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Thermo Fisher (TMO)-AstraZeneca to Co-Develop NGS-Based CDx

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Thermo Fisher Scientific Inc. (TMO - Free Report) and AstraZeneca (AZN - Free Report) have collaborated under a multiyear global agreement to co-develop next-generation sequencing (“NGS”)-based companion diagnostics (CDx). Through the agreement, the companies aim to grow AstraZeneca’s portfolio of targeted therapies.

NGS-based CDx are widely used to match patients with new treatments for cancer and other diseases. Over 90% of AstraZeneca's clinical pipelines, including key areas such as oncology, cardiovascular and renal, metabolic, and respiratory disease are targeted precision medicine therapies.

The recent collaboration is likely to boost Thermo Fisher’s clinical next-generation sequencing and oncology businesses.

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At present, Thermo Fisher offers the only internationally distributable NGS CDx solution approved and reimbursed by governments and commercial insurers in over 15 countries, including the United States, multiple European nations, Japan, South Korea and the Middle East, covering over 550 million lives globally.

In 2019, Thermo Fisher launched the Ion Torrent Genexus System to expand access to a growing list of precision medicine therapies globally. This Ion system is the first fully-integrated NGS platform that has an automated specimen-to-report workflow that economically offers results in one day.

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Thermo Fisher’s comprehensive NGS workflow, powered by Ion AmpliSeq technology, features multiple solutions for solid tumor biomarkers and liquid biopsy testing.

Strategic Implications of the Collaboration

Per Thermo Fisher’s management, with the expansion of its pipeline of targeted therapies, the availability of diagnostic tools that can cross-examine multiple biomarkers at the same time will ensure that patients can be matched with the right therapies more quickly. Introduction of diagnostic tools early in the process of drug development will be able to further assist the success of CDx development.

The collaboration with Thermo Fisher will offer AstraZeneca the technology, expertise and ability to decentralise CDx tests to local healthcare providers across its markets worldwide, which will help the latter to spot more patients globally who can benefit from treatments and effective care.

Industry Prospects

Per a report by Grand View Research, the global oncology companion diagnostic market size was valued at $2.2 billion in 2019 and is expected to grow at a CAGR of 12.7% by 2027.

Considering the market opportunities, Thermo Fisher’s efforts to expand in NGS-Based CDx market are prudent.

Recent Developments

In August 2021, Thermo Fisher announced the receipt of the FDA’s pre-market approval for Oncomine Dx Target Test as a CDx to spot patients with isocitrate dehydrogenase-1 (IDH1) mutated cholangiocarcinoma who may be candidates for Servier Pharmaceuticals' TIBSOVO (ivosidenib tablets).

In July 2021, Thermo Fisher expanded its Hematology Oncology NGS portfolio with the launch of a new suite of Ion Torrent Oncomine immune repertoire assays intended to identify potentially malignant clones of T-cells and B-cells that play a vital role in the immune response system.

Price Performance

Shares of the company have gained 38.6% in a year’s time compared with the industry’s rise of 18.9%.

Zacks Rank and Key Picks

Currently, Thermo Fisher carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks from the broader medical space are Envista Holdings Corporation (NVST - Free Report) and BellRing Brands, Inc. (BRBR - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.

Envista Holdings has an estimated long-term earnings growth rate of 27%.

BellRing Brands has an estimated long-term earnings growth rate of 29%.