As Covid fizzled out, the share price of medical device company Atomo Diagnostics (ASX: AT1) did, too, falling from $0.50 per share in 2020 to $0.059 today. However, the Company is not about to breathe its last with this slump. Instead, it is pivoting to a new diagnostic test—one expected to be worth around $3 billion in 2023: pregnancy tests.
Atomo has signed a new agreement with its long-term branding and distribution partner NG Biotech. Under the five-year agreement, the companies will manufacture and distribute rapid blood-based pregnancy tests globally for professional use and at-home self-tests.
In the US, the sale of pregnancy tests has grown 13 per cent every year since June 2020, with millions of women pegging their future on the devices. Typically, these tests involve urine. But the one by Atomo and NG Biotech focuses on using blood to provide results in five minutes.
The rapid test product combines a highly sensitive hCG (Human chorionic gonadotrophin, or the pregnancy hormone) test assay by NG Biotech with Atomo’s integrated Pascal blood test device—a hand-held, disposable device that is easy to use.
Detectable hCG levels typically build up quicker in blood than in urine, helping women detect their pregnancy earlier and quicker than they would with a urine test.
Atomo’s CEO, John Kelly, said, “We are delighted to have been able to secure a long-term strategic partnership with NG Biotech for blood-based pregnancy testing. We have been investing in US market entry for the company and feel that these products represent a valuable commercial opportunity for us, with pregnancy testing being one of the largest established self-test categories, and with blood testing already utilised in the US in emergency settings to rule out pregnancy on admittance.”
Atomo will supply NG Biotech with assembled Pascal devices and grant an exclusive licence to manufacture the finished rapid pregnancy tests. It’s a five-year agreement, with an additional five-year potential unless either party decides to terminate the contract. Both companies get IP ownership—Atomo for its Pascal devices and NG Biotech for its rapid hCG test strip.
The Atomo-NG Biotech partnership covers a lot of ground. Recently, NG Biotech reordered Pascal cassettes to support the launch of its products, which are CE (Conformitè Europëenne) Marked—mandatory conformity marking for the European Union—and marketed by NG Biotech under their own brand. NG Biotech also recently purchased an initial quantity of Pascal cassettes to support a product launch in Brazil.
Kelly added, “NG Biotech’s professional use and self-test products have already secured CE Mark for sale in Europe, so we are confident in their performance and have received strong interest from potential channel partners in the US with earlier detection of pregnancy seen as a real competitive advantage when compared with more common urine rapid tests”.
The Company has already secured exclusive distribution rights for both professional and self-test versions of the product in Australia, New Zealand, Canada and the United States. Atomo and NG Biotech will also work together during Q3 FY23 to finalise planning and costs associated with securing US market regulatory approvals from the US Food & Drug Administration (FDA) for new market opportunities, like seeking over-the-counter (OTC) home use approval.
If Atomo approves NG Biotech’s proposed plan and costs for US regulatory approval, which will be shared by the parties, then the United States will be part of the exclusive distribution territory under the agreement.
This is a crucial pivot for Atomo which was relying on Covid diagnostic tests to carry its financials through. In FY22, the Company suffered a loss of $5.7 million as Covid departed from its status as a public health emergency in Australia. Fewer people sought self-testing kits, thus reducing the overall demand and forcing Atomo to consider other avenues.
With the pregnancy tests, the Company is aiming to expand its rapid test portfolio beyond infectious diseases and tap into the US market.
Alinda is a Business Reporter for The Sentiment
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