Graeme Evans has the details on a setback for the British pharmaceutical sector today.
Former AIM high-flyer Novacyt (LSE:NCYT) was trading at a one-year low today as sentiment in the Covid-19 testing sector was dealt a fresh blow by a slide of 18% for shares in Abingdon Health (LSE:ABDX).
The setback for York-based Abingdon, whose antibody testing solution produces results in 20 minutes to determine immunity status, came as it revealed annual revenues for the year to 30 June will be at the bottom end of its previous forecast.
It is also waiting for the Department of Health and Social Care (DHSC) to settle a £6.7 million invoice for components and testing kits delivered between November and January this year.
Abingdon said there had been “significant implications” for the company because of the non-payment, with the need to contain costs and manage cash causing the company's workforce to shrink from 190 to 130 employees over the past four months.
It said today: “The pressure on cash flow will increase the longer that payment by DHSC is outstanding.” Abingdon said DHSC had chosen not to pay the outstanding sums until after a judicial review process on Covid contracts, which is due to be heard in early December.
- Top 20 most-bought UK shares in Q2 2021
- Explore great ii video content on our YouTube channel
- Half-time report: how our 10 Dogs of the Footsie are faring
Abingdon generated revenues of £11.6 million in the year to 30 June for an underlying loss of £3.3 million. Its guidance in April had been for revenues of between £11.4 million and £17 million and a loss of between £3.3 million and approaching breakeven.
Chief executive Chris Yates said the company continues to see “material opportunities” for its rapid test both in the UK and internationally, as well as across a range of use cases.
It has also built its manufacturing customer base with the signing of several contracts both within and without Covid-19, which should contribute meaningfully to 2021-22 revenues.
Despite this optimism, the shares fell almost a fifth to below 30p today. The AIM-traded shares were initially priced at 96p for a market capitalisation of £92 million when it raised £22 million from institutional investors in December to support increased manufacturing capabilities.
The shares peaked at 126p in January at the height of investor interest in Covid-19 testing stocks.
Novacyt's shares were 1,190p in January, having risen from 13p at the start of 2020 on the back of its early mover advantage on testing, but now stand at 291.6p after falling another 3.4p today.
The diagnostics firm is also in dispute with the DHSC over unpaid invoices worth £73 million.
- Take control of your retirement planning with our award-winning, low-cost Personal Pension
- Read more of our content on UK shares here
Elsewhere in AIM, the stand-out performance came from John Lewis of Hungerford (LSE:JLH) after the maker and retailer of kitchens and other furniture said it more than recouped first-half losses during a stronger-than-expected finish to its June financial year.
Dispatched sales and forward orders in the new financial period also stand at £4.7 million, prompting the shares to surge 0.3p to 1.35p for a rise of 29%.
Specialist staffing firm Empresaria (LSE:EMR) also did well on the junior market as it reported an “outstanding” 67% rise in half-year profits and said the performance for the year as a whole will be significantly ahead of last year and current City expectations.
It added that demand was returning to pre-pandemic levels in many markets, with skills shortages at a 15-year high. Shares rose 14% or 11p to 92p, their highest level in three years.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.