I like to buy the forgotten, lonely, and broken then sell the exuberant and frothy. As a once treasured stock tarnishes the masses move on to the next shiny toy, leaving destruction in their wake. That's when I get excited. I try to find what has been tossed aside, knowing that if the sun hits just right the sparkle may bring them back.
Chembio Diagnostics, Inc (CEMI) is a medical diagnostic test developer. On Mar 16, 2020 the stock closed at $2.36, it's lowest point in 9 years. Four days later CEMI announced a $4M order for a COVID-19 test. Eleven days after that CEMI launched their DPP COVID-19 test, triggering the highest volume day ever. The stock peaked at $15.89 a month later.
Alas it was not meant to be as the FDA rejected their test on June 17 and the stock instantly gapped down from $10 to $4. What a change of heart.
CEMI is not giving up. On July 6 they announced a US FDA contract to develop a COVID point-of-care antigen system. They also announced they are revising the system and will seek EUA approval from the FDA for their system. The question is what happens if they get that FDA clearance.
Check out this chart. You can see the dip in March matching the rest of the market. That huge volume spike on Apr 1 is the COVID test launch press release. Look at that rise! I'm betting it's not the last.
When a theme befalls the market you can make a lot of money getting in front of the hype. There is always something on the fore front of the market's brain. When natural disasters strike you'll see movement in construction and generators. As legislation has moved to de-criminalize marijuana you see stock spikes in companies that just mention it in a press release. There doesn't even have to be anything material behind the announcement, if the market is hot on a theme you may see a spike.
As corona virus has moved around the world and uprooted our lives, many stocks have shot to the moon on news, rumors, and announcements.
Earlier this year DYNT tripled just because people realized they sell masks, wipes, and sanitizing spray. When the quarterlies revealed sales didn't live up to the hope the stock fell back down. I sold some on the spike and bought back on the fall.
Take a look at VODG. Some well worded COVID press releases pushed this little stem cell stock as high as a dollar from the $0.20 range. I like the company and still hold the stock because it's full of potential. News can really move a stock if the starting point is small, ignored, and illiquid.
We are a leading provider of point-of-care diagnostic products for the detection and diagnosis of infectious diseases. We have been expanding our product portfolio based upon our proprietary Dual Path Platform, which we refer to as DPP, which uses a small drop of blood from the fingertip to provide high-quality, cost-effective diagnostic results in approximately 15 minutes. We seek to build additional revenue streams by entering into technology collaborations with leading global healthcare companies to leverage the DPP technology platform.
The DPP technology platform addresses the lateral flow test market, which includes infectious diseases, cardiac markers, cholesterol and lipids, pregnancy and fertility, and drugs of abuse. Based on our review of third-party reports and other information, we estimate that the market for lateral flow tests will increase from $5.5 billion in 2017 to $8.2 billion in 2022, representing a compound annual growth rate of 8.2%.
Infectious disease tests constitute the largest and fastest growing, segment of the lateral flow test market.
We have obtained FDA approvals and, directly or through our partners, international regulatory approvals for infectious disease tests as follows:Several tests in our infectious disease pipeline are approaching commercialization, and several have received initial regulatory approvals:
- 17.7M shares outstanding vs 17.2M in 2018
- no preferred
- 550k warrants outstanding exercisable at $5.22
- Cash 18.3M vs 12.5
- BV $24M vs 33.3
- revenue $34.5M vs 34.6
- EPS -$0.81 vs -$0.54
- Cash $36.4M
- shares 20.2M
Now, I would like to discuss our plans to leverage Chembio's technology to develop a portfolio of COVID-19 tests. We are encouraged by the exponential market growth observed as a result of the immense demand for various types of COVID-19 tests across a wide variety of settings and providers. This interest includes demand from areas outside of traditional health care verticals, such as companies seeking to establish back to work programs. We feel the advantages and versatility provided by our DPP assays and micro readers, creates an opportunity for us to take share and build a meaningful position in this market. Our success here is dependent on 3 factors: product development, regulatory clearance and commercial execution.
In product development, we are working on a complementary set of COVID-19 tests with unique capabilities to assist clinicians in all phases of virus detection and infection monitoring. We have 2 tests currently under development, the revised DPP CPVOD-19 IgM/IgG system for antibody detection, and the DPP COVID-19 antigen system for viral protein detection. Further prolonging development is a revised DPP COVID-19 IgM/IgG systems, serology test for the detection of 2 types of COVID-19 antibodies.