ODX.L Share News (ODX)

(Sharecast News) - Omega Diagnostics updated the market on a number of fronts on Tuesday, announcing the signing of a longer-term supply agreement with Mologic, first orders for the Covid-19 'ELISA' test, and the signing of an additional material transfer agreement with Mologic.
The AIM-traded firm said it signed a supply agreement with Mologic, under which Mologic would supply raw materials to enable Omega to manufacture its CE-marked ELISA antibody test.

It said the antibody test would play a "key part" in identifying people that have antibodies, demonstrating previous infection with Covid-19.

The agreement was for an initial three-year period, and would renewable annually after that.

Omega also announced that it shipped its first order for the Covid-19 ELISA test to Senegal, worth around £0.1m, and that it was currently engaged in registration and evaluation activities in 15 countries, which was expected to lead to orders in the near future.

In addition, it said it had widened its collaboration with Mologic by signing another material transfer agreement, providing it with access to the raw materials and know-how to manufacture a number of additional Mologic Covid-19 tests.

Those included an ELISA antigen test that would determine the concentration of Covid-19 antigens in human blood, saliva or swab extract samples, thus identifying an individual with an active infection.

It would also produce a lateral flow antigen test product, that would determine the concentration of Covid-19 antigens in a human blood, saliva, or swab extract samples, which would also be used to identify an individual with an infection.

Finally, it would make a lateral flow antibody test product that would determine the concentration of human antibodies in a human blood sample,specifically targeting Covid-19 antigens.

Omega said it intended to CE-mark those additional tests under the material transfer agreement, after which both parties would work together to commercialise the tests under an expanded supply agreement.

The material transfer agreement would enable Omega to broaden its growing portfolio of Covid-10 tests, using both its Scotland and England manufacturing sites more effectively, and would ensure it could meet the needs of global healthcare systems that required both antibody tests and antigen tests in a range of formats.

Omega said it was now involved with five opportunities relating to Covid-19 testing, of which four used Mologic's technology platforms, including the Covid-19 ELISA, which it was already shipping.

Two were ELISA lab-based tests - both antigen and antibody - and three were lateral flow tests.

Two of those lateral flow tests were in collaboration with Mologic, and the third was an antibody test with the UK Rapid Test Consortium, as announced on 9 April.

Looking at its current trading, Omega said that it now expected EBITDA for the year ended 31 March to be between £0.85m and £0.9m, which would be slightly ahead of market expectations.

It also reported that, after additional review, it had decided to stop the development of its allergy product range.

Omega said it would continue to manufacture the 69 CE-marked allergens developed to date, to meet ongoing commercial demand from its partner Immunodiagnostic Systems.

It said it had decided it was "prudent" to fully impair the carrying value of intangible assets for the allergy business, and as a result, an impairment charge of £8.73m would be recognised in the financial year ended 31 March, comprised of capitalised development costs of £7.25m and a licence fee paid to Immunodiagnostic Systems of £1.48m.

The impairment charge of £8.73m would be offset by a credit to the profit and loss account of £1.02m, being a proportionate amount of deferred income, previously recognised on the balance sheet relating to the Scottish Enterprise grant.

"We are pleased that Omega has been able to widen its collaboration with Mologic which should help to expand the number of Covid-19 tests that can be run both in centralised and decentralised settings, which, along with our 'VISTECT' CD4' tests, strengthens our position in global health," said chief executive officer Colin King.

"The decision to stop the development of further allergens has not been taken lightly but we recognise we can achieve better returns from directing our development efforts in other areas and we look forward to providing further updates as the opportunities we have in front of us deliver on their undoubted potential."

At 1413 BST, shares in Omega Diagnostics were down 8.95% at 56.45p.