Novacyt Sas (Euronext:ALNOV) — H1 Results

0:01 Good afternoon, and welcome to the NOVACYT H1 results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time by the Q and A tab situated in 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 received 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. And for those benefit and for the benefit of those joining us from France, And I'd now like to hand you over to David Ullman, CEO. Good afternoon to you, sir.

1:26 Good afternoon. Thank you, and good afternoon, everybody, and welcome to the twenty twenty two half year results presentation in which we'll also cover an extensive update on strategy and execution against our strategy. Next slide, please. Please, take the disclaimer, as read. Next slide, please. So as an organization, we are blessed with our capability from our talented team. Our product portfolio, which you'll see in this presentation, is extensive and expanding, and our operational capability from r and d through to scale up manufacturing and international supply, regulatory and beyond.

2:24 From a vision perspective, we want to reinforce our vision which is clear. We are committed to becoming a leading global clinical diagnostics company in infectious diseases. That is our strength and our legacy, and we continue on that path. From a purpose perspective, we are proud, to have protected many lives during a pandemic, and we will continue to protect lives across multiple settings in infectious disease. Next slide, please. I'm joined today, by James McCarthy, CFO, who will walk us through some of the key financials. And I'm not here on this slide. Of course, are the executive team who are bringing bench strength to the leadership of the organization along with the wider talented team and and the the very strong support we have from our board of directors.

3:21 I also wanted to flag to you from a leadership perspective and from a capability perspective. You'll see that we've rightsized the company, and but I want to reassure everybody that we've maintained core capability to execute against future strategy. Next slide, please. I'm gonna pick out one or two things here before I hand to James. I think the most exciting thing for me on this slide is that we have, yesterday, signed a deal, global deal, for accelerating our clinical CE marked infectious disease assay menu with over 40 new assays that are already approved across the therapeutic verticals that we were already pursuing based on our market research.

4:16 This is a huge accelerator to allow us to build into the clinical market setting with non COVID portfolio on our instrument platforms. So in addition to the menu expansion, we we are also enhancing the workflow solutions to be able to take the chemistry and testing to the right place at the right time, largely in decentralized laboratories, spoke laboratories, private laboratories, where near patient testing is is a growth area. The other point I will flag on this slide from my point of view, which I'm also excited about, is that we have really gone back to our our research use portfolio, which is over a thousand products across veterinary food, environment testing, etcetera, which I'll come back to later.

5:09 But we have really done some extensive work on relaunching that exciting portfolio, which we think is world class. So you'll see more about those points as we go through. And with that, I'll just get James to add to my comments on this slide and cover the financials. Thank you, Dave. Good afternoon, everybody. So look, I'll just pull a few points out here. Just to confirm the closure of the Microgen BioProducts and Lab twenty one Healthcare business. This was something we flagged to you back in January that we were doing a strategic review and confirmed in April subject to consultation. That business has now been closed. And I think also at the start of July, in the face of declining COVID sales, we announced that we would do some further adjustments to our cost base. So we announced a program of restructuring.

6:00 That also completed more or less by the end of August. So I think just from an execution point of view, it's good to have those two things completed. And and the third point is on DHSE. Just to reiterate on DHSE, on the June 15, we filed a defense of the claim received from the DHSE on the April 25 and a counterclaim for 81,500,000. The value of the claim and the counterclaim are broadly in line with what we had put in our accounts at the end of twenty twenty. And the company position in relation to the claim remains unchanged. And we we believe we have strong grounds to defend the claim and to solve our contractual rights under the counterclaim. That position hasn't changed.

6:51 I mean, unfortunately, as you may appreciate, the company is unable to provide detail on on the on the case. All the confidentiality clauses in the contract are still in place. It's also as a as a legal case, it's up to you to say, so we are limited in what we can say. I mean, I assure you that as anything material happens, we will keep you up to date. Next slide, please. So there was quite a lot of detail in the release this morning, including the accounts themselves. So I'm just going to spend a few minutes running through a few of the highlights, maybe just to orientate you towards a few things, but there are quite a lot of detail in the accounts themselves. The first thing I might say, as you read the financial statements for the first half of this year, please note that the Microgen Bioproducts Lab twenty one Healthcare business has been reported on a separate line.

7:47 It's a loss from discontinued operations and accordance with IFRS five. So and that's been restated for 'twenty one and 'twenty two. So both sets of numbers you're looking at here excludes those businesses in the main, so they are comparable. And if we start with revenue, revenue of $16,000,000 in the half compared to $52,000,000 in the same period last year. And the decline is mainly a result of COVID sales declining. And the quantum of that really was thirteen million of the sixteen point five million was COVID this year versus forty seven point six million in H1 last year. So you can see there's been a significant falloff in COVID sales in the first half.

8:33 I mean, geographically, the business is still well balanced. I mean, UK accounts for just over 50%, but, you know, 20% next 20% is roughly America's 20%, Europe 20, and the balance then split between APAC, Middle East, and Africa. So still, you know, quite an international business. And beyond Lab twenty one post the close of Lab twenty one health care, primal design is is going to be about 95% of total revenue. So I think the whole strategic rationale of having a more focused business around molecular is really now borne out in the numbers. If we look at gross profit, the gross profit improved from $1,200,000 last year to $4,000,000 this year. Now last year was subject to a lot of significant adjustments in relation to DHSC.

9:23 This year's gross profit also had some adjustments, some additional stock provisioning and write offs in relation to falling COVID-nineteen demand. I think the important point was if we exclude those from this year, the underlying gross margin would be in excess of 60%, and that's a key number for us as we go forward, saying what's the underlying margin gross margin we can generate from this business. And in OpEx cost terms, OpEx cost fell 17% from GBP 13,300,000 last year to GBP 11,100,000 this year. And that was mainly a result of reducing general admin costs. And that's quite important because it meant that we were maintaining investment and, in fact, increasing investment in what I would call the front end of the business, which is R and D and sales and marketing. And in the case of R and D, we increased R and D investment in the first half of this year by $1,400,000 over H1 last year. It's like a 74% increase.

10:27 And sales and marketing was pretty much comparable year on year. So overall, even though we've been addressing cost in the business, we're maintaining investment at the front end of the business. And as a metric just of size, if you like, overall headcount, which includes direct staff, at the end of December, it was about two eighty three at the end of June, around two ten and I think, as we sit here today, close to about 160,000,000 just to give you an indication of how we are kind of resizing the business post COVID. In terms of profitability, we reported an EBITDA loss of GBP 7,100,000 compared to the loss of GBP 12,000,000 last year. And that GBP 5,000,000 improvement effectively is the GBP 2,800,000 of gross profit I just mentioned and the GBP 2,200,000 savings in OpEx.

11:16 And the loss after tax is 5,000,000, improved by 7,000,000 versus last year, and that's effectively the 5,000,000 of EBITDA we saw plus an improvement in other financial income. And that's mainly the revaluation of intercompany balances and other balances based on the weaker sterling, which is flowed through in other financial income expense year on year. Just finally, on discontinued operations, which I mentioned upfront, you'll see a line in discontinued operations, which is moving from GBP 3,700,000 last this year versus GBP 600,000 last last year. I think it's very important to understand that number in context. The bulk of that number is noncash.

12:03 And so there's about of the $3,700,000 roughly $700,000 is what I would call trading. So it's lower revenue and gross profit as that business continued to struggle, which is part of the strategic rationale for closing it down. But there's about $3,000,000 of noncash write offs in relation to the closure, which are things like the impairment of the assets of the building lease we held, stock write offs. There's also a deferred tax change. So a lot of these are noncash items, which make up that significant loss. So moving on to the balance sheet. The cash position at the end of June was just under GBP 100,000,000, which is comparable. We had GBP 101,700,000 in December 2021.

12:49 So the business still has an incredibly strong cash position. You'll see working capital, if we exclude cash, fell by a third from just over $18,000,000 at the year end to just under $12,000,000 at the end of June. That's really based on falling revenues and actions taken in relation to COVID-nineteen stock. The capital expenditure, you'll see a decrease. I mean, H1 last year, we spent around GBP 2,000,000 and H1 this year, 300,000. And I think you should look at the 300,000 as a more normalized number for this business. 2,000,000 in h one last year had still quite a lot of scale up. We were, if you remember, insourcing manufacturing, bringing manufacturing, house and investing behind that, still supporting quite a strong corporate business. But I think, again, thinking of the business going forward, this year's CapEx is a better indication of what we should be spending on CapEx going forward.

13:45 And just finally, to call out a patent for our RF-1AB. That patent covers quite an extensive amount of our business. And what it means over The UK patent box tax regime is that tax on profits associated with this patent can benefit from a tax rate of 10% rather than 19%. And it will not be a cash refund. It will be an offset against future tax liabilities, which is still, of course, valuable for us. We estimate that at the moment to be around £5,000,000 So look, I'll leave it there. I appreciate that's a quick run through. As I said, there's a lot more detail in the accounts themselves. And of course, at the end, we'll we'll happily take questions. Just hand you back to Dave. Thank you.

14:33 So what I'm gonna do now thank you, James. What we're gonna do now is talk to you about our delivery against the strategy that we've previously set out where we are are very very proud of what we've achieved in the last months to prepare ourselves for future growth in a non COVID environment. So this slide is we've we've shown before, but let me just remind you all of of our core strategic imperatives. If you look on the bottom left hand side of this chart, this is an illustration. But prior to the pandemic, we were really a research use only life science molecular company in the 10 to £15,000,000 range of of income. And and and I have to have to remind myself every day of what the company achieved in a pandemic was amazing.

15:26 Really, first to market in Europe and an extensive portfolio to protect lives. And that nominal peak there was driving significant growth in the scale of the company and its revenues and its cash. But, of course, inevitably, the downturn in that, which is perhaps good from a for us from a public health perspective, but less so from a business perspective, is that it declines quite quickly in highly vaccinated settings, and we're seeing testing just decline rapidly. That's not unexpected, but hard to predict. However, there therefore, we turn as we turn to our opportunities for growth beyond the pandemic, we are very fortunate as a company to have a significant portfolio already. And you'll see in this presentation, we are enhancing that portfolio significantly.

16:16 So we have a human in vitro diagnostics portfolio, which is not only COVID, but it's already expanded into respiratory. And you'll see with when I go through the deal with CloneNet, that now expands radically as of signing yesterday. We have a RUO portfolio, which was the strength of the primer design days, which is over a thousand products spanning various areas of veterinary, food, environment, and human research. And we are switching that back on, and I'll come to that separately. And then we are able to run either chemistry on instrument platforms, either the MYGOs for the RUO or the Q series for the, human diagnostics.

17:03 So we can offer workflow solutions in the right place at the right time, in in diagnostics. So that concept of three key areas of portfolio really allow us to now turn to build a sustainable base business, which is growing and predictable. Last thing I'll say on this slide, last two things. One is the that the RUO portfolio is an innovation engine if we choose to advance something into a clinical use. But keep in mind that now requires a long journey because of IVDR. The regulation came in in May of this year. That's more like a two year journey to bring products human use. It's no longer a few months.

17:48 And the last thing then is to say we will continue to be a global first responder. You know, we're proud of that. That's something we we've done very well in the pandemic. We did it before with Ebola, Zika, h one n one, and more recently with with with monkeypox. Next slide, please. So, again, I've shared this slide previously, but I think this sets us up in this presentation to walk through the the key pillars. So the question we are quite rightly always asked is, in 2021, you were more than 80% reliant on COVID, business or income and 20% non COVID. How are you gonna get to the other side to be 90 plus percent non COVID and and residual COVID revenues?

18:39 And can you make it? Because the moat just got wider, but the price on the other side is probably bigger. And I I want to convince you that we are supremely confident we will get to the other side, but it does take some time. There are four key pillars. Portfolio development, which we are making significant steps as I walk you through that in just a moment. Instrumentation is the enabler to the chemistry. And, we're making significant advances in enhancing our instrument workflows to deploy the chemistry and replenish the chemistry in a Nespresso type model. From a geographic expansion perspective, I'll cover that momentarily in terms of our distribution base and our direct, team.

19:27 And we have really, really now accelerated our efforts for business development, which has actually led us to today with the deal with CloneIt. But we're not stopping there as we advance the funnel for transactable m and a opportunities. Next slide, please. So I'm gonna walk through each pillar to show you the progress we've made since we last engaged on on each of these, which I believe is substantial, and it really is now setting the foundation for future non COVID growth. So firstly, portfolio development. We're really excited to have signed a deal with Clonet for global access to a broad approved CE marked menu of assays, which span the therapeutic area of interest that we already have identified in our market research from respiratory, gastrointestinal, insect borne disease, and sexually transmitted infections.

20:27 So immediate access to a broad portfolio. The European opportunity, we estimate the market size for that portfolio is in the order of £470,000,000 with a with a healthy CAGR of 10% approximately. So a really significant opportunity to deploy near patient solutions with our workflows and chemistry in that setting. We relaunched the IUO portfolio. But just so you're you you understand what that took, that wasn't a situation of just launching it. It was a case of making sure that the very extensive portfolio was fit for purpose and ready to go back to a focus in the market. We've prioritized over 250 assays, checked that they're ready to go, and have them on the shelf for within a week turnaround, and we've we we maintain the the other broad portfolio for customers to order on a slightly longer lead time of six to eight weeks. And that will be an it it it would evolve as as we we learn the demand.

21:32 We've had some early wins since going out with that portfolio again, already seeing uptake in Canadian salmon farms, which is big business for for for maintaining ensuring the salmon stock is is in good health, especially in spawning season, and also in Poland with salmonella testing in chicken farms. We expect to see these to grow. We we may see repeat models of this in other countries. To give you a flavor, that's already seeing some early early wins. And then we have advanced our own organic r and d, which is not today the center of our presentation because it is absolutely ongoing in the background, it will take a little time to come through under IVDR to drop in to the clinical efforts we're making with the cloning portfolio. So, really, this is clearly, offers us near term growth and and momentum to drop our future developments into.

22:28 On the instrumentation side, pillar number two, we have now sourced an extraction system to put into the workflow, which which would be needed for genesig assays or cloned assays if customers don't already have extraction. We're enhancing and expanding the co prep flexibility for automation in the workflow beyond ProMate, where it started, into GeneSig, dry and clonate assays. And then we've launched the lateral flow portfolio. 18 of 21 of those assays are non COVID, and actually, I'm delighted to say they span the same therapeutic verticals as our molecular portfolio that I outlined above.

23:13 So really, this is a decentralized workflow to deploy and enable the use of our assays in the right place at the right time. Next slide, please. In terms of geographic expansion, another really extensive piece of work we've done is to review that globally. We've deployed our own talent selectively in in in in in countries in Europe. We were already in The US. In in Latin America, we have initial boots, but really to manage distribution, which, you know, which we've enhanced significantly now, making sure that in each jurisdiction, we have the right partner for RUO and the right partner for clinical, and in some cases, the same partner. And then we will manage tightly the the relationship relationship with those partners to ensure they are well trained and motivated to deliver successful channels to market across the globe.

24:13 You wouldn't I wouldn't have expected originally until I reviewed this, given the the rush of the pandemic, which was more reactionary to the business. We actually had 18 markets in the EMEA where we didn't have good distribution coverage. We've now entirely plugged that gap. We've been also optimizing our network in The US, Asia Pacific and Latin America as we speak. I've just come back from Portugal, where we've just had the first round of training of our EMEA distributors on our diverse portfolio, getting ready to to go to market with with as we relaunch RUO and our clinical portfolio. Very they were very excited to see what NOVACYT can offer.

25:01 From a business development point of view, not a day goes by now where James and I and some of the other senior members of the team are focused on business development across the the three key areas of innovation, acceleration, and strategic transaction. And I I hope you join me in seeing that we've delivered on that already with the Clonak deal. We've we're investigating additional panels to drop in, which are already approved to see if if we can even expand further into GI. And we we've found now a number of strategically aligned executable opportunities for m and a coming through the funnel. I can't be more specific, rest assured, we we will not rest until we find best use of of our capital for shareholder value and future growth. Next slide.

25:52 When one comes through a pandemic and the the the attention responsiveness to a pandemic takes, you turn around to the warehouse and think, what do I do? And here, we are very excited as a company because we don't have to to to build not from from nothing, from scratch, to to redeploy our teams and to drive for future growth. We have the ProMate direct PCR platform, which we're expanding in in organic r and d, the GeneSig platform for clinical and RUO applications, our lateral flow platform, most of which is non COVID, our Snipsig assays for delineation of variants of concern, and a very extensive portfolio of instrumentation to deploy our testing in the right place at the right time.

26:46 So we are immediately now deploying this. In fact, I've just come from a a sales team with a just down the road briefing again on how to deploy these offerings to the right customers across our regions. And I'll be going back there this afternoon to keep up the momentum driving for growth. Next slide. The research use portfolio I've sort of covered earlier, but it you know, you many of you would be familiar. It spans veterinary, food environment, and human research. Importantly, our MYGO range is a is a partner to this because the assets can be run on the open systems of sixteen and thirty two well thermo cyclers.

27:32 Again, in in the chicken farm example I gave you, they they would be deploying the instruments and the assays for salmonella. And in the salmon testing example I gave you, they'd be looking for viruses in salmon, again, using q 32 or of migo 32 well systems so they can do the work on the farms in in the immediate vicinity. Those are early wins. This is an extensive portfolio, and we see growth opportunity now as we take this forward. Next slide. We were already on this track depicted on this slide, focused on COVID nineteen initially because we we dropped everything to focus on such a dramatic situation.

28:18 We'd already expanded into respiratory with our winter panel with influenza a b and RSV in addition to COVID, and the gene sig version is on the market. We still still await CDTA approval, which we're chasing every day. But now with the Clonix deal, rather than waiting two years under IVDR with our organic efforts, which continue, we are now able to already move into respiratory respiratory non COVID assays, gastrointestinal infections, sexually transmitted infections, insect borne viruses, and insect borne protozoa not listed here. So we really have hugely accelerated our opportunity to enter these clinical markets. Next slide.

29:05 From an instrumentation perspective, we see this as the enabler. And you'll see here, if you look on the left, next to sample collection is an example of a extraction instrument, which we will bring into the workflow because the gene sig and the clonic chemistry would require it. Some customers have this already in different forms, but we would be able to offer it, where needed. The co prep was a pro mate enabled system for automation, allowing that convenience, walk away time, reduced contamination risk, and human error risk. But we're now bringing on the GeneSig, our dry formulations, which we've just announced recently, and also the Clonet chemistry into the capability of the liquid handler.

29:54 And then as you, I'm sure, know, we can attach or daisy chain, if you like, multiple q 30 twos or sixteens to one liquid handler, up to eight, in fact, which could take you to well over a thousand tests a day if you were seeking to scale up with a semi automated workflow. And from a deployment perspective, this workflow, either a part of it, if it's a q 16, you could in a carry case or a battery could go out in the field, but from a Versalab perspective, as we did in the pandemic, can be deployed, you know, into areas of need. We we did that in the pandemic at airports and the Port Of Dover and in in employee settings, etcetera. So we have that ultimate flexibility.

30:41 Next slide. From a cloned deal perspective, it it comes in three phases as we see it. Number one is now, and that means we have access to over 40 approved assays across those areas I've outlined, including a very extensive transplantation portfolio that complements the work we were already doing. Number two, we start to validate those in a prioritized way onto our queue instruments. We've already completed a number of STI validations, which led us to the signing of the deal because we became confident. And we we will now move to the respiratory GI in the next couple of months to get those validated onto our platforms.

31:31 And then we'll bring in the entire workflow to make sure that we can deploy the whole automation and scalable workflow, and that's only into next year we'll be ready for that. Why are by insect borne? It's just because we need to define a clear international regulatory strategy, because most of those diseases occur ex Europe. And we want to make sure that we're prioritizing the right countries for regulatory access alongside the validation work, which requires our R and D team to work. Next slide. I said to you in the illustration earlier that we want to build a solid, sustainable growth based business with our extensive portfolio not beyond COVID, and we will do that.

32:21 But we then can remain responsive to outbreaks. We've done that recently with monkeypox and adenovirus f forty one, one of the suspect virus suspected viruses in juvenile hepatitis cases. And we can turn those assays in three weeks, and we we are proud of our ability to respond fast when when we are needed. Next slide. In terms of business development, I touched on this earlier, but let me give you a little bit more color of what we've delivered against these three subheadings that we shared with you earlier in the year. Number one on innovation, which is earlier technology where we're seeking to develop disruptive technology, we're advancing our efforts on the co development of a point of care biosensor platform.

33:13 That's early, but it's it's, you know, it's advancing towards stage gates. From an acceleration perspective in the middle bucket, that's where we've had the biggest traction, which leads us to today's presentation with a huge expansion in the in the approved menu to run onto our systems. We've also added a digital reader into the lateral flow portfolio. We've expanded, as I've described, you know, our capability. We're expanding the capability on the liquid handler and bringing extraction in. And I and rest assured, on the third pillar here of strategy, we really have now increased the funnel for strategically aligned transactable deals.

33:59 I can't can't give more detail, but but we will be coming back to you once we have something that is is, you know, is is announceable. But we are working tirelessly to deploy capital towards strategic transactions to accelerate growth and deliver shareholder value. Next slide. So in in by way of summary, I I won't repeat too much here what I've said, but I just will say, let's are I want to reiterate on the revenue side, we see q three twenty two is circa 2,000,000, similar levels in q four, and an expected full year loss of 13,500,000. But I think the key takeaway for me, as we prepare ourselves to for future growth is that we really think we're now well positioned with our core capabilities, maintained despite downsizing to drive towards our vision to be a leading global clinical diagnostics company.

35:01 I hope you've seen today that on every pillar that we set out to make it to the other side as we transition to become a non COVID growth company, we've we've hit a lot of positive results, and we will continue to execute on that plan. And with that, I'll stop, and we perhaps could go into some questions. Thank Thank you. David, James, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just using the q and a tab situated in the top right hand corner of your screen. David, James, we've received a number of questions, both presubmitted and live from investors. And I want to start off the q and a session with this one here, which reads as follows.

35:49 Why have you chosen to focus on the specific areas outlined in your strategy for development of your portfolio? Okay. Yeah. So when about six months ago, we completed some significant market studies, market research studies, which centered mostly on on Germany, UK, Nordics as as as examples of key markets, where, really, we were we were researching the question of which are the most attractive markets we we should consider in the future in terms of addressable market, unmet need, competition, and reimbursement potential. And then alongside that, in parallel, we were considering which is the best strategic fit for the company given our workflow so that in terms of could we leverage NOVACYT's capability, and could we offer differentiated propositions in a decentralized setting for our customers?

36:51 And from that, we picked the key areas, which are respiratory, gastrointestinal, insect borne, STI is a growth area in that near patient setting, and the transplantation assays, which we were already embarking on, we've now expanded that. So I I'm very confident that we've done the diligence from a market perspective on which which are the most relevant areas of focus. But what I'm most excited about is I now don't have to wait two years for our own organic r and d, which will be highly contributory. I can get going now with the team in deploying our workflows and chemistry into what we believe is in the order of £470,000,000 market opportunity, which is growing significantly.

37:44 And Europe only. We will reach beyond Europe with our capability. So there's a really complementary business development deal here, and it's fully aligned. And I said to you earlier, the the lateral flow portfolio is also aligned to those therapeutic verticals as a screening tool ahead of reflex to confirmation. So I think, hopefully, that gives you some some some reassurance that we're on onto the right therapeutic areas. That's great. Thank you for that. How does the reduced cost base leave you placed to execute your strategy? Yes. So I shall take that one. I don't think it affects our strategy as we lay it out at the moment. I think I mentioned in the results, particularly in relation to r and d, we actually increased our r and d spend in the first half of this year. Over last year, we increased r and d spend significantly.

38:40 So I think we're working hard to protect the investment, as I recall, and repeat the front end of the business, which is r and d and sales and marketing, commercial end. And I think if you look at our full year costs, I think it's around like $10,000,000 which is about half our cost base. It's only half our cost base this year will be spent across R and D and commercial. So these are considerable sums. We're still investing in the front end of the business, and we believe that is sufficient to support the strategy as we've laid it out at the moment. James, thank you very much for that. The next question here reads as follows. Can ITIS machines purchased by customers for COVID nineteen testing also support testing for other diseases?

39:29 Yeah. I'll I'll take that one. It's Dave. Yeah. So so the answer is yes. But, actually, let me go a bit further than than that. So if you think of the ITS machines, which are, we believe, best in their category. We have the MYGO range, are open instruments 16 well and 32 well thermocyclers. They can be used extensively across the RUO portfolio that I shared with you across those broad areas. And indeed, they are sold together with chemistry for that purpose. Then think about clinical use, the q 30 twos, q sixteens, the the the answer is yes. We we can use, you know, our new assays, such as the respiratory assay, and all of the cloning assays of relevance will be validated onto the q 32, q 16 as appropriate. And what we'll be doing is updating the IFUs with working with Cloning who who would update their IFUs we do the validations, which doesn't push us into IVDR.

40:41 These these are seen as minor changes. So it really gives us an acceleration of the versatility of our instrument platforms across a very broad menu. So that's a good question, but that's actually why we're excited about both the offerings we have, bringing them together. That's great. Thank you very much for that. The next question is really around institutional investment and if and ask if you're looking to attract any institutional investment. So I'll let James take that. Yes. Look, in short answer, yes, of course. We'd love to have more institutional investors on board. I think if we look just briefly at the history of the company, I think during the COVID period, I think it's difficult for institutional investors to get involved because of the uncertainty of COVID revenue, and I think that's proven to be the case. So I think part of explaining the strategy, part of setting out a clear strategy is to demonstrate to all investors that, look, there is a road map.

41:39 It's a road map that can be valued, that can be measured. And and, look, and ultimately, we have to produce track record against that strategy to attract and and all investors, institutional investors in particular. So look. In the short answer, yes. But I think we have to we have to put more runs on the board, have more track record before realistically, I expect institutional investors to come on board. Perfect. Thank you very much. The next question, we've had this question from a few investors. I can see there's one from Stuart and Sam here. And just grouping those together, what is the latest update in regards to the dispute with the DHSC? Yeah. So, Garth, I I shall take that one. Look. In my statement that we're on, I mean, I just outlined where we were on the process.

42:27 We've filed our defense of their claim and our counterclaim for $8,081,500,000 for unpaid invoices plus interest. I mean, I would repeat the the the company position. We believe we have strong grounds to defend the contractual rights and to enforce our contractual rights under the counterclaim. It it's still a legal case. The confidentially confidentiality clauses in the contract remain in place. So we are very limited on what we can say about this in public. So and I think that's very frustrating for people. I think people would like to hear a lot more about the case, would like to hear about more about the exchanges. But, unfortunately, that's not going to be the case as as we go through this dispute.

43:16 All I can assure you is that as something relevant for the investors, course, we will always share it with you as we have done. And, yes, it's taking time, and it's a slow process, and that frustrates everybody. It certainly frustrates management, but I think it's a process we we have to see through now. And, again, that's maybe unsatisfactory to a lot of people because we're not getting into the detail. But I think in this instance, that's as good as it's going to get, I'm afraid. Thanks very much for that, James. The next question here asks, can you comment on the CTDA approvals? Yeah. Absolutely. I'll I'll take that one. So, you know, the the CTDA was in motion last late last year set up to to to approve these tests as you as you all know.

44:11 And it's been a headwind for us to get through those process, but we're very pleased that we've made significant progress to get five of our products now approved on by the CDTA, which is the most, we believe, really UK based company. In recent times, you know, we've had the approval of the pro mate assays for the one gene assays for q 16 and q 32 instruments and also a a two gene pro mate assay approved on the q 30 twos. And then post period in July, we also got a UK approval for Exig direct assay, which was great to have that validation of that assay based on the clinical evidence.

45:04 And we are continuing now to see through, hopefully, the final approvals, particularly winter panel. I'm raising that every other day to get that, you know, approval through because the winter is coming, and flu could be an issue as we've seen in the news. There is also a three gene gene assay under review, And then we have the final two would be the lateral flow. So we have more to do. I appreciate when governments put in new processes that they need to take time to bed in. It has been challenging. I think we've done the best possible job we could do as a company to deal with the regulatory requirements.

45:54 Thank you very much for that. The next question here is really around expansion and asked, how is NOVACYT attempting to grow the business internationally, including in The US? Yeah. Okay. So what we've done, you know, internationally is that number one, we were a UK operationally UK based company, and that's the home market. But James has shown you that's not that's that's half of our business. We were already expanding into Europe. Have more direct presence in Europe covering Germany, covering Southern Europe, but we also have coverage now directly just with throughout to manage our distributors for The Middle East.

46:39 And And we will be very judicious in deploying our teams on the ground, but but we are certainly enhancing the distribution network with those individuals initially. As I described to you earlier, we've we've had a a huge amount of work to get the right partners and make sure we're working closely with them in all the key markets. But I I will you know, in the future, if we see an opportunity in a particular market where we we need to go more direct and the business case is clear, that that is certainly something we'll look at on a case by case basis. Outside of Europe, when that I I mentioned Europe because that's our primary focus because that's where CE marks apply across the European economic area. The other areas we have deployed in Latin America to someone to manage in local time, local language, our distribution.

47:33 We have deployed previously, as you're all well aware, in North America, managing and optimizing our distribution. And we have revitalized our partnership with our our agent in Asia Pacific, who manages distribution in the APAC region. And then from a central perspective, through our international team, we still liaise on a regular basis with the WHO, UNICEF, and the NGOs where we had a huge demand and success during the pandemic. So what what to expect there is is to build success, build growth, and then one step at a time, you know, where where should we invest directly next, and can we get, you know, the best out of our partners. I think we're making great progress to be with international reach given our scale.

48:29 Thank you very much. That's great. Next question here. Are the new LFTs CE marked, and have we developed them by ourselves? Yeah. So, yes, the LFTs are CE marked, so they're all professional use. One one of them is actually a a self self test, saliva based antigen test for COVID nineteen and therefore can can be used by individuals. The rest of them are professional use. They're all CE marked. We didn't manufacture them direct ourselves. We we are not a lateral flow originator, if you like. So they're OEM from from another party. They're they're our brand on the path flow.

49:18 And as I said, you know, in the presentation, what I'm excited about, if you have an offering, it's complementary to the molecular portfolio because it it conveniently spans the same therapeutic verticals for where we're focused on the molecular side. And you do see in health care, in certain settings, screening and then reflex to PCR confirmation. We can offer lateral flow across a range of sexually transmitted infections, gastrointestinal infections such as norovirus, respiratory infections, and insect borne infections. So, So, yeah, that that portfolio really, as I said earlier on, is very nice to have that complementary to our molecular portfolios.

50:07 Thank you very much. The next question here reads as follows. How do you intend to use co prep post COVID? Yeah. So I sort of sort of covered that earlier, but let me just just just go over the couple of key points here. So co prep was was launched earlier in the year. It's been deployed already in settings largely for film and media testing, where it allows an efficiency around the staffing and laboratory staff and and the, you you know, know, the the sample stewardship, reduced contamination risk, and walk away time. But because we now have an expanded menu, you know, beyond ProMate with dry formulations, we also have GeneSig platform, and we have a very diverse cloning chemistry platform.

50:54 We'll open up the co prep functionality in the workflow to all of that chemistry to give it flexibility so that the the semi automation with multiple Q series could offer what whatever the the spoke laboratory or private laboratory needs from, you know, 40 or 50 samples a day up to a thousand. So the co prep is is an enabler within that flow, and I think offers significant value for efficiency in certain customer settings. So we continue to be excited about it. That's great. And perhaps one final question. I know we're coming up to the hour.

51:40 What tests and instruments are we working on? Yeah. So if I if I go back a little bit from the prior prior presentations we gave, let me just go back to those. So number one, we are working on our own r and d on using on ProMate platform initially on GI panels, so viral and bacterial panels, which is a very significant opportunity. As you could imagine, the sample type is complex, so that requires quite a bit of work on the master mix to being able to do that in a direct PCR. But that's advancing nicely now through R and D.

52:27 We also, completed work on some transplant assays we were working on, but that's now hugely complemented by the Clonate deal, which has one of the most extensive transplant portfolios around. So that's been accelerated. Working on respiratory panels, which are non COVID. That's not just influenza or a influenza and RSV. That's into other respiratory panels, such as parainfluenza, adenovirus, rhinovirus, etcetera. And the insect borne viral panel, Zika, dengue, yellow fever, and chikungunya virus, which is we we may have seen you you if you look up the arborvirus initiative under the WHO, you know, you can imagine under climate change, insect borne diseases becoming highly problematic with dengue outbreaks expanding now from what was 10 countries into over a 100.

53:21 And this will only get more challenging as mosquitoes, etcetera, migrate their habitats. So all of that continues, and I said it wasn't the centerpiece of today's presentation really because we're so excited about the the acceleration on the clonest side, but we will be updating you in due course as those come through our pipeline. And you could imagine with a commercial background like myself, being able to get started in a much more, you know, clinical play alongside our RUO relaunch with a with a over the next couple of years gives us real near term opportunity and momentum to drop our own r and d products into that into that team as they come through. That's great. David, James, thank you very much for that. I think you've addressed those questions you can from investors. And, of course, the company will review all questions submitted today and will publish those responses on the Investor Meet company platform.

54:20 But just before redirecting investors to provide you with their feedback, which is particularly important to you both, David, could I just ask you for a few closing comments? Yeah. My my closing comments, thank you, would be, firstly and foremost, to everybody for taking the time today to come and listen to our interim results and our our strategic update. I hope you join me in in seeing the amount of work we're putting in to right size the company, clarify the strategy, and execute. And we will continue to execute tirelessly, and we we will will continue to seek to deploy the capital for future growth and shareholder value and and be keeping you up to date as things progress. But thank you, and wishing you a wonderful rest of the day.

55:20 David, James, thank you very much 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. This will be, this will only take a few minutes to complete, but I'm sure 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.