They've got $50+ million of malaria revenue. Here CEMI and others pose a substantial threat, particularly if CEMI were to become part of a larger competitor. I know ALR is taking the ultra sensitive malaria (USM) effort very seriously. Can they afford to let CEMI grab significant market share, either alone or as part of a larger entity?
According to a new CDC report, only 30% of sexually active gay teens have been tested. The most common reason given was that they didn't know where to go to be tested. The HIV problem is most definitely not fixed. And, now, with increased IV drug usage due to increased heroin use, AIDS is most definitely not over.
Great news that the CDC is discouraging use of POC testing! That will really help solve the problem.
The flu test, of which we haven't heard much, uses a reader. The CDC hasn't yet ordered any.
Couple of notes: on WHO prequalification for DPP HIV-Syph: It's just sloppy work on CEMI's part that they didn't know in advance which samples WHO was going to use. That kind of thing can't happen again. You've got to build relationships with these people.
CEMI has a technology which can be used in the field, in places where limited HC infrastructure exists, to test for multiple diseases very simply. That's unique. Sperzel is trying to figure out a way to take best advantage of DPP for use in the developing world. In my view, that's what will make CEMI a growth company.
There has been a move afoot to 4th gen HIV lab testing in the US. Well, yes, but the problem with lab testing for HIV is that patients never get the results, mainly because they get cold feet or can't be bothered. That's why POC testing has proven to be so effective. If CEMI can develop a superior 4th gen POC test for the US market, that could be a winner. We know they've been working on it since February, but no evidence that they have a test which can beat Determine Combo. Now, perhaps they wouldn't say what they have for competitive reasons, but they haven't yet dropped the effort like they did with HCV.
This company is trading, once again, at barely more than 1x forward revenues (and those revenue calculations assume that none of the development projects will produce a dime in 2016). That's just silly, but the market doesn't care what I think.
Alere is "all in" in terms of resources, and their results are very promising.
A 10x test or better is absolutely necessary for eradication efforts. We're talking about hundreds of millions of tests.
As to CEMI, Mr. Esfandiari is heavily involved, and why wouldn't he be? This is a BIG DEAL. CEMI does this all on a shoe-string. Pretty amazing, actually.
What I don't know is how sensitive a test has to be. Is there an advantage to being 20x sensitive vs. 10x? It might come down to that. Clearly, CEMI wouldn't send the test to Gates if it hadn't achieved the 10x mark. My take from Sperzel's remarks is that future tests may be better than 10x.
Sperzel is probably right to tamp down enthusiasm since this may not work out, but hope is in short supply at the moment.
Gates awarded three malaria grants. In addition to CEMI, there was a New Jersey affiliate of a Korean company called Access Bio that already has a malaria test. And, then, of course there is Alere. Alere has put vast resources into asymptomoic Falciparum detection, so it's really a David and Goliath situation (with a second David in the room).
Can CEMI win this battle with Alere? CEMI has to source the antigens, antibodies, reagents, etc. that Alere accesses in-house. That's a big disadvantage.
CEMI has a testing technology in DPP which is, supposedly, superior. However, perhaps it's time to join up with a bigger diagnostics company, one which can match the resources of Alere.
I think the answer is that Sperzel has built a US sales force, and he must feed it new product in order to justify the investment. (As an aside, I'm surprised CEMI hasn't contracted with other small diagnostic companies to distribute these 3rd party products, as well).
There are no cases in Sierra Leone or Liberia, and only 4 last week in Guinea. It's almost over. So, whatever filed data the CDC has collected for DPP Ebola is pretty much it (unless they're using stored samples).
DPP Malaria hasn't even been sent to Gates for verification, and hasn't had a field trial.
I think we have to remember DPP TB, which didn't work, for whatever reason.
DPP really needs a win at this point, which is why Ebola is important. I'm slightly worried about the fact that Sperzel made no mention of DPP Ebola field trials, other than that they are ongoing. If CEMI is talking with the FDA about EUA, CEMI must have some indication as to how the trials are going. I don't think DPP Ebola is a slam dunk, or CEMI would have gotten its EUA by now.
No doubt malaria could make CEMI a takeover candidate, as you say. What's got the market spooked on malaria is Sperzel's statement to the effect that DPP HIV-Syph for US market is #1 priority. Why would that be if malaria is a potential blockbuster and DPP HIV-Syph is going to take 2 years, minimum? He's definitely downplaying malaria, which is probably wise at this point.
We probably won't know for sure about DPP malaria until next year. However, a fresh Gates grant would be a good sign.
That's what I think could happen if malaria meets the targets. If there are 200 million tests, and CEMI takes even 10% market share at 50 cents, that's $10 million of revenue. Of course, we don't know if it's going to achieve the goals.
I hope you're right.
Regarding last quarter, I think the biggest shock was the US HIV sales, which are running at something like $4.2 million, a $7 million decline from 2014. I think the "slow and steady" progress would take that to, say, $6 million in 2016 and, maybe a bit more in 2017. If HIV-Syph is approved and waived by, say, late 2017, then perhaps total US revenue will reach its previous peak of around $12 million in 2018.
CEMI could really use a "blockbuster" like malaria. Based on Sperzel's cautious take on malaria, I don't think he's sure whether it will meet the Gates target or not.
One thing that hasn't been discussed here is whether Esfandiari is working on a next generation DPP platform. No doubt CEMI wouldn't mention it until the day the patent application is submitted, but I think it's likely.
Also watching DPP Ebola, not because it's going to be a big revenue generator, but because it's proof of concept that would pave the way for febrile illness. Only worry there is that OSUR seems to have friends in high places at the FDA.
This company usually moves in baby steps, so this is unusual but not entirely surprising given the rather poor earnings report. I think the key to a turnaround here is Gates. If they give CEMI money to further develop malaria and/or 7-plex, that's a good sign that DPP malaria is a winner. It really comes down to tropical diseases at this point, and I think Sperzel's attempt to downplay expectations on malaria really led investors to believe that it wasn't going to work.