Cepheid shipped six of its newly launched GeneXpert Infinity automated real-time PCR systems during the third quarter, the company’s CEO disclosed last week.
The Infinity system is a higher-throughput version of Cepheid's flagship GeneXpert platform that can run up to 2,074 tests in a 24 hour period.
John Bishop made the remark during a presentation at last week's Piper Jaffray Healthcare Conference in New York, adding that the placements are notable for taking place "in a tough capital environment."
Furthermore, Bishop said that four of the six systems are "already running 24 hours a day," which is a "testament to the ease of use of the platform." He contrasted this with competing "large, complex" high-throughput systems that he did not name.
"Do you see the laboratories operating on a 24-hour-a-day basis with these systems?" he asked. "The answer is, 'You do not,' because there's often a ton of maintenance required to run them and you need more qualified personnel."
Bishop cited the large installed base of its GeneXpert systems — 1,241 worldwide as of Sept. 30 — as an advantage in an increasingly competitive marketplace.
One "key driver" for growth in the molecular diagnostics market is test menus, which he said are likely to evolve from the "nominal overlap" that is currently seen between test providers, and "almost complete menu overlap" five years from now.
Another driver, he said, "is that testing has moved out of the specialized laboratory and has moved into the central core lab, and, frankly, is now moving beyond the central core lab."
As a result, Bishop said that Cepheid's strategy is "to have a complete and extensive menu on a uniquely scalable platform that, coming into the market, will address not only the large central lab, but also the broadly disseminated laboratory."
The expanded GeneXpert product line is intended to address the latter half of that equation. The GeneXpert line is a modular platform, with each "module" able to detect six targets in a single reaction cycle with up to 12 results per assay. Previous GeneXpert systems could run a maximum of 16 modules, while the Infinity system, launched in September, offers configurations ranging from 16 to 48 modules.
The other half of the equation is its test menu. In North America, Cepheid’s menu of available Xpert tests includes MRSA (methicillin-resistant Staphylococcus aureus) Surveillance, MRSA/SA Skin and Soft Tissue, MRSA/SA Blood Culture, GBS (Group B Streptococcus), EV (enteroviral meningitis), Clostridium difficile, and HemosIL FII & V, which detects Factor II and Factor V Leiden genetic variations associated with thrombophilia.
Outside of North America, Cepheid’s menu of Xpert tests also includes vanA/vanB for identification of vancomycin-resistant Enterococci, MTB/RIF for detection of Mycobacterium tuberculosis and rifampicin-resistant strains, MRSA/SA presurgical, and BCR-ABL for managing patients with chronic myelogenous leukemia. These tests are marketed for research-use-only in the US.
Cepheid gained FDA approval for the C. difficile test in July, joining real-time PCR-based tests from Gen-Probe's Prodesse division and Becton Dickinson's Genohm group, which both garnered FDA approval earlier in the year.
The market for C. difficile testing is large, leading to increasing competitive pressure among providers. It is estimated that as many as 7,000 patients in the US suffer from C. difficile infections on any given day, and that there are around 28,000 C. difficile-related deaths in the US per year. A recent study in Infection Control and Hospital Epidemiology estimated that the economic impact in the US from C. difficile is around $3.2 billion per year.
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Most labs still use immunoassay testing for C. difficile, which has been shown in several studies to lack sensitivity when compared to molecular testing — a fact that could bolster sales of real-time PCR-based systems.
Nevertheless, Bishop noted, "The immunoassay aspect is not dead. It's got yet another gasp." Specifically, he noted that several reports have found improved sensitivity for a "refinement" of the standard enzyme immunoassay called the glutamate dehydrogenase assay, or GDH. As a result, "people are going to that as a front line, but specificity [it] is not good."
He cited "emerging data" that indicates this might not be a good approach. "It turns out that the sensitivity of the GDH test is highly variable depending upon the ribotype that the patient is presenting with." The problem, he noted, is that "you don't know what patients are going to be presenting at any point in time with these ribotypes. Therefore you don't have the dependable result that you're getting to with molecular [testing]."
In light of this, "I would see over time the migration is going to be to molecular," Bishop said, though he noted that it is still "early days."
Although molecular assays are "still in the minority" for C. difficile testing, "it's gaining ground quickly," he said. "Over the next two- to three-year period, I would expect that molecular [testing] would start to become the majority."
He added that despite Cepheid's late entry to the C. difficile market relative to the Prodesse and BD tests, the company's large installed based of GeneXpert systems led to "good uptake" after launch.
"That's another factor relative to our business in general, where you're looking at a large and growing installed base as you introduce new tests," he said. "The laboratories want to start to use one common platform versus multiple platforms. So as you get more menu, that menu will be utilized with that."
The company's installed base is also expected to give it a leg up in the flu testing market. Cepheid plans to file its influenza A test — intended to identify seasonal H1, seasonal H3, and H1N1 strain types — for emergency use authorization with the FDA before the end of the year, but it lags behind a number of other competitors in the market that have already gained EUA clearance for real-time PCR-based tests, including Prodesse, Roche, and Quest's Focus Diagnostics division.
"When we decided to move into flu we did not make that decision because it was a big market," Bishop said. "The decision that drove us to move into flu was if we are truly facing a pandemic, that our ability to serve the needs of the market will break down if we think we're going to send all the specimens into a central laboratory. It's going to be impossible to get the workload turned around."
Bishop said that Cepheid spoke to a number of institutions — several of which had already qualified tests from other providers — to determine whether there would be any demand for a test that runs on the GeneXpert.
"The answer was, overwhelmingly, ‘Yes,’" he said.
Overall, Cepheid has a conservative outlook for 2010, which Bishop said should look "similar to 2009." The company expects total revenues for 2009 to be in the range of $165 million to $169 million, which is flat to slightly down from 2008 revenues of $169.6 million.
Yet even though capital is still tight, "it is available," Bishop said. "If you have a demand in the market … the capital is available, and so as a result we're seeing the placements."
Bishop said that the real challenge right now is that the sales cycle is longer than it used to be. Many lab heads that previously had the authority to approve instrument purchases are finding that they now need to get clearance from institute CFOs, "so it takes a tad longer to make that happen."