Create Your Own Diagnostics ETF

With HealthShares closing shop at year-end, including the former Diagnostics fund, investors who are interested in the space can create their own ETF comprised of companies from the ETF Innovators Preventive Medicine and Emerging Diagnostics Indexes. Below is a list of companies which have stocks listed for trading in the U.S. at over $1/share with a market cap of less than $10B, focusing on smaller companies which are more leveraged to diagnostics and represent possible takeover targets for larger players such as Roche (RHHBY.PK), Abbott Labs (ABT), and Johnson & Johnson (JNJ).

However, the smaller size for many of these companies also increases the investment risk, as illustrated by the plunge of over 80% in AspenBio Pharma (APPY) yesterday on disappointing preliminary clinical trial results for AppyScore as a screening test for appendicitis. Despite the massive decline yesterday, APPY rose by about 27% in the past month (from $6 on 12/16/08 to $7.63 on 1/16/09), providing many chances for investors and traders to take profits or at least let only their profits ride into the major binary event for the stock.

The list of 33 companies below includes web links to all of my previous articles for companies that I have written about previously and also includes the market caps and 52-week stock price changes. With the widespread availability of low-cost, online trading platforms; investors today can easily create their own ETFs in areas such as diagnostics and other industry groups, which do not currently have any exchange-traded products on the market. At least five stocks should be chosen for adequate diversification for this strategy and investors have the added flexibility to choose their investment management strategies (e.g. equal versus market cap weighted, active versus passive management, etc.).

Molecular Diagnostics (9)

Myriad Genetics (MYGN): $3.3B, +57.9%
China Medical (CMED): $469M, -65.9%
EXACT Sciences (EXAS): $39M, -45.2%
Sequenom (SQNM): $1.5B, +207.5%
Nanosphere (NSPH): $101M, -60%
CombiMatrix (CBMX): $42M, -17.5%
Rosetta Genomics (ROSG): $32M, -52.8%
Monogram Biosciences (MGRM): $52M, -65.7%
Cepheid (CPHD): $425M, -72.8%

Lab Service Providers (7)

LabCorp (LH): $6.3B, -18.9%
Quest Diagnostics (DGX): $9.1B, -4.1%
Clarient (CLRT): $97M, -36.4%
Genoptix (GXDX): $548M, +1.4%
Genomic Health (GHDX): $561M, -8.7%
Bio-Reference Labs (BRLI): $330M, -12.2%
MEDTOX Scientific (MTOX): $59M, -60.8%

Diagnostic Devices, Products, and Equipment (13)

Home Diagnostics (HDIX): $97M, -27.3%
Vision-Sciences (VSCI): $52M, -43.5%
Beckman Coulter (BEC): $2.8B, -31.2%
Electro-Optical Sciences (MELA): $74M, +2.5%
OraSure Technologies (OSUR): $122M, -61%
Meridian Bioscience (VIVO): $840M, -38.1%
Immucor (BLUD): $1.9B, -6.5%
ResMed (RMD): $2.9B, -16.6%
DexCom (DXCM): $90M, -60.7%
IDEXX Labs (IDXX): $1.9B, -46.1%
Neogen (NEOG): $327M, -3.8%
Gen-Probe (GPRO): $2.2B, -28.3%
Natus Medical (BABY): $206M, -45.9%

Diagnostic Imaging Agents and Service Providers (4)

AMAG Pharma (AMAG): $585M, -42.7%
Molecular Insight Pharma (MIPI): $64M, -62%
Alliance Imaging (AIQ): $422M, -11.7%
NightHawk Radiology (NHWK): $128M, -73.8%

Comments

[hoopdreamer...:]

Mike, about 99.99% of amag valuation is a drug, not an imaging agent.

Jan 21 07:07 AM

[Mike Havrilla:]

I know their valuation is largely based on prospects for Feraheme as a treatment for iron-deficiency anemia, but included AMAG since they have a diagnostic imaging business. Also HealthShares Diagnostics actually held AMAG as position when they rebalanced their funds last October:
biz.yahoo.com/indexuni...

The new stocks being adding to HHD are:

Abaxis
Affymetrix
AMAG Pharmaceuticals
AngioDynamics
Enzo Biochem
Given Imaging
Merit Medical Systems
Neogen Corp.
Nighthawk Radiology Holdings
Quidel Corp.
SonoSite
TomoTherapy
TOPCON Corp.

Jan 21 09:56 AM

[doctorJ:]

This is a very good synopsis of the diagnostics business. However, you left out Transgenomics,a fast growing company with a diversified and highly profitable product line. The market cap is approximately 40 million and a stock price of .40 per share. Transgenomic is a dominant player in the fast growing Mitochondrial diagnostic market.Check it out.

Jan 30 06:42 PM