NEW YORK (GenomeWeb) – Cowen, Leerink, and JP Morgan have initiated coverage of immunoassay firm Quanterix.
Cowen and Leerink both gave the company an Outperform rating with the former giving no price target and the latter a price target of $27. JP Morgan initiated coverage with an Overweight rating and a price target of $24.
Quanterix, which specializes in high-sensitivity immunoassays, closed its initial public offering last month, selling more than 4.9 million shares of common stock at $15 per share and raising $73.7 million in gross proceeds. Cowen, Leerink, and JP Morgan acted as joint book-running managers for the offering.
Quanterix's Simoa technology uses arrays of femtoliter-sized reaction chambers designed to isolate single molecules, enabling each well to serve effectively as an independent assay for a single molecule. A detection system consisting of an optical fiber bundle to carry light in and out of each well, a proprietary image-capture device, and image-analysis software allow researchers to observe these assays on a single-molecule level.
The company has focused primarily on protein analysis, but it has also explored use of its technology for nucleic acid work where it could measure these molecules without requiring amplification steps like PCR.
In a research note, Cowen's Doug Schenkel noted that the large size of the protein immunoassay market gives Quanterix substantial upside. He cited the more than 15,000 protein immunoassay instruments currently used for protein research, adding that Cowen estimates that "Quanterix only needs to place 550 to 600 instruments to grow revenue at a [roughly] 40 percent [compound annual growth rate] over the next three years."
Cowen also cited Quanterix's ability to generate steady revenue from consumables as an attractive feature of its business model. Schenkel estimated that around 70 percent of the company's 2017 revenue would come from services and consumables.
Leerink analyst Puneet Souda likewise noted the large size of the immunoassay market Quanterix seeks to address, putting it at around $3 billion annually in the research space and $8 billion annually in diagnostics. Souda added that the company's focus on Alzheimer's disease and other neurology research should benefit it, as these areas have received growing funding from the National Institutes of Health.
Souda also noted that while the company's technology is more expensive than conventional immunoassays, 61 percent of its current revenues come from biopharma, biotechs, and contract research organizations, which, he said, "are less price sensitive when the product has high relevance to their translational research projects and clinical trials efforts."
These customers "can also drive significant test volumes," he added.
JP Morgan's Tycho Peterson noted that Quanterix's new benchtop SR-X platform, which the company launched today, will help it expand into "the more cost-sensitive academic and international customer segments."
In the long term, clinical applications represent an even larger potential market for the company, Peterson added.
"We expect Simoa to eventually find a number of important use cases in the diagnostics and health screening markets… with [Quanterix] building out applications in oncology, neurology, cardiology, inflammation, and infectious disease, among others."
Quanterix's shares fell 3 percent to $20.80 in morning trading on the Nasdaq.