Genomics companies are down but far from out
- July 1, 2022: Vol. 9, Number 7

Genomics companies are down but far from out

by ROBO Global

Genomics companies have been all the rage over the past few years, as technologies such as next-generation sequencing and cancer testing have been capturing investor attention. Lately, these stocks have taken a back seat: The genomics subsector of the HTEC Index has pulled back nearly 60 percent from its highs in February 2021. Much of the sell-off appears more tied to rising interest rates, inflation, supply-chain constraints, and ongoing COVID-related lockdowns in various parts of the world.

We believe the group is now oversold, and investment opportunities abound.

Within the genomics space, there remain several gems that have rich R&D pipelines, and a long runway for growth in the respective markets in which they serve. HTEC Index members like Guardant, Natera, and Akoya have the potential to drive the most compelling themes in healthcare, such early disease detection and personalized medicine.

One of the most anticipated data reads in years is approaching this summer, as the world awaits results from Guardant’s ECLIPSE trial. Guardant offers genetics tests that help physicians determine which therapies to use to treat cancer. The company spent the past two years recruiting more than 12,000 patients to participate in a study to evaluate the performance of a new blood test used to detect colorectal cancer.

This test is just one of many in development in the liquid biopsy industry, an area that has seen more than $15 billion in investment in just the past few years. Liquid biopsy tests are essentially blood tests that can detect DNA that sheds off other things in the body, like a developing fetus or a cancer tumor. If Guardant’s test proves it can detect cancer as well as the current gold standard (Exact Science’s Cologuard at-home stool sampling kit), this could be a positive for the whole liquid biopsy industry by validating the science works and providing a convenient alternative to the market.

It would also likely catalyze much more investment in the space, as other companies race to bring more liquid biopsy tests to market. An estimated 100,000 lives could be saved annually with earlier cancer detection, and Exact Sciences, Illumina, Roche and Natera are examples of other HTEC companies going after this market.

While the world gets better at diagnosing cancer earlier, biotech companies can develop treatments for these cancers in tandem. Twist, a technology disruptor specializing in DNA synthesis, can create a vial known as a library, which contains a billion DNA mutations that pharma companies can use to select the right antibody needed for a treatment.

Once DNA has been sequenced and treatment targets have been identified, new treatments must undergo clinical trials before coming to market. Many biotech companies, from startup to multibillion-dollar revenue generators, need additional help to commercialize new therapies. The HTEC Index provides exposure to these companies, and includes players such as Tecan, Thermo Fisher Scientific, Lonza and Catalent, all of which specialize in manufacturing drugs for the companies that need to outsource.

While they didn’t make as many headlines, many of these lesser-known companies were instrumental in getting COVID-19 vaccines across the finish line during the pandemic. This group includes companies used for clinical trials, such as IQVIA, the world market leader in outsourced clinical trials, specializing in data-driven analytics to improve clinical trial efficiency. IQVIA helps companies recruit trial participants and complete trials faster, which saves their clients millions of dollars on the cost of bringing drugs to market.

Investors can gain diversified exposure to these themes.


Excerpted from a ROBO Global report on the company’s website. Read the complete report here.

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