Summary
- Recently, 3 separate press releases changed the course of T2 Biosystems.
- The BARDA and Premier contracts, along with NTAP, will accelerate the development of the company's pipeline.
- At the same time, the financial clouds that were over the company's stock have begun to disappear.
- Shares exploded to the upside, but if I am right, the long-term uptrend has barely begun.
On my previous article on T2 Biosystems (TTOO), I said my next article would be about putting some numbers together and coming up with a possible price target, based on the information I wrote in that article. However, since then, we have a lot of new developments, so I thought commenting on these is more important.
On September the 10th, after the trading session, a barrage of news came out that literally transformed the company and its share price overnight.
For starters, the company announced it was awarded a "Breakthrough Technology Contract" with Premier Inc. (NASDAQ:PINC). The company "is a healthcare improvement company uniting an alliance of approximately 4,000 U.S. hospitals and health systems and approximately 165,000 other providers and organizations".
In a nutshell, this deal will help T2 introduce its products to a wide variety of potential customers that will lead to sales and higher revenue. I see it as an extension of T2's marketing arm. In any case, it is always good to partner with someone who has such a broad clientele.
The second piece of good news was that the company announced it has restructured its Term Loan Agreement with CRG Servicing LLC.
The key updates of the restructured agreement include (from the press release):
- Extending the interest-only payment period by one year so that principal payments will commence beginning in March 2022 instead of March 2021.
- Reducing the minimum revenue targets for 2019-2022 to levels that are below the company's current financial forecast. For any shortfall to achieving the minimum revenue targets, the company has the right to pay double the amount of any shortfall as an acceleration of principal payments (unchanged from existing structure).
For starters, principal payments are set to commence about 3 years from now. Yes, that is more than enough time for the company to be cash flow positive to be able to service the loan agreement. However, please note that it probably will not need to do so. If the company's financial position after 3 years is much better, it will simply refinance the loan with much better terms.
