Novacyt Sas (Euronext:ALNOV) — Full Year Results

0:01 Good afternoon, and welcome to the NOVACYT Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received in the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. And for the benefit of those joining us from France,

1:11 Before I begin, I'd like to make the following poll. And I'd now like to hand you over to James McCarthy, acting chief executive officer. Good afternoon, chief sir. Thank you very much. Good afternoon, everybody. Welcome to the twenty twenty two full year annual results.

1:31 I would just pause on the disclaimer. If we just go back one for the Just please pay attention to the disclaimer. We will take that as read. I think it's an important page for the document which will be from the public domain. So

1:50 my name is James McCarthy. I'm acting chief executive for NOVACYT since November last year. I've been prior to that CFO from January 2021. And I'm delighted to be joined today by Steve Gibson, who's the group finance director. So maybe I'll just hand over to Steve to introduce himself before we proceed. Yeah. Thank you, James. Good afternoon, everyone. Steve Gibson. I've been with NOVACYT for seven years now. I joined just prior to the IPO. And prior to that, I worked for Hewlett Packard for about twelve years. Thank you. So just in terms of the format, Steve and I will run through some slides today, try and give you a summary of how the business has been performing and the key actions looking forward. At the end, we will pause and and deal with questions.

2:41 I'd like to just maybe do a quick recap of of the vision and capabilities of the business. Know for many of the long term holders, they would be familiar with this, but but there may also some some some new voices out there. The the origin of of NOVACYT, the primal design business, was an RUO business that really was incredibly successful for a couple of things. The its agility to react to the knee needs of the market, its speed to market, and the quality of the reagents it produced. And that was underpinned by a bioinformatics capability, which meant that not only could they spot what was happening in the marketplace, it was also key to design, you know, diagnostics products that were highly successful.

3:39 As the pandemic hit, the business really shifted from being a core RUO life science business to a clinical business because many of the COVID assays were clinical products. So that really is the first foray, if you like, into into clinical products. And the business learned a lot in terms of product development, commercialization, and regulatory, etcetera.

4:04 The group also acquired the ITIS international business along the way in October 2020, and that brought an instrumentation capability into the company, which the business hadn't had previously. And we're now really putting all of those capabilities together to leverage the post COVID landscape and try to build a leading global clinical diagnostics company. Go to the next slide. So 2022 has been a a key year of transition for the business. I mean, even though COVID sounds like a distant memory to most people now, but for the NOVACYT business, for q one in 2022, we still had pretty substantial sales from COVID products.

5:03 And pretty much for the first half of twenty twenty two, we were developing products for the COVID portfolio. And we had six further CTDA approvals during the course of 2022, most in the first half of the year, bringing our total approved portfolio to seven, which, look, is something we're very proud of and and I think something that shows the underlying capability and ability of the business to to build leading products. But it's it it became clear in q two twenty twenty two that the COVID sales fell rapidly, and that really triggered the beginning of the transition. And that meant a shift in development terms towards the non COVID portfolio, so really pouring our energies into developing the the the non COVID menu and also looking at our costs.

6:04 And and, look, as we work through the year, the first couple of products to come out of that internal development is a gastrointestinal bacterial product closely followed by a gastrointestinal viral product, which we're working on. They'll they will be the first two internally developed clinical products. That's supplemented by a deal we did with an Italian company, an Italian molecular company,

6:32 where we distribute some of their molecular products, which is to give us a broader menu as we start on our journey of commercializing clinical diagnostics. We we also did quite a bit of work in our RUO, I mean, the original life science portfolio. The the RUO business, which has been the the the founding part of the primal design business. The RUO business suffered really during the pandemic. I think it suffered because the market was looking elsewhere. I mean, there's a lot of resources developed towards COVID and but also internally. I mean, I think the NOVACYT business also deprioritized RUO, at least the priorities were all taken by focus on COVID.

7:19 And we've been rebuilding that towards the back half of 2022. And that includes refreshing the the the top products to make sure everything's up to date and working a lot on our supply chain to increase our response. And and we feel we've made a lot of progress in reestablishing that business. And finally, we had to, you know, we had to address our cost base in 2022 and address it fairly aggressively, and that included the disposal of the MicroGen lab twenty one businesses, plus some significant change in the cost base of the primary design business. And and that was entirely necessary. Think as we face into a different future, we need a different cost base going forward.

8:04 I think we've we have now done the the heavy lifting and rightsized that during the course of the year. And and just maybe lastly in this section to talk about business development, and business development is a catchall for us that covers pretty much all third party partnerships. There are some clear evidence where we've been building partnerships. I mean, I've talked about corners on the asset side, but we've also built partnerships in developing our workflow. So partnerships to develop extraction systems, a partnership to develop a liquid handling. And when you put that together, we we now have a a workflow that goes from, you know, I guess, sample extraction through the liquid handling, so sample preparation, and the thermocycles which are in house to develop develop to deliver, sorry, a total workflow for clinical customers.

8:59 And I think that's very, very important that we have. And it's a really good demonstration of us working with third parties. And we also called out our work with Elucida, which is okay. It's it's not the biggest project, but we worked with Elucida last year to do a proof of concept for a biosensor product. This is obviously, a non PCR diagnostic solution. And I think it's important for us to keep a fairly open mind on alternative alternative systems. And we're now moving forward with that relationship and targeting a couple of products, one in in a nonhuman health, which we hope we could develop within the next six to nine months and have in the market in 2024.

9:48 And, look, it's a very exciting product. I mean, the whole biosensor platforms are very, very interesting in in terms of the the sample to result you know, the time involved at low cost. So it could be a very exciting application in the right circumstances. And, look, I think m and a, and I'll come back at the end, business development also includes more strategic m and a, that is not something we've taken our eyes off of. I think, you know, it it it's clear we have cash. I think we also need the right partner for the business. I think valuations have been problematic for a lot of the start of last year. I think a lot of that has now leveled off. I think the field is leveling. So I think we're confident we can actually put that capital to work going forward.

10:37 So I shall now hand over to Steve to talk through the financials. Thanks, James. Good afternoon, everyone. Hope you're all well, and it's great to be here today to chat you through the 2022 financial results. As you read the financial statements, please remember that the results of Microgen bioproducts and Lab twenty one Healthcare have been reported on a separate line loss for discontinued operations, and that's in accordance with IFRS five, and that's for both 2021 and 2022. If if we kick off from a revenue perspective, we reported revenue of 21,000,000 for FY 2022, and that was in line with guidance. That is a decline from the prior year of 92,600,000, and that was driven predominantly by a decline in COVID related sales.

11:24 If if we look at revenue from a product mix perspective, around 70% of our revenue, or just over 14,500,000, came from COVID sales, and around 30% of our revenue came from our non COVID business. And that's really our RUO business and our instrument business. That was a decline year on year, and that was driven by lower instrument sales compared to 2021, which benefited from COVID nineteen demand. If we look at revenue as well from a geographic perspective, what we remain is a well balanced and international business. And what you will see is that The UK region generated around 50% of our revenue, which is over £10,000,000, and that's because we have our largest direct sales force presence on the ground in The UK.

12:12 Other regions, Americas and The UK and Europe, sorry, excluding The UK, both generated around 20%, and then the remainder, 10 to 12%, was derived from Asia Pac, Middle East, and Africa. One point to note is that post the closure of Lab twenty one Microchip, Primary Design, our molecular business, now represents around 93% of our overall group revenue, and that's important because it's our most profitable business. From a group from a gross profit perspective, we reported 5,700,000 or 27% compared with 28,200,000 or 30% in 2021. Now the 2022 gross margin was impacted by significant levels of obsolete stock as a result of COVID sales declining quicker than we expected, and this diluted the gross margin significantly.

13:05 Now if we exclude the impact of these one off items, which totaled approximately £7,000,000, the underlying gross margin of the business would have been in excess of 60%, which is a key metric for us going forward.

13:19 James mentioned it earlier. We're on this journey of rightsizing the cost base of our business, and our OpEx costs fell by over 20% from 25,100,000 down to 19,300,000 in 2022. And the main driver for that was the group wide restructuring program that we undertook, and this reduced the headcount of our continuing business from around 240 at the end of December twenty twenty one down to around a 137 at the end of December twenty twenty two, so a reduction of over a 100. Our current headcount is around a 120 at the moment. We also saw further savings in legal and professional commercial insurance and facilities as the business contracted.

14:08 We did manage, though, to protect some of the front end of the business, and we continued to invest in r and d. We saw a 9% year on year increase in expenditure, taking it to over £5,000,000. And that's important because product development and innovation are, you know, critical to the continued success of our business. From a profitability perspective, we reported an EBITDA loss of 13,500,000 versus an EBITDA profit of 3,100,000 in 2021. Now the swing from EBITDA profitability to an EBITDA loss was driven by significantly lower sales and, therefore, a reduction in the gross margin contribution totaling around £22,500,000, which we managed to partially offset by a 5,800,000 reduction in OpEx costs.

14:59 So this meant that the group reported a loss after tax from the continuing operations of 22,200,000 compared with a loss of 6,000,000 in 2021. Now in addition to the EBITDA loss that I've just discussed, we also reported exceptional costs of around 7,700,000, and that was made up of three key items. The largest by far was a 5,200,000 goodwill impairment charge associated with the ITIS acquisition. The next largest charge was 1,300,000 restructuring expense that predominantly covered redundancy payments, and then there was £900,000 of costs in relation to the ongoing DHSC contract dispute. Taxation of 2,100,000 is predominantly as a result of the movement in the deferred tax balance.

15:51 And if we just jump back to the discontinued operations, that's reported on the separate line loss from discontinued operations, and it reported a net loss of £3,500,000 for 2022. And out of that 3,500,000, about 50% or 1,800,000 is closure related costs, which are noncash impacting items, and there's two main drivers in there. The first one is we recognized the 1,000,000 impairment charge in relation to the Canberley facility lease, and we actually surrendered that lease in January of this year, saving the company over £1,000,000 in cash had the lease run to term. And the other big item in there is a 600,000 impairment charge for the remaining property, plant, and equipment that we couldn't utilize in the wider business.

16:41 So overall, this resulted in the group reporting a loss after tax attributed to the owners at 25,700,000. Go to the next slide, please. Moving to the balance sheet. We closed the year of £87,000,000 of cash in the bank, and that was compared to just under 102,000,000 in 2021. And this provides the company with a strong platform for which to execute its future growth strategy. Importantly, we remain debt free as a business. Goodwill, as I touched on earlier, has decreased year on year, and that was driven by the impairment associated with the ITIS acquisition. From a working capital perspective, excluding cash, that fell by just over £2,000,000, down to £16,000,000 at the end of twenty twenty two, and that was driven by falling revenues that reduced the trade receivables balance.

17:36 The actions that we took in relation to COVID nineteen stock that reduced inventory and the payment of the remaining twenty seventeen to twenty twenty LTIP scheme that reduced trade and other liabilities. From a capital expenditure perspective, we incurred costs of naught 400,000 in 2022, and that's a much better indicator of our future run rate as a business compared to 2021 where we incurred over 4,000,000 of expenditure because we heavily invested in insourcing manufacturing. That that was a quick run through the 2022 results, and more detailed information can be found on our website where we published today the group results. I'll now hand back to James. Thank you. Thank you, Steve. So, Phil, if you just advance the main slide. Thank you. So just a quick reminder of how we think about strategy and and and how we think of the journey we're on. So, you know, we look at four pillars of the strategy, the first one product product development.

18:41 And here, we talk more about reagent development. So this is about building clinical menu. And the second pillar is instrumentation. You should also think here of probably instrumentation and workflow because it's not just the the hardware. It's it's the process for a sample to result, which involves instrumentation for sure, but also software and connect you know, connectivity across those different platforms. Geographic expansion also covers commercial for me. So commercialization, the obvious one, you know, developing these products and but but finding a customer base for the products. And finally, business development, which is, I think, I already mentioned is, for me, all things third party partnerships of of various sizes all the way through to, say, more strategic m and a.

19:33 And if we just move forward, but, I mean, I will I'd like to just give you some of the highlights under the different pillars. I'll try not to have too much repetition from the full year highlights. That'd be a little bit apologize for that, but I think it was just good to give some context of progress against the pillars and how we think about it.

19:50 And when I talk about building the reagent portfolio, I talked about the the GI viral bacteria, which are the in house developed ones, and what we've done with our parties. But we've also launched Winterplex, and so there are there are still COVID testing going on. It just happens Gen tends to happen now as part of a a broader wind winter panel of of flu, flu, b, RSV typically is the types of panels. But we're very pleased to get our winter products product launched last year, CTDA approved for UK sale in October last year. And we've been selling that successfully in The UK and in Europe even though we were a bit late to the season because of The UK CTDA coming so late.

20:39 So so that's quite a good example of us commercializing a clinical product. I think also we have unique strength with our RUO heritage. If we look at clinical development timetables

20:55 since May last year when IVDR came into force, we've gone from a a system where you could probably do an IVDD product in maybe six to seven months.

21:06 An IVDR product is something like two years, and that clearly changes the game. You know, it makes it much more difficult for something smaller diagnostics companies to bring products to market. We're our RUO experience to build a set of initially RUO products, diagnostic products, but guided by the targets we we we Kevin came out of the market research we did last year. So we're taking those key clinical areas where we feel we can be competitive, and and we're developing audio, typically multiplex diagnostic products in those target areas.

21:53 And that's something I think you'll see in our our update. That's something we can do in fairly short order. So, you know, we've set ourselves a challenge of up to probably 10 products during the course of 2023, and their products we should see is RUO multiplex products that we can develop and get in front of some customers and get more experience. I'd love to think that all of those will will, you know, will will go down an IVDR route later on, but let's wait and see what that looks like when we have a bit more market experience with those products. I think it's important that we can use our RUO credentials to kind of turbocharge that clinical development. And I guess it's gonna be super important for, you know, for for for clinical customers.

22:42 And just on instrumentation, I mean, I talked a little bit about the partnerships, you know, a mixture of internal instrumentation knowledge, particularly in thermal cycling, plus the external liquid handling and extraction to build workflow. And look, we're looking to develop our thermal cycles further, again, under the theme of multiplexing. So upgrading our q 32 instruments so that it can deal with with multiplex products, a more complex multiplex products, which is where the market is going. In fact, I think it's become almost the the basic entry level. You have to have multiplex assets now, we're gearing up for that. And and, again, I think the fact that we've seen our both water instrument oh, sorry, instrumentation, and we've seen our liquid handling.

23:30 We're about to see a marker extraction system. Again, this is very important for clinical clients because that's, again, the minimum they want. They want to see a CE Marker solution, which is great. Next slide, please. So talking about geographic expansion and particularly commercialization. I mean, commercialization in in the post COVID world, look, is a very different very different from what we experienced before. This is a much tougher job, not least of all, as I've talked about the lead times in developing products, but also clinical products typically, you know, customers need to validate. And some we we had the experience of some of that during COVID as well, and there's a slightly longer runway to do that.

24:16 So that's something we're engaging head on. So it's it's very important for us where we develop clinical products or finding customer partners who we can work with. I think also what I'm talking about are you all. I mean, REO, we need to also try and make a shift in REO from more, I would say, academic, and that's not only where we sell to the from from more an an academic market to a more industrial repeat market, repeat business market. Because, look, we all want to have this repeat, more predictable sales profile rather than, you know, just a series of lots of individual projects going on, which has is probably been more of the characterization of REW historically. And and we certainly have the capabilities, we believe, to to deliver those services.

25:05 And just finally on business development,

25:09 and, you know, as I said, to repeat, business development for me is how do we deploy our cash with third parties? And that, as I said, can be I mean, the the overarching objective here is to accelerate the strategy. Right? How can we deploy our cash to accelerate the strategy? And and the examples so far of building workflow solutions, building extraction solutions, that's an example. I was working with a third party in a business development capacity and accelerating our strategy. And what we've called out with biosensor, so biosensor work with.

25:46 And that's again trying to look at an opportunity where we could accelerate our strategy that that happens to be in a non PCR area. Let's go to the next slide. So maybe just to to leave you with a couple of key messages. You know, the the the three things the three things we have to demonstrate to you as we go through this year are are we accelerating development of the portfolio. Right? And I think I've set out some of the direction we're going there. We'll we'll come back to you later in the year and let you know how we're getting on. You know, can we drive commercialization? Can we commercialize the the portfolio we have in the emerging portfolio successfully?

26:30 And can we put our capital to good use in business development? Those are kind of three things that you should measure us on as we go through the year. We're also putting in the other cost base. I mean, we don't wanna lose sight of our cost base. I think we've done pretty significant work last year in rightsizing the cost base, but we continue to challenge ourselves to make sure there's value for money given all the moving parts of the business. And I think when you look in in q q one twenty twenty three, we were posting sales of 1,700,000, of which 300,000 was still COVID related, which is obviously a fraction of what COVID has been historically, but we still see a low level of COVID coming through the door. I mean, look, we were disappointed with revenues in q one, and there was some overhang in the instrumentation business. We've always reported that the instrumentation business is non COVID.

27:24 But, clearly, I think, for simplicity, but but but, clearly, when you look into that industry, I mean, there was a lot of instrumentation went into the market during COVID, right, from from all sorts of different sectors. And I think we're having a little bit of a hangover from that, and we hope to work through that as we get into the balance of the year. And, generally, we need to drive, you know, the the the the rate of COVID sorry, of RUO and instrument sales and improve that for the rest of the year. Plus, we should see some more clinical sales coming through the back end of twenty twenty three. So I think with that, Phil, I'll just leave you with this picture. I think we're ready at this stage to deal with any questions. So if I hand back to Mark, I'm not sure which one of you guys is James James Steve. Yes. Of course. And thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen.

28:25 Given the significant attendance on today's call, the company will not be able to answer every question, but we'll start off the q and a session with this one here, which reads as follows. What performance milestones can we expect in the next twelve months? Thanks. I think I probably just mentioned this a little bit. I think the three pillars would be product development and, you know, coming back to you specifically with what products are we developing, what stage are they at? Are they at the are your stage? What's the journey to IVDR? So that's a very clear metric. Commercialization will be something on what sales we're posting. So what actual sales we're posting, but also, you know, do we have line of sight of contracts as we develop our sales plans towards the back end of the year?

29:13 And m and a progress will be yeah. I mean, m and a is always a difficult one. Clearly, bigger projects are, by definition, something we don't discuss openly. But, you you know, this is something we're working on very hard. You know, I'd love to be in a position we come back to later in the year and and actually demonstrate some moves in that area, and and hopefully we can. So so I think it'll be very clear when we talk to you next whether we're making progress or not to get these pillows, and we'll be very transparent about it. Perfect. Thanks very much, James. Can you provide an update on your m and a progress? Sorry. Sorry. I just preempted that maybe a little bit, but I think look. I've tried to show you, you know, the real examples where we've partnered with outside firms, right, in terms of the the thing, and rather than going all over it again in terms of the development of the workflow, etcetera.

30:08 I mean, I can just assure you we we are looking at more strategic partnerships, which could really accelerate the the journey of the business. So something that could give us a bit a bit bit of a step change. But that by by its nature, it's hard. And I think we are rightfully challenging ourselves to, you know, pick the right partner. Right? Know people will say you sat on your cash for a long time. That's probably still a better outcome than spending on the wrong thing because you kinda get one go at this. I think I also mentioned valuations have have come back, to be fair. In the last six to nine months, valuations are more reasonable, so I think we've got a more level playing field. And and, again, we're working very hard in that area, and, I'll have more progress to share with you through the course of the year.

30:57 Great. Thank you. Thank you very much. Just turning to the next one. Any further cost cutting measures planned? Yeah. So I'll hand over to Steve. Perfect. So so I think, you know, fundamentally, as a business, we'll always continue to review the cost base of our business. And and where it is appropriate, it will take cost out of the business. But if you're asking in terms of will there be another large scale restructuring program like we saw in 2022 in the immediate near term, the answer is no. Perfect. Thank you very much for that, Steve. When will you appoint a new CEO, and is it likely to be linked with m and a? Yeah. Look. I I think just to recap for everybody, I'm I'm I'm the acting CEO at the moment. So and, look, I think that was the decision the board took.

31:48 You know, we changed the CEO last year. I think the board wanted to have, you know, some time to say, look. There are so many moving parts in the business, right, as we still come out of COVID, I don't need to appeal the the the kind of extent businesses like this have shifted. And look, the board felt I was the right person to to lead this business through that transition until, you know, we can demonstrate we're on this on the right strategic journey. We can get runs on the board, and that's why it's an acting CEO. Look. And I'm delighted to be in the role. I mean, I love the business. I think it's got great potential, so I'm very pleased to be in the seat. But I also appreciate it's an acting role because of the uncertainty around has been around this strategy. But they're not there's no plans to change that for now. I mean, I I'd I'd I'd love to think that if there was a, you know, a currency or I'd be a good candidate for that, then I'd be considered, and I'd be very pleased to to do the role.

32:44 And that's really kind of a matter for the board. But as far as I'm concerned, I don't wake up every morning and think, oh god. I'm only the acting CEO. Right? It's not something that troubles me. I think the business gets our full attention, and that we're very committed to making it a success. And but the second part of the question, you know, is that is that linked to m and a? I mean, I don't think we're that clever. You you never know with m and a what happens, but, I mean, it's just not a consideration. M and a, you you always like to think you pick up great talent. You you can't really plan for it like that. So that's not really a a primary consideration at all. Perfect. Thank you very much. How realistic is your five year revenue target of a £100,000,000? Yeah. So I think the, you you know, the the 100,000,000 was an aspirational plan for the business. You know, this business should be able to get to those levels, you know, if it can build, you know, a compelling clinical portfolio.

33:37 I mean, when I look at our where we are at the moment, how we're trading in q one, a 100,000,000 is a long way off. And, look, it was always a kind of a five year plan out there. I think it's still an ambition of the company, but I, you know, I can't play a road map out for you now about how we get to a 100,000,000, but I think it's still you know, we should have the ambition to be getting to that kind of size of business over that period of time. Perfect. Thank you very much. Can you be specific about where you're focusing your r and d efforts? Yeah. Sure. I mean, we did an extensive piece of work last year, market research, which I think we we shared some portions of that through the various updates.

34:25 And look, we're on infectious diseases and gastro insect borne. They were the kind of three major pillars and also some walk in transplantation. And we're we're I I mentioned we're developing RUO multiplex assays. We're developing them in those spaces in the main. So, you know, we're using that research to guide our development efforts. And look, as we as we get following that development process, we will share with you the products. I I don't want to get into specific product areas at this stage. I'm still working on them, but we'll be able to share those to you. So we've been we're we're we're we're remaining faithful to the strategy we set out last year in terms of the target areas we're going after. That hasn't changed.

35:18 We're just getting on and on developing products in those spaces. That's where the main r and d effort is going when it comes to reagents. When you look at instrumentations and workflow, as I think I mentioned, we we need we need our instrumentations to continue evolving, become more have more capability as the diagnostic industry moves to more multiplexing. And if we're gonna continually work on things like extraction systems, sample handling, this is not a static market. You you can't develop something based on requirements at the moment. You have to keep reaching forward, and customers expect better and better outcomes. So we will continue to walk in that workflow instrumentation piece as well. Perfect.

36:05 The next question here reads as follows. How is the IVDR and CTDA advancing for new products, and how the AG LFT self test respectively? Okay. So let me try and break that down. There's probably three questions in there. I mean, I IVDR is I mean, we've talked about it a lot since, obviously, well known industry. But I IVDR is a significant, if not seismic shift for the diagnostics industry in terms of product development. So not only have development times gone from, let's say, around six months to twenty four months, and if you think of where is that where does that extra time come from?

36:51 And at the moment, about half that twenty four months is products have to go through now a third party, a notified body. So as a diagnostics developer, you hand your product to a third party for validation, And and those third parties are, funny enough, at capacity because, as you can imagine, that, you know, there was a lot of people trying to get their products through IVDR. So there's definitely a capacity issue in terms of notified bodies and a transparency issue because it's very hard to get a, you know, a detailed timeline for some of these. That uncertainty is not helpful. It's absolutely not helpful when you're trying to build launch plans and commercialization. So that's why I think I mentioned we are using our REO expertise to develop REO versions of some of these the next kind of levels of development, do some client work with that in the RVO space, and try and make sure if you go down the IVDR route, you're pretty damn sure you you're on a winner because it's pretty expensive process to go down there and find two years later this thing doesn't maybe have the market reach that you thought or you're you're you're struggling with clients. So it definitely has raised the bar in terms of, like, the idea of development pathways.

38:11 CTDA look. CTDA has been predominantly a COVID testing requirement for the for The UK only, and we've been very, very successful. We have, I think, now seven products approved, including Winterplex. And I I think the future of COVID only tests is obviously very uncertain. Right? I mean, I think we would all assume that it's gonna be very difficult COVID testing going forward, which works out in how we're running our business. But just on CTD also for the and as I said, just UK, our Winterplex product, which which is a panel it happens to have COVID in the panel, but it's a respiratory panel. That also has to go through CTD. So to the extent that the product has still got that COVID left in it, a start of the panel has to be tested.

39:01 I don't think CTDA is a big issue for us going forward. I don't think there'll be a lot more and more developments following the CTDA, but so it's really an IVDR issue going forward. So I don't think we need to worry too much about CTDA. And the last sorry. The third part of that, the the the LFT self test, this is a product we see marked, which is gonna go through CTDA. And, look, there there's a fair argument to say, well, why bother? You know, COVID's over. Do you really need another self test product approved in The UK? Look. Our view at the moment is we've we've gone so far with that product. It would be a shame not to have it CTDA qualified. I think that's the journey we're going on. That that in itself isn't a, you know, short process. And, again, it's not almost exactly clear how long it would take.

39:47 But we certainly would like to take that through CTDA and and see how we get on. Because I think, you know, for for the incremental efforts, having had the product, you know, c marked for that incremental effort, I think it's worth it to have another UK self test that we we could use, right, in the in the event that that demand came back. So that's our call of thinking out. Okay. Perfect. Thank you very much, James. Do you plan to replace Edwin Snape with a new non exec? Well, that's probably more a question for my chairman than me, but I'll I'll be brazen as to give you an answer anyway. Look. First of all, I'd like to just add my thanks to what James said publicly at the time for Ed's service to NOVACYT S. I think it was outstanding.

40:37 I mean, I think he'd seen the business probably not the longest serving director. He must be close and certainly a long history with the business and, you know, great support for the business. I think, you know, at the moment, I think there's five directors. I think we we'd always look for talent. Right? So it's not just as you know, it is a a replace aid. It's more a question of what does the business need going forward. So I think if James Wakefield was here, he would probably echo that. You know, we we will always look for talent, always try and keep the board refreshed, but this thing doesn't happen, obviously, quickly. Right? So this is something that will will happen in the background. Perfect. Thank you very much. Can you give us an update on how the business is performing in terms of geographic sales?

41:28 Steve, yeah. Yeah. I can take this one. So I think I covered it earlier in the presentation. Let me just go over it again. So in terms of 2022, The UK region accounted for around 50% of our sales, and that's where we have the most boost on the ground. So it's not a surprise there. In The Americas region and Europe, excluding The UK, both of those regions generated around 20% of our global turnover. And then the balance was from Asia Pac, Middle East, and Africa. And when you look at our q one sales for 2023, the total is about 1,700,000. You know, it's broadly a similar geographic split as well, so it continues to trend at 2022. Perfect. Thank you very much, Steven. Perhaps what time for maybe one final question.

42:15 Can you provide an update on the situation with the DHSC? Sure. I mean, look, I will always caveat this. This obviously is very tricky in terms of disclosure. Right? So I'm very limited on what I can say about a a live legal case, which is what it now is. Look. We have shared, I think, everything with the market that we can. So we try and keep you up to date on all the milestones around the case. I mean, as a quick recap, it became a legal claim in April 22, and we now I think we updated you on this. We have a a date for the court case, which is June 2024, which is little over a year away.

43:03 So we've got a a court date booked, and that's that's really the day still working towards. And, look, I think I would say to everybody, we we will still work to resolve the case any way we can in advance of the court case. I think all parties are still obliged to do that, and we're certainly willing and and, you know, keen to try and come to a settlement if we could in advance. And I think it's but I think it's also important to know it doesn't really have a major impact on the day to day running in the business. Right? So this isn't a it's not a major draw on our resources. It's not a distraction for the business in an operating sense, and we can pretty much just get on with our business, run our business, and continue to invest. I think that's important from investors' point of view. This is not dragging us down.

43:57 And look. It's always unsatisfactory, I think, the answers to DHSE, but I think you just have to appreciate a case like this is not something we can really just disclose anything public. So beyond what I just said, if there's any changes along the way, of course, you know, we we update you as we always do. Right? So any material changes along the way, we'll update you as we can. Okay? James, Steve, thank you very much for that. I think you've actually addressed all of those questions you can from investors. And, of course, the company will review all the questions submitted today and will post their responses on the investor meet company platform. But just before redirecting investors, provide you with their feedback, which I know is particularly important to you both. James, could I just ask you for a few closing comments? Yeah. Look. I think the only comment is is to thank people for participating in the call. Thank you for shareholders for sticking with us. This has not been an easy ride by any stretch of the imagination.

44:52 It's been incredibly volatile and a very difficult time. Look. I I hope we're starting to lay out the forward direction. I I think there's some really good strengths from which the business can build and sort of proven track record of developing products which we believe we can carry forward. We're well funded so we can support ourselves, and and I think we're in a market where there are actually more opportunities to to invest. So I think we're in a good place as we go forward. We have to prove it. We know that, And we will come back and be very transparent with you in terms of how the business is performing as we move forward. And, again, just to thank everybody for their participation today. James, Steve, thanks once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

45:47 This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of NOVACYT, we'd like to thank you for attending today's presentation, and good afternoon to you all.