Omega Diagnostics Group PLC UK Government contract and trading update (6952O)
11 February 2021 - 6:01PM
UK Regulatory
TIDMODX
RNS Number : 6952O
Omega Diagnostics Group PLC
11 February 2021
OMEGA DIAGNOSTICS GROUP PLC
("Omega" or the "Company" or the "Group")
UK Government manufacturing contract
Board appointment & trading update
Omega (AIM: ODX), the medical diagnostics company focused on
CD4, infectious diseases and food intolerance testing, announces
that it has agreed a contract with the Department of Health and
Social Care ("DHSC") to provide manufacturing capacity for COVID-19
lateral flow antigen tests, as part of the UK Government's
well-publicised target of producing two million lateral flow tests
per day.
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.
This will facilitate the necessary expansion in production
capability in Omega's Alva-based facility, to ensure the tests are
made available as soon as possible.
The Company anticipates that the above actions will provide the
Company with capacity to produce approximately 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(R) CD4 or COVID-19 antibody tests according
to demand.
Board appointment
As separately announced today, the Board has appointed Simon
Douglas, who has over 25 years of Board level experience across a
variety of Diagnostics, Life Science and BioPharma companies, as
its new Non-Executive Chairman to support the Company and the
executive team in delivering shareholder value through its next
phase of growth.
Trading update
The significant contribution to future performance expected from
the DHSC contract above will impact the new financial year ending
31 March 2022. For the current financial year ending 31 March 2021,
the Company's Food Intolerance division has held up well, despite
the impact from pandemic lasting longer than originally thought.
Sales are expected to be in the region of GBP7.5 million for the
year ended 31 March 2021, which is a reduction of 19% over the
previous year. 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.
The Company also continues to support the Clinton Health Access
Initiative, Inc. ("CHAI")(1) to accelerate access to Omega's
VISITECT(R) CD4 Advanced Disease test through the supply agreement
signed with CHAI in April 2020. The pandemic has also had an impact
on the roll-out of the test with sales for the year ended 31 March
2021 expected to be in the region of GBP0.2 million to GBP0.3
million. That said, despite the delays, 7-10 countries are expected
to have initiated roll out plans for the test by the financial
year-end so the Company expects to see an acceleration in the
deployment of the test and remains confident that the test will
deliver significant value in the new financial year.
Revenue from COVID-19 activities is expected to be approximately
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.
In summary, Group revenue is expected to be approximately GBP9.3
million with an EBITDA loss in the region of GBP2.1 million to
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
(2020: GBP0.6 million overdraft).
Outlook
The timing of the antigen supply contract with the DHSC coming
so close to the deadline of the financial year-end means that it
will have very little impact, if any, on the results for the year
ended 31 March 2021 but the Group expects that this supply contract
will lead to significant volumes of tests being delivered over the
coming weeks and months. Utilisation of our weekly production
capacity for the supply of antigen tests under the DHSC contract is
expected to have a significant impact on the future performance of
the business and whilst volumes are unquantified at this stage it
is likely to result in substantial revenue growth in the financial
year beginning 1 April 2021.
Colin King, Chief Executive Officer 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."
The information communicated in this announcement is inside
information for the purposes of Article 7 of EU Regulation
596/2014.
(1) The Clinton Health Access Initiative, Inc. (CHAI) is a
global health organisation committed to saving lives. CHAI works
with partners to strengthen the capabilities of governments and the
private sector to create and sustain high-quality health
systems.
Contacts:
Omega Diagnostics Group PLC www.omegadiagnostics.com
Simon Douglas, Chairman Via Walbrook PR
Colin King, Chief Executive
Kieron Harbinson, Group Finance
Director
finnCap Ltd Tel: 020 7220 0500
Geoff Nash/ Teddy Whiley (Corporate
Finance)
Alice Lane (ECM)
Walbrook PR Limited Tel: 020 7933 8780 or omega@walbrookpr.com
Paul McManus Mob: 07980 541 893
Lianne Cawthorne Mob: 07584 391 303
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