What happened
Shares of Fluidigm (FLDM 6.34%) rose over 58% today after the company announced it was selected to receive up to $37 million from the National Institutes of Health through the agency's Rapid Acceleration of Diagnostics (RADx) program. The funding is intended to develop methods for expanding the country's testing capacity for SARS-CoV-2 tests using the company's microfluidics technology.
The initial tranche of funding is only $12 million, but Fluidigm could receive the full amount depending on deliverables. Beyond that, the business could receive a significant boost if its fleet of machines can be used to detect positive and negative cases of SARS-CoV-2, although the details are a bit fuzzy.
As of 2:53 p.m. EDT, the small-cap stock had settled to a 20.2% gain.
Image source: Getty Images.
So what
Fluidigm is a laboratory-hardware developer. The company's microfluidics-based platform has been utilized for various biomedical and bioengineering applications, including real-time PCR, mass cytometry, and single-cell analysis. Those techniques are used in the development of cell therapies, genetic medicines, and other next-generation biopharmaceutical approaches.
Despite the well-positioned market niche, the business has struggled to capitalize with profitable growth. Fluidigm ended March with $48 million in cash and reported a first-quarter 2020 operating loss of $15 million, which suggests the RADx deal could provide up to six months' worth of cash.
If successful, the RADx deal could provide a significant near-term boost to Fluidigm. The company has been selected as part of a project to expand U.S. testing capacity to 6 million daily tests by December 2020, up from roughly 750,000 daily tests today. Fluidigm is specifically targeting up to 1 million daily tests by the first quarter of 2021 -- enough to more than double the current national testing capacity. It was one of seven companies selected from 640 applicants.
Now what
It's not immediately clear how this contract will directly benefit the business. Unless Fluidigm designs tests and testing materials to be run on its existing fleet spread throughout the country, or sells significantly more instruments as part of the RADx project, the company may not see much financial impact from the contract. Additionally, it's impossible to predict the level of testing that will be required in the U.S. months from now.
Today's news is a positive development, but it may not become a significant mover for the business or shareholders in the long run.
