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TrovaGene Rallies despite Wider-than-Expected Q3 Loss

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TrovaGene Inc TROV reported adjusted loss of 37 cents per share in the third quarter of 2015, wider than the Zacks Consensus Estimate of a loss of 28 cents and the year-ago loss of 23 cents. The wider loss can be attributed to higher operating expenses.

Following the release, shares of TrovaGene increased 3.3% (15 cents) to $4.75 in after-hours trading.

Trovagene Inc. (TROV) - Earnings Surprise | FindTheCompany

Meanwhile, revenues were flat year-over-year at $0.06 million in the quarter. Operating expenses jumped 61.8% on a year-over-year basis to $6.5 million in the quarter, driven by higher research & development (R&D), selling & marketing (S&M) and general & administrative (G&A) expenses.

R&D and G&A expenses were up almost 28% and 33%, respectively, on a year-over-year basis to $2.5 million and $1.9 million. Also, S&M expenses more than tripled on a year-over-year basis to $1.8 million in the quarter.

As a result, TrovaGene reported loss of $6.4 million from operations, which was much wider than a loss of $3.9 million reported in the year-ago quarter.

Clinical Development Programs/Collaborations

TrovaGene continues to focus on developing and commercializing its Precision Cancer Monitoring (PCM) technology. In order to achieve this goal, the company continues to present and publish clinical data and study results from several platforms.

At the 16th World Conference on Lung Cancer held in Denver, the company presented data that demonstrated PCM's effectiveness in detecting EGFR T790M mutations in urinary circulating tumor DNA (ctDNA), which can result in better management of the disease.

TrovaGene's PCM indentified EGFR T790M resistance mutations much earlier than radiologic detection of progression in patients. Through daily monitoring of urinary ctDNA, PCM helped in identifying patients who respond to anti-EGFR therapy considerably earlier than follow-up CT-scans.

TrovaGene also presented data from the clinical trial of its urine-based HPV HR Test at the 30th International Human Papillomavirus Conference in Lisbon, Portugal. The results clearly demonstrated that the HPV HR Test is equally capable of detecting high-risk HPV when compared to traditional cervical cancer tests.

Human Papillomavirus (HPV) is the most common sexually transmitted infection (STI), which affects nearly 14 million people each year. Approximately 79 million people in the U.S. are currently infected with HPV.

At present, there is no specific test for the detection of HPV in a person. It can be found in women who are screened for cervical cancer. Traditionally, a Pap smear test using cells from cervical area can detect HPV. In case of any abnormality, oncologists prefer a DNA test for HPV.

However, as compared to traditional diagnostic tools, TrovaGene's HPV HR test is non-invasive as it uses urine samples. Nonetheless, it is effective in detecting CIN2+ and CIN3+ much like the traditional tests. The trial results were also consistent with the findings of Predictors 4, which was announced by the company in Feb 2015.

During the quarter, TrovaGene set up a European subsidiary - Trovagene Research Institute (TRI) - which will be headed by prominent researcher Alberto Bardelli. The company also landed a partnership with the Department of Oncology at the University of Torino - which is currently associated with Bardelli.

Commercial Strategy

In early May this year, TrovaGene launched its PCM platform for commercial use. To assess clinical interest for the platform among oncologists, the company started its Clinical Experience (CE) Program and also launched a marketing agenda - "Yellow is the New Red." Interestingly, both the programs were instant hits.

Under the CE program, TrovaGene signed up 171 physicians within 60 days, much faster than its original objective of signing 30 physicians. Currently, 240 physicians have agreed to use the PCM platform. The company received orders for 295 tests through September which marked the end of the pilot (CE) program.

Notably, approximately 20% of physicians have already started sending billable samples to the company's CLIA laboratory, which is issuing reports to physicians within seven days on an average. TrovaGene believes that this fast growing adoption among physicians will help it to start reimbursement discussions with third-party insurers (at least on a case-by-case basis) in the near future.

Liquidity

As of Sep 30, 2015, TrovaGene had cash and cash equivalents of $74.2 million. In July this year, the company raised $40.3 million in gross proceeds through a common stock offering of 4.6 million shares. The company expects to use this fund to support clinical data generation and publication, technology and product development and commercial launch activities.

Our Take

TrovaGene's technology of using urine as an optimum sample and PCM's superiority in detecting ctDNA in samples as compared to traditional procedures will significantly boost adoption among oncologists, in our view. Further, TrovaGene's non-invasive, cell-free technology is cost efficient.

TrovaGene is currently part of more than 15 clinical collaborations, which aim at evaluating the efficiency of the company's PCM system in detecting and monitoring different mutations related to pancreatic, melanoma (advanced skin cancer), colorectal and lung cancer.

We also note that TrovaGene's growing relationship with leading cancer centers (top 20) and collaboration with Illumina ILMN are key growth catalysts. Meanwhile, the company is expanding its sales and marketing team, which is another positive.

However, TrovaGene's financial results continue to disappoint. Unless the adoption rate gets a boost and the visibility around reimbursements gain credibility, we believe that the company will continue to lose money in the near term.

Zacks Rank & Stocks to Consider

Currently, TrovaGene has a Zacks Rank #3 (Hold).

Better-ranked stocks in the same space include Anika Therapeutics ANIK and Baxalta Inc. BXLT , both of which sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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