China Medical Technologies, Inc. (NSDQ:
CMED) (????????) reported it received SFDA approval for its Surface Plasmon Resonance (SPR) diagnostic technology, a molecular biology biosensor. China Medical Technologies has developed SPR as a diagnostic test for human papillomavirus (HPV), a common virus that causes warts and can ultimately cause cervical cancer. One year ago, China Medical paid a very substantial $345 million to acquire the technology.
SPR has been used as a research tool for 20 years to analyze proteins, nucleic acids and viruses. HPV can be diagnosed by adding pathological samples on the HPV-DNA biosensor chip, which is analyzed in the SPR System. The SPR System is label-free with high throughput, high speed and a high degree of automation. Results are displayed on a real-time and online basis. SPR also offers the possibility of being used in other clinical diagnostic applications, such as detecting infectious diseases, cancers, cardiovascular disorders and immune system disorders.
China Medical currently derives its revenues from selling diagnostic chips for two other diagnostic systems: ECLIA (Enhanced Chemiluminescence Immunoassay) and FISH (Fluorescent in situ Hybridization). Adhering to its current business plan, the company will install the SPR system in hospitals free of charge and then make its money by selling chips for individual tests. China Medical has done a very good job in the past of acquiring technology and turning it into a profitable business, but the $345 million upfront cost of the SPR system is much higher than its previous in-vitro diagnostic technologies.
At the time the technology was acquired, China Medical said the market for an HPV test was $700 million annually in China. HPV is very common condition. Most of the over 100 types of HPV are relatively harmless, causing skin or genital warts, while others can cause cervical cancer. Presently available HPV tests can classify the virus only into the high-risk or the low-risk categories, and these tests also suffer from high rates of false positives/negatives when identifying specific HPV genotypes. The SPR system can identify each of 24 distinctive common HPV genotypes, including 16 high-risk genotypes and 8 low-risk genotypes with a high degree of accuracy.
The HPV-DNA chips will be bundled together with China Medical's FISH probe for cervical cancer.
