AIM-listed Anglo-French biotechnology stock Novacyt (AIM: NCYT) has conitnued its upward momentum since we first tipped it on 18 February. It was a major contributor to our team portfolio in March. And it does not seem to be losing speed either.
Novacyt shares were trading at £1.62 when we first covered it. It has added another 134% since then. Shares are trading at £3.88 today, having slipped from a peak of around £4.91.
Fast turnaround testing for COVID-19
Much of the investor interest stems from Novacyt’s ongoing work on a fast turnaround testing solution for COVID-19. Called a CE-Mark test, it is designed to allow non-clinical staff to apply fast tests to suspected cases.
Novacyt has a clinical diagnostics unit called Primerdesign which has been the focal point for many orders from health serves around the world. located in Southampton, it was acquired by Novacyt (which has its head office in Paris) for £12.4 million in 2016.
As we reported when we first focused on Novacyt, the company was preparing in February to ramp up production of its testing kits. It is now aiming to produce over 4 million tests per month and is partnering with BioPharma Process Services and Biofortuna, both companies based in the UK, to help it to meet these targets.
Novacyt says it will be able to expand its production to 8 million tests per month thanks to these new agreements. This had been a source of concern back in February, but we are seeing partnerships like these springing up all over the biotech sector at the moment.
As effective solutions come online, you will see the smaller, R&D firms, teaming up with bigger and bigger manufacturers as demand spikes. Novacyt has said that it has received approval for its tests from the health regulators in Indonesia and Saudi Arabia, and we would expect further such approvals in the near future.
Testing to play key role in fight against coronavirus
Testing is going to play a critical role in helping to control and contain the coronavirus outbreak in the next few months. Companies that are able to develop effective solutions will have to meet massive demand from public health services. In Novacyt’s case, the company confirmed this month that it is in talks with yet more companies that stand ready to assist it with additional manufacturing resource.
It also told investors that it has retained Chartwell Consulting to help it with rapid process improvement and is ordering in new raw materials.
“Our primary focus today is to expand Primerdesign’s manufacturing capacity as quickly as possible to service the continued significant demaand for our COVID-19 test,” explained Graham Mullis, Chief Executive of Novacyt. “This includes the appointment of a specialist consulting company to focus on operational efficiency, which will enable Novacyt to build a larger, sustainable supply chain.”
Novacyt has also said that it is working on a direct to PCR (polymerase chain reaction) extraction method which is designed to remove the need for scarce re-agents. One of the problems with testing has been bottlenecks in sample processing in some labs. This would remove some extraction steps and it is projected that this will be available in May.
