It has become apparent to me, that GHDX will experience better traction in Europe than in the US in the short term. Europe seems to have come to grips with their slow growth dilemma and is trying to trying to squeeze the most out of the GDP which means being more efficient in health care spending. This is the crux of the NICE and recent Spanish recommendations for Onco DX. In the US too much of the Health Care economy is still dependent on overtreating disease. As long as the analysts line up behind an Intuitive Surgical and others, it will be hard to get coverage for a company that is dependent on testing that stands to reduce costs for managing these diseases.
The key is seems to be approval for the payer reimbursement codes for the prostate test. That is the tipping point for GHDX. Until that time, the build out of the sales force and the scientific research journals will continue to cause cash burn that will hold back the share price. Payers will endorse the test whole heartedly once the codes are approved since the ACA requires cost reduction and more efficient treatment. 2015 Looks Bright to me. However, I suspect that GHDX will be taken out before 2016 when the full measures of success are realized.
Very good post.@ the shareholders meeting there was a discussion about the biggest problem with the test is not that it is not reliable ,but there is Big Money in chemotherapy and Doctors are resistant to change.
Proton radiation, robotic surgery, hormone treatment, targeted drugs and even the physicians all have a stake in the over treatment of diseases like prostate cancer. On paper, the ACA seeks to switch the payment model to outcomes rather than treatment for treatment sake. I think it will take a while to switch the mindset of the medical community since it will result in shifting of the winner and looser landscape. The lobbyist power is firmly entrenched to maintain the status quo.
I think the Europeans have come to grips with their limited resources and are taking steps before the US. I hate to admit it but they seem to be a couple of years ahead of the US in healthcare trends. Take biogenerics for example. They have had guidelines in place for biogeneric drug approvals for a couple years whereas we are still struggling with it in the states. Everyone realizes that it is necessary to control costs, but the entrenched interests and lobbyists are too strong for logical legislation to be passed quickly. With national debt pushing $17T we are able to kick this can down the road because borrowing costs are so low. As soon as interest rates kick up, this will no longer be the case. It will become immediately apparent that we as a nation cannot afford to spend 17% of our GDP on health care. Then companies that save money like GHDX will have a tailwind.