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BioMerieux Joins the Ebola Bandwagon: Cepheid in Trouble?

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France-based BioMerieux recently joined the elite list of Ebola diagnostic device makers that include the likes of US-based Cepheid CPHD and Germany-based altona Diagnostics.

BioFire Defense, a U.S.-based subsidiary of BioMerieux, recently announced that its FilmArray Ebola test (BioThreat-E test) has received Emergency Use Assessment and Listing (EUAL) from WHO. This makes the in vitro diagnostic assay one of the six available devices eligible for WHO procurement.

Notably, the FilmArray Ebola test received FDA Emergency Use Authorization in Oct 2014, which was considered sufficient enough for the EUAL eligibility by WHO.

EUAL was introduced by WHO as an emergency mechanism to fight Ebola outbreak in West and Central Africa. According to WHO, Ebola causes an acute and highly contagious illness, which can turn out to be fatal if left untreated. It is thought that the fruit bats of the Pteropodidae family are natural hosts of Ebola.

Although Ebola gained widespread attention in the 2014 epidemic that affected multiple countries in West Africa, the virus was first discovered in 1976 when two simultaneous outbreaks occurred in Sudan and in the Democratic Republic of Congo.

As of Sep 16, 2015, more than 28,000 individuals were affected by Ebola and the virus claimed over 11,000 lives. West and Central African countries like Guniea, Liberia, Sierra Leone and Mali were the most affected. However, lack of specific diagnostic test has made it difficult for physicians to provide suitable treatment to many of the affected.

The availability of BioMerieux's FilmArray will definitely result in early determination of the virus. Meanwhile, it will pose significant competitive threat to the likes of Cepheid's Xpert and altona Diagnostic's RealStar Filovirus diagnostic assays.

However, we believe that Cepheid enjoys a competitive edge owing to the strong support it receives from the likes of Paul G. Allen Family Foundation and the Bill & Melinda Gates Foundation. Moreover, Xpert Assay has gained significant traction among physicians largely because of to its ability to detect the virus within 2 hours, facilitating fast and better treatment.

Currently, the company offers 22 Xpert tests outside the U.S. and 17 in the domestic market

, representing the broadest menu currently available on a single platform. Management expects to launch more tests in the quarters ahead. The numbers are expected to reach 41 and 37, respectively, by 2017 and 2018.

As the diagnostic market for various diseases (including Ebola) continues to evolve, we believe that Cepheid's diversified portfolio will help it to gain market traction. Moreover, international expansion will help the company to capitalize on the growing opportunities in the molecular diagnostics space.

However, unfavorable currency fluctuations is a major concern.

Zacks Rank & Key Picks

Currently, Cepheid carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical instruments space are Masimo MASI , Thoratec THOR and Cyberonics CYBX . All these stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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