Is Ellume laying the foundations to list on the ASX?

Is Ellume coming to the ASX?

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Woman prepares to insert a swab in her nose to test for COVID-19 at home.

Image source: Getty Images

There have been a number of high profile initial public offerings (IPOs) in recent weeks. These include GQG Partners Inc. (ASX: GQG), SiteMinder Ltd (ASX: SDR), and Vulcan Steel Limited (ASX: VSL).

Potentially joining these shares on the ASX boards in the near future is COVID-testing kit company, Ellume.

Is Ellume going to launch an IPO soon?

According to the AFR, Ellume has been doing the groundwork for a potential listing in the near future.

The Queensland-based biotech has tasked stockbrokers Morgans and Ord Minnett to raise $85 million in a pre-IPO funding round. Sources have suggested that this will give Ellume a valuation in the range of $600 million to $800 million.

The report states that a spokesperson has confirmed that these pre-IPO funds would be used for working capital, sales and marketing, new product development, and capital expansion.

What does Ellume do?

Ellume is a biotechnology company that develops, manufactures, and commercialises the next generation of digital diagnostic products for healthcare professionals and consumers. Its focus is the accurate diagnosis of common infectious diseases.

The company came onto investor radars earlier this year after it signed a massive US$231 million contract with the US government to supply COVID-19 testing kits. This agreement was signed after its testing kit became the first non-prescription over-the-counter self-test authorised by the U.S. Food and Drug Administration.

The big question on investors’ lips if it does IPO will be how sustainable its current revenues are. When COVID-19 testing finally slows down, investors will be wanting assurance that Ellume’s revenues won’t dry up.

What are your other options?

Time will tell whether Ellume goes ahead with an IPO in the future. But in the meantime, if you’re wanting to gain exposure to COVID-19 testing, then you can do this through a number of ASX shares.

These include Healius Ltd (ASX: HLS) and Sonic Healthcare Limited (ASX: SHL). Both companies have been growing at an explosive rate over the last 18 months thanks to heightened demand for testing.

Should you invest $1,000 in Ellume right now?

Before you consider Ellume, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Ellume wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare Limited. 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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