What is the potential market size for the Percepta Nasal Swab lung cancer test compared with existing diagnostics, and how will Veracyte capture market share?

Potential market size

The U.S. lung‑cancer diagnostic market is estimated at ≈ $5 billion in 2024, dominated by imaging (CT/PET‑CT ≈ $2.5 bn) and invasive tissue‑biopsy pathology (≈ $2 bn). Molecular‑testing panels and next‑generation‑sequencing add another ≈ $0.5 bn. A non‑invasive, “first‑line” molecular test that can rule out malignancy in patients with indeterminate pulmonary nodules therefore targets the screening and triage segment—the portion of the market that currently relies on repeat CT scans and costly bronchoscopy/biopsy work‑ups. Analysts widely quote a ≈ $1 bn‑$1.5 bn annual volume for this pre‑screening niche (≈ 20 % of total lung‑cancer diagnostics).

Percepta’s nasal‑swab assay is positioned to capture a share of that niche because it:

• Reduces the need for repeat imaging – each avoided CT scan saves ∼ $300–$400 per patient.
  
• Avoids invasive bronchoscopy – average pathology cost ≈ $800–$1,200 per procedure.
  
• Offers a rapid turnaround (≤ 3 days), enabling earlier treatment decisions and downstream therapy revenue (e.g., targeted‑therapy prescriptions).
  

Assuming Veracyte can price the test at $250‑$300 per kit (typical for molecular screening assays) and attains 15–20 % of the pre‑screening niche within 3‑5 years, projected annual revenues range $180 – 300 million—a modest but high‑margin addition to Veracyte’s $500 million+ existing revenue base.

How Veracyte will capture share

1. Clinical‑utility data lock‑in: Completion of the NIGHTINGALE enrollment provides a full data set (≈ 1,200 patients) to demonstrate a ≥ 30 % reduction in downstream imaging/biopsy versus standard work‑up. Strong utility outcomes speed up payer coverage decisions and foster inclusion in diagnostic pathways.

2. Reimbursement strategy: Veracyte will seek a new CPT code (or add‑on code) for the nasal‑swab test, leveraging the trial’s “clinical‑utility” label to argue for a value‑based pricing model tied to avoided downstream costs. Early coverage from Medicare/major private insurers would generate a de‑‑facto “first‑line” status.

3. Provider adoption framework: The test is performed at the point‑of‑care (clinic or primary‑care office) with a simple collection kit, aligning with the “refer‑and‑receive” model that many pulmonology groups already use for the existing Percepta bronchial‑brush assay. Veracyte will bundle the nasal swab with its established cytology platform, offering bundled analytics and a streamlined EMR integration that reduces administrative burden—key differentiators versus stand‑alone molecular labs.

4. Geographic roll‑out: After US launch, Veracyte can leverage its 70 + global partnerships to expand into EU markets where lung‑cancer screening programs are being legislated (e.g., France, Germany). Early market‑share capture outside the U.S. could add another 5‑10 % of the global niche.

Trading implications

The trial‐completion milestone is a near‑term catalyst that clears the path for a possible FDA submission (Q4 2025) and payer coverage announcements in early 2026. Given the size of the pre‑screening pocket and the test’s cost advantage, analysts are likely to upgrade revenue forecasts for Veracyte by 15–20 % in 2025‑26. The stock, which has been trading near a 12‑month low (~ $5‑$6), could experience a 10–15 % bounce on the first positive data release, with upside further priced in if early payer coverage is confirmed. Conversely, if the clinical‑utility results fall short of the 30 % reduction threshold, the upside will be capped.

Actionable view: Hold with a modest upside bias ahead of the Q1 2025 data release; consider a long‑position at current levels with a target of $7.50–$8.00 if the trial meets its primary endpoint and Veracyte secures coverage for the test within the next 12 months. Risk management should monitor interim safety signals and payer policy updates, which could materially affect the share‑capture trajectory.