Member Info for Okehurst1

Thanks responding MB, fair points.

The Abingdon general update to the market may result in a similar/ relative same time RNS by ODX just in relation to the Abc 19 test? Potentially interesting week ahead.

Hi MB,

Suggest it’s a given we are increasing capacity up to 2M LFT’s a week come the end of the month ? It’s not Avacta’s that’s for sure as their test has not completed clinical validation nor cleared Porton Down.

Could we be manufacturing antibody tests for a Government contract whilst we await instructions on which Antigen Biotech is to be used ?
Or could we be manufacturing antigen test cassettes with the view to insert the nominated antigen biotech once advised by the Government?

The latter has some merits although I do appreciate its potentially double handling but we do hit the ground running ,we will of course get more of an idea if it’s the former next week when Abingdon update the market, ODX should in theory also separately advise on same day regards our own output and contribution to the Abc19 test .

What’s your opinion ?

TWatcher, actually very good question, you hit the nail on the head?

Where are they getting the money to make all these tests? Who is paying them upfront? They don’t have enough cash on the balance sheet, it must be the Government ?

Thanks for sharing Big Jock, you symbolise the best of a BB for PI’s.

Suggest there must be terms of the Government contract that satisfies the ODX BoD that we are not aware of? For example if by April ODX are manufacturing 10M a month who is funding the components of these tests? Ditto the tests currently being manufactured and the capacity in March.Signing up for additional real estate as disclosed by the ODX landlord, there are so many pointers to ODX stockpiling finished goods, it’s highly unlikely this is being undertaken speculatively, it’s serious cash that ODX don’t have on the balance sheet, the contract they have signed with the Government must include an upfront payment to commence manufacturing, why wait ? Put the biotech in later from whom whoever is chosen by the Government?

Sure everything will be revealed within next few weeks.

Benyon,
Fair point, we know it’s 10M tests a month, rumour is £2 per test
Gross profit £240M on a 12 month basis X 2 years, £480M
Maybe a tad lower

Discount to zero the Abc antibody test which is very accurate according to the U.K. Government , ditto their other products and being the 2nd largest LFT manufacturer in Europe, just on a potential cash basis the shares are a steal.

Based on timings, reckon it’s Mologic first , Avacta after it completes clinical / TT, end of May , June

Forgot to add,
The capital gains is then only payable on any gain over 90p after using the annual CGT allowance.

If the option was at 10p a share and the day of issue was 90p then the paper gain is taxable as income if it’s an unapproved HRMC scheme.
Otherwise I guess every one in a quoted company could in theory be paid in shares and avoid NI/ income tax if it was just CGT and pay a straight 20%.

Contender, it’s actually a fair comment on the tax relief.

This time last year the enterprise tax was 10% on a lifetime limit of £10M, the Government reduced this to £1M life time there are rumours this may be removed in next budget.

If a director sells £1M of shares this week they may be able to enjoy the 10% tax rate, if they then receive generous options outside an approved scheme then they pay income tax on the gain relative to the date of the shares when issued ,this could be up to 45% , they may not otherwise have cash to settle this bill.

To summarise, it’s been a well executed coordinated BOD bit of tax planning, they pay 10% tax up to £1M gain on any fully paid up shares they sell , they then pay the tax on the paper gain and this becomes their new strike point for capital gains in the future based on the closing price on date of issue, there is also a reasonable chance CGT may be increased at the next budget in line with income tax and an outside chance of a higher rate tax above 45% on the income benefit of the new options , plus they now enjoy a higher starting point for future CGT gains which is could be increased and they have funds to settle tax liabilities.

Guess the share price would have to be at £2 maybe
a wee bit lower for them to be at scratch to make it worthwhile to hold the shares, assuming worst case for taxes in the next budget that is ,plus they then need cash to settle their income bill on the options, all in it was a good bit of business, let’s hope they show the same acumen with the anticipated sales contracts.

Rodders, that’s correct but that will be under the CE accreditation, Avacta will sell those tests to whoever but not the U.K. Government.

Porton Down is a separate validation to get onto the Government contracts, phase 3a/3b, assuming stage 2 being the LFT itself has been cleared.

Then there is the question of the TT with ODX/Abingdon.

As such it’s looking highly likely the initial production run for ODX will be Mologic and that assumes they themselves have passed Porton ? Although the FT article reported they had alongside ODX/ Surescreen.

At best it’s looking likely it’s end of Mayy/ June before ODX are manufacturing tests in conjunction with Avacta on behalf of the government

SSimon,
Think you could be correct, my call / timeline is not dissimilar

Avacta may ultimately be the sovereign antigen but from a timing point of view it’s going to take a few more months.

Post CE accreditation it then has to go Porton Down for phase 3a/b, it has to pass before it can considered for PHE contracts.

At this point we could be end of March early April, lets assume the Government has to the negotiate contract terms.

ODX/ BBI/Abingdon then have undertake TT, in the meantime the Mologic GAD factory may well start manufacturing the Avacta JV test for Africa and in the ODX will manufacture the Mologic test for PHE.

ODX will not have a contract off Avacta, the contract will be via the Government, same for the other LFT manufacturer’s and the boxes will have an NHS logo on.

TWatcher, it’s a generous award , I agree, but it’s not a ‘ free lunch ‘ there is a substantial tax charge when receiving options at the price he/ others have enjoyed.

It makes sense to sell shares that attracted CGT at 10% to pay the a much higher tax rate/ bill on the options, otherwise the directors have a cash flow problem.

The Government also reduced the 10% CGT threshold last year from £10M to £1M lifetime, coupled with the potential of a steep CGT rise in the next budget, this is just sound legal financial planning that has been coordinated following advice tax lawyers, it’s nothing sinister.

909, Abingdon number one capacity wise based on disclosed information in their prospectus and reported to be 150M p/a , assume ODX 120M .

Suggest it’s healthy to have a good debate, 909 whilst at times can lean on the negative side, he/ she also has the right to voice their opinion, however it’s worth reminding ourselves just how far Omega have come in the last 52 weeks, both commercially and with their share price/ market cap.

Think it’s fair to say that over the last 12 months and overall the BOD of Omega have done a decent job and ODX are now the 2nd largest LFT manufacturer in Europe, they are sitting on cash, plus they are fully funded and in a position to generate possibly £200M p/a of revenue according to their in house broker and in this period the share price has increased 600% .

Whichever way you look at it we have to give credit to Colin and the board.

Twatcher
If you read the original £912M Antigen tender document it actually does lead the price point to £6, it mentions how many tests will be included for the £912M

This was covered extensively over on the Avacta BB before Xmas.

The original Innova contract was won at £15 each, the Government have basically driven the price down.

If you price up the components of an antigen LFT its more expensive than a antibody test , plus the buffer cost , on that point alone that’s why we can say Finncap have just covered themselves with a number that is meaningless in this discussion.

Of course do your own research as you are doing.

This also leads onto Abingdon and their position

As lead partner in the Abc test they had an element of control, Omega were receiving just 75p gross profit for their input.

Abingdon announced a partnership with a USA company this week, it is quite possible Omega were the lowest price high volume LFT manufacturer in the U.K. tender process, and Abingdon had higher value orders elsewhere so priced accordingly.

The fact the Abc test has been quietly shelved for the foreseeable future for what looks like the more lucrative Antigen tests indicates this to be possible.

Colin was quoting 10M tests a month by April 2021 late last year, it’s feasible that Omega will ramp up above the 10M tests a month by leasing the machinery from the Government.

Abingdon could well be smarting from the Government not continuing with the Abc antibody test in high volume and have secured commercial orders as mentioned above, this leaves ODX ideally positioned to increase its volume, the announcement intimates a volume driven structure as well.

Twatcher,
Finn Capp said they don’t know the sale price of the test as yet and it appears they have gone with the revenue as per the ABC -19 antibody test buts not like for like, there are more components in an antigen test.
The Government tender document directed the market towards £6 a test.

The buffer/ reagent is around 50p a test on average as it’s different to the antibody blood test, we can speculate and say the biotech element could receive £2 gross including the buffer/ reagent
£1.50 to £2 should cover manufacturing / packaging and forwarding to the Governments designated distributed warehouse
£2 gross profit for ODX which is what is suggested by MB

Staff costs / establishment / general running costs etc are to be deducted, we are then left with EBITA cash.

Steve,
That’s what TOn1c pointed out, £5 @ 50% margin
MB thinks it will be £2 gross cash, so £240M cash over a 12 month cycle .

TOn1c

Good summary of the gross margins.

As MB has pointed out , 10M tests @ £2 gross per test , £240M gross cash a year, ODX is now a de risked business and by April will be the 2nd largest LFT manufacturer in Europe, Abingdon being the largest but Omega are closing fast.

One point I have been thinking about with Abingdon, they possibly enjoyed higher revenue /margin on the Abc antibody test than Omega and may think they can secure better unit price in the commercial market than that from the U.K. Government, Omega and credit to Colin and his team took the opportunity and made it work for the business.

This then leads us on to speculate that ODX could continue to ramp up its capacity to 15M or even 20M a month using the cash flow from the government contract.

ODX shares are a steal at this price.