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Investing in the Age of Coronavirus (INO, APT, CODX, SGMD, IBIO, AYTU)

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The market is crashing almost every day right now. If you own the SPY, or a basket of large-cap leadership stocks that have defined this bull market for years, you’re getting destroyed over the past three weeks.

But there is an answer. A small group of stocks has been rallying precisely because of the impact of this terrible pandemic outbreak. The stocks in this group are driven by one of two core themes: either they represent companies vying to help solve the crisis, or they have operations that will be positively impacted by the behavioral adjustments that the outbreak is causing.

We have compiled a list of some of the most essential versions of these themes. Two of them are trying to help solve it medically (INO, IBIO). Two of them are working to supply us with the tools to weather it (CODX, APT). And one of them is primed to benefit from how people are being changed by coping with it (SGMD).

We will take a closer look at each of them in turn: Inovio Pharmaceuticals Inc (NASDAQ:INO), Alpha Pro Tech, Ltd. (NYSEAMERICAN:APT), Co-Diagnostics Inc (NASDAQ:CODX), Sugarmade Inc (OTCMKTS:SGMD), Ibio Inc (NYSEAMERICAN:IBIO), and Aytu Bioscience Inc (NASDAQ:AYTU).

 

Inovio Pharmaceuticals Inc (NASDAQ:INO) trumpets itself as a clinical stage biopharmaceutical company that develops active DNA immunotherapies and vaccines to prevent and treat cancers and infectious diseases.

The company is working on a vaccine for the novel coronavirus disease. In that vein, the company recently announced that it was accelerating the timeline for its experimental COVID-19 vaccine, INO-4800, and expects to begin a phase 1 study in humans in April.

This isn’t new for INO. At this point, the company is actually the only name out there with a vaccine for preventing a coronavirus in phase 2 testing, although the targeted disease, in this case, is MERS rather than COVID-19. But that still represents a meaningful edge in the all-important race now confronting the world.

The company’s lead candidate, though, is VGX-3100. Inovio expects to report preliminary results later this year from a late-stage study of the immunotherapy in treating cervical high-grade squamous intraepithelial lesions (HSIL) caused by human papillomavirus (HPV). The biotech is also conducting phase 2 studies of VGX-3100 for treating vulvar HSIL and anal HSIL.

Its SynCon immunotherapy design has the ability to break the immune system’s tolerance of cancerous cells, as well as is intended to facilitate cross-strain protection against known, as well as new unmatched strains of pathogens, such as influenza.

The company is involved in conducting and planning clinical programs of its proprietary SynCon immunotherapies for HPV-caused pre-cancers and cancers; prostate, breast, lung, and pancreatic cancers; hepatitis C virus; hepatitis B virus; human immunodeficiency virus; Ebola virus; middle east respiratory syndrome; and Zika virus.

The context right now for the stock is a bit of a bid, with shares acting well over the past five days, up about 4% in that timeframe.

Inovio Pharmaceuticals Inc (NASDAQ:INO) pulled in sales of $867K in its last reported quarterly financials, representing top line growth of -56.7%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($93.8M against $19.5M).

 

Alpha Pro Tech, Ltd. (NYSEAMERICAN:APT) engages in developing, manufacturing, and marketing a line of disposable protective apparel, building supply products, and infection control products in the United States and internationally.

The big idea powering the stock lately is its products of masks capable of helping to prevent the spread of COVID-19.

The company operates through three segments: Building Supply, Disposable Protective Apparel, and Infection Control. The Building Supply segment offers construction weatherization products, such as house wrap, synthetic roof underlayment, and other woven materials.

The Disposable Protective Apparel segment provides shoe covers, bouffant caps, gowns, coveralls, lab coats, hoods, frocks, and other miscellaneous products.

The Infection Control segment offers face masks and eye shields. The company provides its products under the Alpha Pro Tech brand name, as well as under private labels. Its products are used primarily in cleanrooms; industrial safety manufacturing environments; health care facilities, such as hospitals, laboratories, and dental offices; pharmaceutical markets; and building and re-roofing sites.

The company distributes its products through a network of purchasing groups, distributors, and independent sales representatives, as well as through its sales and marketing force.

APT has had a rough past week of trading action, with shares sinking something like -29% in that time. That said, chart support is nearby and we may be in the process of constructing a nice setup for some movement back the other way. On a larger timeframe, the stock has been a juggernaut in the wake of news surrounding the COVID-19 outbreak, up as much as 1000% in the past 2 months.

Alpha Pro Tech, Ltd. (NYSEAMERICAN:APT) managed to rope in revenues totaling $10.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -0.4%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($6.9M against $2.3M).

 

Co-Diagnostics Inc (NASDAQ:CODX) promulgates itself as a molecular diagnostics company that intends to manufacture and sell reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules. It also intends to sell diagnostic equipment from other manufacturers as self-contained lab systems.

The stock has been on a rampage for a simple reason: it has an inside track as a key distributor in the extremely important process of testing for COVID-19 infections in the US and international markets. As the outbreak expands, which it will, testing will be as important as anything else in regaining control.

And the stock has been acting well over recent days, up something like 10% in that time.

Co-Diagnostics Inc (NASDAQ:CODX) generated sales of $41K, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -32.7% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($2.5M against $308K).

 

Sugarmade Inc (OTCMKTS:SGMD) is especially interesting here because of the nesting trend among consumers. SGMD recently took a major stake in BudCars, with the contractual option to gain a controlling interest in the leading California cannabis delivery business.

This morning, the company announced a sharp rise in demand for its cannabis delivery service, driving an associated 10% week-over-week rise in total sales, over the past two weeks. According to the release, the company believes this dynamic is being driven by the stay-at-home trend that has emerged in many communities around the world in response to the global pandemic outbreak of the COVID-19 disease.

BudCars is undertaking an expansion in headcount to meet the current and anticipated sharp expansion in demand. SGMD now anticipates the upward shift in sales growth to help solidify its $15 million 2020 revenue target as a conservative target for sales this year.

“The Coronavirus pandemic is undeniably a game-changer for consumer behavior patterns that will likely have long-term implications as it drives new habits into place,” commented Jimmy Chan, CEO of Sugarmade, who recently announced a large stake in BudCars with an option for a controlling stake. “As a growing mobile ecommerce and delivery service in one of the fastest growing commercial markets, BudCars is extremely well-positioned for this dynamic. It’s already very clear: people are showing an overwhelming preference toward delivery as nesting takes hold. That applies to cannabis as much as anything else. We are fully prepared for a continuous ramp in demand for our delivery services over coming months and beyond.”

On this basis, the stock appears massively underpriced because it hasn’t yet made the dramatic jump that other stocks in this list have already displayed.

With the stay-at-home dynamic now taking a vice-grip on consumers, and cannabis demand unlikely to wane in the process, SGMD could be poised for dramatic gains once the crowd finds it.

 

Ibio Inc (NYSEAMERICAN:IBIO) bills itself as a biotechnology company that provides product development and manufacturing services to clients, collaborators, and third-party customers in the United States and internationally.

The company’s services cover the stages of pre-clinical development, regulatory approval, commercial product launch, and on-going commercial phase requirements. Its lead therapeutic candidate is IBIO-CFB03 for the treatment of systemic scleroderma, idiopathic pulmonary fibrosis, and other fibrotic diseases.

The company is also developing vaccine candidates for third parties. It has a license agreement with the University of Natural Resources and Life Sciences, Vienna; a strategic relationship with Beijing CC-Pharming Ltd.; and collaboration agreements with AzarGen Biotechnologies (Pty) Ltd, The Texas A&M University System, and Fraunhofer Center for Molecular Biotechnology.

In addition, the company offers a range of product and process development, analytical, and manufacturing services.

The stock has suffered a bit of late, with shares of IBIO taking a hit in recent action, down about -27% over the past week. But that move comes in the context of a 400% rally as the market fuels companies potentially instrumental in the battle against the COVID-19 threat.

Ibio Inc (NYSEAMERICAN:IBIO) pulled in sales of $314K in its last reported quarterly financials, representing top line growth of -51.8%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($3.6M against $4.7M, respectively).

 

Aytu Bioscience Inc (NASDAQ:AYTU) bills itself as a specialty pharmaceutical company that focuses on developing and commercializing novel products in the field of hypogonadism (low testosterone), cough and upper respiratory symptoms, insomnia, and male infertility in the United States and internationally.

The company markets Natesto, a nasal gel for the treatment of hypogonadism (low testosterone) in men; and Tuzistra XR, a prescription antitussive consisting of codeine polistirex and chlorpheniramine polistirex in an oral suspension. It also offers ZolpiMist, an oral spray for the treatment of insomnia; and MiOXSYS, an in vitro diagnostic semen analysis test that is used in the measurement of static oxidation reduction potential in human semen.

If you’re long this stock, then you’re liking how the stock has responded to the announcement. AYTU shares have been moving higher over the past week overall, pushing about 127% to the upside on above average trading volume.

Aytu Bioscience Inc (NASDAQ:AYTU) pulled in sales of $3.2M in its last reported quarterly financials, representing top line growth of 76.9%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($5.5M against $15.9M, respectively).

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Business

Sproutly Canada Inc (OTCMKTS:SRUTF) Chalks Out A Business Strategy To Focus On Commercialization Of APP Technology

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Sproutly Canada Inc (OTCMKTS:SRUTF) has chalked out a business transformation strategy to focus on commercializing its proprietary APP technology by moving away from cannabis cultivation resources. Infusion Biosciences Inc will contribute additional funds to implement business transformation. It will also supply additional talent to support the transformation plan.

Business transformation strategy

As part of the light technology model, Sproutly will focus on generating revenues through establishing ingredient supply agreements, technology licensing, and partnership opportunities. It will scale down the cultivation of cannabis, which is capital intensive, and reduce cash burn.

Sproutly has recruited Dr. Anup Sen as Chief Executive Officer for implementing a business transformation plan. Anup is the first scientist to invent water soluble CBD in cannabis plants. Following the appointment of Dr. Anup, Keith Dolo is relinquishing the post of CEO. Keith will also step down from the board of Sproutly. He will act as an advisor to the Chairman. Keith said the company’s main target is to introduce unique products in the market by using APP Technology. Sproutly also slashed cash expenses by giving pink slips to operational and corporate staff.

Sproutly is adopting the new business strategy because of the operational challenges and headwinds in the industry. Prohibitive costs associated with cannabis cultivation have forced the company to change its business strategy.

Commercializes APP technology

Sproutly will focus on APP technology commercialization through formulation, production, and the sale of ingredients by using Bi-Natural Oils and water-soluble cannabinoids. The company will use the licensed manufacturers’ distribution networks and its existing infrastructure to realize its revised plan. Sproutly has faced bottlenecks in introducing cannabis 2.0 products because it has earmarked human resources and significant capital for cannabis cultivation.

Adopts cost-cutting measures

Sproutly has reduced the employees by 75% to reduce costs and reduce cannabis cultivation. It has eased the capital requirements for Sproutly and pursues other strategic alternatives. The company will get the support of six key personnel of Infusion Biosciences to assist in its daily operations.

Infusion Biosciences’s key executives have helped Sproutly in obtaining licenses for APP technology and in forming partnerships in the US. Sproutly also expects to expedite its commercialization efforts with the help of these executives.

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Aleafia Health Inc (OTCMKTS:ALEAF) Reports An Astonishing 2,486% Rise In Q1 2020 Revenues

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Aleafia Health Inc (OTCMKTS:ALEAF) has reported revenues of $14.59 million in Q1 2020. It is an increase of 2,486% compared to the same period last year and a 143% increase compared to the previous quarter.

Reports solid growth for the fifth consecutive quarter

Geoffrey Benic, Chief Executive Officer of Aleafia, said the company achieved a breakthrough in Q1 2020 on the backdrop of sustainable and disciplined growth. As it builds the cannabis wellness and health ecosystem, the company gives importance to the patient-centric approach. It is the fifth consecutive quarter to report solid growth.

Expects to introduce new cannabis 2.0 products in H2

Aleafia expects to introduce new cannabis 2.0 products tailored for the wellness and health consumers in H2, 2020. Its active registered patient count has surged to 10,983 as of March 31, 2020, from 10,249 as of December 31, 2019.

Key achievements in Q1 2020

Aleafia on March 26, 2020, announced plans to introduce direct-to-door medical cannabis delivery service to the registered patients. It is a contactless and safe delivery mechanism for the patients. Therefore, Aleafia eliminates the need for collecting the products from post boxes and post offices.

Achievements after Q1 2020

According to the announcement on May 1, 2020, Glenn Washer and Rhonda Lawson will be appointed to the board with effect from May 16, 2020. It is on the backdrop of the resignation of the existing directors – Bill Stewart, and Raf Souccar with effective from May 15, 2020. Julian Fantino, Chairman, has also resigned from the board.

Aleafia has temporarily shut down its physical offices of the education centers and cannabis clinics across the nation since March 16, 2020, because of the ongoing coronavirus crisis. The company is completing the patient consultations via its virtual clinics.

To maintain long term success, the company maintains a diversified portfolio of differentiated and high-quality product formats. The company will use in-house facilities to manufacture cannabis 2.0 products and satisfy the demand in the medical and adult-use cannabis markets in Canada. It will also supply cannabis 2.0 products in markets worldwide where legally permitted.

Aleafia Farms Inc, a wholly-owned subsidiary of Aleafia, has secured an amended license from Health Canada on May 12, 2020, for the outdoor cultivation at its Port Perry Facility.

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BIOTECH

Meridian Bioscience, Inc. (NASDAQ:VIVO) Reports Revenues Of $57.3 Million In Q2 2020

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Meridian Bioscience, Inc. (NASDAQ:VIVO) has posted revenues of $57.3 million in Q2 2020. It is an increase of 14% year-on-year. The life sciences segment has contributed $22.4 million (up 33%) to the revenues by responding early to the COVID-19 pandemic. Meridian’s diagnostic segment contributed revenues of more than $34.9 million (up 4%).

CEO of Meridian, Jack Kenny, said the company has performed very well in Q2. He said its Life Sciences segment has offered extraordinary performance by responding to the coronavirus crisis early. The company’s raw materials are widely used in molecular tests worldwide to find a coronavirus vaccine.

FDA clears HpSA and Curian Analyser

Meridian has received the FDA nod for its HpSA and Curian Analyzer in Q2 2020. HpSA and Curian analyzer expect to contribute revenues soon to the Diagnostic segment, which has delivered outstanding performance during the quarter.

Unprecedented response for Life Science products

Chief Financial Officer of Meridian, Bryan Baldasare said the company has exhibited strong growth despite the ongoing coronavirus crisis. It has received an unprecedented response for its Life Science products. Meridian expects to post better results going forward in 2020.

Collaborates with QuantuMDx

Meridian collaborates with QuantuMDx for its newly introduced SARS-CoV-2 assay for use in laboratories. QuantuMDx benefits from the Lyo-Ready 1-Step RT-qPCR master mix of Meridian for a quick and reproducible assay, stable at ambient temperature. Meridian facilitated the production of several COVID-19 assays since the coronavirus outbreak by establishing partnerships with more than 35 diagnostic companies across the world. The company has expanded its manufacturing facilities to satisfy the burgeoning demand of various customers that comprise QuantuMDx.

Vice President (Global Sales of Life Sciences) of Meridian, Todd Howren said the association with QuantuMDx shows how its master mixes help to expedite the development of assay and improve efficacy and quality of the molecular test. The company is pleased to partner with QuantuMDx in meeting the testing requirements at this difficult juncture.

Vice President (R&D) of QuantuMDx, Colin Toombs said the Lyo-Ready Mix of Meridian is vital for improving sensitivity, performance, and run time needed for the assay. The company expects to continue its association with Meridian for current and future needs.

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