By Ben Butkus
As the US market for nucleic acid-based testing for hospital-acquired infections heats up, so too is competition between two of its biggest players, Roche and Cepheid.
On the heels of both Roche and Cepheid receiving 510(k) approval from the US Food and Drug Administration for PCR-based nasal swab tests for methicillin-resistant Staphylococcus aureus, executives from both companies traded barbs related to their competitive position within the burgeoning market, which is estimated to be in the neighborhood of $130 million to $150 million.
In a diagnostics-focused investor event and conference call at the American Association for Clinical Chemistry meeting this week, Roche executives refuted a recent claim by Cepheid CEO John Bishop that he doesn't view Roche as a competitor in the burgeoning market because Roche's PCR testing platform, the LightCycler 2.0, doesn't have the clinical installed base that Cepheid does for its GeneXpert system or even its earlier-generation SmartCycler.
"It is absolutely not true that we don't have an installed base in the clinical setting — we do," Daniel O'Day, COO of Roche Diagnostics, said during the AACC event in response to an investor who raised a question about the Cepheid claims.
Last week, during a conference call discussing Cepheid's Q2 financial results, Quintin Lai, an analyst with RW Baird, asked Bishop how Cepheid sees the competitive landscape for MRSA testing shaping up. Lai posed the question after Roche, during its own Q2 financial results conference call earlier in the week, touted its MRSA test, which recently won US regulatory approval and which runs on the LightCycler 2.0 (PCR Insider, 7/22/10).
"We now have an assay that is very competitive and … will go out there on one of the largest installed instrument [bases] in the US," O'Day had said in Roche's earnings call.
However, Cepheid's Bishop claimed that Roche's LightCycler-based test "is more directly competitive to the [Becton Dickinson] SmartCycler product," referring to BD's GeneOhm MRSA assay, which also has FDA 510(k) clearance and which runs on Cepheid's SmartCycler PCR platform.
"Frankly, it's maybe not as competitive as the BD product," Bishop added. "Contrary to some questions out there, the LightCycler does not have much more of an installed base in the market as we have with SmartCycler. Most of the LightCycler installed base is more on the research/industrial portion of the market, not the clinical market."
Bishop also said that Cepheid "doesn't see any real competition" from Roche LightCycler 2.0 tests for GeneXpert, Cepheid's second-generation version of SmartCycler that includes automated sample prep and analysis.
If a hospital or clinical lab wants to run a Roche test, he said, "you've got to purchase multiple pieces of equipment. If you're going to be doing any volume at all, you're going to be purchasing a Roche sample prep system, LightCycler, and then you're still looking at batch mode" because the LightCycler primarily runs at a 32-specimen capacity.
Lastly, Bishop said that the current generation of LightCycler "has some issues [in that] historically, it's not a great thing to be spinning down your specimens with glass capillary tubes" due to a danger of shattering; and that Cepheid's GeneXpert system is "easier to use. At the end of the day, all of this for Roche is still high complexity."
During the Roche AACC investor event, O'Day and Paul Brown, Roche's head of molecular diagnostics, declined to comment specifically on many of Bishop's claims.
However, in regards to his comments about the LightCycler installed base, Brown said that "the fact is we have a fairly substantial foothold in the market with LightCycler 2.0. We have a large footprint of more than 300 LightCycler customers in the market today, and they are all really ready and able to add the MRSA test at any time. Those are obviously customers we're calling on first."
Also, in an email to PCR Insider, a Roche spokesperson reiterated that it does not wish to respond to Bishop's comments, but that "the LightCycler MRSA Advanced Test is cleared by the FDA for clinical use in the United States and the LightCycler 2.0 Instrument is a reliable and effective platform."
It is unclear how many SmartCyclers Cepheid has placed with US customers. An email sent to the company was not returned in time for this publication. However, Cepheid said that in the second quarter of 2010, it installed a total of 106 GeneXpert systems and 478 add-on modules; and that as of June 30, it was approaching 700 total system placements in the US and has installed a total of 1,605 GeneXpert systems and 8,618 modules worldwide.
Brown said that moving forward Roche Diagnostics is "looking to grow and expand" its menu of HAI tests, including tests for organisms such as methicillin-sensitive S. aureus and Clostridium difficile; and that it eventually plans to transition its menu of tests to the Cobas 4800 clinical laboratory system, which already has molecular tests for oncology applications, human papillomavirus, chlamydia, and gonorrhea in its menu or under development. "So we would have a platform with an extensive menu," Brown said.
Bishop also addressed this point during Cepheid's conference call. "In addition to Roche, I know of at least two other companies coming with reagent-only MRSA tests," Bishop said. "For all of these … you're looking at a number of one-offs."
In recent years, Cepheid has built an extensive menu of tests on its SmartCycler and GeneXpert systems, including several tests for prominent HAIs including vancomycin-resistant Enterococcus and C. difficile. The company also already had a nasal-swab molecular test for MRSA available, but in June received FDA clearance to market Xpert SA Nasal Complete to simultaneously detect and differentiate S. aureus and MRSA colonization in less than an hour (PCR Insider, 6/17/10).
"Labs really want to look at menu consolidation on a platform, and right now we have the broadest and [most expansive] HAI portfolio of tests out there," Bishop said. "Faced with growing test volumes and fewer skilled technicians, we believe that labs will move to consolidate their testing onto one or two platforms that address the majority of a lab's test menu.
"This is why Cepheid and others are working aggressively to deliver expanded test menus as quickly as possible," Bishop added.