Omega Diagnostics set for 'significant' sum after agreeing terms for CD4 testing sale

Omega Diagnostics, the medical testing developer that recently sold its Scottish manufacturing facility, has agreed terms for the sale of its CD4 testing business.

The firm said the preferred bidder has now been granted four weeks in which to complete the remainder of its due diligence, which mainly comprises commercial discussions with key customers and suppliers. The transaction is expected to complete shortly thereafter, it added.

Omega is set to receive a “significant up-front cash payment” and a future royalty stream linked to test sales.

CD4 is the part of the business that manufactures and supplies tests of Visitect CD4, which measures the amount of CD4 protein in human cells.

The group told investors: “As previously indicated the board believes the CD4 business will be more successful under new ownership, with an owner which has a greater capacity to invest in production capabilities and product development. The company will now focus solely on its health and nutrition business, where there are significant growth opportunities.”

Recognising that the future funding requirements of the group will change significantly following the sale of the CD4 business, Bank of Scotland has agreed to extend the existing overdraft facility of £2 million by an additional three months, to the end of September, Omega noted.

Chief executive Jag Grewal said: “We were delighted by the level of interest we have received for the CD4 business and look forward to announcing the completion of the transaction in due course.

“Having withdrawn from the Covid-19 market and disposed of the Alva site earlier this year, the divestment of our loss-making CD4 business will leave the group solely focused on our higher margin health & nutrition division. The net proceeds from the sale of the CD4 business will enable our product and geographical expansion ambitions to be realised.”

Omega Diagnostics' Visitect CD4 product enables people with HIV to test their immune systems.

In February, Omega announced that it was selling its Clackmannanshire manufacturing facility that employed more than 100 staff while raising millions of pounds to boost its fortunes.

The firm said it had signed a sale and purchase agreement with Accubio, a wholly-owned subsidiary of Zhejiang Orient Gene Biotech, for the Alva operation, for a cash consideration of some £1m.