What happened
Shares of T2 Biosystems (NASDAQ: TT00) were down more than 46% as of 10:45 a.m. on Friday after the healthcare company announced preliminary third-quarter earnings and a reverse stock split on Thursday. The stock is down more than 93% this year.
OTC: TTOO
Key Data Points
So what
T2 Biosystems is a diagnostics company that focuses on detecting sepsis-causing pathogens and antibiotic resistance genes. On Thursday, the company said it expected third-quarter revenue of $1.5 million, down 60% year over year, blaming the drop mainly on a $1 million reduction in Biomedical Advanced Research and Development Authority revenue.
T2 also said it expects full-year revenue of $7.5 million, down 10% compared to last year because of a sepsis test panel backorder.
The company also announced on Thursday that it is doing a 1-for-100 reverse split to remain compliant with the Nasdaq minimum bid price rules. The split-adjusted shares began trading on Friday. Investors usually react negatively to reverse splits because they are seen as a sign of desperation and are the last resort of struggling companies.
Now what
It's probably wise to stay away from the stock until it can get back to improving revenue.
The only positive news this week for T2 Biosystems is that the Food and Drug Administration (FDA) has given a 510(k) clearance for the company's T2Biothreat Panel and received the company's 510(k) submission to add the Acinetobacter baumannii pathogen detection to the FDA-cleared T2Bacteria Panel. That means the company's T2Dx Instrument can perform more tests, making it a more valuable device. The A. baumannii pathogen is particularly common in hospital settings because it is more effective against immune-compromised patients. It can cause infections in the blood, urinary tract, and lungs (pneumonia), or in wounds in other parts of the body.
