Biolidics shares sink 22% after calling off US sales of Covid-19 test kits

BIOLIDICS shares sank 22 per cent on Monday after the Catalist-listed firm announced on Sunday that it had mutually agreed with Aytu BioScience to terminate a distribution agreement for its Covid-19 antibody test kits in the US, amid increased competition for such kits.

Shares of Biolidics, which ended Friday at 41 Singapore cents, plunged to 29.5 cents as at 8.58am on Monday. The stock recovered to 35 cents as at 9.26am, before closing at 32 cents, down nine cents.

Earlier in April, Biolidics signed a one-year agreement with Aytu for the distribution of its test kits in the US after completing its US FDA listing.

With the distribution deal scrapped, Biolidics will need to refund Aytu in full for all deposits paid with respect to undelivered orders of its test kits.

The Catalist-listed company also intends to apply to voluntarily withdraw its application to the US Food and Drug Administration (FDA) for Emergency Use Authorisation (EUA) pursuant to the FDA's serology test policy. As a consequence, its current test kits will no longer be available in the US market, it said.

However, Biolidics intends to continue to distribute, market and/or sell its current test kits in markets outside the US. It has signed distribution agreements for the sale of its kits in Thailand, the Philippines, Indonesia, Myanmar, Vietnam and Hong Kong.

In its Sunday bourse filing, Biolidics also revealed it had signed a non-binding letter of intent (LOI) with Aytu to jointly develop a new test kit with broader use outside of laboratory or clinical settings.

The company explained that it was withdrawing its test kits from the US as it had observed "significant changes" over the last few weeks for serology test kits in the market due to the rapidly evolving pandemic situation.

Competition had increased since Biolidics and Aytu inked their distribution agreement, with over 190 different serology test kits in the US offered by various manufacturers as at June 26, it said.

Some of the kits that had obtained US FDA EUA had established leading US market positions, Biolidics added.

In April, Biolidics had assessed that the distribution agreement with Aytu would likely have contributed positively to its revenue for the current financial year ending Dec 31, 2020. However, revenue from US sales of the test kits under the agreement to date was not material, it said on Sunday.

The company's existing test kits are limited to testing in laboratories, or by healthcare workers at the point-of-care.

It now plans to refocus efforts and resources into the proposed project with Aytu to develop a new serology test kit with broader use and applications outside the laboratory or clinical settings - for example, by individuals at home - in the US, which Biolidics believes may present a better commercial opportunity.

"The company understands that there is currently no EUA authorised serology tests which could be used outside of the laboratory or clinical settings in the US market," Biolidics said.

Both parties are negotiating the terms of a binding definitive agreement for the proposed project for the new test kit.

The termination of the distribution deal and the signing of the LOI are not expected to have a material impact on the group's earnings per share and net tangible assets per share for the current financial year, Biolidics said.

The company noted that results from all serology test kits are not to be used for confirmatory testing or as the sole basis for diagnosis. They will have to be interpreted together with clinical presentation and are to be confirmed with supplementary testing.

 

Rachel Chia