Cambridge Nutritional Sciences plc (CNSL.L) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Omega Diagnostics Trading Update Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor Meet Company dashboard. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. I would now like to hand over to Colin King, CEO; and Kieron Harbinson, CFO of Omega Diagnostics. Good afternoon.

Good afternoon, Marc, and first, thanks very much. And first of all, I'd like to thank everyone for attending this trading update presentation. And what I hope that we can show during this presentation is that we are in a strong position to perform both short and midterm value and [ for all, again, our ] shareholders. In terms of presenting, as Marc alluded to, it's myself, Colin, and Kieron is helping me today. In terms of the agenda, we'll give our core business overview, trading -- an H1 trading update and then an update on the core business in terms of VISITECT CD4 and a little bit about lateral flow manufacturing capacity. I don't know if we've had a lot of questions around that area, and cohort opportunities in food intolerance and then summary. And then we'll just take any questions that comes -- that come our way. And so in terms of the core business overview, what I'd like to do is just spend a couple of minutes giving an overview of all of its core business in case any of the attendees are new to the story. Our CD4 product is used in the management of people living with HIV. It's the world's only instrument pretest. It's patent protected and received WHO prequalification, which enables NGOs to procure the test with the knowledge of its met strict performance targets. The test has been specifically developed to deliver a WHO initiative to reduce the number of deaths amongst high-risk patients and is the only CD4 test included in a Unitaid-CHAI initiative which is in place to implement this WHO strategy. In addition, PEPFAR, a U.S. government fund and the largest donor for HIV care, has publicly stated that for CD4 testing, we won an instrument-free solution, which illustrates the potential for this test. In terms of COVID, at the outbreak of the pandemic, we realized that diagnostics would play a key part in the global recovery and that we had the skills and expertise to help this recovery, especially with lateral flow rapid tests. We decided that we wanted to cover both antigen if you currently have COVID and antibody tests, if you have COVID -- if you have had COVID, and also to cover a lot of primary care and self-testing scenarios. To date, we have all 3 bases covered from antibody testing, including being part of a U.K. government-backed consortium and are currently working with our partners to introduce antigen testing by the end of this year, early next year. thanks to our recent fundraise, we're also rapidly increasing our capacity to deal with the potential demand. This will allow us to take a flexible approach to our production to meet the demand as the disease progresses. Finally, with regards to our food intolerance testing, which is a more efficient way than the traditional food elimination process to identify the foods that are causing chronic problems such as IBS, this business is cash generative, delivering revenues in the last financial year of GBP 9.2 million and an EBITDA of GBP 3.9 million. For this business, we have an exciting opportunity in China where we've developed a Chinese-specific food plan, and our partner has received approval for lab testing and is currently awaiting self-test approval. Overall, we have a strong position in the short term to realize significant value from our COVID strategy. But as important, we have a core business with a great potential to deliver significant value in the midterm. I'll now hand over to Kieron.

Thanks, Colin, and good afternoon, everyone. So on Slide 5, what this is highlighting is group revenue for the 6 months to 30 September 2020. It was down on prior period by 29% coming in at a total of GBP 3.16 million. I guess as a majority of you probably know, right now, the company's revenues dominated from the revenues generated from our food intolerance segment. So if we look at that one, revenue at $2.53 million, this was down by 38% on the prior period. and in effect, this has all been an impact from the coronavirus pandemic. But it is less severe than we first anticipated. And certainly, it's less severe than financial sensitivity models that we have run. I guess what's encouraging is -- I mean over the last 3 or 4 months, sales have been down in each of the months this year compared to the prior months by -- in the region of 35% to 40%. But if we have a look for the current month of October 2020, which is obviously outside of the first half, but for October 2020, we're expecting sales to actually be up by 20% as compared to October 2019. So we actually see this as the first early sign of recovery in the food business to hopefully get back to and, indeed, even exceeding prior levels. And what's also encouraging is it's not down to any one single geography, but we're seeing a revival in orders from distributors throughout Europe, Middle East and, indeed, Latin America. We did have global health revenues of a total of around about GBP 0.5 million, which did come from COVID activities. Just under half of that is related to the Mologic ELISA antibody test that Colin will talk about later. And there's also some development income from an unnamed source at this stage. So for the first half, we came in with an EBITDA loss of GBP 1.3 million. That was right in line with management expectation given the performance in the first half of the food intolerance business. And Colin will talk to you this afternoon about all the opportunities we have for a significantly improved second half. But at the end of the first half, we also had cash balances of GBP 7 million, and that is enough to execute on the opportunities that, again, Colin will describe. So at this point, I will hand back to Colin.

Thanks, Kieron. In terms of sort of the core business update, in terms of VISITECT CD4 Advanced Disease, I think we're making great progress there. As I said, this is part of a WHO initiative to really drive down the number of people dying with HIV. It's a key initiative for WHO. They appointed Unitaid and CHAI to implement this strategy. And obviously, in April this year, we signed an agreement with Unitaid and CHAI. And we are the only suppliers for CD4 tests under that agreement. And I think what's also helped in terms of getting that traction with that agreement is this WHO prequalification that we received in July this year which really without that, what you've got to go is for every country, you got to go through a process of getting approval within those countries running trials, et cetera. And what the WHO prequalification does is basically indicating that, as I said earlier, our test is -- meets strict criterias. The performance of the test is sound, and therefore, allows countries to basically import the test and without going through such a stringent regulatory process as we may have had to without it. And it also allows for a number of the NGOs to procure. They have -- there are certain rules that they won't procure without having WHO prequalification. So it was a very crucial milestone that we achieved in July this year. And again, maybe just to reiterate in terms of the market potential, as I said, this is -- currently, revenues are relatively low for this product. We do expect to sort of be around the sort of GBP 2 million, GBP 2.5 million from the end of this financial year as per the finnCap Research. So we believe we're on track for that. But I think more importantly, looking beyond this year and as those initiatives take place and embed in, basically Unitaid and CHAI were concerned around our -- what capacity we had. And they were demanding that we could prove to them that we could produce up to 6 million tests per annum within the sort of 3- to 5-year framework. Clearly, we can deliver as I'll demonstrate to you the capacity graph shortly. And in terms of the selling price, it's $4 a test and it's approximately 70% margin. So you can see a huge potential in the coming years ahead for CD4. And as I said, we're certainly on track for meeting market expectations in this financial year as well. Just to go in a little bit more detail around those -- where those opportunities are coming from and where the sales will be driven from. As I touched on, I think the really important and key milestone for us is that Advanced Disease initiative that's driven by the World Health Organization. And Unitaid and CHAI have started that implementation process, and we currently have 6 countries who have placed purchase orders with us. And through this agreement, these 6 countries are, I think I mentioned before, are really designed to get the logistics and the way that the test will be deployed in country in place and make sure that all those logistics are working, and then there'll be further countries roll on behind that. There is already demand coming from other countries for the test as well, and we expect for other countries to come on board before the end of this financial year. The way this initiative is set up with CHAI and Unitaid is that they are really there to get the test implemented and get it implemented within the country. And they put the test into the country free of charge. And the aim is to -- basically to ensure long-term funding for the test in country. Then organizations such as PEPFAR and Unitaid will come in behind -- sorry, PEPFAR and the Global Fund will come in behind Chai and provide that long-term funding for the tests. And obviously, for us, it's a huge benefit not having to deal with a lot of these low, middle-income countries where potentially there's obviously payment issues. There are a lot of issues that we have to deal with because our relationship is with the likes of CHAI or PEPFAR or the Global Fund. And so there's no payment issues there, which is obviously great for us. The -- I think in terms of where we are, we've always been engaging with Global Fund and PEPFAR as well. And PEPFAR, their financial year actually aligns nicely with ours. So it starts in April and then finishes in March. So we're expecting to see demand coming from PEPFAR during our next FY. They've started that planning process already, and we're already having encouraging meetings with them and the Global Fund. So overall, this initiative is starting despite COVID. And the issues within these low middle-income countries, there is still a good momentum behind this initiative and getting it off the ground. In addition to this initiative, MSF, who is a long-term partner with us and a key advocate for the test, they really weren't a key driver in convincing WHO that this initiative was important to drive down those number of people dying of HIV every year. And that relationship is getting to the point where we're now expecting orders to come in, in the next few months. And certainly, before the end of this calendar year, we expect those -- there's orders to come in and then start to deploy the test in all the MSF field sites. And then finally, in terms of the other NGOs, really the UN agencies, now that we've received WHO prequalification, we started having those discussions with those organizations and getting them to look to include them into their budgets for 2021 and beyond. And those discussions, again, have been very encouraging. And again, a good thing about the UN agency is that they tend to place large purchase orders and also their long-term contracts as well. So once you secure them, you do have a little bit of longer-term visibility of what that demand can look like. So overall, in terms of CD4, we're really encouraged with the way they were progressing here. And I think this year is really going to be a short -- a strong foundation to really build on for going into the next financial year and beyond. Moving on in terms of the -- again, I touched on this already. I've had a number of questions with regards to our lateral flow capacity. So they quite [indiscernible] quite regularly. I think maybe some of our message has maybe not been as clear. And we -- when we talk about capacity for the rapid test consortium versus overall capacity, that message can sometimes get a little bit confusing. So hopefully, this slide will address those questions and then can give a bit more clarity to what we're talking about. So if I look at the sort of next -- October to January timeframe, what you can see here is that the -- we're committed to producing 200,000 -- so currently 100,000 tests per week for the U.K. Rapid Test Consortium and ensuring November going up to 200,000 tests per week and then that continuing on that basis. I'll pause for a second because I think -- again, so in terms of the rapid tests, the U.K. Rapid Test Consortium, that 200,000 represents somewhere around about 25% of the overall weekly production by the 3 consortium members. What's in the agreement that we have as a consortium is that if the demand is greater than that weekly output, then as a consortium, we can then increase -- as an individual consortium member, we can increase our capacity. Initially, it would be offered up by 1/3. So whatever that -- so if the demand was to go, say, go up to 1 million, there'll be 200,000 additional demand, then that will be split equally, 1/3 each. If one of the consortium members couldn't take that up because of other commitments, and obviously, that will then become available to the remaining 2 consortium members. So our baseline is 200,000 tests per week from about the middle of November going forward, but we can flex that capacity if the demand comes in -- additional demand comes in and also if we obviously have the spare capacity as well to take that additional demand. So in terms of that spare capacity or additional capacity, so currently, we're -- as we come out of October, we're at approximately 200,000 tests per week. And so we have 100,000 tests available, and that's available for CD4 and Mologic lateral flow antibody test. And then moving into November, we increased that capacity up to 300,000, again, retaining that 100,000 per week capacity for those other products. And then as we move into December, we take delivery of -- in November, we'll take delivery of the equipment that we have placed that increases our capacity up to 0.5 million tests per week. What I should have said in terms of November, as I look at that capacity, most of that capacity is already consumed with demand, whether it be for the rapid test consortium, CD4 or Mologic antibody tests, which is really encouraging as we move forward. So as I say, in December, we'll be up 0.5 million tests per week that we can produce. And then as we move into January, we believe that with some efficiency savings on the machines bedding down that we can actually take the current equipment that we procure, either that's already on-site or being delivered, we can get that capacity up to around about 600,000 tests per week mark. So that's where we started with the investments that we've made already. Oops. Sorry, I just jumped back. As we then look beyond that into sort of February, March and April, I touched on the presentation I did a few weeks back. The -- one of the things I was looking at was can we increase our capacity beyond the 1 million tests per week that we have initially tried to target. So we've done -- we've been doing a lot of work in this area in terms of our existing Alva site, which has gone through considerable reconfiguration work since lockdown basically. And the site has been a permanent building workplace. I think we're just about closing [ Phase 4 ] at the minute of works on the site. What we've identified is that we can actually -- another -- the one remaining part for a facility, we can actually reconfigure and that would allow us to bring in an additional equipment, which would then allow us to increase our capacity even further. So we're currently working with architects, getting that layout correct in terms of how that will work. We will commence that work within the next week or so to basically reconfigure that the site. So by Christmas, it will be in a position where we would be ready to take in new equipment, and we're looking at it. And we're in discussions with equipment manufacturers in terms of what lead times they can offer and what the best way forward is just now. The graph is indicating that we will step our capacity up. And so I think obviously, by the time we get to April, we'll be around about the 2 million mark or we will reach 2 million. And I think as you look beyond that, we could possibly get it up further as well to maybe 2.5 million through equipment efficiencies. But this is an outline of what we're looking at being able to achieve. In terms of our equipment that we're looking to purchase, it's -- we have the funds available as Kieron alluded to earlier in terms of the cash that we raised as part of the fundraise. So we have that funding available to procure that equipment. And so we're going to say we're just looking to finalize that in the next few weeks and get that in place. The reason that we're really looking at increasing the capacity further is really being driven by what we see as that the market really moving towards lateral flow and test, predominantly just now antigen tests, and I'll touch on that later on this slide. But I think as we move forward when vaccines become available, I think antibody testing will also become quite -- will also eat into a lot of that capacity as well. So we've been speaking with a lot of stakeholders in terms of what we feel the demand will be for lateral flow testing, and that's really where we -- why we've looked to that additional capacity. So it's something that we believe that will be consumed. It's not just something that we're building for the safety builder basically. So hopefully, that's explained what -- where we are with capacity currently, where we will get to by the end of the year and then as we move into the new year, how we're going to build up even more capacity to meet the demand that we believe is coming our way basically. So if I now move on to the sort of COVID and antibody testing, I think we -- overall, obviously, all the tests are now available. They've all been CE-marked, which is still great progress when you think going back to March that you've heard of COVID or what we've heard of COVID, but those tests were not being into -- were in development. To be sitting here 6 months later, having 3 products that have been fully developed and CE-marked is actually exceptional progress that's been made, and it's a real credit to both the staff that's involved here but also with our partner companies as well in terms of Mologic and Abingdon as well. I think in terms of ELISA antibody sales, clearly, we had hoped that the traction would have been better than it has been. The sales have been lower than we anticipated. And I think really what's driven that is the larger automated players really got into the market quicker than certainly had expected. The -- and they obviously have a large positions in these labs, and they basically started to monopolize those labs where we expected to see some sales. But I think also the market has moved towards lateral flow antibody tests as well. And the -- and I think that combination of the larger automated instruments and those lateral flow tests has really squeezed the ELISA test, which is sitting in the middle. And what we're doing now is we're not sitting back on our laurels in this one. We are actually actively looking at utilizing our in-house laboratory testing service. We hope to get that up and running quite soon. And we've already had discussions with a number of external parties, which we can offer service to, to provide that testing with. And really our thinking here is that whilst we might not be able to get the volume that we particularly had initially expected, what we will be able to do here is attract a far higher selling price. It's probably about a tenfold difference between the price that we sell and the price that the lab offering our service can demand. So clearly, in terms of -- if I look at the numbers that are in the market, that's really where we're looking to recover that shortfall is through that in-house laboratory testing service. And as I mentioned, a lot of the demand has been driven because of lateral flow testing, and what we have obviously now is with -- we have the 2 lateral flow tests available in the market that have just entered into the commercialization phase. So that gives us an additional optimism and what is increasing the capacity as well that we believe that the lateral flow antibody testing will consume a reasonable amount of demand. So if you look at where we are with Mologic and the VISITECT and branded CE-marked test that we just CE-marked in September, the -- where we currently are is we have started a registration process in a number of our key countries. And we've already seen some sales from U.K.-driven customers and also some European-driven customers as well. We can obviously just take from the CE-marked product we have. So during October, we've already seen some sales, and we've already have demand in November as well. These are initial orders, but we do expect those to increase in the coming months ahead. What we've also looked at is we've looked at the prevalence of -- where COVID is highly prevalent across the world, and we've compared that to our existing -- or our existing distributor network and where there are probably identified gaps in our distribution network, what we have and we did this a few months ago was we engaged with some consultants in the area to go and target and find us some key distributors in those key markets. And that work is starting to come through already where we've identified some very exciting distributors in some key countries to take our tests. And obviously, that process is starting in terms of registration -- registering the test, getting those tests approved, and then we'll start to see that demand coming through. One key country that we have identified is the U.S., and we are actually started to work on an FDA submission, and we expect to submit that in the coming weeks ahead for this test. And we're working with a consultant in the U.S. in terms of finding the right opportunities there to take this test. And we've already had some quite exciting feedback from that market. In terms of just -- so just to be clear in terms of position in the U.S., we've got to go through an approval process. So you are looking at into the new year before we would see the demand coming for that. But we do see that as an exciting opportunity in addition to the markets that we already serve. Then moving on to the U.K. Rapid Test Consortium. Clearly, we've CE-marked the test. The one probably bigger question that we -- that I get regularly is where are we with the MHRA approval. We have submitted it to the MHRA. They're currently reviewing this. I'm expecting some feedback relatively soon from them. And obviously, as I've said before, it really depends on what that feedback is. It could be that they're happy, and then we move forward. It may be that they want some additional information, which we would then have to find and provide them and then that approval would come thereafter. So trying to predict timing just now is difficult. But it is certainly something that has been actively managed just now and I've -- hopefully see something soon around MHRA in terms of news. I think encouragingly, obviously, we got that U.K. government contract. The -- I think, again, in previous presentations, I obviously had indicated that we've -- I did expect that to have been happened quicker than it did. And I certainly misjudged how long that procurement process in terms of completing that agreement. It's great. It's over the line now. And we've got an initial order for 1 million tests. And as I said, in terms of -- and the consortium, we are certainly ramping up our production. And from an Omega's perspective, we're starting off 100,000 tests per week. And by the middle of -- middle end of November, we'll be producing 200,000 tests per week, which we expect to be consumed either by the U.K. government. And if it's not by the U.K. government, as part of the agreement we have, we can actually sell this product to non -- outside of the U.K. government. And that can be within the U.K. or external -- outside of the U.K. Our partner is -- a partner member within the consortium is doing some great work there. And again, there's a registration process that's needed for countries outside of the EU. That work is currently ongoing. I think what's encouraging is because it's been backed by the U.K. government, there is some quite excitement around the product. And I think some countries are taking a -- because it is backed by the U.K. government, are taking a more positive approach towards the tests. So again, I'm hopeful that we'll start to see demand coming from nongovernment sources. Certainly, with the work towards the end of November, I would expect to see that demand coming through, which would start to consume what we're producing within the facility. So again, just in terms of antibody testing, we're now in a commercialization phase. ELISA definitely disappointing in terms of the sales opportunities. We do have a strategy to try and rectify that by targeting higher volume revenues through our lab testing. We're seeing significant opportunities for lateral flow testing not just within the U.K. but across the world. And we're actively exploring them just now both in terms of the VISITECT-branded lateral flow antibody test and the U.K. rapid test as well. So again, just to reiterate, that's why we're building that additional capacity because we do see that demand will come. And I touched on -- finally, just a final point in terms of antibody testing, I think with the news of vaccines coming out into the market, hopefully, in the new year. Now these vaccines -- one thing we won't know is how long that immunity will last for. And in fact, whether or not -- in terms of when you had a vaccine, whether or not the vaccine actually work even immediately because of a number of patients that may not work for. This is where antibody testing will come in. So once you find your vaccine after a period of time, 7 or 14 days, you could see where you have an antibody test. And then periodically throughout the cycle, you would be getting tested to confirm whether or not that immunity is still there or not. So I think that's going to be a big play for antibody testing as we move forward. So I think that positions antibody testing. In terms of antigen testing, really where we see a huge demand is with lateral flow testing. I think what's -- in terms of what's come from the news, if we just take the U.K. government initially, clearly, the U.K. government have mentioned lateral flow antigen testing quite significantly as they see this is actually driver for getting back to normality. And I think one of the things that the antigen test offers is that there's a lot of the symptomatic patient -- asymptomatic people walking about who are actually affecting people, not showing signs and symptoms, and obviously, therefore, not getting tested or by the time they get tested, that infection rate has already spread. By getting large volumes of antigen test -- lateral flow antigen tests out into the public and getting test -- getting that testing done, you could see where you can actually identify those asymptomatic patients, get them isolated and then get that pandemic under control again. But also if you do test negative for it, then obviously, it could offer you some freedom to roll down your business, go to a football stadium or whatever. The -- and it's not just the U.K. government though. I think, again, if you look at the WHO, World Health Organization, they see lateral flow antigen testing as a key driver for managing the way through this pandemic as well, and that's been well publicized. So I think it's not just the U.K. You've got the World Health Organization and you've got a number of other countries that are looking towards lateral flow antigen testing as a way to getting out of this pandemic, especially over these winter months as we look ahead. So that's really why we've really looked at what we can do in terms of increasing our capacity because we do believe that demand will come from antigen testing. The slide sort of highlights key features of why -- what the benefits are there. In terms of where we are just now, obviously, we have an NMPA with Mologic. We identified this very early on, and we have that agreement in place with them. They're making excellent progress with the test. They've had a -- taken part -- their prototype devices are being taken part in a number of evaluations not just in place like Liverpool School of Tropical Medicine but actually in some of the -- in [ Latham ] as well in terms of drive-thru centers, et cetera. So they really have started to get the test and the prototype devices out there to understand how the test is performing. They've been very -- they have shared some data with me, and it's very encouraging. I think they are getting very close to completing the development phase. I would expect that to be relatively soon. And then what they will then do is they will look to obviously scale up their manufacturing and get it into an industrial form. The timelines that have kind of spoken to Mologic around in terms of where we should expect that transfer to start. The early indications are the end of November is a realistic start time. It could be slightly earlier, but I think end of November is a realistic start time frame for us to basically take their methods, bring them on to our site and then basically to complete 3 validation lots and confirm that what we are producing is of the same performance as to what Mologic can produce. And then we can build our technical file up just exactly as we did with the antibody test. And then that would allow us to CE-mark. I did mention in an earlier presentation that I hoped that this might well -- it could well be a nice Christmas present for all of us. I still hold up hope that we could get complete by Christmas. If it's not Christmas, it would certainly be early into the new year that we'll have this test available and been able to start commercializing it. But I said my target is that by Christmas to try and get that transfer complete and be in a position where we could start commercializing it. So that's certainly my hope. I say that's why we've really looked to drive up our capacity as well to meet that potential demand that is likely to come from antigen testing. So I think that covers COVID. Hopefully, I've given you a good overview in terms of where we stand today, the opportunities both for antibody and antigen testing and how we have that capacity available and we're building that up every month. We're increasing that capacity, and we expect that demand to consume that capacity as well as we move forward. And then finally, in terms of food intolerance, I think Kieron gave a great summary of where we were. Clearly, the pandemic has had an impact on the business in the first half of the year, encouraging signs that we're seeing a recovery in October. And I think -- as Kieron mentioned, I think the fact that it's not just in one area, it's basically across most of the world that we're seeing that recovery, that gives us hope and certainly a strong expectation that the -- our food business will recover. I think China, though, I mentioned this multiple times, this is really where we see a huge potential to drive this business forward as we look beyond this FY and into the coming years ahead. Our partner has estimated the potential demand for China alone within a few years is up to 1 million tests per annum. And again, just as a reminder, it's $15.5 a test at a 70% margin, so significant revenue potential to generate here. Our partner has made great progress and invested a lot of money in this. And not just in terms of getting the approvals but getting a specific Chinese app, which uses artificial intelligence to basically remove the need of a nutritionist and give the advice to the end user when they complete the test. So they have invested heavily. They're geared ready to start commercial launch. The one thing that we're waiting for is the Chinese approval for self-test. And our partner certainly hoped that we would have -- we have received this already. It has taken longer, and the documents are submitted, and it is just going through that process. Well, they did feedback to the words that because of COVID, the -- and especially the number of submissions that are around COVID, and obviously the Chinese government have been prioritizing COVID, the other things have -- are taking longer to come through. And that's probably a reason why there's a delay. But we do expect that approval to come very soon, which will obviously then allow them to implement that marketing plan they have in play. And they already have the tests that they procured from us already to be able to hit the ground running. So again, really encouraging here in terms of our Chinese strategy and that huge opportunity we have as we look beyond this financial year into FY '21, '22 and beyond. So I think that kind of covers our core business, and maybe just to summarize it in terms of CD4, I think key for us in terms of CD4 was getting that agreement with CHAI, which gives us the foundation to drive it forward. And a law with the WHO prequalification really puts us in a very strong position to start to see revenues -- significant revenues coming from CD4 this year and going forward. In terms of COVID, I think we've got excellent opportunities where we'll utilize that capacity. We've built the capacity up, and it's now a case of starting to generate revenues from that capacity that we've built up. We're starting to see demand coming from our antibody test. And obviously, as I've touched on already, I think the antigen test opportunity is also huge for us and will have an impact in this financial year without a doubt. And then as I say, we've already touched in terms of food intolerance. So I think overall, I expect a significant improvement in the second half performance and that we really are well positioned for both short and midterm growth and hopefully that managed between ourselves and Kieron being able to get that over in this presentation.

That's brilliant. Thank you, Colin, and thank you, Kieron. [Operator Instructions] I think it's worth noting with over 1,200 investors accepting today's meeting that the company will not be in a position to answer every question it receives during the meeting itself. And the company will review all questions submitted today, and we will publish responses where it's appropriate to do so. I'd also like to remind you that a copy of the presentation, the recording and the published Q&A along with the slides can be accessed via the Investor Meet Company dashboard. And finally, before I hand back to Colin and Kieron for the Q&A, I'd like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. And we very much encourage you to let the company know how you feel.

Colin and Kieron, obviously, investors had the ability to presubmit question. As I'm sure all on the call would imagine, there were a few submitted. I know what we've tried to do is put some content around the commonality within those questions. So we've got a few. We've got about 7 of them. So if I fire off with those, and then perhaps time permitting, we can go through the live Q&A. And I think you have touched on a lot of this within the presentation. But where you can, obviously, the greater transparency we can give investors, the better it is. So the first question we have is why have contracts not been put out in an RNS before they're announced by the DOH.

Yes. Thanks, Marc. I'll take that one. I mean I think, firstly, just to clarify the legal position, there is a contract between the U.K. government and Abingdon Health. And then separately, there is a back-to-back contract between Abingdon Health and Omega as part of the UK-RTC. So in other words, there is no direct contractual relationship between Omega and the U.K. government. So it's important that we put out announcements around events that can have a direct and meaningful impact on Omega's business. So for example, as soon as the government placed a firm order for 1 million tests on Abingdon, Omega announced that in an RNS at the beginning of this month around about the 6th of October, I think it was. And then secondly, as soon as Abingdon and Omega entered into the back-to-back contract that I just referred to, this was also announced without any delay by Omega in an RNS on the 19th of October.

Okay. Next question. Omega is awaiting MHRA update for the RTC antibody test? Is Omega also waiting approval with MHRA on the VISITECT antibody test developed by Mologic?

Okay. Thanks, Marc. I'll pick this one up. Simple answer is no. There is no plan to seek MHRA approval for self-test use for the VISITECT antibody test that was developed in conjunction with Mologic. This is because the approval for self-test of any tests is only being sought when the U.K. government wants to procure tests. So even if we wanted to go down that route, unless the U.K. government wanted to procure the test, our -- the Mologic or VISITECT antibody test, then we couldn't go down that route under the way it's currently structured. My understanding is that the only test that is going through MHRA self-test approval is the UK-RTC test. There is no other test currently under approval with MHRA for self-test. And finally, I'd just like to add in terms of -- because we've tried to segment the markets between the 2 tests and our intention was always with the VISITECT product that this would be used in the professional market, and we would predominantly look to export this test. So that was always our -- always has been our strategy there. So we do not require any MHRA approvals for the VISITECT antibody test.

There have been some suggestions amongst investors that the vaccination program will require extensive antibody testing to monitor the effectiveness of the program. Is there an expectation that a mass U.K. vaccination program will require mass antibody testing?

Yes. Thanks. I think it's actually a great question. My belief is yes, that there will be a requirement for mass antibody testing if a vaccine becomes available. And I think as I touched on earlier, it's likely that when people get vaccinated, they will need to be tested on multiple occasions to determine how long that antibody response for the vaccine last for. So it's certainly my expectation that this will occur.

Very kind. Do the RTC expect further government orders beyond the 75 million already confirmed in the public domain?

I'll take this one. So again, maybe just to clarify the point that Kieron raised, the government has so far only placed a purchase order for 1 million of the UK-RTC antibody tests. The contract between the government and Abingdon allows for a potential supply of test well beyond the 1 million test orders so far, but the government has, so far, only placed an initial order on Abingdon. And obviously, when additional orders are placed on Abingdon, then that's where the back-to-back arrangement would come into play.

Can you clarify whether profit from RTC tests are slightly more than 75p per test only? Or whether in addition, there is a profit share across the RTC.

Okay. Thanks, Marc. I will pick that one up. So 2 parts to the response, I guess. So to the extent that RTC tests are supplied to the government, then I guess I would say that the guidance, which is currently available in the finnCap research is a good guide to the contribution that can be earned by Omega. However, to the extent the RTC tests are sold to third parties other than the government, then yes, this back-to-back contract that we have with Abingdon, it allows for an additional profit share mechanism. So yes is the answer to the question. When the RTC test is sold to third parties, there will be an additional profit share mechanism. And that itself will be linked to the ultimate selling price per test achieved with that third party.

Very kind. Now we've got 2 final pre-submitted questions, I guess, ahead of some of these that have come in through the live event. The first of that is, is the experience of COVID likely to result in Omega plc redirecting the business towards more in keeping with its focus as it was in 2018, 2019?

Yes. I'll take this question. It's Colin here. And the -- I think we indicated during the foundries that with the buildup of the lateral flow capacity for COVID that are post-COVID world, we would look to bring tests to the market in the a global health space and that are complementary to CD4. So for example, TB was one that we've raised that we are actively looking at starting to develop. And the idea there is, obviously, by building up that experience -- that portfolio in the global health. We already have a strong presence with NGOs with CD4 that we could obviously utilize that lateral flow capacity that we're building in that post-COVID world. So a little bit back towards there but not fully, I would say.

And finally, and I know there's been a number of questions that have come through on the Q&A chat about capital raisings and raising money, and the final question is, are you planning to raise money through a placing to increase production?

And the short answer to that is no, we are not planning to raise any additional funds, certainly not to attain the production levels that you've heard about from calling this afternoon. So the fundraising we completed back in June of this year, which people may remember, was predominantly undertaken to ensure that we could increase production capacity significantly. And that does still include increasing production to the levels indicated in the capacity chart that Colin presented this afternoon.

Well, I know we've got about 10 minutes until really the end, and I know that investor feedback is very important to you. Obviously, there's a lot of questions. There's a lot of people on this call, so -- and I'm sure there's a lot of commonality within the questions. Perhaps if I could ask you just to take a look at the Q&A panel on the right-hand side of your screen, Colin and Kieron, and if we could perhaps deal with a number of questions. And just to really reassure investors that no question that has been submitted today will not be presented to the company that have the ability to review as they did last time the questions that were submitted. So if I may hand over to you guys, and I will come in a little bit later to redirect investors and ask you to wrap up.

Yes, sure. Thanks, Marc. Just trying to work the technology here. So apologies, just give me a second. I think there's a good question from [ Michael Jay ]. Unfortunately, the screen keeps jumping about. So the finnCap report mentions a facility in Dundee is it's still being pursued. Why are we not more aggressively adding capacity? I think in terms of -- hopefully, I maybe addressed that in terms of the aggressive approach we're taking with capacity. And obviously, when we were raising funds in June, one of the ideas we had was to get to the million was to look at a facility in Dundee, that it was potentially available. And the more that I looked at this and in terms of the management that would be required in terms of putting that facility up and running in terms of quality systems, operational management and quality management and then getting all that recruitment in place, it was going to be not impossible but within the time frame, so it was going to be more difficult. That's why I then looked at the existing site we had and then started to really think about can we utilize the space that we have here to be more efficient and actually get more equipment into the existing facility. So that's -- as I said, and that's really what's driven a lot of my thinking is that we can actually achieve what we wanted to do with going to that Dundee facility within our own Alva facility. We can get that equipment in. We can get it ramped up. And then obviously, in terms of that overall management structure, I don't need to employ additional operations managers, QA managers. I have that infrastructure here. So it's a lot more one cost effective. But actually, just from a practical point of view, it is actually more efficient as well. And really what we're then looking to do is really just wrap the head count up at a more -- at a sort of scientist and sort of saying the skilled level within the site, which is, without question, an achievable prospect. And so hopefully, I've answered that question. The -- I think a lot of the questions are maybe already answered in terms of MHRA. And I think [ Stu ], can you be completely clear about ELISA test? Are you going to expand this as previously announced or switch to lateral flow? Again, great question, [ Stu ]. I think what you could probably tell from the presentation that we've given is that there's probably, without question, a greater emphasis on lateral flow testing. I think we had initially thought around in terms of antigen ELISA testing. And when we looked at that in terms of getting a lot of market feedback, it was clear from the market feedback we're getting was that really what the market was demanding was a rapid antigen test, [ how faster ] we'd be able to develop and implement an ELISA test. I think the demand may not well be there because I think there's other technologies that are coming in that are pretty well suited for the labs, a lot of point-of-care equipment-based antigen testing that's coming in. So I think that's probably quite well served, and we will probably end up being squeezed like we've seen with the ELISA antibody tests. So it's really kind of -- that's why we're really now just focusing really quite strongly on driving that lateral flow capacity up to meet what we see as a very large demand coming from both antibody and antigen lateral flow testing. The -- so sorry, just...

Do take your time, Colin. There's obviously -- I can see the number of questions that are coming in just to let those where we can. And...

Yes. I'm just trying to see questions that are maybe -- that I think I've already addressed through the question.

Sure. Take your time.

I think we've really addressed a lot of these questions already, if I'm honest. And [ there a number that are not being addressed ].

As I did highlight to investors, there is a lot of commonality within these questions. And of course, everything will be published on our website after. So do feel free just to take a few moments just to review anymore. And then as I say, if not, what we can do is redirect investors to feedback. And then, of course, like you did last time, we can review questions and then put a publication out to the investors at the call.

Yes. I think in terms of -- thanks for the stalling tactic there, Marc.

[indiscernible].

[indiscernible] and then -- and get used to this technology. The -- I think for those that listened to the previous one when I mentioned my daughter helped me made [indiscernible], I think she might have to help me with the Q&A polls as well. The -- yes, [ Andrew H. ] asks, when do you anticipate generating revenue for the CD4 test? I think, [ Andrew ], we obviously have generated some revenues in the first half of this year but very small. I think in terms of -- if you look at finnCap research now in terms of what we're predicting for revenues for this year, we're confident that we will deliver those revenues. As I said during the presentation, we have already received orders from -- for the advanced disease test from 6 countries. And that's currently working our way through our production process. And we will start to supply them in November and December. And as I said, we do expect additional countries to come on board sort of January, February, March time frame through that CHAI initiatives and also the MSF and looking to procure as well. I think [ LNG ] CD4, VISITECT, HIV, for [ us ] anticipated cost and earnings per test. I think I probably covered that, but it probably is worth just reiterating. So -- and do you want to take this from [indiscernible] and the VISITECT [indiscernible] what's the anticipated cost and earnings per test?

Yes. So I mean Colin's already mentioned that the selling price per test is around about the $4 mark, and that we earn a margin of around about 70%. So broadly, what that means is that the cost of goods is at or just above -- around about GBP 1 a test. And one of the things that we had identified at the time we did the fundraise was a project to reduce the cost of goods for VISITECT CD4 which is basically sourcing alternative raw materials in effect. That would then -- these additional raw materials or alternatives would need to be validated. And if successful, we expect that the cost of goods could be reduced by around about 50%, i.e., taking the cost of goods down to just over 50p per test.

Colin, just on the basis of -- obviously, I monitor the attendee numbers and people may have allocated time for the meeting. We're just going over the hour mark. I just wondered if perhaps if there were maybe a couple of final questions. And then if I could ask you to wrap up and genuinely ask investors to provide feedback as they've taken the time to attend today's meeting.

Yes. Again, maybe just stick on the CD4 stream question from [ Richard S. ]. As part of the marketing to Malawi, have Omega held any discussions with the Scottish government who are currently reviewing their overseas a policy for a multiple linked to NGOs in Malawi. To answer that, we haven't had any direct conversation with the Scottish government, and certainly, I do a number of contacts with Scottish government. So thanks for raising that. I'd certainly pick that up with them. In terms of Malawi, it is actually a key country that is part of the CHAI arrangement and is also a key country for MSF. So it's something that we -- a country that we're actually very active in. But I think certainly, if there are additional help there that we can get from the Scottish government, they'll pick that up. So thanks for raising that, [ Richard ]. That was a good question or good observation. The -- again, I think as I'm looking down, I think we've probably answered a lot of these questions already, Marc, in terms of the presentation.

Well, let's do this then, Colin. That's -- if I could finally just ask you perhaps just a few final words to wrap up. And then I will automatically redirect investors to provide you with feedback. And as I said before, that will be greatly appreciated.

Yes. Of course, so -- yes. I mean I think really the point of this was obviously trying to give everybody a feel for in terms of where we currently stand. I know that there's probably some disappointment around in terms of perhaps expecting larger movement in contracts, et cetera, than where we currently are. And what I would say is that hopefully, this presentation has really emphasized the fact that we are in a very strong position to deliver both short-term and midterm value. I think the COVID opportunities are in front of us. We will start to see revenues. We will have a significant improved H2 and obviously then looking beyond this financial year. Looking forward, I think the prospects not just in terms of COVID but with our core business as well are exceptional in terms of growth opportunities for the company. So hopefully, we managed to get those points over during this.

That's pretty. Well, thank you very much to both Colin and Kieron for certainly updating investors around your trading update today. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback. If you access this meeting via our website, the feedback page will appear automatically. If you access this from the link sent to you by e-mail, you'll have to wait a few seconds, and you'll be asked to log in to submit your feedback. On behalf of the management team of Omega Diagnostics PLC, we would like to thank you very much for attending today's presentation and, indeed, your questions throughout. That now concludes today's session. Good evening to you all.