HOLX / GPRO Deal Could Be Good for CUR - Analyst Blog
May 01 2012 - 8:25AM
Zacks
HOLX / GPRO Deal Could Be Good for CUR
Brian Marckx, CFA
The news yesterday that Hologic Inc (HOLX) is acquiring Gen-Probe
(GPRO) could have positive implications for DiagnoCure
(T.CUR, CUR.TO) and
their Progensa PCA3 prostate cancer test.
In 2003 DiagnoCure licensed development and commercialization
rights of their PCA3 marker to Gen-Probe in return for royalties on
sales. Gen-Probe had been selling the test in the U.S. only
as an analyte specific reagent (ASR) until the assay received FDA
approval in February of this year. Gen-Probe also sells the
test in Europe.
As we noted in our initiation report on DiagnoCure (3/20/2012),
"Gen-Probe has not had much success in moving the needle on
Progensa sales in Europe but FDA approval of the test offers a new
opportunity to spark revenue growth. The rate of ramp in
sales of the test may be determined by a number of things, many of
which are out of DiagnoCure's control including coverage decisions
by private payers and the utility of the test in clinical
practice. Perhaps the most influential factor that may shape
the near and intermediate term success of PCA3, however, will be
the level of effort and resources that Gen-Probe dedicates to
marketing and sales of the test."
Hologic's motivation for acquiring GPRO is to bolt on a major
diagnostics business and they didn't shy away from paying a hefty
premium (20%) to do so. While HOLX clearly believes there's
synergies with their women's health products and GPRO's sexually
transmitted disease tests, Progensa PCA3 could also be a natural
fit with Hologic's major presence in cancer diagnostics and
treatment. Hologic's sales force will also have a
substantially larger presence than did Gen-Probe's.
We cover DiagnoCure with an Outperform rating and $2.25 price
target.
To view a free copy of our most recent research report
on CUR.TO or subscribe to our daily morning email alert,
visit Brian Marckx's coverage page at http://scr.zacks.com/
.
GEN-PROBE INC (GPRO): Free Stock Analysis Report
HOLOGIC INC (HOLX): Free Stock Analysis Report
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