Co-Diagnostics (CODX) Stock Gains On Fund Raise

Co-Diagnostics CODX Stock News

Co-Diagnostics Inc (NASDAQ: CODX) issued a press release early this morning, saying that it would be issuing new shares in order to raise about $4.2 million in funding. While raising funds through the issuance of shares generally leads to declines, that’s not the case today. So, why the gains on a fund raise? Well, it has to do with the fact that the funds will be used for Wuhan Coronavirus, or COVID-19, related equipment. Here’s what’s going on:

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CODX Stock Gains After Announcing A Fund Raise

As mentioned above, fund raising activities usually lead to declines. However, Co-Diagnostics is doing just fine in the market this morning, trading on gains of more than 99%.

In the announcement, the company said that it has entered into definitive agreements with institutional investors for the purchase of 470,000 shares of common stock. The purchase will take place at a price of $9.00 per share in a registered direct offering.

All told, CODX said that the gross proceeds from the offering are expected to come it at around $4.2 million. However, it’s not the fact that the company is raising funds that has investors excited, it’s what the company is doing with these funds.

In the release, the company said that it will use net proceeds for the purchase of polymerase chain reaction, or PCR, equipment. Funds will also be used to purchase raw materials. The company intends on using these materials and equipment in connection with the sale of tests used to diagnose infectious disease, including strains and mutations of the coronavirus.

Why Is This Such A Big Deal

At the moment, there are no true diagnostic tests on the market for the Wuhan Coronavirus, or COVID-19. Considering this, there may be quite a bit of false positives or negatives taking place in the diagnosis of the virus.

Ultimately, false positives or negatives can lead to the inadequate treatment of COVID-19. Moreover, without conclusive diagnostic testing, fighting the spread of the virus is very difficult.

CODX is one of the first companies that is working on a way to properly diagnose the coronavirus. Given the current market landscape, demand for this type of testing is likely to be tremendously high.

So, while the company is issuing shares at a discount in order to rasie funds, in the long run, this will likely prove to be a very smart play by CODX.

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