Cantor Says Trovagene's Liquid Biopsies Have '10x The Kick,' Is Buying In

• TrovaGene Inc TROV shares are down more than 50 percent, since hitting a high of $13.29 on June 11, 2015.
• Cantor Fitzgerald’s Bryan Brokmeier initiated coverage of the company with a Buy rating and a price target of $10.
• Since most companies are developing blood-based assays to test for tumors, Brokmeier believes Trovagene has a competitive advantage, as it tests urine which gives 10 times the DNA yield.

Analysts Bryan Brokmeier said, “Over the last six months, TROV has transitioned into a commercial stage company with a 13-person commercialization team. The company launched a marketing campaign and Clinical Experience Program (CEP), which in addition to registering hundreds of doctors, the program should develop case studies and be another tool to drive adoption.”

The emerging diagnostic category of liquid biopsies allows for more frequent and non-invasive monitoring of “oncogene mutation status, disease progression, and disease recurrence,” Brokmeier wrote. Moreover, given the heterogeneity of tumors, liquid biopsies are less susceptible to missing a diagnosis.

Since most companies are developing blood-based assays, Trovagene has “a key competitive advantage,” since it is testing urine, “which it has demonstrated has 10x the DNA yield compared to blood.” Although revenues may not be significant in the near term, Brokmeier believes that Trovegene is positioned to become a leader in the cancer diagnostics market, given its “differentiated approach to cancer detection and monitoring.”

Brokmeier estimates that there are 16.0 million people in the US suffering from cancer, with 1.7 million new cases being reported every year, and almost 600K annual deaths. If the company is able to successfully demonstrate “validity and clinical utility of its assays,” it could penetrate 5 percent of the US cancer market by 2020, the Cantor Fitzgerald report stated.

“Assuming a $1,000 reimbursement rate, we forecast 2020 U.S. product revenues of $114.2M, which is based on relatively conservative assumptions, in our view,” the report added. Trovagene’s shares have plunged more than 50 percent since they reached a 52-week high on June 12, 2015. Brokmeier believes the pressure is “overblown,” especially in view of the “potential near-term catalysts.”