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TD Cowen Initiates Coverage of Biodesix With Buy Rating

NEW YORK – Investment bank TD Cowen on Monday initiated coverage of molecular diagnostics firm Biodesix with a Buy rating and a $2.80 per share price target.

In a note to investors, TD Cowen analyst Dan Brennan wrote that Louisville, Colorado-based Biodesix is among the fastest-growing stocks in his firm's coverage portfolio, "serving a large, underpenetrated oncology diagnostic opportunity — lung nodule management."

The firm offers five blood-based proteomic and genomic tests, with its core portfolio comprising Nodify CDT to identify lung nodules that are likely malignant and Nodify XL2 to identify nodules that are likely benign. The investment bank said that it estimates about 75 percent of Biodesix's 2023 revenue derived from the Nodify portfolio, with Nodify XL2 specifically responsible for about 60 percent.

Brennan wrote that lung nodule diagnostics is about a $4 billion addressable market that is only about 1 percent penetrated, and that Biodesix is currently the only commercial player in the market. Furthermore, the company has validated its technology through multiple clinical publications, including the prospective ORACLE study, the results of which were published in PLOS One last summer. In that study, researchers from Biodesix and its academic collaborators showed that use of Nodify XL2 can change physicians' practice and reduce invasive procedures in patients with benign pulmonary nodules.

In addition, Brennan noted, TD Cowen sees "multiple upside catalysts to volume growth, the most tangible being the near doubling" of the company's sales force. In addition, Biodesix recently raised $55 million in an oversubscribed common stock offering, "which bolsters the company's liquidity position and has potential to bridge the company to [free cash flow] positivity" in 2027, Brennan wrote.

Last week, Biodesix reported that its first quarter revenues grew 63 percent year over year to $14.8 million, buoyed by a 58 percent spike in lung diagnostic testing revenues.

In Monday midmorning trading on the Nasdaq, shares of Biodesix were down a little over 5 percent at $1.49.