LabCorp, GENFIT Tie-Up To Develop Test For NASH, Widen Suite

Laboratory Corporation of America Holdings (NYSE:LH) or LabCorp recently announced that, its drug development business Covance has signed a licensing agreement with GENFIT. The agreement will expand LabCorp and Covance’s access to the non-alcoholic steatohepatitis (NASH) liver diagnostic test, NIS4, developed by GENFIT. Through the agreement, NIS4 will be deployed in the clinical research space through Covance’s central laboratories.

This association will help in further studying NIS4’s effectivity in identification and characterization of patients along with developing biological insights on NASH disease pathogenesis.

Market Potential

Going by a report published by Allied Market Research, the global NASH market is expected to see a CAGR of 58.4% between 2021 and 2025. Considering the company’s efforts, we believe it is well-positioned to gain from the bountiful opportunities in the niche market.

Strategic Collaborations Drive Growth

LabCorp has strengthened its foothold in the diagnostics space through both organic and inorganic means and plans to collaborate with leading companies and academic institutions to provide a wider portfolio of tests. Among the company’s recent alliances, worth mentioning are the company’s collaborations with UnitedHealthcare and Aetna (NYSE:AET) which have helped LabCorp become a contracted laboratory provider for all major national plans. This apart, the company’s comprehensive laboratory collaborations with Baptist Health and Appalachian Regional Healthcare are important.

Also, LabCorp’s Covance recently announced a tie-up with Definiens, a pioneer in artificial intelligence (AI)-based image analysis to improve global development of precision medicine. Covance has also made a strategic technology agreement with GlaxoSmithKline. Under the terms of the agreement, GSK will use Covance’s Xcellerate Monitoring, Xcellerate Insights, and Xcellerate Clinical Data Hub solutions in a software-as-a-service model.

Share Price Performance

Over the past six months, shares of LabCorp have underperformed its industry. The stock has declined 31.6% compared with the industry’s 15% fall.

Zacks Rank & Key Picks

LabCorp carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Veeva Systems (NYSE:VEEV) , Integer Holdings Corporation (NYSE:ITGR) and Surmodics, Inc. (NASDAQ:SRDX) .

Veeva Systems’ long-term earnings growth rate is estimated at 19.5%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Integer Holdings, with a Zacks Rank #1, has an earnings growth rate of 31.2% for the first quarter of 2019.

Surmodics’ long-term earnings growth rate is projected at 10%. The stock carries a Zacks Rank of 2 (Buy).

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