Time To Buy Signal Genetics? Chardan Thinks So

In a report published Tuesday, Chardan Capital analyst Keay Nakae initiated coverage of Signal Genetics Inc. (NASDAQ: SGNL) with a Buy rating and $2.50 price target. The company has a "multi pronged" strategy to boost sales growth.

The first strategy was to hire more sales people, along with plans to increase marketing spend during 2015 to drive adoption of its Myeloma Prognostic Risk Signature (MyPRS) test. This test is Signal Genetics' initial offering and measures the level of expression of certain genes that help predict the long-term prognosis for multiple myeloma patients. The data from the test can also be used to assess the level of risk severity, which in turn can aid physicians in choosing the best suited therapy option.

Another strategy to drive revenue growth is the development of more RNA based tests, along with additional DNA based tests that can be administered with the use of next generation sequencing equipment. Signal Genetics also intends to expand the use of the MyPRS test via additional clinical studies, especially for patients with Asymptomatic monoclonal gammopathy, an asymptomatic precursor form of multiple myeloma.

The company also has plans to sign agreements with biotech and pharma companies so that they incorporate MyPRS testing in their drug development programs for multiple myeloma, possibly as a companion diagnostic tool.

"Despite its many positives, we believe that the company faces a number of additional near-term challenges going forward as it seeks to grow revenue, most of which we believe are solvable with time," Nakae stated, while adding, "We believe that Signal Genetics is an intriguing speculative micro cap investment story. We believe that there could be substantial market demand for the company's MyPRS diagnostic test, as well as other tests the company plans to develop."