Revolutionary new pathogen detector

Many of the world’s best and most important products (eg Space exploration, nuclear medicine/power & the internet) were originally invented by the military. It’s happened again – but this time to combat airborne pathogens like Ebola, SARS/MERS and all manner of other biological nasties doing the rounds.

In December 2018, Kromek was awarded a $2.0m contract by DARPA (research arm of US Dept. of Defense) to develop a vehicle-mounted bio-threat detector. The idea being that this should be able to rapidly identify (within 1 hour) any dangerous germ that might have been released into the environment, say by terrorist groups, organised criminals &/or rogue states.

18 months on, Kromek has come up trumps. In fact once finished, using state-of-the-art RNA/DNA sequencing, the solution will be able to continuously monitor & collect airborne microbes, which are condensed into single droplets of water. The samples are then genetically coded, with results available in <60 minutes. Not only detailing exactly what families of viruses & bacteria are present, but also which specific strain or mutation.

Long term this could potentially revolutionise how mankind deals with any deadly pathogen, albeit right now Kromek’s smaller civilian version is not yet ready for deployment in an urban setting.

However, DARPA are sufficiently confident of the project’s primary goal being reached that it has awarded a new $5.2m extension to the initial $2m agreement. With the objective of having a fully operational system by June 2021, or earlier.

This new device could materially upgrade our (unpublished) expectations for FY22 & beyond. At 20.5p, the shares trade on a 4.5x EV/sales multiple, which appears exceptional value for risk tolerant investors. Particularly for an IPR-rich business, sporting disruptive technology and addressing high growth multi-billion dollar markets.