Kromek Group (KMK) , a leading developer of radiation and bio-detection technology solutions, announced the award of a US$5.9m contract from the US Department of Homeland Security (DHS) Countering Weapons of Mass Destruction (CWMD) Office for the research and development of a bio-detection system.
The US$5.9m contract has been awarded under a 4-year programme to commence immediately. Kromek expects to receive US$874k during the first year base period to October 2024. The programme directly addresses a CWMD Office priority focused on the detection, classification and identification of bioterrorism attacks.
"We are pleased to have been awarded this new contract for the research and development of agent agnostic biosecurity technologies, which will build on our existing expertise and technology in the field of automated bio-detection solutions. It is our first biosecurity contract from the Department of Homeland Security and underscores our belief that there are significant market opportunities in this area, as our technologies align well with government biosecurity strategies." said Arnab Basu, CEO of Kromek Group.
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A major contract win for Durham-based Kromek as the US and other governments increase their focus on biological threats, particularly in light of the Covid-19 pandemic. The £5.9m 4-year programme aims to provide increased capability to detect and identify biological threats in response to the operational needs of the DHS.
Kromek will pilot an agent-agnostic bio-detection system capable of providing species-level identification of biological agents. To date c. £15m has been invested in the programme, including c. £11.5m of non-dilutive grants from the US Defense Advanced Research Projects Agency (DARPA), Innovate UK, and the UK Ministry of Defence.
The contract gives Kromek good revenue visibility over the next 4 years, with US$874k to be awarded during the 1st year to October 2024. It also provides further substantial endorsement of Kromek's IP, building on its existing expertise in the field of bio-detection solutions.
Investors welcomed the news, driving KMK shares 15% higher on Thursday. Broker Cavendish maintained its target price of 25p (21-31p range) in which the biological threat detection programme is valued at £30-50m or 5-8p per fully diluted share, compared to Kromek's current share price of 4.9p, which gives it a market cap of £28m. Cavendish does not believe Kromek's biological threat detection programme is yet reflected in its valuation.
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