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Shares of PacBio Tripled in 2013 Amid Strong Year for Biotech Stocks; Affymetrix, Illumina Among Big Gainers

NEW YORK (GenomeWeb News) – While 2013 was a very good year in general for the stock market, biotech stocks, including those of omics tools and molecular diagnostics firms, provided a particularly strong return for investors.

The GenomeWeb Daily News Index, which tracks the stocks of 30 players in the omics tools and MDx space, was up 38 percent in 2013. The gains posted by many of the firms in the Index are particularly notable because of the decline in public funding for research efforts and reimbursement issues faced by many molecular diagnostics developers. Such concerns apparently have not dampened investors' enthusiasm over many firms in the omics markets.

The return from the GWDN Index matched the 38 percent gain for the Nasdaq market and surpassed the nearly 27 percent increase for the Dow Jones Industrial Average for the year. Biotech stocks, in general, were hot last year, and the Nasdaq Biotech Index recorded an almost 66 percent gain for 2013.

Among the top performers in the omics tools space were PacBio, which closed the year up 208 percent, and Affymetrix, up 170 percent — both of these stocks rebounded from a rough 2012. PacBio's shares had dropped 39 percent during the previous year, while Affy saw a decline of 22 percent.

Shares of PacBio climbed in the back half of the year and were driven higher by its announcement in late September that it had signed an agreement with Roche Diagnostics to develop diagnostic products based on PacBio's SMRT technology. The deal is potentially worth more than $75 million to PacBio.

Shares of Affy jumped in early August after the firm announced a 20 percent spike in its second-quarter revenues as it made efforts to pay off its senior secured debt. Its shares also climbed over the last two months of the year following its announcement that its third quarter results beat analysts' estimates on the top and bottom line.

Among the other top gainers for the year were Accelerate Diagnostics (+203 percent), Fluidigm (+168 percent), and Illumina (+99 percent).

Accelerate's shares have climbed throughout the year, as investors appeared to be enthusiastic about changes made at the firm starting more than a year ago. In the spring of 2012, the firm received a $35 million investment. Changes to management, including its CEO, and the board were also made in conjunction with the investment.

Fluidigm's shares began a steady climb in the summer and received a boost in late October after the firm reported a 43 percent jump in its third quarter revenues and upped its guidance for FY 2013.

Meanwhile, Illumina's stock jumped 37 percent over the last quarter of the year and nearly doubled for the year. A busy year on the deal-making front began with the firm's acquisition of Verinata Health for $450 million, providing it with direct entry into the fast-growing non-invasive prenatal testing market. It closed the year with US Food and Drug Administration clearance for its MiSeqDx system, two cystic fibrosis assays, and a library prep kit that enables laboratories to develop their own diagnostic tests.

Only five of the 30 stocks in the GWDN Index closed down for the year. The top decliner was CombiMatrix, which dropped 56 percent, followed by Sequenom, which fell 50 percent year over year.

For CombiMatrix, much of that decline came in the first half of the year. A spike in its share price followed a recommendation in early December from the American College of Obstetricians and Gynecologists that chromosomal microarray analysis should be the first-line genetic test in pregnancies where ultrasound screens uncover signs of fetal abnormalities. But those gains were short-lived, as CombiMatrix's shares dipped soon after it announced $12 million stock offering.

Sequenom's shares took a hit in late July after it announced that its Q2 revenues jumped 91 percent year over year, but missed the consensus Wall Street estimate as changes in molecular diagnostic billing and payment codes delayed receipt of payments. Its stock took a tumble again in late October after a federal court invalidated US Patent No. 6,258,540, which underlies the company's MaterniT21 Plus non-invasive prenatal diagnostic test.

The other stocks that fell during the year included Rosetta Genomics (-37 percent), Myriad Genetics (-23 percent), and Nanosphere (-20 percent).

During the year, Complete Genomics was removed from the GWDN Index after its acquisition by BGI-Shenzhen. NanoString was added to the Index following its initial public offering.