Molecular diagnostics company Genedrive’s (LSE:GDR) share price has risen a staggering 76% in just one month on the back of some positive news for the company, indicating it is moving further into commercialisation. But at around 28.18p the stock is still way below its 52-week high of 95.98p and it is down 63% over one year.
Much of the boost for the company’s business has come from its Covid-19 testing kits. Following the outbreak of the pandemic, when Genedrive’s share price was languishing around 9p, the company refocused its business. Previously resources were dedicated to bringing assays – or testing – to developing countries. Now, the company has been working on providing point-of-care testing for Covid-19 and baby deafness and has focused on markets that are closer to home, which, according to a recent statement, “support more predictable commercial processes and price points”.
The group’s Covid-19 test kit was CE-marked – meaning it conforms with European Union regulations – in December and it signed distributor agreements for Spain, Portugal, Oman and the United Arab Emirates.
The test has been submitted for regulatory approval in the UK. Its AIHL assay, which screens for a genetic mutation in babies that can cause hearing loss in response to certain antibiotics, was also CE marked. Earlier this week the UK National Institute of Clinical Excellence gave it a new Medtech Innovation Briefing, which are designed to support NHS staff who are considering using new medical devices and is an important step in increasing awareness of Genedrive’s test.The test has been launched and deployed at Manchester NHS, although the group said UK adoption is expected to be moderate until the test is considered best practice. However, in addition to the UK, the group also has a pilot site in Greece and is working to build the European market.
“This is a critical phase of the company, but we have sufficient cash resources to allow both point of care products to embed themselves and have confidence that over time we can build successful revenues streams for these and other point of care products in the future,” CEO David Budd said in the results published on 29 March.
According to the group’s interim results for the six months to the end of December, Genedrive recorded an operating loss of £2.8m, slightly down from £2.9m year-on-year. The company didn’t generate any revenue over the period due to delayed product development. However, it is debt-free and has cash of £6m.
A loss-making company in the healthcare sector is not a rare phenomenon. Many small businesses that are in development phase, whether they are drugs or diagnostics, can have many years of losses where they are in the build-up phase. And it can be risky to invest in such businesses as there is no way of making sure their products will ever come to market. But Genedrive is starting to make progress and according to Budd, the company is moving further into a commercial phase.
There is clearly still need for Covid-19 testing and the AIHL assay is the world’s first genetic bedside test to be used in an emergency setting.
In addition, the group is in a growing and increasingly more important market. The global molecular diagnostics market value is expected to pass $15bn by 2026, up from $9.3bn in 2020, according to Mordor Intelligence. The growth of the market is due to large outbreaks of bacterial and viral epidemics and increasing demand for point-of-care diagnostics.
