TTOO Stock: T2 Biosystems Climbs on COVID-19 News

T2 Biosystems Inc (NASDAQ: TTOO) is screaming for the top in the market this morning, and for good reason. The company announced that its T2SARS-CoV-2 Panel is capable of detecting multiple variants of the SARS-CoV-2 virus. Here’s what’s happening:

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T2 Biosystems Announces Efficacy News Surrounding Its COVID-19 Test

In a press release this morning, T2 Biosystems announced that its T2SARS-CoV-2 Panel is effective in detecting multiple variants of the virus that causes COVID-19 infections. These varians have recently been found in the UK, South Africa, and the United States. 

The T2SARS-CoV-2 is a molecular diagnostics test that was designed for detecting the SARS-CoV-2 virus. 

In the release, TTOO said that both variants detected in the UK and South Africa contain multiple mutations. These mutations have been found in the S gene, the gene that encodes the spike protein. 

The company went on to explain that in order to confirm that its test would detect these and other potential mutations of the virus, an in silico analysis was performed using genome sequencing. 

TTOO evaluated more than 42,000 genome sequences for SARS-CoV-2 for alignment with primer and probe sequences from the T2SARS-CoV-2 Panel. The analysis showed that the Panel should detect 99.99% of all SARS-CoV-2 viruses based on sequence alignments. 

The company went on to an analysis specific to the mutations seen in the UK and South Africa to confirm that the Panel should be able to detect these variants as well. 

Importantly, the T2SARS-CoV-2 Panel provides results in less than two hours using an upper respiratory swab sample. 

Management Commentary

In a statement, John Sperzel, President and CEO at T2 Biosystems, had the following to offer:

As new strains of the COVID-19 virus emerge, it is critical that we ensure our technology continues to be an effective diagnostic solution during the ongoing pandemic.

I’m proud that we can confidently say, after extensive analysis, that our T2SARS-CoV-2 Panel, which has demonstrated clinical sensitivity of 95 percent and specificity of 100 percent, can continue to help impact lives by detecting multiple variants of the SARS-CoV-2 virus.

Why Investors Are So Excited

There are plenty of reasons to be excited about the news released by TTOO this morning. First and foremost, we know that the virus that causes COVID-19 infection is mutating. Few tests have proven an ability to detect mutations of the virus. 

As the world works to bring vaccines to the masses, and even after vaccination, I believe that COVID-19 testing will be incredibly important. 

At the moment, demand for these tests is spiking. 

If you were going in for a COVID-19 test, would you rather get a test that might show mutations of the virus, or would you rather get a test that is proven to show mutations of the virus?

I’m sure I can answer that question for you!

The fact of the matter is that with this news, TTOO has the ability to grab the COVID-19 testing market by the horns. Afterall, its test is effective in detecting the virus, regardless of the mutation. 

What Analysts Think About TTOO Stock

According to TipRanks, analysts love T2 Biosystems. In fact, there are currently two analysts that are weighing in on the stock. Both of them rate it a Buy with no Sell or Hold ratings to speak of. 

Both analysts also have a price target of $3.50 on the stock, representing the opportunity for gains in multiples. 

Although it’s never a good idea to blindly follow the opinions of analysts, or any expert for that matter, it is wise to use these opinions to validate your own, and if you’re bullish on TTOO stock, the validation is clear. 

Risks to Consider Before Buying TTOO Stock

Investing comes with risk, no matter how you slice it. Even keeping cash is an investment in the currency you’re holding, which comes with inflation risk. TTOO stock is no exception to that rule. Some of the most significant risks to consider include:

  • Penny Stock Risks. First and foremost, TTOO is a penny stock. This means that it comes with added risks, including increased volatility.  
  • Profitability. Sure, T2 Biosystems generates revenue through the sale of its products, but that revenue isn’t nearly enough to keep the roof attached to the walls. Put simply, the company operates at a loss. Should the company fail to reach profitability before cash on its balance sheet runs out, it will likely sell newly-issued shares to raise funds, diluting value for existing shareholders and leading to significant declines. 
  • A Speculative Bet. Another risk that we generally see among penny stocks is speculation, and TTOO stock is no exception to that rule either. The fact of the matter is that while the company’s diagnostics tests have been proven, the company’s business model has not, hence the lack of profitability. As such, an investment in the stock would be a speculative bet. 

Final Thoughts

I didn’t write the risk section to scare you off. Again, all investments, even a savings account, comes with risk. That’s there to give you a fair shake. 

In my opinion, TTOO stock is a major opportunity. I believe that even with vaccines and treatments, COVID-19 testing is going to be a long-term necessity, and with the news today, the company has the potential to lead the charge. All in all, this is a stock that’s well worth watching.