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GWDN Index Halts Losing Skid Despite End Market Concerns

NEW YORK (GenomeWeb News) – The GenomeWeb Daily News Index halted a three-month losing streak, rising 4 percent in October, despite continuing concerns about end markets for genomic tools vendors.

The GWDN Index was the beneficiary of a sharp uptick in the broader stock market following the European debt deal last week. The gain for the Index compared to an 8 percent drop in September and August each, and a 9 percent decline in July.

Even though concerns remain about a handful of European countries and the larger macroeconomic environment, the Dow Jones Industrial Average rose nearly 10 percent for the month — its best monthly performance since 2002. The Nasdaq finished October up 11 percent, and the Nasdaq Biotech Index gained around 5 percent.

The rise among genomic tools makers and molecular diagnostics firms comes amid growing concerns about end markets, particularly the academic/government market. Several tool vendors reported third-quarter results last week, and all of them cited uncertainty about that customer base heading into the fourth quarter and next year.

The US Congress has yet to set funding levels for Fiscal Year 2012, even though the fiscal year began Oct. 1, and there are concerns about potential cuts to the National Institutes of Health and the National Human Genome Research Institute.

In addition, a recent survey of researchers conducted by investment bank Mizuho Securities and GenomeWeb found an expectation that funding for genomic research would decline 2 percent in 2012.

Twenty of the 33 stocks tracked in the GWDN Index gained ground in October led by Nanosphere, which rose 51 percent, bouncing back from a 30 percent drop in September and a 31 percent decline in August. The molecular diagnostics firm is scheduled to release its third-quarter results on Wednesday.

Among the other top-performing stocks were those of Pacific Biosciences (+22 percent), Exact Sciences (+20 percent), and Agilent Technologies (+19 percent).

PacBio had fallen sharply in August (-36 percent) and September (-55 percent). It recently announced it was laying off 130 employees as a result of "uncertainties associated with the economic environment" and to put the company in a position for success in the long term.

Last week the firm reported a 1 percent decline in Q3 revenues sequentially but beat analysts' consensus estimates on the top and bottom line. It also lowered its revenue guidance for the year based on its current backlog of instrument orders. But, its shares closed down only 2 percent following the report.

Rosetta Genomics' stock had the steepest decline for October, falling 31 percent. Earlier in the month it said that it would eliminate 24 jobs as part of a corporate restructuring that is expected to reduce its monthly cash burn rate by half. It followed that announcement with the closing of a private placement that netted the firm $1.3 million.

Illumina's stock also was roughed up, dropping 25 percent. The firm announced preliminary Q3 revenues early in the month, showing a 1 percent decline year over year. It attributed the disappointing figures to uncertainty in funding in the US and Europe, which resulted in purchasing delays of both instruments and consumables, especially among large volume centers. That announcement caused its shares to tumble more than 30 percent.

The preliminary results were confirmed last week, and Illumina subsequently announced it would cut 200 jobs, or around 8 percent, from its global workforce.

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