Quest Diagnostics (DGX - Analyst Report), a prominent player in the field of diagnostic testing, has expanded its portfolio with a new laboratory assay, named TERC test to help physicians recognize molecular changes to cervical cells that increase the probability of cervical cancer in women.
As cervical cancer fails to produce symptoms in the initial stages, this test is expected to play a vital role in the detection of pre-cervical cellular abnormalities among thousands of women with the risk of malignancy each year.
According to Quest Diagnostics, when standard screening tests like Papanicolaou (Pap) and human papillomavirus (HPV) fail to provide clear results about the cervical cancer risk, its TERC test will enable physicians to detect women who display characteristics of a cancerous state, unless treated.
The test will examine the abnormalities of telomerase RNA component (TERC) gene based on advanced scientific knowledge on molecular changes that turn cervical dysplasia into malignancy. The company believes that this test, which is designed as an addition to Pap and HPV tests, will act as a second opinion for doctors to confirm malignancy in the initial stage.
To develop the TERC test for cervical cancer, Quest Diagnostics earlier acquired a nonexclusive patent license for human TERC gene marker from the National Institutes of Health (NIH). TERC result will help in classifying risks in abnormal Pap tests prior to colposcopy.
Women with high risk results may benefit from additional cervical biopsies at colposcopy and more aggressive observation and treatment, while women with low-risk results may undergo lesser follow-up procedures.
With cervical cancer being the major cause of death in women in the U.S., we expect this TERC test to mark a definite improvement over traditional methods, leading to better treatment from faster detection. Therefore this test should strengthen Quest Diagnostics portfolio of molecular testing.
Quest Diagnostics has been working continuously on expanding its portfolio. In early 2012, the company started offering testing services to identify E6/E7 messenger RNA to help detect women infected with HPV who may have a significantly increased risk of cervical cancer.
Other significant tests that were launched over the recent past include a thyroid test to help physicians determine whether a thyroid gland is cancerous and requires surgical removal. Also, the company introduced c. difficile test and an advanced renal transplant monitoring test to detect rejection in kidney-transplant patients.
This test enables physicians to adjust therapy based on an individual's genetic makeup. All these tests not only improve patient care but also reduce the high costs associated with traditional treatment.
Quest Diagnostics is currently focusing on latent areas such as drugs-of-abuse testing, gene-based, esoteric testing for cancer, cardiovascular disease, infectious disease and neurological disorders. The company has been witnessing stronger demand for these tests than routine tests.
In order to bolster this specialized niche, Quest Diagnostics has engaged in accretive acquisitions such as Athena and Celera. This apart, we are encouraged by Quest’s efforts to improve its sales effectiveness and strengthen its relationship with health plans and payors.
However, the company continues to witness challenges with respect to physician office visits, which remains soft. Moreover, the competitive landscape is tough with the presence of Laboratory Corporation of America Holdings (LH - Analyst Report). LabCorp is also targeting the esoteric testing space and has acquired Genzyme Genetics to meet its objective.
We currently have a Neutral recommendation on Quest Diagnostics over the long term. The stock retains a short-term Zacks #3 Rank (Hold).