Quidel Aims for a Piece of the Colorectal Cancer Screening Market
No matter how many times Katie Couric reminds folks that detecting colon cancer early can be a lifesaver, most people are pretty squeamish about the tests involved—not only the invasive ones like colonoscopy but even the less-invasive ones like those that look for traces of blood in the stool.
So I was intrigued to hear San Diego-based Quidel (NASDAQ: QDEL) tell the story about how it’s trying to enter the market for less-invasive tests with a product that might make the testing process a little easier to stomach. I met with chief financial officer John Radak to hear about the company’s growth strategy to move beyond its bread-and-butter marketed tests for pregnancy, flu, and strep throat.
This is where colorectal cancer enters the picture. More than 108,000 people in the U.S. are estimated to get this disease each year, making it the nation’s third most common malignancy behind lung and prostate cancer, according to the American Cancer Society. The organization recommends that the 91 million Americans over the age of 50 get screened for colorectal cancer, and one option for doing this is undergoing annual testing for blood in the stool, which can be an early sign of colorectal cancer. Quidel thinks it can capture a tidy portion of that market, and turn it into a corporate growth engine.
“We think we can give you an early indication of colorectal cancer,” Radak says.
Notice he didn’t say this offers a rock-solid definitive diagnosis. Colonoscopy is considered the gold standard for accuracy, because it uses a tiny camera mounted on a tube to actually look inside the colon and possibly take a biopsy of any suspicious tissue. But this is obviously a little uncomfortable, and carries the risk of overlooking flat polyps in the colon, or even puncturing the bowel, Radak says. So when he said, “This screen is not a replacement for colonoscopy,” you can understand how this was a bit of a letdown. But given that many people simply refuse colonoscopy or don’t have access to it, there is a viable market for screening tests like Quidel’s.
Quidel’s test isn’t one of those whiz-bang molecular diagnostics that I sometimes hear about in development, that are supposed to detect trace amounts of DNA or proteins shed by tiny tumors into the bloodstream. Quidel (pronounced QWHY-dell) is instead marketing a more traditional “immunochemical” test that uses antibody-based dyes to detect blood in the stool, Radak says.
A recent study indicates that Quidel’s test catches 96 percent of colon cancers and accurately rules out cancer 82 percent of the time.
There are also convenience advantages for the Quidel technique, Radak says. The company’s method requires patients produce just one sample, he says, instead of the three required with the so-called guaiac test, the most commonly used test for blood in the stool. This means it should encourage patients to actually follow doctors’ orders and complete the test, which is a major challenge, Radak says.
Quidel’s test is also specifically spots human hemoglobin, a protein in blood, and won’t mistakenly give a positive reading by picking up trace amounts of animal blood. “If you go out to a nice steak house the night before the test,” then some of the cow’s blood could show up in the guaiac test and set off false positive alarms, Radak says. The advantages are compelling enough, that “we are looking to convert the entire market from guaiac to immunochemical,” Radak says.
The Quidel test costs about $10, so it will take a lot of sales volume for this to spur growth for a company that had $118 million in revenue last year. A lot will depend on whether the company can persuade physicians to get on board. Currently only about 2 to 3 percent of the 50 million fecal blood tests sold each year are of the immunochemical variety like Quidel’s, Radak says.
The company isn’t giving financial guidance on its expectations for the test, although it’s sharpening up its marketing message—focusing on the fact that patients only need to produce one stool sample. “Then they’re done,” Radak says. One and done—given people’s squeamishness about the whole idea of these tests it sounds like a reasonable pitch to me.