Co-Diagnostics (NASDAQ: CODX) is Well-positioned with 3 Key Verticals

About Co-Diagnostics, Inc: Co-Diagnostics, Inc., a Utah corporation, is a molecular diagnostics company that develops, manufactures and markets a new, state-of-the-art diagnostics technology. The Company’s technology is utilized for tests that are designed using the detection and/or analysis of nucleic acid molecules (DNA or RNA). The Company also uses its proprietary technology to design specific tests to locate genetic markers for use in industries other than infectious disease and license the use of those tests to specific customers.


Dwight Egan discussed Co-Diagnostics’ NAM product line, part of their mosquito vector program which primarily is targeted at identifying diseases that are spread by mosquitoes such as Zika, dengue, chikungunya, West Nile virus ect.  He also went over the company’s three key verticals, infectious disease, agriculture and liquid biopsy and CODX’s technological advances and competitive advantages in those sectors. Mr Egan talked about their recent deal with LGC, and joint venture with Asence Pharma in India. He outlined Co-Diagnostics’ upcoming goals, milestones, and hurdles over the next several months. Have a listen below:


WSA:  Good day from Wall Street, this is Juan Costello, Senior Analyst with the Wall Street Analyzer, joining us today is Dwight Egan, he’s the CEO for Co-Diagnostics Incorporated.  The company trades on the NASDAQ Capital Market, ticker symbol CODX.  Thanks for joining us today there, Dwight.

Dwight Egan:  My pleasure.

WSA:   So, for some of our listeners that are new to the story, can you start off by providing us with an intro?

Dwight Egan:  I’d be pleased to do that.  Co-Diagnostics is a firm that specializes in what we refer to as revolutionary diagnostics incident to a patented platform that we own, that we specifically refer to as CoPrimers.  CoPrimers is a particular molecular structure in the manufacturing development and bioengineering of molecular diagnostics that gives us several key advantages.

First of all, it allows us to eliminate primer-dimers or nonspecific amplification errors, and what that results in is our enhanced ability to multiplex.  It also does superior SNP detection, and we’re also able to multiplex the detection of SNPs.  SNPs are single nucleotide polymorphisms, where you’re looking for just one nucleotide that’s misplaced in a genetic sequence. 

So, with those advantages, we have the ability to play in a lot of different fields of use.  We are concentrating at the moment on three specific fields; infectious disease, agriculture and liquid biopsy.  There’re numerous other fields of use that we could go into in the future but given our current situation, and balance sheet and such, we believe that we’re best suited to concentrate and focus specifically on those three verticals.  In each of those verticals, we are making significant strides.

Our infectious disease vertical, which is our most mature vertical, is off and running.  We have developed a joint venture with a company called Synbiotics in India, which is a subsidiary of Asence Pharma, one of the largest pharmaceutical companies in India.

We have built a new plant there, which we inaugurated in April this year, and we are currently selling products to a number of customers in India with our infectious disease portfolio.  In the field of agriculture, we are also making strong headways.  We have developed an agreement with a company called LGC, out of England.

LGC is an international leader in the agricultural space and we have signed an agreement with them that allows them to represent our product in their area of influence, which is 150 or 160 different countries.  Now, they have over 20,000 clients and about 12,000 laboratories that they serve.  We’re featured dominantly on their website at Biosearch, and this is a product that has now been introduced to the market and we look for some very serious action in that particular theater.

Finally, in liquid biopsy, we just concluded a test in the EGFR mutation space, which is a very common cancer mutation particularly present in non-small cell lung cancer.  The results of our study are very good, that demonstrate clearly our having a seat at the table of providing liquid biopsy products. We anticipate doing that through the introduction, in the future, of various panels that would cover the prominent cancers such as non-small cell lung cancer, colorectal cancer, breast cancer, and so on.  So, it’s a patented technology, been highly proven out and vetted, we have received our patent for CoPrimers, and we’re now in the midst of commencing commercialization in three key verticals; infectious disease, agriculture and liquid biopsy.  That’s an overview for you.

WSA:   So bring us up to speed on some of the recent buzz regarding your NAM product, and what are some of the trends that you’re seeing there in that sector and how is the company positioning itself to capitalize?

Dwight Egan:  Yeah, the mosquito vector program is something that we have placed under our agricultural area because it deals in that space.  It primarily is targeted at identifying the diseases that are spread by mosquitoes and that would include things like Zika, dengue, chikungunya, West Nile virus, St. Louis encephalitis, and these diseases are very closely related.  They are ina family of viruses known as flaviviruses.

Flaviviruses are spread by the Aedes aegypti mosquito, they’re also spread part by the albopictus mosquito, they’re coming further and further north as weather permits, and they cause all kinds of serious problems in human beings.  The most devastating problem is the presence of microcephaly with an infected fetus.

But West Nile virus also can kill a person who gets it and a measurable percentage of the people who get West Nile virus actually die.  So, the ability to detect that is what that particular vector program is all about, and we have developed a unique group of products to help vector control units do that, we just began marketing that program and we’ve had good success.

Companies or counties around the United States, for example, of which there are more than 3,200 different counties, many of them have mosquito vector programs.  Certainly more than 1,000 abatement districts, I think much higher than that, and we have begun a serious campaign to these counties to sell them our product line which includes our reagents, which are unique for this market in that they are multiplexed.

In other words, as I mentioned earlier in the overview, we’re able to do multiplexing because of our reduction of primer-dimers, a cause of false positives.  So, a county or district is able to test their own mosquitoes, their own dead birds, or any other place where they think they’ve got something they need to test, utilizing inexpensive equipment and inexpensive reagents that come from Co-Diagnostics.

We think this is going to be a very important product over the next many years, as counties who spend a great deal of money spraying and buying equipment and trucks and sprayers and things that enable them to get out into wetlands, they spend an enormous amount of money.  So, to participate with our program is almost like a rounding error for the district.

It’s inexpensive, and because they can do three tests at a time, in other words, they can test for West Nile virus, for St. Louis encephalitis, and for Western equine encephalitis, because they can test for all in one test, it saves them a considerable amount of money.

It also saves them time; they don’t have to go to a state lab or some other kind of expensive laboratory to get their results which cost more and also take time, and enables them to get same day results so they know where to spray to knock out the infected areas, as opposed to waiting a week or 10 days to get results from the participating state lab.  So, we’re excited about the rapid interest and pick up in that product line, it’s part of our agricultural vertical and I think it’s going to be a real winner for us.

WSA:   Yeah, and I’m sure with the recent prevalence and the weather continuing to heat up, it’s going to be even more of epidemic which I guess for you guys is a good thing, right, already having that position there?

Dwight Egan:  Yeah, we don’t like to take advantage of things that are otherwise negative but the presence of these mosquito borne viruses, it’s not going to go away.  It’s endemic and it’s becoming a problem.  Every state in the United States has West Nile virus, every single one of them, in the continental United States, so we know that there’s going to be a– or at least we feel that there’s going to be a broad interest in this product, and if our initial marketing results are any indication of the future, it’s going to be a strong area for us.

We might also add that we’re the only company with a PCR molecular test that uses a mosquito internal positive control as opposed to a human control.  So, we have developed a test specifically for the testing of mosquitoes and that’s a strong point for us.

WSA:  Yeah, certainly.  So, yeah, switching gears to your liquid biopsy product lines, can you talk about first of the market opportunity there, what specifically some of those products are and what the benefits are versus traditional biopsy methods?

Dwight Egan: The important thing to remember about liquid biopsy is that it is an alternative and a supplement to what is traditionally done and is still the gold standard, and that is a tissue biopsy.

But the concordance between liquid biopsy and tissue biopsy result is getting stronger and stronger, and so when you look at the ability to determine whether somebody has cancer by doing a simple blood draw, it has obvious ramifications and positive ramifications including it costing $15,000 to $45,000 to do a traditional tissue biopsy whereas a liquid biopsy can be done considerably cheaper than that.

The whole notion here is, and the riddle is, finding the needle in the haystack, which is sort of a metaphor for finding the presence of cancer DNA or cancer cells that are flowing through the blood, when you have a lot of normal cells and you’re trying to define the rare allele or the rare genetic mutation.

Liquid biopsy gives the opportunity to find the presence of a mutation when they say, 12 million cells in the bloodstream of the patient or in the whole body of the patient, as opposed to the 100 billion cells that are necessary to have a tumor that could be detected in a scan.

So, the ability to do liquid biopsy has ramifications both before somebody shows that they have cancer with symptoms and it also becomes a very important tool after somebody has been formally diagnosed through a tissue biopsy in terms of monitoring the patient, say, every four weeks when they go in to see their physician and they want to see whether the drug or therapy that they’re using is effective.

The kind of test you can do with a liquid biopsy would show whether or not the treatment is effective because the quantity of genetic material will continue to be knocked down from month to month as the therapy is administered.  Now, our targets in that business are in the area of screening, so screening a patient before they have a cancer diagnosis and, secondly, and monitoring a patient after they have received a diagnosis.

Those are the areas where we think that will be the most lucrative for us and the best place to apply our technology.  Now, the proof of concept test that we recently concluded on 10 different targets in the EGFR mutation scheme yielded excellent results in our ability to determine the presence of cancer mutations amidst large measures of what we call wild type or normal cells.

So, our ability to find that needle in the haystack which we performed on reference materials that come from a company called Horizon, another public company, our results are terrific in that regard on all 10 mutations that were part of the study.  So, we’re moving forward to stake a claim in the liquid biopsy area but, again, we believe will concentrate mainly in the screening area and in the monitoring area.

WSA:  So, what are some of the factors, Dwight, that you believe makes it something unique from some of the other players in the sector?

Dwight Egan:  Well, I think the fundamentals of Co-Diagnostics are built on our technology and ultimately we believe that technology trumps here, and our ability to do what we do with our CoPrimer molecule in the polymerase chain reaction space, it gives us unique opportunities in all the world in all of those different verticals that I mentioned.

The fact that we have eliminated the primer-dimers makes it sowe pretty much eliminated the false positive problems, and the fact that we own our own platform gives us the ability to price things without having to in-license technologies from other companies.

The fact that we can multiplex is also significant. I mean we put out a product for Zika, chikungunya, and dengue, all at the same time.  So, it saves a customermoney, and then the initial premise of this company was that if we engineered products in the US, and then marketed them in the developing world, that we could take superior products and make them available at a fraction of the cost that they’re having to pay to get them from traditional suppliers.

I’m pleased to see that we’re finding that to be the case in our initial marketing in India, for example, which we believe will become the largest health care market in the world.  They have a 1,000 people a day that died from tuberculosis.  They have 1,400 people a day that die from cancer.  So, it’s a very fertile market for somebody like us who has a high level, high grade diagnostic or screening product for something like tuberculosis, or for liquid biopsy for cancer detection or for many of the other diseases that we’re introducing diagnostic products for in that country, which include things like hepatitis B and C, and malaria, and HIV and so forth.

It is a value proposition that is very important because it’s a relevant value proposition.  It’s something they can afford, and we think that will be a very positive market for us.  Now, all of a sudden we have a very nice US market developing in our flavivirus mosquito vector program, because while we always intended to eventually show up in the US market with our diagnostics product, this has given us a jumpstart that we hadn’t previously really planned on.

WSA:  So, what are some of the main goals and milestones that you’re looking at here over the course of the next few months that investors should be aware of?

Dwight Egan: Well, the main challenge that the company is taking on right now is the introduction of our products, and the commercialization of our products, particularly in infectious disease and in agriculture.  We have strong initiatives underway, we have begun selling product with success, and we will continue to expect that we will see strong gains from quarter to quarter certainly, compared to last year, but also incrementally from quarter to quarter as we attract new customers with these new products.

So, I think what investors should concentrate on with Co-Diagnostics is they should be able to connect the dots that, “Hey, this is a company that has a very strong technology that’s been heavily vetted in the market place,” that is represented by our signing a deal with LGC, which is an international leader, and with our joint venture with Asence Pharma in India and the successful introduction of these products.

So, they should say —”they have a great technology, it’s been heavily vetted, and they’ve also shown their ability to get regulatory approval with things like the CE marking.” And we’ll have a number of products that have a full in vitro diagnostic designation from the CDSCO, the Indian version of the FDA in the near term here.  So, they’ll see a number of different products being released from quarter to quarter that put us in a good position to grow the company from a revenue base.

I might also add that Co-Diagnostics is not a company, like so many other companies in our space, that continue to lose $25 million to $50 million, and as much as $100 million a year, as they build their product line and try to get it to the market.  I could point out a number of different companies but I’ll spare you that.  But we have a company that can break even on a very small level of revenue because we just don’t have that kind of a burn rate, largely because we own our own platform and we don’t have to license things from other companies.

So, we have a very lean workforce of about 22 employees and we have the ability to break even on, say, $6 million in revenues.  We don’t have the kind of burn that other companies have.  So, that would be the other thing I would encourage investors to keep an eye on is, “Okay, these guys not only have the technology and it’s vetted, and they’re getting into the market, but they don’t have to sell $100 million of the product to start making money.  They start making money, a lot faster than that.”

That’s one of the other milestones that we think people ought to keep an eye out on the next 12 to 18 months with this company, how close is the company coming to achieving its called breakeven status?

WSA: Yeah, certainly very key point.  So, perhaps you can talk a little bit about your background and experience and what the key management team is there, what makes you guys qualified to be able to achieve some of those goals and hit those milestones?

Dwight Egan:  My background, I’m not a scientist, I’m a businessman.  I’ve spent most of my adult life in senior level management of public companies.  I cofounded a company called Broadcast International, which was a successful company.  We’ve then sold that to a company called Data Broadcasting, on which, for that company, I sat on that board, I was one of their senior executive officers and also was the president of the subsidiary that they bought that I had cofounded.

We took a company public called CBS Market Watch, which many people are familiar with still to this day.  It’s not called CBS Market Watch, but it is called Market Watch, it’s one of the most successful and recognizable financial portals in the world.

So, I have just a lot of experience and in working with public company leadership, because I’ve been part of it most of my adult life, so I’m just familiar with the drill, and what it takes to get a product to market.  In Data Broadcasting, we had about 27,000 customers that used our products to monitor the market and also to do analysis of sophisticated fixed income portfolio analytics.

Our CFO is Reed Benson, who is also has a long history of being involved in public companies.  He was with me at Data Broadcasting, he was with me at Broadcast International, and is now with me in this particular endeavor, which we think will be the most important one that we’ve been involved with.

Our bench strength with respect to our scientific group is also very strong. Dr. Brent Satterfield, who is the Chief Science Officer of the company and was the founder really of the company in terms of creating the science, creating the CoPrimer technology and several other technologies, has a long background with a number of important entities that he’s done developmental work for.

Dr. Jana Kent is the head of our research, Dr. Rebecca Garcia is the head of our product development, so we have good bench strength in terms of the talent that we have developing our products and doing the research.  

I might point out to you that we became introduced to the agricultural space about two years ago. That has culminated in a great deal of developmental work and research and development that has ended up in a very nice agreement in contract with LGC of the UK, they’re an international leader in the life sciences sector and they don’t do these types of agreements and feature products like ours so predominantly and their website if it’s not a very high grade product.

We have two excellent facilities, one in Salt Lake City, Utah, we’ve been certified under ISO 13485 for a number of years, and we just opened up a new plant about the same size in Ranoli, India, close to Vadodara, in signatory joint venture with the Asence Pharma group through their subsidiary, Synbiotics.

So, we’re well positioned, we’ve done the heavy lifting in terms of R&D, we’ve done the proving out of the vetting of the technology and the ability to get regulatory approval, that’s all about commercialization at this point for our company, and we feel very strongly about how nice the successes that we’re having in our initial steps in that direction, and that’s manifesting itself right now in the infectious disease area and, secondly, in the agricultural area.

WSA:  Certainly.  So, once again, joining us today is Dwight Egan, President and CEO of Co-Diagnostics Incorporated, which as mentioned trades on the NASDAQ capital markets ticker symbol CODX, trading at $1.31 a share and market cap is about 23 million.  So, before we conclude here, Dwight, to briefly recap some of your key points.  Why do you believe investors should consider the company as a good investment opportunity today?

Dwight Egan:  Well, I think they ought to consider because we’re going to make an important contribution in healthcare with the products that we’re doing and in agriculture.  We have a product line that is very desirable and in so many different fields of use, the world has to double its food supply between now and 2050, and technologies that are like ours that are helping major companies in the agricultural area develop products that can grow in less water, that can be more resistant to bugs and disease so that we can yield greater harvest, is a very key area, it’s going to be a major focus over the next three decades in the world.

What we’re doing in infectious disease is really democratizing the availability of high-grade molecular tests including for things like testing the blood supply for transfusions and such.  We’re going to make a significant contribution throughout the world and particularly in the undeveloped world where there are 145 countries including all of the BRIC countries that need these types of technologies and need them to be made available at prices that make a difference because they can be afforded.

Of course, what we’re doing in liquid biopsy is an area that we think is one of the most exciting things going on in healthcare today.  It’s just explosive and the fact that our product will enable us to do cancer screening and monitoring, again, at very low prices compared to what is being talked about out there by other major purveyors of liquid biopsy, we believe that we’re going to have a significant stake in that business as well.

Then we’ll see what goes on with the other things but for the next 36 months look for us to concentrate on those three verticals and then we’ll look to getting involved in some other either out licensing or taking on a few other fields of use as time goes on.

WSA:  Well, we certainly look forward to continuing to track the company’s growth and report on your upcoming progress, and we’d like to thank you for taking the time to join us today, Dwight, and update on rest of the audience and Co-Diagnostics.  It was great having you on.

Dwight Egan:  Thank you, it was my pleasure.

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