Novacyt Sas (Euronext:ALNOV) — Interim Results

0:01 Good afternoon, and welcome to the NOVACYT Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right 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 in the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And for the benefit of those joining us from France,

1:16 I'd now like to hand you over to James McCarthy. Good afternoon. Thank you, Alexandra. Good afternoon, everybody. Welcome to the NOVACYT half year results. I should just start by the showing the disclaimer, and I'll just take that as read by everybody before we proceed. Okay. So my name is James McCarthy. I'm the acting CEO of NOVACYT. It happened since November last year. Prior to that, I had an almost two years as the CEO of the group. Delighted to be joined by, Steve Gibson, who's the finance director, and Lynn Reese, who's recently joined us from the Eugene acquisition. So perhaps if I ask those two gentlemen to introduce themselves before we proceed.

2:04 Perfect. And good afternoon, everyone. Steve Gibson, group finance director. I've been with NOVACYT for around six and a half years. And prior to that, I spent around twelve years at a blue chip IT company working a variety of different commercial finance roles. Luke?

2:18 Thank you, Steven. Good afternoon, everyone. Real pleasure to be able to, present to you today. My name is Lynn. I'm the, ex CEO of YourGene Health, and I've been in this diagnostic market space for about twenty seven years now. So real pleasure to be with you today. Thank you, guys. So running all of today, I will I'll take you through some of the kind of key highlights of the business performance for the first six months of the year. Steve will dive into the numbers in a little bit more detail.

2:48 We've added a section in for Lynn to really explain and talk about the Eugene business. I mean, some people might know it, but, I mean, we're assuming there's a lot of investors and all of sudden that may not know the business very well. So we thought it'd be a great idea to share some insights into the into the business we've just acquired. I come back and talk about how we're thinking about integrating the businesses, our thoughts on that. Obviously, very early days, but just not even three weeks into this. And in the end, just do a do a wrap up for everybody. Okay?

3:24 So just a, you know, a quick run through our strategic pillars, just to update everybody against how we've been falling in strategic pillars in the first six months of the year. I mean, if I start with instrumentation, I mean, the instrumentation business has has struggled a bit for sales over the last eighteen months to two years. We've definitely seen a market that was fairly saturated post COVID. We're be we're beginning to see that change. So we're beginning to see the market opening up again. We were delighted with the progress we made in q two. Mean, instrumentation sales will continue to be lumpy. They they tend to come in in in kind of infrequent but loud orders. But I think we've we're getting some decent momentum there. The second thing really to call out is the whole product development.

4:10 We had a very intense six months in product development and and deliberately so. We've been really working hard to build the non COVID portfolio, and we've nine new non COVID products which we've developed in the first half of the year. And look, this is really important to us as as we go forward. We still have a lot of work to do to commercialize those products. We've mentioned in our trading update in July that we're we're looking at going down a UK CA route instead of the full IVDR for some of those products because it's it's the quickest route to commercialization, and that's a real approach for us. We're actually taking our Winterplex product, which is the IVD mount through the IVDR process.

4:57 That will be a clinical trial, which should complete largely towards the back end of this year, and then we'll submit that for submission. But that won't impede, you know, the sale of the product in any way the product would be available on the market. In terms of commercialization, you know, the the focus has been on the RUO business as well as instrumentation and really trying to rebuild our RUO business. I mean, you know, neglected during COVID, neglected by the market and it's up and neglected a little bit by us as we focus on other things. And I think we're busy trying to reengage with customers, build customer solutions in specific verticals. We've talked to you before about global fisheries in North America. You know, we're really pleased.

5:43 We've we've brought some of that progress closer to home. We're working with oyster farms in The UK. So we really feel we can offer solutions and actually build sustainable repeatable revenues in some of those spaces. Similarly, we're having success in Latin America, again, looking at solving problems for livestock testing, you know, across groups of farmers and and, again, trying to build those repeatable and sustainable revenues. And and maybe finally, in commercialization, just to remind everybody of, you know, our NGO business, you know, we still have good connections to NGO and and really had a really successful first half in terms of in particular. So it continues to be an important business for us. I think, look, we're very proud of the products we developed for that market.

6:30 And maybe finally on the strategic pillars of on the business development, you know, we've we've talked to to you over the last year of eighteen months of, you know, putting our balance sheet to work, looking for acquisitions, and clearly, UOG is a big step in that process. You know, it's it's a fantastic opportunity, I think, to put these two businesses together, and I'll come back and talk with more about the integration. But I think it's it's a it's a very big step in the journey, but, you know, we will continue to look for, you know, acquisitions that make sense as we go forward. I'll also come back to that later on. So maybe for now, if I just hand over to Steve to talk you through the numbers in more detail, and I'll come back to some of the UOG and integration questions later on. Steve? Thank you, James. Good afternoon, everyone. It's great to be here with you today to chat through the NOVACYT interim financial results.

7:25 This sort of obviously covers the period January through to June 2023. So it doesn't include the financial performance of Eugene Health. But instead, Lynn will touch upon the sales of that group in his presentation shortly. If we kick off from a revenue perspective, the h one revenue totaled 3,300,000 compared with £16,500,000 for the prior period. Now this decline was driven by a reduction in COVID-nineteen sales as the pandemic has eased. If we look at revenue from a product mix perspective, our non COVID portfolio has delivered over 80% of our revenue in H1, and it's also grown now for the third quarter in a row since Q4 twenty twenty two by around 10%. If we look at revenue from a geographic perspective, we remain well balanced in an internationally diverse business.

8:15 And if you look at our H1 sales, our top four regions all generated around 700 to $800,000 of revenue. And those four regions were The UK, Europe, Americas and the Asia Pacific region. Finally, on revenue. From a business unit perspective, Primer Design continues to be the main revenue generating business and that delivered in excess of 80% of group revenue. If we turn to gross margin, the gross margin has doubled since the prior period from 24% up to 50%. However, it is still impacted by further stock write offs as a result of lower than anticipated COVID-nineteen sales. If we move on to OpEx costs, we continue on this journey of rightsizing the cost base of our business, and we're making really good progress.

9:04 So from the prior period, we've reduced our OpEx costs by around 35% or 4,100,000, taking our h one OpEx cost down to around 7,000,000. Now the main driver for that was our group wide restructuring program where we reduced headcount from around two ten people in June 2022 down to around 120 staff at the end of June twenty twenty three. Our pre acquisition headcount was around 120 staff. We do, though, continue to invest heavily in R and D, and we spent over £1,200,000 within that function to support bringing new products to the market. From a profitability perspective, the group produced its EBITDA loss to around £5,400,000 down from £7,100,000 in the prior period.

9:54 Now this reduction was driven by £4,100,000 reduced OpEx costs as we reduced the cost base of our business, offset by a £2,300,000 reduction in the gross profit contribution of the business due to lower sales. Now in addition to the EBITDA loss, the group also incurred exceptional costs totaling around £1,900,000 That was made up of three key buckets. The largest one was £800,000 of acquisition related costs in relation to the YourGene deal. Now this is the cost that's been incurred until the end of June. It's not the full advisory costs of the deal.

10:31 The second big chunk was around GBP600 million of costs in relation to the ongoing DHSC commercial dispute. And then the final bucket was around GBP0.5 million of restructuring expenses that predominantly covered redundancy payments. So all of that culminated in the group reporting a loss after tax attributable to the owners of the business of £8,300,000 which is slightly ahead of the prior year results. If we turn to the balance sheet, there's no real material changes since the end of the year other than a reduction in cash, and cash has reduced broadly in line with our EBITDA performance. So what it meant is that we closed June 2023 with a cash balance of around £81,700,000 that allowed us to fund the Georgine acquisition from our cash reserves.

11:20 Importantly, we remain debt free as a business too. Now that was a quick run through of the financial results of NOVACYT, have now been published on our website if you would like to look at them for further details. And I'll now hand over to Lynn who will walk you through the Allogene business. Thank you very much, Steve. We can go to the next slide, please, and the next one, please. So really, really excited to be here today. You know, James just mentioned that this is a fantastic opportunity. I absolutely believe that as well. So really excited in in sharing a little bit more about Georgine, who we are, what we do, and what you can expect from us as as shareholders moving forward. So YourGene is an integrated technologies and services for genomic medicine. What does that mean? It means we develop, we manufacture, and we take to market molecular diagnostic tests, and screening solutions predominantly in the reproductive health care and oncology market segment. So moms and dads looking to have new babies and and anyone that's, you know, with with a cancer diagnosis, those are the two markets that we fundamentally address, two of the fastest growing markets in the molecular space at the moment.

12:30 I believe we have a complementary portfolio of in vitro diagnostic products, which includes our flagship NIPT noninvasive prenatal screening, which checks babies around Down syndrome and other genetic disorders. When the baby is born then, we check for cystic fibrosis. We're either market leader or second in the main markets that we serve. We offer a follow-up product, invasive rapid aneuploidy test. So if you do have a high risk result, that is the confirmatory test. And in recent years, I'll talk a bit about this later on, we've entered into oncology and other market adjacencies to sweat the assets and the technology that we have within the Orgyne Group. We were first established in 2013.

13:16 We are headquartered in Manchester, UK, with offices and facilities in Singapore, in Florida, and in Vancouver. Our revenues in '22 were, just shot, higher than 37,000,000, but that did include some COVID. And as Steve said, I'll give you a bit more flavor on where we are currently. I'm a bit later on in the deck. We employ about a 150 people, and we take over a 100 products and services to a global marketplace. And when I say global marketplace, that is about 65 countries where we're either selling direct or indirect through a distribution network. So that's a bit of a snapshot from Georgie. If we click the slide and and look at the sort of timeline, the organization was set up in 2014, so very much at the forefront of next generation sequencing. That was when the first platform started to appear in the market.

14:07 So really early adopters of this, you know, unbelievable technology in terms of advancing, you know, kind of medical diagnosis. In 2016, we acquired a business in Taiwan called Your Gene Biosciences that we actually turned into the full name of the organization in in 2018. Primatha was pretty much just around, you know, the reproductive health care market. We wanted a wider appeal as an organization. So Your Genes and Your Genes to to manage your health is where we sort of come up with the name there. At the back of that sort of rebranding, we started to go on a on m and a journey. So we acquired a company called ElluciGen Diagnostics in 2019. They brought to the table a cystic fibrosis testing. So up until that point, we were pure play.

14:57 As an organization, we only had really had an NIPT test. And as the market develops and becomes more mature, it's very commonplace that the customers wanna buy more than one product off you. You know, the the cost of running a relationship with a single product supplier is quite high when you consider all the regulatory hurdles and just the management of looking after that relationship. So the more products you can provide to the customer base, I think the the better off you'll do in in the long run. And Aleutrogen brought cystic fibrosis to go alongside NIPT test. It also brought the confirmatory test to the NIPT test. So we sell the diagnostic and if you get a high risk result, we sell a confirmatory test. So we're always looking to broaden the range of products and services that we took to market.

15:46 Also very important from the Aleutrogen team and their brilliant R and D capabilities was launching our first TPUID assay, which is our first sort of move into the oncology space. And anyone that's unfortunately been touched by cancer, either themselves or through loved ones, will realize the earlier diagnosis you get, the better chance of positive outcome. This test really does support that journey, I'll explain a little bit about that later on. In 2020, we were continuing to acquire. We bought Coastal Genomics, X5 Genomics and Eugenics, so mixtures of technologies, customers and markets, which allowed us to really to springboard in 2021 into The U. S, where we put a lot more capability. We'd license some of that technology we bought in 2020, specifically around the range of technology.

16:37 And and I guess over that period of eight years, your gene grew from sort of one product, a couple of people, no revenue to £37,600,000 worth of revenue and over a 100 products. And even the core growth, you know, taking away that COVID was about fifteen million. So fast growing organization with a lot of ambition to put more products and services into the market. Next slide, please. To bring that a little bit more to light and look at the split of the organization, on the right hand side of your screen, you'll see a circle. The green part of that circle is our services. This is where we receive samples into our own lab. So we have a lab in Manchester.

17:22 Until recently, we had a lab in Taiwan where we would routinely receive samples and give results to to patients. Now predominantly around our reproductive health care options, you know, we're using our own products in our own labs to give our customers results, but we've we've broadened that offering into pharmacogenomics, clinical oncology, and we also do a lot of research work now in whole genome sequencing and whole exome sequencing. Again, really at the cutting edge of molecular technology and and giving almost personalized diagnosis to to to patients. The services side of our business, you know, is about 10% to 20% of our revenue in any given year. So whilst not the biggest revenue part of our business, but it creates an amazing structure to be able to trial new technologies, to look at our own products and validate them and verify them, you know, to be able to work on clinical trials, to build up big sample banks that allow us to bring new content and continually looking at product improvements within our portfolio. So it's a very important part of our business.

18:33 And everything that sort of comes from that right hand side ends up being products that we take to market. So genomic technologies are where we send our customers a test and they run the test in their own labs, and that's normally about 80% of the revenue the business. You'll see similar product categories within the reproductive healthcare, NIPT, precision medicine and Ranger. So everything you see on the right pretty much gets replicated on the left and taken out into the customer base. To bring some of those products a bit more to life, you know, if I look at our in vitro diagnostics product, you know, the little box you'll see in the top left hand corner of your screen is a DPUID assay. DPYD is given to patients who are usually stage three or four of cancer treatment.

19:22 So serious diagnosis, they're about to receive something called five f u, which is the most widely prescribed chemotherapy agent used globally. There's a couple of million scripts written for this each year throughout the world. Unfortunately, up until us launching this DPUID product, about one percent of patients that would take that drug

19:43 would die because they lack a gene which stops that drug from attacking every organ in their body. So normally a patient would receive this five FU within twenty four hours. If they lack this gene, they'd have serious sepsis. And and as I said, one percent of that patient population would die. We launched this DPYT product a couple of years ago. And from a very low base, it's now mandated in Wales, in England, in Scotland, in France, in Italy, in Belgium. We've just taken the product out, into The US. We've got some initial sales. I think we're in two of the the five main hospitals in Canada. And I'm proud to say that it's a product that saves, you know, one in every one hundred patients' lives. And for the other ninety nine, gives them comfort that the the difficult treatment that they're gonna have is gonna be, you know, risk free.

20:33 The little box underneath is our range of technology. That's a light bench box. A blue and white box is is really becoming quite a pivotal bit of technology in our portfolio. If you can imagine, you know, having a a mom to be in in in a in a health care setting kind of about eight or nine weeks, and she wants to give a a sample of blood to understand if there's any genetic risk to the, you know, to the fetus that she's carrying around with her. So we've gotta get rid of mom's blood. We've gotta get rid of all the interfering substances and find a tiny, tiny little bit of cell free DNA that has come from the fetus that's traveled down through the you know, into mom's bloodstream. This range of technology, basically, in layman's terms, allows you to clean up that sample really, really quickly.

21:20 And it allows you to do it with automated machinery so you can feed the sample in, and then a bit of time later, you you you get yourself free DNA out, which is the stuff that you sequence to be able to give your patient a result. So it increases the speed, of which you can give a patient result. And, you know, and and in our market space, time to result is everything. And it reduces the cost because it's a fully automated system. You don't need people sitting around waiting for the results to come through or adding bits of gel or or adding reagents into the process as it goes goes along. So we were an early adopter of that technology. Gosh. When we developed the last NIPT test about four years ago, and and we thought it was so good we bought it. And we're seeing significant market opportunities from that coming through now.

22:07 And as well as as as those sort of key products, as I said, we do a lot from a genomic services perspective. We're constantly increasing our product range our service with that. And we're now looking at, you know, not just reproductive health care, but oncology, genomic medicine, heredity risks and really supporting some big pharma companies with the clinical trial works and the like. Our next slide covers our sort of geographic region. As you can see from this map, we're pretty much everywhere. We spent the last four years heavily invested in the commercial team. We rely on a fantastic set of distributors in Southeast Asia, often sharing those distributors with with Tim or Fisher. In Europe and America and South America, we've got dedicated sales organization and and experienced sales leaders that help us go direct in those markets. And as you see from the pie chart on the right hand side, we've pretty good good split there. So we're not relying on one market or one territory, and we've got good diversification within our customer mix, you know, to to to manage the ups and downs of the international markets and the reality that we operate under derived demand where we can sell our products, but we need our customers to be able to find patients and test patients to make it work. So hopefully, the map shows truly global with a lot of commercial opportunity to bring in more products and more services.

23:35 I think in terms of my last slide, just a bit of an update, as Steve said, with regard to where we are for figures. We finished last year, it's unaudited at the moment at around about GBP 19,100,000 worth of revenue. And within that, we had the sort of that final hangover of the COVID market, so about GBP 2,000,000 worth of business. So a core revenue of around about GBP 17,000,000.

23:58 Within that mix, we had a range of product, that little special box I told you about earlier that cleans up samples that have doubled its growth by 100% and is now a £2,000,000 product range. Our NIPT service, which is the flagship product within our range, it's the first product we brought to market, that's got a CAGR of now 20% year on year. So back to the high double digit CAGRs that we were experiencing pre COVID and is now generating close to £9,000,000 worth of revenue. Our international businesses, again, really kick started and we saw the fantastic recovery in APAC and North America specifically, where we see sales revenues increased by a minimum of 50% in those territories.

24:46 And when we look at the period this year, obviously, Steve will explain that our calendar we're not a calendar year business, so we were sort of April to March as a financial year. But if we look at the first half of this year, so from January to June, we sat at about £9,100,000 worth of product with an even smaller amount of COVID in there near just 500,000 now. So hopefully, that gives you a a nice update on your gene, and I'm gonna hand back to James, you know, to discuss the integration further. Thank you, Lynn. Let's move on more. So, look, I I think we've got a fantastic opportunity here, you know, to build a combined global diagnostics business. I think we've we've got a real business of quality in Eugene.

25:34 I think putting the businesses together will give us more scale, which is very important for for both smallish businesses. So putting us together builds strength. And I think you can look at that strength through a few different pillars. One is obviously commercial. I think we we we both have a kind of global Salesforce. I think putting that together would be really beneficial. It will give us more reach on the ground and probably mean we can penetrate more markets more quickly. You know, two fairly extensive r and d and product development departments we can put together. Yes. There's some new technologies in Neogene that NOVACYT doesn't have, but there's also a molecular overlap.

26:21 So we're quite excited about putting those two businesses together. And I think that will really support longer term growth. You know, we've got more products, more services off of customers, we feel that we'll just build a more sustainable business going forward. And if we just talk about integration for a second, I mean, we are very early days. I think we're we're kinda two and a half weeks in, and we're really just starting to do the work in integration. But I think the principles or the objectives of what we're trying to do on an integration are quite important. And the first one for me is that, you know, the Eugene core business has been growing very nicely as it came out of the COVID period. That's a really, really good business in that.

27:08 And and kind of my first rule of integration is do no harm. So we want to be ensured we do not distract that team. We do not lose momentum. And in fact, everywhere we can support, you know, that growth effort, we will do to keep that momentum going. I think the the Eugene business is a more mature selling operation than NOVACYT. So I think NOVACYT can benefit and learn from the journey that Eugene has been on. And if you look at the commercial performance of NOVACYT, you know, it has been challenged over the last period. So, you know, we're we're hoping to be able to leverage your genes expertise into NOVACYT. We won't get anywhere unless we can build one organization.

27:51 So that'll be really important that we we we put the organize organizations together as quickly as we can, then it works fairly seamlessly. And, look, underpinning all of that would be a really good communication. I think we have to, you know, put different systems together, different ways of of communicating, and and try and run this as one

28:10 business. And, you know, we we would all of that together has to build a compelling investment case. So, clearly, there's growth opportunities here. We'll definitely try and accelerate the top line of both businesses, and there will be cost synergies. As we put the business together, we expect duplication, back office, and a little parts of the business, which we will address. And we also see, you know, there'll be an economy of of skills as well as an economies of scale, right, where we can eliminate duplicate functions, etcetera. So, you know, we we definitely see a compelling business case coming out of that.

28:47 And so maybe just to recap, just go to the last You know, the the acquisition is a really significant step. You know, it's a step change for our business. The integration plans, you know, we're we're just beginning that journey, you know, this will start to gather momentum now in earnest. We normally come back to the market around the end of January to give an update on our full year revenue trading. I think it's a good milestone to come back and give them after a more detail of days on where we are on integration. We think it's around a six month project to do most of the heavy lifting. It probably won't be all, but we should have made substantial progress in about six months. So by the end of January, we should be able to give everybody, you know, a a pretty good update of of where we are.

29:33 And I also just wanted to mention the Taiwan divestment, which I think was mentioned last probably in a maybe in some of the acquisition documents. We we still expect to complete that by the end of the year. It's not entirely in our gift. I mean, there are some permits, etcetera, we've got to get from governments, but we're confident all of that will happen before the end of the year. So that's still in plan. So we're basically following through on the plan that Georgi started. We've put guidance out there just for revenue at this stage. We will have a slightly strange year in that we'll have three and a bit months or three and maybe three quarter months of Eugene revenue because we will consolidate from the date of the acquisition plus nine months of sorry, twelve months of NOVACYT revenue.

30:24 So slightly odd year, but you'll have seen from, you know, what Lynn said, you you get a feel for the run rate, the underlying run rate of the business. And and I think just to recap, I mean, I think for NOVACYT, the first half of this year was really about building out that product portfolio and, you know, very, very strong quarter in in r and d, which will be really important for us. You know, we have to really focus on building this noncore portfolio. I mean, I think that's clearly been the strategy for us and clearly what we've been busy with over the last period of time. And I think we remain focused on building out this global diagnostics business. Again, Eugene is a big step towards that. And yeah, I think we're we're very, very confident that, you know, this accelerates us and puts puts us on, you know, a faster track to achieving that.

31:13 So I think with that, we are going to now open for questions, I believe. Yeah. Perfect. James, Steve, Lynn, thank you very much for your presentation. We have had a significant number of questions for today's meeting, so the company group these questions together to try and address as many of those as possible. The first one reads as follows. What was the rationale for the acquisition of your gene? What are the synergies?

31:38 Okay. Thanks, Alejandro. I'll take that one. Look. As you may expect, some of the questions will have been called in the content of the presentation. So I I think we still I'll try and repeat myself a bit here. It's probably worth repeating some of this, but just bear with us. I mean, clearly, questions come in before people see the content, so you will get a little bit of repetition here. Look. I I think the rationale for the deal, as we've we've stated publicly, you know, we've been on a trend track of organic development. In other words, building our own internal in house solutions for post gold. We're also looking at acquisitions and using our balance sheet. And we've been scanning the market, you know, for at least twelve to eighteen months looking for the right partner, the right fit.

32:24 And Eugene as a as a an established revenue generating global diagnostics business was really perfect. Right? I mean, there isn't that many of those businesses around, which would have been within our, you know, in in our sphere. So I think that really was it was a fantastic acquisition for us. I think that really sets us off in building the the the this kind of stronger global diagnostics business. And and with with the benefits of, you know, combined selling force, geographic reach, products, r and d, etcetera, as I've covered.

32:55 And I think in synergies, I think I mentioned that, you know, yes, there will be opportunities for synergies, but, you know, synergies isn't all just about cost. Cost will be important. That's something definitely we will chase down. But I'm not as excited about the, you know, the bringing skills together, you know, getting that synergy of putting, know, different minds together. There's a lot of very, very bright people in both businesses, and I think we can do something really special with with those two groups. Perfect. Thanks very much. The next question here really just follows. How do your genes products fit into NOVACYT S. Diagnostic portfolio? Yeah. That's probably easier for me to take this one, James. I think the fact that we both work in the molecular space is, first of all, really, really important. So we're working on the same sort of platforms, PCR and next gen sequencing.

33:49 You know, then effectively, what we brought to NOVACYT is a reproductive health care pillar and an oncology pillar to add to a very strong infectious disease pillar. So I think there's really good synergy there. And specifically in some of the more democratized lab settings, thinking about Europe, LatAm and APAC, it's quite common to go into one hospital or one customer and be able to speak to one person that looks after all three areas, oncology, reproductive health care, you know, and infectious diseases. So I think it's a good complementary fit there. I think when you look at the the capabilities of the organizations, you know, we've got good instrumentation skills in both parts of the organization. So I'm sure those teams are gonna get on really, really well and and and get, you know, some great ideas and working practices together.

34:40 You know? So really, really confident about that. And then if you look at the the product ranges, you know, this range of technology that I spoke about in my presentation and being able to find the, you know, a really clean sample, I think that's critical. I think that is critical for both sets of customers and both both organizations. From a services perspective, we will obviously be looking and and as James said, we're only sort of two and a half, three weeks into this process. So but as part of that, we'll be looking to see if there's any products or services that we can take from, you know, NOVACYT and and run them in our own labs and and start generating data and and revenues from that. And I think, ultimately, it it it kinda makes, you know, this enlarged organization kind of platform agnostic.

35:26 As I said, you know, we work on PCRs. We work in a range of embedded hardware that you'll find in most of the labs throughout the world, it with Thermo Fisher, be it our own systems. Our NGS runs on both Illumina and Thermo Fisher sequencing platforms. And for those of you not so, buffet with the next gen sequencing market, if you kind of think about it like a mobile phone market, you know, then you you you've got Apple and Android, is basically Illumina and Thermo Fisher. They've got about 90% of the hardware that exists in the global marketplace. And if you think of of your gene or or now NOVACYT as as a company that makes apps or content to sit on that machinery, then we're the only organization in the world that runs NIPT in both Thermo Fisher and Illumina, which captures about 90% of the addressable sequencing market out there. So, yeah, I think they fit very well in my summary.

36:24 Perfect. Thank you very much. I think you just touched on this, but just to highlight again, the next question is what is the market opportunity for your genes products? Yes. I mean, I mentioned it in my deck, NIPT is a fast growing market, predominantly driven by the moms and the midwives. I mean, if if you get asked you know, if you can come in and do a test at nine weeks as opposed to twelve, thirteen, you you're always gonna take that opportunity because you get your results, and it can lead to a less stressful pregnancy. I remember when my wife was was having our three daughters, and, you know, I've been in health care for a long, long time. I couldn't quite work out if it was a higher risk to have the the the test or a higher risk to, you know, for my wife to have a needle in her belly to take a bit of the the fetus' blood. So I think the fact that next gen sequencing allows NIPT testing to be 99% specific means it's just getting adopted year on year on year, and our growth rate in that space is twenty percent.

37:22 We spoke about the need to have real good clarity on the samples. And the quicker you can get that cell free DNA, the bit of the the the DNA that you wanna sequence and get your result from, you can clean that up quickly, and then, you know, that's a massive market opening up there, and our our range of technology does that. And as I mentioned earlier, it's got a 100% year on year growth. DPYD saves lives. You know, the average cost of five f u treatment is about £50,000 for a full course of chemotherapy treatment, and a DPUID test costs £50. You know? So I think any patient or any health care professional that's administered five f u and is aware of this DPUID assay, which will save the life in in one in every hundred patients that they put through the the, you know, the chemotherapy programs. It's a bit of a no brainer. So we're we're seeing that growing like a reave as well.

38:11 I think from a from a services perspective, you know, the market has changed. Everyone is aware now of molecular testing because of COVID. You my mother knows what a PCR test is, but I still have to spend twenty five years working in the market. I'm not having a clue what I do. You know, I think the market is changing and advancements in in medicine, trying to make medicine more bespoke to individuals as opposed to sort of a hit and miss approach. We try on something. If it works, we'll give you more. If it doesn't, we'll give you something else. Trying to get to this personalized medicine. I think all of these factors, you know, and the fact that from a genetic screening perspective, probably most of us have had our DNA read for Christmas present with 21 and me or or something in the last couple of years. I think it's just making the market more accessible, and we've got products and services that can certainly play a a part in that, give us confidence in the market opportunity ahead of us.

39:03 Perfect. Thank you very much. Does the acquisition of your gene indicate a change in strategy for Novocide? I'll take that one. No. I I think it it definitely changes the scope. So I think we've got a we've got a wider range of products now, but I think if the core strategy was about building, you know, organic products and, you know, accelerating and track for acquisition. I think it absolutely falls within that. And as as Lynn said, there is some commonality even in the products we get. So I I I just see it as it changes definitely changes the footprint and the shape of the group, but absolutely moves us along that road of building global diagnostics business. So I don't see it as a major change.

39:49 Perfect. Thank you very much. The next question, how much investment will your GM require before the business reaches sustainable profitability? I can take that one then, because no one says. So I think, hopefully, not too much cash. Right? But in all seriousness, this is something that we'll look at as part of the integration planning process. And as James mentioned earlier on, we're gonna come back in the January earnings release and give you a progress update on how the integration is progressing. Would I also give a strategic update as well and set out some goals and targets then. But for me, the key takeaway of the Georgine acquisition is it's a really exciting acquisition. It's great to have them as part of the NOVACYT group and family. And I think they're gonna be a key driver for accelerating the sustainable growth within the combined business in the future.

40:40 Perfect. Thank you very much. Next question here asks if there'll be any changes within the NOVACYT senior leadership team. I think, look, as we've said, there are two new board members who joined us in, which is John Brown and and Lynn Reese himself. And then, obviously, subject to being ratified at the shareholders meeting. But but, look, for now, that's as far as we've got. I mean, as as we walk through integration, we will we will figure out how we want to run the business. But, look, on those two appointments, I'm delighted. And we we've we've got two very experienced board members joining the group, and that's super important that we're getting that knowledge in onto our board and, you know, of the UGN business. So I I'm delighted we've got we started there.

41:27 And and, look, I think we will we will come back to everybody when the integration's a bit more advanced about, you know, how we're how we're running the business beneath that. So Perfect. What milestones can we expect in the next twelve months? Look. I think the one I called out, Oliver, is that, you know, we come back to you at the end of January. At that point, I think, yes, give you an update on how how how we're trading, right, how the revenue of all businesses is trading. That's important. And I think I'll also come come up come back to you with how we're progressing on the integration because we should be fairly advanced by then. Look. If I was talking to the employees in the business, I guess what I would say in terms of milestones, let's not get distracted. I mean, acquisitions can be new shiny things sometimes.

42:14 You know, we we both have customers. The customers don't care about the acquisition. They want us to continue and improve our service. So, you know, we need to keep focused on that. You know, we have lots of deals in motion. There's, you know, good pipelines and businesses. We need to keep focused on that. Don't distract anybody. So that's really would be my message. Something the message internally and and something to share with you. You know, we want to remain focused, keep the momentum we have in the business, right, build on that momentum, and do the integration without distracting people. That really is going to be the focus for the next few months. Thank you very much. Could you provide an update on the progress of your RUO strategy?

42:59 When will your new multiplex test be commercially available? Yeah. So look, we as I said, we've we've developed quite a few products in the first six months of the year. And and and I mentioned about going down a UKCA route as opposed to full IVDR. And the first two of those products is scheduled to complete towards the back end of this year. So and then that that they're ready for commercialization effectively from early twenty twenty four. And unfortunately, in this in the in the regulated market we are in, there is a long lead time between developing a product. Like I said, that's the easy bit, and it's not an easy bit, but there there's a long lead time for for developing the product and getting it out into customers' hands.

43:48 And look and I think the other thing I would say on RUO is and I mentioned in the main presentation is, you know, we have a very, very broad portfolio, you know, a substant substantial portfolio. And I think the reputation of travel design was, you know, custom assay business. It really could turn assays around really quickly and and solve customers' problems very quickly. And we don't want to lose any of that. We want to keep that reputation. But I think we also need to build some more category expertise. I think we are going to have to try and accelerate growth in the business. We have to become better in certain categories where we can build more sustainable solutions for customers, attract bigger customers, and build sustainable revenues. And that's really how we're thinking about how you go about. Perfect.

44:36 Thank you very much. I think you mentioned this in your last response, but what's the difference between UKCA and IVDR, and how does the regulatory process differ? Yeah. So I think the the for those who who're familiar with this, the old IVDD process was replaced by an IVDR process. And IVDD is a in vitro diagnostics directive, and it's now been replaced by the vitro diagnostics regulation. But what that means to companies, which is the only thing you're interested in, what does it mean to businesses like us? In in the old regime, you could effectively build a product, validate it yourself, and say, roughly, that was a month journey to market. The difference now, and I'm speaking very broadly here, is, of course, more complex than that.

45:26 The difference now is that you need independent clinical data to validation products. Right? So instead of it being a six month set program from development to commercialization, that's more like an eighteen month process. Right? And that's a big deal. That's a big deal for small businesses. Because I said, you know, the the difference between putting energy into launching a product or trying to solve a market need and actually getting that product out into the market, it's long. That's the difference. What the UKCMR does is the UKCMR does effectively keeps the old IVDD type regime for The UK for a period of time, but it's it's for for for next I think it's four or five years depending on your products.

46:16 So as I said, it gives us a shorter route to market, which for us which for us matters. I mean, that's that's an important for us that we can get to revenues quicker. So that's the difference. Perfect. Thank you very much. The next question is really around m and a and ask if you're still looking or actively looking for m and a targets. Yes. We are. I mean, we have you you know, I think it's it's a it's a favorable market at the moment. I think we still have a strong balance sheet. You know, I think we will still remain active in the market. If we see something that makes sense, that accelerates our strategy and fits, I'd like to think we will pursue that. Maybe not something quite as big as your gene, but, you know, there there's a lot out there.

47:07 So, absolutely, we're to remain focused on M and A. Perfect. Thank you very much, James. And final question we've got here is, could you provide an update on the situation with the DHSC? Yeah. Look. As I've already can't really say all out in DHSC. I mean, this is a this is a claim that's going through the courts. There hasn't really been any material updates since I updated everybody the full year results. The trial date is still the same. It's June 2024, which is in the public domain. And both sides in these processes are busy building their case and going through the various steps that the court puts you through. And and to be fair, there's there's not a whole lot more I can say at this stage.

47:55 That's where we are. No real change. Perfect. James, Steve, Lynn, 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 the questions submitted today, and we'll publish those responses on the investor meet company platform. But just before redirecting investors, provide you with their feedback, which I know is particularly important to the company, James, could I just ask you for a few closing comments? Yeah. Look. I I I think Eugene was the big news, I guess, mean, in the last months, I I hope what Lynn was able to share with you a bit more insight into what this business is, what this business means, and you get a sense of the opportunity. I think we're all really, really looking forward to putting the businesses together. I think it's a really, really exciting opportunity.

48:42 You know, I've spent quite a bit of time with with as many of the teams I can over the last couple of weeks. You know, I think the cultures are aligned. I think they're similar businesses. So I'm really optimistic, really excited. I think it'd be it's a great deal. And look, I kinda thank shareholders really for their patience because, you know, you've been waiting for this for a while. It's been a difficult journey. I mean, it wasn't the the quickest deal we've ever done. So I thank you for your patience, and I think we can really deliver. So that that would really be my my closing comment, Alexandra. Thanks. Perf perfect. James, Steve, Lynn, thank you once again for updating this today. Can I please ask investors not to close this session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

49:31 This will only take a few moments to complete, and I'm sure we'll be greatly valued by the company. On behalf of the management team of NOVACYT, we'd like to thank you for attending today's presentation, and good afternoon to you all.