Celera Genomics (www.celera.com) has a current share price of about $13 and core technologies in proteomics, bioinformatics, and genomics, applied to drug discovery and diagnostics. Recently the drug discovery business was divested to focus on genetic tests.
As a pure-play diagnostic company, it has a collaboration with Abbott Diagnostics with a potential for 11 genetic tests for cardiovascular disease and cancer. The partnership with Abbott and the m2000 System was launched in Europe in 2005 for infectious disease monitoring with tests for hepatitis and STD. Recently the HCV genotype test was approved in Europe for the Abbott system. The partnership generated revenues of $62 million in 2006, with revenues projected for the Abbott alliance at $80 million in June 2007, assuming U.S. approval.
The company has great expectations for two tests outside the Abbott alliance: HCV with associated cirrhosis risk and a genetic test for individuals with high risk for coronary heart disease. These new tests will be introduced initially as reference lab tests. A premarket approval for a cystic fibrosis screening test has also been submitted to the FDA and development is under way for a genetic test for Alzheimer’s disease and stroke.
Eric Schmidt, Ph.D., of Cowen and Co. projects total revenues of $44 million in 2007 with a loss of $30 million due primarily to high R&D expenses of the same amount. Profitability is forecasted in 2009 with revenues of $102 million.
Cepheid (www.cepheid.com) develops, manufactures, and markets a fully integrated, easy-to-use, PCR-based DNA testing platform focused on clinical diagnostics, biothreat, and industrial tests, primarily in the infectious disease area. It is currently valued at $7.25 per share. A first-generation system called the SmartCycler has been on the market since 2000 with over 2000 units placed. A second-generation system called the GeneExpert has demonstrated its capability with its Anthrax test. Recently Cepheid received FDA 510k clearance to market its Xpert test for Group B Strep on its GeneExpert platform.
Cepheid has a license agreement with Applera for real-time PCR (RT-PCR) for potential entry into the HIV and HCV testing markets. It also has a license from Roche (www.roche.com) for a broad range of PCR patents. Cepheid recently acquired the French microRNA company Actigenics (www.actigenics.com) to expand its range of biomarkers.
Quinton Lai, Ph.D., of RW Baird estimates revenues of $131 million in 2007 with growth coming from new product offerings in the clinical market for GBS and methicillin-resistant Staph. aureus. Other clinical viral diagnostic tests expected soon are cytomegalovirus, enterovirus, varicella-zoster, and herpes (HSV-1 and 2). A growing installed base of system placements will fuel growth in cartridge and reagent revenues.
Based on its market cap of around $480 million, the price/sales ratio for 2007 would be about 3.7. In the recent quarter ending June 30, product sales decreased 7% from prior year because of lower sales to the USPS for the completion of its Biohazard Detection System. Net loss was $7 million. However, clinical product sales increased 135% to $4 million in second quarter.
Genomic Health (www.genomichealth.com) was one of the few biotech IPO’s of fourth quarter 2005 and is currently trading slightly above the IPO price at $12.25. It is focused on oncology diagnostics with genetic-based tests utilizing a panel of 21 genes that are used in early-stage breast cancer to predict the likelihood of cancer recurrence, patient survival, and chemotherapy benefit.
U.S. patent 7,056,674 was issued in July covering the utility of two genes utilized in Oncotype diagnostics for breast cancer prognosis testing. Genomic Health is working on additional diagnostics tests for breast cancer that can assess response and recurrence to chemotherapy. The technology used in the Oncotype Dx (RT-PCR and related algorithims) is a platform that can be leveraged into tests for other cancers, such as colon, prostate, lung , and renal.
As new targeted therapies for cancer are developed, there is an increasing need for selecting patients and disease response. Genomic Health is currently working with Bristol-Myers Squibb(www.bristolmyers.com) and Imclone(www.imclone.com) to develop a genomic test for predicting the response to Erbitux in colorectal carcinoma.
The OncoType DX test is a service targeted to the estimated 125,000 early-stage breast cancer patients that are early-stage node negative (N-), estrogen receptor positive (ER+) and represents an estimated $350-million market at a cost of $3,460 per test. Product revenue in second quarter 2006 was $7.8 million, up sharply from the same quarter of 2005 revenues of $1.1 million. Medicare-related revenues in the second quarter were $4.8 million. Net losses in this quarter were $4.2 million.
JPMorgan analyst Tycho Peterson is projecting 2006 revenues of $21.9 million and a diluted net loss per share of $1.61. For 2007, Peterson projects revenues of $53.5 million.