Certain companies are so deeply ingrained in our memories that we often compare them. For me, in a particular region of the healthcare industry, Theranos is its codified company. Please enter Caris Life Sciences Inc. (CAI). Tyler Crowe, editor of MISFIT Alpha, says the diagnostic and testing company has developed several groundbreaking testing regimes for precision medicine.
Whenever I read a medical company's SEC filing with a new detection or diagnosis, my internal monologue says, “Maybe it's another Theranos.” It's not fair to these companies, but reflexively reads healthcare companies' reports from their defensive positions than other industries. Something pops out of the page and you need to be sure it's a real deal.
The CAI was recently released. I was immediately wary when I began reading the IPO prospectus, but there were a few reports that I had seen a glimpse of boxing gloves.
It's difficult to describe the charis life science in a few short words, but here we go. The company has developed several new blood tests used throughout the healthcare industry to sequence patient genetics. According to its (long) prospectus, it is one of the only blood assays that perform all exome sequences (WES, whole DNA gene sequences and their protein encoders) and all transcriptome sequences (WTS, whole RNA transcripts and their protein encoders) in a single assay.
Caris monetizes its tests in two ways, where clinicians order for tumor treatment decisions (pay with insurance companies) and Pharma/Biotech companies use it for R&D and drug development. Management believes that several other ways can monetize the test and expand it to other diseases.
There are some persuasive elements. Revenue and case volumes have increased by 28% and 31% per year since 2019. More cases equals an improved AI-driven insight. The acceptance of potential Medicare and Medicaid is promising.
But it's not perfect. Its finances have a statement of material weaknesses. The establishment of Texas will result in less protection for minority investors. There are risk factors on page 77. Additionally, the company has been operating for 17 years and continues to announce substantial losses.
In short, Charis is a company I am not yet decided. The business seems novel, but it hasn't been proven. The risk of it being implemented is high, but management seems more transparent about it. There is enough flesh in the bones.
Subscribe to Misfit Alpha here…
