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 switched at any time by the Q and A tab situated on the right hand 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 it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll.

0:28 And for the benefit of those attendees joining us from France, And I'd like to hand over to David, CEO. Good afternoon to you.

1:26 Good Good afternoon. Afternoon. Good afternoon, everybody, and thank you for joining, and welcome to the to the call. I'm looking forward to covering the 2021 full year results and operational highlights with sitting here today with McCarthy, CFO. Without further ado, if we could go to the next slide, please, James. So for the disclaimer, I won't read through it word by word, but please take the disclaimer as read. Next slide, please. So let me start by talking about NOVACYT's core competencies, capabilities, which were built in the pandemic, but built prior to the pandemic.

2:11 And this bench strength we we have in our capabilities now from the talent across the company, the research and development organization, the manufacturing and supply chain at scale, and a globally deployed commercial team now set us in a great position for future value creation and shareholder value. So since joining the company in October of last year, we have now aligned in the company around the vision for the company going forward. And we are committed to becoming a leading global clinical diagnostics company focused in infectious diseases.

2:54 And it is palpable in the corridors of primer design and and and Cambly, and it is sites that our purpose and mission is to protect lives as we have done in the pandemic from the invisible threats by enabling informed clinical decision making through clinical diagnostics delivered in the right place at the right time. And it is with passion and pride across this company that we believe in the vision and the purpose, and I hope you see that coming through as we go through this presentation. Next slide, please, James. My background is in global roles, la latterly in mid stage growth companies, working on strategy to execution across the globe.

3:45 And that's why I joined NOVACYT to bring that experience and leadership into the team. But it's not just about me. I'm joined here with James, key member of the team, and you can see at the bottom of this slide our executive team who bring a huge wealth of knowledge and bench strength to the organization. And we also have a very supportive board. And most importantly, it's the broader NOVACYT team, which is full of talented talented individuals that will will make this bring this plan to life. Next slide, please. So with that said, I'm gonna hand over to James for the next few slides talking around the full year results and the operational highlights. And then what I wanna do is come back and and talk in some detail about the future corporate strategy. Thanks, Jace. Sure. Thank you, Dave.

4:36 So I'm gonna start with some of the the key highlights for the 2021 results. I just picked out a few things that really under my underlines what Dave has been saying about the capabilities of the business. If you look at the agility and speed of innovation of the company, you know, we launched 15 new products in 2021, and pivoted the business, rapidly towards private testing market. The second thing was if you look at our platform technology and instrumentation, capabilities, how we launched that into Versalab, which is a successful integration of reagents and instrumentation. And if you look at our position in key markets, where we signed new contracts with WHO, and UNICEF, you know, just to underline our geographic spread.

5:27 And, additionally, today, we're we're announcing that we concluded our review of Lab 21 and migration and the strategic review. And look, we have a proposal to discontinue those businesses at the moment. And this is a real opportunity to to simplify the business and increase the focus on the core molecular diagnostics platforms. And finally, a few words on DHSC. Tuesday's announcement, of litigation signals a novel step in what's been a very, very slow dispute process. However, it it doesn't change our belief that the company has strong grounds to assert its contractual rights. As you'll appreciate, we are limited in what we can say further at this time, and I'm sure there's loads of questions on that.

6:22 But I think you just have to be patient with us on that. But we will continue to update you as appropriate. And and just finally, I I think it's important to recognize that the board is determined to carry on with the core business and to use the company's balance sheet to invest in both in continued organic and m and a support the strategic aims so we can work as normal. If we turn to the 2021 financial highlights, and I'd like to start with revenue. Group revenue for 2021 was 95,800,000 compared to two hundred and seventy seven million in 2020, which was in line with the management's guidance.

7:11 Revenue in 2021 excludes 40,900,000 of revenue shipped to DHSC in 2021, which became part of the contractual dispute and which we've explained earlier in the year. Revenue from COVID accounted for 86% of total revenue in 2021 compared to 95% in 2020. And there was a significant shift, in 2021 revenue away from large centralized and mainly government contracts towards private laboratories. And private laboratories revenue almost doubled from twenty eight million, in 2020 to almost 56,000,000 in 2021, including over 10,000,000 with NGOs.

7:57 And this means that private testing accounted for 58% of revenue in 2021 versus only 10% in 2020. We also saw a more balanced, geographical spread, and and with The UK being less important. So it accounted for 45% of revenue in 2021, which is still pretty important, but compared to 79% in 2020. Moving on to gross profit. The group delivered an underlying gross profit of 65,400,000 or 68% of of revenue, which is below the 2020 gross margin of 76%. Now 2020 was a pretty exceptional year in many ways as a comparator, but the the two main reasons for that change were higher stock obsolescence of COVID nineteen products in 2021.

8:52 As variants and testing shifted rapidly through the course of the year, which required, many new products as I talked about some of the innovations earlier, but also more obsolescence. You know, some of the variants were short lived. Some of the testing regimes change very rapidly. And and some margin dilution also in 2021 as a result of increased instrument sales, as we roll out our instruments and increase the installed base. And the those gross profit figures, the underlying gross profit figures are before taking a 35,800,000 exceptional charge in cost of sales in relation to the DHSC contract. And there was two main elements of to that as we explained earlier in the year. Just over 26,000,000 of stock provision for products the group purchased, to fulfill expected demand from DHSC, which did not materialize, and 6,900,000 cost of sales or cost of stock, which relates to product we shipped to DHSC, is now in dispute. But the cost has we've full expense, of that product.

10:02 And that reduces the reported gross profit to 31% or 29,700,000.

10:11 If we move on to OpEx, the group operating costs fell from 35,400,000 in 2020 to 28,400,000 in 2021, so just over 7,000,000. But that was mainly a result of the '20 sorry, the long term incentive program in in 2020 of 19,000,000. So if you strip that out, the underlying, OpEx cost has gone up and because there's been significant investment in the capabilities of the business. And and I just call out two important ones. R and d investment increased threefold from 1,600,000 in 2020 to 4,800,000 in 2021, And and sales, our sales and distribution effort, increased by over 50 from 4,500,000 in 2020 to just over 7,000,000 in 2022.

11:05 So a clear focus on the front end of the business. And the overall headcount of the business increased from 237 at the end of twenty twenty, to 283 at the end of twenty twenty one. And when you put all that together, we delivered an adjusted EBITDA of 37,100,000 in 2021, which is in line with the guidance we had given and EBITDA margins of 39%. And it means an operating profit of 28,000,000 also excluding exceptional costs. When you add in the exceptional costs, we go to an operating loss of 7,800,000 and an after tax loss of 9,700,000. And and just a footnote on tax, it doesn't affect 2021 tax computation, but you may see in our results that we announced that a patent was granted at the end of March, which will qualify us for patent box relief. And patent box relief is all profits attributed to that patent will will be taxed at a reduced tax rate. It'll be 10% rather than the 19%.

12:09 And we can apply that to profits back to the date the patent was filed. So even though it was granted at the end of March this year, was filed back in October 2020. So this is quite valuable for us, and it's something, though, that will be a carried forward credit against our tax liabilities rather than a refund, but but still highly valuable to be carried forward to the future. If I move on to balance sheet and cash, cash at the end of December was a 101,700,000 compared to 91,800,000 at the end of December, driven by the strong underlying performance. Working capital significantly reduced post the DHSE contract adjustment.

12:58 But capital expenditure increased by about 3,000,000 to 4,000,000 in 2021, which is probably the highest CapEx this business has ever seen in a in a in a single year. And in in the new phase of this company, also quite a high high number. And that was mainly because we insource quite a lot of production from using subcontractors to bring it in house and to protect margins and and also spent quite a bit of CapEx in kitting out our laboratories supporting, well, both and d product development and quality systems. So quite a lot of investment there. That that was offset by a reduction in acquisition spend. I mean, we had a ITIS acquisition in 2020, but no acquisitions in 2021.

13:46 And overall, the company remains debt free, and and to reiterate, in a very strong position, balance sheet wise, to support m and a and organic development. Okay? Thank you, James. Thank you, Dave. Yep. Okay. Next slide. Yeah. So so what I want to do in the next few slides is walk you through corporate strategy. And following on from January where we promised to come back on this very topic, I wanna give you more more more color and detail this next section. So starting here with the problem we face, all of us, all of you, have and continue to endure a global pandemic.

14:37 It's a wake up call. In that case, a zoonotic disease likely jumping between species into humans and then human to human, but it won't be the last. We've seen it with influenza. It may be something else. And that, think, has accelerated and given momentum to the diagnostics business at large in terms of innovation and deployment. In in other areas of of infectious disease, which is our primary focus now, you know, antimicrobial resistance, it poses a major threat to human health as we seek to treat infectious disease with antibiotics that become redundant due to the overuse in various settings, or climate change where warmer climates allow vectors, mosquitoes, for example, to change habitat and and bring diseases into broader habitat or geographic areas such as Zika and dengue or whether it's a protozoan like malaria.

15:41 So it it it it is what drives us. This this is what NOVACYT is here to do is to contribute to these challenges in global health. Next slide, please.

15:55 I've put this schematic together, which is illustrative, and let me walk you through it because I think it poses some of the questions and answers on all of our minds. If you look down the bottom left hand corner, this organization was a 10 to £15,000,000 life science research use only business prior to the pandemic. And I I'm gonna give credit now to the wider team. I wasn't in the company for a large part of that that period when the COVID pandemic hit. This organization delivered the first CE marked product in Europe and then then a very impressive portfolio to respond and workflows to respond on the front line to to to to protect lives in the pandemic. And that illustrative peak and and subsequent tailing down of of that of the pandemic, it is one of our opportunities, but one of our challenges because coming back off of the response, you need a firm based business. And therefore, you see on the right hand side of this chart two primary areas of focus for corporate strategy. Number one is build the base.

17:04 What do I mean by build the base? It's build a strong foundation for growth, sustainable, predictable growth, in the future in three major buckets. Number one, in human in vitro diagnostics. I'm gonna share with you future areas of targeting in in a moment in the next few slides beyond COVID nineteen assays and workflow. Secondly, on the bottom, you see life sciences RUO. That is the legacy portfolio of primary design. We have neglected it to some extent in the last two years whilst all hands were on the pump to to respond to the pandemic, but we have a huge product range. We have the network to commercialize. We're going to revitalize that portfolio.

17:51 And then instruments are intentionally in the middle here because they are integrated with either the life science portfolio where the chemistry can go through the the MIGO range, for example, or integrated, with our human IVD portfolio. And I'm gonna show you a workflow in in a moment. The other point I would make on this slide, that sustainable growth is the engine room for innovation, enabling us to serve, outbreaks in the future, either with front runner research use products followed by IBD products, or just because of the the the the depth and breadth of that portfolio with primers and probes that can target hundreds of different pathogens that we have in our in our hands.

18:38 So, hopefully, this this illustration, gives you confidence that we're in the future, we won't just be relying on outbreaks, but we will remain agile to respond, and we will strengthen the base. Next slide.

18:55 So the proof point, if you like, for the global first responder is this is not fantasy. The company has responded rapidly to outbreaks over a number of years to swine flu in 2009, to an Ebola outbreak 2015, to a Zika outbreak in 2017, and, laterally, to the global, pandemic with COVID nineteen. And as I said, we we intend to continue to be agile and responsive and enhance our surveillance for such potential outbreaks in the future. Next slide, please. The other question then on my mind since day one joining this organization, and I'm sure on everybody's mind on this call, is how do you transition from a company that by by its last two years of responsiveness has become more more reliant upon COVID revenues at 80% of revenues in 2021, for from COVID and 20% non COVID revenues in in that year. How do you take that over the coming years to be over 90% from non COVID related revenues and perhaps some residual COVID portfolio revenues depending on the shape of of of the pandemic at that point? If the product even if the the disease is endemic, there's still potential for testing the future.

20:25 And and, really, look looking below on this slide, the there's four buckets of driving that transition. And the first one, which we're gonna go into a bit more detail in a second, is is portfolio development. So we will relaunch the research portfolio in the second half of this year, beginning of the second half of this year. Going to enhance the channels for that and and and revitalize the distributor networks, which were built maintained, but we need to strengthen those going forward. We're going to also leverage the COVID portfolio globally. It varies by country as to the rates of testing in different sectors. But we're going to develop non COVID clinical in vitro diagnostics portfolio and integrate our instrumentation into those workflows. They as I said earlier, these these these portfolios talk to each other.

21:22 They're not they're not separate. They they they work well as one. We are continuing to enhance our geographic reach and expansion. We have a direct presence in a number of markets now. We have a UK team, as you know. We have boots on the ground in Germany now. We have, EMEA, experienced leadership, and we're also covering, Southern Europe, now, partly through distributors, but also some direct, initial presence. And beyond that, I'll show you later some of the other parts of the world where where we're we're we're managing through third parties or directly some of our business.

22:07 And then lastly on this slide, which I'll I'll go into further in detail later, is business development. James has already alluded to this, and we are very, passionately, pursuing three areas from innovation to accelerating the molecular portfolio through to strategic transactions, and I'm gonna describe that a bit more in in a moment. Next slide, please. So when I joined the company, I felt, and I believe the same today, with the advent of IVDR and the the clinical requirements and the regulatory hurdles in the future, we better be absolutely confident in where we place our investments for organic r and d in the future. And what you can see on this slide is that we've conducted extensive, market research. This is a piece of priming research, secondary research, and advisory boards,

23:05 in order to inform, where we focus, in the future, and I'll walk you through some of that. But here, you you can see market attractiveness on the bottom axis and and the elements of market attractiveness are described on the top right hand bullet. And then the on the left hand axis, we we we are would this be a strategic fit for NOVACYT? So, therefore, things that migrate up to the top, right hand corner of the chart and the size of those bubbles, which is indicative, are the most attractive. And I'm gonna walk through of these in in just a second in in some more detail. But before I do that, you might be looking at insect borne viruses, and thinking, well, that's actually not at the top right. Well, the reason for that is this is western market research. This this particular piece of research was done in Germany, Nordics, UK.

23:59 Even in then, it came up, by the way. But, actually, the the reason I'm gonna show you in a minute that we're interested in panels in that setting is much more to do with our work with the WHO and the NGOs and the Southern Hemisphere concerns over over arboviruses. The WHO has just launched an initiative because they see major threat from dengue, Zika, yellow fever, and the likes. That's why it's it's featuring low here, but it it had it's a significant opportunity globally. Next slide, please. So let's just give that a bit more color. And and I wanna underline something here this is the initial prioritization. This is this is not the end, though.

24:44 This is the beginning of our transition to a broadened, diversified, non COVID portfolio. Let me just walk through this without every last word. Otherwise, I, you know, I'd take up the whole time, but let me just give this some color. Number one, the most obvious adjacency for the organization is respiratory disease. We already had embarked. This is confirmatory for us. We already have a winter panel on on the platform for this winter, and we'll be developing that for promate going forward. And that that, then to bring in additional respiratory panels in some of for some of the viruses mentioned here, perhaps also for atypical pneumonia and the like is an obvious adjacency for the company.

25:30 Research confirmed that's a huge opportunity for us. The other area that was confirmatory was in, transplantation, and I'm pleased to say that we already have developed the EBV, BKV assays, and the CMV is fast behind them, which and and that is the most common chat you know, virus in this context for monitoring the risk of of organ rejection. And there is a range of other viruses that we can add into the mix over time. So we were were on on that that track, and we're confirm

26:00 it through our research with customers. The new areas here, GI, gastrointestinal disease, though, are are exciting. Very large opportunities, very very significant unmet needs for us to serve. So viral GI, so you're I'm sure you're familiar with the problems of norovirus that's rearing its head as we come back out of pandemic in schools and ships and the like, and then bacterial panels for, you know, bacterial GI infections. And I did mention on the previous slide, you know, separate to this piece of primary research, we've done a lot of work on with advisers and secondary research in the WHO thinking about how we support, the emergence of viral vector borne disease in in in developing world. So we're we're also developing an assay there too.

26:54 Me just finish this slide on one reading out one of these quotes. There were many other quotes in the research. Let me just read one of them. An extraction less workflow would be great for these tests. This is referring to g GI. It will be quicker. And because there are a billion bugs, it wouldn't I wouldn't have to worry about any decrease in sensitivity. That's from a Nordics laboratory director. And I just read that out because we heard many such many such comments around some of the workflow offerings that that I'm gonna share with you in a second. Next slide, please. This slide hopefully gives you three key points to take away.

27:39 Number one, it shows you we have a broad commercial portfolio now to commercialize, and we are doing exactly that as we strengthen our reach and our global team. Number two, it shows you that we have a deep development pipeline that we're investing in. And that pipeline, although it will take in in brand new assay development because of IVDR and the clinical development needs eighteen plus months to bring to market,

28:16 there are double arrows on some of these lines. And that what they're there to indicate is we are we are not starting from scratch in all of these areas. We We already have winter panel. We're we're late stage development with the dry formulation of of Promet for COVID nineteen. We have transplant assays, near near completion. What the way to think about the IVD, timelines here is we'll have a flow of new, product launches over time, and as we seek to diversify away from COVID nineteen alone. The research research is only. We're good to go. Second half, we're just working on the primer probe relevancy to make sure they're up to date. We're we're looking at the customer base. We're going team are gonna be redeployed and and trained up with the right materials to revitalize that portfolio, and we'll integrate the instrumentation where we have, in in a good to go q series, mygos, and our co prep recently launched, which I'm going to describe to you in a moment.

29:19 And something new on this slide is we do have a partnership where we are, investigating pre proof of principle, proof of concept, a biosensor platform for future longer term potential application in point of care. Next slide, please.

29:38 So back to first principles, which you'd expect, from a marketing guy is I want to know what customers need and what customers want. And when we ask them that question in the in the recent research we've we've just completed, you can see they want these are rank order. You want they want performance. They want ease and convenience of workflow. They want relatively quick turnaround time, flexibility, and practicable lab logistics. And when you break that out by, by, you know, test, assay feature, you you can see the top seven here, and I'm gonna talk about pro mate workflow in a second. But, really, from rank order, sensitivity specificity, low risk of contamination, no extraction required, simplicity of the assay setup, standard reaction parameters, rapid amplification time, and potential for decentralized use. Well, we have, a competitive differentiated solution for ticking against those those seven customer expectations.

30:53 And I'm really, really excited because the one thing that I care about is serving our customers ultimately who help to protect lives. Next slide.

31:06 So here we are as a workflow, example. I wanna just walk you through this because it's it's not about linear thinking here of assays versus instruments versus research use portfolio. It's about how this works together in a decentralized or near patient setting. So here's an example of an integrated workflow with ProMate, direct PCR for medium throughput scalable solution to take diagnostics to the frontline. And you could take this workflow to the frontline in Africa because you could put it in a in a VersaLab or in a in a briefcase with the q 16 with the exception of the co prep if you were going that far into the field. This is highly versatile for spoke laboratories, for, maybe ward settings, private, laboratories, perhaps shipping, perhaps nursing homes.

32:00 This is really exciting to bring us together. Coprep is an automated liquid handler, simple workflow, sample stewardship. The convenience, with walk away time for lab staff is is a is a desirable, need. They've they've identified. We can reduce contamination and human error by deploying the co prep in this workflow. And then many of you are familiar on the right hand side. That's a q thirty two, thirty two well PCR device, rapid results, high sensitivity and specificity with a direct PCR assay such as ProMate. So this this workflow, I'll show you in a second, I believe, is highly competitive to for for NOVACYT to win in its chosen segments in the future.

32:48 Next slide, please. So let me describe that a little bit more. If you take a view of of the market in three main segments, if I start here on the right hand side, I do not want, and I and we never will go head to head with the big guns. We are not gonna go fighting against Roche, QIAGEN, Abbott, and Hologic. They they have the instrumentation. They have the assays. They serve serve the central labs. We we actually do supply product into the central labs, and we will in the future where we see, unmet need, but it's not our primary focus. Our primary focus, I'll come to in a second, but before that, think of the other side of this chart on the left hand side where you see point of need also occupied by some key players from BioPharm to QIAGEN to Roche.

33:47 In that segment where you typically see syndromic testing, low low volume, low, high plex, low, low throughput, relatively high cost per test, we we are not that's not our primary focus today. We might play in that in that growing segment in the future if we bring our biosensor platform to bear, but today, NovaSight's workflow and its its offerings sit in what we call the decentralized setting or near patient setting where we believe we have the winning formula to be differentiated and highly competitive, versus competition with the only qPCR solution. And and as we add menu, we, you know, we can really compete here.

34:35 When I showed you that workflow earlier, you could imagine if you wanted to, you could deploy eight q 32 off the back of one co prep, you could be cranking out a thousand, tests a day in a in a relatively near patient setting of your choosing with or without a VersaLab, combination. So we really can go for precision and scale on the front line. Next slide, please. I said to you earlier I'll give you more color on the global reach of the company. So let me just walk around this quickly and give you a bit more insight. So starting in UK, we have the direct team. We deal with UK sales, both public and private with a direct commercial team.

35:25 We've enhanced our EMEA team. We have a head of EMEA. We have North South, sales leadership, and we have enhanced our distributor network across EMEA. As I said, we're now present, for example, in Germany, which is the biggest market, in the EMEA. You're aware we're we're present in The US. We manage that business through distributors, and we have the boots on the ground to manage the them in, you know, in in The US and US time. We continue to do that. And the same in Latin America. We have boots on the ground. We manage our distributors proactively in in Latin America. Chosen distributors chosen for the appropriate portfolio who who know how to commercialize, whether it's RUO or or IBD.

36:11 We've been been highly successful, as James pointed out, in the WHO,

36:14 UNICEF NGO world, and we continue to do that, going forward. And we manage that from our global key accounts team. Similarly, I It is was very successful historically in APAC, and now our global key accounts team, not just instrumentation, is taking the portfolio across our APAC distributor network. So this, coupled with the bench strength of talent in global marketing and commercial leadership we've brought into the company is a growing strength of the company. Next slide, please.

36:46 I also said to you earlier on that I will give you more a bit more color on this inorganic strategy, and I there's not a day goes by where I don't look at opportunities on the business development side. It's an absolute priority now for the company. And James made, I think, a really, really important point I want to underline. And that is we plan to deploy the capital that we accrued to drive inorganic growth and deliver shareholder value across three main buckets. Number one, innovation. We've done it already with co prep. We bought it in in early develop co developed viable products launched. We've got a biosensor platform in proof of concept development with partners now.

37:36 We are are looking at CRISPR. We're looking at microfluidics. We're looking at next gen sequencing. I don't know what else fits there yet, but we're going to build, earlier stage innovation. If I place all the bets on that, though, that would be a long game. It might be a winning game, but, therefore, we have two other buckets. Number number two is what we call acceleration, and that is where if we take our time, which because of IVDR and clinical development regulatory requirements to develop our own future portfolio for non COVID, assays, we can accelerate that portfolio. And we've dedicated now a task force for that very purpose, seeking additional additional chemistry to to run on our workflows, looking at extraction capability if it's required in that workflow for sensitivity reasons because higher sensitivity comes with extraction if it's if it's an absolute requirement, and and also other devices such as lateral flow digital readers.

38:40 And then last but by no means least, we are very active now, proactive in seeking strategic transactions through m and a to diversify and build NOVACYT for scale. Next slide, please. So let me just sum up from what I've said, and I'm gonna hand back to James, for a slide before I could put some closing remarks. I hope what I've shared with you convinces you that our portfolio development now with integrated instrumentation workflows still leveraging the the COVID nineteen portfolio across the world, which varies according to need, bringing in the dry formulation and so on.

39:27 The the pandemic's not gone, but now increasingly bringing in other, other assays on our platforms, promate and and sometimes gene sig. We will enhance that from a BD point of view in terms of breadth or depth of that of that portfolio. We do have a very, very comprehensive research use portfolio. We we are revitalizing and relaunching, including ecommerce channel. And and we we have that near patient capability now, which is a highly differentiated competitive work, you know, midsize scalable workflow taking testing to the frontline. Impressive global reach through our team directly and through our hand selected partners who we're enhancing the relationship and and the and the motivation for us to to commercialize our portfolios in the future.

40:20 And as I've hopefully convinced you, business development is at the center of the inorganic growth strategy now to supplement our organic investments. All of that gives us the right to be a global first responder. We have been one, and we will continue to be. We'll remain agile, and we have the innovation engine to to contribute materially, to global health. And with that, I will hand to, to James, to give us a bit more color on the 2022 and and longer term outlook before I come back to wrap up. K. Thank you, Dave. So just looking at 2022 and beyond that, so perhaps just to start with how we got on in q one twenty twenty two, we posted just over 13,000,000 of revenue compared to 34.4 last year. That's on a like for like basis.

41:17 And the the COVID element of those sales were just over 10,000,000 this year, versus 31,000,000 last year. And if you do the math, that's a 67% decline, just two thirds decline. When we talked about guidance or gave an indication in January, we were thinking of COVID sales being about 50%, so falling at about, like, about half twenty twenty two versus 2021. This looks like it's accelerating faster. So I look if that continues for the balance of the year, you're looking at a sales range between 35 and 45,000,000, which is still, I guess, quite a wide range, but COVID revenues are still very, very difficult to predict. I mean, it feels like it's gone away forever.

42:04 I suspect that's not going to be the case. I think, you know, there's another winter comes and things can look very different. So that's our guidance at the moment. Just for clarity, that excludes any revenue from Lab twenty one and Microgen. We've I've talked to you earlier about our proposal to just discontinue those businesses. So just to be clear, for for this forecast, they're taken out of the numbers. If that proposal goes ahead, they'll be treated as discontinued for the whole of 2022. So in effect, as if they were discontinued from the 01/01/2022. But, look, I I think the important strategic element for us, as we go through this year and beyond is growing that non COVID piece.

42:50 And I'm not about to repeat everything Dave shared with you, but a lot of the elements are about, you know, trying to drive that non COVID portfolio, whether it's organic or inorganic, you know, support. That's really the focus for for 2022 and beyond. In in terms of profitability, you know, we make a statement here. We will we will aggressively manage our costs to keep at least double digit EBITDA for the full year of 2022. And this is a balancing act because, of of course, course, we want to keep some investment behind the organic development and product development and and all the other, you know, great things that Dave talked about. But that's our commitment for for 2022. And if you look further ahead, we're calling out a figure here of about you know, we could get to a 100,000,000 of revenue as a total business in five years.

43:44 And just again to be clear, that doesn't include any acquisition activity. This is a organic growth. Acquisitions, of course, you know, may accelerate that target, may make it bigger. I mean, acquisition is very difficult to predict. But just to think for everybody's clarity, the 100,000,000 is a is is an organic number. Okay. So, Dave, I'll just hand back to you. Thank you, Jane. So just one more wrap up. You've seen this slide at the beginning, but I think it's important just to round up, round off with it, now. So so I think that there are strong foundations, now in NOVACYT built before and during the pandemic that allow us to drive for growth and future value creation ultimately ultimately to protect, lives in infectious disease and contribute to global health.

44:42 Our vision and purpose now are clear, and and we we we we hold those with passion, and pride, to to to to make those real. And I think we've made it real in the past, and we can continue to do so. And now it's all about execution. It's all about disciplined execution to bring to life, what I've shared with you today across the business, and that is what we're doing. And we we look forward to updating you, with progress, on that as we go forward. So with that next slide, James. With that, I'll stop there because I I suspect there may be some questions that we can address. And thank you for for for for your attention. But the q and a, please.

45:30 David, James, thank you very much for your presentation. Ladies and gentlemen, please continue to submit your questions using the q and a tab situated on the top right hand corner of your screen. But just while the company take a few minutes to look at those questions, I'd like to remind you that a recording of this presentation along with a copy of their slides and the published Q and A can be accessed via your investor dashboard. David James, as you can see, we've received a number of questions throughout today's presentation and ahead of today's event, and thank you to all the investors for submitting those. And perhaps I could start the q and a session with this one here. Can you give further detail on your product pipeline, and how do you anticipate growing this beyond COVID nineteen? Yeah. So, you know, hopefully, I've given some of that detail in in this presentation, and and there's more to come. I think there's a couple of points I would make, though.

46:17 One is that I wanna underline the the point I made about initial focus. So, yes, we're we're gonna go broader in respiratory. Yes. We're going to develop GI transplantation, insect borne viral panels. But I said to you that was the beginning. We are going to thereafter consider other areas, of interest, and they may be, and I can't tell you what which ones other than they may be sexually transmitted infections. It may be urinary tract infection. It may be hospital acquired infections, for example, you know, antimicrobial resistance issues and so on. There are so many opportunities. Meningitis is another one with with those and sepsis. So there are so many, but I don't want to embark on any further, commitments until we've done more homework.

47:07 But we wanted to get started, on that portfolio right away. In terms of instrumentation, we've been enhancing the instruments. They're good to go. We do have to consider future instrument development, which we will do strategically as or whether that's more inorganic or and organic. I've I've flagged some of the areas of instrumentation we are. We're working with partners with the with the co prep, the biosensor platform, and we've got a very strong team at at Stokesley who from design to to execution, in the instrument space. So we continue in that area. And as you all know, you know, we are a global leader in in in respect of research use portfolio, and we are going through the key, primary and probe master mix combinations that to make sure that our our research use portfolio is fit for purpose, for targeting pathogens in a research context, and we'll be launching that shortly. So I think the best thing to say is that this is an area where we need to execute.

48:13 We need to supplement with the inorganic piece as I've described, and then we need to keep you up to date, on our progress. Thanks very much for that. The next question reads as follows. What update is there on the DHSC, and what impact do you expect Tuesday's announcement to have? James? Yeah. I'll take that one. I think the update really is as I shared earlier, and I know it's a source of great frustration that we can't say more, but there are restrictions and, you know, what we can say as a confidential dispute resolution process which we're engaged with. I see Tuesday as just another step along the process. It doesn't change our our belief that we've got strong grounds to assert our contractual rights, and it doesn't affect us in focusing on our core business using our strong balance sheet and continuing to invest.

49:02 So I understand the frustration. I understand everybody would like to, you know, get into the detail of that, but I think that's all we can share plus a commitment to continue to share with you as and when, you know, appropriate. Okay? Perfect. Thank you very much. The next question is really around cash and asks what the primary use, will be of your cash in the bank, and will it be for organic growth or m and a? And if both, what split do you anticipate? Yeah. So I think I mean, the simple answer is if if we if we take our cash resources, that would be primarily used for inorganic, so third party acquisition and partnerships, etcetera. I mean, the the the growth so far, the organic, the internal resources, we were funding from from the business. So it's been internally funded.

49:55 Been absolutely true in 2021. The commitment in 2022 to maintain double digit EBITDA margins would mean from an operating point of view, an operating cash flow point of view would also be positive. So we would have funded our internal costs. So so that's really how how we look at it at the moment. It's primarily, the cash will be used to, for m and a and partnership type activity. Thank you very much for that, James. Next question asks if you white label any of your tests at present, and will this be a focus of the business post COVID nineteen? And if so, where do you intend to form partnerships? Yeah. So let me take that. So that question in two halves, if that's okay. So one is, there's sort of inbound and and outbound.

50:43 So, yes, we have OEM product inbound. We have a full lateral flow portfolio that covers pathogens, including COVID nineteen, lateral flow offering already under the name of Pathflow. We're not the primary manufacturer for for that. And as I said, we want to accelerate the the molecular portfolio while we turn the machinery of our own r and d. And so we may see some more OEM chemistry if it's a fit for purpose for our workflows to either broaden our portfolio of menu or be front runner to our our organic r and d when we may come with a preferred product or, you know, lower COGS, for example. So there's a a there's there's a a whole whole piece around the in you know, the white label, the the incoming portfolio.

51:37 In terms of outgoing, absolutely, we are willing and are in discussion with large corporates who approach us. There is no, no, you know, news today on on on something signed up, but we're absolutely, willing to participate either through chemistry through instrumentation or both to, to work with partners, to, you know, to, to supply OEM products to them, you know, case by case. But, absolutely, that is an opportunity. We're We're in some discussions. If there's any material news on that, you'll be the first to know. Perfect. Thank you very much for that, James.

52:23 Question asked, how do you anticipate increasing institutional support in the business, and is this important to you? Yeah. So I'll take that. Look. I think the first thing is to is is acknowledge and thank the existing shareholder base. It is predominantly retail shareholder base, and I'm very conscious of there's been a lot of twists and turns along the way, so it certainly hasn't been an easy ride. I think institutional investors, yes, it's desirable. It's something that I think the the the strategy, will attract. And I think part of unveiling the strategy today, giving all future investors more certainty around where we're gonna invest our money, how big a business we think we can grow, you know, our right to succeed in the chosen areas we compete.

53:12 That's part of building the the strategy and the story. And and I I, you know, I I think and I and I hope that will attract, institutional investors and and reward existing shareholders, because, I mean, that's that's clearly a priority. Perfect. Thank you for that. In the presentation, you talked about NOVACYT's global capabilities. Can you give us some specifics? You highlight your capabilities in The US, but can you explain how these have changed in the last twelve months? Is there any update on interactions with the FDA? Thank you. Yeah. So so, yeah, going back in your minds to the global slide I I showed you, Yeah. The US, we continue to do significant business in The US through the distributors. We have boots on the ground.

54:03 You know, one day one day, we may be able to enhance that. That that's in our our minds to to be more substantive in The US. But, I think today, for me, the focus is is, you know, we have CE Mark products. That's the whole of the European economic area that they can be commercialized with limited regulatory hurdle with some exceptions. We need to make sure we optimize that, while we continue to support The US with boots on the ground, our distributor network. We've done the same in Latin America with significant business and Asia Pacific. And so there there with our NGO, WHO successes and a a dedicated team now, which we put onto that, global key accounts and Asia Pacific, to to drive and support the the the those businesses, as well.

54:53 And in terms of The US specifically, there was a question about the FDA. While we do have, you know, emergency use approval for one product, we are pursuing it for lateral flow. And in the future, you know, if we decide to invest more substantively, then, of course, you have to, you know, you have to go into more, you know, appropriate clinical research, five ten k regulatory type filings, and and that's a significant time and money investment. And you'd have to have the strategy to commercialize either, you know, with partners or or directly. And I'm I'm not saying today we're not gonna do that. What we will, but at one step at a time, let's get let's get the business transitioned to non COVID reliance. Let's grow that base, and then then and conduct the m and a and the business development activities, and let's consider our strategic options for, you know, the next move as it were beyond beyond what I've shown you today.

55:53 Thanks very much. Next question reads as follows. Historically, you've mentioned The US and European markets such as Germany, such as that of Germany is high importance. Are these still the key targets, and what splits revenues from ex UK sales? Yeah. So well, yeah, Germany absolutely is a key market, and we have now deployed headcount in Germany, and we're to to to assess how best to to to develop that with partners and and directly. So, yeah, absolutely, Germany is key. There are other key markets across Europe, obviously, that we are starting to address with that dedicated EMEA team who come with years of experience in in in building commercial success across the region from Europe, Middle East, Africa.

56:44 So I think that's that's well underway, but we are judicious with s g and a. You know, we're we're not gonna deploy huge sums of money in headcount and hope they will come. We will build one step at a time as we generate success. In terms of contribution, you know, U UK, last in 2021 was less than half of the business. So I'm I'm I'm glad that we're not over reliant on one market. You'll see that trend continue as we enhance our global revenue. Europe is 34%, and then you go down in the 10% range for Americas and and then APAC, and then there's some other smaller pieces.

57:31 So that mix, I think you'll see UK, as I say, come come proportionally down as we grow the other areas. Europe, we're we're gonna really leverage the CE marking and certificates of free sale from CE marking ex Europe. And then Americas and LatAm, let's continue to support our distributors with with with direct presence managing them on the ground. So you will see that that that mix grow ex UK over time. Thanks very much. And potentially, just time for one final question. Have your biosurveillance activities highlighted anything in the last two years beyond COVID nineteen which might highlight a future outbreak? What split do you think there is there will be, between base and global first responder activities?

58:20 Yeah. So the biosurveillance capability we have is largely deployed to ensure our COVID portfolio is current relevant for all variants of concern. And I'm delighted to say that given that this is the bioinformatics group and the clinical r and d team who get credit for this. Since day one, our our products the, off one a b target and other targets chosen by that, specialist team remain relevant for all, all variants of of concern, including Omicron. So specific biosurveillance point of view, that is a strength of this company. And, you know, we've we've got a great design team. They're also freshening up the the primes and probes for the multi pathogens we can cover in the research use portfolio to make sure they are current and relevant.

59:13 But but my I guess the broader question being asked here is around general surveillance for outbreak. What what we're gonna be doing there is pulling together in a systematic way a method of, you know, scanning through, Internet based algorithms, media, social media, also scanning for third parties who who focus on this. There are large organizations around the world who who do this very work to so that we're on the front foot of hearing of outbreaks and and issues. Whether we respond to them all is more a matter for judgment, and we will instill a COBRA like task force mentality that if something is significant and we really need to to to to move quickly, we'll have, you know, the internal wherewithal to consider those as the company proudly has done with COVID.

1:00:09 I don't pray for another major outbreak, but it certainly will happen. At some point, there'll be other viral disease outbreaks, etcetera, and we will be responsive. So, yes, we're enhancing it, and, and, yes, we continue with the rigorous biosurveillance on our existing portfolio. David, James, thank you very much for addressing those questions for investors. Of course, the company will review all questions submitted today, and we'll publish those responses on the investment company platform. Just but just before redirecting investors, provide you with their feedback, which I know is particularly important to you both, David, could I just ask you for a few closing comments? Yeah. So I just wanted to close out by firstly thanking everybody who's joined this call, for your time, for your investments, for your attention in this call.

1:01:05 I hope we've gone a long way towards giving you some clarity on the future strategy of the company, and some of our ambition. And and we will, work tirelessly to execute, against that plan, and we will seek to update you on material information and news going forward so that you have, you know, the level of information you need. But I'd just just finish up by thanking you again and wishing you a great rest of the the afternoon and and day. Thank you very much. David, James, 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.

1:01:57 This will only take a few moments complete, and I'm sure will 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.