(Alliance News) - Omega Diagnostics Group PLC said Thursday it has agreed a contract with the UK Department of Health & Social Care to provide manufacturing capacity for Covid-19 lateral flow antigen tests.
Shares in the medical diagnostics product distributor and manufacturer were 4.3% higher in London on Thursday mid-morning at 96.95 pence each.
"The intention is that as soon as the DHSC has access to a test that has successfully passed a performance evaluation, the test will be licensed for Omega to manufacture. As part of the contract, DHSC will loan a number of key pieces of manufacturing equipment," Omega said.
The firm noted this will allow it to expand production at its Alva-based facility.
Omega said it expects to be able to produce about 2 million tests per week by the end of April, when combining the government-loaned equipment with its own manufacturing equipment.
"Omega expects that this capacity will be sufficient to meet the expected demand for lateral flow Covid-19 antigen tests, with enough remaining capacity to be used for Visitect CD4 or Covid-19 antibody tests according to demand," the company said.
Omega expects a "significant contribution" from the government contract to boost its financial year ending March 31, 2022, but noted it is too close to the end of financial 2021 to have any impact.
"For the current financial year ending March 31, 2021, the company's Food Intolerance division has held up well, despite the impact from pandemic lasting longer than originally thought," Omega said.
Sales are expected to be in the region of GBP7.5 million for financial 2021, which is a 19% year on year drop.
"The board is encouraged by this performance given that food intolerance sales in the first quarter of this financial year were 47% down over the first quarter of the prior year," Omega added.
Revenue from Covid-19 products and contracts is expected to be about GBP1.5 million which includes sales from the UK-RTC antibody test, sales of the Mologic ELISA antibody test and development income for work undertaken on behalf of a third party.
Total revenue is expected to be about GBP9.3 million, with an earnings before interest, taxes, depreciation and amortization loss between GBP2.1 million and GBP2.3 million.
"Despite the considerable investment in the scaling-up of our production capacity, the year-end cash position is expected to be in the region of GBP5.5 million to GBP6.0 million," Omega added.
Chief Executive Colin King said: "We are delighted to formalise our relationship with the UK government and to utilise our lateral flow test production capacity to support the Covid-19 mass testing programme being rolled out across this country. I appreciate that trading in our core business has been softer than expected for the current financial year, however the on-going opportunity for growth in CD4 testing and Food Intolerance revenues is unchanged.
"The new financial year will see this growth opportunity realised, and will also see the full impact of Covid-19 antigen testing, and so we are likely to deliver substantial revenue growth compared to this financial year which ends next month. These are very exciting times for the business and I am delighted that we can play a part in supporting the UK government's national effort to control the spread of the coronavirus."
Separately, Omega has appointed Simon Douglas as independent non-executive chair, with immediate effect.
Douglas has 25 years of board level experience at both early stage and public businesses within the diagnostics, life science and biopharma industries, Omega said.
He is currently non-executive chair of AIM-listed Fusion Antibodies PLC, having previously served as its chief executive officer up until 2011. Douglas is also non-executive chair of C-Major Medical, a private limited company.
As a result of the appointment, Bill Rhodes has stepped down from his position as interim non-executive chair with immediate effect, but he remains on the company's board.
By Paul McGowan; paulmcgowan@alliancenews.com
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