With the announcement of the commercial availability of their urine-based HPV test, Trovagene (NASDAQ:TROV) has taken their first steps to capitalizing on the ever-growing market of Human Papillomavirus screening. As I pointed out in my previous article (read here), the need for HPV testing is at an all time high with more than 20 million cases in the United States, growing at a rate of 6.2 million a year with 80% of women contracting the sexually transmitted infection by age 50. Influxes of direct-to-consumer advertising and support from the U.S Preventative Task Force has dramatically increased the awareness of HPV and the role it plays in the etiology of cervical cancer in women, which could only be detected via Pap Smears which involve the removal of cells from the interior vaginal wall.
Typically, analytes such as tissue, skin and blood are used to detect the presence of cancers and infectious diseases. In most cases, the collection of these samples from diagnostics currently available is invasive, expensive and uncomfortable (on a physical, personal and cultural level) which deters patients from getting tested. Urine however, is naturally produced by the body and is voided-generally several times a day and represents the most non-invasive, cost effective analyte that can possibly be used as the basis for molecular diagnostic data collection. Trovagene's truly non-invasive urine sampling platform, patented through the use of transrenal DNA and RNA data sampling (detection of short nucleic fragments, originating from normal and diseased cell death that cross the kidney barrier), offers a competitive advantage in the industry as it is used to detect 15 known high-risk strains of HPV without infringing on the users privacy. Commercialization of the test positions Trovagene for potential license deals and buyouts as it may improve the adoption and acceptance rate of HPV testing in both men and women.
According to Global Industry Analysts Inc, the global HPV testing market segment is set to reach $1.6 billion by 2018. Market capitalization can be measured from past success in the industry by former HPV diagnostic giant Digene. The company was initially created in 1987 as a private company which became publicly traded in May 1996. Since its incorporation, Digene has significantly devoted a large portion of its resources developing, manufacturing and marketing its proprietary gene-based testing system for the screening, monitoring and diagnosis of human infectious diseases. The company got its public recognition from developing the HC2 High-Risk HPV DNA Test, an in vitro nucleic acid hybridization assay with signal amplification and chemiluminescence for the qualitative detection of 13 types of human papillomavirus in cervical specimens. Digene's revenues, to a significant extent, have been derived from the sale of the HPV diagnostic test with revenues of $134,361,000 in the fiscal year 2006 (accounting for 88% of total revenues) and $135,162,000 in 2007 (accounting for 91% of the total revenues). Qiagen (NASDAQ:QGEN), a company providing sample assays and technologies through their subsidiaries, took note of the HC2-HPV test's success and profitability which prompted them to buyout Digene in the amount of $1.6 billion, or 10.5X sales in the last twelve months in 2007.
When comparing the HPV diagnostics available between Trovagene and Qiagen (formerly Diegene's technology), distinct differences between the fundamentals of the tests give Trovagene a significant competitive advantage in the fields of sample collection, user-friendly features, cost and accuracy. Qiagen's HC2 test requires the sample of cervical cells collected from the interior of the vaginal wall to be used in an in vitro analysis that will conclude if the sample is infected with any of the 13 high-risk strains of HPV it detects. The sample is collected via Pap Smear, which involves a physician or medical professional to physically scrape the cells from the inside of the vagina. Trovagene's sample kit, harnessing the patented technology of Transrenal DNA and RNA, offers users the opportunity to take the non-invasive test from the comfort of their home, with the test only requiring a urine sample of 50-100 ml needing no medical professional whatsoever. The availability and cost-effective qualities of urine sampling offer an unlimited sample supply with lower costs in maintaining and collecting the specimen. Much like Qiagen's test, the sample is then sent to a lab where it is analyzed for 15 strains of high-risk HPV compared to the 13 strains of potential detection offered by the HC2 test. Trovagene's statistical accuracy of the test also extends far beyond the accuracy of Qiagen's sampling technique which has been proven in a head-to-head clinical comparison conducted by Trovagene. The results concluded:
"[...] Trovagene's urine-based HPV test was compared with the QIAGEN hc2 High-Risk cervical cell DNA test. Using DNA sequencing as the gold standard, the false negative rate for the urine-based test was 5.6% compared with 16.8% for the hc2 assay; the false positive rate for the urine-based test was 5.0% compared with 17.6% for the hc2 assay. The authors concluded that urine can be used to detect high-risk HPV as opposed to cervical scraping, and that the sensitivity of urine-HPV testing is comparable to currently used QIAGEN hc2 test based on analysis of cervical cells."
Trovagene 's success is not limited to the acceptance and achievement of HPV assay, the company is concurrently developing a pipeline of diagnostics used for the detection and monitoring of several cancers, infectious diseases, and prenatal genetic disorders using the Transrenal urine-sampling technique. However, with the mounting importance of early detection and monitoring of HPV exceeding all time highs, Trovagene is poised to capitalize on the growing market share and take a piece of revenue from inferior HPV tests currently available. As the world reacts positively to the non-invasive, novel approach Trovagene has created, licensing agreements and buyout offers may be on the near horizon as this technology now becomes commercially available.
Disclosure: I am long TROV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.