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MB, as always a good post and good debate.

It does appear that the U.K. Government are focused on saliva based antigen tests ,from asymptomatic stage Day 1 up to day 10 is their ‘ wish list ‘, coupled with hoping that once you have symptoms and you have not been randomly tested in the week in question then you self isolate, the POC saliva antigen test will pick up if you are infected or not within the time frame of Covid 19 symptoms, so you test yourself at that point .

Personally I think be it Avacta or Mologic whoever is first to market with their saliva based test then Omega will get the ‘ gig ‘ to make the LFT in partnership and it will be these tests alongside other antigen tests that the U.K. rely on
Government will fund all as part of their so called 4M tests a day target , all in an attempt to stop the population spreading the virus unknowingly.
They have also taken the view by day 6 the viral load is much lower than day 2 /3 .

This is why the ODX share price has drifted lower even after yesterday’s announcement.

I value ODX on the following fundamentals based on my personal view.

We will earn £2.50 min per antigen test whoever we partner with , possibly based on previous performance with a 65%
gross margin. Due to the volume of tests the end sale price will be around £7 to £8 but out partner enjoys the balance.

We will scale up to 2M tests a month , eventually generating £3.25M gross profit per month.

Covid 19 testing will be with us for 4 to 5 years and our minimum ARR will be £60M ,maybe higher if we can continue to scale to a higher level.
I have excluded capex costs for scaling.

Revenue from all other Products / Partnerships Is extra on top, I am not fully convinced the orders will flow for a blood based antibody test and we will divert manufacturing resources to the saliva antigen from whoever brings it first to market and places an order with ODX.

Potentially @ £30M p/a EBITA at the minimum range with scope to grow and a £100M m/cap is massively undervaluing ODX today , especially if Covid 19 is with us a lot longer than first expected.

I have been topping up in small amounts daily to average out my price.

Fully agree.

I had a small holding in ODX and then picked up on MB’s posts, topped up the other day on the back.

Hi RegulatorUK

We know from the July RNS that our manufacturing capacity is say 850k tests per month, my point being is what can we scale up to per month ? At what point do we hit maximum capacity ?

At that point could Mologic in theory move production to multiple engineers to meet demand ,would we enjoy the IP revenue from the same?

Assuming £2.50 is the market price of an LFT and sale price £15 - IF the Avacta CEO is right and it works.

How many LFT tests a month could we produce?

What’s your view?

Hi MB
I am in both shares.

I think ODX looks well under valued and overlooked, excellent UK manufacturer.

I have a small holding in ODX and think it’s a good business and I have larger one in Avacta.

Personally I think Avacta will be partnered with all of the 4 main suppliers of LFT’s based in the U.K. eventually ,they are now at 50% as we know.

Put aside both businesses opportunities ex Covid 19 tests the one difference between the two is scaling.
Avacta are basically a platform business , ODX is restricted to its manufacturing capacity.
If we look at BBI/ Abingdon they have worldwide manufacturing capacity , Web Industries ltd and Cytiva another Avacta partner , all 4 are based in Portland and
WI Ltd are recruiting staff for their manufacturing plant for LFTs.

Mologic are very good partner but will they give up their IP margin to ODX when they can secure manufacturing worldwide, doubtful ?

Based on lack of manufacturing scalability , no unique IP of the test itself and potentially no leverage on the price then ODX is being overlooked by the market.

I think ODX is a brilliant UK engineering business , I like it a lot but it’s growth capacity for the LFT’s is restricted.

Morning MB
Guess we will be partners before too long, the U.K. needs every LFT it can get its hands on.

MB, fair comment, let’s review ,good debate.

The Avacta CEO has advised the selling price is around £15 with a cost base of £2.50, appreciate this will be lower for ultra high volume contracts, as you say the way you monitise a product is to sell it at volume for more than it costs, but this is the strength of the Avacta model

Avacta can go anywhere in the world to get their LFT’s manufactured and could conceivably produce multi millions of tests per month across multiple suppliers, ODX are restricted by their sole manufacturing capacity.
They don’t have the same economic clout over Avacta or Mologic, it’s just a fact .

ODX looks a decent business in its domestic field but it can’t scale but Asian competitors could supply / flood the U.K. market with LFT’s to Avacta / others and this is when the ODX LFT is a commodity product .

Unless Worldwide Pharma or whoever join the CONDOR programme they won’t be able to compete with Avacta in the U.K.
Ditto unless Mologic have a inclusive manufacturing contract with ODX then if Mologic secure a product through CONDOR in 3 or 4 months time they will be calling all the shots,not ODX.

MB, think your comments are quite helpful in terms of focusing the mind on the difference between ODX and Avacta

With respect ODX / Abingdon/ BBI ,are commodity players in the testing market, whilst they offer a good service it’s not unique, this may sound disrespectful but it’s like making the parts for say the Iphone or the Holding tanks for the Guinness Brewery, there is no intellectual
leverage apart from being an excellent supplier of a product which ODX without doubt are, however we have been informed by the Avacta CEO the kit costs around £2.50 each , ODX are restricted by how many LFT’s they can manufacture.

It wouldn’t be a surprise to see ODX and all of the UK members of the so called LFT consortium be announced as suppliers to Avacta , BBI being the first / lead manufacturer.

But assuming the Mologic test is cleared in 3 months time unless ODX can secure a piece of Mologic’s revenue over and above the price of the LFT then ODX can only generate revenue per their manufacturing capacity.

Appreciate you are an investor like all of us and it’s just a hunch but a decent chance all of the U.K. consortium will be partners / suppliers of Avacta over the coming months .

Good luck with your investments.

Excellent posts Ken, thank you .

Thanks for explaining RegulatorUK, so the ODX/Mologic test is flawed and not going to work in terms of identifying asymptomatic carriers.
Pointless test for the Airport to use really.

Thanks for clarifying.

Hi Ali,
Interesting comment, have you any data on the ODX/Mologic antibody test? Particularly the first 4 days of contracting Covid 19, the only public data from Mologic excludes this time period.
Would be very helpful.
Thanks

Amarulla,
I can’t see anything on their press release mentioning Antigen test? Just triple antibody ? The only data they have published is their Antibody test ? Have you got any links to demonstrate their day 1 to day 4 results ?
Helpful information if you have access to?

On their web site

Note the only data Mologic have published does not include Day 1 to 4 when Viral loads are the highest, it doesn’t provide confidence they can identify this time period.
June-3-CE-Mark-Data-Tables-1.pdf