ASX IPO April: Atomo Diagnostics Limited

With only one company set to list this month, it appears that the volatility that surrounds the ASX is prompting some companies to delay listing until some degree of normality in financial markets is restored. 

One company brave enough to face the current environment is Atomo Diagnostics Limited (Proposed ASX: AT1). The Sydney-based medical diagnostics company is looking to raise $30m at an offer price of $0.20.

Essentially, the company develops easy to use diagnostic tests that return a positive or negative result in a quicker time frame than other blood diagnostic testing methods. Atomo successfully developed the world’s first integrated, blood-based rapid diagnostic test (RDT) for HIV.

Requiring only a pin-prick in the finger, the device can deliver an accurate result in 15 minutes and is simple enough that patients can do it themselves. Currently, they have sold over half a million units since commercialisation began in 2015, and almost another half a million RDT units to other manufacturers of the tests. In order to fund their operations, the company received a $6m loan and additional $2m in equity from the Global Health Investment Fund who are supported by JP Morgan Chase & Co. and the Bill and Melinda Gates Foundation. 

The company has recognised that a similar product which could allow users to self-diagnose COVID-19 could take pressure off medical facilities and allow potentially infected people to stay at home. One benefit of the current method for testing COVID-19, nasal and throat swabs, is that it can detect the virus at lower concentrations when compared to the proposed blood-based product. Yet, Atomo’s test could deliver results in 15 minutes, significantly faster than ‘a few days’ it currently takes to receive results, according to the Department of Health. 

If the rapid diagnostic test could be successfully developed, there could be significant delays in bringing the product to market. For instance, such products need to be approved by individual jurisdictions, and need to be mass produced and distributed. 

Even with the success they have had with their HIV RDT, the company has not been profitable in recent years. From FY18 to 19, while their revenue almost doubled, they encountered similar losses for the years of almost $5m each year. The first half of FY2020 recorded almost double FY19 revenues again, whilst still recording a loss of approximately $2m. 

Of the funds being raised under the IPO and existing cash reserves of $12.44m, approximately 50% is allocated towards R&D, product commercialisation, and the expansion of manufacturing and distribution. Just over $7m is going to repay the loan by the Global Health Investment Fund (16.5%), and about $5m to working capital and operating costs (11.9%).  

The company is targeting a list date of the 16th of April, having closed the offer on the 1st of April.