Atomo Diagnostics Limited ($AT1)

Atomo Q3 webinar. Today, I'll be going to discuss our Q3 quarterly result and also providing an outline of our strategic focus moving into FY '27 and beyond. We've had a landmark quarter, a very transformative milestone and a building order book, and I'm very excited to walk through the details. So as an introduction, a quick summary of what Atomo does. We develop, manufacture and supply rapid diagnostic tests globally. We have 2 revenue streams: finished diagnostic tests supplied to distribution partners and in Australia direct to market and a growing supply business where we supply other diagnostics companies with very valuable usability in their tests. Our finished test portfolio, HIV, already extensively launched, is growing in terms of market penetration as well as revenue. And we have a number of very exciting products in the pipeline. Active syphilis, liver function, now both well advanced in terms of development and go-to-market. We also have Pascal, our proprietary and increasingly valuable solution for rapid testing in point of care. These cassette solutions are now embedded into partner products and are increasingly critical to their product approvals. That performance underpins the value of both businesses, the core differentiator being proven ease of use and reliability, now validated in a number of markets, most recently with U.S. CLIA waiver through Lumos' FebriDx test. If we move briefly to the Q3 activity highlights. Obviously, the significant event for us in the quarter was the CLIA waiver of Lumos' FebriDx test by the U.S. FDA. And that unlocks material growth for the U.S. market for our supply of Pascal to Lumos for FebriDx. It also provides a validated predicate pathway now to the U.S. market for Atomo's own portfolio of diagnostic test products. And in the broader market, it validates the performance of Pascal, proves that Pascal can establish itself as a CLIA-waived solution in that very large market. And that's obviously of attractiveness to new customers, two of which we announced in the quarter, and we believe, over time, a growing portfolio of customers very keen to access that performance. We also in the core business had momentum growth, over $2 million worth of sales orders received during the quarter. So we do expect to see a strong finish in Q4 and strong momentum going into FY '27. In terms of the performance numbers themselves for the quarter. Obviously, cash on hand, $2.6 million at the end of December 31. Remaining debt-free. We received over $1.6 million in customer receipts and just under $200,000 by way of the syphilis CRC-P grant from the federal government. Cash outflows for the quarter were $2.6 million, and that was a focus on delivery and supply for existing customers as well as progressing new opportunities in the market, primarily syphilis and liver as well as some other opportunities that we're going to be able to talk to the market about in the coming months. The capital raise proceeds from the end of quarter are not yet reflected in the numbers. So we do expect to see further strengthening of the balance sheet as we move into this Q4 period. In terms of financial highlights, cash flow activities. Revenue for the quarter was just over $800,000. That's slightly up but similar to the prior comparable period, although as you'll have seen from orders received during the period, we do expect to see significant growth in that Q4 period and a strong finish to the FY 2026. We also strengthened our balance sheet with a capital raise at the end of the period. We are seeing good opportunities for the business in terms of existing product revenues. That's primarily HIV test sales as well as increasing demand from Lumos for the Pascal supply to FebriDx. So we are very comfortable with where we are moving forward with the financials, the balance sheet and sales momentum moving into FY '27. I'm going to talk a little bit now about the investor opportunity more broadly. In terms of sort of key investor highlights, I think the summary from our perspective is that we've now got direct participation into a number of high-growth diagnostic markets, and that's spread across Atomo's own finished test portfolio, where we offer excellent ease of use and performance. HIV, now widely recognized as a very user-friendly test, very successful in Australia and in the U.K. with expansion pending into Europe. We have a very novel active syphilis test that performs exceptionally well against incumbent rapid tests in the market, and we see a very big opportunity for both public health and consumer applications. We announced a liver function test that I'm really excited to talk about a bit later in the presentation. And we are looking at a portfolio of other products moving forward, and I think the CLIA waiver of FebriDx and Pascal's role in that really underpins that long-term pipeline. We supported and, in many ways, enabled the CLIA waiver of FebriDx. And that's a real step change not just for FebriDx, but also for Atomo. And there's a number of reasons for that. Obviously, firstly, it unlocks significant growth in the U.S. market for us in terms of supplying Pascal to Lumos. It also creates a predicate pathway for our own tests, and we're actively engaged with go-to-market planning for the regulatory pathway for a number of products that we think the U.S. market will be interested in, and this pathway gives us a pipeline to move forward with. And finally but certainly not last, the validation of Pascal's performance has significantly expanded the opportunity and the awareness of Pascal in the U.S. market. We announced 2 new customers coming on to the platform this quarter. Since then, CLIA waiver of FebriDx has further expanded the validated usability and benefits of Pascal, and we do expect to see that inbound pipeline expand materially over the coming years. And that's all underpinned with an innovative patented proprietary technology that's now proven to deliver unmatched levels of performance, as demonstrated in the usability and concordance between trained and untrained users in the FebriDx clinical studies in the U.S. And that really backs up the user preference that our technology has now continued to highlight in markets in both Europe, Australia and, now, in the U.S. This is just a quick look at the financial summary more broadly than the quarterly. I think we are expecting strong growth for the FY '26 period relative to FY '25. We're finishing the year very strongly in terms of quarterly orders and supply to customers, and we expect to see that momentum continue into FY '27 and beyond. We're debt-free. We have a clean balance sheet. That balance sheet has recently been reinforced to support the growth that we now see ourselves delivering over the next 2 to 3 years. And we're very excited about the ability to make that balance sheet a productive asset, and we'll talk a little bit about the operational expansion that the business is now undergoing to be in a good position to supply into that growth medium term. Our capital focus has been on new test development. We're very mindful of shareholder funds being used for those activities, so we are always keen to minimize the use of shareholder funds for products. And that's why we're very focused on the syphilis test that allowed us to a secure large federal government grant. And also by partnering with Burnet on the liver function test, we were able to take advantage of the significant work and development effort that Burnet have already made to develop that assay to a point where we were able to take it on through an exclusive license with minimum risk in terms of that development performance. Finally on the fundamentals. We are seeing the business fundamentals trending in the right direction. Our EBITDA losses are consistently narrowing. We expect to see that continue into FY '27. And we are seeing, at the same time, revenue looking to expand in that period, and that's a very encouraging trend. All of this opportunity is based on the fundamentals that underpin the business, and that is some test solutions that are truly unique and novel but increasingly recognized for not just being different, but for being really effective in terms of how they allow professional users to test very reliably and also allow self-test users to test in areas where previously the usability of standard kits just didn't allow for that. And it's really that unlocking of approvals like CLIA waiver and self-test that really add the value to the market. And we've now established that we can deliver that across a range of applications: Class IV HIV, Class III FebriDx, Class II blood pregnancy; and not only across different applications but across increasingly large global markets: Australia and New Zealand, prequalification for Global Health, IVDR approval in Europe for both self-test and professional use applications and now, most recently, CLIA waiver in the U.S. on top of the earlier 510(k). So we're very confident about the platform, its performance, its acceptability to regulators. I'm very excited about the amount of tests that can be commercialized now on that platform over the longer term. All of that's backed up with an extensive patent portfolio that is granted patents at fairly high levels of functionality across key markets and underpinned by significant proprietary know-how and manufacturing expertise to make those products at scale. So we're very excited about the position that this technology provides the business and shareholders. In terms of our own test portfolio, obviously, we have a HIV test that's a leading test in a number of markets. We'll talk a little bit about the expansion of that revenue over the near term. We do have some programs actively underway in certain markets globally. We do have professional use approvals, and we're also very mindful of the opportunity to upgrade to gen 4, which has increasingly been used in point-of-care professional settings, in particular, for screening people on PrEP to keep them on treatment. Blood-based pregnancy, we have a partner in NG Biotech that has proven successful in launching into a number of European markets, and we'll talk a little bit about the opportunity there in the presentation. But we have agreed with them for Atomo to get access to a number of markets where they haven't got go-to-market capabilities. And we do expect to be able to announce to the market in the coming months, a number of partnering opportunities for that product to be launched through Atomo into markets where NG aren't active using the performance and the success that they've had in markets like Spain, Portugal and Italy, where they are now in some markets well over 5%, close to 10% of the pregnancy market in some of those territories. So that tells us that when properly marketed, this blood pregnancy test does appeal to women who want more accurate and reliable detection in the early phase of pregnancy. And that really gives us a marketing template that we can look to expand into markets like the U.K. and, over time, potentially into the U.S. off the back of the validated CLIA waiver performance that Pascal we know can deliver. Our active syphilis test has completed development. We're now in the process of tech transfer. Once that's done, we'll be able to make validated batches that unlock clinical trials. We'll be looking to commence them later this year. And that allows us to complete a dossier and submit to regulatory approval next year. We know that syphilis continues to be a growing global health burden both in developed and developing markets, and we'll talk a little bit about the opportunity we see for that test in a later slide. Last but certainly not least, the most recent announcement we made in terms of a new product to market relates to liver testing, an ALT biomarker. And there's very extensive opportunities for that across a range of chronic diseases, and we'll talk about what we're doing there to prioritize getting that to market. Beyond that committed pipeline, there are a number of tests that we're actively looking at for longer-term opportunities. And really for these market assessments, we're looking to balance regulatory risk, the ability to get an approval that's meaningful, the ability to get reimbursement and the ability to deliver ideally a test that can support both professional and self-test channels in various markets. And we'll bring those developments to shareholder disclosure as and when they get to a stage where we're able to do that. So I'm going to talk a little bit about the individual products and what our sort of medium to long-term focus is for those markets. So obviously, the first one is self-test HIV. We estimate that, that's a market opportunity of up to AUD 200 million annually across various markets excluding the U.S. And that's a growing market. Self-testing is starting to eat into the established professional laboratory market as point-of-care testing becomes more established as a growing opportunity and a cost-effective way to test. We are already in a number of countries successfully. We're the market leader in Australia. We'll talk about that in the next slide. But in the U.K., we partnered with Newfoundland. They've launched into the U.K. markets, notably into pharmacy retail. BOOTS, Tesco and, I think, potentially Superdrug being the next chain that they're entering in there. And we've expanded that partnership and are actively supporting them now to move into a number of markets in Europe where they've established go-to-market channels. So we do expect to see continued growth in that European channel over time. We received significant orders from The Global Fund that we announced to market during the quarter. And we continue to see demand in Africa for our products, and we're very proud to continue to supply that important channel. We are working with Newfoundland to also provide them with a template of the success we've had here partnering with the public health channels and opening up programs that are public health funded, such as the NAPWHA program and the vending machine program. And we're supporting Newfoundland in their engagement with the U.K. government and the National Health Service to try to see if we can replicate some of the success that we've had here in public health for them in the U.K. market and longer term, I hope, in Europe. We do have a scalable model for Asia Pac, and we're in discussions with a number of potential distributors in Asian markets where we can get easy or cost-effective registrations in place using our World Health prequalification or, in some cases, Australian TGA approval. If we look at the Australian and New Zealand business specifically, it's a much smaller market. We estimate around $8 million per annum, although we will note that we are the market leader by far in this channel. We estimate conservatively 85% of the market, probably more. And that's because we really help set this market up. We got the first approval. We worked with public health. We launched into the pharmacies. And we've established the platform now as the go-to solution for Australian HIV self-testing. We do see further opportunities in that market. We've announced sales momentum in the last year. But we do see opportunities to grow further. There are a number of pharmacy chains we're not in. The success we've had in the ones that we are in, I think, has motivated for a broadening of the adoption of the test into some other channels, and we do expect to be able to announce some new pharmacy partners in the coming year. We're looking to get into a further 600 pharmacies, which would more than double the pharmacies that we're currently in. We're starting to expand into non-pharmacy retail, so adult retailing, adult e-commerce specialty channels and do see some opportunities there given the type of product those channels specialize in. And we're continuing to work very closely with the Australian government, both at a federal and state level, to expand the programs like NAPWHA, like the vending machine that have proven themselves to be so effective in reaching people that need to test. And as I mentioned previously, we're working on how we can kind of export those models to other partners in other markets where public health maybe hasn't been as progressive in adopting self-testing. So we're very excited about HIV business as a category, and we do expect to see continued growth in that market both here and overseas over the period. Beyond HIV, our next priority is active syphilis. People are always surprised to hear that syphilis is still a problem. It's actually a very, very growing problem. It's been under the radar for a while. It's now on the radar in terms of public health. To give you some idea of the scale of the opportunity, the U.K. did more than 1.5 million syphilis tests in 2024. That's one country. This is a big problem and it's a growing problem, and rates of syphilis infection are growing significantly faster than HIV. There is a limitation to current rapid syphilis test because it's not a viral infection. It's a bit bacterial. And the main limitation is if you have had previous infection, then you will be reactive to the test even if that infection has been treated. And that's a real limitation for point of care and typically requires some pretty extensive laboratory testing and results a week to 2 weeks later that confirm whether you had or didn't have syphilis. The test developed by Burnet that we've partnered with them to commercialize provides with very good levels of specificity the ability to distinguish between active and prior treated. And on top of that, being delivered to market on the Pascal platform allows it to be ideally used in self-test scenarios with a low level of blood, which again makes it very different from the tests that are out there. So we're not only unlocking, we believe, the active syphilis market with something pretty unique, but we're also able to do it in a format that supports both self-test and professional use deployment. And the reason we think that's really important is we can leverage our existing HIV self-test channels because the user groups needed or recommended to test for syphilis are very similar to the groups that test for HIV. And we've already had engagement from the federal government and some of our existing go-to-market channel partners like NAPWHA to see whether it might be possible, when that test is approved by the Australian TGA, to essentially dovetail into those existing channels where we've set up access for HIV. Very excited about obviously not just getting that product to market, but the fact that there is a building established channel that we can immediately start to move into. We announced in the quarter an expansion of our partnership with Burnet Institute to address liver function testing by way of a biomarker, ALT, which is a very common biomarker used to manage liver inflammation. But currently, that biomarker is delivered in a lab test. And it's used extensively in a range of chronic disease management conditions, and we'll talk about each of those here in a little bit of detail. But by transferring it from a lab test to an easy-to-use, reliable point-of-care test, we really open up that real-time monitoring that becomes much more problematic when you have to go to a doctor, have blood collected, get a lab test done and a result a week later. It allows for real-time screening in decentralized settings and potentially, subject to regulatory approval, monitoring in the home over time. The most progressive of these is drug-induced liver injury. So there are a number of very common drugs that are fairly excessive on your liver. And for people who are on long-term drug medication, liver risk becomes a major concern. For some of the drugs, it's more of a concern in the first month or 2. For some, it's through the whole life cycle of the drug. And there are periodic ALT tests done to try to manage that liver risk. A test that allows a patient or potentially a drug company to monitor the risk of liver injury for people coming on to treatment or staying on treatment, we believe, is very significant. It's quite a lot of different drugs that have this risk, and these risks are well known and currently being managed through lab testing. So we feel that there's a real opportunity for a more companion diagnostic solution that can go to market with people joining drug treatment programs. And we have a test that's now been developed with Burnet on Pascal that's under evaluation by a large multinational pharma company, although we do note that, that's one company out of many that have drugs in this category. So we are very excited about the opportunity to partner with a number potentially of pharmaceutical companies that will want to derisk the use of their drugs both in the clinical trial phase as well as the longer-term treatment phase. Beyond that priority channel, there are a number of areas where we know the ALT testing is recommended. Hepatitis management is one where there's a clear need to manage hepatitis treatments and, in the case of hepatitis B, people being cured and being able to come off treatment. And ALT is the common biomarker used to make that clinical determination. The ability to do that point of care reliably and quickly is not to be underestimated, and we do have a program to try to evaluate that as a pilot sort of pending for later this year. Slightly less progressed but I think a bigger size in terms of commercial opportunity is the ability to help screen, diagnose and monitor people with fatty liver disease. Fatty liver disease is a lifestyle type disease that's becoming increasingly common, more than 1.5 billion people globally suffering from it. And most of those are not diagnosed. Most of those people don't get it diagnosed until the conditions lead to symptoms that generate intervention and testing in the lab. And we feel that a test that can be used more proactively to identify people with early-stage fatty liver disease or at risk of fatty liver disease is an important preventative step that will save a lot of money to the health care system over time. It will also allow people to be more proactive about managing their condition over time and not getting to the point where the symptoms are so severe that they end up in a hospital and getting a confirmation that is generally delivered too late for them to really take action. So we think that's a huge opportunity. We're still working through the clinical path to market, but that is something that we're focused on. But as mentioned previously, drug-induced liver has a more established go-to-market partner in pharmaceutical companies and is more progressed in terms of our clinical validation. Alcoholic liver disease is similar to fatty liver disease, not quite as many people but similar clinical symptoms and similar need to manage and monitor liver function, and we're looking at that in parallel. So we'll certainly be coming back to the market with updates on each of these over the period with drug-induced liver injury being the priority in the near term. Beyond those Atomo products, we do continue to really promote and look to grow the partnering business, the partnering supply business, similar to the one we have with Lumos. And that's where we supply our assembled cassettes to partners who use that cassette not only for the usability of their test but, increasingly, to get regulatory approval for their tests in key markets. And the Lumos FebriDx CLIA waiver that was delivered in the quarter really sort of substantiates that value to our partners and, therefore, that value to our shareholders as the supplier of that proprietary solution to market. We believe that's a USP and offering a unique opportunity that is increasingly now visible to the market based on the awareness and success that we've had. That obviously generates opportunities not just to grow the business with Lumos, but to bring an increasing number of new customers onto the platform now that it has been, to some degree, derisked from a regulatory perspective with that U.S. approval for FebriDx. We're very, very proud of the performance of the device, greater than 99% concordance when untrained and trained users did the same test. That's a very high level of performance for a rapid blood test in an untrained setting. And that really is the value of the platform, not just to Lumos and their CLIA waiver market, but I believe longer term in self-test home opportunities, of which there are several large ones in the U.S. market. So we're very focused on making sure that we supply Lumos, that we have the capacity to not only grow that volume but bring other customers onto the platform as well as having capacity for our own products, syphilis, liver and others. And that's a long-term operational expansion that we believe is fully merited off the performance that Lumos FebriDx test has now shown. And we did announce two new customers on the platform. We'll be hoping in the next quarter or 2 to be able to provide further details on those opportunities, the market and the benefit to Atomo in terms of supply of Pascal for those customers. If we just quickly summarize what the operational capabilities of the business are. You'll get a sense of kind of our footprint and where we're looking to expand. So at the moment, and I'll go counterclockwise, we have outsourced cassette molding and assembly in China. That's used to supply cassettes to our partners, Lumos in California, NG Biotech in France for their own finished products. We have our blister machine 1 operational in the U.S. We are in the process of qualifying blister machine 2, which is a next-generation machine with better yields and better annual capacities, and running that directly ourselves in an Atomo facility in New South Wales. And that will give us increased capacity as well as better economies of scale over time. We have currently got HIV manufacturing in an Atomo facility in Cape Town, and we'll be looking to expand operations to include the finished assembly of syphilis once we get to that stage. And that allows us to really control that rollout and look at improving cost of goods over that product as well. We will be looking to obviously use some of the use of funds in the $3 million we raised to expand our capabilities and capacities, and we'll bring news of those developments as they get delivered. But I think the main message here is that we are comfortably able to supply in the short term with what we have, and we've got a plan in place to grow the capacity and capabilities of the business to support ourselves and our customers over the medium term as well. This is the last slide. Really just to reiterate, I suppose, the investment highlights that we see in the business. Really great products in high-growth markets, covering both professional and self-test channels with an unmatched level of performance that I think is unique in the market. We've shown that we can grow our own test revenues. We've got a very exciting pipeline of test revenues that are largely now funded through the market. We also have shown that we can allow our partners to be very successful in unlocking large markets in the U.S. with our platform, and we do expect to see that revenue channel not only grow significantly with current customers but grow over time with new customers coming to the platform. We're very excited about the opportunity. We're very excited to finish out this calendar year. We expect to see good growth in the business relative to FY '25, and we do expect that growth to continue through into FY '27 and beyond. That's the end of the presentation. I'd like to thank you for your time.

I do have a couple of questions that have come through that I'm more than happy to cover off. When do you think Atomo will start making net profit? And would the company Board consider any takeover offers if they were presented? In terms of net profit, we're not making predictions as to when we become profitable. I would just reiterate that the losses are trending in the right way and the revenue is growing. So we do see a trajectory to get to breakeven and beyond. And we're very comfortable with that trajectory and very focused on making sure that happens as soon as it is practical. In terms of takeovers, look, we're a public company. We're not going to comment on potential M&A. But we're mindful of our duties as directors in the event that there was an offer. Next question. How will the company pivot once there's a cure for HIV in the next few years? I'd start by saying I don't believe that there's a widespread cure getting deployed globally in the next couple of years. I think the clinical time for these things to be approved and then accepted and then rolled out globally are very long. And we do expect HIV testing sales to continue for the next 5 to 10 years, and there's strong growth expected in the market for a considerable number of years before any potential cure starts to impact that testing. Next question is, I read a report that gonorrhea and chlamydia is on the cards for Pascal. I just want to clarify. Gonorrhea and chlamydia are generally swab-based tests. So they're not Pascal-compatible. I'm not sure where that particular comment was picked up. We don't have any plans to commercialize gonorrhea and chlamydia tests on Pascal. We are mindful of the opportunity for chlamydia and gonorrhea. They do sit nicely alongside HIV and syphilis in terms of the channel that they would go into. If they were tests that we were looking to develop, they would be based on a core swab solution that might be compatible with existing test on the market. So we do have an interest in that channel, but it wouldn't be a Pascal-based product. And the last question. With regard to Australian -- with tariffs on Australian companies in the U.S., will Atomo consider increasing interest in the Chinese or Indian market? With regard to the Indian market, our partner, Viatris, who are Indian headquartered have applied for HIV self-test approval in India. We're very excited about the size of that market should that approval be secured and mindful that we do have an Indian multinational as the distributor into India, which I think would really help with the likelihood of significant traction in that market. So we do see India as important for HIV. With regard to China, it's a hard market to get an approval. It's a harder market for a non-Chinese company to launch in. So we don't have any immediate plans to prioritize the Chinese market. I would say with regard to tariffs in the U.S., they do appear to be coming down, not going up. And we do not see Australian production as being problematic in terms of tariffs to allow us to be competitive in the U.S. market over the longer term. I'd like to thank everyone for their time. I hope that's been helpful. We're very excited about our end of year Q4 results, which we'll be putting out to market in due course. And I'd encourage you all to dial back in if you can for that. In the meantime, thank you very much.