Member Info for StarBright

Thank you _TCO and RegulatorUK, interesting points.

Unfortunately it is plausible that approval is being withheld for policy reasons. With our government worried about compliance / adherence to its newly announced restrictions, perhaps they are concerned that people will self-test and modify their behaviour if the test shows they have antibodies. Furthermore, home testing doesn’t result in stats collection.

We may see “community use” eg via GP’s and formal healthcare settings before we see approval for home testing.

If that doesn’t ensure a 7am RNS nothing will....!

Our government have (of late) become control freaks. It is possible that de-centralised testing, where government have no systematic access to results/statistics, runs counter to their preferences. It is also possible that they are concerned that individuals in possession of a positive antibody test will be more likely to disregard tightening COVID restrictions. The sudden availability of an accurate antibody test would be a boon for individuals, but not for a government working the way ours appears to be. We have already seen moves to restrict the availability of private testing “for the greater good”. Perhaps approval is being slow-walked deliberately for wider policy reasons?

I agree that ODX are highly unlikely to commit financial resources to volume production ahead of necessary approvals and contracts. Similarly, the government won't commit to purchasing contracts - or the funding of production - until the approvals are in place. This is particularly true as they've been caught out "wasting" taxpayers money on useless diagnostic and PPE kit during the last few months. Committing taxpayers money ahead of approval will be a political risk too far in the current climate.

The MHRA approval is therefore a vital step. It will unlock progress on this aspect of ODX's business.

If you believe conditions are ripe for a flash crash type tree shake, you can of course look to turn this to your advantage by placing a limit order to buy at (say) 5 or 10% below the current price. Once this is in place, if such a shake occurs you'll join the MM's in hoovering up shares from those who set stop losses.

I’m not taking anyone on! Just pointing out that working capital is often the biggest constraint / challenge for growing businesses. The opportunity here is self-evident, and that is why I am invested. As investors it’s important always to evaluate constraints alongside opportunities. For any government contracts I expect that working capital will be made a non-issue one way or another. The non-government / commercial space may be different. To the extent such funding is required I expect MHRA approval to be on the critical path. That’s one of the reasons it is right to see the prospective approval announcement as an important milestone.

Merchantbanker: “Omega need to start producing. If they may 500k a week from now until Dec and MHRA approval doesn't come until December, they have 3 and a half months of stock which will sell in one day. Manufacturing capacity is the limiting factor, not demand.“

Did I read somewhere that the tests have a marginal production cost of £1.50 each? If so, producing 500k tests/week for 3.5 months will require £11.25m of working capital.

Working capital requirements may be the limiting factor for manufacturing capacity, especially in the absence of hard orders. If the orders are there, then finance will be available. But it’s difficult to see such orders ahead of MHRA approval.

Not much chance of CK being head-hunted to be a FTSE CEO that is.

Not much chance of that!

officemanager - that is a positive comment. A holder has done well out of their investment in ODX. We can all be pleased about that can’t we?

I hope to do well with my investment in ODX. I’m sure you hope to do well with yours too. There’s no need for you to try to police contributors and their comments in the meantime. So give it a rest.

If anything they will have exited because the market cap of ODX has become too high. This particular fund has focused on small (<£15m gross assets) early-stage businesses, and the part of their portfolio in which ODX sat is effectively being wound down through realisations like this. As I said - this will have been a successful investment for them!

This is interesting. An institutional holder "of sorts" who's sold their entire holding of 2.3m shares realising a profit of £659k. A successful investment for a small (£10.4m NAV) fund with a specialist healthcare and biotech mandate.

"Seneca Growth Capital VCT Plc (the "Company"), 16 September 2020

Full Realisation of Ordinary Share Investment in Omega Diagnostics Group plc (“Omega”)

Following the recent rise in Omega’s share price on AIM, the Company has sold the remaining 400,000 Omega shares it retained, realising £296,166, an increase of £132,166 (unaudited) on their carrying value as at 30 June 2020, being the date of the most recently announced NAV per Ordinary Share. The Company has now sold a total of 2,293,868 Omega shares from the Ordinary Share pool since 31 December 2019 fully realising the investment for a total of £987,318 and generating a profit versus original cost of £659,318 (a 3x return on the original investment)."

I can’t find that in the investor presentation.

The only info I can find is in the Finncap note which talks about £1.50 per foil-wrapped test, but this is in the context of RTC only.

To value this business properly it’s really important to understand the potential selling price for tests, but equally to have an informed view on who will capture what in terms of margin. I haven’t been able to find much to work on in this regard.

Similarly with respect to the threat posed by substitute or competitor products.

I fully understand that this is a unique opportunity, but it would be really unusual for a business like Omega Tto be “allowed” (by government / customers / competitors) to generate and sustain the level of profitability contemplated by MB’s valuation.

Got it (in the “Use of Proceeds” section). Thank you.

Is there a company source for the £3 average selling price, or is that just a straightforward assumption? Seems reasonable if the latter, but just wondered if it can be validated/corroborated to any degree?

Where does the 2m test per week figure come from..?

Here’s our government inviting suitably capable organisations to tender for the delivery of 200k home test kits per day. The contract is expected to last for 2 years, and has an indicative value of upto £785m.

https://ted.europa.eu/udl?uri=TED:NOTICE:431071-2020:TEXT:EN:HTML&src=0

“ The demand for Covid-19 testing via the Home Channel is increasing significantly. NHS Test and Trace is seeking to procure the replacement service for Home fulfilment, with continuity of service being fundamental during this transition period. The ambition of NHS Test and Trace is to ensure that everyone who needs a test in the UK has access to one. The Home Channel is one of a number of convenient channels helping to facilitate Covid-19 testing. To support the Home Channel, NHS Test and Trace requires fulfilment services consisting of order management, picking, packing and delivery of test kits to individual homes. We are investigating potential Lotting options and more information will be shared within the contract notice. Contract duration is estimated to be 2 years plus an optional 6 month extension, with an indicative value of GBP 384 million to 785 million for the initial contract period. The volume is anticipated to be approximately 200 000 test kits a day. For the duration of these contracts, we anticipate suppliers will have to provide their own IT to support the delivery of the services along with the appropriate estate and facilities from which to provide them. Supplier event details: We intend to hold a supplier event, likely to be a Webinar, in September (Further details will be provided nearer the time). It will provide those who may be interested in delivering Covid-19 Home Testing Fulfilment Services with details of the outline business case and proposed procurement approach. We would request that organisations determine who would be best placed to attend. Please register with your interest via our e-Procurement System by Friday 18th September where further details of the event will become available. Details of how to register can be found below. Please note that all future correspondence for the event will be our e-Procurement System.“

Sorry if posted here previously.

L&G not M&G sorry...

Hmmmm..... On the topic of M&G / Sneller shares, the sequence of events in the last 24h looks suspiciously like someone being “helped out” of a position. Perhaps especially because the news event was meaningful but not so meaningful as to require an RNS. In the long run such happenings are of no import; the SP will at some point be driven by real earnings. Until then though, we should all keep our spider-senses acutely tuned....

“ Spent the whole day dummy selling...” - never a truer word!