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Co-Diagnostics' detection of infectious disease has led it to join the coronavirus fight with flagship test

Snapshot

The Utah company's in-vitro Logix Smart Coronavirus Disease 2019 (COVID-19) test kits are available in nearly 50 countries

Co-Diagnostics - Co-Diagnostics joins fight against coronavirus with diagnostic test

Quick facts: Co-Diagnostics

Price: 13.11 USD

NASDAQ:CODX
Market: NASDAQ
Market Cap: $366.76 m
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  • Develops products to detect infectious diseases in humans and animals
  • Offers Logix Smart Coronavirus Disease 2019 detection test in US and globally
  • Had $18.6 million cash position at end-2Q to fund operations for next three years

What Co-Diagnostics does: 

Co-Diagnostics Inc (NASDAQ:CODX) is a molecular diagnostics company that develops products to detect infectious diseases in humans and animals. The company also develops tools for liquid-biopsy cancer screening and agricultural uses.

The Utah-based company, which also operates a second location at the CoSara Clinical Laboratories (CSCL) in Gujarat, India, offers medical labs and facilities a proprietary platform for the development of molecular diagnostic tests. It also manufactures state-of-the-art diagnostics technology. 

Co-Diagnostics' technology is utilized for tests designed for the detection and/or analysis of nucleic acid molecules (DNA or RNA). The company also uses its proprietary technology to design specific tests to locate genetic markers for use in industries other than infectious disease and licenses the use of those tests to specific customers.

The company's main product is its Logix Smart test that runs a foundation of its trademark CoPrimer technology and CoDx software. The company offers four tests to detect tuberculosis and viruses - Zika, Dengue, Chikungunya, and, most importantly at present, the SARS-CoV-2 virus, which causes the coronavirus (COVID-19) disease.

Co-Diagnostics also offers a host of mosquito abatement tests in the eastern US as well as the Midwest. The tests can be tailored to all regions of the country, including multiplexed tests that include either eastern equine encephalitis or western equine encephalitis. 

How is it doing:

Like many diagnostic and pharmaceutical companies, Co-Diagnostics has been marshalling most of its resources to help medical professionals, regulatory officials and governmental bodies combat and stabilize the coronavirus (COVID-19) pandemic through testing, therapies and treatments. 

Co-Diagnostics received an Emergency Use Authorization from the US Food & Drug Administration (FDA) in April for its COVID-19 tests. The firm currently has clients in more than 50 countries, including Australia, India, Mexico and European Community countries, plus 25 US states, and also has validations of test accuracy from regulatory bodies of numerous countries around the world.

On September 13, the group revealed it had entered into an agreement with Arches Research Inc to expand Arches' coronavirus (COVID-19) testing services using the Logix Smart COVID-19 test kit. Arches Research, a CLIA laboratory and subsidiary of Polarity TE Inc (NASDAQ:PTE), began using Co-Diagnostics' tests for its customers earlier this year.

The announcement followed news a week earlier of additional, independent third-party validation of its COVID-19 test, supporting its performance characteristics and value in helping communities, schools, and workplaces to re-open safely and news that it was “augmenting” its test kit with a respiratory virus panel to prepare for the flu season.

On September 24, Co-Diagnostics said its Logix Smart ABC Test for Influenza A, Influenza B, and coronavirus (COVID-19) is anticipated to be ready for launch to US CLIA lab customers in the first week of October. CLIA is regulated by the Centers for Medicare & Medicaid Services, with a primary goal to ensure quality laboratory testing.

Co-Diagnostics also continues to participate in successful joint government and private collaborations in several states. In early August, the company noted that the Los Angeles Unified school district would start testing its 700,000 students and 75,000 employees for the coronavirus COVID-19, using technology developed by Co-Diagnostics. 

The integrated testing program for the nation’s 2nd-largest school system will be executed in part using Clinical Reference Laboratory (CRL), which recently received an Emergency Use Authorization from the US Food and Drug Administration (FDA) for a self-administered saliva test. That test will be analyzed using Co-Diagnostics’ technology.

CRL is one of the largest privately-held clinical testing laboratories in the US, with dedicated facilities in North America and Europe and staff of more than 600 associates working around-the-clock performing hundreds of thousands of tests every day for clients large and small.

At the end of August, Co-Diagnostics announced that the US Patent and Trademark Office had granted increased patent protection for the company’s novel CoPrimer technology used in the COVID-19 test kit and other molecular diagnostic tests.

The firm said the new patent further validates the uniqueness of the CoPrimer molecule and provides even more comprehensive protection for all of its potential applications. The original patent covered certain applications of the CoPrimer molecule - which has been shown to enhance the output of polymerase chain reaction (PCR) molecular diagnostic tests by dramatically minimizing false-positive test results - and its use in PCR, but not the molecule itself.

The additional patent covers the physical structure of the CoPrimer molecule, with more broad claims and including all configurations of a molecule with such a structure.

On the financial front, on August 13, Co-Diagnostics reported stellar second-quarter results, swinging to a profit of $12.6 million on the strength of its coronavirus test sales.

Total revenue for the quarter 2020 ended June 30, 2020, came in at $24 million compared to $61,600 in the same period a year prior, while its profit of $0.43 per share was a sharp contrast to the loss of $0.08 or $1.3 million in 2Q 2019.

The firm said then that its COVID-19 test and equipment sales orders were approaching $50 million in the year to date, a figure that included joint venture sales in India.  Co-Diagnostics ended the second quarter with $18.6 million in cash.

And in a boost for shareholders, the stock was elevated the small-cap Russell 2000 Index and broader Russell 3000 index in late June. Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. About $9 trillion in assets are benchmarked against Russell’s US indexes.

Inflection points:

  • Boost availability of Logix Smart Coronavirus 2019 test kits
  • Move forward on developing a second COVID-19 test
  • Seek regulatory clearance for Logix Smart 2019-nCoV detection kit for ROU

What the broker says:

In early August, the Maxim Group repeated a Buy rating on the stock with a price target of $30 a share -- which is close to the company’s most recent stock price. 

Analysts noted that Co-Diagnostics’ partner Clinical Reference Laboratory, one of the largest testing providers in the country, announced that it had received Emergency Use Authorization from the FDA for a self-collected, saliva-based PCR test for COVID-19. The test uses Co-Diagnostics probes and primers. 

“The test has demonstrated 100% sensitivity/specificity (higher than any other saliva-based molecular test for COVID-19) and can be processed within 24-48 hours, which is important considering that current tests are taking up to a week or more to return results,” they wrote. 

“With COVID cases on the rise in the US and testing times increasing past the point of usefulness, interest in expanding testing capacity has increased markedly.” 

Litchfield Hills Research and HC Wainwright & Co also have 'Buy' ratings on the stock with price targets of $36 and $35, respectively.

What the boss says:

Reporting second-quarter results in April, Co-Diagnostics CEO Dwight Egan said: “Co-Diagnostics has established a distribution platform that we believe will continue to support sales and profitability as our tests have gained widespread acceptance in the market.

“We have created a test menu and established the production capacity to meet demand for tests as the nations of the world continue to battle the pandemic, and believe these efforts will continue to bolster the company's durability in the months and years to come.”

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Co-Diagnostics to reach wider audience with FDA Emergency Use Authorization...

Co-Diagnostics Inc (NASDAQ:CODX) CEO Dwight Egan tells Proactive the molecular diagnostics company's Logix Smart coronavirus test has obtained Emergency Use Authorization from the FDA to be used to diagnose SARS-CoV-2. Egan says the authorization confirms the quality and performance of the...

on 04/07/2020

6 min read