) recently disclosed that the U.S. Food and Drug Administration
(FDA) has granted clearance to market its Xpert CT/NG test. The
company had gained European CE Mark approval for the test in May
Cepheid's Xpert CT/NG is an innovative qualitative in vitro
molecular diagnostic test, based on the GeneXpert Systems, for
the detection and differentiation of
(NG). The clearance ensures that same-day patient consultation
and treatment is possible for two of the most common sexually
transmitted bacterial infections in the U.S.
The Xpert CT/NG can deliver results within 90 minutes. Gonorrhea
and chlamydia can be treated easily in case of early detection
and diagnosis. The optimal way to reduce false positive results
for gonorrhea is by including more than one genetic target.
Hence, Cepheid's latest offering tests for both CT and NG to
improve accuracy of results.
Chlamydia is the most common sexually transmitted bacterial
infection in the U.S. Despite widespread prevalence, the market
for chlamydia testing remains largely untapped. In 2011, the
disease infected more than a million Americans. According to
guidelines by the Centre for Disease Control and Prevention
(CDC), women aged 25 and under should undergo annual testing for
chlamydia. However, statistics suggest that only 38% of sexually
active women were tested in 2011.
Gonorrhea is the second most commonly reported bacterial
infectious disease in the U.S. Per CDC estimates, more than
700,000 individuals in the U.S. are infected with gonorrhea
annually. However, more than 50% of these cases are undiagnosed.
While reported cases of gonorrhea decreased during 2007-2011, the
figures for chlamydial infections remain alarmingly high.
Considering that women in the U.S. are more prone to these
bacterial infections exacerbated by low testing rates, the
commercialization of Cepheid's Xpert CT/NG presents an
opportunity to improve reproductive health in the U.S.
Cepheid has been consistently working on expanding its portfolio
of tests. The FDA clearance underlines the company strategy of
portfolio expansion by increasing research and development
expenditure. Cepheid has stepped up its investments to support an
expanded portfolio which targets 37 tests in the U.S. and 36
ex-U.S. by the end of 2017. The successful commercialization of
these tests should expand the addressable market to more than
$5.2 billion by 2016-2017 from the current level of less than $1
Cepheid already has a go-to-market strategy for the Xpert CT/NG
test. Moreover, the in vitro diagnostic market under molecular
diagnostics is witnessing the highest growth rate.
We currently have a long-term 'Neutral' recommendation on the
stock which carries a short-term Zacks #2 Rank (Buy). Other
medical sector stocks carrying a Zacks #2 Rank are
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