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Biotech / Medical : QDEL - Quidel more quick diagnosis -- Ignore unavailable to you. Want to Upgrade?

To: Robert Busse who wrote (1436)	3/20/1998 5:06:00 AM
From: Mike Relyea	Respond to of 1693

Bob, What a great study (Pharmacoeconomics, An Economic Model for a Novel Viral Influenza Diagnostic). Thanks for the link (http://www.medicomint.com/resources/mipe398.html ). It's the first study I've seen that estimates the number of potential candidates for a flu test. The study also indicates flu testing can reduce medical costs, even without a treatment such as Glaxo's Relenza, now in Phase III. If I'm interpreting the study correctly, it appears the number of flu test candidates is about half the population (From the study: "For model demonstration, it is assumed that the population of interest is an MCO with 100,000 enrolled lives." "Dividing the total number of visits by the average number of visits per episode (63,000/1.3) yields a total of 48,462 respiratory illness episodes where the test might be administered." - 48,462/100,000) Well, just for fun, here's some number crunching: 280M (U.S. population) / 2 = 140M (flu test candidates); 140M (flu test candidates) X $10 (my estimate for Quidel's test) = $1.4B (gross sales). (I've got no idea what Quidel's flu test would sell for, but the study used $20, Quidel's H. pylori test sells for about $10 and its Strep A about $3.) $1.4B (gross sales) X 50% (profit margin) = $700M (net profit). $700M (net profit) / 24M (shares) = $29 (eps, considering only the flu test). $29 (eps for the flu test) X 30 (p/e) = $870 (Quidel's stock price considering the flu test only). Of course it's ridiculous to assume Quidel will sell all the flu tests and all patients who are candidates for a rapid flu test would be tested. But, if as the study suggests, every year half the people in the U.S. are potential candidates for a flu test, it doesn't take a super computer understand how a clinically viable flu test could significantly boost Quidel's earnings. And consider this: about 40M to 50M Strep A tests are performed each year in the U.S. The study indicates that if a certain algorithm is followed, the cost of influenza diagnosis could more than offset antibiotic and physician visit costs. This may be so, but I think the savings will have to be more than the study indicates for ZymeTx to sell many tests, assuming ZymeTx's flu test sells for $30, takes an hour to process, and a flu treatment such as Glaxo's Relenza ( biz.yahoo.com ) isn't available. However, if Relenza is approved and Quidel brings to market a 5-10 minute, POC, CLIA waived, $10 flu test, there's no doubt in my mind, considering the large number of flu test candidates (reference the study), the demand for Quidel's test will be huge. Roche also has a flu treatment drug in Phase III ( roche.com ). Mike