NEW YORK, NY / ACESSWIRE / February 5, 2019 / Relatively thin trading and susceptibility to wider swings in trading price and volume are nothing new to most microcaps, but few companies calmly and strategically ride the wave of short-term volatility and end up on stronger footing than they started. Yet that is exactly what Utah-based Co-Diagnostics, Inc., (NASDAQ: CODX), accomplished last week. Let's take a look at the timeline for this molecular diagnostics company, and compare where they began to where they are today.
Following a few weeks of aggressive selling, CODX opened the week of January 28 at $0.96. The stock was trading on average roughly 80,000 shares a day, with the only previous news released by the company for the year related to the launch of a private-label product built on their patented CoPrimer™ platform. On January 30, concurrent with the surprise announcement of a sale of $3 million of preferred shares at $1.20 - effectively eliminating the company's $2 million of debt while also adding $1 million to their bank account - the stock exploded. The 80k share daily moving average launched into the stratosphere as the price reached as high as $3.77 for the day, on a mind-boggling 35 MILLION shares. The stock closed at $2.24, but the week wasn't over.
Possibly capitalizing on their unexpected but sure to be short-lived exposure, Co-Diagnostics followed the preferred sale with the announcement of the sale of over 3.9 million shares of common stock to institutional investors at $1.40, for gross proceeds of $5.5 million. The share price corrected throughout the course of the day after trading mostly around the $1.40 mark, and closed at $1.36.
Short-term volatility is practically inherent in a microcap stock, and it can be difficult to truly gauge the importance of a single day's events or activity without taking a broader view. Ignoring the temporary spikes, between January 28 and February 4 we see a stock that moved up $0.36 to close at $1.32 (prior to the after-market announcement of the close of the $5.5 million offering). Irrespective of the expected correction following January 30, this remains a healthy and encouraging 37.5% for the week.
In addition to the bump in share price, the company has zero debt as opposed to $2 million, nearly 4 million shares in the hands of institutions instead of a negligible amount, and more than enough cash to carry them comfortably into revenues (and beyond) if the CEO's expectations in recent press releases are any indication. The Company intends the net proceeds to be applied to existing initiatives in the infectious disease testing and agrigenomics verticals, to further develop and commercialize applications of its technology in the growing liquid biopsy and next-gen sequencing markets, to expand its sales efforts.
Will dilution be an issue? It's impossible to predict. But the cap table remains palatable, with only ~16.5 million shares issued. Having enough cash on the books to last well into next year and then some at the burn rate seen in their most recent 10-Q, with no debt, a stock price over 37% higher than the previous week, more stability thanks to the institutional investment, and a respectable daily volume are all objective improvements. These developments, and of course their patented technology that plays in some of the most exciting and profitable spaces in medtech with revenues right around the corner, make CODX a stock to watch.
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SOURCE: Co-Diagnostics, Inc.