Shares in Omega Diagnostics recovered a bit of lost ground yesterday after the company’s rapid Covid antigen test received approval to be sold for self-use in Europe.
The CE accreditation for its Visitect assay is a regulatory precondition for being able to market the test in Europe, and is conditional upon Omega submitting additional data by the end of March. The company said it is currently working with its external study centres to supply this information, relating to the test’s performance in real-life circumstances, by that deadline.
The approval does not cover the UK, where in the wake of Brexit the government has introduced additional CTDA (coronavirus test device approval) regulations that came into effect at the beginning of November.
Omega said Visitect for use by UK healthcare professionals remains under CTDA review as the company seeks to collect additional field study data. This information was “recently requested”, Omega noted, and it “may not be available” prior to the current extended deadline of February 10.
Jag Grewal – who was promoted to chief executive two weeks ago following the departure of Colin King – said Omega is talking to commercial partners on how best to service the European market and other territories that recognise the CE mark. It intends to sell the test through business-to-business partners and distributors, rather than direct to consumers.
“We are delighted to have reached this milestone, achieving CE mark for our Visitect Covid-19 antigen test for the home-use market,” he said. “It is frustrating that our test is still awaiting approval under CTDA regulations for sale of the professional-use test in the UK.
“We will now look to begin the process of filing for approval to sell our home-use product in the UK. In the meantime, we look forward to working with prospective partners to determine the best route to market.”
Shares in AIM-listed Omega have been stuck in a nosedive this past year as a potentially lucrative contract to produce rapid Covid tests for the UK government came unravelled. The latest hit came at the start of this week when the Alva-headquartered company confirmed it is considering raising additional cash at a discount to its battered share price.
Investors appeared concerned that despite statements to the contrary by Omega, the company may have to return a £2.5 million pre-payment made to help ramp up manufacturing capacity for the now-defunct contract to make tests on behalf of the Department of Health and Social Care (DHSC).
First awarded in March 2021, the DHSC contract was repeatedly delayed until confirmation in November that it had expired and would not go into the production phase. Omega was then hit in December with a demand to return the pre-production payment.
The company has said that based on its legal advice, it does not believe it is liable to repay the money. Discussions are continuing with the DHSC on the use of equipment installed during the pre-production phase of the contract.
Omega alluded to those concerns again on January 19 when it announced Mr King’s departure. Referencing “recent speculation”, it noted that it had cash balances of £2.5m and an undrawn overdraft facility of £2m.
“Thus, there is no short-term need to raise additional capital,” it said. “Like all growth companies, Omega will look to raise funds to drive growth as and when appropriate.”
But following continued online speculation among its predominantly retail shareholder base, Omega issued a statement on Monday confirming that it is in discussions with “certain investors and shareholders” regarding a potential equity fundraising.
“Market conditions remain challenging and accordingly any issue of equity would be at a discount to the current share price,” Omega said at the start of this week. “Any fundraise would include an open offer to accommodate retail investors.
“As per the announcement of 19 January, the company has significant cash resources. Accordingly there is no immediate need to raise additional capital and the company may choose not to proceed with a fundraising until such time as conditions are more favourable.”
Shares in Omega, which slumped to a low of 7.25p by Monday’s close, finished yesterday’s trading more than 14% higher up 1.38p at 10.88p.