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Rodman & Renshaw Initiates Coverage of HTG Molecular With Buy Rating

NEW YORK (GenomeWeb) – Citing an expectation for a "gradual expansion of the HTG EdgeSeq system footprint in the coming years," investment bank Rodman & Renshaw has initiated coverage of HTG Molecular Diagnostics at a Buy, with a 12-month price target of $5 for the company's shares.

In his note, Rodman analyst Raghuram Selvaraju wrote that HTG's Edge molecular profiling system and EdgeSeq next-generation sequencing platform require less than 10 percent of the biopsy material required by traditional sequencing methods, doesn't require extraction of nucleic acids, and retains high fidelity under various sample conditions. All of this reduces costs and makes the system more convenient for the user, he added.

For cancer and tumor profiling in particular, the note said, HTG's system can "consolidate multiple techniques on a single platform, thus enhancing workflow efficiency with a faster turnaround vs. traditional methods, and is sequencing platform-agnostic (i.e., can be integrated seamlessly with existing next-generation sequencing systems in the field)."

In July, HTG announced that it had received CE IVD marking for the EdgeSeq system and its HTG EdgeSeq Diffuse Large B-Cell Lymphoma Cell of Origin Assay.

Further, the company has strong ties to the biopharmaceutical industry, leading to collaborations and opportunities to expand its installed instruments base. Most notably, Selvaraju wrote, HTG signed a deal with Bristol-Myers Squibb in May 2016 to evaluate the potential for immuno-oncology molecular profiling in multiple tumor types. "We view the Bristol relationship as validation of HTG's technology, as Bristol is a recognized immuno-therapy leader," he added. And in August, the firm reported a 140 percent increase in second-quarter revenues, largely drive by an increase in services revenues — mostly derived from sample processing services provided to biopharmaceutical customers.

The global market for cancer and tumor profiling continues to grow and could reach $35 billion in 2018, Rodman noted, and HTG is "well-positioned to grow its footprint and revenues from both instruments and consumables."

The firm's current share price makes for an attractive entry point, Selvaraju said. HTG's shares were up 4 percent at $2.60 in Tuesday afternoon trading on the Nasdaq.