This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Nanosphere: A Low-Risk, High-Growth Diagnostic Stock

Stocks in this article: NSPH CPHD

NEW YORK ( TheStreet) -- Many biotech investors believe mistakenly that the only way to make money is to invest in high risk-high reward stocks. Unfortunately, the biotech landscape is littered with failed clinical studies, management promises never kept, and of course, investor hopes destroyed.

Instead, I like to look for companies where the risk is lower. That might mean sacrificing some upside but, overall, the chances for investing successfully are higher.

Here's an example: I purchased Nanosphere (NSPH) after a key FDA approval removed risk from the story. Even after the positive news, most of the potential reward in the stock remains, as long as Nanosphere can execute and convert the FDA approval into meaningful revenue.

Nanosphere is developing and marketing the Verigene System, a molecular diagnostic testing platform designed to detect nucleic acids and proteins simply and quickly. By enabling the early and accurate detection of infectious and life-threatening diseases, Verigene helps doctors and hospitals improve patient care and lower costs.

The company went public almost five years ago and has already achieved FDA approval of several diagnostic tests, including flu and a test to determine patients' suitability for the anti-clotting drug Warfarin. None of these tests were unique enough to generate significant revenue.

Nanosphere's outlook improved in June after FDA cleared a new Verigene-based test to detect gram-positive bacteria -- a blood-based infection responsible for life-threatening sepsis.

Sepsis is the leading cause of deaths in hospitals and every hour that a patient remains undiagnosed increases the chance of mortality. Bloodstream infections cost hospitals more than $15 billion per year and can cost more than $20,000 per patient to treat. Currently, diagnosing sepsis requires a blood culture that can take 48 hours to turn around and report results.

Nanosphere's gram-positive bacteria test can confirm a diagnosis of sepsis in just two and half hours. The Verigene System costs $25,000 and individual tests are priced around $50, so the value to hospitals seems obvious.

Since receiving approval for the gram-positive test, Nanosphere says interest from hospitals in the Verigene System has been through the roof. We can't quantify demand until we get through the summer and into the fourth quarter because of the lag between approval, installation of the platform at hospitals and revenue generated from the new test. By all indications, however, interest from hospitals is very high.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs