What’s a Good Small Cap Genomics Stock? ROSG, GHDX & CLRX

Small cap genomics stocks Rosetta Genomics Ltd (NASDAQ: ROSG), Genomic Health, Inc (NASDAQ: GHDX) and CollabRx Inc (NASDAQ: CLRX) are at the forefront of genomics testing or research. I should mention that Wikipedia defines genomics as a discipline in genetics that applies recombinant DNA, DNA sequencing methods and bioinformatics to sequence, assemble and analyze the function and structure of genomes (the complete set of DNA within a single cell of an organism). A 2013 Booz Allen Hamilton report on the sector noted that in 2011, the US genetic and genomic clinical testing market size was estimated to be $5.9 billion while the number of available tests has grown substantially from 1,680 just 4 years ago to 2,886 in 2012.

However and despite the potential that genomics and related testing offers, the following small cap genomics stocks have also given investors a mixed performance in the past:

Rosetta Genomics. A leading molecular diagnostics company advancing microRNA-based diagnostics discovered and developed through its proprietary microRNAs and platform technologies, small cap Rosetta Genomics is backed by a strong IP portfolio as its scientists have developed proprietary platform technologies for the identification, extraction, quantification and analysis of microRNAs from a wide range of sample types. Last week, Rosetta Genomics announced that it had received a patent covering the identification of the tumor of origin in cancer of unknown or uncertain primary and metastatic cancer plus the company announced that it had a strategic alliance with Marina Biotech, Inc (OTCMKTS: MRNA), a leading nucleic acid-based drug discovery and development company focused on rare diseases. The companies will collaborate to identify and develop microRNA-based products designed to diagnose and treat various neuromuscular diseases and dystrophies. At the end of March, Rosetta Genomics reported revenues from continuing operations of $405,000, more than double the $201,000 of revenues, while its net loss after discontinued operations for 2013 was $12.9 million verses a 2012 net loss after discontinued operations of $10.5 million. Nevertheless, the CEO commented:

"Throughout 2013 we made considerable progress in all three areas critical to long-term revenue generation including current product sales, new product development and third-party collaborations. On the commercial front we made inroads enhancing awareness and driving demand for the Rosetta Cancer Origin Test and expanded coverage through Medicare and private healthcare network providers."

It should be mentioned that Rosetta Genomics also estimated that net cash requirements to fund 2014 operations will be in the range of $14 million to $15 million and management believes that its cash balance of $24.5 million (as of December 31, 2013) along with projected revenue growth, will be sufficient to fund operations until late 2015. On Thursday, Rosetta Genomics fell 8.8% to $4.25 (ROSG has a 52 week trading range of $2.35 to $6.69 a share) for a market cap of $44.50 million plus the stock is up 48.6% since the start of the year, down 5.6% over the past year and down 90.2% over the past five year.

Genomic Health, Inc. Committed to improving the quality of cancer treatment decisions through the research, development and commercialization of genomic-based clinical laboratory services, small cap Genomic Health conducts sophisticated genomic research to develop clinically-validated molecular diagnostics which provide individualized information on response to certain types of therapy, as well as the likelihood of disease recurrence. In early February, Genomic Health reported an 11% product revenue increase to $259.2 for 2013 along with a net loss of $12.8 million verses net income of $8.2 million for 2012. Those results included a fourth quarter net loss of $9.4 million verses net income of $2.0 million due to an up-front payment of $9.0 million for the Almac in-licensing agreement (Note: Excluding that, the net loss for the fourth quarter was $0.4 million). Cash and cash equivalents and short-term investments stood at $105.4 million at the end of the year verses $99.1 million at the end of 2012. Genomic Health is also planning to produce a net loss for this year, but the CFO explained:

"Given the large prostate cancer opportunity, we are choosing to accelerate our investment to drive test volume while continuing to strategically invest in R&D programs for the long-term growth of the company. Our investment in the prostate cancer opportunity is the primary driver of the planned loss in 2014." 

On Thursday, Genomic Health fell 4.34% to $27.31 (GHDX has a 52 week trading range of $25.50 to $38.99 a share) for a market cap of $851.62 million plus the stock is down 6.6% since the start of the year, down 1.1% over the past year and up 7.6% over the past five years.

CollabRx Inc. A leader in cloud-based expert systems to inform health care decision-making, small cap CollabRx Inc uses information technology to aggregate and contextualize the world's knowledge on genomics-based medicine with specific insights from the nation's top cancer experts starting with the area of greatest need: advanced cancers in patients who have effectively exhausted the standard of care. In early February, CollabRx Inc reported total fiscal third quarter 2014 operating revenue of $56,000 verses zero for the same period last year along with a net loss of $1,004,000 verses a net loss of $1,152,000. CollabRx Inc also reported the following important catalysts or milestones during that quarter or since it ended: A multi-year agreement with Quest Diagnostics Inc (NYSE: DGX) to provide medical and scientific content for its Next Generation Sequencing (NGS)-based tests. A multi-year agreement to with Cynvenio Biosystems, Inc., a cancer diagnostics company, to access CollabRx, Inc's technology and content resources in support of the clinical interpretation of genetic sequencing-based tests provided by Cynvenio. A significant expansion of the pipeline of prospective lab customers for the Genetic Variant Annotation (GVA) service. A multi-year agreement to provide its GVA service to CellNetix Pathology & Laboratories, LLC, a leading anatomic pathology testing and services provider.

In addition, the Chairman/CEO commented:

"The impending launch of our mobile app, CancerRx(TM) in association with MedPage Today, promises to serve both doctors and patients as they face the challenges of planning the treatment of advanced cancers with the same information available to the leading experts in major metropolitan cancer centers."

For the rest of the current fiscal year 2014 and beyond, CollabRx, Inc is expecting to increase both initial and recurring revenues for its GVA service while advertising revenues related to its web-based Therapy Finders and the launch of its mobile app CancerRx in association with MedPage Today, will occur early in next fiscal year (which begins on April 1, 2014). On Thursday, CollabRx Inc fell 1.57% to $3.15 (CLRX has a 52 week trading range of $2.86 to $6.75 a share) for a market cap of $6.31 million plus the stock is down 20% since the start of the year, down 10.5% over the past year and up 173.9% over the past five years.

Finally, here is a look at the performance of all three small cap genomics stocks:

As you can see from the above performance chart, small cap Rosetta Genomics Ltd has been a real underperformer while Genomic Health, Inc and CollabRx Inc have given a investors a mixed performance at best. Nevertheless, the past poor performance of small caps in the genomics sector does not mean they will continue to perform poorly for investors.