Applied DNA Sciences, Inc. (APDN) provides technology solutions in the Polymerase Chain Reaction (PCR) based DNA manufacturing and nucleic acid-based in vitro diagnostics.
Recently, APDN’s Q4 revenue jumped 9x to $3 million, beating analysts’ estimates by $743,000.
The company registered a net loss of $0.52 per share, missing analysts’ estimates by $0.15. The jump in its top-line was attributed to the company’s decision to enter the COVID-19 testing and assay manufacturing markets, and make use of its expertise in PCR. Additionally, APDN has submitted its Linea 2.0 COVID-19 validation package to the New York State Department of Health.
With these developments in mind, let us take a look at the changes in APDN’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, APDN’s top two risk categories are Legal & Regulatory and Finance & Corporate, contributing 29% and 27% to the total 41 risks identified, respectively. In its recent annual report, the company has added two key risk factors.
Under the Finance & Corporate risk category, APDN noted that false-negative test results are a key risk with all laboratory tests, which also includes COVID-19 molecular diagnostic tests. APDN’s Linea COVID-19 Assay Kit test assesses two regions of the virus, which potentially reduces the chances of a false negative in the presence of one or more COVID-19 mutations.
Nonetheless, the risk remains that the assay kit may result in false negatives. If it is determined that the results of the kit are not accurate or reliable, then APDN’s emergency use authorization (EUA) could be terminated by the FDA, which may adversely affect the company.
Meanwhile, under the Legal & Regulatory risk category, APDN noted that the 69-70del mutation was found in a number of COVID-19 variants. Currently, there are only two EUA authorized COVID-19 molecular diagnostics, which indicate whether a sample contains this mutation including APDN.
The risk remains that other companies may obtain authorization for molecular diagnostics to detect this mutation. Such a scenario could negatively affect the sales of APDN’s Linea COVID-19 Assay Kit.
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Compared to a sector average of 20%, APDN’s Legal & Regulatory risk factor is at 29%.
Wall Street’s Take
Consensus on the Street is a Strong Buy based on 3 unanimous Buys for the stock. The average Applied DNA Sciences price target of $16.67 implies a potential upside of 218.7%. That’s after a 21.5% drop in APDN’s share price over the past six months.
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