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BTIG Upgrades T2 Biosystems to Buy

NEW YORK (GenomeWeb) – Investment firm BTIG upgraded shares of molecular diagnostics firm T2 Biosystems, citing the market potential for a bacteria sepsis panel the company has under development.

Analyst Karen Koski upgraded T2 to a Buy rating from Neutral, putting a $16 target price on the company's shares. During late morning trading Friday, T2 stock was trading at $11.19.

In a research note, she stated that the opportunity for the sepsis panel, called T2Bacteria, outweighs ongoing concerns about a low rate of adoption of T2's recently launched Candida test, T2Candida, due to pricing.

During channel checks, some academic centers expressed "frustration and reluctance to adopt T2Candida due to its pricing of $200-250/test," she wrote. Those planning to adopt, however, had moved "past the initial sticker shock and grown more comfortable" with the test's pricing after conducting return-on-investment analyses.

"Additionally, some mentioned that after speaking to physicians within their hospitals, they had come to the realization that the controlled use of T2Candida in specific subsets of high-risk patients would not drastically alter their laboratory budgets," Koski added.

While BTIG continues to view T2Candida's launch as "lackluster," the firm believes this to already be reflected in T2's current share price and suggested that investors should "just look forward to [T2]Bacteria," which is expected to receive US market approval by mid-2017.

"Though data for the T2Bacteria Panel seems mainly limited to internal company data at this time, we believe the company has demonstrated feasibility of the technology" in light of having already held pre-investigational device exemption talks with regulators and having started lining up clinical trial sites, Koski wrote in the note.

"Additionally, since the T2Bacteria Panel is designed to run on the same instrument as T2Candida, we see more limited development risk [versus] an entirely new platform," she stated.