At one point, investors loved Zomedica (NYSE:ZOM). Giddy with anticipation, investors sent ZOM stock from six cents to $2.90 for a win of 4,733% in about two months. Every $1,000 risked would have been worth more than $48,000.
The stock could do no wrong.
Up it went, fueled by a combination of Reddit mania and the approaching commercialization of its point-of-care diagnostic product. Even the pet industry was howling with anticipation. Shortly after, the company announced it first commercial sale.
Then, it all went to pet waste, as the company announced, “Zomedica’s flagship product – TRUFORMA – is intended to have five initial assays to test for adrenal and thyroid disorders, which will be followed by many more assays to address other disease states. Three of the initial assays (TSH, tT4 and Cortisol) currently are available,” according to the company’s update.
At 53 cents, I’m not picking that up. At least, not until Zomedica Corp. finds its way out of the doghouse.
Investors Aren’t Ready to “Stay” Much Longer
After posting a net loss of $4 million in the first quarter, the company posted a loss of $4.7 million, or 0.5 cents per share, for the three months ended June 30. That’s comparable to the $5.3 million, or $0.02 per share loss, a year ago. For the six months ended June 30,it posted a loss of $8.7 million, or 1 cent a share.
Revenue for the three month period came in at $15,693. For the six months, revenue was up to $29,817. All thanks to limited sales activity.
Unfortunately, the situation may not improve for some time.
As even Robert Cohen, CEO, said:
“For quite some time now, we have been focused on executing on the many behind the scenes activities necessary to advance and grow a young company. After a delay due, in part, to the unexpected sale of our distribution partner and the lack of completion of the fT4 and ACTH assays from our development partner, we have implemented a new plan to place TRUFORMA® Instruments in veterinary clinics.”
The plan, according to the company is to place TRUFORMA instruments in vet offices, with an agreement that the vet will buy assay cartridges when available in the future.
If it works, that’s great. Unfortunately, investors won’t get too excited until it can prove itself with earnings growth.
Don’t Write ZOM Stock Off Completely, Though
There may still be long-term opportunity here.
Remember, as I noted on March 31, “Veterinarians can use the Truforma platform to identify any thyroid or adrenal problems in your dog or cat. Better, instead of shipping your pooch’s blood tests to an outside lab, your vet’s office can use the platform to run all the necessary tests right then and there.”
Until it can get its house in order, avoid the stock. It’s still waiting on the necessary assays. It’s still waiting to produce sales.
Instead of risking money on the 53-cent stock now, wait for the dust to settle. Eventually, if the company can turn things around, and TRUFORMA can sell, the company could grab part of a potential $10.5 billion animal diagnostics market.
Right now, it’s just not worth the risk – just yet.
At the moment, CEO Robert Cohen says, “We expect that market adoption of TRUFORMA® will be challenging until our fT4 and ACTH assays are available for commercial release,” as noted in the company’s second quarter results release. At the same time, he also noted, We expect that the fT4 assay will be available for commercial sale in the fall of 2021 and that the ACTH assay will be available for commercial sale by the end of 2021.”
Even with the hope, don’t buy just yet. Let’s wait and see what happens next.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.