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Despite Concerns About Research Budgets, Genomic Tools and MDx Stocks Rise In 1H 2012

NEW YORK (GenomeWeb News) – While there is widespread concern about potential cutbacks in federal spending for research both in the US and abroad, that concern did little to dampen the stock performance of many of the firms in the GenomeWeb Daily News Index in the first half of 2012.

The GWDN Index, which tracks 30 firms in the genetics analysis tools and molecular diagnostics industries, climbed 16 percent for the first six months of the year. Though that could be viewed as a strong performance, biotech stocks in general were up, with the Nasdaq Biotech Index rising 25 percent for the first half of the year. The broader Nasdaq market was up nearly 13 percent, while the Dow Jones Industrial Average gained a little more than 5 percent.

The GWDN Index, along with biotech stocks in general, started the year off strong, rising sharply in January, before hitting a lull in May.



Among the top gainers in the GWDN Index for the first half of the year were firms with some of the smaller market capitalizations: Rosetta Genomics ($8.2 million market cap) rose 313 percent, Accelr8 Technology ($34.8 million market cap) climbed 122 percent, Vermillion ($32.5 million market cap) gained 92 percent, and Nanosphere ($130.8 million market cap) jumped 50 percent.

Rosetta undertook a one-for-fifteen reverse stock split in May to up the price of its stock and regain compliance with Nasdaq listing regulations. The firm subsequently received notice that a designated Medicare contractor would cover its miRview mets2 assay for all Medicare beneficiaries, and last week it announced that its miRview lung assay had received conditional approval from the New York State Department of Health.

Accelr8's shares popped in late April after the firm said that an investment group planned to pump up to $35 million into the company to support further development and commercialization of its BACcel platform. it also said that Larry Mehren, most recently head of global business and chief operating officer of Roche Tissue Diagnostics, would become CEO of the firm.

The jump in Vermillion's stock came largely at the end of the first quarter when the firm announced that an American Medical Association panel approved its application for a Category 1 CPT code for its OVA1 test. It followed that announcement with the release of strong fourth-quarter 2011 results.

Nanosphere's shares jumped last week after the firm said that the US Food and Drug Administration had cleared for marketing its Gram-Positive Blood Culture Nucleic Acid Test (BC-GP).

In addition to these smaller players in the industry, several other tools and MDx firms also saw strong gains for their shares: Gen-Probe (+39 percent), Illumina (+33 percent), Exact Sciences (+32 percent), Genomic Health (+32 percent), and Cepheid (+30 percent).

The jump in Gen-Probe's stock price was due to Hologic's $3.7 billion, or $82.75 per share, bid to acquire the firm in April. That deal is expected to be completed in the third quarter of this year.

Conversely, only four out of the 30 firms in the GWDN Index saw a drop in their stock prices over the first six months of the year. The biggest decliner among that group was CombiMatrix (-58 percent), the Irvine, Calif.-based molecular diagnostics firm that was warned earlier this week by Nasdaq that it currently doesn't meet the $1 minimum bid requirement to remain listed on the exchange.

The other decliners included Complete Genomics (-36 percent), Pacific Biosciences (-23 percent), and Sequenom (-9 percent).

Complete Genomics' shares have dropped sharply over the past two months. Early in June, it said that it would lay off 55 employees in order to reduce its cash burn, and it hired a financial advisor to explore strategic alternatives, which could include a merger, business combination, equity investment, or sale.

Pressure BioSciences was removed from the GWDN Index after being delisted from the Nasdaq in early April.

*Reflects a one-for-fifteen reverse stock split undertaken in May.


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