Novacyt shares rally over 66% following launch of coronavirus detection test

Novacyt shares rally over 66% following launch of coronavirus detection test

Novacyt SA (LON:NCYT) shares have rallied as the firm announced that it has made progress in battling COVID-19, the most recent strain of coronavirus which has spreading vastly.

COVID-19, now its formal name as declared by the World Health Organization has been running riot across the globe.

The outbreak was first reported in December, and since that time the number of affected people, deaths and cases has continued to climb across the globe.

The new strand of coronavirus has been detected in China, Hong Kong, Japan and most recently the United Kingdom. It seems that a few weeks on from the initial scares off the coronavirus, that the situation is slowly being controlled.

Today, Novacyt SA have said that it has launched a CE-Mark approved molecular test for the detection of the coronavirus (COVID-19).

CE-Mark allows a company to register their product in compliant with the European Unions safety, health and environmental requirements.

The update today will not just please shareholders, but the global business environment and world citizens.

The firm said that the COVID-19 test is the first CE-Mark test for the 2019 strain of novel coronavirus and follows the company’s rapid launch of its research use only coronavirus test on January 31.

Novacyt added – “As a result of the CE-Mark, the Company’s COVID-19 test can be used directly by laboratories and hospitals for the testing of patients without the need for validation by clinicians. The Company anticipates increased demand for its test for COVID-19 due to this extended use for clinical diagnosis.”

The company has already received requests for quotations for 288,000 tests since preordering was made available on Friday. Novacyt noted that they had seen “high conversation rate” from quotations to orders.

Assessing the situation, the firm also said “However, it is difficult to predict how demand for the test will grow as the epidemic is still in its early stages.”

The coronavirus, or COVID-19 is still at large, and many businesses and people have fallen victim to the lethal illness.

Progress from the private sector will help the containment and stop the spread of the disease, however Matt Hancock did say a few weeks back that the coronavirus could still be around for a few months.

Graham Mullis, Chief Executive Officer of Novacyt commented:

“I am very pleased to announce the launch of our COVID-19 CE-Mark test, which we believe is the first CE-Mark approved test for clinical diagnosis of the 2019 strain of the novel coronavirus. As with our research use only test, it can produce a result in less than two hours, with the added efficiency of being able to transport the test at ambient temperatures eliminating the need for cold chain shipping. It is designed to run on multiple instrument platforms commonly used by clinical laboratories around the world, which ensures our COVID-19 test can be used by the largest possible number of clinicians. We look forward to continuing to support clinicians in the fight to contain the spread of the novel coronavirus during this public health emergency.”

Analysts pointed out that this a competitive space and while Novacyt have provide a winner for investors so far, caution should be taken given the recent rally.

“The share price has already started to move on expectations and so the next leg higher could really come into play if they receive the approval they are looking for. This area is not without competition and let’s be clear the competition is fierce in the sector. The race to get approved is strong and AIM’s stocks can be fickle. That all being said Novacyt is not a one trick pony and have plenty of other assets in the market. As with any AIM-listed company, caution needs to be exercised and whilst Novacyt are winning the race at the moment this could easily change,” said John Woolfitt, Director of Trading at Atlantic Capital Markets.

Shares in Novacyt trade at 165p (+66.69%). 17/2/20 16:33BST.