Genedrive (LON: GDR) shares have been on something of a rollercoaster ride in recent months. This was all to do with the company’s rapid covid tests, and it isn’t entirely obvious that this has been of any lasting benefit to it. Yes, Genedrive shares went from just under 20 p to 70 but then they slid back down again to below their starting point. We’ve now got another rally, and it’s possible that this is based upon a firmer footing.
It was obviously all hands on deck during the covid pandemic and any company that could even vaguely make covid tests went and did so. Sadly, many development programmes – even with substantial government support – took their time to come good. Genedrive shares started their leap to 70p when the company announced they had applied for a CE Mark – this is a necessary precondition for being able to sell across Europe. As it turned out, this didn’t lead to mass government orders. The distribution of such tests is now on that normal basis of distributing any medical item. Smaller lots to smaller customers with all the costs associated with having to run a normal distribution chain.
Yes, it’s true, Genedrive has sent in their tests for the British government’s more restrictive tests but even there it’s difficult to see mass sales. For the obvious reason that tests are no longer free, they must be paid for. And paid for at the pharmacy or supermarket – that brings us back again to having to run the normal and expensive distribution chain.
It’s possible – possible only, of course – to think that Genedrive, in common with a number of other companies, has rather missed this boat then. A good attempt, but there we are.
However, unlike some of the other companies, Genedrive does have another business underneath this. For example, the MT-RNR1 test. The sort of thing that the company was actually set up to do in the first place the result of the ongoing research programme. This is a genetic test for newborns. Some gene combinations can lead to permanent deafness if certain antibiotics are used- so, test the baby, see if it has this combination, then use different antibiotics for whatever might ail.
This is the way that medicine is going these days, to much more specific treatments based upon the individual rather than population norms and averages. It’s possible to think that now all that excitement about covid tests is out of the way that this underlying business at Genedrive is gaining its due attention.
This does, of course, mean that we’re dealing with events that will unfold over rather more time. But also, given the nature of how pandemics fade away, to a more sustainable valuation possibly. That future valuation now depending upon the more usual medical testing ones and the pipeline of such tests that Genedrive has.
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Tim Worstall is a freelance writer specialising in economics and the financial markets.