Q&M Dental Group to invest $3m in new Covid-19 testing business; shares jump

Dr Ong Siew Hwa of Acumen Research Laboratories with a diagnostic kit that her company has developed for the coronavirus.
Dr Ong Siew Hwa of Acumen Research Laboratories with a diagnostic kit that her company has developed for the coronavirus.PHOTO: ST FILE

SINGAPORE (THE BUSINESS TIMES) - Q&M Dental Group is investing some $3 million to build a new Covid-19 testing business via a joint venture with scientist Dr Ong Siew Hwa, the company said in a statement on Thursday (April 23).

Dr Ong is the sole shareholder and director of Acumen Research Laboratories (ARL), a local biotech company developing diagnostic tests with a focus on infectious diseases.

ARL's Acu-Corona 2.0 Diagnostic Test has been given provisional authorisation by the Health Sciences Authority, which means the test can be supplied to healthcare institutions, private hospitals, medical clinics and clinical laboratories in Singapore.

"The board believes there is a market demand for diagnostic test kits and vaccine trials, as well as vaccines due to the ongoing Covid-19 pandemic and other similar future events," the dental services company said.

The venture will be formed through three transactions: a business transfer agreement, a joint venture (JV) agreement and an option agreement.

As part of the business transfer agreement, Q&M will first inject some coronavirus-related assets from ARL into a newly formed subsidiary called Acumen Diagnostics.

Q&M will pay $400,000 for these assets, which relate to the manufacture, sale and distribution of Covid-19 test kits; the analysis of results; the conduct of clinical vaccine trials; and the distribution of such vaccines.

The assets include 20,000 diagnostic tests, and Q&M intends to work with various agencies to deploy its dentists to assist in conducting tests.

As part of the JV agreement, Dr Ong and two other parties will work with Q&M to develop Acumen Diagnostics' business further. The two parties are Dr Ong's sister-in-law Amy Zeng and a private investment holding company called Acumen Holdings.


Ms Zeng has been helping Dr Ong with sales at ARL.

The directors of Acumen Holdings are Pong Chen Yih and Tan Lee Meng. Its top three shareholders are Mr Tan (37.1 per cent), HC Surgical Specialists (6.1 per cent) and Shinex Capital (6.1 per cent). The remaining 50.7 per cent stake in Acumen Holdings is held by 23 shareholders, Q&M said.

Acumen Diagnostics will issue new shares to Dr Ong, Ms Zeng and Acumen Holdings, such that they will each hold 30.7 per cent, 5 per cent and 13.3 per cent of Acumen Diagnostics, respectively.

Dr Ong will be contributing her technical expertise as consideration for her stake. Q&M's stake in Acumen Diagnostics will be 51 per cent, and it will contribute $3 million in cash.

Finally, as part of the option agreement, Dr Ong has granted Acumen Diagnostics the right to purchase her entire shareholding interest in ARL at any time within 18 months after April 22.

Among other things, completion of the deal is conditional upon regulatory approvals and a "reasonably satisfactory outcome" of all due diligence investigations, Q&M said.

Based on the unaudited financial statements of ARL for the financial year ended Feb 4, ARL had a negative book value of $151,000 and a negative net tangible asset value of $248,000. No independent valuation was conducted on ARL.

As at 12.51pm on Thursday, Q&M shares were trading at 64.5 cents, up 20.5 cents or 46.6 per cent.

Correction note: An earlier version of this article stated that Q&M invested $3.4 million. Q&M later clarified that it actually invested $3 million in Acumen Diagnostics, which will in turn purchase part of ARL's business for $400,000.