Introduction 

Atomo Diagnostics Limited (ASX: AT1) made its debut on the Australian Securities Exchange (ASX) on 16 April 2020, following an oversubscribed initial public offering (IPO) of $30 million at a price of $0.20 per share. The business focuses on the development and distribution of rapid diagnostic tests, and recently partnered with NG Biotech to supply integrated blood test devices to France and the UK to support COVID-19 rapid antibody testing. 

Atomo listed with a market capitalisation of $112 million, and was the first company to undertake an ASX virtual listing ceremony – testament to the company’s adaptability in response to government-mandated lockdown in Australia. Atomo was the 3rd listing on ASX for the calendar year. John Kelly sits down to share some of his observations on going public. 

1. What is Atomo’s founding story? How did you get here? 

When my daughter was younger, she had to go for quite a few medical procedures, and they were always trying to draw [blood] from her arm through phlebotomy and it was very difficult, and she ended up with a lot of bruising. I found out later that a lot of the tests require, actually, microliters. I had a medical background and so I started thinking “there must be a better way to do point of care testing”. We started to use finger stick sampling and point of care solutions to avoid the need for blood to be sent off to the laboratory. So it’s really been a focus to bring testing into the doctor’s office and increasingly, into the home. 
 

2. What is the Atomo business about? 

We set up the business 10 years ago, and the focus was to look at really innovating the diagnostics space and deliver next generation usability. Usability has increasingly been important in the success of medical device commercialisation. And the diagnostic industry was a little bit behind the curve in terms of its focus on usability. Coming out of a more consumer-orientated part of the healthcare market, we felt there was a real opportunity to move the dial in terms of usability within diagnostics, and specifically, point of care. We’ve worked hard in the last 10 years to make our products really meet the needs of users in this space.    
 

3. When Atomo was weighing up its capital raising options, what were the factors you considered to be important, compared to other sources of funding? 

The move to a listed vehicle was the right one. For medtech and biotech in Australia, there’s a limit to how much venture capital and private equity is available. Certainly for smaller rounds, there is funding, but once you need to expand internationally and look to secure larger amounts of capital, there aren’t a lot of options. I think the listing process allowed us access to those equity markets, and from a credibility perspective – more than 90% of our product revenue is generated from exports. All of our customers are based in the US and Europe and most of them are listed. So I think by being listed, it provides us with a level of credibility when we deal with them at the boardroom level, which has been very helpful.   
 

4. Taking the leap into an IPO is quite a significant decision. How did you decide on getting the right advisors to help you through the IPO process?

Getting the right advisors is critical. If you have the wrong advisors, it’s a very, very difficult journey. We have an early stage supporter at Walker Corporation, and they had previously been involved in a listing about one year prior of another company called Next Science that was executed efficiently and very successfully. In our discussions with Walker, they obviously recommended the team that delivered that IPO. So we did a pre-IPO raise with Paterson Securities (Lead Manager), and they did a very good job of that pre-IPO raise. And then during that process, they were acquired by Canaccord Genuity. We had HWL Ebsworth’s Grant Hummel and his team do the legal work, and BDO were the investigating accountant. This was the team that had done very well with Next Science, and our attitude was if it’s a good team that works well, then we would try and keep that formula. And they’d obviously had a lot of experience doing a similar type of business the year prior, so it gave us a good template to move forward with.  
 

5. Atomo successfully listed on ASX in April, during a time when many other companies were understandably deferring or delaying their IPO timetable. Tell us a little bit about that journey. 

We did the roadshow and had great support from both retail and institutional investors and the bookbuild went very well. But at the same time we were closing out the bookbuild, the market went into essentially freefall for a short period of time. We were quite nervous about the ability to get the IPO done through that turmoil.  What was different for us is that we’re a medical device business that’s focused on infectious disease testing, and point of care testing. If any business or any sector was somewhat insulated from COVID-19, its businesses that actually deliver products for COVID-19. Without that being our core business, it probably wouldn’t have been a sustainable period for us to list, but we executed an agreement with French company NG Biotech, and they launched their COVID-19 assays on our devices. We didn’t have to modify that, we used our HIV test and reformulated it quite quickly. So it all worked out very well. And I think that commercial opportunity helped get the IPO done through this period. 
 

6. How long was the total IPO process for Atomo- from making that decision to list on the ASX board, and successfully floating in April? Was this in line with your expectations? 

I started putting down notes on what might go into the prospectus in August during a rainy weekend in Cape Town, and we listed in April so that was more than a 6 month process. I think the first two or three months were more working on what we needed to get in place before we actually pulled the trigger. The board and executive team made the decision to list in mid-October, but there was quite a bit of preparation in the months prior to that, to make sure that we had structurally the things in place that we needed. It’s a six month program if you’re focused. 
 

7. Atomo was the first company on ASX to hold a virtual listings ceremony, what was that like? 

It was quite surreal, I had these visions of being in the city with a crowd and ringing the bell, but it ended up being done with a Tibetan singing bowl in my kitchen. I stayed in the house the rest of the day and we had a celebratory dinner. So it wasn’t quite what I’d expected, but it was very nice to get it done. We were still very happy to be able to get the listing done virtually, and very happy with the support ASX gave us to facilitate that remotely.     

8. Now as a successfully listed company, any advice you would give to those considering going public? Any tips or pitfalls you would like to share with future IPO candidates?            

There’s two things. One is that during certain periods through the process, the requirements on the executive team are overwhelming. You need people attached to the IPO, and other people focused on running the day-to-day business, because you can’t do both – it just isn’t feasible, and one of them will suffer. So definitely being properly resourced. We brought in a few extra people to help manage workload that we knew was coming and companies that don’t do that, I suspect are going to struggle. Secondly, make sure the fundamentals of the business are set up in advance of running the listing - all of the accounts, corporate structure, tidying up any outstanding options…all of those type of things can become very problematic in the end. I am really glad that we took the first two or three months sorting that out before we really started implementing the process. I also find the due diligence committee meetings very good for project management. If they’re run well, it really helps drive the timeline. 
 

9. Any processes or contacts you found helpful going through the IPO process, and can share with our readers? 

We got in specialist support around company secretarial and also finance experts to help with prospectus drafting so that our internal finance team were not overwhelmed. Some things related to IPOs are quite specialist, so having that expertise available really helped troubleshoot some of the areas that companies could potentially get into trouble or experience delays with. 
 

10. Conventional advice to CEOs is ‘do not obsess over the company’s share price’, how often have you checked Atomo’s?

I’m checking it less the further away we get from the listing. The first couple of days, I kept checking every hour just to make sure it wasn’t changing massively. But, we are a long term business in the medtech space, which is a slow burn in terms of growth for a business. The proposal we made to shareholders was that we want to be the next Nanosonics, the next ResMed. We can do that, but it’s not an overnight journey. We’re trying to teach our shareholders patience, and I have to practice that patience by not being overly focused on day to day fluctuations on share price. So, I’ll check it at 10am to make sure nothing drastic has changed overnight, and then I’ll check at the end of the day. During the day, I try not to think about it. 
 

11. Listening to any thought-provoking podcasts or books lately? 

I’ve been diligent about checking in on some of the Economist podcasts, I think they provide a very good level of business background, particularly for a business that is internationally focused. More specifically, I’m on to a lot of podcasts in relation to COVID-19. It’s one of the major drivers of business growth at the moment. I’ve been looking at trying to work out the level of immunity that the antibodies might provide, given that we provide antibody tests to the market. Obviously the media is saturated with COVID-19 related information, but we have some link into some experts in Geneva through the World Health Organisation and the U.S, so we’re trying to be selective about what information we rely upon for our decision-making.