Veterinary diagnostics company Zomedica (NYSEAMERICAN:ZOM) has been on a tear this month, with its shares up over 103%. A few weeks ago, I wrote about the company, citing its potential in the rapidly growing diagnostic care market. Moreover, I also talked about how its best to assess its revenue patterns and the developments in its Truforma platform. Though my thesis remains the same, the recent positive developments are widening the bull case for ZOM stock.
The company is taking advantage of the heightened investor sentiment surrounding the stock through its upsized stock-offerings. It recently completed an upsized offering of 91.3 million shares at $1.90 to raise over $173 million. Initial plans were to raise $25 million from 13.16 million shares. The development further strengthens its $90 million cash balance which is more than enough to fund its operations until 2023. Therefore, all eyes are on the commercial release of its Truforma platform this month.
Letter From The CEO
In late January, CEO Robert Cohen released a letter addressed to the shareholders, highlighting the company’s progress. The letter provides an insight into the company’s activities leading up to the release of its flagship Truforma. Additionally, it also details its progress from a financial standpoint.
Perhaps the first noteworthy thing mentioned in the letter was that ZOM stock regained compliance with NYSE American’s listing requirements. There was a time the stock was worth only 6 cents but is now up 3,000% from that level. With the imminent release of its diagnostics platform, the stock should continue to jump in value.
Additionally, Cohen states that the company should be cash flow positive by 2023. It has done well to control its expenses for the year, with a considerable decrease across all significant heads. Moreover, with its recent stock offerings and warrant conversions, I expect things to go smoothly for the company from a financial standpoint.
Most importantly, the letter talked about the impending commercial launch of Truforma. The company plans a limited release on March 30th, with already verified assays. Later in the year, it plans to add other additional assays under development and expand to new locations in late 2021.
Potential Competition
Zomedica’s Truforma platform is unique in its application and features, enabling it to cash in on a substantially underserved market. However, it is likely to face competition from existing companies offering point-of-care diagnostics.
You firstly have Siemens (OTCMKTS:SIEGY), with its Immulite 1000 immunoassay system. Though it has little to do with veterinary applications, it was used as a benchmark against which Zomedica verified its platform. You have LexaGene with its MiQLab system, which offers effective point-of-care pathogen detection, focusing on bacterial infections and antibiotic resistance.
IDEXX’s (NASDAQ:IDXX) Catalyst One platform covers in-office diagnostics for over 30 assays. Thyroid diagnostics is one of the company’s core offerings, which could potentially compete with Truforma. It currently has a 5% market share in the pet diagnostics market.
Regardless of the competition, the addressable market for pet car diagnostics is such that there is plenty of room for several players. The company estimates the total addressable market to reach $2.8 billion by 2025. Hence, through effective brand equity, it could grab a substantial portion of the market.
Bottomline on ZOM Stock
Zomedica has built a great head of steam as it inches closer to its Truforma platform’s commercial release. Moreover, its success could provide the company with a multi-million dollar revenue stream and lay the foundation for massive expansion. Things are looking good so far, with no reported hiccups and sufficient capital for the platform’s development. Hence, ZOM stock could potentially be a fascinating play in the fast-growing diagnostics market soon.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article
