APDN pivots to new sectors as tagging business stays sluggish

Still waiting for that elusive sales uptick in its DNA-based authentication business, Applied DNA Sciences is continuing to branch out into new areas like contract manufacturing and diagnostics.

APDN is a few months into a revision of its strategic plan to try to inject some upward momentum into its business, but its results for the quarter to December 31 showed the continued financial challenges at the company – revenues were down 28 per cent to just $634,000.

Chief executive Dr James Hayward (pictured) said the fiscal first quarter is generally slow sales-wise and gathers pace over the course of the year, and on this occasion suffers from comparison with the prior period that included a contribution from a now-defunct contract with the US Department of Defense.

The update includes the usual litany of development updates which shows that business development continues apace, even though there’s yet to be breakthrough in revenue generation.

On the company’s conference call, Hayward acknowledged that “while our platform can be used in many industries, too much diversity can bring distraction and under-investment in sales and marketing and product development in any one important area.”

Top of the list of new priorities? Supplying linear DNA for use in biotherapeutic drugs and diagnostic development – plus some early-stage drug discovery – as its DNA-tagging business, focused heavily on cotton at the moment, remains flat.

Hayward said on the call that he is expecting commercial headway in three other categories – recycled PET, leather and thread – in the next few months, although he cautioned that the first two of those sectors are exposed to the impact of the coronavirus outbreak centred on China.

There have been some positive development elsewhere. In pharma, partner Colorcon officially launched its On-Dose Authentication platform that uses APDN’s DNA taggants to provide track-and-trace for individual tablets.

The company also signed up its first partner in the nutraceutical sector a few months ago, Nutrition 21, and has now completed tagging activities for Nitrosigine, the first commercial product in the alliance.

APDN is also focusing on the emerging legal cannabis product industry but that is a mixed picture. A contract with Theracann – announced with some fanfare a year ago as one that could unlock multimillion dollar annual sales – was cancelled in December.

The company has a pilot project ongoing with a cannabidiol (CBD) oil processor, Maine-based Old Port Oil, but there’s no denying the cancellation of the Theracann deal is a setback.

Overall, there are signs that the company’s plans may see the authentication and traceability business ever more marginalised in future.

“Looking ahead, we are placing greater emphasis on positioning our platform for biotherapeutic and diagnostic applications where there is a growing imperative for our capabilities,” said Hayward, although he added this would take place “while also nurturing key industrials applications to commercial-scale deployments.”