Shares of rapid drug test manufacturer rise after securing new contracts

Stock prices of Intelligent Bio Solutions, which develops fingerprint-based drug screening technology, rose by more than 5% on Thursday, June 27. The company announced contracts with three UK retailers that have a total of 55,000 employees.

Details

Intelligent Bio Solutions (INBS) shares grew by 5.65%, to $1.87 per share, on June 27 on Nasdaq. On Thursday, the company announced contracts with three UK retailers that intend to use the technology to test their employees, a total of 55,000 individuals.

INBS’s solution uses sweat from fingertips for rapid testing of common drugs, including cocaine, cannabis, methamphetamine, and opiates. The technology aims to replace traditional tests that use urine or saliva samples. Two of the three new INBS clients had previously used the latter method for employee drug testing. Switching to INBS technology has allowed them to make testing a larger number of people more effective, the company noted in its statement.

Context

The number of employees deceiving their employers during drug tests has reached a 30-year high, according to the Wall Street Journal. The number of substituted urine samples increased sixfold in 2023, the publisher cites data from Quest Diagnostics, one of the largest laboratories in the US.

The screening industry is combating fraud in drug testing and seeking simpler, faster, non-invasive, and cost-effective solutions, notes INBS, explaining the growth in its performance. For the nine months ending March 31, 2024, the company’s revenue was $2.38 million, a 193% increase from the previous year. About 93% of this revenue came from sales in the UK.

The company plans to enter the US market. In June, INBS completed volunteer recruitment for clinical trials of its test in the US. This is the first step towards submitting the technology to the industry regulator FDA, which is planned to take place in the fourth quarter, the company explained. Sales in the US are expected to commence in the first half of 2025, INBS announced at the LD Micro conference in April in New York.

What analysts say

Over the past year, INBS shares have dropped by more than 93%. According to MarketWatch, one analyst is following the company. The rating is Buy with a target price of $12, indicating a potential upside of nearly 542% from the current level.