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I definitely have Frankie, far too long, and long enough to know you’re full of sh*t, as usual.
Let’s see how it unfolds. Nothing wrong with speculating whether today’s news could present an opportunity for YGEN.
Yeah, not sure it does Frankie, but don't let that stop you.
For better or worse, I've been invested here since the RTO of Vialogy. Now I'm not saying that's something to be proud of, but it is certainly a fact that excludes me from qualifying as a rainbow chaser.
Anyway, it seems that following the NCYT news, investors are more interested in buying-in over at MHC.
Because that makes sense...
Who are the rainbow chasers Frankie?
That's my understanding too. NCYT were providing exsig (which includes their genesig PCR test), as well as PROmate as part of the contract with DHSC.
http://primerdesign.co.uk/exsig/covid-19-direct
By not renewing the contract with NCYT, surely that leaves a gap for somebody to supply the government with PCR testing kits?
It does make you wonder if the DHSC are looking to replace NCYT, or whether this news just reflects the shift in focus from mass PCR testing, to a role where PCR acts as a confirmatory test, following a positive LFT test?
There's a lot of press today regarding the expensive nature of PCR testing in relation to international travel. I wonder whether YGEN are well positioned to step-in and provide cost effective PCR testing. Could we provide Clarigene tests directly to the Government's testing labs?
Agreed JAdam. I remember towards the end of 2020, Lyn talked about 500k Clarigene tests that could be processed by other testing providers at their labs. Obviously YGEN retains the 20,000 per month capacity at the lab in Manchester, some of which will be taken up by this deal with MHC/Boots, but the Clarigene tests being processed by MHC at their own lab should eat into the 500k stock previously mentioned.
But for whatever reason the market doesn't seem to want to assign any value to this, and I have no idea why. Like you say, YGEN has essentially bagged itself a nationwide contract with Boots to provide PCR testing through its 507 stores.
And this is in addition to any contracts YGEN lands with airport hubs (such as the Leeds/Bradford Airport contract) to provide Covid-19 PCR testing services as part of the re-opening of international travel.
The way I read it is this:
1. YGEN will be providing extra testing capacity to MHC as an 'exclusive external provider'. These tests will be processed by Yourgene Genomic Services at YGEN's Citylabs 1.0 laboratory. This is the 'proportion' mentioned in our RNS.
2. MHC will provide the remainder of test processing capacity through their own labs, but using YGEN's Clarigene SARS CoV-2 PCR CE-IVD test kit.
But I'm still no clearer as to what MHC actually is, apart from a sales channel for YGEN's covid testing services. A YGEN sales channel with a market cap of £40-50m!
Not missing anything Andy, unless I'm missing it too of course...
I'm struggling to see what the MHC business is all about. Except from being a sales window, offering YGEN's covid testing services to the public, what else do they do? MHC seem to be the definition of a middle man.
"Through the service agreement, a proportion of the MyHealthChecked™ COVID-19 tests will be processed by Yourgene Genomic Services ("YGS") at the Company's Citylabs 1.0 laboratory in Manchester, which is well equipped to manage the increased demand. In addition, samples processed at MHC's own laboratories are already using Yourgene's Clarigene SARS CoV-2 PCR CE-IVD test kit."
Do they have their own test or testing service?
With the involvement of AR and Lyn at MHC, I really hope YGEN will be receiving a substantial chunk of the end price as revenue.
Thoughts in Cytox Ltd as a potential acquisition target? Based on YGEN’s growth strategy and previous acquisitions, it would seem plausible.
Alzheimer’s would add a very different string to the company’s bow.
Yourgene hasn’t been awarded the NHS England contract... yet, so they couldn’t name a provider - only Wales has been confirmed as far as I’m aware. But you’d like to think we’d be a very strong contender.
Hopefully we’ll get some news on this front soon.
They also have iOS and Android apps you can download :)
You’re more than welcome to join me over at BullsEye Investors. It’s pretty quiet as it’s a new platform.
https://www.bullseyeinvestors.com/
Blimey, seems it got a bit heated here last night.
I agree, even if an effective vaccine is confirmed, there will inevitably be challenges in rolling it out. Even if you believe a state of herd immunity can be reached, it will take time to get to that point with the likely need for boosters etc. Then you still have the complexity of co-ordinating vaccine rollout internationally (with all the political noise that will bring) to allow the economy to fully open for things like international travel. It's likely testing will still be required well into 2021, if not longer, it's just a question of scale and the composition of type of tests to be used (i.e. PCR vs. POC rapid tests etc.). From YGEN's perspective, due to the relatively small capacity we can offer both for in-house testing and the supply of Clarigene to external providers, and the fact our test is proven to be extremely accurate, I think we will sell whatever we can produce for at least another 9-12 months.
Whatever your view, I imagine we can all agree that the success or not of YGEN does not hinge on our Covid-19 testing sales. At worst it is a strong side-business which will help plug the gap due to a temporary loss of expected NIPT revenue. I believe it will prove to be much more than that when we look back in 6 months.
@notaflipper - the way I read it, it's YGEN's ability to add capacity quickly that is the limiting factor, not the demand for a 'gold standard' PCR test. I'm sure an extra 10,000 PCR tests per month would be gobbled-up, either by public bodies like the NHS or privately - if only they were available. The challenge is freeing-up or building the extra capacity as quickly as possible. One downside from this morning's update was that it seems to take a couple of months to add an extra 10,000 block to the in-house capacity. And we know from LR's recent comments that he will not free-up extra capacity at the expense of the NIPT business. But I'm hopeful we can hit 30,000 tests per month, maybe by March 2021. The big question, with a vaccine on the horizon, is how the demand for PCR tests will hold up in H1 2021.
I'm also hopeful that we can add significant revenue via sales of the Clarigene test to external testing providers. If we can sell the 500k Clarigene tests touted, at say £5-10 revenue per test, that's an extra £2.5-5.0m in revenue. Which is why I'm a little nervous that no figures for these sales were mentioned this morning.
I'm also disappointed that if, as appears to be the case, the quarterly Covid-19 testing updates promised by LR seem to have been interspersed with other RNS releases. A small point maybe, but I think it dramatically lessens the impact. Maybe this is intentional, but naively I was expecting a standalone Covid-19 testing RNS update on it's own, clearly outlining tests sold in the quarter, both in-house and sold to external providers. We haven't had that; all we have had is an update that in-house capacity has been increased and radio silence with regards to the number of Clarigene tests sold externally.
I tend to agree that the drop in core business (NIPT) sales in international markets has come as a surprise. I can understand the frustrations of investors because this was not signposted. The rationale given for the drop in revenue is that resources have been diverted towards Covid-19 testing in those markets during the early stages of the pandemic. However, LR did state that they are starting to return to normal patterns - whether the 'second wave' impacts this in a similar fashion remains to be seen. Ironically, maybe our core business would benefit from a rapid Covid-19 LFT being rolled out as it would re-divert lab resources back to NIPT.
Either way, the core business growth rates in the UK (+40%) and Europe (+80%) were shown to be very solid - both markets which were somewhat insulated from the issues experienced in the international markets. So, if we apply an assumed 40% growth rate to the international market, it shows how much impact the Covid-19 pandemic has had on the international segment of the NIPT business:
£5.1m (H1 2019) x 1.40 = £7.14m (instead of £3.8m). That's a £3.34m swing in H1 2020 revenue due to the impact of Covid-19.
Also bear in mind that H1 2020 revenues and growth rates for the NIPT business do not factor in the IONA Nx test on the Illumina platform. Therefore H2 2020 and 2021 growth rates should be significant for the NIPT business. We also still have the DPYD 'dark-horse' which should add to revenues for H2 2020 and the additional revenue from the Genomic Services venture.
With regards to Covid-19 testing, it's very positive that we are actively increasing the in-house testing capacity to 20,000 tests per month (equivalent to £1m monthly revenue). This does two things: (1) confirms the revenue expected per 10k capacity block (at roughly £50 per test), and (2) shows how long it takes to bring an extra 10k capacity block online (it's not particularly quick and takes 2-3 months). LR also hinted at further in-house testing capacity to be added, based on demand, so maybe we will move to 30k tests per month early 2021 (if demand remains). However, he doesn't seem willing to quantify the additional sales relating to the Clarigene tests being sold to external providers (i.e. the 500k tests available up to the end of 2020). The £1m monthly revenue is from the in-house testing capacity only, but we are still no clearer, as far as I can tell, as to how much we will earn from the Clarigene sales to external providers.
And for NHS Scotland:
https://www.sglc.scot.nhs.uk/wp-content/uploads/2020/07/DPYD-Testing-Update-2.pdf
"Although the pilot was originally for 6 months it has continued in recognition of the importance of
DPYD testing during the current COVID-19 pandemic. DPYD testing has been classified as an
‘urgent’ testing service for patients, where genetic testing would inform clinical treatment, reducing the
number of patients requiring bed days in hospital and ICU / ITU. The application of DPYD testing has
added resilience in the response to COVID-19 by helping to maximise bed availability as well
reducing risk of exposure to COVID-19 for cancer patients undergoing chemotherapy.
At the present time recurrent funding has not been identified for continuation of the test nationally.
Healthcare Improvement Scotland have been undertaking some work to demonstrate the economic
case for this pharmacogenomics test. NSD commissioning colleagues are working with the
consortium laboratories and clinical representatives have compiled a business case with a view to
seeking to secure recurring funding on a national basis. Opportunities for funding options are currently
being explored. "
A quick Google search for DPYD testing NHS England, top result:
https://mft.nhs.uk/dpyd/
"This is a new service and the test request form will be added in due course."
Coming soon?