Shares in Omega Diagnostics edged slightly higher yesterday after the company confirmed the sale of its CD4 testing business to the same Chinese-owned firm that bought its Clackmannanshire manufacturing facility earlier this year.

The loss-making CD4 division, which makes disposable point-of-care tests for people living with HIV, has been acquired by Accubio, a wholly-owned subsidiary of Zhejiang Orient Gene Biotech. The deal is valued at up to £6.1 million before costs, including £1.1m upfront, a further £4m payable later in the autumn, and royalties on Accubio’s future CD4 revenues up until December 2026.

Chief executive Jag Grewal said the deal completes the first phase of Omega’s turnaround plan that started with the disposal in March of its former headquarters and manufacturing facility in Alva. That followed a bruising experience for the company during which it threw its weight behind the manufacture of Covid test kits for the UK government.

The company, which has re-located to Cambridgeshire, will now focus solely on its health and nutrition business which makes tests for detecting food allergies.

READ MORE: Omega sells Alva HQ and exits Scotland

“The disposal of our CD4 business completes the first phase of our turnaround plan, addressing the unsustainable cost base in Scotland and divesting our loss-making businesses,” Mr Grewal said.

“This sale now allows us to focus all our efforts on the profitable and cash-generative health and nutrition division, maintaining our leadership position and targeting organic growth through geographical expansion, a broadening of our product offering and embracing digital technologies.”

Accubio paid £1m for Omega’s former Alva facility, ending the company’s 19-year association with the town as about 100 staff transferred over to the new owners.

Its parent company Orient Gene was one of four major suppliers of lateral flow tests supplied for free by the UK government during the first two years of the pandemic. The Chinese group also held an exemption from the government’s Coronavirus Test Device Approval (CTDA) regulations, which came into effect in November in the wake of Brexit to regulate approval of testing devices in the UK.

After enjoying surging valuations in the early part of the pandemic, Omega’s share price went into freefall as its ill-fated contract with the government was eventually allowed to lapse. Omega’s test kits had neither approval nor exemption from CTDA regulations.

Shares in Omega, which will issue its year-end results on August 18, closed 0.18p higher yesterday at 3.38p.