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Interpace Diagnostics Group Inc (NASDAQ:IDXG) Making A Comeback

Interpace Diagnostics Group Inc (NASDAQ:IDXG) Making A Comeback
Written by
Jim Bloom
Published on
September 20, 2017
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A lot has transpired in and around Interpace Diagnostics Group Inc (NASDAQ:IDXG) since we last discussed the company here.In the last couple of months, IDXG has made several announcements. Of these announcements, there are few that we believe have put the stock on the radar of many more investors and that they will have far-reaching effect on the direction of the stock both over the short and long-terms.Before we get into the details of today’s review of IDXG, take a look at the company’s price action. IDXG Daily ChartA piece of information contained in a September 18 securities filing by IDXG shocked the market and caused the stock to pull back. Fortunately, the shock wasn’t strong enough to reverse the general comeback that the stock has exhibited since releasing strong quarterly results for 2Q17 and issuing a number other coverage updates.In this report, we examine some of the notable recent developments around IDXG.BusinessIn case you are coming across IDXG for the first time, we’ll give you a little background on the company.IDXG was incorporated in 1986 and it is headquartered in Parsippany, New Jersey. The company develops and commercializes molecular diagnostic tests geared to the cancer diagnosis market. Its ThyGenX is used to assess thyroid nodules for risk of malignancy, while its ThyraMIR is used to assess thyroid nodules for risk of malignancy based on a proprietary gene expression assay.IDXG’s customers are primarily physicians, hospitals and clinics.Recent developmentsIn a September 18 filing with the US Securities and Exchange Commission (SEC), IDXG said it held its annual shareholder meeting on September 14. Several proposals came up for voting at the meeting, including election of two board members.The securities filing also contained information about shareholders voting to increase IDXG’s authorized shares – the maximum number of shares the company can issue. The shareholders voted to increase the company’s authorized shares by 3.7 million.The passage of the proposal on authorized shares expands room for stock dilution at IDXG, which is not something that the market likes to here.But looking beyond the dilution risk, there are more impressive reports on IDXG.On August 28, IDXG announced the renewable and extension of its 2016 contract with Laboratory Corp. of America Holdings (NYSE:LH) or LabCorp. LabCorp is a leading global life sciences company and an operator of a healthcare diagnostics company.The contract between IDXG and LabCorp was extended by two more years, so it will run until January 2019. During the contract period, LabCorp will exclusively offer IDXG’s ThyGenX and ThyraMIR for the diagnosis of thyroid cancer in patients with indeterminate thyroid nodules.Here’s what Jack E. Stover, the President and CEO of IDXG, stated about the renewable and extension of LabCorp contract.

“We are pleased to renew and extend our agreement with LabCorp, a world leader in healthcare diagnostics. Execution of the initial phase of our arrangement has proven successful and we are encouraged by recent developments that clearly facilitate the opportunities to work even more closely together in the future.”

Source:In assessing the potential impact of this contract renewable with LabCorp on IDXG’s stock price, there are two ways to look at it. First, the contract renewable means that IDXG has secured the revenue that streams to it through LabCorp by another two years. Second, contract renewable and extension with a prominent company like LabCorp give much-needed reputational boost to IDXG’s cancer tests. LabCorp has a market cap of more than $15 billion.On September 11, IDXG announced that the American Medical Association (AMA) has assigned the coveted discreet CPT (Current Procedural Technology) code to its ThyraMIR test. The discreet CPT label shows that a technology boasts enough distinctive characteristics from other tests such that a discreet CPT code for billing payers is warranted. As such, the code will simplify and expedite the process for IDXG in submitting claims and securing reimbursement.The AMA assigned the code after conducting a formal review of IDXG’s submission in relation to ThyraMIR.With ThyraMIR having been cleared, IDXG expects to have a much easier time seeking CPT code for its ThyGenX-ThyraMIR combination test.This is how Jack E. Stover, the President and CEO of IDXG, reacted to the assigning of CPT code for ThyraMIR:

“This important reimbursement milestone combined with our other recent announcements regarding increased coverage of ThyraMIR, will enable the Company to fully leverage the increasing access of the test to both patients and physicians.”

Source:As the CEO noted, IDXG has in recent months attracted more health insurers to cover its tests.For instance, IDXG announced on August 16 that coverage for ThyraMIR had exceeded 250 million lives across the US. That happened after IDXG expanded ThyraMIR coverage with Oxford Health Plans, a UnitedHealthcare company.IDXG’s tests, including ThyGenX, have nationwide coverage by insurers such as CIGNA Corporation (NYSE:CI) and Aetna Inc (NYSE:AET).ConclusionIn summing up, we see that the moves that IDXG is making, such as winning more coverage for its tests and securing coveted product labels, are having positive impact on the company’s finances – and the market is starting to realize this. The company finished 2Q17 with cash balance of $14.3 million, implying a double increase from the prior quarter. IDXG didn’t have any long-term at the end of 2Q17, and its liabilities diminished and assets grew during the quarter.We will be updating our subscribers as soon as we know more. For the latest updates on IDXG, sign up below!Disclosure: We have no position in IDXG and have not been compensated for this article.

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