Member Info for Muck165

Well, during H1 we had revenue of £2.4m and our cash fell by £1.2m to £2m, or £200k per month.

My very worst base case given everything Yates has said is that in H2 we will see revenue of £2.9m. If that’s the case, then very crudely our cash will drop £7-800k to £1.4/£1.5m. In my view, even that doesn’t put us at risk of an imminent raise and even at £200k burn, probably not for another 6months.

But I don’t think that will be the case.

I think revenue will be higher than £2.9m. Yates has already indicated as much, and personally I think it will be materially higher. Apart from anything else (like our strengthening CDMO and regulatory support services) our product sales, which only yielded £200k in H1, should be quite a bit higher in H2 given the Boots deal and wider distribution of Salistick.

And I think our costs will be at least comparable to H1. Yes, as revenues increase so will our cost of sales, but compared to H1 there will be no staff bonus, no Director “settlement payment”, and we’ll receive our R&D credits. That’s got to be £100k right there.

And then we have the fact Yates waived £500k of fees to invest in FOFH. If cash was a concern I can’t see him doing that. And if it happened that he was forced into it because FOFH couldn’t pay, I’d have expected him to get more than 23% ownership. So I think he chose to invest, and felt he could afford it.

And finally we should remember that our fees are largely generated through known milestone payments, giving Yates a good degree of revenue foresight and certainty. So when he indicates H2 this year looks like being materially higher that H2 last year, I believe him.

On balance, I’m expecting some good numbers with a manageable reduction in cash.

All just my views. I’m hoping for a really pleasant surprise (like breakeven) in the TU but am not at all fearful about it, and certainly not worried about a raise.

And thanks for the comment! This, unlike other boards, is a pleasant place to be. When the idiots show up you’ll know we’ve hit the jackpot.

Who knows Loskins.

The real news we all want to see is the TU and details of full year performance. Last year they put it out on 6/7, just 3 working days after year end, so we could potentially get it next week.

I’ve seen nothing to indicate it will be poor. We do, however, need to bear in mind that we waived fees to buy into FOFH, and there will have been some legal cost in buying IVDeology, albeit moderate I think.

For me, the single thing that will determine the market reaction will be our cash position and/or any comment about the potential for a raise. If we can show continued revenue growth and cost control then cash should look after itself.

I think we should remember that in the last 3 months we have

- Bought IVDeology

- Announced design freeze on four STI test, and a significant investment in FOFH

- Announced a major relationship with Boots, including getting Salistick on the shelves as an own brand product.

As an aside, it looked to me like the trading book strengthened today despite slow trading and apparently with more sells than buys. Am interested to see what tomorrow brings.

Sandy - I'll take your word for it on the flip flops; you have more experience with AP on that front than me!

On the Swiss, I think you're right insofar as we have nothing (except perhaps the continuing delay in fund transfer) to suggest they're no longer in play.

On the re-organisation, it's certainly plausible this might have been required by the Swiss, but I'm less convinced of that. I think the driver there was to protect Vast against unsecured creditor actions, particularly from ANAF, and that blaming it on the strike action is a bit of a smokescreen.

Ultimately we're all just left guessing.....and hoping.

Agree Sandy - if the Swiss are still interested they are likely waiting for the licence renewal. We could, therefore, get a bumper RNS confirming both.

Alternatively the Swiss may no longer be interested regardless of the licence, or we may have problems with the renewal, particularly I think if there’s a concern about worker safety.

If the Swiss don’t show up, it’s either alternative finance, a raise, or continued patience from current lenders.

We’ve heard nothing about alternative finance discussions, and personally I think there would be a very small pool willing to lend (if any) and, even if we could secure it, I suspect terms would be harsh.

A raise would be eye wateringly dilutive and to get anywhere near enough to cover Alpha Vast would, given the current SP, have to breach the undertaken given not to issue more than 2bn (we’ve already issued 280m).

And it seems Alpha have run out of patience given the payment plan we agreed.

So for me everything would appear to hang on the Swiss, at least for a half decent outcome. Or I suppose the diamonds….

But might be of interest to some on here…

https://www.theguardian.com/world/article/2024/jun/17/boss-us-firm-uk-covid-contracts-accused-squandering-millions-on-jets-properties

Innova had a positive and negative effect for companies like ABDX I think.

On the plus side the U.K. decision to pursue mass testing introduced LFT’s to the masses, and opened eyes to their benefits which subsequently encouraged diverse development.

On the flip Innova tests were just rubbish, leaving many with mistrust that still pervades, but which the industry is striving to overcome with an explosion of tech advancements.

Of course there’s one other significant advantage, which is that as far as I can tell we are likely to be first to market (anywhere) with a universal sustainable LFT cassette.

It is exciting isn’t it.

It’s something end users value, whether that be retail customers or national healthcare organisations/governments. If end users want it, developers will want it. And it’s product and developer agnostic, so we can offer it to them all, everywhere.

But in particular, anyone using our CDMO services will be offered it as part of that service, which is great for attracting new CDMO customers.

Finally, there is a link in the article to this interesting 2022 piece, which explains something I’d not even thought about.

https://www.cambridge-design.com/blog/how-to-reduce-the-carbon-footprint-and-plastic-waste-of-lfts/

Currently LFT’s have a lot of plastic. Eco-Flo is seeking to address that.

But on the flip, enabling someone to test at home rather than travel to a GP etc has a positive environmental benefit in itself. As the article says;

“It’s also worth considering the positive environmental impact of a user-administered test on the health system. Conducting a test at home can eliminate the need for an individual to visit a test site, GP’s surgery, or hospital (assuming the clinical performance of the lateral flow test is adequate). Based on estimates from the Sustainable Healthcare Coalition, one lateral flow test has around 5% of the carbon footprint of a single GP appointment and produces a similarly low percentage of non-degradable (plastic) waste.

And that’s before we consider travel. We estimate one lateral flow test has the same carbon footprint as driving 350 metres in an average UK car. So, if you’re driving yourself to a test site or GP surgery some distance away, at-home lateral flow tests compare even more favorably.”

Part 2

“ Liam Currivan, head of sales and marketing at Abingdon Health, said this week that the catalyst for Abingdon's cooperation with Morrama was simple: the company wanted to reduce the amount of plastic waste created by lateral flow tests which was highlighted during the pandemic. "It was off the back of that reality," remarked Currivan. Morrama had similar reasons for designing its Eco-Flo prototype.

"They saw a problem and wanted to fix it," he said. As such, the partnership was a natural fit.

Currivan said the first cassettes are on track to reach customers by September with work ongoing, and that the company is taking an iterative approach. "There are some exciting and interesting projects that we're working on with this particular cassette, but it will be offered as a standard product to our customer service base," Currivan confirmed.

There are also efforts to further reduce the amount of plastic in each kit, he said. While the cassette can be replaced by a biodegradable housing, the test strip itself is made of a nitrocellulose membrane, and there are other non-biodegradable components inside each test kit, such as the foil pouch or pipettes.

"The first stage is the cassette but, in theory, anything that is lateral flow and has a plastic housing can be molded with this material and produced at scale," he said. "It gives you sort of insight into how we're thinking and approaching this particular product." Abingdon Health's ambition is for the new design to become the "gold standard of lateral flow housings," Currivan added, and to eventually replace the plastic designs on the market.

Currivan noted that since Abingdon Health not only makes its own kits but manufactures them for others, these innovations could have market-wide ramifications as others adopt them. Companies that partner with Abingdon Health as a contract service provider will also be offered to have their tests made using the new sustainable design. The first kits manufactured in the new format will most likely be its own, he said. Abingdon Health also noted that it does not expect a material change in cost for tests made with these alternative materials.”

Note, the piece does talk about two other companies doing something similar (in different ways), but I don’t think either nearly ad advanced as us.

Part 1

“ NEW YORK – While the COVID-19 pandemic was a boon to manufacturers of lateral flow and at-home diagnostic tests, it also cast a shadow in the form of the plastic waste generated by these assays.

In April 2022, for example, the innovation company Cambridge Design Partnership estimated that the UK alone had burned through 2 billion lateral flow tests during the pandemic. The production of each test, the company said, created about 61 grams of carbon dioxide, roughly half of which was accounted for by its plastic housing and packaging materials.

Estimates vary, but each plastic lateral flow test generates on average about 10 to 12 grams of plastic waste. To reduce the environmental impact caused by conventional lateral flow tests, several companies and institutions have been working to develop sustainable test platforms.

Last September, for example, Abingdon Health, a York, UK-based lateral flow test manufacturer, partnered with Morrama, an industrial design consultancy in London, to create plastic-free lateral flow tests. In 2022, Morrama had introduced the concept of a sustainable lateral flow test kit design. With Abingdon Health’s technical input, they collaboratively designed Eco-Flo, which is produced using recyclable cellulose pulp, claiming it would degrade within a month in a landfill. As part of the deal, Abingdon Health and Morrama invested in a new company, called Eco-Flo Innovations, that is focused on creating sustainable product designs for the lateral flow market. The IP around the design was assigned to Eco-Flo Innovations.

At the time of the agreement, the companies pledged to make their first plastic-free, biodegradable cassettes available to customers within a year, or by September 2024, noting the new cassettes would reduce CO2 emissions by 80 percent compared to single-use plastic and would reduce the amount of plastic used in its test by 62 percent overall. ”

A detailed an interesting piece published Friday by 360dx, which is I think the most highly regarded media outlet in the dx industry space, about the move towards more sustainable LFT’s. I’m hoping everyone can read this (ie not behind a paywall) but in case you can’t, I’ll post (in two parts) what it says about ABDX separately.

https://www.360dx.com/business-news/test-developers-using-cellulose-gelatin-chewing-gum-make-sustainable-lateral-flow

Of note for me is

The messaging about Eco-Flo has increased in recent weeks, and I suspect we will hear something concrete on it shortly.

In the piece, Liam Currivan says the first cassettes are on track to reach customers by September. Great! For that to happen, it’s reasonable to think all design and testing must have either already been completed, or close to it.

Liam notes that there won’t be much of a cost differential.

Morning Apre.

You’d hope! Remember also that Yates has said our margins improve as we put more manufacturing volume through the business. See here at about 1.48 in

https://www.youtube.com/watch?v=aHh2Kuw-vzA

So it would seem that increasing Salistick sales won’t just improve top line revenue, but margins as well.

It’s a “medical device” under the regulations, and requires FDA approval before it can be sold in the US. We know they started engaging with the FDA by at least November 2021 by filing a FDA Q submission, which is explained here

https://www.abingdonhealth.com/lateral-flow-development-fda-qsubmission-processed-explained/

I suspect that as part of that process the FDA May have told Salignostics to do further trials before submitting a full application, particularly as this will be the first ever saliva pregnancy test and so there’s no pre existing market equivalent.

But whatever, you’d hope that here, nearly 3 years later, approval can’t be that far away.

Another one, this time through Farmasiet which is Norway’s largest online pharmacy. Different packaging, different but exactly the same product. Which we make.

https://www.farmasiet.no/catalog/intim-og-underliv/graviditet-og-egglosning/addeira-salistick-spytt-graviditetstest,5106089?experiments=ai_search&searchQuery=

Just another little one from me.

I think some get confused and think Salistick is just in Superdrug, Tesco, Boots (U.K. under own brand), and Amazon. It’s not.

It’s launched in Israel and is on the shelves and online through its largest pharmacy retailer, Superpharm, which has over 290 stores.

It’s offered by Addeira in Sweden through Apoteket AB, a state owned retailer 400 stores and online, with Apoteket Hjärtat, a Swedish private retailer with a rapidly growing online business and nearly 400 pharmacies, and with Kronans Apotek, Swedens third largest retailer with 300 stores and online. And now we know they are at least offering it in Norway through Boots, and their latest LinkedIn post shows they will shortly be opening up the Danish market.

And to be honest, all this only tells part of the current distribution story. There are plenty of other retailers selling it.

The point, of course, is again to say that Addeira do not make the tests - they are just the supplier. We make, and get paid to make, part of every single test sold no matter where it’s sold, and it’s being sold far more widely than I think a lot of people think.

https://www.apoteket.se/produkt/addeira-gravtest-1-st-ask-1565701/

https://www.kronansapotek.se/addeira-saliv-graviditetstest/p/797762/

https://www.apotekhjartat.se/produkt/addeira-salistick-graviditetstest-saliv-1st/

In fact, Boots operates across a lot more territories than the ones I mentioned!

Seems to me our Boots relationship could potentially yield a hell of a lot more value than I thought.

https://www.boots-uk.com/about-boots-uk/company-information/walgreens-boots-alliance/global-presence/

Did a bit of bit of digging and (at least according to Wikipedia!) apart from the U.K., Boots operate internationally in Ireland, Italy, Holland, Norway, Malta, Thailand and Indonesia.

I dug because I came across this today - https://www.boots.no/addeira-salistick-graviditetstest-1pk-940753

As you will see, it’s a link to a listing on the Norwegian Boots domain for the Addeira branded version of Salistick. For those that don’t know, Addeira have an agreement to distribute Salistick under their own brand in the Nordic region (just like we do in the U.K. and Ireland.)

It’s really interesting for us because;

1. Addeira are just a distributor and don’t make the test - we do, and they get it from us.

2. Addeira seem to have secured Boots as a major retail partner in Norway, just like we have in the U.K. (albeit under the Boots brand).

3. All this means wider levels of distribution for a product we make

4 If Boots are now offering it in U.K. and Nordic territories, it’s reasonable to hope they’ll do the same in all other territories in which they operate (eventually)

5. I’ve said before that Boots are wholly owned by Walgreens, the largest pharmacy chain in the US. If and when Salistick gets FDA approval, one might hope it will hit Walgreen shelves.

6. The link says it’s a “new” item (Nyhet in Norwegian!), so it seems like a recent development. Certainly I’ve not come across it before, and I dig almost daily!

7. It is a bit strange that Boots are selling the test in Norway under the Addeira brand, rather than their own. Maybe that’s the next step?

Slowly but surely Salistick is advancing market penetration, and as the manufacturer (at least for part of each test), that can only benefit us. Who knows, soon it could be global, and that would mean a lot of benefit!

@Apre - as you intimate, it all comes down to what Yates sees as “material”. I’m certainly expecting north of £2.9m for the period, but am hoping for nearer £4.5m alongside cost control. There is just nothing coming out of the company that gives me any cause for concern. If there is a frustration, and I’m certain it must equally frustrate ABDX and developers, is the slow regulatory approval pace. That’s why Ivdeology was a shrewd purchase, and in that respect it’s always worth remembering the sellers sold it for 100% paper at prevailing prices, so they must have confidence in us too.

I’m tentatively hoping the same Apre. If we do, I think it will relate to either Eco-Flo or potentially the fifth FOFH design freeze.

Whatever, the TU will be the most interesting thing. I’m seeing nothing to say we’re not remaining on track, and tbh I’d hope we’d see an uptick in interest as the TU approaches. Sadly, if that happens I think it will owe more to TA than any real understanding of our fundamentals, but I suppose even that would invite more to look under the bonnet.

Ultimately I’m hoping the TU will be a catalyst.