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Why the Rhythm Biosciences (ASX:RHY) share price rocketed 28% to a record high

asx share price increase represented by golden dollar sign rocketing out from white domes
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The Rhythm Biosciences Ltd (ASX: RHY) share price was an outstanding performer on Friday.

At one stage, the medical device company’s shares were up 28% to a record high of 95 cents.

The Rhythm Biosciences share price eventually ended the day 17.5% higher at 87 cents.

Why is the Rhythm Biosciences share price rocketing higher?

Investors were buying the company’s shares this week due to the release of a positive announcement.

Earlier this week, Rhythm Bioscience revealed that it has appointed France-based Biotem as the global manufacturer of its ColoSTAT test-kit.

Management advised that Biotem was chosen following a robust due diligence process to select a manufacturer for the product that could execute on its ambition to address the global unmet need for the early detection of colorectal cancer.

With over 40 years of immunoassay development and manufacturing experience, it feels Biotem has the capability to deliver the optimisation and process validation of the manufacturing procedure. It also believes it has the ability to economically produce large-scale quantities of the ColoSTAT test-kit.

What now?

The company advised that the initial design transfer and the broader core technology transfer is currently underway.

It expects that small-scale manufacturing of ColoSTAT prototype test-kits will have commenced by the end of the 2020 calendar year.

After which, the initial batches of test-kits will undergo quality assurance and ongoing product verification testing by Rhythm. They will then be used for testing on cancerous and healthy blood samples, forming Study 6, which is on track for completion by the third quarter of FY 2021.

Rhythm CEO, Glenn Gilbert, commented: “Following our recent completion of the ColoSTAT protype test-kit, the appointment of Biotem as our global manufacturer now sets a clear pathway to bring ColoSTAT to the market. We are focused on an exciting few months ahead as we scale up our development plan activities.”

Globally, over 850,000 people die from colorectal cancer each year. This cancer is typically diagnosed at a later stage when there is a poor prognosis for long-term survival. The number of annual unscreened 50 to 74-year olds is estimated to be +130 million for the US, Europe and Australia alone. Combined, this represents a market opportunity of over $6.5 billion.

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Returns as of 6th October 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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