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Piper Jaffray Downgrades Hologic, Citing Competition from Roche's HPV Business

NEW YORK (GenomeWeb News) – Investment bank Piper Jaffray today downgraded Hologic amid anecdotal evidence suggesting Roche may be poised to take market share away from Hologic's sexually transmitted disease testing business.

Piper Jaffray lowered its rating for Bedford, Mass.-based Hologic to Neutral from Overweight and reduced the price target on its shares to $21 from $27.

In a research note, analyst William Quirk said that he spoke with researchers who recently made the switch to Roche's HPV products from Qiagen products, and was told by several that they could similarly switch to Roche from Gen-Probe. Hologic acquired Gen-Probe a year ago.

One Roche convert said it has "definitive plans" to switch from Gen-Probe to Roche's, while a "handful" of others voiced such a potential switch. Quirk said that test consolidation was the primary reason for the platform changes, but added, "We would note, this is the first time our checks," which have been going on for more than eight years, "have picked up any Gen-Probe account losses."

Overall, Piper Jaffray's checks suggested that chlamydia/gonorrhea testing volume is up about 1 percent sequentially, and Quirk said that while Roche could potentially put a dent in Gen-Probe's HPV business, he also found "additional interest" in Gen-Probe's products.

One large reference lab started using Gen-Probe's Aptima HPV products, although the lab will continue to use Qiagen as its primary assays, and Gen-Probe's tests will be used for accounts that specifically ask for them. Quirk did not mention the name of the lab, but last month Quest and Hologic announced a five-year deal covering Aptima products for women's health.

Quirk also said that he found an additional Gen-Probe conversion expected in January and two mid-sized laboratories that are assessing a possible conversion to Gen-Probe's Aptima HPV products from Qiagen and Hologic's Cervista products.

Quirk also noted that Hologic's legacy 2D mammography business remains "a drag" on the company's breast health franchise, "likely limiting near-term upside."

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