The government approved the company’s new test that finds flaws in 324 genes that can drive cancer growth. Foundation Medicine shares (ticker: FMI) rose 18% today, on 14-times recent average volumes, to close at $62.60.
Medicare and Medicaid administrators also indicated their willingness to cover the test, which Foundation calls FoundationOne CDx. Doctors will be able to use it on a broad variety of solid tumors, including melanoma and cancers of the lungs, colon, ovaries and breast. Foundation says it will help identify patients who might benefit from any of 17 targeted therapies, as well as newer immunotherapies. The test will become commercially available after the Centers for Medicare and Medicaid Services finalizes its coverage decision.
Wells Fargo analyst Tim Evans sees the approvals as a modest positive for Foundation and the genomics industry:
Evans rates Foundation Medicine shares a Market Performer, although his price target remains at $43.