Shares of Alva-based Omega Diagnostics Group fell about 30% on Friday after it published a stock exchange statement about a legal fight with the UK Government’s Department of Health and Social Care over a £2.5 million repayment being demanded by the DHSC related to a contract for COVID-19 lateral flow antigen tests.
Omega shares, which were trading at £1 in March this year, fell another 30% to around 23p as the firm’s stock market value slipped to around £42 million.
“Omega, the specialist medical diagnostics company focused on industry-leading Global Health (CD4 and COVID-19) and Health and Nutrition products, provides an update in relation to the company’s contract with the Department of Health and Social Care (DHSC) to provide manufacturing capacity for COVID-19 lateral flow antigen tests.
“As previously disclosed, the DHSC was unable to move into Phase 2 of the contract, which would have seen Omega progress to manufacturing tests using Government-furnished equipment.
“Omega has received confirmation from the DHSC that they acknowledge that the contract expired on 1 October 2021 and a request that Omega submit a proposal for the repayment of the pre-production payment of £2.5m (net of VAT).
“The board of Omega, having taken initial legal advice, do not believe that the company is required to repay the pre-production payment and will respond in writing as requested.
“The board will continue to take further legal advice on this matter and hopes to reach a resolution swiftly.”
Omega Diagnostics CEO Colin King said: “It is clearly disappointing to receive this request for repayment given the efforts we have gone to ensure manufacturing capacity for COVID-19 lateral flow test was available for the DHSC and that we did not progress to Phase 2 of the contract due to the lack of confirmation from the DHSC regarding which test they require us to manufacture.
“Acting in good faith we used these pre-production payments, along with our own funds, to upgrade our manufacturing facilities to be able to integrate the Government-furnished equipment and bringing on the additional staff required to be able to supply the DHSC using our UK-based volume manufacturing services.
“We therefore are confident that, having sought legal advice, we will not be required to make this repayment.”