Molecular Diagnostics and Genetic Testing

07/13/2020 5:00 am EST

Focus: HEALTHCARE

Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

Mike Cintolo is a leading growth stock expert. Here, the editor of Cabot Top Ten Trader highlights two companies in the fast growing market for molecular diagnostics and genetic testing.

GenMark (GNMK) is a testing company. Its proprietary eSensor detection technology (dubbed eSensor XT-8) and ePlex systems are designed to support a broad range of molecular diagnostic tests with compact, easy-to-use workstations and self-contained, disposable test cartridges.

And its ePlex offering optimizes laboratory efficiencies and addresses a broad range of infectious disease testing needs. Its ePlex SARS CoV-2 Test, an in-vitro diagnostic (IVD), has been made available under an emergency access mechanism by the Secretary of Health and Human Service for COVID testing.

While not yet approved by the FDA, the authorization says “it is reasonable to believe that this IVD may be effective in the detection of COVID-19.” Vidant Health, the largest health system in eastern North Carolina (a recent hotspot), has just signed on to use GenMark’s ePlex SARS-CoV-2 test in all nine of its hospitals.

This test is what has investors excited, and analysts forecast revenue growth of 43% this year (albeit with continuing red ink), though based on how demand for testing is only growing in the U.S. as states try to reopen, it's certainly possible even that growth figure could prove conservative.

Invitae (NVTA) specializes in gathering genetic info across every stage of a person’s lifespan, working to consolidate testing into a single low-cost, rapid turnaround service, and it’s making good progress on that front.

Genetic testing makes it easier for medical professionals to understand and diagnose diseases since a big portion of health problems have genetic origins. Its efforts have led to test costs dropping from thousands of dollars to as low as $250 today.

Through its expanding genome network, the eventual aim is to increase the availability of genetic data to support healthcare decisions (one facet will be what it calls “precision oncology”) and the potential is huge, with the genetic testing sector expected to reach tens of billions of dollars a year for cancer alone.

While it didn’t offer official guidance, the company thinks 50%-plus annual growth for the next three to five years is possible for the combined entity. Genetic testing is a big idea, and Invitae’s latest move cements its position as an emerging leader in the area.

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