Q&M to invest S$3m to build Covid-19 testing business
Singapore
Q&M Dental Group is investing S$3 million to build a new Covid-19 testing business via a joint venture that includes local scientist Ong Siew Hwa, the company said on Thursday.
Dr Ong is the founder of Acumen Research Laboratories (ARL), a local biotech company developing rapid, polymerase chain reaction (PCR)-based, culture-independent molecular diagnostic tests, with a focus on infectious diseases.
Following the announcement, shares in Q&M closed at 54 Singapore cents, up 10 cents or 22.8 per cent.
The stock had earlier surged to an intra-day high of 73.5 cents, surpassing its previous 52-week high of 53.5 cents.
Some 51.8 million shares changed hands, making it one of the most heavily traded counters on the Singapore bourse for the day.
In a conference call on Thursday, Q&M's group chief executive and executive director Ng Chin Siau said that Dr Ong was introduced to the company via Chong Kai Chuan, a shareholder of Quan Min Holdings, which is in turn a shareholder of Q&M.
Dr Ng added that there is "strong trust and relationship" between Dr Ong and Dr Chong as they were former classmates at Hwa Chong Junior College.
ARL's Acu-Corona 2.0 Diagnostic Test has been given provisional authorisation by the Health Sciences Authority, which means that the test can be supplied to healthcare institutions, private hospitals, medical clinics and clinical laboratories in Singapore.
Dr Ong told The Business Times that these test kits are now ready to be shipped worldwide.
Q&M has purchased 20,000 of these diagnostic tests and intends to work with various agencies to deploy its dentists to assist in conducting tests.
Separately, Q&M will form a JV with Dr Ong through three transactions: a business transfer agreement, a joint venture (JV) agreement and an option agreement.
As part of the business transfer agreement, Q&M will first inject some novel coronavirus-related assets from ARL into a newly formed subsidiary called Acumen Diagnostics.
Acumen Diagnostics will pay S$400,000 for these assets, which relate to the manufacture, sale and distribution of Covid-19 test kits; the analysis of results; the conduct of clinical vaccine trials; and the distribution of such vaccines.
It is now in the midst of setting up a PCR-based lab in Singapore to analyse test results. Dr Ng told BT that the company has received its first 10 PCR machines with "more to come" and will be able to conduct up to 10,000 tests per day from next week.
"For PCR test kits, analysis can be done on both asymptomatic and symptomatic people in order to deduce if the test subject has a specific virus. In contrast, some other test kits may test just for antibodies," he added.
As part of the JV agreement, Dr Ong and two other parties will work with Q&M to develop Acumen Diagnostics' business further. The two parties are Dr Ong's sister-in-law Amy Zeng and a private investment holding company called Acumen Holdings. Ms Zeng has been helping Dr Ong with sales at ARL.
The directors of Acumen Holdings are Pong Chen Yih and Tan Lee Meng, angel investors who have invested in ARL since 2018. Mr Tan sits on the boards of Singapore-listed companies HC Surgical Specialists and Medinex. According to Q&M, Acumen Holdings' top three shareholders are Mr Tan (37.1 per cent), HC Surgical (6.1 per cent) and Shinex Capital (6.1 per cent).
Acumen Diagnostics will issue new shares to Dr Ong, Ms Zeng and Acumen Holdings, such that they will each hold 30.7 per cent, 5 per cent and 13.3 per cent of Acumen Diagnostics, respectively.
Dr Ong will be contributing her technical expertise as consideration for her stake. Q&M's stake in Acumen Diagnostics will be 51 per cent, and it will contribute S$3 million in cash from internal funds.
Finally, as part of the option agreement, Acumen Diagnostics has the right to purchase Dr Ong's entire shareholding in ARL at any time within 18 months after April 22.
Based on the unaudited financial statements of ARL for the financial year ended Feb 4, ARL had a negative book value of S$151,000 and a negative net tangible asset value of S$248,000.
Nonetheless, Q&M believes that there is a market demand for diagnostic test kits and vaccine trials due to the ongoing Covid-19 pandemic. As Dr Ng puts it: "We want to contribute to the economy, segregate the unwell from the well as soon as possible, so that we can get out of this Covid-19 situation together."
