Atomo Diagnostics Limited (AT1) Earnings Call Transcript & Summary

I was doing that softly, just so that everyone also [ gradually ] pay attention. Good morning all, and welcome to the Annual General Meeting of Atomo Diagnostics. I'm John Keith, and I serve as Chair of the company. I've been informed that there is a quorum present. Maria?

Yes.

Thank you. And I now declare today's AGM open. As the notice of meeting has been circulated to you, I'll take that notice as being read. On behalf of your Board, I warmly, warmly welcome you to Atomo's offices. We are delighted to be able to host today's meeting in person. I welcome those shareholders joining us through the webcast. And although shareholders attending via the webcast are unable to vote or ask questions during the meeting, we also warmly thank you for your participation. I'm joined this morning, of course, by our CEO and Managing Director, John Kelly. And we have online Dr. Paul Kasian, Dr. Cheri Walker, Dr. Curt LaBelle and Ms. Deborah Neff, fellow directors, who are joining through the webcast. We're also joined by a number of our team here in Sydney, including Will Souter, our CFO; and our COO, Chandra Sukumar. Done. My address has been released to the ASX in accordance with listing rules, and that went out this morning. And I'd just like to share some of those comments now. So on behalf of my fellow directors, I warmly welcome you to our Annual General Meeting for 2023. We are gathering this morning in person on the lands of the Gadigal people of the Eora Nation. And the Eora itself reaches west out to the Nepean River and south to the Georges River and north to the Hawkesbury River. To my fellow New Zealanders, [Foreign Language]. I'm joined by fellow directors as mentioned, our company secretary, Maria Clemente; our auditor, Gareth and Andrea; external counsel; and our Atomo senior executives. Our agenda today starts with me talking about Atomo's financial year to June 30, 2023, and our current year. Then I'll invite John to talk and discuss both in further detail. I'll then turn to all of you as our shareholders to consider several resolutions that we have put forward to you. Throughout our last financial year and through to today, we see the continuing adoption of rapid tests by consumers and professional users. The material change in Atomo's revenue mix and magnitude of that change reflects the change from the extreme demand that we saw for COVID rapid tests during the pandemic. Revenues, therefore, are being replaced by steadier, longer-term demand across Atomo's devices and those of our partners that incorporate Atomo's platforms. Corresponding with demand and product innovation are increasing levels of acceptance from regulators here and elsewhere in the world of public agencies, all recognizing the merits of rapid testing. So briefly on regulators and public health. We celebrated our partner, Lumos Diagnostics 510(k) clearance from the U.S. FDA for its FebriDx test, representing the first FDA approval for Atomo's Pascal platform. We announced during financial year 2023, our submission to the Australian TGA of AtomoNOW, the blood-based rapid pregnancy test. And we continue to work with the TGA to obtain approval, and that will be followed by market entry locally. In public health, we're working with government agencies here and elsewhere in the world, particularly around our flagship HIV test and in Australia, focusing on making that test far more easily available than it has been to date. For those of you who are more recent Atomo shareholders, again, a warm welcome. Let me share Atomo's role in rapid diagnostics. Atomo develops, commercializes and supplies devices for rapid diagnostic tests. We sell finished -- we sell finished rapid tests for professional users and to consumers. We work with our clinical partners to develop new tests and launch them into global markets. Our tests detect infectious diseases, chronic health conditions and consumer wellness. Our work in infectious diseases is led by Atomo's HIV test. Demand for that test spans global health programs and increasingly, we've seen demand in developed consumer markets. We are delighted in partnering with Newfoundland Healthcare in the U.K., through which our HIV self-tests are on the shelves of Tesco, one of the largest supermarket chains in the U.K., and our extensive local marketing sees our tests on the shelves of pharmacies across Australia. In Global Health, our continuing relationship with Viatris, one of the largest suppliers of retrovirals and generic retrovirals in the world, sees growing in-country approvals for the sale of our HIV tests, especially amongst developing countries. As partners, during the year, we supplied Atomo platform devices to NG Biotech, Access Biotech and Lumos Diagnostics to support their proprietary clinical rapid diagnostic tests. Let me turn to Consumer Health and Wellness. The market continues to respond to individuals exercising greater control over their health and understanding their health. Signs of this change were reflected in the discussions that we are having with rapid test development companies and consumer retail companies about adding their tests to our platform portfolio. Turning to financial management. I mentioned Atomo's change in year-on-year revenues and also our sales mix, and that this reflected the overall market demand reduction for the pandemic -- as the pandemic passed. Our corresponding ramp-up in revenue is in the production and delivery and sale of our patented products. Atomo shareholders, in the broader market, supported our capital raise that we completed shortly after the end of the financial year. Funds are being invested for regulatory approvals and commercial launch of existing products. We welcomed a number of new shareholders to our register, and I thank them for their interest and engagement in Atomo. The Board and executives are exercising appropriate care in financial management, prioritizing revenue growth and exercising judicious regard for spending. The latter is very much focused on supporting the promotion, the sale of existing product. To this end, the Board very much acknowledges the considerable efforts across the executive team and the wider Atomo workplace to seek efficiency in our activities. I'm also pleased to report that these are efforts around efficiency, around streamlining about judicious financial management is being undertaken, while concurrently, we see very strong positive employee engagement through our workplace survey. And Priscilla, who's our HR head, has overseen that exercise. So on behalf of Atomo's Board and management, we gratefully acknowledge the tireless efforts of those who provide us with services and advice. Maria Clemente from Boardroom, our company secretary; Grant Hummel, HWLE; Gareth and Andrea from BDO; Canaccord and Bell Potter. Atomo's Board of Directors share substantial commercial governance and industry experience across the critical aspects of our business. Amongst the Board priorities is ensuring we have the capabilities and domain expertise to govern our global business effectively. Our Board comprises Cheri Walker, Deborah Neff, Paul Kasian, Curt LaBelle, John Kelly and me. Deborah chairs our People, Culture and Remuneration Committee; Paul chairs Audit and Risk, pillars of our corporate governance. I sit on both committees. You'll be shortly asked to consider Dr. Cheri Walker's reelection to the Board as part of our annual governance process. So in closing, I share the Board's strong recognition of the Atomo teams' hard work and commitment to developing and implementing the company's strategy as validated by the Board, while making sense of and realizing new opportunities in an environment which is, as we recognize, challenging. However, the decentralized -- decentralization of health services, of diagnostics and of care continues to evolve and evolve quickly. The adoption of rapid diagnostics has changed users' behaviors and expectations of testing by way of location. We all know what a rapid test is now. By way of speed to results, 10 to 15 minutes, and timelier prescription. Earliest to test, early to diagnose and then earlier to prescribe. These changes align with Atomo's proven competencies and its focus on developing tests that address unmet consumer needs. Atomo's competitive positioning draws from our product and our commercialization expertise. We're excited about this year. We are mindful of the challenges, but we're also excited about those years ahead. And with that in mind, I welcome John to talk with you about what we're up to in greater detail. I thank you for your enthusiastic support, for your questions during the year and particularly today, which is your [ day ], with our shareholders during our AGM and for your interest in Atomo. With that in mind, I now invite John to deliver the CEO and Managing Director's address.

Thank you, John. I'd like to thank John for his -- not only his speech, but his tireless efforts as Chair of Atomo Diagnostics for a number of years. In terms of who Atomo is and what we do, I think John has been very articulate in explaining the role that we play in the transition -- increase in transition to consumer and at-home diagnostics. Our technologies were developed in advance of the pandemic, while blood testing at home was still considered a relatively niche market opportunity. And we now find ourselves in a market where home testing has become standardized, normalized, and we believe will account for a significant portion of growth within the broader IVD diagnostics market as the pandemic plays out with some structural changes in the market. Our technologies were developed to make rapid testing easier, to make it more reliable, but also to provide higher levels of consumer satisfaction. And we've been able to commercialize those technologies through our own finished products as well as offering the usability and reliability that our technology delivers to other partners. And we'll talk in the presentation around how we've seen a resumption of that engagement post COVID and are confident of an expansion of that OEM customer base. That really talks to the 2 areas of revenue generation that we pursue as a business. One is the finished point-of-care product business where we sell a product in a box with a regulatory approval, typically to a distributor, or in the case of public health, Ministries Health. And that is a portfolio that we will look to see expand beyond HIV. We're already partnered with NG Biotech to move into blood-based pregnancy testing. We're actively looking at commercializing a rapid iron deficiency test that monitors for ferritin, a very significant issue that impacts about 1/3 of pregnant women, a lot of adolescent women. And beyond that, a whole pipeline of opportunities that we're getting feedback from our channel partners around interest as well as the broader market, and that includes both sexual health applications as well as a broader array of wellness applications that reflect the transition of health care management from primary health care providers to consumers. And that, we see, being a long-term transition that we are, not only excited about, but I'd like to be part of making it happen. Outside of that finished product business, we have a technology platform business. The platform is well proven now in terms of its technical performance. We have a range of high-level regulatory approvals that underpin that validation, and we increasingly see consumer preference for our products, and that's leading to agreements, like the one John mentioned, with Newfoundland Diagnostics and a channel into pharmacy retail. We are delighted to see a return to the purchasing of our cassettes by our partners, NG Biotech and Lumos. And that reflects, I think, a transition back from the COVID business that took over diagnostics for a number of years to a more traditional opportunity for products beyond COVID, and that includes a resumption of blood-based testing. And we'll talk a little bit about how that market has returned from our perspective as well as where we see that market going. So in terms of achievements for the year, obviously, as John mentioned, the transition of our HIV business into retail pharmacy channels should not be underestimated. Tesco supermarket, the largest chain, I believe, in the U.K., they were not selling these types of tests before the pandemic. That's a category addition into pharmacy retail that is transformative for the diagnostic market and one that I think sits very well for Atomo as a consumer testing-focused company. We also, as John mentioned, received the first 510(k) for our platform. Again, it shouldn't be underestimated, the importance that, that plays for our business, not only in additional anticipated demand from Lumos, but more importantly, the ability for us to now offer a proven and regularly approved platform to OEM customers and potential customers in that U.S. market. And we have seen an increase in inbound engagement from U.S. partners, and we're very excited about those opportunities. We anticipate a number of them moving through to proof-of-concept engagements with a medium-term revenue addition of new OEM customers. And that, I think, is a welcome development after we had seen a closing up of our R&D pipeline for blood testing as a result of every diagnostics company in the world, focusing almost exclusively on COVID for an 18- to 24-month period. And I think our revenues reflect that tapering off of COVID business for Atomo and a period of readjustment by the market that we're now starting to see turning into reengagement in existing products and the R&D pipeline of new blood-based products coming to market that were on hold or disappeared during COVID. We have been able to grow our HIV self-test business in Australia once we were able to remove some restrictions placed on us by the regulators around the promotion and advertisement of product as well as the ability to offer it through pharmacy retail. We've had a very positive reception from the pharmacy networks that we've engaged with. We're seeing quarter-on-quarter growth of that business, and we're also very encouraged by recent public health engagement, the adoption of a number of vending machine programs in South Australia and Queensland now being scaled up. We believe New South Wales will be next here to bring that pilot scheme to scale. Then that was [ studied ], where people can now go online and order free tests through our back-end website, and that's a program that we think the government is excited about and we're discussing opportunities to scale that. And that reflects, I think, a broader transition to public health, HIV self-testing that's been accelerating in markets like the U.K. and U.S., and I think the Australian public health system is starting to catch up to that opportunity. So I think our HIV business opportunity is solid. As John mentioned, we're seeing an increased contribution of that HIV revenue from developing markets. And I think what that means for us is a better product mix in terms of average price per unit as well as better margins as we have less reliance on global health tenders where margins are tighter. We have also, I think, seen a recognition of the platform and an ability to start to have conversations with larger entities who are now starting to consider their opportunities in consumer testing as the market evolves. And I think our proven usability, proven customer satisfaction and recent regulatory approval in the U.S., all of those really helped that -- those conversations. And finally, as John mentioned, we have been very focused on cost reduction through the business. We have well over $1 million of OpEx, reduced in the FY '23 period. And that reduction continues into FY '24, and we'll continue to look to bring down those fixed costs in the business where we can. In terms of the performance and revenue for the period, we had just over $2.5 million in revenue, obviously, a significant drop-off in revenue from FY '22, reflecting the complete and quite quick cessation of COVID revenues at the start of the period. Our gross margin at 26% really reflects a stock -- COVID stock issue at the start of that period as the market here for rapid testing finished very abruptly. If we strip out COVID revenues, we see that our normalized margin is 37%. We have seen, in the FY '24 period, further improvement in gross margin. And I think that reflects sales into the Australian and U.K. markets for HIV as well as a return to OEM customers driving up that average margin, and we do expect to see that margin push into the 40s in this period, and we do expect to see margins north of 45% to 50% as we have a more balanced business that's less reliant on global health. And we mentioned this drop-off of COVID revenue and a readjustment to life after COVID. We're seeing that on the right-hand side of the slide in terms of our non-COVID revenues. We have seen a return to global health business during the pandemic, a lot of global funding for HIV was diverted to COVID. That's starts -- slowly starting to return to previous levels. We're obviously seeing, in quarter 1, the introduction of the Newfoundland revenue to the product mix. We're going to continue to see neutral, we believe, strongly grow as a partner for us. We announced, recently, the expansion of the agreement to include Colombia, and an order that comes with that. And as John mentioned, in calendar year FY '24, additional products coming to market in the finished product category of the business as well as expectations around new OEM development agreements that then lead to full-scale, long-term supply agreements as we roll into '25. So we do expect to see our half year revenues recover from the post-COVID low that we're seeing for FY '23. And we've been very focused on the cash burn through that period, and we were able to get to the end of FY '21 -- sorry, Q1 with just under $7 million cash on hand, no debt. And since that time, we've had a further inbound payment from the ATO by way of our R&D rebate, so we are very mindful of our cash balance and cash usage. This slide is critically important because I think it talks to, vastly, changed opportunity for Atomo. Prior to the COVID pandemic, health care was really the last -- one of the last untouched markets that haven't been consumer-ized. If you look at every other large value market, there was a level of increasing consumerization over the last 2 decades, and for various reasons, primarily clinical resistance, regulatory resistance and public health inertia, health care was one of the last segments of the market that was to be, in some ways, modernized in terms of how customers were able to access services and products as well as an increasing level of retail focus. The pandemic has fundamentally and, I believe, very irrevocably changed that dynamic. We now have regulators accepting the utility and benefits of home testing. We now have clinicians and pharmacists seeing the efficiency and efficacy of those channels. We're seeing public health bodies really appreciating the ability to test large amounts of people quickly and cheaply at home, and Australia was unfortunately one of the last public health governments to recognize that during COVID, but that has now changed. And finally, and I think most importantly, we have an awareness of the ability to test at home in consumer networks, a desire for further testing and interest in an expanded menu of tests at home. And we have seen, not so much in Australia, but in Europe and particularly in the U.S., a significant transfer of primary health from clinics and hospitals to consumer-focused settings. We have the emergence of online e-commerce platforms that provide clinically supported, reimbursed at-home telehealth services. We have a pharmacy in retail model expanding in locations like Boots in the U.K., Walgreens and CVS in the U.S., and we believe that those trends will come to Australia in the coming years, and our tests are ideally placed to support that transition, because at the moment, particularly in the U.S. market, that blood testing service is really being delivered by an, "at-home collect and mail-to-lab," service because the current generation of rapid test products does not deliver the level of usability and reliability necessary for the FDA to approve a home test. Now various levels of market research by Atomo and others clearly indicate that nobody wants to wait 4 days for a result that can be delivered within 15 minutes. And that's the opportunity in the U.S. market for us, to have our platform established as the leader for at-home OTC testing, and we believe the products that we're bringing through the market like pregnancy, like ferritin, hopefully moving forward, testosterone and Vitamin D, are mainstream applications that people will want to monitor at home over time. And our platform have enabled, as we believe, the best technical solution to that. And really, for us, the challenge has been to find the right go-to-market partners to make that happen. We've done that in the U.K. with Newfoundland. We believe now the next step is to find the equivalent of Newfoundland in the U.S. market and get that go-to-market pathway locked in, funded and executed. And this slide really talks to why we think we have a good chance of delivering that. Our technology is significantly better than the incumbent technology. There's no -- I believe, no disputing that in terms of user preference, in terms of independent validation and in terms of performance. And that's not what we have to sell as a business. We sell usability as a generator of market opportunity for companies that want to enter the consumer self-test market, and we sell usability to regulators as a more reliable way for people to test at home. Independent survey done in the U.S. at the end of the COVID pandemic, the question was what's going to drive continued adoption of rapid testing. There were 3 clear requirements: ease of use; speed of results; and affordability. All rapid tests really deliver rapid test results quickly and with ease of access and affordability, but most solutions really do not deliver inherent ease of use. So that's where our technology, we believe, fills out that critical requirement list and gives us a first-mover opportunity in that market over the medium term. So we'll talk a little bit about our specific finished products, then we'll talk a little bit about the OEM opportunities that we're seeing. So our HIV self-test product, we believe, is the best HIV self-test in the world, registered now in more than 40 countries. We have vending machines in Australian universities. We have vending machines in on-sex -- licensed on-sex premises. We believe that vending model is one that is, not only scalable within Australia but is exportable to other markets. And we're in discussions with a number of partners in Europe and the U.S. around how this model can access, not only sales of Atomo product, but improved access to people that need to test. Our Newfoundland agreement was validated, we believe, with the entry of the product on to the shelves at Tescos last month. They placed a very significant stocking order with us with contract and anticipates further sizable order in the coming months. And that will support scale up beyond the U.K. into Europe. And our commercial director in the U.K. was in Eastern Europe with Newfoundland at a conference, and we've seen significant interest in distribution of the product in the Eastern European markets where HIV rates are significantly higher than they are in Western Europe. Our low-cost product assembly facility in South Africa has been validated by the TGA, by the World Health Organization and by BSI on behalf of the European regulators. We have carried out some further validation work to now be able to make the ferritin test at that facility at low cost, and that continues to support our global manufacturing and also offers us a competitive advantage in global health because agencies like PEPFAR are now actively saying that the ability to manufacture locally in Africa will be an increasingly important factor in the decision-making for tenders. Now we're yet to see that intent flow-throughs additional orders, but that's where we're being told the market is starting to assess the opportunity for tender business. The next column talks to the increasing interest in developed markets from public health. There was a large study done in the U.S. that was sponsored by CDC with an OraSure product that allowed people to test for free through a mail-in website opportunity. That's been replicated in Australia with the Atomo product, and we are very excited about the opportunity to scale that with public health support. The initial program is funded for trial for some tests, but we do have some expectations that, over time, the efficacy of that program will be proven. The government, they will start to fund it. One of the big benefits of those types of discrete mail-in programs as well as vending machine programs is that they attract people who don't typically go to existing facilities for testing. And what that means is that about half of the people testing through those programs are testing for the first time or for the first time in the last 18 months. And they're the high, hard-to-reach populations that the government are really focused on. So we feel these models of access really do speak to the channels that the government are interested to access. Beyond our current business, which we believe will grow steadily over the coming years, we are still looking to access partnership agreements in the biggest 2 markets that we haven't yet entered, being the U.S. and China. And we've had more success in the U.S. than we have with China, just given the current geopolitical situations, but we do still see both of those markets being extremely valuable for us over the longer period and not just limited to HIV. The next product we've spoken about coming to market is the blood-based pregnancy test that we commercialized in partnership with NG Biotech in France. We already supply them cassettes for their own markets. We're supplying them roughly a container a month -- sorry, container a quarter of Pascal. We're very pleased to see that reordering recommence after COVID. There was a period where they weren't ordering product because they were purely focused on COVID business. They're launched in France. They're launching in the U.K., and they are launched in Brazil, and we believe that further orders for those markets will be coming in the next periods. We've submitted to TGA and we're working with them to try to get a sponsor of the NG product listed on the ARTG for local launch here in Australia, and we're very encouraged by the independent market research we've done that suggests that 1 in 5 women would pay a premium to access a blood test that was earlier to detect pregnancy and more reliable in other [ issues ] of pregnancy. And that, we believe, is a very compelling product benefit when compared to rapid urine tests. Beyond the Australian market, we've been working with NG to submit a pre-sub to U.S. FDA and that meeting is scheduled to occur later in the year. And from that, we expect to be able to lock in a clear clinical go-to-market plan and move on from there with the commencement of clinical activities as well as commercial engagement with partners to help lock in that pathway to approval and access the market for approval. Our OEM business was not mothballed during COVID, but certainly was significantly impacted. Our OEM customers who are platforms were not ordering and OEM pipeline customers stopped their development programs. We have seen, as we mentioned, our partners reengaged and recommencing in the market. We've seen an inbound increase in inquiries for the existing platform. And increasingly, we've seen a couple of inbound inquiries for companies that are working in diagnostic applications outside of lateral flow, so newer technologies such as biosensors, microfluidics and point-of-care molecular. Those applications have different types of diagnostic technology underpinning their performance, but they still often require blood and reagents to run the test, and they still have a lot of the usability challenges that lateral flow kits have. And we're seeing inbound inquiries from a number of U.S.-based primarily companies that are looking to find out how Atomo might be able to redeploy its proprietary know-how in its capabilities to deliver custom solutions that don't look like Pascal but offer similar types of performance and usability. They will take some time to come to market. There's no doubt about that, but we do have expectations that some more -- potentially all of those development costs will be borne by some of these companies looking for these customers that are still from or into contracts with NG and with Lumos. is -- Once those customers get their regulatory approvals, those regulatory approvals are predicated off the usability of our device that we've developed for them, which means we have a captured customer for the life cycle of that product. And in this market, that's typically a 10- to 20-year life cycle. So it's a slow burn to get to market but a long revenue stream on the other side. So we have to really be mindful of that and play a longer game with our OEM business. So on testing, we developed a swab solution that performs well at the proof-of-concept level, and we're now actively engaging with companies that are developing new [indiscernible] COVID test, the market does not support an accessory that delivers better performance, but there are a number of tests where the transfer price in the finished product is much higher than COVID, and they are applications for these types of swab devices that add value. We have a blister solution that we've developed in-house. It's proprietary, it's patented, and we have our own machine to make it at scale. That not only supports our blood and swab products going forward, but it also gives us the opportunity to develop custom-listed solutions for other companies, particularly in microfluidics where the automated dispensing of reagents is critical to the activation and performance of microfluidic cassettes. Again, that's not short-term revenue, but that is a long-term asset for the business. We're the only company in the world that can deliver multistage [ frangible ] sale-based delivery. So rather than bursting a blister, it delivers the whole amount at once on control. Our devices allow us to repeatedly dispense fluid from a single blister, and that is a competitive advantage that's being recognized by potential partners. How we translate that into custom blisters for them, that's still being developed, but I do see that as a long-term asset for the business. What I also see is important over the longer term is our ability to digitize results. Increasingly, in the U.S., the results need to be digitized, captured and traceable to support reimbursement. So it's no longer a case of showing the doctor a cassette on a Zoom call. You need to be able to capture when the test was done, where it was done, what the result was to be reimbursable. And as public health starts to use home testing more effectively, these types of app-based integration will become critically important. We have developed a proof-of-concept app that works. We're now working with the regulators to see how we would bring that to market to start to, not only record the result, but provide some measure-of-line intensity, which then allows us potentially to offer monitoring test at home. So rather than yes, no, we start to measure analyte levels, and that allows for home monitoring of things like testosterone, PSA, vitamin D, where the level of analyte is critical, not just whether it's there or not there. A lot of companies are trying to develop readers that deliver that, but I don't believe that people want to pay several hundred dollars and have a medical device sitting on their desk. I believe an app is a much more discrete and efficient and cost-effective way to deliver the types of diagnostic performance that we need to have to support our easy-to-read rapid test. So that's our OEM business. Just to wrap up in terms of kind of where Atomo is as a business, we're making an impact, and we're ready to scale. We have supplied nearly 3 million finished test to market and a further 3.7 million devices to market that weren't Atomo-finished tests. We've invested in our capacity. We're audited. We're at scale, and we're ready to produce. We can make over 17 million cassettes per annum and over 3.5 million finished HIV tests per annum. That can be expanded to now cover the ferritin test, when it comes to market. So we do have more than 1 product that we can utilize through that facility. We have an extensive patent portfolio, which gives us a really strong ability, we believe, to protect the uniqueness of this solution as it does become the gold standard for home testing. And that gold standard is really validated by way of user preference. It's color TV versus black and white in terms of the user's perception of our device versus the kit. And I think ultimately, that's what's going to drive success in consumer health, and that's what's going to continue to get the notice and interest of partners who want to access the platform. We've shown that we can register products in our own name, but more importantly, we've shown that we can validate different types of assays on the platform. It's a platform solution that's very easily adapted to new clinical applications. And we've shown, with HIV, we can bring our own products to market. We've shown with NG's pregnancy test and Lumos's FebriDx test that we can support OEM customers. But really, 3 applications is the tip of the iceberg. This platform could support 30 to 40 blood-based applications in the market. And our goal now is to find the right channel partners to open up those markets and to expand the menu so that we can bring more Atomo test to market as well as offering our platform to an increasing list of new customers that are interested in the platform for their own applications. I'd like to thank everyone for their time. Hopefully, that presentation has been helpful. I'll finish with a strategic focused summary on FY '24 and beyond. This will, I think, hopefully be clear and obvious given the presentation, continued growth of the HIV business to continue to grow revenue and provide gross margin back to the business, and that's through continued focus on engagement and adoption with public health, particularly in developed markets, a continued focus on consumer retail channels, such as Tescos and pharmacy retail in Australia and to continue to expand our relationship sold in markets where we don't have the [ actors ] actively entering the market. We look at alternate arrangements in Colombia is the first example of that. We expect that to continue as we have customers in countries put their hand up and say that we can launch this product, and if the [ app ] isn't going to do it, then we want to certainly do it with other partners. Outside of HIV, then, obviously, the expansion of the portfolio, as I mentioned, launch of the pregnancy test in Australia and New Zealand, completion of go-to-market planning for the U.S. market for pregnancy, submission to regulators for the ferritin test and completing commercial partnership agreements for tests in the pipeline beyond ferritin, with testosterone, vitamin D, not necessarily completely locked in as the next 2 tests to market, but certainly looking, like, very exciting candidates. And then beyond that, continued expansion of the OEM business for Pascal, continued expansion of blood-based cassette solutions for applications outside of lateral flow. And then in parallel with that, as opportunities arise, repurposing our technology for swab, blister and other applications where we believe we can deliver, really, best-in-class user solutions to market and making sure that they're app-supportive, because that's where the market is going. That's our focus. We're clear on it. We're very committed to delivering on this. And I'd like to thank you for your time again.

Great. Thank you, John. And my thought, it's reasonably warm in here. Would you like some water? Okay. Now it's your time to talk by way of voting and questions. So thank you, John, that was very thorough. And I hope that, that also leaves you excited and interested in continuing to follow what we are doing. And particularly that last slide, thinking about where we sit in what we see as a continuing to change environment. I'll take just a moment just to explain voting and question process this morning and -- that we're going to use. So we have Maria, we have Link here who are running governance, so you've had various notices from them. All of our resolutions will be considered by way of a poll. So each of you, as shareholders present, will have received a voting card from Link Market Services on registration. Please indicate your vote on each resolution by putting a check or cross in the yes, no or abstain boxes next to the applicable resolution. If anyone needs a pen or pencil, please shout out.

I need a pen.

This is Kath. Kath is standing, together, [ principally for all ], so thanks, Kath, right. So I need to tell you that I will vote any undirected proxies given to me as Chair in favor of all resolutions, okay? All polls will be conducted following the reading of all resolutions, and I will direct all of you to the poll box at the conclusion of meeting, which hopefully people will pass on the way through. And the voting forms will be collated by our share registry and then results will be posted as an announcement to the Australian Stock Exchange. Our AGM is an important platform for shareholders to engage with us, and I encourage shareholders to please ask questions. And questions will be called for after the reading of each resolution. And when I call for questions, could anyone wishing to ask a question, make a comment, please, just raise your voting hand and just, if you wish, state your name, name if you're holding, just for our governance purposes. And then please offer your question or your comment. And if you can address those to me as Chair and then I can direct them on, but I can also limit questions and comments just for one at a time just so that I can stay on top of where we are. And the meeting will only, of course, consider questions that relate to the business of today's meeting. I also reserve the right, as Chair, to rule questions as not pertaining to the business of the meeting or indeed out of order. But I can't imagine any of you will ask any random questions, but just in case that proves to be the case. Okay. We have item 1, which is our financial year '23 -- sorry, FY '23 financial report. So the first item on today's agenda is to receive and consider the financial statements, directors' report and auditor's report here with us, should you have questions to our auditor for the year ended June 30, 2023. The financial statements were subject to audit by BDO, and they are welcome and represented here by Gareth and Andrea. So that's the first item on the agenda. I will take that as having been read. I'll take questions on the financial statements and allow you this opportunity to ask any broader questions you may have on the business as a whole. So welcome any questions.

I'm [ Christian Muñoz ]. Probably, it was -- I imagine it would have been quite pleasing to see FebriDx's approval in the United States. I'm interested to see how you're supporting that growth by products? And what lessons you may have taken through the FDA approval process, which would have been…

Great question.

That's for John to answer. We're following the order, otherwise I'm going to get in trouble, so the question comes to me. I think it's a great question, and I quickly , if possible, pass it.

So it's a great question and one we're happy to certainly expand on. So for us, I think that 510(k) was a fundamental milestone because one of the biggest issues we've had with trying to convince U.S.-domiciled partners to join the platform is that nobody wants to be the guinea pig in the U.S. market with a -- not an unproven technology, but an unapproved technology in that market. And I think the FebriDx 510(k) has shown that the U.S. FDA has reviewed the usability, performance and dossier for the device and they found it acceptable. I think that de-risks, for us, that OEM business more broadly, and it validates that the U.S. has now joined Australia and World Health in Europe in recognizing the performance of our device. So I think that can't be underestimated in terms of importance. I think with regard to the FebriDx approval itself, there was a second round of engagement with FDA to get that approval. So I think it reinforces, to us, the importance of making sure that the clinical and regulatory plan that's executed has stopped FDA buying upfront, which is why we've been very focused with NG on getting the pre-sub engagement with FDA organized before we kick off clinical trials because we don't want to waste time and effort and capital on a clinical trial that has to then be adjusted or isn't fit for purpose. So I think it's shown us the importance of getting the FDA engagement organized early. But we haven't necessarily seen very significant U.S.-based orders come off the back of that initially. And I think that also speaks to the fact that the U.S. market is very big and takes time to enter. And I think we need to be realistic that when we get our approvals, there's not necessarily expectations of 1 million units ordered the next day. That's not how new products enter the market. That's not how the U.S. market -- that's quite fragmented work. So I think it's really good for us to get there, but it's also good to see the realities of how you get there and how you move forward beyond your approval. So very excited about the opportunity for FebriDx over the medium term for both Lumos and us, very excited about the ability for us to now promote the product based on that approval, but realistic about how quickly that then turns into common tracks that get you into hospitals and get you on to retail pharmacy shelves.

Do you mind if I just add a comment from a Board perspective? One of the things I think was pleasing for the Board is we've spoken a lot about scaling with others. We are a small company, and so we necessarily need to scale with others. Lumos is not a large company. Part of the scale impact is by way of FDA approval, and that then helps the scale benefit to ourselves. I think also, from a Board perspective, that proved veracity and validity of the approvals that we have from other regulators for our platform. So from a validation of IP and the integrity of our being able to produce, that was also, from a risk management perspective, powerful validation for us. It was exciting news, but very much as John has explained, it's now how do we actually put this in the market. And remembering the FebriDx test has been around for a while. It was previously thought about -- just on a traditional platform, they've moved it to our platform. So for us, we get the scale benefit of their marketing, their go-to market. But also very much to your question, we actually learn a lot along the way. And so it means, particularly as I've talked about at length the very careful capital and cash preservation within the company means that we're not finding ourselves with a large U.S. spend. We can actually learn a lot from FebriDx -- sorry, from Lumos's efforts with FebriDx. I hope that answers your question from an executive perspective and also how the Board is considering where the Lumos is going to. Can I ask if there are any other questions? Okay. Thank you. Okay. There are -- as there are no further questions, I now declare the financial statements and the directors' report as duly received and considered at meeting. And again, thanks, Andrea and Gareth for their close attention and to our finance team as well, for delivery of those results.

We now move on to item 2, which is resolution #1. And I'm just going to check because I was just texting that with -- yes, Cheri is all ready. Resolution -- we move on to the resolutions. Resolution 1 is an ordinary resolution for the reelection of Dr. Cheri Walker as a director of the company. Now Cheri Walker joined us late last year to the Board. And so as part of our regular renewal and election of members -- of directors rather, then she has rotated in for reelection. The resolution is displayed on the screen, along with the proxy votes received for this resolution. I will vote the undirected proxies in favor of the resolution. And I welcome now Dr. Cheri Walker to address the meeting and hopefully, will give a -- come to us. Good morning, Cheri. Sorry about this. Sorry, I'll just have Cheri join us. Just bear with me. Hi, Cheri. Yes, I'm going to put you on speaker phone, you've got a room full of shareholders wanting to hear from you. Let's bear with me. Don't go anywhere and I'll put you on speaker. Hi, Cheri.

Hi. It's nice to meet you virtually. And I want to, first of all, thank John and Will and then the team of the Atomo, the Board and unit shareholders for the opportunity to serve on the Board of Atomo. It's a privilege to be, [ first of all ], by the shareholders of Atomo Limited. [Audio Gap]

So I just realized I was on mute. So for those online, apologies. I'll go back to the beginning. Resolution #2 is an advisory resolution for the adoption of the remuneration report. The report which explains the Board's policies in relation to the nature the level of remuneration pay its directors and key management personnel forms part of the director's report included in the annual report for the year ending June 30, '23, and that has been sent to shareholders. The full resolution is displayed on the screen, as you can see, along with proxy votes received for this resolution. I will vote the undirected proxies in favor of this resolution. May I ask, are there any questions on this resolution relating to the remuneration report? In the absence of any questions, I will now move to item #4, which is the ratification of the issue of placement of shares. This is resolution #3 on your yellow sheet. Resolution 3 is an ordinary resolution to ratify the issue of 34,977,932 placement shares on the 19th of July to restore our capacity to issue up to 15% of issued capital. The full resolution is displayed on the screen along with the proxy votes received for this resolution. I will vote the undirected proxies in favor of this resolution. Are there any questions to this resolution? In the absence of any questions, I will now pass on to item #5, which is ratification of the issuance of options. Resolution -- sorry, item #5, resolution 4 is an ordinary resolution to gratify issued an unquoted 6,668,333 options to employees of Atomo under our employee option plan outside of the 3-year period following the lodgement of the company's IPO prospectus in early 2020. Full resolution is displayed on your screen along with the proxy votes received for this resolution. I will vote the undirected proxies in favor of this resolution. Can I ask if there are any questions with respect to resolution 4, which is ratification of the issuance of options? No? Thank you. Item #6, resolution #5, is approval of the employee option plan. Resolution 5 is an ordinary resolution to approve the employee option plan. The full resolution is displayed on the screen, along with proxy votes exercised -- received to date for this resolution. I will vote the undirected proxies in favor of this resolution. May I ask if we have any questions on this resolution? Thank you. Okay. We move on to the item #7, resolution 6. Now this refers to the issuance of options to our Managing Director and CEO, John Kelly. Resolution 6 is an ordinary resolution to approve the issue and allotment of 366,666 unquoted options under the option plan to John Kelly, Managing Director and CEO, and as part of Atomo's remuneration scheme to reward the diligent execution of the corporate strategy and to ensure retention of the key talent needed to deliver the strategic outcome in the interest of all shareholders. The full resolution is displayed on the screen along with proxy votes received for this resolution. And I will vote the undirected proxies in favor of the resolution. And I'd ask are there any questions around this resolution? I'll take that as no. Thank you. Okay. We move on to item #8. This is an additional 10% placement capacity and it refers to the earlier item, which refers on the same or similar matter. Resolution #7 is a special resolution to issue equity securities of up to 10% of Atomo's issued capital over a period up to 12 months after today's AGM. The full resolution is displayed on your screen, along with proxy votes received for this resolution. I will vote the undirected proxies in favor of the resolution. Just wonder if there are any questions about this additional placement capacity?

[indiscernible]

No, of course.

No, thank you. And what's it for? And why is it there?

Yes.

Okay. So I would -- I'll pass, actually, to John because he spent a bit of time on whether we need this and the flexibility that it allows us in terms of being able to issue additional capital.

Yes. So there is normally a 15% threshold allowable for the company to issue new equity shares in a 12-month period. And there is an opportunity, an option to increase that number from -- by an extra 10%. And what that allows the company is the ability to take advantage of the availability of capital if and when capital was available to execute on the business plan without the requirement to then have a long-drawn out process to get approval beyond that 15%. It's a mechanism to essentially change the 15% threshold to a higher level, and it's typical and normal. A number of companies will apply for that. And that's a decision then for shareholders to either accept or not.

And just to run the other side a bit, it lets you -- additional capital, we'd have to go to move. So what this is allowing an up to 15%, as John has identified under the Corporations Act ASX rules, allows to 15%, this allows us to 25%. So it allows us just a little bit more capacity to raise additional capital. That's it. That's helpful. It is only for the 12 months from today until the 2nd of November 2024.

I'd just add, it also does not presuppose that we do that. It just gives the company increased flexibility to do that, should it choose.

So it's not related to any particular plans we mentioned earlier?

No.

No.

The targets?

No.

Coverage, no?

Yes, correct.

That answers it.

So we've got the mechanics and also answering your second question. But no, there's not anything just intended at the moment for that.

Okay. Thank you. Do we have any other -- thank you for your question. Do we have any other questions on resolution 7? No? Okay. All right. Poll, I now ask all shareholders to complete your voting. If you haven't got a pencil or pen, shout out. I want to hear that this is a democratic process. [Voting]

Has everyone had a chance to submit the yellow cards? I can't see anyone's hands. Thank you. I've looked around the room, and I have confirmed that all votes have been lodged. Yes. Thank you. And if there are no further questions, I thank you again for spending time with us this morning. I thank you for your continued engagement, and thank you also for your support from for Atomo. I'm pleased to declare the poll closed. The results of the poll, as mentioned, will be announced to the ASX following the meeting, and that's for Link to now compile. So you've seen that process. And if I can now say that brings our meeting to a close and concludes our business, and I will declare the meeting formally closed. Ms. Maria, you've got anything else for me to do?

No.

No. Okay, so we'll formally close, and you'll be welcome to join us and the Atomo team afterwards. Thank you. Thank you all and our auditors. Thank you very much all.