Concepta outsources manufacturing to Abingdon health
(AIM: CPT ) announces that it has agreed to outsource manufacturing for myLotus® with Abingdon Health allowing the Company to focus on product commercialisation.
The Company has signed various agreements with Abingdon Health Ltd ("Abingdon Health"), a leading UK rapid test developer and manufacturer, to acquire Concepta's lateral flow test manufacturing site in Doncaster, for the technical transfer of the manufacturing processes, the further development of Concepta's lateral flow devices, and for the continuing contract manufacturing and supply of myLotus® testing strips.
As part of the asset purchase agreement, Concepta will assign the leases on the facility and machinery, transfer the staff, and will sell residual manufacturing equipment to Abingdon Health. Under the agreement Concepta will receive a total cash consideration of approximately £0.3m.
The change in manufacturing strategy follows the announcement made on 29 January 2020 to further improve the efficiency of the Company's cost-base. Having already achieved a 30% cost reduction across the Company, this move to outsource manufacturing is expected to generate annualised overhead costs savings of at least £0.23m.
Shares in Concepta open up 8% at 1.3p
Commenting, Penny McCormick, Chief Executive Officer, commented: "Our critical products and services are the myLotus® monitor, myLotus® test sticks and the myLotus® app. The decision to outsource manufacturing allows us to have a more agile approach to supplying and developing these assets. It also allows us to focus on turning concepts into commercial products and services that will help women and couples to conceive. We can now focus our efforts on the evolution of our technology to make it more valuable to our end user, whilst striving to give customers a user experience that gets better and better.
"We expect to see a benefit in the first year of over £0.5m due to reduced overheads and receipt of the cash consideration. These funds, along with the proceeds of our recent £1.9m fundraise, will be channelled into our digital marking efforts and commercial activities nationally and then globally, rather than paying for a manufacturing capacity way beyond our current requirements at this stage of our business.
"I have no doubt that as the Company matures we can look again at our manufacturing strategy, but in the meantime I am delighted to be supported by such a capable partner as Abingdon Health, and also pleased to see that the additional capacity of the facility can be used in the efforts to develop and manufacture a badly needed COVID-19 antibody test to be used in the wider the community."
Whilst the Doncaster site will continue to supply myLotus® testing strips to Concepta, the additional capacity at the facility will support Abingdon as it spearheads the UK Rapid Testing Consortium (UK-RTC) in its programme to deliver a new COVID-19 antibody rapid test. The site will provide Abingdon Health with a fully certified facility to efficiently support the volume requirements of this essential national programme.
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