April showers came early for biotech investors, leaving the SPDR S&P Biotech ETF (XBI -2.04%) down over 17% year to date, trailing the S&P 500. The good news is that solid companies are on sale. 10x Genomics (TXG -4.89%) and Guardant Health (GH -6.57%) are two companies that have been particularly stung by recent market volatility.
These two biotechs are in full-on growth mode. Plus, both are in emerging and expanding fields with billions of dollars in addressable markets. Combine that with being down significantly from all-time highs, and 10x Genomics and Guardant warrant a second look.
10x Genomics
Building products to investigate, understand, and master biology, 10x Genomics is giving today's researchers the tools they need to make scientific breakthroughs. The company makes instruments as well as associated consumables and software to analyze the inner workings of a single cell at previously inaccessible resolution and scale. And with over 3,300 publications citing its tools, the scientific community loves the product. Not to mention that keeping customers happy is a great way to continue to chip away at its $15 billion opportunity in the global life sciences market.
The company is performing well financially with fiscal-year (FY) 2021 revenue up 64% year over year and 85% margins. Demand for its products remains strong with a 46% increase in the number of instruments sold in 2021, bringing the biotech's install base to more than 3,500 worldwide. And management has the right mindset -- the C-suite has altered the timeline of new product launches to meet customers' most urgent requests. Leadership has continued to set up this cutting-edge company for accelerated and sustained growth into 2023 and beyond.
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Unfortunately, Wall Street does not see it the same way. Shares have been crushed lately -- down over 40% year to date and just under 60% from their 52-week highs. 10x Genomics has essentially tracked the market since its IPO, gaining just over 50% since September 2019. There is a lot to like here, though, including smart management in tune with what its customers want, not to mention the company's growing revenues. If you believe that we are in the century of biology and that science is progressing at a record pace, then 10x Genomics may be right for your watch list.
Guardant Health
Guardant Health, a budding precision oncology diagnostics company, saw revenues increase 30% year over year, rising in FY 2021 to $374 million. Don't tell the market that, though, as Guardant has been stung over the last year. Despite the shares falling over 20% year to date and over 55% from its February 2021 all-time highs, there is plenty of reason to think now is an excellent time to get a great company on sale.
Guiding for approximately 24% revenue growth in 2022, the company also announced an agreement that may help boost its testing volume. Guardant unveiled a partnership this week with Epic, America's most widely used electronic medical record (EMR) system. Integrating its tests into Epic should reduce friction and streamline the ordering process for clinicians. By making ordering easier for healthcare workers, Guardant is now more readily available to over 250 million patients with a record in the Epic EMR system.
Finally, this $7.7 billion diagnostics company expects to present data in mid-2022 on its blood test to detect colorectal cancer with hopes for approval in 2023. That market is a formidable one as Guardant estimates screening for colorectal cancer is valued at $20 billion. With a blood draw likely more comfortable and safe than a colonoscopy, it's easy to see how this testing strategy could gain traction. Despite some expected competition from Roche's Foundation Medicine, Illumina's GRAIL, and Exact Sciences, to name a few, it's looking like Guardant may have the advantage of being first to market. Regardless, at $20 billion, this is still a market big enough for multiple entrants.
Down over 55% from its highs and coming up on an approval for a potential monster market opportunity, Guardant could be a steal for investors today. And while clinical trials can be expensive, the company is flush with cash, having $1.6 billion on hand to end 2021. With that and solid growth prospects, now may be the time for investors to pay closer attention to this growing oncology diagnostics company.
