Best Stocks for 2021: OncoCyte (OCX)

Editor’s note: This column is part of InvestorPlace.com’s Best Stocks for 2021 contest. Matt McCall’s pick for the contest is OncoCyte (NYSEAMERICAN:OCX). 

The future of healthcare will look so different that you may feel like you stepped into a new universe. From telemedicine to precision medicine to genetic therapy, the global healthcare industry is about to shake up like never before.

The logo for the InvestorPlace.com best stocks for 2021 contest.

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That said, one of the key pillars to getting there is genetic testing, which involves mapping a human’s entire genome. The information on that map is invaluable. And it’s the gateway to the future of medicine.

I know this may sound scary and even a little sci-fi — just 20 years ago, it was considered uncharted territory. It took the government 13 years and nearly $3 billion to sequence the first human genome. It was completed in 2003, two years ahead of schedule.

Now, 17 years later, Nebula Genomics offers a full human sequencing for just $299. And prices are expected to keep falling in the coming years. We’re not far from the day when you can sequence your genome for same cost as a new pair of shoes.

And that’s great news… because genetic testing is the key to building all future medical treatments.

When you visit your doctor now, you are usually prescribed a treatment plan that is based on your age, weight, symptoms, etc. Anyone with similar physical characteristics will receive an identical treatment. However, this approach is old school and backward for so many reasons.

In the future, your treatment will be based on your own unique genome. People respond differently to medicines, and your doctor will be able to prescribe the best option for your genetic makeup. When you think about that, it almost makes today’s approach kind of scary.

That said, the only way we ever get to personalized medicine is through genetic testing. The 99.9% decrease (and still falling) in the cost of mapping a genome has made it affordable. And going forward, I expect genetic testing will ultimately be a requirement.

That’s right. I believe health insurance companies will require their customers to sequence their genomes. This will result in lower healthcare costs over time, and we all know that’s a major goal for insurance companies. Even more importantly, sequencing will provide preventative benefits to people’s health.

All of that brings me to my pick for this year’s Best Stocks for 2021 contest, a small company that’s playing a big role in healthcare’s march into the future.

Providing Answers to Previously Unanswerable Questions

OncoCyte (NYSEAMERICAN:OCX) is a molecular diagnostics company that offers genetic testing to physicians and patients, who then receive clinically-actionable information back. The goal is to improve patient outcomes and decrease overall costs by helping doctors and patients make better and more informed decisions.

In the past, molecular diagnostics has accounted for just 3% of all U.S. healthcare spending. But get this — it has helped make about 70% of all healthcare decisions. That simply doesn’t add up. And when you have this kind of discrepancy, you also have a massive opportunity.

In this case, that opportunity is the early detection of cancer, which I expect will be one of the biggest trends in the Roaring 2020s decade. According to the company, cancer-related healthcare accounts for more than $150 billion every single year.

Moreover, OncoCyte has grown its product pipeline through acquisitions and licensing. Its Determa platform offers two unique tests that help manage the patient journey from diagnosis to treatment to monitoring.

The first is DetermaRx, which is the first and only genetic test that can identify non-small cell lung cancer (NSCLC) patients with a high risk of experiencing a recurrence after surgery — a $450 million market. Since its launch in February, DetermaRx has been available through more than 70 health systems in the United States.

The second test is DetermaIO, which can predict immunotherapy responses across multiple drug classes — another unmet need. This is a $3 billion market in the U.S. alone. This test is expected to be available for commercialization in the second half of 2021.

2020 was a building year for OncoCyte, as it integrated its recent acquisitions and launched its first two products. Now, in 2021, it is time to grow.

Additionally, revenue is expected increase from virtually nonexistent in 2020 to $7 million in 2021, $18 million in 2022 and nearly $60 million by 2024. That’s 750% growth in just three years. Plus, the company should turn its first profit that year as well. Being able to identify a clear path to profitability is key when investing in early stage companies.

Therefore, as genetic testing and diagnostics become more mainstream in the years ahead, look for OncoCyte’s share price to soar. The company is perfectly positioned in an industry with massive long-term potential, and I expect 2021 to be a kickoff for all the great things ahead.

On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in the article.

Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now.


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