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Leerink Upgrades T2 Bio Shares to Outperform

NEW YORK (GenomeWeb) – Leerink today upgraded shares of T2 Biosystems to an Outperform rating, noting the unusually fast regulatory approval of the company's technology platform and Candida test. 

Analyst Dan Leonard upgraded the company's stock from a previous Market Perform rating and maintained a $23 price target on T2 Bio's shares. In a research note he highlighted the quickness at which the firm obtained clearance from the US Food and Drug Administration of its T2Dx Instrument and T2Candida panel assay for the direct detection of Candida species in human whole-blood specimens. 

The FDA cleared the platform and assay about four months after T2 Bio filed its 510(k) submission, which Leonard said is about half the time it usually takes with comparable products. "[W]e believe the speed at which the FDA issued its clearance … signals a high level of interest in the medical community for a test that can deliver Candida results" in about four hours, compared to the two to five days it takes with conventional technology, Leonard said. 

The company is in the process of commercializing the Candida test and has increased its sales and marketing team to 14 people at the end of 2014 from four in June, he said, and added that T2 Bio is engaged with about one-quarter of its target 450 hospitals, "a larger funnel than it initially contemplated at this stage." Nine of the facilities have finished favorable economic evaluations and Leonard said that he expects T2 Bio can obtain its first commercial contracts in the next three months. 

He also said that as the company initiates clinical trials for T2Bacteria and T2HemoStat, they could serve as potential catalysts for the company's stock. T2Bacteria is a multiplex diagnostic panel for detecting major bacterial pathogens associated with sepsis. T2HemoStat, which is being developed to run on the company's T2Stat instrument, would provide data across the hemostasis spectrum, such as clotting time, fibrinolysis, platelet activity, clot contraction, and clot lysis, according to T2 Bio's website. 

Lastly, the company reached a deal with Canon US Life Sciences to jointly develop a diagnostic test panel for detecting Lyme disease. According to Leonard, the agreement "highlights the breadth of [T2 Bio's] technology platform and the potential for further third-party collaborations." With the endorsement by a "major company, albeit with a minor presence in [the] life sciences," additional partnerships could follow, Leonard said.

In afternoon trading on the Nasdaq, T2 Bio's shares rose almost 5 percent to $16.66.