Interpace Diagnostics Group Inc (NASDAQ:IDXG) Is A Healthcare Runner

Interpace Diagnostics Group Inc (NASDAQ:IDXG) is the latest runner in the biotech space, with the company announcing this week that it has entered into an agreement with what's called the Blue Cross Blue Shield (BCBS) "Center for Clinical Effectiveness". The company currently trades for a little over $7.7 a share, having initially ran up to trade at $14. To put this in perspective, at close on Friday 30, 2016, Interpace sold for $4.4.We believe the initial run may have been a little bit overenthusiastic, but current prices leave plenty of upside run room to take advantage of as we head into the close of the week, and that the BCBS agreement paves the way for a flurry of near to medium term upside catalysts for Interpace. Here's what we're thinking.Fort those not familiar with the company, Interpace is a commercial stage diagnostics company, with a number of tests already FDA approved and at-market in the field of oncology. The company's approved tests include a system called PancraGen, which is a pancreatic cyst molecular test that can aid pancreatic cancer risk; ThyGenX, which assesses a thyroid nodule's risk of malignancy; and ThyraMIR, which assesses a thyroid nodule's risk of malignancy utilizing a gene expression assay.We covered these latter two tests in significant detail in our previous coverage, and their then fresh coverage by insurance behemoth Aetna Inc (NYSE:AET) was the basis of our upside bias. At that time, Aetna had just agreed to include the tests in its coverage plans, adding 46 million potential new customers to the company's target population, and – as we calculated – an extra 25% in revenues annually. It's worth checking out that coverage here for a bit more detail, there's a large unmet need in thyroid cancer diagnosis. The current SOC can turn out a considerable amount indeterminate results, and most patients who get an indeterminate result end up undergoing surgery. More than 80% of these, however, prove benign. Interpace's test fill the gap, offering a follow up to the current SOC tests, and diagnosis cancer risk in suspect thyroids with an improved accuracy.So how does the latest announcement change things?The company is now part of what's called Evidence Street. It's a program run by the above mentioned BCBS Center for Clinical Effectiveness, which is designed to allow for the collection of data on a set of diagnostic tools or other therapies. Interpace can then use this data as to underpin an argument that BCBS should allow for wider coverage of its core diagnostic tests across the existing BCBS coverage network. It's worth mentioning here that the tests are already covered in some policies, but BCBS has more than 106 million covered lives in the US, and if this program can support an advancing of the diagnostics tools into this network of 106 million patients, it's going to significantly improve Interpace's top line going forward.Which brings us to the catalysts. Not only is this development in itself worthy of some upside momentum (as we've seen with the latest run), as is the expanded coverage that the Evidence Street system will enable, but it should serve up a number of catalysts across the medium term. These, in turn, should give us plenty of nice run ups to trade as they hit press. Specifically, we're looking for the data from the Evidence Street studies as and when they are announced to infer benefit for the tests in question. Each one that comes out positive strengthens the argument of Interpace when it pitches for expanded coverage, and in turn, should boost the company's market cap on release.As a side note, a recently announced RDO (conveniently announced just after the BCBS agreement) may weigh on price form a potential dilution perspective very near term, but don't expect it to last, and we see any dip as an entry opportunity.We will be updating our subscribers as soon as we know more. For the latest updates on IDXG, sign up below!Disclosure: We have no position in IDXG and have not been compensated for this article.