Novacyt shares tumble despite 2000% revenue increase By Investing.com

By Samuel Indyk

Investing.com – Novacyt (LON:NCYT), the Anglo-French pharmaceutical company, saw shares fall sharply on Friday after providing its FY20 update. Despite announcing a revenue increase of over 2000% YoY, focus is on the outlook after the recent surge in its share price.

The company agreed a deal with the UK’s Department of Health and Social Care in September last year to deploy its rapid PCR testing system for the Covid-19 coronavirus, however, no agreement to extend the deal has been reached currently. Novacyt did say that they are in active discussions with DHSC to extend this phase of the contract.  

PCR TESTS

The company was one of the first companies to have a polymerase chain reaction (PCR) test approved for detecting Covid-19 and the deal in the UK has seen its cash position swell from EUR 1.8M at the end of 2019 to EUR 101M at the end of 2020.  

“2020 has been transformational for Novacyt,” Graham Mullis, Group CEO of Novacyt commented. “We have signed significant contracts with national governments, supplied our products to over 130 countries globally and continued to develop innovative testing capabilities to support laboratories and clinicians during these challenging times.”

M&A?

With the improving cash position, the company has said they will continue to invest in innovation, organic expansion, and external business development. Separately, they announced they will continue to evaluate potential M&A opportunities and will consider additional bolt-on acquisitions to add strategic assets and functionality to the expanding group.

In October last year, Novacyt purchased instrument manufacturer IT-IS for GBP 10.1M. IT-IS was a private diagnostic instrument development and manufacturing company and they were the exclusive manufacturer of its q16 and q32 rapid PCR instruments. The deal gave Novacyt the manufacturing capability to help manage the expected demand for the sale of its PCR tests and they expected the deal to help reduce costs.