T2 Biosystems: Going, Going, Gone?

Bret Jensen

T2 Biosystems (TTOO) is up some 10% in early trading today on a confluence of positive news. The company reported slightly better than expected first quarter results with revenues and its quarterly loss slightly better than expected after the bell yesteday. The bigger news was that company management confirmed that its expects the FDA to approve a new bacterial panel sometime in the second quarter of this year.

This could be a game changer both the company and the detection of sepsis. T2 Biosytems’ platform using this panel can detect sepsis caused by candida in under 5 hours compared to the current average of almost five days using current standard procedures. Sepsis is one of the leading causes of death in the United States. Its mortality rate can reach 30% and affecting primarily elderly, immunocompromised, and critical care patients. The cost of treating sepsis amounted to over $23 billion in 2013, or 5% of costs related to domestic hospital stays. Candida is the deadliest form of common bloodstream infections that cause sepsis (mortality rate on average 40%) and affects over 135,000 patients in the United States each year. A study published in the American Journal of Respiratory and Critical Care Medicine concluded that targeted antifungal treatment provided within 24 hours of symptoms appearing led to hospital stays decreasing by ten days and average cost of care per patient decreasing by $30,000.

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Given these comments from management, it is not surprising to see some positive analyst action early today in this stock. Other analyst ratings could be forthcoming over the next week. This morning H.C. Wainwright reiterated its Buy rating and $8.50 price target. More encouraging Janney Montgomery upgraded the name to a Buy from Neutral with a $13.00 price target.

FDA approval in the coming weeks could power the stock further. That makes T2 Biosystems our analyst call of the day. I am adding exposure to this name today using a Buy-Write order.​

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Thank You & Happy Hunting,

Bret Jensen, Founder

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