Every year, more than 100,000 white papers on the topic of cancer and cancer treatments are published. Right now, there are over 500 new cancer drugs in development, and those therapies are part of more than 10,000 different clinical trials currently underway. That's all in addition to the already-approved cancer drugs, and the volumes of information we already know about oncology. What's it mean? It means the cancer-treating energy often suffers from information overload, which in turn means patients aren't getting the best care they could get. The solution is a tool built by a little company called CollabRx Inc. (NASDAQ:CLRX). The validation for that solution comes from much bigger companies Quest Diagnostics Inc. (NYSE:DGX) and Affymetrix, Inc. (NASDAQ:AFFX).
The amount of data and information an oncologist could sift through is enormous... more than even the best and brightest among them could actually work through, especially considering how much new data - and new drug trials - are created every year, particularly now that genome sequencing has made it possible to pinpoint the strain of cancer being treated, and how that particular patient's "chemistry" might respond to a certain drug. Enter CollabRx. CollabRx has developed an online tool that can guide a caregiver to the best treatment options for a particular cancer, as indicated by DNA sequencing tests. The online portal even points out relevant drug trials that may be worthy options, if approved treatment regimens aren't apt to be effective.
And just how marketable is the idea? More so than one might believe at first. As proof of that marketability, one only has to know that diagnostic laboratory companies Affymetrix and Quest Diagnostics - no slouches in the diagnostic arena - have already leased access to the CollabRx tool, AFFX and DGX both attach the suggested treatment options provided by CLRX to each test it performs, as a "value add" for the physicians requesting diagnostic work be done. Both companies realize that by helping doctors take better care of patients, everyone wins.
As for the future, young CollabRx Inc. is already driving revenue, but it's only scratched the surface. This year, the company is on pace to generate about $600,000 in revenue (though that was before Affymetrix came on board). By 2017, however, the top line is expected by some to reach $2.6 million. By 2020, Taglich Brothers expects CLRX to generate $16.5 million in annual revenue. That's not bad for a $6.4 million company.
But how is CollabRx going to grow that fast between now and then. It's got a lot to do with the business model. Unlike most companies that must constantly sell products to drive revenue, CLRX sells a subscription-based product that, once is purchases, tends to be repurchased with little to no ongoing effort. That recurring revenue model allows the company's sales team to focus on bringing new customers to the fold, without being forced to spend a lot of time keeping existing customers on board.
Better still, there's no real direct competition for CLRX out there right now, and none on the horizon.
It may not be a household name yet, but with a clear path to profits and a marketable product, CollabRx could make for an interesting addition to most portfolios.
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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