Member Info for HillSeeker

@B2HS2L

Yes, I think this now removes a step. Previously, they would have had to use a standard PCR test to give the patient a result and then passed a positive test on for sequencing. This can test can now be used to check which variant and at the same time give a result to the patient. Particularly relevant in the US , as you intimate, as they seem bent on multiplex testing.

@Sir Digby - agree

and ref your previous post:

"The efficient CO-Prep™ workflow includes a small footprint for use on benchtops or in containment hoods."

So, suited to booth POC and lab use.

Thumbs up emoji!

We are looking for contracts.

The Co-Prep looks like it will start generating cash income soon, but I don't think this is going to be in the tens of millions. To me this will simply help sell more Q16/Q32 (the more of which we have out there, the more PCR test revenue we generate) and more significantly, will give our machines, alongside Promate, an operational advantage into the future, improvingworkflow and increasingoutput (more tests sold). For POC, it is essential that workflow is simple and labour efficient (staff shortages are only going to increase). Happy customers equals continual sales.

Of greater immediate importance regarding increases in revenue, however, is the SNPsig announcement. I could not see why this wasn't being used in in huge quantities. I hadn't realised that previous announcements were for RUO (or perhaps I thought this would still allow use in central labs). But this must, clearly, have been a barrier to sales. With clinical use now possible, we can now sell into the large central labs. Pillar 2 is where the large revenue streams are. And this will be much cheaper for UK Gov than using full genomic sequencing. - eat you heart out Oxford Nanopore.

I agree that home use LFT may be high sales and low margin, so disappointing but not critical. I think the vulnerability of home use, being so open to abuse, is becoming more clear. We have a clinical use LFT already on the market for FitToFly providers such as Katalyst. This a quality product that should bring in revenue if/when travel requirements change from PCR to LFT.

The advanced antibody test news is more disappointing. The statement is a little ambiguous- are they looking for different suppliers or a different partner? The delay here is significant, as first to market will be key for partnerships with vaccine providers.

All in all, some positive news for the bottom line and a further bolstering of longer-term revenues.

As it's midnight. Who is the new bb member? Seems familiar, and knows a fair deal, for a new poster. Perhaps working on behalf of the company! Now there was someone equally positive who left this board to work for Novacyt a year or so ago; they haven't returned have they? LOL - just a thought; no reply expected.

I remain positive about the company and the outlook in general but that does not mean I want to put my head in the sand and keep stum when I have concerns.

Communication and engagement (or lack of it) is the key issue here, and needs to be addressed. The resolutions have stayed the same, fine, but let's hope we get something of substance before the next meeting. I'm not sure why for the EGM resolutions I would vote to dilute share capital in order to make acquisitions when we have so much cash already in the bank.

Is it a case if little fish wants to swallow big fish? Or is our cash in danger of being further eroded?

Let's see what snippets they're willing to share between now and then, so that we can make a more informed decision.

Not what most of us were expecting, but some good debate today.

Looking forward to the climb ahead.

GLA

@Poidster
Correct, we need this. But you are assuming it is assays/tests alone and not machines in the inventory. As Kaeren and I were deliberating yesterday - there have been £5.9m cross-sales between IT-IS and Primer. Only £1.5m (of the total £7.4m) were reported as sold under geographical region. That's at least a thousand machines unaccounted for. Great, if they have been sold, but if not shouldn't we know?

I completely agree - there will be no take over at anywhere near these prices, PE or otherwise. The reason is as follows:

We didn't vote for the AGM resolutions knowing that short term pain may be needed for longer term gain (hopefully they will get the message and rectify behaviour accordingly).

So, if we are looking at longer term gain, who is going to vote to seel at these prices. They would need at lest 50% of votes, and as others have pointed out the BoD have next to no shares and nor do ii. So, we are truly in control here.

I won't even consider and offer unless it's in double figures; appreciate this may be some time down the road now. Despite all the current shenanigans, the company is still materially undervalued buy multiples.

Agreed,

The bottom line on this very large payout is that either the dispute is resolved completely in our favour (which means they pay for all goods delivered and for all the cost incurred in good faith in anticipation of meeting further orders) - in which case GM should fairly get his rewards

or

it isn't, in which case, if not fraudulent behaviour, there must have been a certain amount of negligence (in terms of the contract itself and also in investing millions in preparation for a second contract that had not been agreed); negligence should be reason enough for non-payment (at least in part, dependent on the degree of negligence/the amount the DHSC eventfully reimburse).

The second point is having an open meeting. An online meeting is no substitute for some serious questioning. It is too opaque and thorny points can be too easily skirted. Perhaps in normal times the company can be afforded a larger element of trust to simply get on with it. This may mean allowing a degree of secrecy to gain a competitive advantage etc. But, in the current climate, SHs need to be given clear signals to invest and the company cannot hide behind NDAs and the like.

I am still positive that this will all come good in the end and the SP is going to be significantly above where it is now in six to twelve months, but that is a significant wait and the risk element cannot be ignored.

This is not a bad wake-up call to the company. The message has to be clear that there are two parts to their role. One is to develop the company and its product and the second is to secure SH value. The later is not meant to be ephemeral!

Honest, open and unambiguous communication is, of course, key in all of this.

GLA

Ctrl123
You forgot about GM LTIP - surely they need to address this too. Whoever thought of tieing his bonus/vestige to one point in time? That was completely open to abuse. It could be argued that it was a fraudulent act to inflate the share price by announcing enormous but fictitious contracts. Part two of phase one never transpired let alone phase two and we're not being paid for phase one. It could be that GM did absolutely nothing wrong but IMO the company should not let go of over £8m of company funds until the dispute has been settled and the matter is properly and independenty investigated. I was going to vote for but held my votes and abstained in the end. This was despite my positivity for the company and for their POC diagnostics niche. I have some serious concerns /questions and with so much invested would have wanted to attend the meeting in person. I felt I was being cheated out of this opportunity.

Exactly, Exmex - this development in automated extraction is just going to increase the number of tests used by all those machines. A clever move to focus on this development.

@Bluelight - I hope I am mot being naïvely positive in thinking they are scientists who simply don't want to count anything unless it is proven certain. But is somewhat odd they are counting not counting any income form DHSC but are still counting the VAT paid! They do seem disparaging of shareholders, more of an inconvenience when they need 25% of votes, especially as they need no fund raise. But, I'm hoping this is actually all a charade to exert maximum effect in the negotiations - "look at how much this has cost us" type of argument.

OMG Kaeren, I'm not sure where I got my £10k for a machine from? I thought that was the approx price for a Q16, and Q32 would be about £15k

The only source I can find is this https://www.b3cnewswire.com/201408271104/primerdesign-launch-worlds-most-affordable-real-time-pcr-machine.html , as all current resellers invite you to give your details for a quote. This article from 2014 boasts "the World’s most affordable Real-Time PCR instrument" at £3995. So, the most they would be selling the Q16 for now is about £5k. I was out by a factor of three.

£7,424k at just under £5k each equates to about 1,500 machines sold in six months!

The significance is that, if they were all being run at full capacity (14 tests at a time) on an eight hour day, five days a week, at 90 minutes cycle time (i.e. five loads a day which allows for 10 mins change over and a lunch break), they would require:

5 x 14 (per day) x 5(per week) =350 tests per machine per week x 1500 (machines sold in H1) = 525,000 (total weekly tests)

@ 10$ a test or £7, that's over £3.5m per week to feed the machines (just the ones sold in the first six months of this year). Over the course of 50 weeks we are talking over £175m. Now that's a fairly constant use over one eight hour shift per day during an average working week. So, assume that they are only used for a quarter of this time (some will be run more, others less) we still need £45m just for the upkeep of the machines reportedly sold in H1 this year. That's enough to justify a much higher long term SP on its own.

Hence, the need to establish how many machines have really been sold since the beginning of the pandemic and to whom. IMO this is critical to calculating a substantial part of the future income predictions of the company.

For new investors, it is critical to understand that these machines can run, not just covid tests, but at least 250 other PCR tests. Labs that use these machines and Primer Design's tests (such as Katalyst Laboratories), also have an eye on the post covid scene and have already indicated a desire to expand their testing portfolios for general health check type POC screening.

IMO this is where corporate responsibly to their work force will be heading, alongside a national heath strategy to be more preemptive, as the diagnostic landscape irreversibly changes.

That's why patience is required with this investment - things are moving more quickly than ever due to the pandemic, but it will take some time to fully evolve, let alone mature, and for ii too realise what's happening in this space.

It can be scary having a large holding and seeing value eroded with the SP back at this level, but I take comfort at looking at the 5 year chart as my default. From that view, the £3 level definitely looks like a base from which the company will now grow.

IMO only. DYOR, GLA

Just to add further ref the Q machines:

There was a significant incentive plan (in the millions) for IT-IS management to hit targets. So, there is no doubt they scaled up manufacturing considerably and it is in black and white in the report that the revenue for H1 is £7,424k. So, they definitely have made them in the hundreds - the question is, where have they gone?

Perhaps this is a Q for the the AGM we should be asking.

@Kaeren,

My only explanation is that they are not the types to swagger and are avoiding any fanfare at all cost: One, it's not good to be seen as profiteering from the pandemic and, two, they don't want to alert the competition.

Instead they want to corner the diagnostics market by stealth and take market share from under the noses of the sleeping giants.

There is a another possibility regarding the machines that has since crossed my mind. They built a load of them for the NHS and now they are sitting as part of the £15m net inventory - would they be able to put that down as intercompany sales? I hope not. But, at least they wouldn't have a sell-by date, unlike assay stocks, and could be sold or given away as part of a package deal. Probably best not to speculate on this as it's only a thought - but worth further digging.

Part 1 of 2

I agree there's nothing much new in this report, the bad news already having been given a few weeks ago. Everything is being presented on the overly-cautious side. In other words, absolutely the worst case scenario - although if we did get absolutely nothing more from the DHSC, we would then be due some tax rebates that they haven't yet applied - so actually, they've totally overbaked the negative - possibly as part of their grievance and negotiating tactics. IMO the bad news, and there was plenty of it, is all out of the way and we have only upside from here.

With regard to the future development, the way I have read it , is the intention to apply their new (patents pending) streamlining tech(ProMate) to the 250 odd other PCR tests, giving them a strong competitive advantage for NPT and also to use their new sales force to proactively sell their existing and expanded (soon to be announced 2 new tests) PathFlow range of LFTs. It is not clear what they mean by making 'investments' to expand their geographical range but this could be M&A activity, they certainly are not giving too much away here. As with IT-IS, any such activity will be announced when the ink is dry.

Clearly, they want to milk the covid income opportunities as much as possible and revenue streams from this could go on indefinitely, as other posters have alluded to. Whilst they have previously said this market is predicted to decline next year, they intend to take a larger share of what is left, as they have not only superior products but now also have a sales force with which to do it. They are also best placed in terms of continued surveillance with their SNPsig range for those that cannot afford the cost of, or to wait for, full genomic sequencing.

Part 2 of 2

To me one of the most interesting but intriguing pieces of additional information was regarding their instrumentation. Clearly, they intend to develop products to complement the Q machines and reduce further the amount of manual pipetting. These devices (I assume designed to fit the circular test-tube rings that are used on the Qs) can then be sold alongside their Q offering when selling new products but also to all existing customers. And this is the intriguing part. When I emailed Novacyt some weeks ago, they were unwilling to confirm the number of Q machines sold (to the NHS or otherwise) and in the report they have shown sales from IT-IS by geographical regions as just over £1.5m. However, the total revenues attributed to IT-IS are, in fact, over £7.4 million! So IT-IS sold £1.5 million worth of machines directly to customers but a further nearly £6m worth of machines were delivered through one of Novacyt's other arms, I am presuming Primer Design (as part of tests and machine packages) and it is hidden in the £50m of Primer sales. So, it's not possible to say where these have gone geographically. But my calculations based on £15k per machine would be 500 machines in H1 2021 alone (if the cost per machine is closer to £10k then it will be more like 700 machines). Using the old razer analogy, these machines will not all stand idle but require feeding.

@brochrock
Warren Buffet is overused - but whether people are fearful or just plain bored - now is the time to be greedy and load up. IMO opinion the skeletons are all out of the closet and with AGM this week, imminent product development announcements, a new CEO starting and the DHSC eventually put to bed (I suspect in the new year following GLP reviews etc) by whcih time we will have overshot teh £100m revenue predictions for the full year, the future will be far more rosey.
IMO, DYOR, GLA

Enjoy Brentw1 - hope you have a great time. If this comes good, as we are all hoping - will be able to buy one of those.

GLA

@GT4racer

I agree, a good buying opportunity on the drop this morning. I could see this going blue by the end of the day, if not certainly later in the week as news sinks in.

@Poidster - possibly

as one door closes another opens

But what we are doing at anywhere around £3 is beyond me. If I had any more money I'd be buying, but as I'm already fully loaded,all there is to do is sit on my hands, ignore some of the nonsense on here, and wait for the rise whenever it eventually comes.

keeping the faith - patience required

GLA

Thanks, Kaeren - think you're right about it being Exsig. 30m of it! (and possibly some machines), ready at the end of 2020. But then superceded by Promate, which was then also not needed (at least not in the quantities expected).

Thanks also, Mr Big, for your reply. I'm not sure you full understood my point/question, either that or I don't understand your reply. To me the cost of creating the 30m of inventory (Exsig) in 2020 was already deducted (as a cost, reducing gross profit), so cannot be deducted again. Which leads me to think that we might actually be writing off nearly 60m of inventory in total, minus whatever Exsig they were able to sell (or give away) earlier this year.

Off to Newcastle tomorrow to take my eldest to Uni - and hus first night on the 'toon' - so will be away from the screen for a bit. Bi bad thing! As other's have said, let's hope this has drawn a line in the sand and we move upwards from here.

GLA

Thanks for your response, ChrisTopher. Indeed, it could be Promate and Q machines. I would, therefore, like to know hat the other 30m of inventory consisted of; it remains and enigma. Let's see what details are given on the 27th.

@ Kaeren, ChrisToffer et al

I was following your posts and can see the logic to a certain extent arriving at cash in bank of 77m. (If I understand you correctly, 92m at end of 2020 plus earning in H1 this year minus the costs we have been told about today - disappointing, but makes sense, arriving at just under 80m).

However, what I do not quite comprehend, is the fact that full year 2020 already finished with an inventory of just under 30m. Surely this was in preparation for the DHSC contract(s) and the cost incurred would have been associated to that year? What have they done with all of that stock? Why would they spend more this year creating more inventory when they already knew they were in dispute? The amounts seem to similar to be a coincidence. I'm not being obtuse, but cannot see how they can carry a cost forward for something bought/manufactured and already listed as an asset (and I assume invoiced) into the next year. The only other answer is that they are separate items, but surely, they didn't have 60 m worth of inventory? Perhaps there is a long lead time and they were using up the 30m from 2020 in Q1 this year and had already placed orders at the end of 2020 for delivery at some point in 2021, and it now needs paying for.

There is certainly insufficient information for share holders to be clear about their investment decisions IMO, unless, I am being plain dumb and have missed some vital info. Any further thoughts or light that could be shed on this would be appreciated.

I'm glad I have not voted yet - more info to come ahead of the meeting in my opinion, hopefully more positive, and more time to formulate my Qs to the board.

Nice to see the SP take a turn on the news today.

Some good extracts form UK Gov's the Autumn & Winter Plan already posted but if you read further there are more. I have extracted three further paragraphs of particular interest to us:

69. The UK will continue to push for greater scientific leadership and innovation, working
closely with others including the World Health Organization, to develop the The Global
Pandemic Radar and increase international pathogen genomic sequencing capability
through the new Centre for Pandemic Preparedness. These are global public goods
which will keep citizens everywhere safe.

91. Domestic sequencing capacity has been enhanced in 2021 and will continue to
increase over the coming months, enabling a higher number of PCR positive cases to
undergo whole genome sequencing, improving the detection of variants. In addition,
wastewater testing and the use of new technology, such as genotype assay testing,
have been expanded as an additional surveillance function to detect variants and
outbreaks.

92. The Government’s work to support and develop international surveillance capabilities
and support for the rollout of vaccines globally will also protect the UK by helping to
identify and reduce the risk of Variants of Concern.

I hope this is of help to those who are more pressed for time. I cannot use highlighter as those on twitter have done - but you should be able to pick out "World Health Organization, to develop the The Global Pandemic Radar" through the "new Centre for Pandemic Preparedness" (who has a contract with the WHO?) and even better "the use of new technology, such as genotype assay testing, have been expanded as an additional surveillance function to detect variants and
outbreaks." I read that as SNPsig - but there could be other providers of genotype assay testing.

@Earth - keep your shares until at least the year end - things will look quite different by then, I'm sure.

GLA