What do Quest Diagnostics Inc. (NYSE:DGX) and Affymetrix, Inc. (NASDAQ:AFFX) know that the rest of the healthcare industry doesn't seem to know yet? In simplest terms, AFFX and DGX seem to have come to grips with the reality that there's so much information out there in the diagnostic and treatment world that caregivers are actually stumbling over it. The end result is not only care that's not better than it was in the recent past, but perhaps less effective than it used to be simply because of information overload and/or a lack of understanding of what to do with all sorts of data.
Enter CollabRx Inc. (NASDAQ:CLRX) - a provider of an overdue solution to the aforementioned problem.
In simplest terms, CLRX has built a website designed to be used doctors - oncologists in particular - who need to stay up-to-date on all the latest treatment options for cancer patients. And it's not just a list of the most apropos drugs that might be well-suited for a particular type of cancer [the kind of detailed diagnosis that genetic testing now allows] that the CollabRx app offers. The website, available by subscription, also suggests clinical trials that may be worth a shot if the patient is so inclined... or if the normal treatment regimens aren't working.
A needless tool? Not even close. There's a huge demand for the kind of service CollabRx Inc. is providing, even if doctors and caregivers don't know it yet.
Some of the numbers underscoring that idea are staggering. For instance, right now, there are over 500 cancer drugs in development, and they're being tested in over 10,000 different trials. Last year, more than 100,000 research reports on the topic of treating cancer were published, and that's all in addition to dozens of oncology drugs that are already on the market, but each with its own different set of cancers it's approved to treat. It's overwhelming to say the least, even for the best-read doctors.
But what do Quest Diagnostics and Affymetrix have to do with CLRX? Both have partnered with CollabRx in recent months, utilizing the focused information that only its unique website/tool can provide. Specifically, DGX will be attaching robust treatment-option data for a specific type of cancer to its diagnostic tests that indicate cancer is present for a particular patient. That data will come from the CollabRx site. As for Affymetrix, it will essentially be doing the same with a couple of its cancer-diagnostic assays.
As for what it all means to CollabRx and CLRX shareholders, the fact that much bigger and much more established names like Affymetrix and Quest Diagnostics want the service - and are paying for the service - validates that what CollabRx is doing is on target. From here, it's all just a mater of scale-up.
While it will be a couple of years before the recurring revenue hits a critical mass, there's a clear light at the end of the tunnel. Odds are pretty good the stock will start to reflect that light well before the revenue light is actually reached.
For more on CollabRx, visit its corporate website here. Or, you can read the SCN research report here, or the SCN recommendation here.
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