Things have started to change for Check Cap since the NASDAQ compliance re-gain extension.
The clinical-stage medical diagnostics company shares are trading with strong momentum. The average trading volume of Check-Cap Ltd. (CHEK) is just over 8 million. As we write this on Jan 5., the trading volume is almost 235 million. Is it a good time to jump in and buy the stock?
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What going on?
Check-Cap Ltd. (CHEK) stock is skyrocketing, but what’s the exact reason? On Dec. 30, 2020, the company received a notice of a 180-day extension to regain NASDAQ compliance. This allows the stocks to have enough time to trade above the $1 minimum required share price on the market.
This NASDAQ compliance extension has driven high volume over the past week. Investors are now seeing things in a positive way as the company tries to fight back.
Back in Nov. 2020, the company announced that it had submitted the Investigational Device Exemption (IDE) application to the FDS for its pivotal study of C-Scan. The IDE is a great achievement towards the initiation of the pivotal study in the U.S. The company is expected to provide updates on its C-Scan study in the near future, following the guidance from the FDA.
Moreover, the company is preparing well at the backend for the U.S. pivotal study; improving the supply chain, quality controls, and device manufacturing. The company is also managing the expansion of this study at the leading Israeli sites.
The core objective of Check-Cap is to advance its C-Scan towards the final cynical stages and make it to the market. The C-Scan is being developed as a patient-friendly colorectal cancer (CRC) screening option—detecting pre-cancerous polyps. The company expects a response from the FDA anytime soon.
However, on the other side of the picture, there are concerns regarding Check-Cap’s cash balance. As of Sep. 2020, the company had cash of $21 million with zero debt. Essentially, the cash burn was almost $13 million over the past twelve months. With that, the company had only 19 months of cash runway. The worrying part is that if the company runs out of cash, and that too in the middle of a pandemic.
Check-cap is still in its early days and is developing as a business. The increase in cash burn shows that the company is focused on future growth and its current focus on its C-Scan pivotal study.
Conclusion
Wall Street is positive on Check-Cap Ltd. (CHEK) and expects medical diagnostics to grow in the long-term. The game will change once the company receives the guidance update from the FDA on IDE. However, analysts’ rate CHEK stock as a strong buy. The average price target is around $1.7, with an upside of 32% over the next 12 months.
