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Sequenom Leads GWDN Index Rally in July on News of Acquisition by LabCorp

NEW YORK (GenomeWeb) – The GenomeWeb Index rose nearly 9 percent in July as stocks and indices rebounded from their Brexit-induced June falls on good earnings news and a surprise acquisition. July's performance reversed the half-percent dip the Index saw in June, with all but three companies showing stock gains for the month.

The Index outperformed the Dow Jones Industrial Average and the Nasdaq, which rose nearly 3 percent and 7 percent respectively. However, the GWDN Index underperformed the Nasdaq Biotechnology Index, which gained nearly 13 percent in July.

Unsurprisingly, Sequenom led the winners in July with a whopping 159 percent gain in stock price after LabCorp announced it would acquire the smaller firm. LabCorp said on July 27 that it will pay $302 million in cash — acquiring all of Sequenom's outstanding stock for $2.40 per share. Including Sequenom's net indebtedness, this represents a total enterprise value of approximately $371 million. The deal is expected to close by the end of the year.

This represents a change in fortune for Sequenom, which earlier this year was forced to cut 20 percent of its workforce and divest a lab in North Carolina, and saw the US Supreme Court deny its petition to review decisions by lower courts that invalidated a key patent it held related to noninvasive prenatal screening.

Exact Sciences continued its winning streak, with a gain of 42 percent in July. The firm reported on July 26 that its second quarter revenues had more than doubled thanks to a 160 percent increase in the number of completed Cologuard colorectal cancer screening tests in Q2. In June, the firm benefitted from updated recommendations on colorectal cancer screening from the US Preventive Services Task Force, which concluded "with high certainty that screening for colorectal cancer in average-risk, asymptomatic adults aged 50 to 75 years is of substantial net benefit. Multiple screening strategies are available to choose from, with different levels of evidence to support their effectiveness, as well as unique advantages and limitations, although there are no empirical data to demonstrate that any of the reviewed strategies provide a greater net benefit."

Quidel rounded out the top three in July with a 28 percent gain. The company reported an 11 percent increase in Q2 revenues, and beat analyst estimates both for revenues and loss per share. Its infectious disease revenues rose 14 percent on the strength of its influenza and Strep A products, and CEO Douglas Bryant noted a deal with "a large integrated delivery network that will be purchasing over $1 million in Solana Group A Strep annually," on a call with analysts to discuss the earnings. The firm also received CE mark for Solana Trichomonas, and that assay is under active review at the US Food and Drug Administration as is the firm's Solana Influenza A and B product.

The three losers in July were led by T2 Biosystems, which saw a 28 percent drop in its stock price. The company's shares started their slide early in the month when they fell more than 20 percent after T2 disclosed that it had secured fewer commitments for its T2Candida sepsis test than expected, that it had encountered problems with test results from T2Candida cartridges, and that it had to delay plans to submit its upcoming T2Bacteria bacterial sepsis test to US regulators.

Alere fell 10 percent in July after reporting what it called "preliminary unaudited financial information" for FY 2015, and for the quarter ended March 31. The firm reported estimated revenues of $2.44 billion to $2.47 billion, and net income from continuing operations of $10 million to $25 million for FY 2015, which ended Dec. 31, 2015. Alere also reported estimated revenues of $573.0 million to $593.0 million, and an estimated income range from continuing operations of a loss of $8.0 million to a gain of $2.0 million for the three months ended March 31. 

Alere said in its statement that over the past four months, it has reviewed hundreds of customer contracts and thousands of individual revenue transactions to determine whether revenue was recognized in accordance with US generally accepted accounting principles. The company said it had incorrectly recorded the timing of recognition of certain revenue transactions, including in Africa and China, in FY 2013 and FY 2014 and in the first three quarters of FY 2015.  

There is also continued uncertainty surrounding the company's acquisition by Abbott, which agreed earlier this year to pay $5.8 billion to buy the company.

Meridian Bioscience was also a loser in July, with a less-than-1-percent dip. The company reported on July 28 that its Q3 revenues rose 5 percent, but it slightly missed analyst estimates for both revenues and earnings per share.