Bought at 76p on 27/01/2021

Another Covid testing play to complement, and in some ways mitigate risks associated with Avacta.

Omega Diagnostics ‘are focused on selling a wide range of specialist products, primarily in the immunoassay, in-vitro diagnostics (IVD) market within three segments: Allergy, Health & Wellbeing and Global Health’.

The traditional diagnostics market is an interesting investment opportunity in and of itself. However, this is not the reason I’m invested.

The main appeal of ODX is their role in Covid diagnostics. Their current share price, in my opinion, is hugely undervalued compared to the tests they’re about to launch.

Firstly are the antibody tests. They currently have two: the COVID-19 IgG ELISA, and the VISITECT^® COVID-19 IgM/IgA/IgG tests. I admit they’re not the catchiest names. 

More importantly however, is their recent scaling up of production of lateral flow tests. These lateral flow tests are for detecting if you currently have Covid. ODX’s target is to be able to produce 2 million lateral flow tests per week.

Where does this fit in?

The government has an action plan to source 2 million lateral flow tests per day in the near future. This will allow mass testing of the population to extents not previously seen. ODX are ‘part of the UK Rapid Test Consortium (“UK-RTC”) to jointly develop and manufacture a COVID-19 point-of-care antibody test as part of the UK Government’s five pillar national testing strategy for COVID-19’.

It seems extremely unlikely that they will not be able to sell these tests directly to the government. Furthermore, this all fits into the yet to be unveiled ‘Operation Moonshot’ (the government’s mass testing strategy).

The only remaining question is who’s tech are they using for the LFTs? It would seem to be Mologic, however there are hints it could also be Avacta.

If its Mologic, ODX provides a useful hedge against Avacta if, for some unknown (and highly unlikely) reason Avacta fails to produce a working LFT.

Consequently, ODX occupy a useful place in my portfolio. Their tests will likely develop significant revenues in the years to come – Covid is here to stay unfortunately. The current share price does not reflect this, and if they win the government contracts to manufacture LFTs, I expect it to rocket.