Cambridge Nutritional Sciences (LSE:CNSL) — Final Results

0:03 Good afternoon, ladies and gentlemen, and welcome to the Omega Diagnostics Group PLC Final Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Please just simply type in your question and press send. Given the number of investors that are on today's call, the company may not be in a position to answer every question received during the meeting itself. Have the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor Meet company dashboard. And as

0:35 usual, we'll send you an email to notify you when they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll, and I would be most grateful if you could give that your kind attention. And then I'd like to hand over to Colin King, CEO from Omega Diagnostics. Good afternoon, Colin. Hi, Martin. Thank you. Welcome, everybody, to our investor presentation and from our rather hot and stuffy Alvar, which is pretty unusual for Scotland. But yes, thank you for everybody for attending. To existing shareholders, I'd like to thank you, especially in terms of your patience, what's been a difficult few months due to the unforeseen delays with the DHSC contracts. I hope this presentation provides you with the comfort and confidence as we remain confident that we will utilize our expanded capacity supplied here at GSE who, like COVID, haven't gone away, and this financial year will be a transformational year for the business.

1:37 To non holders who are listening, I hope you'll see throughout this presentation there's an exciting time for us to invest in the company and that we have strong growth potential in our core business that's underpinning the COVID opportunities. And what I'm going to do just now is I'm just going to switch off my camera because it is a little bit off putting, and I also think it will make the screens a little bit wider for everybody to see, including myself. So apologies for that. Okay. So we'll just move on to the next slide. So in terms of presenting today, you've got myself and Kieran. As you'll have noted from today's announcement, this is likely the last time that myself and Kieran will will present together. He has decided to hang up his co pen. I think, you Kieran has played a a key role in in the company and in getting it from to where it is today in terms of converting it from private to public. And I'd personally like to thank you for for all these efforts, especially the support he's given me, since I've been CEO and and been at Omega.

2:39 I'd also like to take this opportunity to to welcome and and Chris Lee as well. I think Chris brings a wide range of experience and expertise that's going to be invaluable as we move into this next site and phase of development. In terms of Kieran himself, he will be with the company. He's not leaving in in August. He there will be a a transition period, you know, with with Chris. And so it's something and I think that's important as well, you know, that it's you know, Kieran's decision has given us the time to to find a a a really top quality caliber

3:15 person to replace them and also in terms of allowing us to transition the the rollover in a in a smooth and orderly way. In terms of the agenda, again, very similar to previous. We'll run through a kind of overview, a quick overview of what the business structure is. Kieran will run through the financials, and I'll go in a bit a lot more detail in terms of business update, in terms of Health and Nutrition, Visitex CD4, COVID opportunities and our global health expansion, and then I'll sum up. We'll then cut back to Mark as he alluded to in terms of taking questions. Just again, just to reconfirm what Mark said in terms of there is a large number of questions that we that I know have already come in. We're unlikely to get through them all, but we do make the commitment that we will work through, provide answers and then feed them back through this platform as well. So please be assured that you will get answers to your questions.

4:15 In terms of the business units, we've obviously got two business units. You'll notice in the Health and Nutrition, which was previously labelled as food intolerance, we rebranded that and our Global Health business unit. In terms of our Health and Nutrition, the reason that we've rebranded is really a couple of main reasons. One, in terms of currently our product range is very much focused on intolerance, food sensitivity testing. We do see opportunities to expand that around the gut health, broader gut health area, so hence why we've moved to health and nutrition as we sort of shift that focus from just a single product range into a wider product range. And then also in terms of, I think it better describes the outcomes of using our tests.

5:04 Our tests help identify lifestyle and dietary changes that can significantly improve long term health and well-being. Just remember that the ultimate market we serve is a consumer driven, paid market, and it's not health care provider driven either. So again, this is very much kind of focusing more towards the consumer side of our business. I think the key thing I hope to go through this presentation as well is the great opportunity for rapid growth in this business. And you'll maybe have noticed from our announcement today that to help achieve this, Jack Rule has actually we've refocused Jack, and he's now taken full responsibility for driving this provision forward to deliver the exciting opportunities that we have in front of us. In terms of our Global Health division, it's focused on advanced HIV disease segment in the market and obviously with CD4, our unique CD4 test really at the heart of that. And in terms of our CD4 test, it is unique. It is the only instrument free CD4 test and has been designed specifically for low middle income countries to improve the lives of people living with HIV.

6:14 Now obviously, other part of our division is where our COVID opportunity sits, where we offer both antigen and antibody lateral flow tests and has been the reason for our significant site expansion in Ulva over the past year. At that point, I'll just hand over to Kieran, who will run you through the financial numbers. Thanks, Colin, and good afternoon, everybody. So revenue for the year ended March 21, it was down 11% to 8,700,000 and that is down to an early impact from the pandemic. If I just split that into h one and h two, so in h one, we actually did £3,200,000 of revenue and in h two, that grew to £5,500,000 of revenue. So we do see that as an early sign that that we are recovering to near pre pandemic levels.

7:12 One of the products that was impacted by the pandemic, it was our highest margin product, in fact, but was most impacted. And in essence, that's run its way through all these other KPIs that you can see on the screen. So gross profit in absolute terms down to 4,500,000, and the gross profit percentage down to 51%, and clearly an EBITDA position that's moved from positive in the prior year to the 2,200,000 of loss that we indicated in the February trading update that we issued. In terms of our health and nutrition sales, they're dominated by the two key flagship products of Foodprint and Food Detective.

8:00 And you can see in that top chart that it's Foodprint that dropped from £5,700,000 of revenue in the prior year down to just under 3,300,000 in the year just ended. For those that are familiar, Foodprint is our lab based test using a microarray platform that can test for your food sensitivity to over 220 foods. Being a lab based, it's obviously used in a lab environment and that is the environment that we saw that was most impacted from the pandemic. Whereas, if you look at the bottom half of the slide, food detective, which is a food sensitivity test for 59 common foods, that's more of a consumer facing product and that only dropped by 4%.

8:52 Helps, it has to be said, by the food panel that we launched in China in the prior year. And in the year just ended, our Chinese partner bought over a 100,000 tests generating £1,240,000. So just under half the total revenue of 2,500,000. In terms of global health, so we did total sales in global health of £1,900,000, and I've tried to split that out for you into some product groups here. So reading from the left, we have our Visitec CD four. I mean, clearly, it's a relatively low level of sales just now, doubling from 50 k in the prior year to a 100 just over a 100 k for the year just ended.

9:42 That's not what we had originally anticipated would be the level of sales for the year ended March 21. And it is fair to say that the rollout of the test itself has been impacted by the COVID pandemic, but we are now starting to see some momentum gains and Colin will fill in some detail on that as we go through the presentation. There's 900 of revenue that was generated from Omega being a member of the UK Rapid Test Consortium, which was brought together at the request of the government and led by Abingdon Health to come up with a lateral flow antibody test.

10:28 And of that revenue that we generated, just over £500,000 was from Omega selling product Abingdon so that Abingdon could meet its commitment to supply DHSC with its 1,000,000 tests, which was the first order that the government placed. As most people will know, the government didn't place any further tests further orders beyond that, and Colin will also touch on that later on. The other 400 k of revenue to take us up to £900,000 is over the supply of Abingdon so that Abingdon can carry stocks to meet demand that is expected from other third party commercial opportunities.

11:15 Then we have just under £500,000 of revenue from a subcontracting activity, which was Omega in effect just using its plant facilities and people to undertake some activity on behalf of third party companies that approached Omega. It's it's obviously not a particularly large number, but it made sense to just cover some costs whilst we have people and equipment available. Then there's just over 250 k which came from the ELISA antibody test which we started to use. And in reality, I think what's happened with that one is, as you'll hear later on, the focus has switched away from antibody testing as it was in the earlier days of the pandemic, more towards antigen testing.

12:09 So that product opportunity did not go as we had originally anticipated. And then then in terms of the other category, it's a combination of some of the legacy infectious disease products that we've sold to lab twenty one in 2018. We are still recording some sales to the extent that our Indian subsidiary does source some products from lab twenty one to still serve service the Indian market. And in that prior year, think you can see on the upper $5.97 k that also includes a discontinued product range which cover the range of autoimmune products.

12:57 And then slide eight is just the it's it's basically a snapshot of where across the business we generate money, where we spend money, and where we deploy our people. So you can see with our health and nutrition division, it generated overall sales of 6,800,000 and had a positive EBITDA of 1,200,000. The majority of that 6,800,000 comes from foodprint and food detective that was positioned on slide six. In addition, there are lower levels of revenue which come from selling a food Eliza product and also the CNSLabs service offering which is run from our Liverpool facility.

13:45 And then we have global health which generated 1,900,000 of revenue which I detailed on the previous slide, and that had an EBITDA loss of 2,200,000. And then we have the corporate costs and the cost of being a PLC. So over on the right hand side, you can see the overall EBITDA loss of 2,200,000 which I detailed on the first of my slides. In terms of development spend, we spent £900,000 on development activities. This is spend which is capitalized on the balance sheet. So what that means is that the activities we undertake have to comply with one of the international accounting standards, IAS 38, and if all the criteria are met, then we're required to capitalize that spend on the balance sheet.

14:37 And that 900,000 is about half of what we did in the prior year which was around about the £2,000,000 level. And then really the bottom half of the slide just details the movements of cash that you would see on the cash flow. So you've got working capital movements, money coming in from some asset financing, which part financed £2,200,000 of CapEx. We you can see the issue of equity shares on the penultimate line. That covers the placing and open offer proceeds from June 2020, we did repay the overdraft of March 2020, which was not 600,000.

15:23 So at the end of March twenty one, the cash that we had on the balance sheet was £5,800,000. And at this point, I will hand back to Carl. Thanks, Kieran. So then just moving into some more detailed updates in terms of our our two business units. So starting off with health health and nutrition. The in terms of the where we are just now, I think, you know, as Kieran alluded to, I think last year, it was severely impacted by the pandemic, revenues down from 9,200,000 to £6,800,000 I think what's really encouraging though is that in terms of quarter four, we did see a recovery in terms of £2,400,000 during quarter four. But I think probably even more encouraging is actually what we achieved in quarter one.

16:12 The in terms of £1,700,000 which is actually 97% higher than last financial year, but probably even more encouraging is actually the fact that it's 5% higher than FY 2020 equivalent, which is obviously pre pandemic. And that I think what's happened in quarter four and the movement in quarter one really gives us the confidence that we believe that our revenues for our Health and Nutrition business will recover back up to pre pandemic levels around the £9,000,000 mark in this financial year. I think also in terms of what last year, there was a couple of other key things that have helped drive the business for not just in terms of next year, but or for this year, sorry, but also in terms of mid- to long term growth.

17:03 In terms of China, clearly,

17:06 great news that we got the approval in November last year for the self test or our partner did anyway. And I think, you know, what's encouraging there is that and just to point out is that, you know, our partner is the only the only self test that is actually approved in China for food intolerance or sensitivity testing. So clearly our partner has a first mover advantage here and given the time it takes to get approvals, you're looking at a clear one way for eighteen months to two years that they have to generate the market, grow the market and be successful. And really just want to reaffirm, basically our partner still remains committed to the forecast they provided us, which was by calendar year 2023, they will be procuring in the region of 1,000,000 tests.

18:01 And if you remember that selling price per test is right about $13.5 and a reasonable margin as well. That's a significant uplift to our revenues as we look forward from China. And then in terms of I think the other thing I just want to point out is that clearly the pandemic did have impact in the business, but our sales team has done a really great job.

18:26 During that time, we actually identified seven new customers, which resulted in seven installations of our footprint system into new laboratories, which has taken our total worldwide installed base to two twenty three in over 43 countries. So I think that's exceptional in terms of and really underlines our belief that this division has huge, huge potential to generate significant revenues as we move forward. In terms of how we're going to achieve that, we really see this in three areas. We have a large existing customer base organic growth that we see and we also see it being driven through geographic expansion.

19:12 And then also, as I alluded to at the start, in terms of why we've moved to Health and Nutrition as well, we do see a menu expansion opportunity as well to further enhance growth. In terms of the organic growth and what we've been doing a lot in the last year, we set up a health and nutrition training academy We delivered webinars to over 1,000 healthcare and nutritionist providers to obviously help educate them and drive that awareness. As I said at the start, this product is sort of consumer driven, So really making our brand aware and getting our the people who buy our products and obviously ultimately deal with those end customers, making them more comfortable

19:58 is something that we've really focused on in the last twelve months to help drive demand as we move forward. Additionally, clearly, terms of digital was quite key and customers are expecting data to be transferred digitally. So again, we've been working on the back of those customers is on that digital technology platform to enhance that. And we do see that as an opportunity for us to leverage fuller demand as we move forward with our existing customer base. And then finally, we've been working with these customers to increase marketing, especially around digital marketing brand awareness in country. And I think again, we're starting to see some of those benefits, I think, in those quarter one numbers. In terms of geographic expansion, really sort of three target areas here.

20:48 In terms of what we're looking to do is in terms of the coverage that we have already is try not just increase our coverage by product line or by segment. And that's an area where we've really tried to focus a lot again in the last twelve months. As an example, those seven installations I referred to were actually achieved in Europe, which again, we've always taken the view that that's a relatively mature market. But what we are doing is we're identifying opportunities even within existing channels to expand that and expand our product offering, which is

21:27 obviously will help drive demand as well. We've already touched on China. In terms of The U. S, again, is where we see a large opportunity for us as we move forward. The U. S. Is probably unlike the rest of the world, and there is, there is actually quite an established market for food sensitivity testing. It is the largest market for for for this product range. The just now in terms of the products that that have the customers or services through labs, And those labs actually have a technology called ELISA. And what we're doing is we're targeting these labs and offering our footprint system, which is far superior in terms of the lab management. It's a lot easier to use for lab staff than Eliza and it's also a lot quicker and could offer more foods as well.

22:22 So we're targeting those customers, potential customers, those labs to convert over. In addition, we're that training academy that I touched on in terms of that awareness in the market and our and our brand, we're we're looking to to to roll that out into The US. And what we've done in in in the last few few months is actually appoint someone in The US to try and help us drive that demand, as I said, as we see this as a huge opportunity for us. So I'd expect in the coming financial year that we'll make further progress in The US and obviously we'll keep you updated as we progress in this key market. In terms of menu, really what we see as opportunities in the wider gut health area.

23:08 So it's particularly in areas called microbiome, nutrigenomics and micronutrients, which is hard for me to say.

23:19 But I think these three areas are good opportunities for us to we've identified potential products, looking to partner with companies and then take those products and put them through our existing customer base and obviously help expand sales that way as well. So I think overall in terms of where I see this is that we've got huge opportunity. I do expect us to recover to pre pandemic levels in this financial year. And then as I look over the next three years, I do expect that it's there would be I'd be extremely disappointed if we didn't get to somewhere around about 18,000,000 to £20,000,000 of the revenues given the opportunities that we have to grow that in these three areas. And then from there, I think we've then got a base where we

24:09 can actually achieve strong double digit growth year on year after that. So that's kind of our Health and Nutrition business. Moving on into our Global Health division, starting with our flagship product, which is obviously VIZITEQ CD4. I think as Kieran alluded to, they were slightly sales were slightly lower than we expected as a result of the pandemic. But I think we have made significant progress in the market development over the last twelve months. And just as a reminder, terms of this test, we're not going in and replacing an existing market. This is part of a World Health Organization initiative to drive down the number of people dying of HIV every year, especially in these low middle income countries.

24:58 And what's identified is that advanced HIV disease is the key reason for these deaths. And in terms of the centerpiece of this policy is CD4 testing because that's in effect the gatekeeper in the people with HIV

25:15 will be tested to see if their levels are below a count of two CD4 count of 200. And if they are, they would then be offered additional tests to try and get aid their recovery. So I'd this is really at the centerpiece of the World Health Organization policy. They basically appointed UNITIED and CHI to

25:39 administer this and then drive this implementation across all low middle income countries. So clearly, we signed that agreement with Unidade and CHI last year, was significant for us as they are the key gatekeeper to driving this test's implementation. I should say in terms of CD4, our test is the only test that's included in that agreement. The reason for, as I mentioned earlier, is we are the only instrument free lateral flow test available and it is patented protected as well. So very unique position and at the centerpiece of this important World Health Organization drive. In addition to that, obviously, we achieved WHO prequalification in August, and that's really the green light for NGOs to be able to procure our test.

26:30 So it's obviously a critical milestone for us. In addition to that, what's quite key is making the product awareness of the product. And one way that you achieve this is through clinical studies and evaluations and in particular independent clinical studies and evaluations where people publish on our test. Where we stand today, we have over 40 clinical studies underway And some of the studies that have already reported back from Africa, Latin America and Asia Pacific have fed back in terms of excellent clinical performance and doing exactly what the test is designed to do in terms of these getting into these settings as well, in terms of

27:11 remote settings. The other thing that we did, obviously, it was partly we'd we'd always plan to do this, but but obviously accelerated due due to the pandemic was we, we have a global learning center, which is an interactive online training course that we offer as we roll the test out. This is you know, we've had some some very encouraging feedback from stakeholders in terms of what we've done here, and I think that's something that we will look to build on as as as we move forward in the coming years. So all that work that we've been doing, what we've now where we stand today is that we've got initial demand from 15 of the 37 strategic countries that we've targeted, and we remain confident that what we stated before is that in terms of those unity to CHI projections of 4,000,000 to 6,000,000 tests per annum that we will be in a position to deliver that within the next three to five years.

28:09 In terms of, again, our selling strategy is very similar to previous slides that we've used before. There are really three key areas where we see this drive. In terms of unit aid, I've touched on there, obviously, the company that's rolling out this initiative. The where they've got to just now is they had identified seven target countries that they wanted to sort of use as a test bed to then learn from and then roll out. They've got currently, they've implemented in five of those seven countries, and we expect LR2 to come on board in the coming months ahead. Key to this is that once those initial implementation is complete, there is the potential then to obviously roll that out to over more than 130 countries that are eligible under this agreement with WHO and Unidade to procure the test.

29:04 I think I've mentioned before in terms of what Unidade are doing, they're really the implementation partners. They're not long term funders for the test once it's established in the country. But what they do, Unidade and CHI do, is they work with other NGOs to ensure that once the test is implemented, that the that it's then backed up by, these long term funders. And really, the one of the organizations that's quite key to this is PEPFAR. PEPFAR are the US government fund, they're the largest donor for HIV care in the world. So clearly an important stakeholder that we want to manage. And really encouragingly, have come out and said that they will only purchase an inexpensive lateral flow CD4 test.

29:49 And remember, that's there is only one test available, and that's ours. And so that's within their guidance. We had expected demand to start coming from PEPFAR from October going forward. That's the start of their new budget year. What's encouraging is that one of those, implementing countries that Unity or Tribe have been working in, have received support from PEPFAR, and they have actually placed an order just recently for an initial order to which is actually pre, obviously, pre the budget starting October as well. So I think that obviously gives us real confidence and shows the excitement that PEPFAR have and belief that they have in our test. So in terms of that's really where we stand with those NGO, that segment. In terms of MSF, they've obviously they have been a long term supporter for VIZITEK CD4.

30:45 They obviously helped us with achieving WHO through that multicenter study. Again, just recently, we have now received demand for initial five countries that they plan to roll out and implement. And there is the potential with them being active in more than 70 countries that this will then roll out further as we progress throughout the year and subsequent years. Then finally, in terms of the UN piece, and this was we always viewed this as a longer term play just because of the timelines that are involved with working with these agencies. Crucially, what we have received just, again, just in the last few weeks is that the test has been included in the UNICEF catalogue.

31:30 And what that allows is it's not just for UNICEF, it's for all UN agencies to actually issue RFQs and then obviously from the RFQs, ultimately purchase orders. The good thing about the RFQs and purchase orders that come from these agencies, they tend to be longer term agreements and obviously give you a lot more visibility in terms of future demand. The in terms of where we expect the time line for this, I would expect that during this financial year, we will start to see RFQs coming out and all going well, we'd start to see purchase orders coming in from the UN agencies as well. So I think that hopefully gives you a feel for in terms of underpinning our confidence in getting up to those levels of 4,000,000 to 6,000,000 tests in the period as we look forward.

32:25 In terms of COVID opportunities, I think in terms of clearly, we all expect the demand to be higher than what it is, revenues to be higher than what we achieved in the last financial year. I think if I look back twelve months, we obviously expect UKRTC to deliver significant revenues during that period. Clearly, that didn't materialize. That said, I'm still remaining extremely confident that in terms of future demand coming to Omega, whether it be through the DHSC contract, which is still active, and I'll say we'll touch on that in a minute, or our antigen Visitec antigen test or indeed the UKRTC antibody test.

33:14 In terms of the antibody test, I guess one question is what happened here. I think if you rewind time, the back to April time, I think it was quite clear that the government policy at that point was trying to get to a point where they believed they could get herd immunity through natural infection. And part and key to that was using antibody testing to prove that immunity was the linchpin of their strategy and hence why the rapid test consortium was put together and obviously with the expectation of government demand. Clearly, the COVID had different ideas in terms of how it was how the pandemic's unfolded.

34:02 And clearly, infection rates became higher than and, you know, obviously, start to become under pressure. So the focus really then became on trying to identify people that have the infection rather than identifying people who have had it. Hence why, you know, during last year there was definitely a switch away from in terms of The UK anyway, the need for antibody testing. Really, it just became being fact what the million tests is being used for is for surveillance purposes rather than routine use. So that kind of explains why where we've got to. I think as a consortium, we still are excited about the prospects for this test.

34:53 Clearly, The UK is probably not a market where we'll see a huge amount of revenues for the reasons I've already given, plus also the fact that the vaccination program that's been rolled out, has been done at such pace that is, you know, is different from a lot of countries around the world and clearly, you know, has very been very much focused on driving that vaccination and just getting people jobs as quickly as possible. And that's because, you know, the government had procured large large volumes of vaccines. Clearly, not every other country in the world is as fortunate as we are in The UK in terms of vaccination programs, and that's really where we see the demand and where the interest that we are currently have for the test is in those countries where the vaccination programs are nowhere near as robust as what we have in The UK.

35:49 And in terms of the use cases, what we see the use cases being, and it's similar to what I said previously, where they will use it to either prioritize, the rollout of vaccinations, identify people who perhaps already have natural immunity or immune antibodies and therefore, give the test to other people. There's also a case on the booster side of things as well, when booster starts to get rolled out in certain countries in terms of trying to identify people that need a booster and who don't, especially when you're moving into these winter months. And then also, is data starting to come out from the recent publications that the consortium put out even last week that is starting to identify the fact that indication of immunity as well, which is obviously a strong use case as we move forward.

36:43 So where we are commercially is that we still have those sort of seven or eight Tier one customer countries that we're targeting, and that pipeline has been building. But in terms of sort of near term demand, there are probably three countries where we're just waiting on final registrations to go through. Once they are complete, there is the expectation that the demand will come and there'll be significant demand as well from these countries from what we've been led to believe. And hence why, as Kieran alluded to, in terms of those COVID revenues for RTC earlier on in the presentation, 60% obviously went to the government, but there was 40% that was that has been manufactured.

37:28 We obviously continue to manufacture during quarter one that we've sold to Abingdon that the expectation is that those tests will be used in the very near term. So that's antibody testing. It's still a huge opportunity for that as we look forward in the coming months ahead. In terms of the antigen lateral flow Visitec test, clearly, we have seen Martin start the commercialization process. I think in terms of the commercialization process, I had noticed some questions that came in early on. I think in terms of a commercialization process for a diagnostic test, it's not something like an iPhone where, you know, you launch it and people are queuing up outside outside the shop to buy.

38:24 There are processes you have to go through. You know, if you're targeting existing customers, they want to evaluate the product to make sure that it that it's it's that's equal to or better than the product that they're currently using, for example. And so so that so the there there are a a natural time lag from starting the commercialization process to receiving those initial orders. We do expect to see some orders coming in for a professional test in the near term. The but I think where we see the real demand for this is actually in The U. S. And through the self test CE marking, especially in UK. The in terms of the FDA, we obviously submitted that to the FDA, we're obviously awaiting approval process coming through.

39:19 The reason I believe that The U. S. Is significant market is that it is slightly different from a lot of other markets. A lot of other markets, there are a lot of competition in these markets, especially with products coming in from the Far East. What's different with The U. S. Is they obviously have the FDA regulatory process that is slightly more stringent. You do have to get U. S. Clinical studies done before you can submit. And that does act as a barrier for a number of companies. So the actual number of companies that are currently approved in The US is actually quite low in comparison to the rest of the world. There's also, know, I think it doesn't you know, it's no surprise to everybody on the call that in terms of The US, there is there's not a huge desire to buy from the Chinese market, and they would prefer to buy other products.

40:14 And I think, you know, and the feedback we've had from from our partners partners there is that coming in with a UK developed and manufactured test is a strong marketing opportunity to realize some significant value in The U. S. So that's why we're confident in that strategy in terms of The U. S. In terms of self test, clearly, CE marked the professional test. And once we completed the CE mark and we started to realize, especially in The UK, with the way that the government had moved to issuing free tests to the public, that the market was actually moving to self test rather than professional testing.

41:03 And that is the same in some other European countries as well. The so basically, although the cassette itself is hasn't changed and it's the same manufacturing process that we undertake to make the lateral flow test, What is different and what we spent time working on is that the professional version that we had when we done internal studies using nonprofessional users, it was clear that you could get inconsistencies with with the with the test. And given that you've got to go through a process and and show that it's consistent, we clearly had to do something, to to improve that. So what what we undertook to do was we we've we basically identified that the putting the the the liquid into bottles was was an area of which people quite often got wrong, etcetera. So we identified a supplier that can produce large volumes of of taking our buffer, producing our buffer, and filling it, at large scale. We obviously received samples from that. We we completed testing and confirmed that we were happy that, basically, what we can internally, we believe that, you know, with this new format that we can get consistent results with non trained staff, or non trained professional staff using the test.

42:27 We've now engaged with a notified body, so we're going into the European Union. We have a notified body who we obviously agreed for the protocols, etcetera, were. And we've now just recently commenced the usability study to confirm basically what we found internally. Assuming that we do get that confirmation of those results, then we do expect to submit to an notified body by the end of this month. And we're working with an O5 body to trying to accelerate the process of approval for this. So once that approval comes in, we do expect to see significant demand for this product, especially, we have opportunities not just in The UK, but in in other European countries as well.

43:18 Then in terms of, the DHSC contract, clearly, you know, it was, significant in terms of signing that agreement. What I think is maybe worthwhile doing is just taking a step back in time a little bit in terms of when the government adopted the policy to start procuring antigen tests. At that point, the combined UK lateral flow manufacturing capacity was nowhere near what the government needed. And at that point, there was no tests, UK developed tests available either, hence why they went to China. China, obviously, had the pandemic started there, so they've always been ahead in terms of developing, whether it's vaccines or whether it's diagnostic tests. So they had the early jump on everybody else, And they also are the largest manufacturer of large lateral flow tests in the world today.

44:17 So hence why we are where we are. But I think the government clearly wanted to have a UT manufacturing to past. And And we've we've a progress there was a clear indication of or expectation that we were going to be both ourselves and GAD would be manufacturing the logic test. Clearly, that's not how it's unfolded. In terms of the contract that that we have with the Department of Health, there is test agnostic, which is important. So, you know, when when the realization was that it's unlikely to to be that neurologic test, the Department of Health have now introduced us to several companies who we're now in discussions with in terms of seeing if we can manufacture their test for them.

45:18 Crucially, terms of these companies, they have gone through the Department of Health process for approval, and they also have self test approval as well. So I think that's quite key in terms of the companies that we're discussing with. In terms of where we stand, clearly, what we wanted to do was make sure that whatever products we manufacture, we're capable of manufacturing, manufacturing in volume. We've done a lot of technical diligence in the last few weeks looking at the tests. And I think we're now in a stage where we're confident that we can manufacture the tests and manufacture them at scale. I think the other key point to mention here is that unlike the Visitex transfer, which did take a little bit longer than we expected, The reason for that is that transfer was taken a product from a developed product. And then obviously, we needed to manufacture at scale. And that's quite took a little bit longer. These tests are manufactured at scale today.

46:19 So again, what gives us encouragement that when we start that transfer, we will introduce these tests a lot quicker. Where we are now is we're now looking at commercial terms for with these companies, and I expect that to conclude obviously as quickly as possible. And then we'll be in a position where we'll be supplying the DHSC with one of these tests. And clearly, what we're doing is we're not just discussing with one company. We're trying to keep our options open here. And I would just finally just stress as well that if we get Visitec self test approval, there is an opportunity as well that that would become available through the Department of Health as well. So I think, hopefully, what I've done here is give you a feel that, yes, it's been disappointing in terms of where where we currently are, but, you know, COVID hasn't gone away. It's gonna be with us. There's multiple use cases for for antigen testing as as we move forward.

47:17 What I would also just highlight is that the demand in sort of May, June time for lateral flow tests was even greater than the now combined capacity of all UK manufacturing sites, and that's with those upscale capacities. So even though that demand has likely come down, there is quite a large scope, a large delta difference. So hence, why we're confident that in terms of what we can produce for the Department of Health, we will get that demand coming through. And it's just a case of concluding these commercial discussions, which clearly we are we are doing as quickly as as as we humanly can can do. So that's kind of where we are with with COVID.

48:04 The in terms of the global health expansion, I touched on what CD4 being a key test in the advanced HIV disease space. What we have is that when the as I said, when the test is run, there's probably somewhere around thirty percent to forty percent of people with a CD4 count below two hundred. Those people will then require further testing. And these tests that you can see in front of you are the tests that are typically would be run to confirm if they have these infections or not. What we're aiming to do is, over the next three years, is basically in a position where we have all these tests available under the Revisitec brand. We'll achieve this either through our own development, which starts with crypto already, or partnering with other companies where we'll adapt strategic relationships with them and look to bring them under the Visitec brand and obviously use the capacity that we have and build up in Alvaro as well going forward. And again, just to give you a size of this potential opportunity here as well, let's say, if you do the math, it's 4,000,000 to 6,000,000 tests that are being run, roughly 3040% of those will end up needing these additional tests. So I think where we see this market potential, including CD4, once it's fully commercialized in sort of three to four years' time, would be somewhere around about 40,000,000 to £50,000,000 revenue business. So very significant and we would be

49:35 we'd have a market leading position in terms of advanced HIV disease management. So that's where we really are focusing our efforts as well to grow the business in the midterm. So finally, just to sum up, I think in terms of our Health and Nutrition business, I think encouraging signs that we'll get back to pre pandemic levels this year. We have a strategic plan that will deliver significant growth over the next two to three years. In terms of VisoTech CD4, momentum is building now and we remain confident that we will get to 4,000,000 to 6,000,000 tests within the time frame that we've established, which is somewhere between 12,000,000 to 18,000,000 revenues. And we have a long term strategy around creating a market leading position in global health, specifically around advanced HIV disease management.

50:27 And then finally, in terms of COVID, we remain confident in delivering significant value for the DHSC, and we expect the approvals for U. S. And self test to drive demand for Visitec, and we also expect near term opportunities for The UK RTC test as well. So overall, I think in terms of this financial year, we expect this to be a transformational year for Omega. And then as we look forward beyond that, we have exciting growth opportunities as well within the business to make a really successful and large scale diagnostic business going forward. So that's really me. I'll hand back over to Mark and we'll take some questions. I am conscious that it is there's only about ten minutes left.

51:16 I can overrun a little bit to take further questions. So hopefully, you guys can stay on the call and listen to the questions that we can take. I probably can overrun it by about five or ten minutes, but I do have another call that I must take in around about quarter two. So with that, I'll just hand back over to Mark. Colin, Kieran, thank you very much indeed for updating investors. As Colin said, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. I just wanted the company to take a few moments to review some of these questions. I'd like to remind you that the recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your Investor Meet company dashboard. And as soon as the company have taken the time to review the questions, we'll we'll notify you by email when they're ready for your review.

52:04 I'd also like to remind you finally that your feedback is important to the company. And immediately after this presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the management team can really better understand your views and expectations. Colin, just touching on the, a number of questions, some which were, presubmitted. Perhaps if I could just read these out, and I and I think this touches on a number that have been submitted as well during the live event. But the first one reads as follows. After the food detective test has gained Chinese authorization, has the company applied for other jurisdictions around the world such as US, India, or South America? Okay. Thanks. I mean, I think in terms of the our food sensitivity business, I think we actually sell today in over 70 countries worldwide, which includes actually India, so is approved in India and a number of South American countries we are and visa approved as well.

53:00 In terms of The U. S, obviously, the good thing about The U. S. Market is actually we don't have to go through an FDA approval for the way. So we wouldn't take Food Detector, for example, into The U. S. Because that would require going through that five ten process. But where we see the opportunity is actually with our footprint systems, as I alluded to earlier. The way that you get approvals for the footprint test is actually it's the lab itself that gains the approval, and they work with the local FDA. So it's basically the the the order their own lab approval, so so you don't have to go through that full five ten k process, which is obviously, you know, makes it easier for us to get into that market.

53:47 The so I think that probably hopefully, that actually, you know, deals deals with that question. I think, you know, we're you know, we are well established in a number of countries. Sorry, ladies and gentlemen. We're just waiting for Colin just to come back in. Colin, if you would be so kind just to click back on the link. It was two browsers open, that will be just a a second or two. And, Colin, if you could just come back in as you did before, that'd be fantastic. As I said, just while we wait for Kieran, the ability to provide feedback will be greatly appreciated by the company, and you'll be redirected on conclusion of the q and a.

55:15 Karen, I'd be grateful if you could just assist Colin in just notifying him that he's connected and he's disconnect he has been disconnected from the meeting. If he could just reconnect, I would be most grateful. Thank you for your patience, ladies and gentlemen. We're just, as I say, waiting for Colin to come back into the room. Unfortunately, his, Internet was disconnected. Thank you, Colin.

56:06 If you'd be so kind just to literally just, connect through using the, processes before, and then that will bring you straight back into the room. Just click on that microphone symbol and then continue to webinar, and that will bring you back through, Colin. Thank you once again. Yeah. Hi, Mark. So Hi, Colin. No apologies for that. I think for some reason, you were disconnected. Just if I may, if I just jump on to the the the the next question, just obviously mindful of your time as well. And then maybe I can look back at the question that you've just answered and add anything there if necessary. The the second question we received is what is happening with the ABC test, and why hasn't the MHRA signed off home testing?

57:02 Okay. I mean, I think I've I've probably answered, you know, what's happening with the ABC test. And just to repeat, I think we do we do see opportunities for for demand outside The UK, and and those approvals are very close and and demand should significant demand should be imminent. In terms of the the question around MHA side off and and for for self test, Basically, within within The UK, the the DHSC did receive a derogation from the h MHRA for the use of the 1,000,000 tests that we supplied. And so, obviously, they they were allowed to use them for home use, which is part of that surveillance study. But, you know, what and within The UK, you can only get a self test approval if there is currently if there is DHSC demand for COVID tests. So so for so just to repeat that. So in terms of COVID tests, within The UK, the in terms of getting self test through the MHRA, they will only approve the MHRA will only approve self test use if there is demand for from the from the DHSC.

58:10 And, the the the currently view antibody testing as as not a requirement, hence why we we've not been able to get the full sign off on on home testing. So hopefully that answers that. Thank you very much indeed, Colin. There's obviously been a number of questions, submitted around, directors and trading of shares. The question reads as follows. Why was there multiple directors selling in q one of twenty twenty one? Were they aware of the delays to contracts issues? They managed to sell at a very good price and helped in no small part by tweets that happened to increase significantly around this time. Perhaps I could leave that with you. Yes. Thanks, Mark. I guess in terms of the to answer this question, I think in terms of the obviously, the you know, in the lead up to to the directors selling, was obviously a closed period, and and that closed period had been in place for a for a number of months. And I think given the nature of of the business, especially just now, you know, we're we're very we're often very often going in and out of basically closed periods due to the sort of discussions that we have at any one time. So there are quite often only narrow windows of opportunities for directors to sell. And obviously, the timing in terms of February was one of those times where it was actually one of the few times this year where

59:40 we've actually had an open period, and that's why they decided to sell either their shares or their options. Or in terms of picking up the other question in terms of the were they aware of, any delays to contracts and issues, etcetera, I I really want to put this to bed. There there is there was no indication of that these delays that we've encountered was was was likely to happen. I think at that point, you know, both ourselves and the Department of Health were very, clear in the messaging that our expectation was the end of April, May time frame that we would be producing tests. And as I've alluded to, that expectation was that it would be a homologic test.

1:00:29 Clearly, that's not how it's how it's impacted. But, you know, I think that, you know, there was absolutely no awareness at that point that there was there would be any delays to the contracts. If there had been, there was no way that they would have come out of a closed period. So I just wanna put that to bed that there was you know, at at that point, those were those were sold in good faith with the expectation that by the end of April or May that we would be producing tests for the Department of Health. I think in terms of the next point, in terms of tweets, etcetera, again, you know, at that point, it wasn't just all of the other tweeting. It was, you know, you had Lord Bethel. You had a number of, Department of Health tweeting as well all around that time. So there was a lot of positivity around the around, the shares and and all this around the company, sorry, and and clearly, with the expectation of of producing tests by the by the end of April or May.

1:01:28 Hence, why there was a significant increase in social media as well. So it wasn't just Omega, it was Omega responding to government, notifications as well that we were treating. So hopefully, that answers the question and and and puts that to bed in terms of that there is certainly no none of the directors, none of us were aware and neither were the Department of Health expecting anything other than us producing tests in April and May this year. Thank you very much indeed, Colin. Next question reads as follows. Why was there over two months gap between Visitec LFTC marking in The UK and initiation of the conversations with EU and U. S. About registering the project there for professional and home use?

1:02:15 Did you hope that all tests will sell in The UK and there'd be no need to undertake registration in any other markets? Again, thanks thanks for that question. I think it's a it's a it's a good question. I hope hopefully, I've I've already answered in terms of what was required to get the self test approval. So to answer the last point, no, we weren't just focusing totally on The UK. We've always had plans for the Visitec antigen test to be a key part of our sales strategy. We had obviously expected in the early part of commercialization that we would be able to achieve private UK sales, but clearly, decision by the government to issue free tests killed the private market by doing so. And the in terms of the delays, I've already alluded to the fact that work that's required to submit and self test because there is a very, large difference between a self test CE Mark approval and a professional CE Mark approval. A professional CE Mark approval, the company can can CE Mark itself and build up a technical file, CE Mark it, and then register it.

1:03:30 And then, obviously, it's then subjected to to audits from its ISO auditor to make sure that that that these files are are appropriate. In terms of the self test, the notified body reviews those, technical files, so you've got to put them in place. And a key part of the technical file for self test is the ability to prove that nonprofessionals could run the test. So that's that's clearly why we're doing this work just now. So so that's really the reason for taking a little bit longer. There was work that was required to to convert that professional test to self test. And then similarly with The US, it's is a professional test that's going in, but that has gone into The US.

1:04:16 But but as I alluded to, I think, earlier, but if I didn't, I'll I'll I'll just reaffirm this. To get approval in The US, we, Mologic, had to undertake studies in The US. So the key thing with The US is they will not just accept data from other countries, They want to see the test being run on a population based with Americans. That study also had to get get get, you know, had to find those study sites. We then had to get those study sites up and run and agree protocols, etcetera, and then run the studies, get the data, analyze the data, then submit to the FDA. Hence why there is a lag between CE marking and next steps in these processes.

1:05:04 So hopefully that answers that question. Thank you, Colin. We've received a number of questions during the live event. I'm just reading one now from Guy G. Thank you, Guy. Around capacity, the the one that we received ahead of today's event read as follows. Has full capacity of 2,000,000 tests per week ever been reached? And if so, when and for how long? Okay. Again, I think it's a good question and worthwhile clarifying. So in terms of the 2,000,000 tests per week, we have the infrastructure in place, the facilities are so by in April, the facilities and equipment were were in place. We have the scientific staff in place to be able to to manufacture 2,000,000 tests. The the one thing that what we we we took the decision to do was with our semi sales semi skilled staff was go via an agency rather than than than employing directly.

1:05:57 Two reasons. One, is quite a lot of administration burden burden given the number of people that we were bringing in. And but two, also, it allows us to if the demand is is is fluctuating, it allows us to flex that demand. So what we have is is a number of agency staff in play, and we've tried to cycle them as well to to get to upscale so that, you know, capacity as as demand picks up, we then we then increase increase it. Clearly, in terms of the 2,000,000 capacity, most a large percentage of that demand was obviously aimed at the Department of Health. So I think it's it's fair to say that we haven't actually delivered on 2,000,000, but I think what what what is clear is that we have the capabilities both in terms of facility equipment and scientific staff and the ability to pull in staff from agencies at very short notice to be able to get up to those levels.

1:06:55 Thank you. Answers that question. Thank you, Colin. Next question reads as follows. How are you keeping the 250 workforce gainfully employed whilst waiting for HMG orders to arrive? Yeah. Again, another good question. In terms of that workforce, I think you can see from Kieran's slide, March, we were slightly actually under two fifty million We obviously we're actually now slightly above two fifty million There's obviously a number of staff that's involved in our Health and Nutrition business, and they remain focused on that. In terms of the if you look back the slide that Cairn had in terms of headcount, any significant number of this has increased from that from the end of March to where we are now it has been increasing in ALVA and predominantly in those scientific staff that came in, in April and obviously agency staff as well. What they have what we have been doing is obviously the workforce.

1:07:57 Ilya have been busy making food intolerance tests and in Alvar, we've been busy making CD4 tests. We have been making UK RTC antibody tests and obviously producing VisoTech antibody sorry, antigen tests in readiness for commercial orders. And finally, I think we announced previously in announcements that we have been undertaking some work for the government in terms of cassette and pouching activities for a third party. And clearly, we've been using that for is we obviously do make a margin on it, but it does obviously cover the costs of those staff that work in those areas. And we'd be really using that as a training aid to upscale our staff so that when that demand comes, whether it be from the DHSC, whether it be coming through large orders from the UKRTC or large orders from Visitec antigen test, we will be in a position to be able to respond to that very quickly.

1:08:59 So hopefully, that answers that question. Thank you, Colin. Just obviously mindful of of time, so perhaps a a couple of final questions, if I may. The first one is one year ago, the company was very active on social media, but in the past three months, there's been radio silence. As some have suggested, is there a background NDA which is restricted to communication and potential updates? Yeah. Okay. Again, I think it's, I I have sent sent that from from some some emails that I've noticed coming in from shareholders as well in terms of questions prior to this. I think in terms of the overall communication, yes, I agree it has been quieter in recent months. There's a number of factors at play here. Clearly, yes, there are some contracts that we have.

1:09:52 You've got to be careful about what we're allowed to communicate. And that includes you know, working with the World Health Organization, etcetera. The and and and also the and and governments as well, but also customers as well. We we do have contracts that that you know, all these contracts have confidentiality clauses, etcetera. It doesn't stop us from doing it. It just means that we've we've obviously sometimes got to get approvals before before we can communicate. But I think generally, the, you know, in terms of the we try to improve our social media presence. And I think, obviously, we increased the amount of money we're spending in that area as well to try and improve the service we are providing.

1:10:40 And, you know, in the early part of the year, as I've already alluded to, there was a lot of communication, not just from omega, but from, you know, wider sources as well around the antigen test, and then there was a real buzz around that. And and clearly, we we were feeding off of that and and sharing that, with with with investors as it was or through our social media platforms. You know, what what we have found is that that since, you know, April or May, May, June time, I think, you know, there has been a drop off, even from the Department of Health in terms of, you know, comments around lateral flow testing. But then also, we were conscious that, you know, that there were delays in the contract and personally didn't think it was appropriate to start promoting what was happening in The UK with lateral flow test whilst we're still trying to work through what tests we would have and that we would move forward with. Now I would expect that as we move forward and and we get get, you know, these res these issues resolved successfully that we would start just to, you know, be more active again on on social media.

1:11:50 And so I think it it was some conscious decision around, you know, being a little bit quieter, especially, you know, given the the the sensitivities around where we were with the Department of Health contract as well. But just in general, there has been a little bit less news coming from us, I suppose, as opposed to earlier in the year. Thank you, Colin. Obviously, finally, in the interest of time, and thank you to all the investors that both pre submitted questions and those that have submitted questions during today's event. And as Colin has said, that they will review your questions, and we will notify you when they're ready for your review. But Colin, perhaps we could end with the final question here, which reads, please, can we have clarification on the preproduction payment, what it covers, and what time scales does it need to be repaid?

1:12:40 Hi, Mark. What what I'll maybe do is I'll I'll maybe just get Kieran to to answer that question given that it's probably more financial. Give me a chance to go drink your tea. Yeah. Yeah. Can I Go ahead, Colin? Yes. It's Yeah. Can you hear me? Yes, sir. All good. Yeah. So the preproduction payments, what it was designed to cover was money from the DHSC to enable Omega to undertake the facility upgrade in advance of, one, signing the contract with DHSC in February, and two, to cover off the fact that, as everybody knows, we don't have the test at the moment.

1:13:28 So they DHSC put the government sorry. DHSC put the company in funds to enable it to undertake all that facility refurbishment which we have undertaken. The intention from here on is that once the test is finalized with DHSC and Omega starts supplying it, DHSC has the right to treat that £2,500,000 as, if you like, a discount on future orders. And the time period over which that money will be claimed back by DHSC is something which in the contract, it was agreed that we would agree the period over which it was, discounted at some future point in time when we know what the test is.

1:14:17 So and in terms of what might happen to that money, if in the downside scenario of DHSC not ordering a test, so if Omega is not at full, that money is not returnable because it has been used for the facility upgrades that I mentioned. The only time it would be returnable by Omega if Omega was at any point in the future in breach of the contract. And, clearly, that's not our intention. We remain ready and willing to supply the HSC once the test coming from the commercial opportunities that Colin described earlier is finalized. That's brilliant. Thank you very much indeed, Kieran.

1:15:04 Colin, just obviously again, thank you very much indeed for updating investors and indeed for taking the time for the Q and A and agreeing to obviously review all these questions. Perhaps before I redirect investors to provide you feedback, given the chance to give you their views and expectations, I could just hand back to you just for a few closing comments. Yes. Thanks, Mark. I see, I think I hope that what this presentation has given, you know, in terms of, existing holders that you now have the comfort and confidence that, you know, we will we we are that this year will be transformation for the business. And to non holders who are listening that you see this as an excellent investment opportunity, both in terms of the the the strong growth potential plus the the COVID opportunities that clear clearly we have in front of us, with the Department of Health.

1:15:53 And thank you for for listening, and apologies for the overrun. Absolutely. No problem at all. Colin, Kieran, thank you once again for updating investors. Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Omega Diagnostics PLC, we'd like to thank you for attending today's presentation. That now concludes today's session, and good afternoon to you all.