The stock in Applied DNA Sciences Inc. (NASDAQ: APDN) skyrocketed nearly 54% to $13.67 per share by midday Thursday on its announcement of receiving emergency use authorization for its Covid-19 assay kit from the Food and Drug Administration.
With the approval, clinical labs certified under the Clinical Laboratory Improvement Amendments (CLIA) can “immediately” begin to use the company’s Linea™ testing kit to perform “hi complexity” tests, according to DNA Sciences statement today. The Stony Brook, New York-based molecular technologies provider's machine said the machine that runs that test can process 94 samples in an hour and more than 2,000 tests a day.
“We believe we have developed an assay with numerous commercial advantages over other EUA approved COVID-19 detections assays,” Mohan Chellani, the director of diagnostic regulatory affairs at DNA, said in a statement today.
He added, “We developed the Linea™ COVID-19 assay kit for high-throughput operations where rapid high-volume testing is requisite. In addition, we have worked closely with our supply chain partners to evolve safeguards to ensure a steady supply of inputs necessary for the construction of our kit.”
It’s also important to note that there has been concern over a great deal of fraud from companies regarding plans to sell COVID-19 tests. In April, the Securities and Exchange Commission suspended 23 companies for making illegal false claims in efforts to sell their stock and make a profit. The greatest ones at risk of fraud are microcap stocks, as there are unknowns with them.
"These rumors cause many investors to purchase the stock," the SEC said.
It added, "Then the promoters or others working with them quickly 'dump' their own shares before the hype ends."
Of course, this now makes things more complicated for investors to pick winners with microcap stocks. While DNA has a market capitalization of just nearly 48 million, the same concerns do not apply to this company, as it has received FDA approval. Rather, this is just a warning to express caution over potential fraud.