Big Upside Potential in 2018 for Innovative Molecular Diagnostics Company


A profound shift is underway in healthcare delivery and clinical practice.

The conceptual and technological foundations for this change can be found in the accelerating momentum of biomedical research over the last three decades.

One of the most exciting areas within this changing landscape has been the advances in molecular diagnostics.

New genomic-driven diagnostic methods provide vital predictive, prognostic, and therapeutic information that drives improved and personalized patient care.

The biggest advances are still ahead, but there is no shortage of exciting developments already happening in this multi-billion-dollar space.

Molecular Diagnostics Market Expected to Reach $10B+ by 2021

According to industry research, the global molecular diagnostics market is expected to reach more than $10 billion by 2021, growing at a 9.1% CAGR.

We’ve identified a molecular diagnostics stock trading on the NASDAQ that is generating even faster growth from its expanding portfolio of innovative, commercially-available tests.

Despite its strong growth, revenue was up 27% year-over-year in Q3, the stock remains significantly undervalued relative to peers, trading for less than 2x its trailing 12-month sales.

Thyroid Assays Cover 275 Million Patients in the US

The company, Interpace Diagnostics (NASDAQ: IDXG), has already secured coverage for its thyroid franchise (ThyGenX and ThyraMIR) from Medicare as well as most major health plans, including United Healthcare, Aetna, Cigna, and others.

ThyGenX and ThyraMIR combine genetic alterations and micro RNA testing for thyroid cancer. This testing combination helps to better assess the risk of thyroid nodules being either benign or malignant. The results from the combined testing also provide an estimated accuracy of “Rule in” or “Rule out” for the risk of progression of indeterminate cysts to malignancy. Clinical evidence supports combined testing:

  • 85% reduction in unnecessary surgeries
  • 94% likelihood negative results are truly benign
  • 74% likelihood positive results are malignant

This compares to a competing product, Afirma, which delivers 50/50 likelihood of malignancy.

In August 2017, the Company launched its newest version of ThyGenX which includes the TERT marker. Currently, the ThyGenX mutational panel includes the following markers: BRAF, HRAS, KRAS, NRAS, RET/PTC, PAX8/PPARy, and PIK3CA. By adding TERT, the panel will not only continue to be a strong positive predictor of thyroid cancer but will also provide evidence that a positive result indicates the cancer is likely to be more aggressive in nature.

Test Portfolio Expansion Targeting Lung Cancer

IDXG introduced a lung cancer test (RespriDXÔ) in September 2017 that differentiates between the local recurrence of cancer versus new primary cancer formation.

According to Dr. Jan F. Silverman, System Chair, Department of Pathology and Laboratory Medicine at the Allegheny Health Network, “We have found this testing to be invaluable since it can affect the staging of the patient and treatment decisions.”

Importantly, the RespriDXÔ test is already covered by the Company’s Medicare Administrative Carrier as well as numerous commercial carriers.

According to the American Cancer Society, lung cancer represents the second highest number of new cancer diagnoses in the U.S. for both men and women after prostate and breast cancer, respectively. However, it represents the highest number of deaths for both men and women, with over 220,000 deaths per year.

Jack E. Stover, President and CEO of Interpace Diagnostics stated, “This represents a significant milestone for the Company as we expand our menu to include an entirely new vertical line of business in lung assays using our already proven technology. We believe this initiative will further diversify our product offering while potentially providing for further expansion of our revenues.”

Pancreatic Cancer Test 90% Accurate According to Clinical Studies

PancraGEN is IDXG’s pancreatic cyst molecular test that, by using a small sample of pancreatic cyst fluid, can aid in pancreatic cancer risk assessment.

According to clinical studies, PancraGEN is 90% accurate, enabling effective risk stratification of patients.

Pancreatic cancer is often difficult to diagnose in early stages and typically spreads rapidly with signs and symptoms appearing when the cancer is significantly advanced. Because of this, and that complete surgical removal of the pancreas is not possible, pancreatic cancer is considered a leading cause of cancer deaths.

Exclusive Contract with $18B Industry Giant, LabCorp

IDXG signed a two-year extension to its agreement with LapCorp (NYSE: LH) in July 2017.

The two companies initially entered into an Agreement in January 2016 whereby LabCorp agreed to exclusively offer IDXG’s ThyGenX and ThyraMIR molecular tests. 

Significantly Improved Financial Position

Through the first nine-months of 2017, IDXG raised an estimated $27.9 million in gross proceeds.

Together with revenue growth and cost-cutting efforts, the new capital has enabled the company to eliminate all its long-term debt.

 As of November 2017, the company had a cash balance of more than $16 million.

Big Upside Potential in 2018

IDXG has proven its ability to grow and secure large-scale reimbursements for its tests. With the stock trading for just over a dollar, investors taking advantage of low valuations could reap significant rewards in 2018 and beyond.

To learn more about IDXG, visit: https://www.redchip.com/company/health-care/IDXG/352/idxg.

You can read the full research report and watch interviews and presentations with IDXG’s CEO, Jack Stover.

 

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