T2 Biosystems has received FDA clearance to market and sell its T2Biothreat panel
Shares of T2 Biosystems Inc. extended their losing streak to two days Wednesday despite the biotech clinching regulatory approval for a key diagnostic test.
In a statement Tuesday, T2 Biosystems (TTOO) announced that it has received 510(k) clearance from the FDA for its T2Biothreat panel. The panel is a direct-from-blood molecular diagnostic test that detects six biothreat pathogens, including the organisms that cause anthrax, plague and typhus.
With the FDA clearance, T2 Biosystems can immediately start marketing and selling the T2Biothreat panel in the U.S. market.
But T2 Biosystems' stock ended Wednesday's session down 11%. The company's shares ended Tuesday's session down 26.1% to snap a two-day winning streak that saw a 65.6% gain Monday, their biggest single-day percentage gain since Sept. 11, 2019.
The FDA's decision to grant approval for the T2Biothreat panel has massive implications for the micro cap, according to Alliance Global Partners analyst Ben Haynor. "We see the T2Biothreat clearance as the most important regulatory development to alter the company's near-term fortunes," he said in a note released Wednesday.
Government entities are the likeliest purchasers of the panel, according to Haynor. "Should they choose to purchase T2Biothreat, we would expect the agencies to stockpile tests, which we believe could lead to large recurring orders (given the test's two-year shelf life)," he said. "We understand the company had identified the appropriate individuals within the government to target once the T2Biothreat panel's FDA clearance was secured, and we would expect the company to be in touch with such individuals in short order if they have not been already."
T2 Biosystems, which describes itself as a leader in the rapid detection of sepsis-causing pathogens and antibiotic-resistance genes, has been generating meme-stock-like buzz recently. The company has a market cap of $113.08 million, according to FactSet data.
Alliance Global Partners maintained its neutral rating and 18-cent stock-price target for T2 Biosystems but expects a "positive bias" to its rating and price target should the company start receiving T2Biothreat orders. "We continue to be believers in T2's technology, but overriding near-term capital needs keep us on the sidelines," Haynor wrote. "That said, provided the company can appropriately finance themselves, it appears to us the worst may be soon behind them."
T2 Biosystems is not yet cash-flow positive. "We have not guided to when we will achieve cash-flow break-even, so I wouldn't do that on this call, but what I can tell you is that we have substantially strengthened our balance sheet," T2 Biosystems CEO John Sperzel said at the Sidoti Micro Cap Conference last month.