Biotech Buzz Post No. 14 - TROV

Molecular diagnostics is hot thanks to low cost gene sequencing. TrovaGene (Nasdaq: TROV) is pioneering urine-based diagnostics.                                                                                                                               

TrovaGene (Nasdaq: TROV) – The next frontier in molecular diagnostics

“Wisdom and knowledge shall be the stability of thy times” – Inscription above the main entrance to the GE Building at the Rockefeller Center in New York City, taken from Isaiah 33:6.

Greetings from Sydney, Australia. I had intended to Blog actively while I was in New York last week but the trouble with that city is that there’s too much going on to be able to settle down and write a good Blog post. Now that I’m back home I can be a little more productive. To all the folks I met in New York last week, thank you for your insights and hospitality and a word of advice: watch what’s going on in Australian Life Sciences because there’s big profits to be made from what I think is a much undervalued sector.

I mentioned a while ago in this Blog my belief that one of the big steps forward in cancer therapy in the near future will come from better diagnostics. The trouble with cancer is that it is often diagnosed too late to do much good. If there were easier ways to detect a tumour early, the survival rate for a whole range of cancers could rise markedly. Take ovarian cancer as a good example. Diagnosed at the local stage, a woman’s five year survival chances can be over 90%, but that only happens 15% of the time. Diagnosed late, which is at least 60% of cases because for a long time the disease is more or less asymptomatic as far as the patient is concerned, five year survival drops under 30%.

Easier cancer diagnosis is one reason why I am intrigued by the San Diego-based TrovaGene (Nasdaq: TROV), because it has technology to do cheap molecular diagnostics from urine. That’s right, molecular diagnostics from urine.

Molecular diagnostics are simply diagnostics for specific nucleic acids or proteins associated with disease. Traditionally in diagnostics you detected a chemical associated with disease. Then in the 1980s science gave us the ability to use antibodies for detection of specific disease proteins but, more importantly, the Polymerase Chain Reaction (PCR) to detect specific disease DNA and RNA. Then came the Human Genome Project, which made the identification of disease genes relatively easy, and subsequent advances in DNA sequencing that cut the cost of sequencing a human-sized genome from the US$1bn of the original human genome down to US$5,000-6,000 today – a massive drop in just over a decade (click here for an eye-opening chart showing how gene sequencing is like Moore's Law on steroids). No wonder, then, that there’s a boom going on in the clinical use of molecular diagnostics based on nucleic acids, with typical double-digit growth for companies playing in the field like Qiagen, Cepheid, Abbott, Roche and Myriad. TrovaGene now wants to get in on this boom with genetic tests that use non-invasive and easy-to-obtain urine samples rather than the traditional, more invasive methods of blood testing as well as bone marrow and tissue biopsy.

TrovaGene’s contribution to the molecular diagnostics field has been, firstly, to prove that circulating cell-free nucleic acids cross the kidney barrier and can be found in the urine as ‘transrenal nucleic acids’ (TrNAs – click here for the original 2000 paper), and then to develop methods to isolate and amplify short TrNA fragments, something that you couldn’t do cost-effectively with existing technologies prior to the TrovaGene team’s work. TrovaGene now thinks that it can detect more than six times more mutations in a TrDNA sample than any other PCR-based assay now on the market. The company has a CLIA-certified lab in San Diego that can perform urine-based molecular diagnostics using these technologies, and TrovaGene is now seeking to build a business from this with new diagnostics for Human Papilloma Virus (HPV) and other infectious diseases, as well as for cancer, transplantation monitoring and prenatal disorders.

The potential for TrovaGene’s diagnostics is huge. Consider the cancer field, where the company has done a lot of work on TrNA diagnostics that can detect the various genetic mutations that drive cancer such as those in proteins like p53, KRAS and BRAF and PIK3CA. A lot of new therapies are coming on the market that only work where the patient’s tumour is carrying a particular mutation. For example, the melanoma drugs Zelboraf (Roche) and Tafinlar (GSK) specifically treat patients with a mutation in a kinase called BRAF. Since BRAF mutations shows up in around 20% of all cancers it’s a reasonable bet that more BRAF inhibitor drugs are coming. So it’s very interesting that in January TrovaGene announced a collaboration with MD Anderson Cancer Center in Texas to detect transrenal BRAF mutations in the urine of patients with advanced or metastatic cancers. TrovaGene and MD Anderson will track how BRAF changes during treatment and how BRAF tracks with patient outcomes. The ability to do this with urine points towards a genuinely convenient and real-time diagnostic that can guide decisions on targeted therapy.

Obviously it’ still early days for TrovaGene, but the current ~US$150m market capitalisation reflects in part the fact that the company is now going commercial in a hot market space The HPV test, which detects 15 known high-risk HPV strains and has the potential to displace the traditional and not-well-appreciated Pap smear, launched in March, and other tests are under validation now. If TrovaGene does its homework right on bringing together the right diagnostics into its stable, then it has a shot at some pretty strong growth ahead – competitor Myriad  (Nasdaq: MYGN), which started out with just the breast cancer genes BRCA1 and BRCA2, is now a US$2.1bn company thanks to a portfolio of molecular diagnostics across a range of cancers.

Stuart Roberts, Australian Life Sciences consultant, with global focus
Nisi Dominus Frustra

+61 (0)447 247 909

sroberts2164@gmail.com

Twitter @Biotech_buzz

About Stuart Roberts. I started as an equities analyst at the Sydney-based Southern Cross Equities in April 2001, focused on the Life Sciences sector from February 2002. Southern Cross Equities was acquired by Bell Financial Group (ASX: BFG) in 2008 and I continued at Bell Potter Securities until June 2013. Over the twelve years to 2013 I built a reputation as one of Australia's leading biotech analysts. I am currently consulting to the Australian biotech industry. Before joining Southern Cross Equities I wrote for The Intelligent Investor, probably the most readable investment publication in Australia. I have a Masters Degree in Finance from Finsia. My hobbies are jazz, cinema, US politics and reading patent applications filed by biotechnology and medical device companies.

Previous Australian Biotechnology Buzz posts:
Advanced Cell Technology (OTCBB: ACTC), 4 September 2013
Aradigm (OTCBB: ARDM), 8 September 2013
Cellular Dyamics (Nasdaq: ICEL), 3 September 2013
ImmunoCellular Therapeutics (NYSE MKT: IMUC), 27 August 2013
Immunomedics (Nasdaq: IMMU), 21 August 2013
Inovio Pharmaceuticals (NYSE MKT: INO), 24 August 2013
Merrimack Pharmcaceuticals (Nasdaq: MACK), 26 August 2013
Oncolytics Biotech (Nasdaq: ONCY),  22 August 2013
Pharmacyclics (Nasdaq: PCYC), 2 September 2013
Regulus Therapeutics (Nasdaq: RGLS), 23 August 2013
Sunshine Heart (Nasdaq: SSH), 28 August 2013
Synta Pharmaceuticals (Nasdaq: SNTA), 1 September 2013
TrovaGene (Nasdaq: TROV), 15 September 2013
Verastem (Nasdaq: VSTM), 5 September 2013

Disclaimer. This is commentary, not investment research. If you buy the stock of any biotech company in Australia, the US or wherever you need to do your own homework, and I mean, do your own homework. I'm not responsible if you lose money.