HTG Molecular Diagnostics Inc (NASDAQ:HTGM) is a company that we have covered on a few occasions here Insider Financial, with our most recent coverage back in July available here. It’s one that, for some time, we have held a bullish bias on but one that, across the period between our first highlighting it and now, hasn’t quite managed to find its feet in line with long-term potential.
Over the last few days, however, things have started to pick up.
The company trades for an 11% premium on its Monday open and gained 14% during the session on Thursday alone. Premarket on Friday it is up a couple more percentage points, suggesting that we may be seeing a longer-term turnaround in fortunes.
We know this stock pretty well, and there are a couple of very specific catalysts that we are watching out for as (we feel) being necessary for longer-term revaluation.
Here is what we are looking at.
Before getting into the catalysts, a quick introduction.
HTG is a molecular diagnostics company (as implied by the name) that has developed a technology platform that allows for the testing of various tumor samples in a way that is far more accurate and all-encompassing than the currently available systems. While there are numerous applications for this sort of technology, the primary right now (and the one on which we believe a large portion of this company’s value rests) is called the HTG EdgeSeq ALKPlus Assay.
The HTG EdgeSeq ALKPlus Assay is designed to allow for the sampling of formalin-fixed, paraffin-embedded lung tumor specimens from patients previously diagnosed with non-small cell lung cancer (NSCLC) and, in turn, the identification of the most appropriate treatment type for the patient in question – in this case, it’s intended to ultimately answer the question, is this patient eligible for ALK-targeted therapeutics, such as crizotinib.
Crizotinib, known commercially as Xalkori and marketed by Pfizer Inc. (NYSE:PFE) can be a game changer for late-stage cancer patients but not all patients respond to treatment. The idea behind EdgeSeq ALKPlus is that it can quickly and accurately identify whether a patient is likely to be a responder or not and, in turn, can maximize the efficacy of subsequent treatment.
In order to get this asset approved in the US, the company has to pick up what’s called pre-marketing authorization (PMA) from the FDA. This involves the submission of four separate modules that combine to create a full application.
It is in this application, and specifically the separate modules, that we find the catalysts mentioned above.
Three of the modules are already submitted and the FDA has completed its review of two of them. Subsequent to the review, the agency advised the company as to what it would require in the fourth and, specifically, said that HTG needed to conduct what’s called a method comparison study.
Management expects to complete the study during the first quarter of next year and this completion is the first of our major near-term catalysts. Once that’s complete, submission of the fourth module (as supported by the data collected from the just mentioned study) is another catalyst that should hit press during the second quarter of 2018.
Beyond that, we are looking at the FDA’s final response, which we expect at some point during the second half of next year, as finally getting this company moving in the long-term direction that we believe falls in line with its forward potential.
As ever, dilution is a risk at this point and we are looking at a more than six-month timeframe before the major binary event, so it’s not a stock for the fainthearted.
For anybody willing to shoulder a bit of risk, however, it’s well worth a look.
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Image courtesy of Army Medicine via Flickr
Disclosure: We have no position in HTGM and have not been compensated for this article.