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PEPFAR Invests Additional $11M to Supply Cepheid TB Test in 14 High-burden Countries

NEW YORK (GenomeWeb News) – The US President's Emergency Plan for AIDS Relief (PEPFAR) this week announced an additional $11 million to provide Cepheid's Xpert MTB/RIF molecular diagnostic platforms and test cartridges for tuberculosis detection in 14 high-burden countries.

The funding will go toward the provision of 150 Xpert MTB/RIF instruments and 450,000 test cartridges in countries in sub-Saharan Africa and in Burma.

Cepheid's test detects Mycobacterium tuberculosis DNA and mutations associated with rifampicin resistance in less than two hours. PEPFAR said that the test is more sensitive for TB than sputum-smear microscopy and has similar accuracy to culture on solid media. It added that for patients with TB/HIV co-infection, the Xpert assay has "significant" advantages.

The US Agency for International Development (USAID) and the Centers for Disease Control and Prevention will implement the initiative. A portion of the $11 million will go toward training healthcare workers on use of the instrument and to help health ministries integrate the test into national laboratory strategies, PEPFAR said.

As a result of the additional funding, PEPFAR's investment in Xpert MTB/RIF totals more than 275 platforms in high-burden countries, it said.

In August, it and the Bill and Melinda Gates Foundation, USAID, and Unitaid announced an agreement to buy down the price of the Xpert MTB/RIF test in order to drive up adoption of the technology in resource-poor nations with multi-drug resistant TB.

William Blair analyst Brian Weinstein said in a research note today that the $11 million in additional funding from PEPFAR is separate from the August announcement and "gives us even more confidence in our 2013 revenue target of $398 million, of which $50 million is modeled to come from" Cepheid's High Burden Developing Countries Program.

In September Cepheid announced a second agreement with USAID as part of the HBDC Program. Weinstein said that "[m]uch has been made of the profitability of these revenues, and while we would prefer these revenues carry margins equivalent to the commercial business, our view continues to be that these sales are not only profitable and absorb fixed overhead, but that they also represent a seeding of the market for the company to eventually sell additional products through.

"Therefore, we view the HBDC program as a legitimate and important source of growth for the business," he said.