5 percent increase in Q2 revenues, and while Bio-Rad reported a 1 percent dip in Q2 revenues, the firm beat analysts' consensus estimates on the top and bottom lines.