The prior month has seen companies having the potential to share in the diagnostics screening of COVID-19 (Coronavirus) experience a sharp rise in market value during the past month. These stocks are acting counter-intuitive to a market that has seen a resurgence of daily 1000 point losses reminiscent of the global Ebola scare that started in 2014. And, while it’s likely that both the markets, and the global population, will regenerate symptoms of short-term memory loss when the virus is put under control, some opportunities should stay in focus. ERBA Diagnostics (OTC: ERBA) may be one of them.
Furthermore, despite the markets recently bidding up the prices of vaccine and drug makers, it’s the first-line-of defense companies, like Erba Diagnostics, that have been lagging investor attention. That’s unfortunate. Since 1980, ERBA has marketed diagnostic test kits and automated systems that are used to aid in the detection of disease markers primarily in the areas of autoimmune and infectious diseases. And, by turning attention to the markers in COVID-19, ERBA may prove to be better positioned to offer long-term value once those that lose the race to find a vaccine plummet back to pre-crisis levels.
The thesis behind ERBA’s growth potential is simple. Global health organizations need to become better prepared to offer diagnostics tools that can provide early diagnoses to a global population. From there, precautions can be taken to contain potentially deadly virus strains from advancing to a pandemic, and even epidemic, status.
ERBA Diagnostics can be a part of that long-term proactive vision. And, with a market cap of only $10 million, this company may be getting overlooked. Importantly, if and when a previously announced land asset sale for properties owned in Miami Lakes, Florida, gets consummated, it would add more than $0.45 per share of cash value to the companies stock. That alone represents a more than 50% increase from current share price levels.
Investors should fully understand that the company has been in a long-term quiet period until they complete a comprehensive internal audit related to a prior transaction. But, it’s also noteworthy to recognize that the company is still building value during this audit period. A series of 8-k filings can be found by clicking here to show activity at ERBA Diagnostics.
ERBA May Be The Derivative Play On COVID-19 Diagnostics Market
ERBA Diagnostics is not a new player to the diagnostics test kit market. The company dates back to 1980 but was reinvented in 2010 when billionaire and Indian entrepreneur, Suresh Vazirani, bought control of IVAX Diagnostics. Despite training as an electrical engineer, he pursued a different interest of business and started a diagnostic testing company, Transasia, in India, and later ERBA, a part of the German-based multinational company, ERBA Mannheim. The stateside office is based in Miami Lakes, Florida, and has roughly 85 employees, according to a recent Miami Herald article.
Now, with financial backing from Mr. Vazirani, the company has been on a mission to build value through acquisition, non-core asset sales, and from its five subsidiaries, four of which are U.S. Based. The strategy is straight forward – develop, manufacture, and sell sophisticated devices and reagents used to perform chemical analyses of blood and to test patients for autoimmune and infectious diseases. Moreover, that strategy includes providing resources to an under-served medical market at an affordable price.
And, it’s that strategy that is starting to catch the attention of investors. Instead of focusing on the end-game, an effective vaccine, investors are now appraising the derivative opportunities that can lead to viable long-term and sustainable revenue streams. Beyond the price appreciation of hand sanitizer and face-mask companies, the long-term value opportunity can come from the companies that provide early diagnosis of viral invasion. After all, it’s only through these types of companies that outbreaks can become both predictable and manageable.
Moreover, with many impoverished countries lacking the infrastructure and resources to combat a full-blown health crisis, the importance of a company like ERBA, can earn center stage.
ERBA and Transasia Already Positioned For Growth
Quoting from a recent article, “whoever would have thought a simple sneeze can grip the attention of the whole world and corona would garner more attention as a deadly virus rather than the amber, scintillating aura that surrounds the sun?”
Well, many didn’t, and most weren’t prepared. But, as India’s leading diagnostics manufacturer, Transasia, and ERBA, in the U.S. And Italy, stand at the forefront for raising concerns about unintended imports – this time the Coronavirus. The start of the new decade has quickly challenged the global health machinery, with the rampant spread of the COVID-19 virus, alternatively named the Coronavirus by the World Health Organization. Already, the deadly virus, which originated in Wuhan China, has reportedly claimed over 3500 lives and infected more than 105,000 people worldwide as of March 8th, 2020.
And, as medical experts continue to work 24/7 to develop a vaccine through a trial-proven program, the primary responsibility is shifted to the governance from each country to contain the virus’s threat and protect its nationals. That objective should not be necessarily hard to manage if countries around the world wake up to the fact that proper planning can replace potential health-related crises.
It’s not as though wake-up calls haven’t happened. Global issues related to SARS, MERS, Nipah, and EBOLA led the headlines for years. The problem has been that countries have not answered the calls. Imagine…simple and affordable preparedness could save thousands of lives. And much of that life-saving can happen through a quick and relatively straightforward analysis.
Seizing Future Opportunity To Save Lives
COVID-19 is for real, and the panic is not misplaced. Despite some claims that the major media channels are building the virus to be a more deadly strain than it actually is, the reality is that people are dying, and the infection rate is surging. Beyond that, while major industrialized countries like the U.S. can absorb health-crisis shocks, most smaller countries can’t.
That equates to the need, not only for a global effort to equip these less fortunate countries with basic diagnostics kits PRIOR to the next viral outbreak, but to also educate on the importance of early and timely diagnosis of disease. After all, as debilitating a virus that the Coronavirus is, it, unfortunately, won’t be the last.
India, where Transasia got its start, is getting applauded for its quick actions that protected its citizens. The country chartered select flights that brought back more than 700 Indian citizens from Wuhan, China, and immediately screened them for the virus. They were also quarantined for two weeks before being allowed to return home to their families.
And, while there are 28 confirmed cases of the virus in India to date, given the outbreak numbers from around the world, that number is more recognized as a blessing generated by prompt government action.
But, India officials point to a potential problem. Despite having the virus “under-control”, past experience shows that India has been a laggard in responding to an epidemic. Even with the health authorities monitoring the daily machinations of the virus, the situation is still considered a “wait and see” situation where “hope” is a crucial ingredient to stopping the spread in the country.
ERBA Is Experienced In The Protocols
From what has been learned, the earliest sign of COVID-19 can be deceiving, with common flu-like symptoms and mild infection misleading physicians to neglect more specialized diagnostic treatments. More notably, it’s been documented that even during the 14 days when the virus is asymptomatic, the infection can be dormant. That characteristic emphasizes the need for early diagnosis.
At Transasia and ERBA, the team has been proactive in working to help India develop a training program to assist in early diagnosis. But, even after the Nipah virus, the practice is still not a standard protocol. But, that may be changing, and countries around the world can take their lead. ERBA and Transasia can be part of that change.
The test for the Coronavirus uses a nucleic acid amplification-based test (NAAT) called polymerase chain reaction (PCR). A more sensitive version of the test is referred to as real-time polymerase chain reaction (RT-PCR). The NAAT test has proven to be a rapid and reliable molecular technique for qualitative assessment of infectious and non-infectious diseases through the identification of their genomics sequence.
The problem for now, though, is that these texts are exclusively performed in centralized NABL accredited laboratories in metro areas using high-end instrumentation and skilled personnel. Thus, despite the need for only a small amount of blood as a sample, in countries where many of its citizens have not even taken a simple blood test for other purposes, accessibility to PCR is an improbable proposition.
But, Transasia believes that several smaller steps can be taken to create awareness and bring necessary diagnostic testing to a substantially larger portion of the population, not only in India but to countries that have similar demographics and infrastructure challenges.
And, it all starts with strengthening the disease response infrastructure, setting up of infectious disease laboratories, and training pathologists to conduct the testing.
Transasia and ERBA Committed To A Better India, A Better World
Transasia may be the best-positioned company to answer the diagnostic concerns in India. But, through ERBA, diagnostics solutions can be an answer to millions of more people outside of that country.
As noted above, ERBA develops, manufactures, and markets autoimmune reagents and research products for use by research laboratories and commercial diagnostic manufacturers. More than that, the company provides instruments for blood cell counting and blood analysis and is well-entrenched in selling testing products to the diabetes market.
The company’s sales infrastructure is already in place as well. It manufactures and sells liquid stable, diagnostics chemistry reagents used for in vitro diagnostics testing. Additionally, ERBA markets its products through its sales force to hospitals, reference laboratories, clinical laboratories, and research laboratories, as well as to other commercial companies that manufacture diagnostic products in the United States. In other words, ERBA is positioned to fill a substantial need. The question is is how quickly can they seize upon this opportunity?
Many in the markets are starting to ask the same question. With the infrastructure and assays already functional at ERBA, can they bring to market an inexpensive diagnostics tool that can get distributed on a global scale. After, all, it appears that through their primary shareholder, they would have the financial means to expedite an ambitious program. And, a recent article from India points toward the fact that the company may be interested in doing so.
ERBA has the science, the infrastructure, and the expertise to bring to market products that can make a meaningful impact to help future generations stop potential pandemic and epidemic crises. Thus, while other companies return from orbit once the COVID-19 virus is contained, other companies may be deserved of more reasonable valuations
And, ERBA, if they take the opportunity to tackle this strain, may be a perfect example of a derivative company that may offer a massive market potential.
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