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TrovaGene (TROV) is a small and undervalued biotech company that has recently had its core technology validated by PerkinElmer (PKI). On April 25, 2013, Trovagene, Inc. entered into a Research and Development Agreement with PerkinElmer Health Sciences, Inc. ("PerkinElmer") where TrovaGene will design an assay, based on its proprietary technology, to determine the risk for developing certain cancers.

The commencement of collaboration is a testimony to the technological capabilities which TROV owns. PerkinElmer will now apply this technology to the study and development of the assay, combining it with its own technology.

The reason Trovagene is potentially a multi-billion dollar patent-play, rather than simply a diagnostics company, is that its patent position is the equivalent of a monopoly on blood tests performed today to screen for cancers and infectious diseases. This validation by PerkinElmer should help propel the company into capturing a large portion of the estimated $22 billion market for screening of cancer and other diseases.

About TrovaGene

TrovaGene is a small biotech company that has been covered extensively by James Altucher, a Seeking Alpha contributor. The company is involved in molecular diagnostics and focuses on the development and commercialization of proprietary technologies for use in screening for cancer and other diseases. In a Seeking Alpha article dated June 18, 2012, titled "TrovaGene: The 1 Stock that could've saved Steve Job's life", Altucher wrote extensively about why he believes that the company has huge upside in capturing a portion of the $22 billion a year already being spent on continued monitoring and diagnostics of patients who have already cured cancer.

Validation by PKI

Recently, TrovaGene disclosed in an 8-K that it entered into a Research and Development Agreement with PerkinElmer Health Sciences, Inc. . TrovaGene will design an assay, based on its TrNA technology, to determine the risk for developing hepatocellular carcinoma. TrovaGene and PerkinElmer will jointly validate the assay and evaluate the potential of combining the company's TrNA technology with PerkinElmer's technology for automation of nucleic acid isolation. PerkinElmer will pay the TrovaGene milestone payments. In addition, they have granted PerkinElmer an exclusive option (the "HCC Option") to obtain an exclusive royalty-bearing license to use the Company's urine-based technology within the hepatocellular carcinoma field (the "HCC Field").

What it means

What this all means is that a big pharma company, PerkinElmer, has endorsed a little company (TrovaGene) technology, allowing it to tap into the $22 billion a year market for Trovagene's product.

Back in June of 2012, Altucher placed a market cap on TROV at between $430 million and $600 million - comparing it to Sequenom, Inc. (SQNM) and Exact Sciences Corp. (EXAS), respectively. Since then, TROV has issued more shares and presently has 15.6 million shares outstanding. Even, with this revision, TROV shares are still worth between $27 - $36 per share if you accept Altucher's method of calculation.

Simply put, TROV shares could be worth at least 5 - 6 times their most recent closing price of approximately $6.

Risks

As Mr. Altucher pointed out in his article, there are risks. The risk, of course, is that TROV is too small to be noticed, or that they don't hire the salesforce to sell their tests. Or that demand overflows their lab.

Also, market acceptance, sales of products based upon the TrDNA or TrRNA technology, and their profitability may depend on reimbursement policies and healthcare reform measures. Several entities conduct technology assessments of medical tests and devices and provide the results of their assessments for informational purposes to other parties. These assessments may be used by third-party payers and healthcare providers as grounds to deny coverage for a test or procedure. The levels at which government authorities and third-party payers, such as private health insurers and health maintenance organizations, may reimburse the price patients pay for such products could affect whether TROV is able to commercialize its products. Their product candidates may receive negative assessments that may impact their ability to receive reimbursement of the test. Since each payer makes its own decision as to whether to establish a policy to reimburse their test, seeking these approvals may be a time-consuming and costly process. If reimbursement is not available or is limited, TROV may not be able to commercialize its products.

The use of the transrenal molecular technology has never been commercialized for any indication. Even if approved for sale by the appropriate regulatory authorities, physicians may not order diagnostic tests based upon the TrDNA or TrRNA technology, in which event TROV may be unable to generate significant revenue or become profitable. Acceptance of the transrenal molecular technology will depend on a number of factors including:

· acceptance of products based upon the TrDNA or TrRNA technology by physicians and patients;

· successful integration into clinical practice;

· adequate reimbursement by third parties;

· cost effectiveness;

· potential advantages over alternative treatments; and

· relative convenience and ease of administration.

Conclusion:

In my opinion, this most recent announcement by TrovaGene should support and even boost the arguments already presented by James Altucher and drive this stock higher.

Source: Will The Latest PerkinElmer Agreement Help TrovaGene Tap Into A $22 Billion Market?