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Omics and Life Science Tools Stocks Dampened by Broader Market in August

NEW YORK (GenomeWeb News) – The GenomeWeb Daily News Index slid about 2 percent in August, mirroring the decline in the broader market.

During the month, 19 of the 30 firms comprising the Index saw their month-over-month share prices retreat, led by Nanosphere, which was down almost 34 percent. Vermillion (-20 percent), NanoString Technologies (-16 percent) and Exact Sciences (-16 percent) were also down significantly during the month.

Pacific Biosciences led the gainers, with its stock up 61 percent in August, followed by Affymetrix (+47 percent), GenMark Diagnostics (+21 percent), and Fluidigm (+15 percent).

The decline in the GWDN Index during the month was in line with losses in the broader market, which was down in August over concerns about Syria, a potential fight over the debt ceiling, and other issues that rattled investors.

The Dow Jones Industrial Average contracted more than 4 percent in August, while the Nasdaq was down 1 percent, and the Nasdaq Biotech Index fell around 2 percent.

Nanosphere was hit the hardest, and after a modest gain in July (+3 percent), the Northbrook, Ill.-based molecular diagnostic company started August by lowering its revenue guidance for 2013, as well as its expectations for instrument placements. The day following the announcement, Nanosphere's shares fell by as much as 33 percent, despite the company also reporting that its second quarter revenues were up 38 percent year over year.

Investment bank Jefferies also downgraded Nanosphere's stock to Hold from Buy and cut its price target on the firm's stock to $2 from $5.50 on Nanosphere's revised guidance.

As in the case with Nanosphere, the market reacted negatively to Vermillion after it released its second quarter earnings results. The firm's stock took an 11 percent hit the day after it announced flat year over year revenues.

Company CEO Thomas McLain said that Vermillion had encountered "significant challenges from the changing regulatory and reimbursement environments in the US," during the quarter, and in particular highlighted an April ruling by BlueCross BlueShield's Technical Evaluation Center that classified OVA1 as "experimental/investigational."

As a result of the ruling, 10 BCBS plans reversed their positive coverage decisions for OVA1. And, while the company said that these reversals did not impact OVA1 sales in the quarter, it "has created market uncertainty," McLain said.

More recently, Vermillion announced it is terminating its licensing deal with Quest Diagnostics covering the OVA1 and Vasclir diagnostic tests after determining "material violations, breaches, and failures to perform" by Quest under the deal.

On the flip side, PacBio's shares have continued an upward trend since it announced its second quarter earnings results at the start of August. While revenues were down 18 percent year over year, the company said that it booked orders for seven PacBio RS II instruments in the quarter, equaling its record for the most systems booked in a single quarter.

That was enough for Piper Jaffray to upgrade its rating for PacBio to Neutral from Underweight and to raise its price target on PacBio's stock to $3.10 from an earlier target of $2.00

Similarly, positive earnings results from Affymetrix that beat Wall Street expectations boosted the company's share price. Its stock, however, continues to swing wildly, and the 47 percent jump last month follows a 14 percent slip in July, which followed a 19 percent increase in June.

Lastly, investors appear to be warming to GenMark again after its stock fell in June (-31 percent) and July (-8 percent), resulting from an announcement in June that Luminex and Natural Molecular Testing had entered into a multiyear collaboration and licensing deal. NMT was GenMark's largest customer and news of the Luminex agreement created concerns about a significant blow to GenMark's revenue stream.

For its second quarter earnings, the Carlsbad, Calif.-based firm reported a 44 percent jump in revenues year over year, surpassing analyst estimates, and company officials sought to allay worries over its NMT business by outlining growth in GenMark's business excluding NMT.

Later in the month, the firm announced a public offering of its stock anticipated to bring in net proceeds of $70 million.