EL MONTE, Calif. - Fulgent Genetics, Inc. (NASDAQ:FLGT) has been awarded a five-year contract worth up to $99 million by the U.S. Department of Veterans Affairs (VA) to provide genetic testing services, including hereditary cancer and pharmacogenetic testing, to veterans and their families.
The company, known for its clinical molecular diagnostic testing, has been intermittently offering genetic testing to VA members since 2017. The new contract expands Fulgent's services, enabling the provision of hereditary cancer tests to individuals with cancer or a family history of cancer, and pharmacogenetic testing, which uses genomic information to predict patient responses to certain medications.
"We are honored to receive this award to provide high-quality testing to those who have served our country and to their family members," said Brandon Perthuis, Fulgent’s Chief Commercial Officer. He highlighted the importance of understanding germline drivers in cancer treatment and the company's successful history with the VA.
Dr. Harry Gao, Fulgent’s Chief Scientific Officer, expressed enthusiasm for leveraging the company's flexible testing options to aid VA physicians in practicing genomic medicine. He emphasized the significance of pharmacogenetic testing (PGx) for patient care, noting that Fulgent's PGx test utilizes next-generation sequencing for enhanced resolution and coverage.
The contract with the VA represents a substantial commitment to personalized medicine for veterans, providing them with access to advanced genetic testing that can inform their treatment plans.
The press release also included forward-looking statements regarding the company's vision for future growth and expansion, while cautioning that these statements are subject to risks and uncertainties that could cause actual results to differ.
Fulgent Genetics is a technology-based company that also operates a therapeutic development business, aiming to transition into a fully integrated precision medicine company. The information provided is based on a press release statement and does not reflect the views or opinions of the VA.
In other recent news, Fulgent Genetics reported a rise in total revenues to $71 million in the second quarter of 2024, up from $67.9 million the previous year. This increase was primarily driven by growth in reproductive health and oncology precision diagnosis services. The company also underscored the expansion of its laboratory facilities and the progression of its therapeutic development programs, particularly the promising Phase 1 clinical data for its lead drug candidate FID-007 aimed at treating head and neck cancer.
Additionally, Fulgent Genetics has initiated a Phase 2 trial for FID-007 and is advancing with its second candidate, FID-022. The company maintains a robust cash position with $838 million in cash, cash equivalents, and marketable securities. Despite uncertainties surrounding a federal lawsuit challenging FDA's authority on lab-developed tests, the company remains optimistic, reiterating its 2024 revenue outlook of approximately $280 million in core revenues.
In terms of acquisitions, Fulgent Genetics has highlighted the success of previous acquisitions and the potential for future M&A opportunities, while also implementing a $250 million stock buyback program. The company is enrolling patients for its Phase II trial of FID-007, with completion expected in early 2026. These are some of the recent developments that have shaped Fulgent Genetics' trajectory.
InvestingPro Insights
The recent contract award to Fulgent Genetics by the U.S. Department of Veterans Affairs aligns with the company's strategic positioning in the genetic testing market. Despite the significant contract value of up to $99 million over five years, investors should note that Fulgent's financial metrics present a mixed picture.
According to InvestingPro data, Fulgent's market capitalization stands at $637.14 million, with a revenue of $290.7 million in the last twelve months as of Q2 2023. The company's price-to-book ratio of 0.56 suggests that the stock may be undervalued relative to its book value, which could be attractive to value investors considering the new VA contract.
An InvestingPro Tip indicates that management has been aggressively buying back shares, which may signal confidence in the company's future prospects. This strategy could potentially support the stock price and increase shareholder value, especially in light of the new revenue stream from the VA contract.
Another relevant InvestingPro Tip reveals that Fulgent holds more cash than debt on its balance sheet. This strong financial position could be crucial for supporting the expansion of services required by the VA contract and for weathering any potential challenges in scaling up operations.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Fulgent Genetics, providing a deeper understanding of the company's financial health and market position.
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