The trials come as the company, whose shares are listed on the Canadian Securities Exchange, has arranged with Canaccord Genuity Corp. a facility that may allow it to raise as much as $10 million by selling shares.
Specializing in medical applications of nanotechnology, Sona Nanotech last year began to apply its technology to a rapid test for COVID-19, which would help meet the need for fast, affordable tests to monitor the disease. In late December, the company received regulatory approval to sell a test kit throughout the European Union.
In its ongoing research, the company has been approved by Health Canada to conduct trials on a saliva-based test at the Humber River Hospital in Toronto. The outcome of the test will be assessed by an independent third party commissioned by Sona.
“New, less invasive rapid tests are needed to support frequent testing and a test that works with saliva would make regular testing for everyone much more accessible and tolerable,” said Sona CEO David Regan in a statement earlier this month. “Developing a rapid antigen test for COVID-19 that works with saliva is complex, as evidenced by the absence of any FDA or Health Canada approved saliva sample-based rapid COVID-19 antigen tests.”
He added that his company has spent several months in the laboratory adapting and optimizing its test so it will work with saliva samples.
Sona Nanotech grew out of nanotechnology research at St. Francis Xavier University, setting out to produce gold nanorods that could be used in medical tests. In adapting the technology for COVID-19 tests, the company and its partners received a $4.1 million development grant from NGen, Canada's advanced manufacturing supercluster.
The prospect of a COVID test sparked a buying frenzy in the company’s stock last year, and its market capitalization (the total value of its shares) soared to about $800 million last summer before settling in the autumn. The company is facing a class action lawsuit launched on behalf of shareholders claiming the company’s statements affected the share price. Sona has indicated it will fight the charges but has yet to release an official response.
The shares closed Friday at $1.92, almost 10 percent higher than a week earlier, as the news of the tests and the financing set in with investors. The company now has a market capitalization of $122 million.
Sona late last year raised $2.26 million in capital through a private placement of its shares, meaning its financial advisers lined up investors who bought new shares at a fixed price. In its latest financing, Sona has set up an “at-the-market offering” under which it could sell as much as $10 million in stock at the market price from time to time. If it pursues such share sales, the company plans to use the money for general corporate purposes, including research and development.