Liquid Biopsy · @Liquid_Biopsy
24th Aug 2015 from TwitLonger
BofA Merryl Lynch: $SQNM $ILMN $PKI NIPT picking up steam
Non-invasive prenatal testing (NIPT) is currently ILMN’s largest clinical market. NIPT is
broadly used in the US on high-risk pregnancies, and the move to the average risk
population is gaining traction. There are now a few private insurers in the US (incl. one
of the largest, Anthem) that reimburse for avg. risk, which may be in part due to
friendlier position statements from ACOG and large longitudinal studies revealing the
economic benefits of broader testing. ILMN still expects ACOG guideline changes in the
next 12-18 months, but we note that most other insurers quickly followed Anthem after
they first covered high-risk. Although expanding NIPT into the average risk population
would increase US test volumes by roughly ~10x, the average risk market represents
only a 5-6x dollar opportunity multiplier for ILMN on its existing $1bn reproductive
health TAM, as the average risk price point would be lower.
To address the decentralized
European market, the company is working on CE-IVD marking for its NIPT software and
assay, which are still expected by YE15. Despite being just ~5% of total sales today,
China is a key part of ILMN’s NIPT and overall business strategy. ILMN is partnered with
Chinese companies Berry and Annoroad to develop NGS systems to the address the local
NIPT market, and both collaborations are progressing. In our view, recent news stories
suggesting that China may introduce population-boosting initiatives in its 2016-20 five
year plan (over concerns that a decline in the working-age population could further slow
domestic growth), could be a positive for both ILMN (see this note for more details) and
PKI (the market leader in newborn screening)