CPHD Cepheid (MM)

Recently, Cepheid (CPHD) released the updated Xpert BCR-ABL Monitor test  in Europe. The test that runs on the company’s GeneXpert system detects the BCR-ABL mRNA transcript in the peripheral blood of patients with Chronic Myelogenous Leukemia (CML) in two hours. CML is a cancer of the white blood cells. If left untreated, the disease deteriorates and approaches the blastic phase where survival is limited.

Cepheid currently offers 11 tests in the US and 12 outside the US. Although the company is one of the leading players in the Healthcare Associated Infections (HAI) segment, it is also looking at expanding in non-HAI markets, which include critical infectious diseases, women’s health, and oncology and genetics.

Additional tests under development in the areas of HIV, HCV and HPV are targeted for release in Europe within the 2012-2013 timeframe. The company is also targeting up to 7 CLIA waived tests by the end of 2016, which would significantly expand the market potential of the GeneXpert system beyond the hospital market. Successful commercialization of these tests should further improve Cepheid’s top line going forward.

Based on a wide test menu, Cepheid has recorded robust growth in its system placement over the past few quarters. The company placed the maximum number of systems during the reported quarter in its history bringing the total number of systems placed globally to 2,224. Excluding HBDC, the company placed 148 GeneXpert systems during the quarter with 79 placements in North America and 69 in the international market.

Within the Clinical business, Cepheid recorded a 53% year-over-year growth in systems sales to $13.2 million and a 14% rise on a sequential basis. International system placements were driven by strong performance in Germany, ahead of the new infection control law that is to take effect at the end of March 2012.

However, the company faces tough competition from other players in the diagnostic market such as Laboratory Corporation of America Holdings (LH) and Quest Diagnostics (DGX).

We currently have an Outperform recommendation on Cepheid.

 
CEPHEID INC (CPHD): Free Stock Analysis Report
 
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