Atomo (ASX:AT1) share price rockets 10% on new agreement

The Atomo Diagnostics Ltd (ASX: AT1) share price has surged up after a deal was announced to distribute its COVID-19 test kit in India.

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The Atomo Diagnostics Ltd (ASX: AT1) share price is up after a deal was announced to distribute its COVID-19 test kit in India. The news has sent the Atomo share price rocketing 10% higher to 38 cents at the time of writing.

What does Atomo do?

Atomo Diagnostics is an Australian medical device company that supplies rapid diagnostics tests (RDTs) and devices to the global diagnostics market. Atomo’s devices are intended to simplify testing procedures and usability for professional and untrained users.

The company has supply agreements in place for tests targeting a range of infectious diseases. These include HIV, COVID-19, and viral vs bacterial differentiation.

New sales agreement

Atomo announced a deal with DIVOC Laboratories, an Indian specialist diagnostic company, to launch its AtomoRapid COVID-19 antibody test in India.

Under the agreement, Atomo will provide 77,000 antibody test kits upon DIVOC obtaining product registration approval for professional use. DIVOC is expected to receive approval in Q2 FY21.

DIVOC will distribute the test kits on a non-exclusive basis to government, corporate, and India’s established home-visit network.

The agreement will be terminated should DIVOC fail to order one million units in the 12 months following regulatory approval. In return, Atomo will receive a fixed transfer price per unit and a percentage of revenues on final product sales.

The non-exclusive sale of its COVID-19 rapid test in India is a further expansion of its agreement with NG Biotech.

Atomo co-founder and managing director John Kelly was pleased with Atomo’s global reach. He said:

We are delighted to be able to offer our antibody rapid test in another large international market. Rapid testing forms a significant pillar of India’s response to managing the COVID-19 pandemic with the numbers of daily rapid tests increasing significantly in recent months.

Our Indian partner is a high-quality provider of diagnostic services, being one of the few laboratories in India that has been able to secure NABL accreditation. We are confident of their ability to roll out the AtomoRapid COVID-19 antibody testing across a number of high value channels in India in the coming months.

Is the Atomo share price good value?

I think Atomo has seized an opportunity that could expand its revenue significantly in the coming months. India has a high ranking for daily COVID-19 infections, hitting more than 90,000 cases in a day this month, and 5.65 million cases in total.

The new agreement is another milestone for the company which listed on the ASX in April this year. At a market capitalisation of $213 million, the Atomo share price has moved little since its Q4 update in June. But that could change in future depending on the success of its agreements.

I would encourgae investors to add Atomo to their watchlist and monitor its ongoing developments.

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