CEMI: Study May Offer Support for DPP HCV Test

Brian Marckx, CFA

Results of a study in which IV drug users in San Diego were tested with three rapid hepatitis-C antibody assays potentially provides further support of Chembio's ( CEMI ) decision to move forward on continued development of its DPP HCV test.

The study article, titled "Field-based performance of three pre-market rapid hepatitis C virus (HCV) antibody assays in STAHR (Study to Assess Hepatitis C Risk) among young adults who inject drugs in San Diego, CA", was published in the online version of the Journal of Clinical Virology and will also be published in the July print version.

Three rapid tests were used in the study, which included Chembio's DPP HCV oral fluid (cheek swab) and blood tests (finger-stick) and MedMira's blood test. Sensitivity and specificity measures were compared to widely used laboratory tests. The highest sensitivity achieved for CEMI's oral fluid and blood tests were 85.4% and 97.1%, respectively. The highest sensitivity for MedMira's blood test was just 80.0%. Specificity of CEMI's oral fluid and blood tests and MedMira's test were 100%, 99%, and 100%, respectively.

Sensitivity and specificity of CEMI's blood test, the authors noted, were "acceptable" and "comparable to conventional assays currently in use." The conventional assays used as comparators were two laboratory assays including that used by the CDC.

Chembio has previously noted that they were in discussions with potential partners for commercialization of a DPP hepatitis C test. Chembio had already done significant work on an HCV test so, depending on the circumstances, we think further development could potentially move along quickly. Management has also noted that discussions with
potential collaborators for an HCV diagnostic, including diagnostic and pharma companies remain in the early stages but ongoing. However, as we've noted in the past, we do not currently model any contribution from a DPP HCV antibody test based on the uncertainty of development and ultimate potential commercial demand. Depending on the progress and success of CEMI's HCV development program, we will update our model accordingly which could potentially provide some upside to our current model.

We cover Chembio with an Outperform rating and a $10.40 (adjusted for the recent 1 for 8 reverse split) price target.


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