Exagen Diagnostics Joins Medco - Analyst Blog

Recently Medco Research Institute, a wholly owned subsidiary of Medco Health Solutions (MHS) decided to enter into a partnership with Exagen Diagnostics, a specialty diagnostics laboratory that innovates, develops and distributes proprietary tests. Under this collaboration, both the companies plan for pilot launching of a new personalized medicine program called NIMBLE (Novel Interventions in Methotrexate Boosts Levels of Effectiveness) for rheumatoid arthritis patients.

Current survey shows that approximately 1.3 million adults in US suffer from rheumatoid arthritis. Many of these patients are being treated with low-dose methotrexate which is considered as safe, cheaper and a highly effective solution for the treatment. The pilot program NIMBLE will be helpful for physicians to effectively determine the optimal level of this low-dose methotrexate therapy. It will work with Exagen's proprietary Avise PG lab test to measure whether patients are receiving an appropriate dose of methotrexate.

Under this set up, Medco Research Institutewill work with Medco clients to recruit patients to take part in the NIMBLE program.  Medco estimates that around 400 members who are new to methotrexate will undergo the Avise PG lab test, thus huge scope lies with the successful pilot launch of NIMBLE.

Overthe past few quarters, Medco demonstratedsuccessful performance in its Specialty business segment primarily banking on significant new client wins and continued growth across the specialty business (Accredo). During the first quarter of fiscal 2011 this segment reported revenues of $3.1 billion, up 14.9% year over year. Presently, the company is focusing on several strategic initiatives such as improved product and channel mix along with new client wins to drive the growth further.

Moreover, encouraged by a robust cash balance, Medco targets suitable acquisitions. The company has adopted several strategies in the recent past to increase its footprint in the international market, which holds immense potential.

We are currently ‘Neutral’ on Medco which also corresponds to a Zacks #3 Rank (short term).

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