Shares in specialist medical diagnostics firm Omega Diagnostics (ODX:AIM) plunged 27% to 23.8p on Friday after it revealed the Department of Health and Social Care has asked the company to pay back pre-production payments it received in relation to a contract to supply manufacturing capacity for lateral flow antigen tests.

Chief executive Colin King commented: ‘Acting in good faith we used these pre-production payments, along with our own funds, to upgrade our manufacturing facilities to be able to integrate the Government-furnished equipment and bringing on the additional staff required to be able to supply the DHSC using our UK-based volume manufacturing services.

‘We therefore are confident that, having sought legal advice, we will not be required to make this repayment.’

Omega said it had received confirmation from the DHSC that the contract which was awarded in February 2021 expired on 1 October.

The first phase of the contract involved the DHSC providing the company with equipment and working capital to scale up manufacturing capacity.

The second phase involved a potential manufacturing contract with the DHSC selecting and approving a test for Omega to manufacture, which failed to happen.

COMMERCIAL FOCUS

Although today’s news is disappointing, in terms of future revenues from Covid-19 testing, the company had already shifted its focus towards commercial partnerships.

On 1 November the Omega signed a contract with DAM Health, a leading fit-to-fly and mobile test company to exclusively supply its VISITECT professional use Covid-19 Antigen test to DAM Health’s clinics throughout the UK and Europe. The value of the initial order was in excess of £750,000.

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Issue Date: 10 Dec 2021