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Cantor Fitzgerald Starts Coverage of Trovagene With Buy Rating

NEW YORK (GenomeWeb) – Cantor Fitzgerald on Tuesday initiated coverage of urine-based liquid biopsy firm Trovagene with a Buy rating and a $10 target price on the firm's stock. 

Analyst Bryan Brokmeier said in a research report that the company's differentiated approach to cancer detection and monitoring positions it to be "a leading player in the cancer diagnostics market." 

While the liquid biopsy testing space is becoming increasingly crowded, Brokmeier singled out Trovagene's use of urine as a biofluid as a potential game changer. Other firms' liquid biopsies are blood-based, but according to Brokmeier, urine has 10 times the DNA yield compared to blood, and provides advantages in ease of collection and costs. 

Last month, Leerink similarly noted Trovagene's use of urine for its tests when it started covering the firm and said that its enrichment method, "optimized for small DNA fragments, makes it uniquely suited for these sample types."  

Brokmeier added that Trovagene has demonstrated positive data for its assay for histiocytic disease, as well as for lung cancer and colorectal cancer. It has also demonstrated that its technology can be used in place of a tissue biopsy when that approach is not an option, and shown that its assays can determine more quickly than imaging whether a therapy is working. 

Lastly, he noted that Trovagene's assays have shown the ability to detect mutations that may have been missed by tissue biopsy. 

Last month, the San Diego-based firm said that it recorded $50,000 in revenues for the second quarter, down from $56,000 in the year-ago quarter, while it net loss increased almost 10-fold year over year. 

According to Brokmeier, Trovagene's near-term revenues should remain "relatively immaterial," but if it can demonstrate the validity and clinical utility of its tests, the firm can capture 5 percent of the US cancer market by 2020 with a volume of 114,209 tests and product revenues of $114.2 million. 

Since mid-June when shares of Trovagene hit a 52-week high of $12.83, the company's stock has plummeted by more than half. Brokmeier, however, called the sell-off "overblown." He attributed the drop to increased competition, the rebalancing of the Russell 2000 index, and an overall pullback in diagnostic stocks, and said that upcoming presentations from some of Trovagene's 30 clinical studies could be a catalyst for a rebound in its stock price. 

Trovagene's shares fell 3 percent to $6.29 in afternoon trading on the Nasdaq.