Below is an excerpt from a complimentary research note by our Healthcare Team of Tom Tobin, William McMahon, and Justin Venneri published on 2/3/21. We are pleased to announce our new Sector Pro Product Health Care Pro. Click HERE to learn more.
The genetic testing equipment suppliers and labs that use them have been significant benefactors of the heightened emphasis placed on sequencing following the onset of the COVID-19 pandemic.
Across the space, we have seen winners on the supply and equipment side like Illumina ($ILMN; Long Bias) and 10x Genomics ($TXG; a Best Idea Long), as well as labs like Guardant ($GH; Best Idea), Natera ($NTRA; Best Idea), and NeoGenomics ($NEO; Long Bias).
With the current landscape in mind, we felt it a good time to update our Genetic Testing Lab Chart Book. We review these charts and the underlying data as a first step prior to updating our models heading into earnings.
Alongside the routine charts and tables we generally prepare, we have included some incremental resources that we believe may be helpful in your own research process.
Please note, the work presented on these slides is a sample of what we are able to see within our proprietary claims data, so feel free to reach out with questions or feedback. All of these workbooks are available upon request.
- EXAS | Acquisitions in Place, The Stage is Set. Genomic Health has seen a modest recovery which is worth monitoring for other re-opening stocks. As early diagnosis and treatment reaccelerate, we should see more Oncotype use for post-treatment therapy selection. We expect the return of in-person care and colonoscopies to dampen Cologuard volume, while electronic ordering provides an offset/tailwind. With the positive pre-announcement behind us, we expect attention to turn to trends in COVID-19 testing, Thrive, and the net impact of a return to in-person care on Exact's volume.
- NTRA | Signatera Tracker, NIPT Index Added. Natera appears likely to exceed consensus volume expectations. We have heard investors express concern about its positioning in NIPT and aggressive pricing by rivals such as Invitae ($NVTA; Short Bias). There is concern that NVTA can underprice its panel test to take share within NIPT testing (Trisomy) similar to what they’ve done in the past to Myriad Genetics ($MYGN). However, through the additional analysis displayed in the slides of this chart book, we were able to better understand the distribution of market share within NIPT. We tracked the billing back to two specific CPT codes which are being used for these tests, and our data seems to confirm what Natera has said publicly: they currently hold approximately 60% of the market (vs. about 5% for Invitae).
- FLGT | In-Home Testing a Major COVID-Comp(+). Prior to the need for COVID-19 testing in the US, Fulgent developed a line of patient-initiated products (Picture Genetics). Picture is an offering of at-home screening tests that combines the company’s advanced NGS solutions with actionable results and genetic counseling. Following the onset of COVID-19, the company launched several tests for at-home testing to check for SARS-CoV-2 through a collaboration with PWNHealth. Since then, the company’s volumes and stock price have skyrocketed.
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Exact Sciences (EXAS)PREVIEW | CHARTS FROM THE DECK
Fulgent Genetics (FLGT)