What happened

Shares of the medical diagnositics company Co-Diagnostics (CODX 1.38%) gained another 152% in pre-market trading Thursday. The company's shares have now risen by a jaw-dropping 1,240% since the start of the year.

What's driving this sustained breakout in the company's stock? On Feb. 24, Co-Diagnostics announced that it had received regulatory clearance for its Logix Smart Coronavirus COVID-19 test. As a result, this first-of-its-kind diagnostic will reportedly become immediately available for export from the United States as a CE-marked in-vitro diagnostic. In plain terms, this newly approved test can be used for a rapid diagnosis of patients suspected of having the SARS-CoV-2 (COVID-19) virus in countries that accept CE marking (meaning it meets Europe's standards) as a valid regulatory approval. 

A young man wearing shades throwing U.S. currency into the air.

Image source: Getty Images.

So what

Diagnosing the COVID-19 illness has proved to be a tough nut to crack for a variety of reasons. So there is a well-defined medical need for an easy-to-use molecular diagnostic. Co-Diagnostics hopes that the Logix Smart Coronavirus COVID-19 test can fill in this gap. If so, this product could turn out to be a huge boon for the company from a financial standpoint. There are already well over 80,000 documented cases of patients with COVID-19. What's more, several countries like Italy, Iran, and South Korea have experienced a notable spike in the number of cases in recent days. 

Now what

Co-Diagnostics' market cap still remains under $300 million, even after this latest jump. So while it's hard to estimate how big a commercial opportunity this test represents, it surely dwarfs the company's present market cap. Put bluntly, this small-cap biotech stock could have a lot more room to run, despite its already monstrous spike since the start of the year.