Reinforcing Our Bullish MyDx Inc (OTCMKTS:MYDX) Bias

MyDx Inc (OTCMKTS:MYDX) management just updated markets as to the company's progress this year, and the its market capitalization is up more than 51% heading into a fresh week this week.We've highlighted the company as being one to watch on a number of occasions over the past couple of months, and the latest gains validate our suggestion that MyDx is undervalued right now. Even with these latest gains taken under consideration, however, we think there's plenty more run room on offer.Here's a look at the highlights, and what we are watching for heading forward.By way of a quick introduction, MyDx is a San Diego based company, with a focus on chemical analysis of, well, pretty much everything. It's current focus ranges from air quality, to food and drink, to cannabis. This latter focus, cannabis, has obviously helped the company over the past month or so, with the legalization ballots boosting speculative volume.Unlike many others, however, there's actually some real potential for revenue growth here.We're going to focus on this cannabis testing product for the purposes of this discussion. Readers who want to catch up on the alternative applications, and MyDx's efforts with each, can check out our previous coverage here and here.The cannabis test is called CannaDx, and it is a handheld device into which users can insert a sample of their marijuana product. It then conducts tests and puts out an analysis of chemical content, designed to indicate quality and purity of the material.As discussed in the latest letter to shareholders, as a standalone business, the CannaDx product has generated revenues of circa $1 million since launch in the third quarter of 2015. For simplicity sake, then, we can say that it's generating at a run rate of $1 million annually as things stand. Additionally, management expects this business (the standalone CannaDx business) to become cash flow positive this quarter.Over the next twelve months, revenues are expected to grow to the tune of 100%.So we've got a business generating a positive bottom line that should bring in circa $2 million sales during 2017, and that's just the cannabis focus.MyDx's current market capitalization is less than $1 million – or to put that another way, the entire company is valued at less than 50% of expected 2017 sales of just one of its portfolio technologies.There's another potential growth source, however, and one that so far isn’t priced into any measure of valuation. In the latest communication, CEO Daniel R. Yazbeck said of this source:

We believe this asset alone has more potential than all of our other product lines combined.

He's talking about data. When a user tests their cannabis with the CannaDx product, the technology collects data and aggregates it on a MyDx server. The company has collected more than 30,000 data points to date, but this number will no doubt grow exponentially as sales increase and recreational marijuana use becomes (legally) mainstream.This data is going to be very valuable for big pharma in its development of new cannabis based drugs. Quality, composition and volume data is tough to come by without spending large sums to collect it internally. As its data volume picks up, CannaDx is going to have an off the shelf data source which it can package and sell to pharmaceutical companies, which can in turn use it to expedite their research and development efforts.Cash position isn’t great, but its far higher than it might be ($190K at June 30) and with the CannaDx set to become cash flow positive very near term, dilution isn’t too much of a potential issue. If it becomes so, it will be to fund high scale growth, which should mitigate any concerns.We will be updating our subscribers as soon as we know more. For the latest updates on MYDX, sign up below!Disclosure: We have no position in MYDX and have not been compensated for this article.