Cambridge Nutritional Sciences (LSE:CNSL) — Trading Update Investor Presentation

0:09 Good afternoon, ladies and gentlemen, and welcome to the Omega Diagnostics Trading Update Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so.

0:36 These will be available via your Investor Meet company dashboard. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. Would now like to hand over to Colin King, CEO and Kieran Harbinson, CFO of Omega Diagnostics. Good afternoon. Hey. Good afternoon, Mark, and thanks very much. First of I'd like to thank everyone for attending this trade and update presentation. What I hope that we can show during this presentation is that we are in a strong position to perform, both short and midterm value, for for for Ogun and our shareholders. In terms of presenting, as Mark alluded to, it's myself, Colin, and Kieran is is helping me today.

1:27 In terms of the agenda, we'll give a core business overview, trading an h one trading update, and then an update in on the on the core business in terms of Visitec CD four, a little bit about lateral flow manufacturing capacity. I know we've had a lot of questions around that area, COVID opportunities and food intolerance, then some a summary, and then we'll obviously take any questions that that that comes that come our way. So in terms of the core business overview, what I'd like to do is just spend a couple of minutes and give you an overview of Omega's core business in case any of the attendees are are new to the story. Our CD four product is used in the management of people living with HIV. It's the world's only instrument free test. It's patent protected and received WHO prequalification, which enables NGOs to procure the test with the knowledge that it's met strict performance targets.

2:24 The test has been specifically developed to deliver a w WHO initiative to reduce the number of deaths amongst high risk patients and is the only c d four test included in a unit aid CHI initiative, which is in place to implement this WHO strategy. In addition, PEPFAR, a US government fund and the largest donor for HIV care, has publicly stated that for CD4 testing, they want an instrument free solution, which illustrates the potential for this test.

2:58 In terms of COVID, at the outbreak of the pandemic, we realized that diagnostics would play a key part in the global recovery and that we had the skills and expertise to help this recovery, especially with lateral flow rapid tests. We decided that we wanted to cover both antigen, if you currently have COVID, and antibody tests if you have COVID, if you've had have had COVID, and also to cover lab, primary care, and self testing scenarios. To date, we have all three bases covered for antibody testing, including being part of a UK government backed consortium and are currently working with our partners to introduce antigen testing by the end of this year, early next year. Thanks to our recent fundraise, we're also rapidly increasing our capacity to deal with the potential demand. This will allow us to take a flexible approach to our production to meet the demand as the disease disease progresses.

3:52 Finally, with regards to our food intolerance testing, which is a more efficient way than the traditional food elimination process to identify the foods that are causing chronic problems such as IBS. This business is cash generative, delivering revenues in the last financial year of 9,200,000 and an EBITDA of 3,900,000. For this business, we have an exciting opportunity in China where we've developed a Chinese specific food panel, and our partner has received approval for lab testing and is currently awaiting self test approval. Overall, we have a strong position in the short term to realize significant value from our COVID strategy, but as important, we have a core business with a great potential to deliver significant value in the midterm.

4:38 I'll now hand over to Kieran. Thanks, Colin, and good afternoon, everyone. So on slide five, what this is highlighting is group revenue for the six months to 09/30/2020. It was down on prior period by 29%, coming in at a total of 3,160,000.

5:04 I guess, as a majority of you probably know, right now, the company's revenue is dominated from the revenues generated from our food intolerance segment. So if we look at that one, revenue at 2,530,000, this was down by 38% on the prior period. And in effect, this has all been an impact from the coronavirus pandemic, but it is less severe than we first anticipated, and certainly, it's less severe than financial sensitivity models that we have run. I guess what's encouraging is I mean, over the last three or four months, sales have been down, in each of the months this year compared to the prior months by in the region of 35 to 40%.

6:02 But if we have a look for the current month of October 2020, which is obviously outside of the first half, but for October 2020, we're expecting sales to actually be up by 20% as compared to October 2019. So we actually see this as the first early sign of recovery in the food business to hopefully get back to and indeed even exceeding prior levels. And what's also encouraging is it's not down to any one single geography, but we're seeing a revival in orders from distributors throughout Europe, Middle East, and indeed, Latin America. We did have global health revenues of a total of around about £500,000, which did come from COVID activities.

6:58 Just under half of that is related to the melodic ELISA antibody test that Colin will talk about later, and there's also some development income from an unnamed source at this stage. So for the first half, we came in with an EBITDA loss of £1,300,000 that was right in line with management expectation given the performance in the first half of the food intolerance business. And Colin will talk to you this afternoon about all the opportunities we have for significantly improved second half. But at the end of the first half, we also had cash balances of £7,000,000, and that is enough to execute on the opportunities that, again, Colin will describe.

7:54 So at this point, I will hand back to Colin. Thanks, Kieran. In terms of, sort of the core business update, in terms of VIZITECT CD4 advanced disease, I think we're making great progress there. As I said, this is part of a WHO initiative to really drive down the number of people dying of HIV. It's a it's a key key, initiative for WHO. They they appointed United and CHI, to to implement this this strategy. And, obviously, in in April this year, we signed an agreement with United and CHI. We are the only suppliers for c d four tests, under that agreement. And I think what's also helped in terms of getting that traction with that agreement is the WHO prequalification that we received in July this year, which which really, you know, without that, what you've gotta go is for every country, you've gotta go through a process of getting approvals within those countries, running trials, etcetera.

8:53 And what the WHO prequalification does is basically indicating that, you know, as I said earlier, our test is it meets strict criterias. The the the performance of the test is is sound and and therefore allows countries, to to basically, you know, import the test and without going through through such a stringent regulatory process as as we may have had to without it. It also allows for for a a number of the NGOs to procure. They they they they have they will their sort of rules are that they won't procure without having WHO prequalification. So it was a very crucial milestone that we achieved in July this year. And again, maybe just reiterate in terms of the market potential.

9:38 As I said, this is a you know, currently, revenues are relatively low for this product. We do expect to sort of be around the sort of 2,000,002,500,000 come the end the end of this financial year as per the the FinCap Research Show. We believe we're on track for that. But I think more importantly, you know, you're looking beyond this year and and and as as those initiatives take take place and embed in, Basically, United and CHI were were concerned around our our what capacity we had, and they they were demanding that we could that we could prove to them that we could produce up to 6,000,000 tests per annum within the sort of three to five year framework. Clearly, we can we can can deliver that as I'll demonstrate with the capacity capacity graph shortly.

10:30 And in terms of the selling price, it's $4 a test, and it's and it's approximately 70% margin. So you can see a huge potential in the coming years ahead for CD4. And as I said, we're certainly on track for meeting market expectations in this financial year as well. Just to go in a little bit more detail, around those where those opportunities are coming from and where where the sales will be driven from. As I touched on, you know, I think the the the really important, key key milestone for this is that advanced disease initiative that that's driven by the World Health Organization. Unit unit aid and CHI have started that implementation process, and we currently have six countries who who have placed purchase orders with us.

11:17 And through through this agreement, these six countries are, I think I mentioned before, are, are really, designed to get the logistics and the way that the test will be deployed in country, you know, in place and and make sure that all those logistics are are working. And then there'll be further countries rolling behind that. There is already demand coming from other countries for the test as well, and we expect, for further countries to come on board before the end of this financial year. The way this, initiative is set up with with with CHI and and UNIDGE is that they are really there to to get the test implemented and get it implemented within the country. They they they put the test into the country free of charge, and then the aim is that that basically to to to ensure long term funding for for the test in country, then organizations such as PEPFAR and UNITIED will come in behind sorry. Sorry. PEPFAR and the global fund will come in behind, CHI and provide that long term funding for the tests.

12:23 And, obviously, for us, it's a huge benefit not having to deal with with a lot of these low middle income countries where potentially there's there's obviously, payment issues. There are not issues that we have to deal with because, you our relationship is with the likes of, CHI or PEPFAR or the global fund. And so there's no payment issues there, which is obviously great for for us. The and I think in terms of where we are, we've always been engaging with global fund and PEPFAR as well. PEPFAR, their financial year actually aligns nicely with ours, so it starts in April and then finishes in March. So we're expecting to see demand coming from PEPFAR during, our next FY. They've started that planning process already, and we're already having encouraging meetings with them on on the global fund. So overall, this initiative is is start despite COVID and and and the issues within these low middle income countries, there is still a good momentum behind this initiative, and getting it off the ground.

13:27 In addition to, this initiative, MSF, who who were a long term partner with us and and key advocate for the test, they they really were were a key driver in convincing WHO that this initiative was was important to drive down those number of people dying of HIV every year. That that relationship is is getting to the point where we're we're now expecting orders to come in in the next few few months or certainly before the end of this calendar year. We expect those initial those orders to come in and then start to deploy the test in all the the MSF field sites. And then finally, in terms of the other NGOs, really the UN agencies, now that we've received WHO prequalification, we started having those discussions with those organizations and getting them to to to look to include them into their budgets for 2021 and and beyond.

14:25 And those those discussions, again, have been very encouraging. And, again, a good thing about the UN agencies is they they they tend to protect place large purchase orders and also their long term contracts as well. So once you secure them, you you do have a little bit of longer term visibility of of what that demand can look like. So overall, in terms of c d four, really encouraged with the way that we're progressing here. And I think this year is really going to be a strong create a strong foundation to to really build on for going into to the next financial year and beyond.

15:02 Moving on in terms of the again, I touched on this already. I've had a number of questions, with regards to our lateral flow capacity. I'll answer them quite and and we'll answer them quite regularly. I think maybe some of our messages has maybe not been as clear. And we've when we talk about capacity for the rapid test consortium versus overall capacity, that message can sometimes get a little bit confusing. So, hopefully, the this this, this slide will will address those those questions and then give a bit more clarity to to to what we're talking about. So if I look at the the sort of next, you know, October to to to January time frame, what you can see here is that the you know, we're committed to producing 200,000 so currently a 100,000 tests per week for the UK rapid test consortium, and then during November going up to 200,000 tests per week, and then that continuing, on that basis.

16:00 I'll I'll pause for a second because I think, again, so in terms of the rapid test, The UK Rapid Test Consortium, that 200,000 represents somewhere around about 25% of of the overall weekly production by the three consortium members. What what's in in the the agreement that we have, as a consortium is that if the demand is greater than that weekly, output, then as a consortium, we can then increase as an individual consortium member, we can increase our capacity. Initially, it would be offered up by a a third. So whatever that so if the demand was was to go, say, up to 1,000,001, there'll be 200,000 additional demand, then that would be split equally, a third a third each. If one of the consortium members couldn't take that up because of other commitments, then obviously that that would then become available to the remaining two consortium members.

17:05 So our baseline is 200,000 tests per week from about the middle of November going forward, but we can flex that capacity. And if the demands comes in, additional demand comes in, and also if we obviously have the spare capacity as well to take take that additional demand. So in terms of that spare capacity or additional capacity, so currently, we we're as we come out of October, we're we're we're we're at approximately 200,000 tests per week. So we have a 100,000 tests available, and that's available for c d four and and logic, lateral flow antibody test. And then moving into November, we we we increased that capacity up to 300,000, again, retaining that 100,000 per per week capacity for for for those other products.

17:57 And then as we move into December, we we take delivery of we in November, we'll take delivery of the equipment that we that we have placed, that increases our capacity up to half a million tests per week. What I should have said in terms of November, as I look at that capacity, most of that capacity is already consumed with with demand, whether it be for the rapid test consortium, c d four, or, logic antibody tests, which is really encouraging as as as as we as we build and as we as we move forward. So then, as I say, in December, we'll be up a half a million tests per per week that we can produce. And then as we move into January, we we believe that with some efficiency savings and the machines bedding down, that we can actually take the the current equipment that we that we've procured, either that's already on-site or being delivered, we can we can get that capacity up to round about the 600,000 tests per week mark.

18:55 So that's where we started with investments that we've made already. Oops. Sorry. I'll just jump back. As as we then look beyond that into sort of February, March, and April, I I touched on the the presentation I did a few weeks back, and the the one of the things I was looking at was, you know, can we increase our capacity beyond the 1,000,000 tests per week that we had initially tried to try to target? So we've done a we've been doing a lot of work in this area in terms of our existing Alva site, which has gone through, you know, considerable reconfiguration work since since since lockdown, basically, and that the site has been in permanent building work phase. I think we're just about closing phase four to four at the minute of of works on the site.

19:47 What what we've identified is that we can actually another no. The one remaining part of our facility, we can actually reconfigure, and that would allow us to bring in an additional equipment, which would then allow us to increase our capacity even further. So we're currently working with architects getting getting that layout correct in terms of how how that will work. We will we'll commence that work within the next week or so to basically, you know, reconfigure that that the site. So by, you know, by Christmas, it will be in a position

20:19 where we would be ready to take take in new equipment. And we're looking at and we're in discussions with equipment manufacturers in terms of what what what lead times they can offer, and what what the best way forward is just now. The graph is is indicating that, you know, that we will step our our our our capacity up. And so and then, obviously, by the time we get to to April, we'll be around about the 2,000,000 mark, or we will reach 2,000,000. I think as you go look beyond that, we could possibly get it up further as well to maybe 2,500,000 through through equipment efficiencies. But, you know, this is an outline of what what we're looking at being able to achieve. In terms of that equipment that we're looking to purchase, it's we know we we have the funds available as Kier Kieran alluded to earlier in terms of the the cash that was raised as part of the fundraise. So we have that funding available to to to to procure that equipment.

21:20 And, you know, so we're we're gonna say we're just looking to, fight finalize that in the in the next few weeks and and get get that that that that in place. The reason that we're really looking at increasing the capacity further is really being driven by what we see as the the market really moving towards lateral flow tests, predominantly just now antigen tests, and I'll touch on that later on the slide. But I think as as we as we move forward and when vaccines become available, I think antibody testing, will also become, quite, you know, will also eat into a lot of that capacity as well. So, you we've been speaking with a lot of stakeholders in terms of what what we feel the demand will will be for lateral flow testing, and that's really where we why why we've we've looked at that additional capacity.

22:07 And so, you know, it's something that we believe that we that will be consumed. It's not just something that we're building for the sake of building, basically. So, hopefully, that's explained where we are with capacity currently, where we will get to by the end of the year, and then as we move into the new year, how we're going to build up even more capacity to meet the demand that we believe is is coming our coming our way, basically. So if I now move on to the sort of COVID and antibody testing, I think, you know, we we, overall, obviously, all all the tests are now available. They've all been CE marked, which is, you know, know, great progress when you think, you know, you know, going back to to March, and we didn't even heard of COVID or or, obviously, we'd heard of COVID, but those tests were were were not being in were in in development.

22:58 You know, to be sitting here six months later, having three products that that have that have been fully developed in CE Mark is actually exceptional progress that's been made, and and it's a real credit to the to to, you know, both the the the staff that's involved here, but also with our partner companies as well in terms of the logic and anti Abingdon as well.

23:21 I think in terms of the lives antibody sales, clear clearly, we we we had hoped that the traction would have been better than it has been. The sales have been lower than we anticipated. And I think really what's what's driven that is the the larger automated players really got into the market quicker than than certainly I'd expected. The

23:46 and and they obviously have a large positions in these labs, and and they've basically started to monopolize monopolize those those labs and where where we expected to see some sales. But I think also the market has moved towards lateral flow antibody tests as well. And the the and and I think that combination of the larger automated instruments and those lateral flow tests has really squeezed the the LISR test, which is sitting in the middle. What we're doing now is we're not we're not sitting back on our on our laurels on this one. We we, we are actually actively looking at our utilizing our in in house laboratory testing service. We hope to get that up and running quite soon.

24:33 And we we've already had discussions with a number of,

24:37 external parties, which we can offer a service to to provide that testing testing with. And really, our thinking here is that, whilst we might not be able to get the volume that we particularly had initially expected, what we will be able to do here is attract a far higher selling price. It's probably about a tenfold difference between the price that we sell and and and the price that that that a lab offering that service can can demand. So clear clearly, terms of if I look at the numbers that are that are that are in the market, that's really where we're looking to recover. That shortfall is through that, in house laboratory testing service. And as I mentioned, a lot of the the demand has been driven because of lateral flow testing.

25:23 And what we have, obviously, now is with we have the two two lateral flow tests available in the market that have just entered into the commercialization phase. So that gives us, you know, additional, optimism and quite hence increasing the capacity as well that we believe that the the lateral flow antibody testing will will will consume a reasonable amount of demand. So if we look at, where we are with the logic, the the Visitec and branded CE Mark test that we just, CE Marked in September, The where we currently are is we have started a registration process in a number of our key countries, and we've already seen some sales from UK driven customers and also some European driven customers as well, who you can obviously just take from the CE Mark product we have.

26:18 So during October, we've already seen some sales, and we've already have demand in November as well. These are initial orders, but we do expect those to increase in the coming months ahead. What we've also looked at is we've looked at the prevalence of where COVID is highly prevalent across the world, and we've compared that to our existing distribution our existing distributor network. And where the where we have identified gaps in our distribution network, what we have, and we did this a few months ago, was we engaged with, some some consultants in the area to go and target and find us, some some key distributors in those key markets. And that work has started to come through already where we're identifying some very exciting distributors in some key countries, to take our tests. And, obviously, that process is starting in terms of, you know, in terms of registration, registering the test, getting those those tests approved, and then we'll start to see that demand coming through.

27:22 One key country that we have identified is The US, and we are actually started to to work on a on an f on an FDA submission, and we expect to submit that in in the in the coming weeks ahead for for this test. And we're working with, a consultant in The US in terms of, you know, find finding the right opportunities there to take this test in. We've already had some some quite exciting, feed feedback from from that market. In terms of just so just to be clear, in terms of positioning in The US, you know,

27:53 we've got to go through an approval process. So you you you are looking at into the new year before we would see the demand coming forward. But I think but we do see that as a as an exciting opportunity in addition to the to the markets that we already serve. Then moving on to to the UK Rapid Test Consortium. Clearly, we've we've we've CE marked a test. The the the one probably big question that that we that I that I get regularly is is, you know, where are the MHRA approval? We we have submitted it to to the MHRA, and they're currently reviewing this. I'm expecting some feedback relatively soon from them. And, obviously, you know, as I've said before, it really depends on what that feedback is. It could be that they're happy, and then we move forward. It may be that they they want some additional information, which we would then have to find and provide them, and then the the the approval would would come thereafter. So trying to predict timing just now is is difficult, but, you know, it it is certainly something

28:55 that has has been actively managed just now. And, you know, I've ex I'd hopefully see see something, soon around MHRA in terms of news. I think, encouragingly, obviously, we got that UK government contract. The I think, again, in previous, presentations, I I obviously had indicated that we'd I did expect that to have been happen quicker than it did. I certainly misjudged how long, that procurement process took in terms of completing that agreement. It's great. It's over the line now. And we've got an initial order for a million tests. And as I said, you know, in terms of and the consortium, we're we're certainly ramp ramping up our production. And from an August perspective, we're starting off a 100,000 tests per week.

29:45 And by the middle of middle end of November, we'll be producing 200,000 tests per week, which we expect to be consumed either by the UK government.

29:54 And if it's not by the UK UK government, as part of the agreement we have, we can actually sell this product to non gut non gut outside of the the UK government, and that can be within The UK or, external outside of The UK. Our partner is is is partner member within the consortium is doing some great work there. And, again, there's a registration process that's needed for for countries outside of the EU. That work is currently ongoing. I think what's encouraging is because it's been backed by the UK government, there is some quite excitement around the product. And I think some countries are are taking a, because it is backed by by the UK government, are taking a more positive approach towards the test.

30:40 So, again, I'm hopeful that we'll start to see demand, coming from from from non government, sources. Certainly, we we you know, towards the end of November, would expect to see that demand coming through, which would start to consume what we're what we're producing, within the facility. So, again, just in terms of antibody testing, we're now in a commercialization phase. You know, ELISA, definitely disappointing in terms of the sales sales opportunities. We we do have a strategy to to try and rectify that by by targeting higher higher value value revenues through our lab testing. We're significant opportunities for for lateral flow testing, not not just within The UK, but but but but but across the world, and we're actively exploring them just now, both in terms of the Visitec branded, lateral flow antibody test and The UK rapid test as well. So, again, just to to to really reiterate, that's why we're we're we're we're building that additional capacity because we do see that the demand will come. And I touched on it, and finally, just a final point in terms of antibody testing.

31:56 I think with the news of, you know, vaccines coming out into the market, in the new year, that these vaccines, you know, one thing they won't know is how long that immunity will last for. And and in fact, whether or not, you know, in terms of when you had a have a vaccine and whether or not the the vaccine actually work even even immediately because a number of patients it may not work for. This is where antibody testing will come in. So once you've had your vaccine after a period of time, you know, seven or fourteen days, you could see where you would you would where you would, have a, antibody test. And then periodically throughout the cycle, you would be getting tested to to confirm whether or not that immunity is still there or not. So I think that's gonna be a big play for antibody testing as as as we move forward.

32:49 So so I think that positions antibody testing. In terms of antigen testing, really where we see a huge demand is is with with lateral flow testing. I think what you know, what's no. You you in terms of what's come from the news, if you just take the UK government initially, clear clearly, the the UK government have meant have have have mentioned bilateral flow antigen testing quite significantly as they see this as a as a key driver for getting, what getting back to normality. And, you know, because I think one of the things that the antigen test offers is that there's a lot of asymptomatic patient asymptomatic people walking about who are actually infecting people, not showing signs of symptoms and obviously, therefore, not getting tested or by the time they get tested, that infection rate has has has already spread.

33:47 By getting, you know, large volumes of, antigen tests, lateral flow antigen tests out into the public and getting tested getting that testing done, you could see where you can actually identify those asymptomatic patients, get them isolated, and then get the get get get the pandemic under control again. But, also, you know, if if you do test negative for it, then, obviously, you you you it it could offer you some freedom to go, to to to go about your business, go to a football stadium or whatever. The and it's not just the UK government, though. You know, I think, again, if you look at the the WHO and World Health Organization, they see, lateral flow antigen test testing as a key driver for for for managing our way through through this pandemic as well, and and that's been well publicized. So I think, you know, it's not just The UK.

34:40 You've got the World Health Organization, and you've got a number of other countries that that are looking towards lateral flow antigen testing as as a way to get getting out of this this pandemic, especially over these sort of winter months as as we look ahead. So so so that's really why, we we've really looked at what we can do in terms of increasing our capacity because we do believe that demand will come, for for from, for antigen testing. The the slide sort of highlights the sort of key features of why why why why why the what the benefits are there. In terms of where we are just now, obviously, we we have an MTA with Mologic that we we we identified this very early on, and we we have that agreement in place with with them.

35:28 They're making excellent progress with their test. The they're they've had a taking part their prototype devices have been taken part in a in a number of evaluations, not just in places like Liverpool School of Tropical Medicine, but actually in in in some of the in Nottingham as well in terms of drive through centers, etcetera. So so they they they really have started to to get the test and the prototype devices out there to understand how how the test is performing. They've been very I've I've shared some data with me, and it's very encouraging. I think they are getting very close to to completing the development phase. I would expect that to be relatively soon. And then what what they will then do is they will then look to to obviously scale up their manufacturing and get it into a into a an an industrial form.

36:23 The the timelines that have that have kind of spoken to to to more logic around is in terms of when we should expect start transfer to start. The the early indications are that end of end of November is a a realistic start time. It could be slightly earlier, but I think end of November is a realistic start start time frame for for us to to to basically take their methods, bring them onto our site, and then, you know, basically complete three validation lots and confirm that that what we are producing is of the same, performance as to what Mologic can produce, and then we can build our our technical file up just exactly as we did with the the antibody test, and then that would allow us to CE Mark. I did mention in an in an in an earlier presentation that I that I hope that this might well that could well be a nice Christmas present for all of us.

37:17 I still hold hold that hope that that we could we could we could get it complete by Christmas. If it's not Christmas, it would certainly be early into the New Year, that that we'll have this test available and and and being able to start commercializing it. But I set my my target is is that by Christmas to try and get that transfer complete and be in a position where we could start commercializing it. So that's certainly my hope. And as I say, that's why we've we've really looked to to drive up our our capacity as well to meet that potential demand that is that is likely to come from from antigen testing. So I think that covers COVID. Hopefully, I've given you a good good overview in terms of, you know, where we stand today, the opportunities both for antibody and antigen testing, and how the we have that capacity available, and we're building that up every month.

38:10 We're we're increasing that capacity, and we expect that demand to consume that capacity as well as we move forward. And then finally, terms of food intolerance, I think gave a a great summary of where where we were. Clear clearly, the the pandemic has had a has has had an impact, on the business in the first half of the year. Encouraging signs that we're seeing a recovery in October. And I think, as Kieran mentioned, I think the fact that it's not just in one area, it's basically across, you know, most of the world that we're seeing that recovery. That gives us hope and expect and it certainly has a strong expectation that that that that our food business will recover. I think China, though, I've mentioned this multiple times, this is really where we where we see a a huge potential to drive this business forward as as we look beyond, this FY and and into into the coming years ahead.

39:06 Our partners estimated, you know, the the, you know, the potential demand, for for China alone within a within a few years is up to a million tests, per per annum. And again, just as a reminder, it's $15.5 a test at a 70% margin, so significant revenue potential to generate here. Our partner, you know, has made great progress, and they've invested a lot of money in this, and not just in terms of getting the approvals, but getting a a specific Chinese app, which uses artificial intelligence to to basically remove the need of a nutritionist and give the the advice, to to the end user when when they when they complete the test. So they have invested heavily. They're geared ready to to start the commercial launch. The one thing that we're waiting for is the, Chinese approval for for self test.

39:58 And our partner certainly hope that we would have we would have received this already. It has taken longer, and, you know, the the the documents are submitted, and it is just going through that process. What they did feedback to me was that the the because of COVID, the the the numb and especially the number of submissions that are around COVID, and, obviously, the Chinese government have been prioritizing COVID, that other things have are are taking longer to come through, and that's probably a reason why. But they why why there's a delay. But, you know, we we do expect that that approval to come very soon, which will obviously then allow allow them to implement that marketing plan we have in play, and they already have the tests that they've procured from us already to be able to hit the ground running. So, again, really encouraging here in terms of our Chinese strategy and that huge opportunity that we have as we look beyond this financial year into FY twenty twenty one, 2022 and beyond.

40:59 So I think that kind of covers our core business. And maybe just to summarize it in terms of CD four, I think, you know, key key for us in terms of CD four was getting that agreement with CHI, which gives us the the foundation to drop to to drive to drive it forward and along with the WHO prequalification, really puts us in a very strong position to to start to see revenues and significant revenues coming from c d four, this year and and and going forward. In terms of COVID, I think, you know, we've got excellent opportunities where we've utilized that capacity. We've built the capacity up, and it's now a case of, you know, take starting to to to generate revenues from that capacity we've built up. We're starting to see demand coming for our antibody test.

41:45 And, obviously, as I've touched on already, I think the antigen the antigen test opportunity is also huge for us, and and will have an impact in this financial year with with a without a doubt. And then as I say, we've already touched in terms of food intolerance. So I think, overall, I expect, you know, a significant improvement in the second half performance and that we really are well positioned for both short and midterm growth. And hopefully, I've managed to, between myself and Kieran, been able to get that over in this presentation. That's brilliant. Thank you, Colin, and thank you, Kieran. Ladies and gentlemen, please do continue to submit your questions using the Q I think it's worth noting with over 1,200 investors accepting today's meeting that the company will not be in a position to answer every question it receives during the meeting itself, and the company will review all questions submitted today, and we will publish responses where it's appropriate to do so.

42:47 I'd also like to remind you that a copy of the presentation of the recording and the published Q and A, along with the slides, can be accessed via the Investor Meet company dashboard. And finally, before I hand back to Colin and Kieran for the Q and A, I'd like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. And we very much encourage you to let the company know how you feel. Colin and Kieran, obviously, had the ability to pre submit questions as I'm sure all on the call would imagine there were a few submitted. And I know what we've tried to do is put some contents around the commonality within those questions. We've got a few. We've got about seven of them. So if I fire off with those and then perhaps time permitting, we can go through the live Q and A. And I think you have touched on a lot of this within the presentation, but where you can, obviously, greater transparency we can give investors, the better it is. So the first question we have is why have contracts not been put out in an r and s before? Are they announced by the DOH?

43:55 Yes. Thanks, Mark. I'll take that one. I mean, I think, firstly, just to clarify the legal position, there is a contract between the UK government and Abingdon Health. And then separately, there is a back to back contract between Abingdon Health and Omega as part of the UK RTC. So in other words, there is no direct contractual relationship between Omega and the UK government. So it's important that we put out, announcements around events that can have a direct and meaningful impact on Omega's business. So, for example, as soon as the government placed a firm order for a million tests on Abingdon, Omega announced that in an r and s, at the beginning of this month around about the October 6, I think it was.

44:55 And then secondly, as soon as Abingdon and Omega entered into the back to back contract that I just referred to, this was also announced without any delay by Omega in an r and s on the October 19. Thank you. Next question. Omega is awaiting MHRA update for the RTC antibody test. Is Omega also awaiting approval with MHRA on the Visitec antibody test developed by Mo Logic? K. Thanks, Mark. I'll pick this one up. Simple answer is no. There is no no plan to seek MHA approval for self test use for the Visitec antibody test that was developed in conjunction with Mo Logic.

45:42 This is because approval for self test of any test is only being sought when the UK government wants to procure tests. So even if we wanted to go down that route, unless the UK government wanted to procure the test, our the the Mologic or or Visitec antibody test, then we we couldn't go down that route under the the the way it's currently structured. My understanding is that the only test that is going through MHRA self test approval is The UK RTC test. There is no other test currently under approval with MHRA for self test.

46:29 And finally, I'd just like to add in terms of because we we we've tried to segment the markets between the two tests, and and and our our intention was always with the VisoTech product that this would be used in the professional market, and we would predominantly look to to export this test. So that was always our our our strategy, and it always has been our strategy there. So we do not require any m MHRE approvals for for, the, the Visitac antibody test. Thank you. There have been some suggestions amongst investors that the vaccination program will require extensive antibody testing to monitor the effectiveness of the program. Is there an expectation that a mass UK vaccination program will require mass antibody testing?

47:16 Yes. Thanks. I think that's actually a great question. My belief is yes, and that the the the there there will be a requirement for mass antibody testing if a vaccine becomes available. And I think as I touched on earlier, you know, it's likely that when people, get vaccinated, they will need to be tested on multiple occasions to determine how long that antibody response for the vaccine lasts for. So it's certainly my my, expectation, that that that this will will occur. Very kind. Thank you. Do the RTC expect further government orders beyond the £75,000,000 already confirmed in the public domain? I'll take this one. So again, maybe just to clarify the point that Kieran raised, the government has so far only placed a purchase order for 1,000,000 of the UKRTC antibody tests.

48:11 The contract between the government and Abingdon allows for a potential supply of tests well beyond the 1,000,000 tests ordered so far, but the government has, so far only placed an an initial order on Abingdon. And, obviously, when additional orders are placed on Abingdon, then then that's where the back to back arrangement would come into play. Thank you. Can you clarify whether profit from RTC tests are slightly more than 75p per test only or whether, in addition, there is a profit share across the RTC? Okay. Thanks, Mark. I will pick that one up. So two parts to the response here, I guess.

48:59 So to the extent that RTC tests are supplied to the government, then I guess I would say that the guidance which is currently available in the FinCap research is a good guide to the contribution that can be earned by Omega. However, to the extent that RTC tests are sold to third parties other than the government, then, yes, this back to back contract that we have with Abingdon, it allows for an additional profit share mechanism. So yes is the answer to the question. When the RTC test is sold to third parties, there will be an additional profit share mechanism, and that itself will be linked to the ultimate selling price per test achieved with that third party.

49:53 That's very kind. Now we've got two final pre submitted questions, I guess, ahead of some of these that have come in through the live event. The first of that is, is the experience of COVID likely to result in a meager PLC redirecting the business towards more in keeping with its focus as it was in 2018, 2019? Yes. I'll take those questions. Colin here. The, I think we indicated during the fundraise that with the buildup of the lateral flow capacity for COVID, that in a post COVID world, we would look to bring tests to the market in the global health space, that are that are complementary to c to c d four. So for example, TB was one that we that we that we've raised that we are actively looking at starting to develop.

50:41 And the idea there is, obviously, by by building up that that, experience that that portfolio in the global health, we already have a strong, presence with NGOs with c d four that we could obviously utilize that lateral flow capacity that we're building in in that post COVID world. So a little bit back towards there, but not fully, I would say. Thank you. And finally, and I I know there's been a number of questions that have come through on the q and a chat about capital raisings and raising money. And the the final question is, you planning to raise money through through a placing to increase production? And, the short answer to that is, no. We are not planning to raise any additional funds.

51:28 Certainly, not to rate to attain the production levels that you've heard about from Colin this afternoon. So the fundraising we completed back in June of this year, which people may remember was predominantly undertaken to ensure that we could increase production capacity significantly, and that does still include increasing production to the levels indicated in the capacity chart that Colin presented this afternoon. Well, thank you very much indeed. Well, I know we've got about ten minutes until really the end, and I know that investor feedback is very important to you. Obviously, there's a lot of questions. There's a lot of people on this call. So and I'm sure there's a lot of commonality within the questions.

52:16 Perhaps I could ask you just to take a look at the Q and A panel on the right hand side of your screen, Cotton and Kieran. And if we could perhaps deal with a number of questions. And just to really reassure investors that no question that has been submitted today not be presented to the company. They'll have the ability to review as they did last time the questions that were submitted. So if I may hand over to you guys, and I will come in a little bit later to redirect investors and ask you to wrap up. Yeah. No problem. Thanks, Mark. Just trying to work the technology here. So apologies. Just give me a second. I think there's a, a good question from from Michael Jay. Unfortunately, my screen keeps jumping about. So the FINCOP report mentions a facility in Dundee.

53:03 Is this still being pursued? Why are we not more aggressively adding capacity? I think in terms of hopefully, I've maybe addressed that in terms of the the aggressive approach we're taking with capacity. Obviously, when we when we were raising funds in in June, one of the ideas we had was to to to get to the the the the million was to, look look at a facility in Dundee that that was that was potentially available. The the more that I looked at looked at this, and in terms of the management that would be required, in terms of putting that facility up and running, you know, in terms of quality systems, operational management, and quality management and then getting all that recruitment in place, I I you know, it was gonna be a not impossible, but within the time frames, was gonna be more difficult.

54:00 That's why I then looked at the existing site we had and then started to really think about well, can we utilize the space that we have here, to be more efficient and actually get more equipment in to to the existing facility? So so that's as I say, that and that's really what's driven my a lot of my thinking is that we can actually achieve what we wanted to to do with with going to our Dundee facility. With with the within our own Alba facility, we can get get that equipment in. We can get it ramped up. Then, obviously, in terms of that overall management structure, you know, I don't need to employ, you know, additional operations managers, QA managers. I have that infrastructure here, so it's a lot more, one, cost effective. But, actually, just from a practical point of view, it is actually more efficient as well. And, really, what we're then looking to do is really just wrap the headcount up at a more, at a sort of scientist and and, sort of semi skilled level within the site, which is the without question an achievable, prospect.

55:08 And so, hopefully, I've answered that question. The as I I think I've had I think a lot of the questions are maybe already answered in terms of MHRA. I think, Stuart, you be completely clear about ELISA tests? Are you going to expand this as previously announced or switch to lateral flow? Again, great questions, Stuart. I think what you could probably tell from, the presentation that we've given is that there's probably a, you know, without question, a greater emphasis on lateral flow testing. You know, I think we had initially thought around in terms of antigen ELISA testing. And when we when we looked at that in terms of getting a lot of market feedback, it was clear from the the market feedback we were getting was that really what the what the market was demanding was a was a rapid antigen test.

56:04 And and whilst we would be able to develop and implement an ELISA test, I think the the the demand may not well be there because I think there's there's other technologies that are coming in that are pretty well suited for for the labs. There's a lot of point of care equipment based antigen testing that's coming in. So I think that's probably quite well served, and we would probably end up being squeezed like we've seen with the, ELISA antibody test. So it's really kind of that's why we're really now just focusing really quite strongly on driving that, the lateral flow capacity up, to to meet what we we see as, you know, very large demand coming from both antibody and antigen lateral flow testing.

56:54 The so sorry. Just Do take your time, Colin. There's there's obviously you know, I can see the the number of questions that are coming in. Just select those where we can and Yeah. I'm just trying to see questions that were maybe I don't think I've already addressed through through through the through the question. Sure. Take your time. PLC in queue. Yeah. I think we're I think we've really addressed a lot of these questions already, if I'm honest. Yep. A number of them have been addressed.

57:43 As I did highlight to investors, there is a lot of commonality within these questions, and, of course, everything will be published on our website after. So, you know, do feel free just to take a few moments just to review anymore. And then, as I say, if not, what we can do is redirect investors to feedback. And then, of course, like you did last time, we can review questions and and then put a publish publication out to the investors of the call. Yeah. I think in terms of the thanks for the the stolen tactic there, Mark. But yeah. If you're not listening and and and get used to this technology, the I think for those that listened to the previous one where I mentioned my daughter helping me with Twitter, I think she may have to help me with the q and a polls as well.

58:29 The yeah. Andrew H asks, when do you anticipate generating revenue for the c d four test? I think, Andrew, we obviously have generated some some revenues in in the first half of this year, but very small. I think in terms of if you look at the FinCap research note, in terms of what we're predicting for revenues for this year, we're we're confident that that we will deliver those revenues. As I said during the presentation, we have already received, orders from for the advanced disease test for from six countries, and we're that that's currently working our way way through our our production process, and we will start to supply them in in November and December. And as I said, we do expect additional countries to come on board sort of January, February, March time frame through that CHI initiative and also the MSF, looking to procure as well.

59:27 I think Dylan g, c d four, visit tech HIV, what is the anticipated cost and earnings per test? I think I probably covered that, but it probably is worth just reiterating. So and do you wanna take this one up, the visit take each points to the dispute cost and earnings per test? Yeah. So, I mean, Colin's already mentioned that the selling price per test is around about the $4 mark and that we earn a margin of around about 70%. So, broadly, what that means is that the cost of goods is at or just above around about a pound per test, And one of the things that we had identified at the time we did the fundraise, was a project to reduce the cost of goods for Visitec CD four, which is basically, sourcing, alternative raw materials in effect.

1:00:27 That would then these additional raw materials or alternatives would need to be validated, And if successful, we expect that the cost of goods could be reduced by around about 50%, I. E, taking the cost of goods down to just over 50 p per test. Colin, just on on the basis of obviously, I'm I monitor the attendee numbers, and and people may have allocated time for the meeting. We're we're we're just going over the the hour mark. I I I just wondered if perhaps if there were maybe a couple of final questions, and then if I could ask you to wrap up and genuinely ask investors to provide feedback as they've taken the time to attend today's meeting.

1:01:15 Yes. Again, maybe just stick on the c d four stream question from Richard s. As part of the marketing to Malawi, have Omega held any discussions with the Scottish government who are currently reviewing their overseas aid policy but have multiple linked to NGOs in Malawi. To answer that, we haven't had any direct conversation with the Scottish government, and it certainly I do have a number of contacts with Scottish government, so so thanks for raising that. I'd certainly pick that up with them. In terms of Malawi, it is actually a a key country that is part of the, CHI arrangement, and is also a key country for, MSF. So it's something that we a country that we're actually very active in, But I think, it's certainly if there there are additional, help there that we can get from the Scottish government, they'll pick that up. So thank thanks for for raising that, Richard. That was a good good good question or good, observation.

1:02:18 The Again, I think I'm just looking down. I think we've probably answered a lot of these questions already, Mark, in terms of through the presentation. Well, let's do this then, Colin. Let's if if I could finally just ask you perhaps just a few final words to to wrap up, and then I will automatically redirect investors to provide you with feedback. And and as I said before, that would be greatly appreciated. Yeah. No problem at all. Yeah. I mean, I I think, really, the the the the the point of this was obviously to try and give everybody a feel for, you know, in terms of where where we currently stand. I I know that there's probably some some disappointment around around, you know, in terms of perhaps expecting larger larger movement in in in in contracts, etcetera, than than where we currently are.

1:03:15 What I would say is that, hopefully, this presentation has has really reemphasized the fact that, you know, we are in a very strong position to to deliver, both short term and midterm value. I think the COVID opportunities are in front of us. We will start to see revenues. We will have a significant improved, h two. And and, obviously, then looking beyond this this this financial year, looking forward, I think the prospects, not just in terms of COVID, but with our core business as well, are are exceptional, in terms of growth opportunities for for the company. So hopefully, we've managed to get those points over during during this. That's brilliant. Well, thank you very much to to both Colin and Kieran for certainly updating investors around around, your trading update today.

1:04:03 Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback? If you access this meeting via our website, the feedback page will appear automatically. If you access this from the link sent to you by email, you'll have to wait a few seconds, and you'll be asked to log in to submit your feedback. On behalf of the management team of Omega Diagnostics PLC, we would like to thank you very much for attending today's presentation and indeed your questions throughout. That now concludes today's session. Good evening to you all.