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correctly identify 91.1 percent of people who had the infection—what’s referred to as “sensitivity.” By comparison, blood culture diagnostics have a sensitivity rate of about 60-70 percent, according to McDonough.
McDonough says that data show that when Candida-infected patients are treated with the right antifungal drugs, their hospital stays are cut by nine days, and their ICU stays are reduced by 2 days. That translates into an average of $30,000 in savings of that total $130,000 cost. McDonough adds, for instance, that if T2 were to charge $800 per test—it plans to price it much lower, between $150 and $250—a hospital would break even economically. Reimbursement in the U.S. isn’t a hurdle for T2Candida, because sepsis diagnosis and treatment is covered by a fixed-sum reimbursement under diagnosis-related group, or DRG codes.
“They’re losing money on these patients usually,” McDonough says of hospitals. “So if we can provide savings and reduce the use of antifungals, reduce length of stay, all of those savings drop to the bottom line of the hospital.”
That’s the commercial argument. The challenge will be for T2 to get hospitals to buy its machines and panels, and trust them enough to adopt them as part of standard practice—not necessarily in lieu of blood culture tests, but at least along with them. And even if that’s successful, it’s unclear just what the market opportunity is, because T2 is trying to create a new niche, wedging itself in front of blood culture tests.
“We’ll have a much better ability to size this market once the products have been commercialized for a couple of years and we have a better feel for how they are used in clinical practice,” writes Leerink Partners analyst Dan Leonard, in a recent research note.
McDonough says with about 6.75 million patients in the U.S. every year with a “high risk” of Candida infection, T2 could theoretically pull in $1.35 billion at $200 a T2Candida test. Leonard was more conservative in his report, estimating the U.S. market at somewhere between $700 million and $900 million annually, which would still place it “as one of the largest markets in infectious disease diagnostics.” The T2Dx machine itself will be priced “in the order of” $150,000, though McDonough adds that it’ll put rental programs in place for those that don’t want to buy the machine. (He says that competing optical-based instruments cost anywhere from $50,000-$500,000.)
Still, those numbers are pure conjecture right now. T2 hasn’t sold a single test or instrument yet, and has yet to see how its tests will be used in hospitals. The company aims to fill out a 15-person sales force by the end of 2015, and is targeting the top 450 or so hospitals in the country, with the goal of having 30 of them as customers by the end of next year, according to McDonough. But to do so, McDonough—a one-time executive at Cytyc—says the company is going to have to publish more peer-reviewed data, set up a registry, and secure those key early customers to boost its credibility in the marketplace.
“While anecdotally it feels like it could be an iPhone type of thing, it won’t be,” he says. “These products go through an adoption curve. Some people are going to believe the data, some people will push back on the data. Some will adopt early, and some will take time.”
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