Quest Diagnostics Expands with Precision Medicine for Melanoma - Analyst Blog

Leading diagnostic information services provider Quest Diagnostics Inc. ( DGX ) recently introduced in vitro diagnostics major bioMerieux's companion diagnostic test, THxID(R)-BRAF to advance precision medicine for melanoma.

According to the company, this U.S. Food and Drug Administration (FDA)-approved THxID(R)-BRAF test is used for two treatments for melanoma. The first one should be helpful in selecting patients with melanoma whose tumors carry the BRAF V600E mutation for treatment with dabrafenib [Tafinlar(R)]. The second one is to be used in identifying melanoma patients whose tumors carry the BRAF V600E or V600K mutation for treatment with trametinib [Mekinist].

According to the company, Quest Diagnostics currently reaches out to about half of the practicing physicians and hospitals in the U.S. The newly developed relationship between Quest Diagnostics and bioMerieux will ensure that this new test becomes accessible to a vast network of patients and providers through Quest Diagnostics, including its AmeriPath and Dermpath businesses, which specialize in anatomic and dermatologic pathology testing.

Quest Diagnostics is upbeat about the addition of the THxID-BRAF test to its menu. The company expects the test to enrich its advanced dermatopathology testing line besides reflecting its commitment to the field of precision medicine.

At present, melanoma is a major cause of death from skin disease. As per estimates from the National Cancer Institute, 76,100 Americans will likely be diagnosed with melanoma and there is a possibility of 9,710 deaths from this in 2014 alone. Thus, the inclusion of bioMerieux's test should prove valuable to Quest Diagnostics' business in this niche in the near future.

In line with the company's five-point strategy taken in 2013, Quest Diagnostics has been focusing on areas with high potential such as gene-based esoteric testing for cancer, cardiovascular disease, infectious disease and neurological disorders. The company has experienced increasing demand for gene-based and esoteric tests compared to routine tests on account of increased esoteric mix contributed by Athena and Celera.

Apart from the bioMerieux test, Quest Diagnostics offers the FDA-cleared cobas 4800 BRAF V600 Mutation Test, which detects the BRAF V600E mutation that helps detection of patients for treatment with vemurafenib - an oral medicine designed to treat patients whose melanoma tumors harbor the mutation. The company also offers a laboratory-developed test for assessing BRAF mutations in melanoma, thyroid, and colorectal cancers based on sanger sequencing.

We are also upbeat about the long-term growth drivers that hold strong deliverable potential in the upcoming period. With baby boomers moving into Medicare, the company is expected to benefit from continued population growth and favorable demographics. Over the long haul, we expect Quest Diagnostics, as a provider of low-cost diagnostic information services, to be able to garner greater growth in this high potential but still underpenetrated niche market.

The stock currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry are Amedisys Inc. ( AMED ), RadNet, Inc. ( RDNT ) and HEALTHSOUTH Corp. ( HLS ). All these stocks carry a Zacks Rank #2 (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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