Business is booming.

COVID testing to stay strong, say biotechs

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The company’s share price is up 131 per cent since January, jumping from $1.01 to $2.34 after the company received Therapeutic Goods Administration (TGA) registration for its SARS-Cov-2 detection kit. Its market cap has increased 137 per cent from last June, from $140 million to $332.3 million.

Genetic Signatures offers pathogen testing kits for gastrointestinal and respiratory diseases and is expecting demand for these tests to grow post-COVID as people look to rule out viruses and ensure they don’t infect others.

The Goldman Sachs global equities team believes demand for virus and antibody tests could go as high as 39 million each month in the US alone as society reopens. It predicts Australian companies such as the $13 billion ASX-listed Sonic Healthcare could see increased demand for virus testing that could offset some of the disruptions caused by the pandemic. The laboratory testing operator withdrew earnings guidance in the face of the pandemic.

Goldman Sachs team suggested virus testing could add 19 per cent to Sonic’s FY21 testing volumes compared with previous estimates, with serology testing for prior COVID-19 infections becoming more important.

“Ultimately, we believe serology testing has the potential to be the more significant opportunity,” they wrote. Sonic Healthcare did not respond to requests for comment on current testing demand.

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Other lab testing giants are also banking on longer-term demand for tests offsetting some of the other disruptions caused by the virus. Last week, $3.5 billion ASX-listed lab tester ALS revealed a $25 million drop in net profit due to write-downs in its Latin American business, a region hit hard by the virus.

ASL boss Raj Naran said the company expected widespread testing of humans and surfaces for COVID-19 would be a “new normal”. The company said it expected to play an increasing role in delivering these services.

Businesses that have pivoted towards the pandemic have had to place other projects on pause, however. Dr Melki said Genetic Signatures was no different, with other clinical trials the company had planned for 2020 now on hold. “We had certain objectives and milestones — those have moved and shifted,” he said.



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