Todos Medical Ltd (OTCQB:TOMDF) revealed Tuesday that it has existing contracts that have the potential to deliver over $60 million in revenue by the end of the second-quarter of 2021.
Headquartered in Rehovot, Israel, Todos Medical develops diagnostic solutions to screen for cancers and neurodegenerative disorders, but it has pivoted to the coronavirus (COVID-19) PCR testing space and won a string of high-value contracts.
The company said it received first payments from a $47.5 million contract with a Wisconsin-based client on October 9.
Meanwhile, for its third quarter ended September 30, 2020, Todos posted $2 million in revenue from sales of ANDis 350 automated extraction machines, related extraction reagent kits, and deposits for reagent supply agreements.
“In the third quarter, we really strove to build a sustainable business model that would allow us to become a significant player in the COVID-19 PCR testing space, as PCR remains the gold standard for testing in the United States,” Todos Medical CEO Gerald E Commissiong said in a statement.
“Critically, we have received our first payments from our largest client from Wisconsin who is rapidly scaling its capacity with our solutions in the face of a marked increase in demand for PCR testing from skilled nursing clients. We have been supplying this client with sufficient reagents to perform over 2,100 tests per day over the last couple of weeks. This week we increased the order size to over 3,500 tests per day,” he added.
Commissiong noted that Todos was now implementing its liquid handler/automated-extraction/ RT-PCR equipment solution with the Wisconsin client, and would build “sufficient capacity” in the fourth quarter to run 84,000 tests per week to meet demand.
“We expect to start supplying them with qPCR kits in the fourth quarter that we believe will increase revenue/test by 250%,” added Commissiong.
The Todos boss noted higher COVID-19 surveillance would automatically increase the need for COVID-19 PCR testing.
“In the initial phase of implementing Todos’ business model, we focused on expanding our ANDis 350 automated extraction installation base and leveraging the performance of that equipment to secure long-term supply agreements with core clients,” said Commissiong.
“As this has been accomplished, our goal is to assist our clients achieve rapid growth. We recognized we must help our clients address the two major obstacles to growth, which are finding qualified staffing in a tight labor market and improving on quality control that is so vital to COVID testing. We believe we have addressed these impediments to growth on behalf of our customers by securing the purchase of liquid handlers.”
According to the company, each liquid handler allows testing to be enlarged by 500% while improving quality control through automation.
“We intend to add additional molecular and immune-based tests to our COVID-19 offering to allow labs and healthcare providers to better serve their clients as the science of COVID-19 evolves,” added Commissiong.
Todos expects to generate revenue from FDA and EU-approved qPCR kits sold in its PCR packages in November. The company said it has struck contracts that may generate $60 million in revenue by the end of the first half of 2021. The enjoys a “priority right” to sell testing kits packages to each of its clients for the first 75,000 tests per day (525,000 tests per week).
“Provided that we continue to execute at the pace we currently are in the implementation of our lab solutions for our clients, we expect to be cash flow positive in the middle of the fourth quarter of 2020,” said Todos CFO Dan Hirsch.
“We do not intend to effect a reverse split of the company’s stock until we become cash flow positive in our COVID-19 testing business. The COVID-19 PCR lab testing market is growing significantly month-over-month in the US.”
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