) announced collaboration with Knight Cancer Institute at Oregon
Health & Science University (OHSU) to develop a menu of
advanced molecular diagnostics to be carried out on its GeneXpert
The collaborative research will focus on clinical oncology
tests, mainly breast and prostate cancer for the GeneXpert system
as they are reportedly the most widely occurring cancers across
the U.S. The diagnostic tests would predict the risk of
recurrence of breast cancer in recently diagnosed patients and
the likelihood of prostate cancer in post-surgery patients. The
initiatives have been dubbed Xpert Breast Cancer Signature and
Xpert Prostate Cancer Recurrence Risk, respectively. The
collaboration with OHSU is expected to enhance Cepheid's
intellectual property portfolio.
Cepheid anticipates the extension of its tests menu to include
a number of high-impact oncology tests in its Xpert portfolio.
The collaboration is aligned with the company's goal to provide
quick, accurate and cost-effective diagnostic solutions platform
for oncology patients.
Presently, Cepheid has a broad and expanding menu of tests
that run on its GeneXpert systems. Specialties covered are
infectious disease, healthcare associated infections (HAI),
women's health, genetics and oncology. The company's effort to
boost its presence outside the HAI market is laudable.
Given the positive momentum of the molecular diagnostic
market, Cepheid's focus on portfolio extension is encouraging. We
expect the collaboration to be beneficial for Cepheid in terms of
expanding the scope of use of oncology assays in a fast growing
market. Going forward, the test menu expansion is a major
catalyst to enhance the company's addressable market and fuel its
Despite several upsides, the dismal guidance for 2013 has
failed to boost investor confidence as exhibited by a downward
earnings estimate revision. With the gloomy prediction, we wonder
whether Cepheid's business model can keep the positive momentum
going. Accordingly, we remain on the sidelines as the stock
carries a Zacks Rank #3 (Hold). Other medical stocks such as
), carrying a Zacks Rank #2 (Buy), however, are expected to do
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