Biotech

Monkeypox Stocks Heating Up the Charts: TOMDF APDN CODX

Investors are facing the sober reality of a twin pandemic, COVID-19, and monkeypox. It’s now clear that the government missed the opportunity to control the monkeypox outbreak with testing.  Formerly a key player in the pandemic response, Dr. Birx speaks out about monkeypox and how the risk levels are higher than originally thought, that under-testing has contributed to this outbreak, and at-risk groups are under-vaccinated.  She said these are the mistakes made in January and February 2020 that have effected the current monkeypox response.  One of her recommendations is to overtest and investors on Wall Street are listening. There are two pure-play monkeypox testing plays, Applied DNA Sciences (NASDAQ: APDN) and Todos Medical (OTCMKTS: TOMDF).  Both of these companies are moving to validate their tests but there are some key differences in their tests and commercialization plans that need to be highlighted.  Other hot stocks are Siga Technologies Inc (NASDAQ: SIGA) which has a treatment for monkeypox and CytoDyn (OTCMKTS: CYDY) which has a treatment for COVID-19.

APDN was the catalyst behind the apparent monkeypox testing landgrab fueled by investors’ fears that monkeypox will become a fixture in an emerging twin pandemic. There are only 5 White House authorized testing labs to refer monkeypox samples to. Aegis Science, Labcorp (NYSE: LH), Mayo Clinic Laboratories, Quest Diagnostics (NYSE: DGX), and Sonic Healthcare (OTCMKTS: SKHHY) are among the 5.  What investors learned from COVID-19 is that the testing labs that have capacity are going to get the most lucrative government contracts since the government needs to secure large volumes of tests instead of dealing with labs with smaller capacities.

APDN started at $0.70 just 2 days ago with a market cap of $9 million and exploded higher to $5.86 in regular trading before settling at $4.10 up 486% with a market cap of $34 million.  The company is in a fundamentally strong position with $6.5 million in cash and revenues of $6.1 million in the most recent quarterly report.  The company derives most of its revenues from its safeCircletm campus COVID-19 testing program. They also supply proprietary assays to their biotech customers. They had a gross profit of $2.5 million with 40% gross margins for the latest quarter.  Unfortunately, their overhead is about $4.5 million which means they are losing about $2.0 million per quarter.  In terms of their capitalization, they only have 8.1 million shares outstanding so when the stock trades 117 million shares or 15 times the O/S like it did on Tuesday its undergoing price discovery as the market tries to figure out how big the monkeypox testing business will grow to.

TOMDF is the other testing stock trying to capitalize on the impending monkeypox crisis. Testing is surely to explode once it makes its way into our primary schools this fall (less than a month). Although Todos is a diagnostics company it also has a profitable nutraceutical line called www.mytollovid.com and has biotech assets recently valued at $1.9 billion after they released clinical trial results whereby their oral antiviral drug bested Remdesivir in a head-to-head comparison of hospitalized patients by taking dying off the table with their 0% mortality rate. Their all-natural supplement is a 3CL protease inhibitor and very similar to their drug in clinical trials called Tollovir.  According to reviews and video testimonials their supplement Tollovid works on pretty much everyone when it comes to acute COVID and seems to work on many Long COVID cases as well.  While this business cash flows and hit a high water mark of $350K in monthly sales, their bread and butter testing business produced $12 million in sales for the year. In the latest quarter, the company had revenues of $4.5 million with an operating loss of $3.6 million.

Monkeypox Testing Differences

Testing companies use real-time or conventional polymerase chain reaction (PCR) testing for monkeypox. The specimen comes from a skin lesion using a swab.  What is so interesting about TOMDF and their announcement is that they stunned investors with their dual track and are taking specimens from skin lesions and also doing saliva testing. If they can validate their saliva-based test they might be able to get to diagnose people sooner, before lesions appear days or even weeks into the disease, so they can utilize antiviral therapeutics like Tecovirimat (TPOXX) which is manufactured by Siga Technologies (NYSE: SIG).

Before investors discount TOMDF and its ability to compete with larger diagnostic companies it’s appropriate to look at their recent developments on the Tollotest.  Tollotest is a 3CL protease test measuring 3CL protease in upper respiratory samples. If the 3CL protease sounds like a familiar receptor, it is because this is the same target of Merck’s (NYSE: MRK) drug Ivermectin and Pfizer’s (NYSE: PFE) drug Paxlovid.  The differences lie in their binding affinity and are explained in a short video. 3CL proteases are the precursor to active viral replication which means at the cellular level they are upregulated 70 proteases to 1 virus which means quicker detection via PCR within 1-3 days of exposure.  A pilot study done at a wedding showed that the Tollotest is much better than traditional PCR. TOMDF has a track record of developing cutting-edge disruptive tests.

The other thing to watch for is the CDC declaring a public health emergency.  Once they do that it allows the diagnostics companies to seek approval under a EUA.  Currently, the states of California, New York, and Illinois are declaring their own emergency. They are trying to get ahead of the curve to contain the contagion. This is why APDN is working with New York state to validate a test for them. TOMDF on the other hand is doing Laboratory Developed Tests (LDTs) that are not specific to one state.

Industry Consolidation

One of the big names in COVID testing is languishing among its peers and might want to acquire technology that expands its depth in testing. Co-Diagnostics (NASDAQ: CODX) has a market cap of $221 million and also appears to have been working on a monkeypox test for the past couple weeks. The company is positioned with approximately $97.4 million in cash equivalents.  This puts the company’s enterprise value at $125 million and their book value at $4.32/share in comparison to their stock price of $6.50. In the last quarter, they sold $22.7 million in sales and brought $9.8 million to the bottom line.  Their P/E ratio is a mere 5x.

Monkeypox Therapeutics

The only therapeutic for the moment is SIGA with their antiviral TPOXX. The technical issue is that Tecovirimat is approved in the USA and Canada for smallpox, whereas it is approved in the EU and UK for monkeypox.  This means the only way to get TPOX is through expanded access.  What the administration has done in previous situations like this is to advance the repurposed drug as quickly as possible, but currently, SIGA’s CSO estimates that it will take a 500 person clinical trial to gather the data to support full approval. The thinking against doing such an extensive trial before approval is that the pandemic may do its damage before the clinical trial is completed and the drug is approved. However, with monkeypox rapidly spreading around the U.S., enrollment numbers are more likely to be hit.

There is nothing else in the pipeline worth mentioning, but to keep the readers engaged there is a mystery stock that looks like it might have the “right stuff.”  Its not CYDY that is simply in this article to talk about an update and why it running.  With the authorization of 350 million more shares, bankruptcy is pretty much off the table and the stock price run ensures that additional funds will be available.  The company has an incredible number of indications to license and with the righ person at the helm could be a licensing juggernaut.  Speculate on the mystery stock and the name of the molecule in the comments section.

Investment Summary

The two runners are APDN and TOMDF.  There is a really good argument that CODX needs them, but that is a long-term strategy.  The strength of APDN is that they have a deal with NY state and that is worth way more than the existing market cap meaning APDN is still undervalued given its meteoric rise and they are really just a one-trick pony until monkeypox is validated.  The validation process in NY state is not easy or quick.  Now TOMDF is a different situation.  That stock was clearly held down by a toxic noteholder that appears to have sold his last share going into the close according to some posters on Reddit. If the seller is gone this stock will gap up and keep going because it has hundreds of millions of dollars in assets in its biotech division.  There are also compelling case reports of patients that have gotten better using their dietary supplements for COVID-19 and Long COVID. Given the technical turn at the bottom and lack of a structured seller, TOMDF should seek an equilibrium point much higher than here. This could be a 5-bagger even with 1.2 billion shares in the OS.  Just read the case studies of the Tollovid as a rescue supplement for Paxlovid rebounds.  That’s a huge market.

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Disclosure: Insider Financial and its owners do not have a position in the stocks posted and have posted this article for free without editorial input. This article was written by a guest contributor and solely reflects his opinions.

Monkeypox Stocks Heating Up the Charts: TOMDF APDN CODX
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