Seeking Alpha
Profile| Send Message|
( followers)  

Venaxis Inc. (APPY) is a Colorado-based in vitro diagnostic company focused on developing and commercializing its unique multi-biomarker diagnostic test, the APPY1 Test. The APPY1 Test, previously known as the Appyscore, is a test designed to aid in identification of patients at risk for acute appendicitis. The APPY1 Test is innovative because in order to diagnose appendicitis right now, physicians have to order CT scans for their patients. CT imagining is effective, but very expensive, and can post long-term health risks with patients continually being exposed to ionizing radiation.

The APPY1 Test could be an alternative to using high cost CT scans for diagnosis of appendicitis. It is a simple, non-intrusive blood test physicians can perform on patients presenting with abdominal pain and suspected of appendicitis. Prior pilot studies of the APPY1 have shown promising results as well. A past study performed in 2011 demonstrated that the APPY1 was highly sensitive and had a high negative predictive value (NPV). These results were positive and outlined the potential value of the APPY1 in a clinical setting. The following chart demonstrates the APPY1 Test's effectiveness.

APPY1 2011 Study Result

95% Confidence Interval

Sensitivity

96.5%

92.1 - 98.5

Specificity

43.2%

38.2 - 48.3

NPV

96.9%

92.9 - 98.7

According to the United States Centers for Disease Control and Prevention, physicians ordered 7.5 million blood test for abdominal pain in 2010. Venaxis believes that if the APPY1 Test gets approved for use in the U.S. and Europe, it can be put to use instantly as a diagnostic resource to cut down on healthcare cost. The APPY1 Test is definitely intriguing and would be a highly sought after diagnostic test for hospitals looking to decrease cost.

Venaxis was recently upgraded from a "Hold" to a 'Buy" by Canaccord Genuity, as they increased the companies price target from $2.50 to $7.00. The upgrade mainly came from speculation that the APPY1 Test would be approved by the FDA. Disregard the upgrade though because Venaxis' financial statement is a mess. The company's total assets have been on a steady decline since 2007, going from $31,662,000 in 2007 to only $8,728,000 in 2011. Net income has been negative the last five years as well. Basically, this stock's success all comes down to whether or not it gets FDA approval in 2014. Up until then, we might see a slow increase in share price. The only true catalyst for this company's growth going forward though is the speculation of the APPY1 Test being approved by the FDA in 2014, so beware.

Venaxis is nothing more than a one trick pony. Buying shares in Venaxis is strictly speculative. It could provide your portfolio with a huge upside, however if something goes wrong during the process of reaching FDA approval, the stock price could tank. Buying biotechnology companies such as Merck (NYSE:MRK), Pfizer (NYSE:PFE), Johnson & Johnson (NYSE:JNJ), and Abbott Laboratories (NYSE:ABT) is a better choice for your portfolio because those are the long-term, dividend paying, biotechnology stocks every portfolio needs. However, I think every portfolio needs a wild card like this stock as well to keep things interesting for you. Do your research, know the company's product, and perhaps your speculative pick could become a winner for your portfolio.

Source: Venaxis: Appendicitis Screening Just Became Cheaper