Shares in Omega Diagnostics plummeted yesterday after the firm issued a profits warning following a “sub optimal” field trials performance from its flagship HIV test.
The Alva-based firm yesterday reported a 2% increase to £5.69 million in revenues in the six months to September 30, a performance underpinned by a 24% increase to £2.78m in its food intolerance division.
But the attention of investors was grabbed by the warning that full-year performance was now likely to come in below previous forecasts due to issues in the roll-out of its HIV-indicator CD4 test.
Shares were down more than a fifth wiping more than £4 million off the market value of the firm as investors took cold feet as Omega struggled to explain mixed feedback from recent field trials.
The firm said an evaluation of 200 HIV positive patients at the YRG Centre for Aids Research and Education in Chennai, India, had returned an “acceptable performance” for the test.
However, a similar Kenyan trial returned a “sub-optimal” performance. “This trial used the same batch of product as in India, and we need to determine to what extent the product, the site, or both contributed to the test’s sub-optimal performance,” Omega said in an update yesterday.
“At present, the Kenyan trial investigator has agreed that, once product becomes available, Omega staff will be on site and have full access to laboratory facilities in Kenya to first demonstrate acceptable performance of the test on 100 patients, after which the original 200-patient evaluation will be repeated.
“It is likely that the earliest this will happen will be late January 2015.
“We have also been fine-tuning the test in order to achieve comparable results between finger-prick and venous blood samples. During this work we have seen variable results with batches of devices which have required further investigative work to be undertaken by us.
“In order to address this, we have undertaken a rigorous programme to investigate for root cause and correct.
“In addition we have engaged experts in lateral-flow diagnostics development and scale-up to assist in these programmes.
“We anticipate this will address and resolve any remaining issues in manufacture and scale-up of finished product which will demonstrate satisfactory performance with both venous and finger-prick samples.”
The company said resolving the issues with CD4, which should have been producing sales for the company by now, was key to its long-term financial health.
“Our future growth continues to be strongly influenced by the prospects for Visitect CD4, but management does not now anticipate receipt of any revenues from this product in the current financial year,” the firm said.
“Accordingly, management expects that this year’s financial performance will be below that previously envisaged.
“While it is not uncommon that issues are discovered as one moves from small-batch production to large-scale manufacturing, these are certainly frustrating events for both management and shareholders.
“However, we must deal with these issues and solve them prior to launch, to ensure that only high-quality, reliable product enters the market.
“The engagement with high-level expertise is a significant step that we feel will be instrumental in achieving resolution of the current issues.
“We are convinced that Visitect CD4 remains in a strong prospective position with regard to the competition and will be a major success for the group.
“We will, however, continue to operate in an environment of timing uncertainty until we resolve the issues we face and evaluations lead to full market acceptance of the product.”
Shares in Omega closed down 16.34% or 3.12p at 16p following yesterday’s trading.