Interesting little news item from molecular diagnostics company Cepheid (Nasdaq: CPHD) last night. The company announced a collaboration with drug giant Novartis (NYSE: NVS) to use its GeneXpert system to develop and market a test for BCR-ABL expression in patients with a type of leukemia called Philadelphia chromosome-positive chronic myelogenous leukemia.
Detecting the Philadelphia chromosome is currently the definitive means of diagnosing CML, and that is usually accomplished with FISH or standard PCR. With the GeneXpert system, though, it may be possible to do perform the tests more quickly, more efficiently, and closer to the patient - a hospital may or may not have a regular PCR machine on hand (or the personnel to use it), but could almost certainly use the simpler, more user-friendly GeneXpert system in its place. It may also be the case that monitoring the expression of BCR-ABL is useful in assessing or fine-tuning therapy for these patients.
In any case, this is not a transformative deal for Cepheid (or Novartis). Cepheid had talked about expanding into cancer diagnostics before, and this may simply accelerate and smooth the process a bit. Even still, I believe molecular diagnostics will have a major role to play in oncology as more and more is learned about the genetic/proteomic basis of the disease (in all its forms) and how that information pertains to treatment.
Cepheid is a great stock for the watch list. Even though I believe in the company's future, I would have to swallow hard to buy it at today's levels.
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