Investors desert diagnostic developer Epistem (EHP:AIM) after pre-tax losses widen and management continue to dither on whether it will tap the market for cash or not.

Shares dived 10.5% to 85p after increased development spend widened pre-tax losses to £3.3 million in the six months to 31 December up from £1.9 million in the red a year earlier.

Epistem’s cash reserves halved to £2.3 million from £4.9 million over the same period.

The Manchester-based company is preparing to launch GeneDrive, a hand-held point-of-care Tuberculosis test, in India this year after several delays. These included tests having to be repeated in the country, while those in Kenya proved successful.

TB is a $250 million market in India where two million people contract the disease each year.

Web - Epistem - 31 March 2016

The £10.5 million cap is not forecast to turn a profit until the year to 30 June 2018 (£300,000) and with a net cash outflow of £2.5 million in the first half of its current financial year funds are needed to help launch GeneDrive.

Peel Hunt assumed a £5 million equity raise in 2016 in a note published in December. The timing of a potential placing has not been decided with management confirming that discussions are ongoing.

Back in December we warned investors not to rush into adding the stock to their portfolio.

Epistem is also working on a Hepatitis C test and is targeting the device towards the personalised medicine market so people receive a treatment that is right for their genetic make-up.

The company is working on a biohazard programme for which the US government handed it $2.9 million of funding.

Issue Date: 31 Mar 2016