STONY BROOK, NY - Applied DNA Sciences, Inc. (NASDAQ:APDN), a biotechnology firm specializing in PCR-based DNA manufacturing and detection, announced a five-year licensing agreement with Indus Group, a multinational textile manufacturer. The agreement involves Applied DNA's CertainT® traceability platform, designed to verify the source and authenticity of cotton-based products throughout the global supply chain.
Indus Group, which annually uses about 450 million pounds of cotton for apparel, footwear, and accessories, will integrate the CertainT platform in its non-home textile products. The platform will be used exclusively in Pakistan, Egypt, and Jordan, where Indus operates, and non-exclusively in other regions.
The CertainT platform offers forensic traceability through DNA tagging, which will be implemented in Indus's cotton spinning mills, aiming for a broader rollout based on future demand forecasts. This partnership marks a shift for Applied DNA's cotton tagging revenues, which previously depended on annual cotton harvests, towards a more consistent year-round revenue model.
Dr. James A. Hayward, president and CEO of Applied DNA, expressed that the partnership is expected to smooth out segment revenues and is the first of its kind following the Uyghur Forced Labor Prevention Act (UFLPA). The UFLPA is anticipated to drive demand for traceable and ethically sourced cotton in the textile industry.
Indus CEO Abid Hafeez highlighted that incorporating CertainT will enhance the company's commitment to innovation, sustainability, and supply chain security, providing a competitive edge in the global fashion and apparel market. The partnership aims to ensure compliance with the UFLPA for U.S.-bound shipments.
Applied DNA Sciences operates in three primary markets: producing synthetic DNA for therapeutics, molecular diagnostics, and genetic testing services, and DNA manufacture for industrial supply chain security services.
Applied DNA Sciences has been making significant strides in various areas. The company has received a Notice of Allowance from the US Patent and Trademark Office for its patent application titled "Compositions and Methods for RNA Synthesis," extending the patent's life until 2041. This patent protects the composition of the company's Linea RNAP enzyme, a key component in mRNA production.
Applied DNA Sciences has also announced a significant reduction in manufacturing costs for a key component in mRNA production, in collaboration with Alphazyme LLC. The successful scale-up of their Linea RNAP enzyme has led to a cost reduction exceeding 70%, expected to improve the profitability of Applied DNA's Linea IVT platform.
On the financial front, Applied DNA Sciences disclosed a public offering expected to generate approximately $12 million in gross proceeds, which will be used to expand its Therapeutic DNA Production Services and MDx Testing Services. Despite these positive developments, H.C. Wainwright lowered its price target for Applied DNA Sciences shares to $1.50 from the previous $7.00, but continues to endorse the stock with a Buy rating.
InvestingPro Insights
As Applied DNA Sciences, Inc. (APDN) enters into a strategic partnership with Indus Group, the company's financial health and market performance become crucial for investors monitoring the potential impact of this new deal. A glance at the real-time data from InvestingPro shows a company with a modest market capitalization of $4.15 million. The revenue figures from the last twelve months as of Q2 2024 stand at $5.52 million, indicating a significant decline of 68.52% compared to the previous period. This contraction aligns with the InvestingPro Tip that analysts anticipate a sales decline in the current year. Additionally, the company's gross profit margin during the same period was 33.98%, which could be a reflection of the company's efficiency in managing its cost of goods sold despite the falling revenue.
InvestingPro Tips suggest that APDN is quickly burning through cash, which could be a concern for investors considering the company’s future growth and stability. Moreover, the stock's price volatility has been high, which might appeal to certain traders but could also indicate a higher risk profile. For those considering an investment, it's worth noting that analysts do not anticipate the company will be profitable this year. This insight is particularly relevant given the current business expansion through the licensing agreement with Indus Group.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/APDN. These tips provide valuable context for APDN's financial and market performance, which could be pivotal in assessing the potential success of the partnership with Indus Group. Moreover, users can take advantage of a special offer using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, which includes further detailed insights to inform investment decisions.
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