Shares in Abingdon Health (ABDX) crashed by almost a third after the diagnostics firm issued a profits warning amid an escalating row with the government over unpaid bills for Covid-19 tests.
The York-based biotechnology group signed a controversial £15million deal to provide the Department of Health (DHSC) with up to 75 million of its AbC-19 lateral flow tests last summer.
It says it had supplied one million of the units worth £5million for surveillance studies before the devices were rejected for home use by medical regulator the MHRA amid concerns over its claimed 99% accuracy.
That prompted Matt Hancock, the health secretary, to cancel all outstanding orders in January.
Abingdon claims the one million units it had provided by then are now in use, but said in a statement to the stock market that it has yet to be paid the £5million owed.
Abingdon is also in discussions to provide its tech - a swab test which detects the presence of the IgG antibody against the SARS-CoV-2 spike protein - to seven other major countries but said international roll-out had taken longer than expected due to delays in obtaining regulatory approvals.
The firm, which floated on London’s AIM exchangein mid-December raising £22million, said: “Whilst each of the opportunities remains in place and the pipeline continues to grow, the speed of adoption and therefore the receipt of orders is taking longer than the board originally anticipated.
“The board therefore expects the results for FY21 will be substantially below the current market expectations.”
The firm slashed its revenue expectation for the year from £30million to between £11.4million and £17million, which it said would lead to an underlying loss of up to £3.3million.
The announcement wiped more than 30% from the group’s share price, sending it to a low of 45p in early trading.
The price crash was spotted by retail traders who sent the firm’s ticker ABDX trending on Twitter as they piled in to buy the dip, lifting it back up to around 55p this afternoon but still well short of last night’s 80.5p closing price.
Addressing the row with the health service, Abingdon said its supply contract with the DHSC expired on February 14 but it had “still not been able to establish from the DHSC when the outstanding debts in relation to this contract will be paid.”
It said it had outstanding invoices with the DHSC totalling £6.7million including £5.15million for “one million AbC-19 tests which were delivered by early January 2021 and are currently being used by the DHSC within the UK Biobank study.”
It claimed there was no contractual basis for the DHSC to withhold payment “on products they have accepted and are using” and warned it may need to reduce its cost base if the overdue sums were not settled.
It has a workforce of around 50 and £7.7million in the bank.
The DHSC contract is currently the subject of a legal claim by activists at the Good Law Project, which is claiming it was awarded without competitive tender.
Despite today’s twin blows the company said it was continuing to expand its manufacturing capabilities, and estimates the lateral flow testing market will be worth more than $10.2bn by 2025 with Abingdon “well-positioned to be the ‘go-to’ provider.”
A DHSC spokesewoman said: “As part of an unprecedented response to this global pandemic we have drawn on the expertise and resources of a number of public and private sector partners.
“We have always been clear that government contracts must deliver value for taxpayer money and we will take action in instances where this does not happen.”