Medical Diagnostics Are Basis For 60% Of Treatment Decisions But Represent Only 5% Of Costs: Recession Resistant Business Poised To Reward Shareholders According To Industry Expert

• On 8:11 am EDT, Tuesday September 15, 2009

67 WALL STREET, New York - September 15, 2009 - The Wall Street Transcript has just published its Medical Research Services report offering a timely review of the sector to serious investors and industry executives. This 23 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Medical Device Research Services - Pharmaceutical Research Services - Diagnostics - Life Science Research Supplies - Biology R & D - Lab Services Business Model - International Economic Exposure - Effect of Recession on Sector Stocks - Top Stock Winners and Losers in Medical Diagnostics

Companies include: Arrowhead Research (ARWR); Cleveland BioLabs (CBLI); IR BioSciences Holdings (IRBS); Power3 Medical Products (PWRM); Illumina (ILMN); Luminex (LMNX); Waters (WAT); Life Technologies (LIFE); QIAGEN (QGEN); Sangamo BioSciences (SGMO); Beckman Coulter (BEC); Invitrogen (IVGN); Amgen (AMGN); Bristol-Myers (BMY); Eli Lilly & Co. (LLY); Myriad Genetics (MYGN); Genomic Health (GHDX); Targeted Genetics (TGEN); Dow Chemical (DOW); Sigma-Aldrich (SIAL); MDS (MDZ); Danaher (DHR); Cepheid (CPHD); Inverness Medical Innovations (IMA); Quidel (QDEL); Meridian Bioscience (VIVO); Gen-Probe (GPRO); Sequenom (SQNM); Genoptix (GXDX); Response Genetics (RGDX); Affymetrix (AFFX); Monogram Bioscience (MGRN); LabCorp (LH)

In the following brief excerpt from just one of the 6 interviews in the 23 page report, an industry expert discusses the outlook for the sector and for investors.

Zarak Khurshid is a Vice President with Caris & Company, covering the medical diagnostics and life sciences sectors. Prior to joining Caris & Company in 2006, Mr. Khurshid was a Research Analyst with Pacific Growth Equities, where he covered the diagnostics and life science tools sectors. Prior to his tenure at Pacific Growth Equities, Mr. Khurshid spent more than two years with Cytokinetics, Inc., in the Assay Development group. Previously, Mr. Khurshid worked at Aurora Biosciences (acquired by Vertex) as an Associate Bioengineer who developed software and hardware for the company's high throughput screening system. Mr. Khurshid holds a B.S. in bioengineering and B.A. in economics from the University of California, San Diego.

TWST: And what are some of the key smaller companies that have caught your attention?

Mr. Khurshid: The majority of the names we cover are considered small-cap companies that are not very well-known, though diagnostics as a whole is a smaller-cap kind of a space. I think it's underappreciated in kind of the grand scheme of things when it's believed that something like over 60% of medical decisions are based on some type of the diagnostic test, where the cost or the expenditure on diagnostics is between something like 3% and 5% of total health care layout. So obviously, you're not going to see many of these names on the front page of The New York Times.

TWST: As you talk to management at the moment, what's your level of confidence in this space?

Mr. Khurshid: I would say that the level of confidence is positive. Obviously, we haven't seen much of an impact on the financials of the companies that we cover directly, and the body language and commentary for management reflects that optimism going forward.

TWST: Are there any companies you would identify as having handled the recession particularly well, balancing their needs to go forward with products, and managing investor concerns and financial constraints?

Mr. Khurshid: I think at the end of the day, it's actually hard to determine which companies have managed the macroeconomic weakness better than others. I think to a certain degree, all of the companies have done a decent job.

TWST: Any other companies you would consider to be ones to watch out for - if not now, then maybe in the longer term?

Mr. Khurshid: Longer term, I think that a company to watch is Illumina. We currently have an average rating on it. But with their leadership in the next-generation sequencing space, and with the impressive rate of innovation and improvement to their sequencing products, we could envision sequencing-based diagnostic tests being a reality long term, in say five to 10 years, which could have a dramatic impact, an improvement on health care. And I'll leave it at that.

TWST: What's investor interest like in the life sciences and diagnostics segments right now? How are you advising investors in each segment?

Mr. Khurshid: We tend to take more of a kind of stock-specific approach rather than making general sort of sector calls, highlighting Inverness Medical Innovations and Genoptix as our top picks. Where Inverness is playing is in a rapid point-of-care space. They have the broadest menu in this field with tests that are relatively cheap, disposable, rapid, used in the physician's office as well as the acute setting. We think they will benefit near term from the potential heavy testing volumes associated with a potential second wave and, say, more deadly wave of the swine flu, combined with what we think is very attractive valuation as well as many levers in their model. IMA is probably a good place to be. Some of the other rapid point-of-care players that would potentially benefit would be Quidel - another name we cover - and Meridian Bioscience, which also have attractive menus that could benefit from the potentially heavier flu and cold season driven by swine flu. Then there is Genoptix, a top pick of ours. We like their emphasis on cancer, their business that has the ability to be of a part of the solution to improve outcomes in cancer and reduce side effects associated with some of the higher-priced cancer medications. We think that as a smaller lab services player with little competition, they may be able to take a lot of market share over the next few years, and that's partially why we are attracted to the name.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 23 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

For Information on subscribing to The Wall Street Transcript, please call 800/246-7673

Buzz up!