Brian Marckx, CFA
Chembio Diagnostics (CEMI) announced this morning that they received CE Marking for sale of its point-of-care DPP Syphilis Screen and Confirm test in Europe. While we had expected the test to receive CE Mark by the current year-end, this news is a major positive for Chembio and also validates their capabilities and progress in getting their various DPP tests to market.
Chembio's DPP Syphilis test is a combination non-treponemal (screen) and treponemal (confirmation) test. It is the only point-of-care (POC) syphilis test approved for sale in Europe that can both screen for the virus and confirm the diagnosis. The distinction is important as; 1) current syphilis testing is done primarily via clinical lab tests (i.e. – diagnosis is not available at the point of care) using separate non-treponemal and treponemal tests and 2) currently available POC syphilis tests do not detect both trepenomal and non-trepenomal antibodies, which can result in a significant number of misdiagnoses.
We believe there could be substantial demand for an accurate syphilis test in the POC setting. Chembio's syphilis test allows a patient to receive their diagnosis while in the physician's office (or clinic) and in the event they test positive, to receive treatment immediately. It also does not require a separate clinical-lab test to confirm the diagnosis. Results with clinical lab-based tests may not be available for days or weeks after the patient is tested, requiring the patient to return to see their doctor for treatment – oftentimes patients do not return for treatment (which may have to do with the stigma associated with syphilis) which can have serious adverse consequences.
We model a small revenue contribution from sales of Chembio's DPP Screen and Confirm test in Europe in the current year but expect sales to show a much more significant ramp during 2012 when the test could be available in both the European and U.S. markets. Chembio recently commenced U.S. clinical trials in support of an expected 510(k) filing in 2012.
We cover Chembio with an Outperform rating and $1.10 price target.
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