Biocept Inc (NASDAQ:BIOC) gained more than 77% during Tuesday’s session this week, and is up more than 100% on last week’s close, on news that the company has picked up a fresh round of insurance coverage for its lead biopsy product. Blood tests in the field of oncology are going to be the future of cancer testing, and a number of companies – big and small – are scrapping to bring a commercial application of this sort of technology to the fore. Biocept is already there, and is working to maximize this step-ahead advantage.
Before we get into the details of what’s driving the run, let’s look at the company and its tech.
The company describes itself a cancer diagnostics company, which develops and commercializes proprietary circulating tumor cell (CTC) and circulating tumor DNA assays utilizing a standard blood sample. For the past thirty years or so, physicians have been using standard biopsies to determine the existence (and progress) of a patient’s cancer. Biopsies, however, are invasive, can be painful, and difficult to carry out in many instances. Biopsies pick up on certain tumor cells, and fragments of DNA, and can use the frequency of these two elements to determine how advanced the cancer in question is.
Biocept’s tests do exactly the same, but they detect circulating cells and the DNA fragments in blood, as opposed to from a direct tumor sample. The tests are called liquid biopsies, and Biocept has developed a platform called Target Selector, which is the technology that detects the fragments in the sample. Target Selector tests are non invasive, and require a small amount of blood. They are ideal for tough to reach biopsy cancers (say, lung cancer) and in clinical studies, have proven similar in detection ability to biopsy. They’re not quite as accurate, of course (it’s a sort of satellite test, so it’s never going to be 100% as effective) but it works, and it’s cheap, quick and easy.
So what did the latest announcement tell us?
Biocept has just secured an in-network provider agreement with Blue Cross Blue Shield of Texas (BCBSTX), the largest provider of health benefits in that state. For those not familiar with the concept of in and out networks, this agreement basically means that if a patient goes to a health care facility that is part of the Blue Cross network, they qualify for a larger discount on the amount they pay to bring the insurance bill to balance. Blue Cross has a very large network across Texas, and this is why the deal is such big news. That it is only in network, and doesn’t include out network, doesn’t really matter too much, since a large portion of the facilities in the state will qualify as in network.
The numbers support this statement. With the agreement in place, the number of patients with in network access to Biocept tests has grown to circa 185 million. That’s a fair portion of the entire US population, and sets the company in good stead for growth moving forward.
From here on out, it is all about patient and physician awareness. Biocept needs to get these tests on the radar of physicians across Texas and other states, in order to up the number of billable procedures. From the most recent numbers available, it looks as though it is working towards this goal, and doing so quite successfully. During the third quarter of 2016, the company accessioned over 1,000 commercial samples, more than double the test volume in the prior year period. Billable samples, which include commercial and development services, totaled 3,113 year-to-end-third-quarter, including 1,179 accessioned during the third quarter.
Revenues for the period (third quarter, 2016) came in at the a little over $1 million, up from $165,000 for the same period a year earlier. Biocept is still registering a net loss, $4.9 million during the third quarter, but as top line increases, and economies of scale kick in, this should narrow into 2017.
Cash isn’t an immediate issue, following a $10 million raise mid-October, but with the cost of physician education in this sort of thing relatively high, chances are the company will need to raise again at some point later this year, and that poses the primary dilutive risk right now.
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Disclosure: We have no position in BIOC and have not been compensated for this article.