Interpace Diagnostics Group Inc (NASDAQ: IDXG)
Shareholders in Interspace Diagnostics were treated to an extended holiday gift on Friday, with shares of IDXG soaring over 400% since Thursday on the news that Aetna, the third largest health plan provider in the United States, has agreed to cover IDXG's ThyraMir test for all of Aetna's 46 million members nationwide, with coverage effective immediately.
Meet IDXG And Its ThyraMir Thyroid Assay
IDXG's proprietary ThyGenX and ThyraMir thyroid assays are now covered for approximately 200 million patients nationwide, including through plans sponsored by Medicare, national, and regional health plans.
The IDXG ThyraMir and ThyGenX assays represent the only test available in the market that can act as a predictor of thyroid-related issues in a patient. Over 80% of those tested with IDXG's ThyraMir are brought back for additional diagnostics, demonstrating that the test has been shown to temper misdiagnosis and warn of early thyroid issues in patients. The ThyraMir test is not altogether new, with IDXG first offering the test back in 2015. Since then, the IDXG-developed test has been successfully conducted in over 5000 patients and has been supported by endocrinologists and pathologists throughout the country.
Both the ThyGenX and ThyraMir reflex testing have been able to foretell, with highly predictive value, the presence of cancer in thyroid nodules. The combination of both IDXG tests can provide improved diagnostic capability and offer surgical decision-making information when the current standard of testing fails to provide a clear indication for the presence of cancer.
Thyroid Cancer In The USA
The test coverage is a boon for IDXG. With thyroid cancer being the most rapidly increasing cancer in the United States (cases have almost tripled over the past three decades), the results of the IDXG test will be an important tool for physicians, providing a means to no longer indiscriminately perform thyroid surgery in patients. With almost 80% of the surgical outcomes showing that cancerous nodules were, in fact, benign, the IDXG ThyraMir and ThyGenX test will be an important indicator to reduce the rate of the unnecessary surgeries in cases where there is no clear indication of malignancy.
With over 525,000 thyroid fine needle aspirations being performed on an annual basis, it has been shown that 15%-30% of the results indicate an indeterminate finding, making the IDXG ThyraMir and ThyGenX test that much more relevant.
The state of the art test uses genetic sequencing that can identify more than 100 genetic alterations that are associated with both papillary and follicular thyroid carcinomas, which are the two most common forms of thyroid cancer.
The Future At IDXG
Obviously, with IDXG now on the verge of providing between 50K and 150K ThyraMir tests per year, the company will enjoy an enormous boost in both revenue and credibility. IDXG has additional tests in the pipeline that serve to evaluate the risk of cancer in the pancreas. With the success of the two recently covered tests, the likelihood that the IDXG science is technically sound for other cancer screenings may lead investors to effectively insinuate that they will have similar success in the pancreatic testing assays.
The stock closed at 25¢ on December 7th, and since then, IDXG stock has traded over 175 million shares and closed at $1.35 on Friday. The rise in volume is staggering, with IDXG trading an average of over 75 million shares on December 8th and 9th, up from its historical average of approximately 200K shares per day.
IDXG filed its most recent 10Q on November 17th and listed just 18.1 million shares outstanding. Frankly, with the potential for IDXG going forward, the share price may have a far greater distance to run. Perhaps the $47 million dollars in total liabilities has led to some investor caution, however, with the tiny O/S count, investors that bought shares last week are in an enviable spot.
While IDXG may retrace some of the move, it may prove to be highly unlikely that the share price will be kept below a dollar for any prolonged period of time. Revenues are going to soar, and interest from third parties will be enormous, with the potential for future predictive testing assays most likely in the near-term pipeline for IDXG.
The company reported $3.3 million dollars in revenue for the three months ending on September 30, 2016. The margins were tight, though, with IDXG having a gross profit of just under $1.5 million on those sales. Further, IDXG is working to restructure slightly over $10 million in debt and $3.7 million dollars in severance costs to former employees.
Regardless of the overhang from prior management and capital structure, IDXG shareholders should have little to worry about moving forward. Except for the potential of manipulative trading by aggressive market makers, shareholders should expect a continued rise in the share price moving forward.
Focused And Disciplined At IDXG
IDXG will be leaving a warped legacy behind, concentrating almost exclusively on a molecular diagnostics market that will offer significant growth opportunities by providing the tools necessary for health care providers to reduce medical expenses based on the predictive capabilities of the IDXG testing portfolio.
The next steps for IDXG will be to grow its test volumes, secure additional reimbursements, and support the current reimbursement and revenue growth for its innovative tests.
For shareholders that have not yet been introduced to IDXG, I suspect that the newly found attraction to the stock will not end anytime soon. For those willing to invest in IDXG, don't feel the need to chase it higher. Like most stocks that trade on the NasdaqCM, shares can be pushed quickly in either direction. Placing a bid well below the current bid may, in fact, allow an investor to snag some shares well below the current value, at least from a percentage standpoint.
As far as Soulstring's "Have We Met" stock of the week, I can only say that I wish I was introduced sooner. While so many investors fail to acknowledge a stock trading at less than a buck a share, IDXG goes to show that enormous opportunity exists for investors lucky enough to find these hidden stocks and perform the proper due diligence before making the investment.
For those that already knew IDXG, they were buoyed by a promising portfolio of tests and a low share count. For now, IDXG in in a position to become a long-term winner, with a current market cap of just over $24M dollars appearing to be extremely low, based on the news last week.
Keep an eye on developing news and market gyrations. Opportunities will present themselves and a cost average approach to purchasing stocks like IDXG, which have increased by over 400% in three days, is advised.
Disclosure: I have no position in any stock mentioned, but may initiate a long position in IDXG within the next 72 hours.
I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article. [adrotate group="4"]
[Image Courtesy of Wikipedia]