Use the Wait-and-See Approach With Zomedica Stock

Zomedica (NYSEAMERICAN:ZOM) is a pre-revenue pet care company developing a novel point-of-care diagnostic tool for gastrointestinal distress for cats and dogs. Its innovative diagnostic platform, Truforma, is set for commercial launch in March. ZOM stock is up 3,500% in the past three months.

a smiling dog on a leash
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With a rapidly growing market that’s pushed into high-gear by Covid 19-induced tailwinds, ZOM stock has immense potential to establish its presence as a first mover in the sector. Investors would want to tread lightly, though, and assess its revenue growth patterns before making a move.

Ahead of the much-anticipated commercial launch of its diagnostic platform, the company is fortifying its liquidity position. It recently announced that it raised $40 million after its investor exercised existing warrants. As a result, it is also in much better shape in terms of its stock price, which fell below Nasdaq’s minimum.

Zomedica is losing money in its operations, but its cash equivalents have shot up over $90 million compared to just $1.5 million in 2019. With its finances straight, it focuses on its commercial launch, which should be on the radar for most investors.

The Novelty of Truforma

Truforma is a diagnostic platform that uses disposable cartridges to provide point-of-care testing of blood, serum and plasma. It uses a bulk acoustic wave technology through its sensors, which facilitates non-optical detection and lab accurate results. Moreover, it effectively ties into the company’s online platform, which streamlines the different elements of its transactions with veterinary customers.

Zomedica’s initial testing has focused on adrenal and thyroid disorders primarily because they are usually a common problem among dogs and cats. It has been working on the platform for more than two years, which will cover a whole host of other disorders as well.

The product’s results are in line with standard reference lab testing and have similar accuracy to those built by Siemens. A few months later, in September, the company has announced that it will be expanding its capabilities for three new assays. These will primarily focus on canine gastrointestinal issues, which has enormous potential for long-term growth.

Market Size and Growth Potential

The pandemic accelerated growth in the pet market, as lockdown restrictions have compelled more people to keep pets. The American Pet Products Association estimates that spending in the U.S. pet market reached a new high of $99 billion. Moreover, spending in the diagnostic care market will grow from $1.7 billion in 2019 to $2.8 billion in 2024.

Zomedica is investing heavily in its sales capabilities ahead of its commercial launch. It recently struck a deal with wholesale veterinary distributor Miller Veterinary Supply to ramp up sales of Truforma on the east coast.

However, there are few risks to consider as well with the Truforma platform. Its bulk acoustic wave technology is licensed from semi-conductor giant, Qorvo (NASDAQ:QRVO). Its technology is versatile, but measuring thyroid concentrations in samples, is way out of its ballpark. Moreover, the company is yet to complete a large validation study or its assays so far, limiting its veracity.

The Bottom Line on ZOM Stock

Zomedica’s product offering gives it the first-mover advantage in a rapidly growing industry. If it can marginalize the risks, the company can gain massively as commercial operations commence.

The company’s finances are in order, so it can continue to invest in improving its platform. Investors want to wait and assess its revenue patterns for the next few months, though.

All in all, though, ZOM stock is a fascinating play in the ever-evolving pet care field.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.

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