Is HTG Molecular Diagnostics Inc (NASDAQ:HTGM) Finally Starting To Turn Around?

For the past six months we've repeatedly suggested that HTG Molecular Diagnostics Inc (NASDAQ:HTGM) is undervalued and should be in line for a near term revaluation. Of course, just because something should revalue doesn’t mean that it will, and this stock has been a tough one to hold over the last few months. From less than $2 a piece it ran up to double figures back at the end of March on some news that its lead tech had picked up a regulatory green light in Europe. However, HTG quickly gave back the lion's share of its gains an, at the end of last week, closed out around $2.40. This week has brought with it some degree of reprieve, however, and the company currently goes for $2.75, having gained around 15% on Monday.Could this be the start of a longer term turnaround? Perhaps.It's dangerous to try and catch a falling knife but sometimes you've just got to take the plunge and, when taken against a backdrop of three months of gradual, but consistent, depreciation, it looks like this might be the time to take a position in anticipation of the ship turning around.For newer readers, it might be worth reintroducing what underpins our bull thesis on this one. The company is a biotech stock that has developed a technology designed to improve on the current standard of care options in the diagnostics space and, specifically, the space as applied to the oncology field. The technology is called EdgeSeq and, while it's a pretty complicated but of it, the justification for its necessity is relatively simple.The oncology space has spent the last twenty years or so reducing the invasiveness of cancer diagnostic testing. How? By reducing the size of the sample needed from tumors. Smaller sample, smaller incision, less pain/time in hospital etc. That's great, but it's only one side of the equation. The technology that actually does the testing is able to do so on small samples, but the samples aren’t able to be reused across different testing machines. To put this another way, one sample used to be good for a spate of different tests as physicians could split it into pieces, one for each test. With the tiny sample sizes that are taken today, the sample can't be split across (many) tests, meaning the picture that a physician can get of the cancer in question (type, size, etc.) from said sample is limited.And this is where EdgeSeq comes in. The technology allows for a spate of different tests to be conduced on the same, tiny sample. If it uses EdgeSeq, a laboratory doesn’t need to break down a large sample into smaller pieces and spread it across machines, nor does it need to restrict its testing to a handful of the available options because of the limitations of the sample size.The company is conducting tests with some of the biggest names in pharma right now to prove the market for this technology (Merck & Co., Inc. (NYSE:MRK), Bristol-Myers Squibb Co (NYSE:BMY) and Qiagen NV (NASDAQ:QGEN) to name three) and the outcomes of these collaborations are going to serve up some real impactful news over the next twelve months. Our thesis is simple, then – this company can only remain under the radar for so long before it eventually starts to draw the speculative volume it deserves.As we've said in the past, the real risk here is on e of dilution. The company needs to start appreciating in value soon or the threat of a raise, or even a split (although we're pretty certain it's not going to fall that far), is going to limit any upside impact of positive news.That's part and parcel of this end of this space but it doesn’t negate its impact on a trader's weighing up of the benefit of an exposure.Catch up on our previous coverage of this stock here. We will be updating our subscribers as soon as we know more. For the latest updates on HTGM, sign up below!Image courtesy of Fawu via FlickrDisclosure: We have no position in HTGM and have not been compensated for this article.