Wild swings in Biolidics' shares after news of Covid-19 test kit deal
Singapore
SHARES of Biolidics rapidly lost the bulk of their gains accumulated from recent days, after the medtech firm announced that Nasdaq-listed Aytu Bioscience will be the exclusive distributor of its Covid-19 rapid test kit in the United States.
The frenzied trading kicked off at 3.30pm on Thursday once Biolidics' trading halt was lifted, and proceeded to set off the Singapore Exchange's (SGX) circuit breaker at least once in the final hour of trading.
SGX's circuit breakers act as "speed bumps" to slow down sharp price fluctuations, giving some protection to investors.
The Catalist-listed firm started the session with a short-lived boost of 12.2 per cent or 9.3 Singapore cents to reach its intraday high of 85.3 cents, but quickly tumbled to an intraday low of 42.5 cents by 4.06pm.
The stock eventually pared some losses and ended the day 34.9 per cent or 26.5 cents lower at 49.5 cents. Some 57.1 million shares of Biolidics changed hands, placing it among the top 10 most active counters by volume on the Singapore bourse.
The price swings activated the circuit breaker, which has a five-minute cooling-off period during which trading can only take place within a price band 10 per cent away from the last traded price at least five minutes ago. One such five-minute period occurred from 4.33pm to 4.38pm.
On Thursday, Biolidics signed a distribution agreement for its Covid-19 rapid test kit with Aytu for a one-year period, with an option for an additional year.
In the US, Aytu will handle all inbound logistics, sales and marketing operations as well as regulatory matters. However, Biolidics retains the right to sell the product directly to certain clinical partners in the country. Aytu is required to purchase from the Singapore firm an initial 500,000 test kits within one business day from the date of the agreement.
Thereafter, within the first three months, Aytu must buy at least 1.25 million of the test kits in order to remain the exclusive distributor. All third-party orders arising from Biolidics' own referrals and sales will not be included in this minimum exclusive commitment.
During the term of the agreement, Aytu will also pay for and lead the clinical trials processes to complete and obtain regulatory clearance from the US Food and Drug Administration (FDA) for the test kits under Section 510(k) of the US Federal Food, Drug and Cosmetic Act. If Aytu completes this clearance, the US company will maintain exclusivity for the remainder of the term of the agreement.
Biolidics said that the distribution deal is likely to contribute positively to its revenue for the current financial year ending Dec 31, 2020.
It is unable to quantify the financial impact, however, because there are no minimum purchase quantities beyond the first three months of the agreement.
Shareholders and investors should note that policies relating to testing or detection of the novel coronavirus may change in response to developments in the rapidly evolving situation, Biolidics said.
Aytu is a specialty pharmaceutical company focused on the global commercialisation of products addressing medical needs such as hypogonadism (low testosterone), cough and upper respiratory symptoms, insomnia and male infertility.
The announcement of the deal came a day after Biolidics disclosed, in response to SGX queries following a surge in its shares, that it was in the final stages of negotiations with a potential distributor for the sale of Covid-19 test kits in the US. The stock had jumped as much as 54.6 per cent to reach 82.7 Singapore cents on Wednesday, before Biolidics called for a trading halt in the afternoon.
Biolidics' substantial shareholder Clearbridge Health also saw its share price fall on Thursday, by 11.2 per cent or S$0.03, to close at 22.5 cents. It was the most heavily traded stock on the SGX by value with 295.7 million shares worth S$92.3 million changing hands.
On Wednesday, the precision medicine firm's shares had rallied alongside those of Biolidics and other healthcare companies, climbing 61.4 per cent or 9.7 cents to finish at 25.5 cents.
