Atomo raises $4m to launch rapid pregnancy test in the US as it pivots from Covid-19

As Covid-19 testing falls dramatically, ASX-listed diagnostics firm Atomo is seeking to capitalise on the $2bn global pregnancy test market.

ASX-listed diagnostics company Atomo plans to release its blood-based rapid pregnancy test in Australia by the end of the year and in the US within the next 18 months as it pivots from Covid-19.

The company, which has a market capitalisation of just $18.2m, is raising an extra $4m ahead of the launch into the $2bn global pregnancy test market.

Atomo listed on the ASX in 2020, with its then standout product being a HIV rapid self-test that could be bought over the counter. As the spotlight was thrust onto diagnosing Covid-19 and isolating those infected during the pandemic, Atomo switched to making rapid antigen tests (RATs) to detect coronavirus.

Testing for Covid-19 has now subsided, with pathology giants losing billions of dollars in government contracts, as the world returns to normal. The end of the pandemic has also hit Atomo hard, with its share price halving in the past six months to 3c.

Cash receipts have dived to $3.3m in the past year compared with $16.32m in 2022.

Sales of its HIV tests hit $1.56m last year, eclipsing revenue from its Covid-19 RATs, which totalled $390,000. This compared with RAT sales of $10.4m in 2022.

Atomo CFO Will Souter expected pregnancy tests to become the company’s main product.

“There are about 5.5 million pregnancy tests done a year in Australia – 6000 pharmacies – and we’re working with a group that essentially contract sales into that pharmacy network and we think the potential to get 10-15 per cent of that market is there,” Mr Souter said.

“The US is obviously significantly bigger than that, with 50-plus million tests a year. The US also has a particular set of political and legal circumstances that make being pregnant a big deal over there, particularly if it’s an unwanted pregnancy.

“So there’s a whole raft of opportunities that would make this much more significant than HIV and have much greater longevity, and much greater annual recurring revenue potential.”

Atomo has partnered with French lab equipment supplier NG Biotech to create its blood-based rapid pregnancy test, securing exclusive distribution in Australia, New Zealand, Canada and the US.

The global pregnancy test market is estimated to surge from about $US1.36bn ($2bn) to $US1.74bn in the next five years, spurred by developments in fertility treatments.

Atomo’s test will detect levels of human chorionic gonadotropin (hCG) – a hormone that is produced by the placenta and spikes during pregnancy. Atomo says it will be more accurate than the over-the-counter urine-based diagnostics on the market.

“Claims vary but three to five (days), possibly up to a week earlier than most urine tests. So for people who really want to get pregnant in the IVF market and others who really don’t want to be pregnant, both those pools of people are interested in this,” Mr Souter said.

The company is awaiting approval from the Therapeutic Goods Administration to sell its rapid pregnancy test over the counter. The US is a little more complicated because the tests involve blood.

“There are no blood-based OTC tests approved in the US yet. The key reason why we might be successful in achieving that is because of the usability,” Mr Souter said. “Normally, you open the box – with a HIV kit for example – and it’s got a separate lancet and a separate pipette.

“So you prick your finger and then you put that down and then you pick up the pipette and then you try to get a bit of blood from your finger onto the pipette and then you’ve got the cassette sitting on there and hopefully you’ve remembered to open that beforehand – then you have to drop the right amount of blood onto that.”

Whereas, Atomo’s test has a built-in retractable lancet and chute that collects the right amount of blood and reduces the number of steps involved in getting an accurate result.

“We’ve done usability studies comparing that with a traditional kit. And it’s 90-plus per cent user preference and 100 per cent reduction in errors. And that has enabled us to get OTC approvals when others haven’t,” he said.

Mr Souter is also hopeful that the FDA’s approval of Lumos Diagnostics’ FebriDx test, which uses the Atomo Pascal platform, will also smooth the pathway to a US launch.

“We’re expecting Australia (launch) this calendar year,” he said. “In the US it will probably take us around 18 months depending on what we can agree with the FDA is required in terms of the trials. The capital raising will help us specifically with that US market entry process.”

The capital raising closes on Tuesday.