Great Basin Scientific Inc (OTCMKTS:GBSN) Is Running Up, What's Next?

Great Basin Scientific Inc (OTCMKTS:GBSN) is running up on some fresh news out of the company detailing FDA clearance of one of its products. Regular readers will know this is one we have taken a look at on a couple of occasions in the past, and most recently at the beginning of February. At the time, Great Basin had just announced the submission of the application to the agency in the US that said agency just green lighted, and we concluded with this: while there's some capital structure risk, as a catalyst driven play, and in anticipation of some near term news related to the application in question, there could be value in a punt.The markets just vindicated this suggestion, but what happens now? Is there any value to holding longer term, or is the run up on the back of this news a flip trade and that's all?Well, again, it's all about risk tolerance.Here's what we're looking at.For those new to this company, it's a molecular diagnostics company that has developed a diagnostics platform that, theoretically, at least, could revolutionize the way infectious diseases are identified and tackled. The platform involves an analyzer into which disposable cartridge tests can be inserted, and these tests are designed to improve dramatically on current standard of care testing across a host of metrics, including cost, scalability, scope of testing, speed, accuracy and more. And it's not just theory – there's data in place, as well as live market application cases, that support each of these claimed advantages.The problem is, however, the company hasn’t been managed well. The science and tech is sound, but with repeated dilution, splits, all that sort of thing, having hit press over the last couple of years, the science has played second fiddle to mismanagement in terms of growth drive potential.Now, there is some suggestion that management is starting to get a hold of things, and that this side of the company's fortunes could be far less prohibitive to growth across the coming twelve months than it has been across the last. Revenues are increasing, customers are using more tests, costs are tightening and margins are improving.We can’t really take any of these things at face value, however, at least not yet.What we can focus on, however, is fundamental developments, and the just announced FDA green light is one.The situation is that this company needs to expand its offerings if it's going to have any chance of gaining strength. The analyzer mentioned above is a sort of razor/blade situation – the company makes money from selling the blades (the tests) not the analyzer (the handle). The latest announcement detailed the FDA clearance of a test for Bordetella (the one we discussed in our last coverage) and this is another type of blade to add to the offering. Combine this with the increasing number of customers using more than one test (as detailed in the recent earnings highlights) and there's the potential for Great Basin to start gaining some traction.Which brings us nicely to the next potential catalyst play.The company has another test with the FDA, a test based on the stool bacterial pathogens, and management expects to get an answer form the agency on this application at some point during 2017. The turnaround is reportedly slightly slower for this sort of test, but with both the one that the agency just cleared and the one remaining to clear submitted in and around the same time, there's a good chance we'll see a response soon. If the response is positive (and it's tough to see why the FDA would turn it down) then there's an immediate run response on the cards, like the one we're seeing right now on the back of the Bordetella clearance.As we've said, it's a short term catalyst play, and there's still plenty to be concerned about with this company. For those that can stick out the risk, however, it could be a nice position.We will be updating our subscribers as soon as we know more. For the latest updates on GBSN, sign up below!Disclosure: We have no position in GBSN and have not been compensated for this article.