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

Good afternoon, ladies and gentlemen, and welcome to the Omega Diagnostics Group PLC final results investor presentation. [Operator Instructions] Given the number of investors that are on today's call, the company may not be in a position to answer every question received 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. And as usual, we'll send you an e-mail to notify you when they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. And I would be most grateful if you could give that your kind attention. And now I'd like to hand over to Colin King, CEO from Omega Diagnostics. Good afternoon, Colin.

Martin, thank you. And welcome, everybody, to our investor presentation and from a rather hot stuffy Alva, which is pretty unusual for Scotland. But yes, thank you for everybody for attending. To existing shareholders, I'd like to thank you, especially in terms of your patience, it has been a difficult few months due to unforeseen delays with the DHSC contracts. And I hope this presentation provides you with the comfort and confidence as we remain confident that we will utilize our expanded capacity, supply DHSC who, like COVID, haven't gone away. And this financial year will be a transformational year for the business. To nonholders who are listening, I hope you'll see throughout this presentation, there is an exciting time for -- to invest in the company and that we have strong growth potential in our core business, that's underpinning the COVID opportunities. And what I want to do just now is I'm just going to switch off my camera because it is a little bit off-putting and I also think it'll make screens a little bit wider for everybody to see, including myself. So apologies for that. Okay. So we'll just move on to the next slide. So in terms of presenting today, you've got myself and Kieron. As you have noted from today's announcement, this is likely the last time that myself and Kieron will present together to, say, to hang up his cold pen. I think Kieron has played a key role in the company in getting it to where it is today in terms of converting it from private to public. I personally like to thank him for all his efforts, especially the support he's given me since I've been CEO and been that long ago. I'd also like to take this opportunity to welcome at Chris Lea as well. I think Chris brings a wide range of experience and expertise that is going to be invaluable as we move into this next -- second phase of overall development. In terms of Kieron himself, he will be with the company. He's not leaving in August, there will be a transition period with Chris. So and I think that's important as well. Kieron's decision has given us the time to find out our early top-quality capable person to replace them and also in terms of allowing us to transition the rollover in a smooth and orderly way. In terms of the agenda, again, it's very, very similar to previous. We'll run through a kind of overview, quick overview of what the business structure is. Kieron will run through the financials, and I'll go in a little more details in terms of business update, in terms of health and nutrition, VISITECT CD4, COVID opportunities in our global health expansion. And then I'll sum up. We'll then come back to Mark as he alluded to in terms of taking questions. Just again, just to reconfirm what Mark said in terms of -- there is a large number of questions that we -- that I know have already come in. We're unlikely to get through them all, but we do make the commitment that we will and work through, provide answers and then feed them back through this platform as well. So please be assured that you will get answers to your questions. In terms of the business units, we've obviously got 2 business units. You'll notice in the Health and Nutrition, which was previously labeled as Food Intolerance. We rebranded that and our Global Health business unit. In terms of our Health and Nutrition, the reason that we've rebranded is really a couple of main reasons. One, in terms of -- currently, our product range is very much focused on Food Intolerance, food sensitivity test, and we do see opportunities to expand that around gut health -- growth in the gut health area. So hence, why we've moved to Health and Nutrition as we sort of shift that focus from just a single product range into a wider product range. And then also in terms of, I think, you better describe the outcomes of using our tests. Our tests help identify lifestyle and dietary changes that can significantly improve long-term health and well being. Just remember that the ultimate market we serve is a consumer-driven paid market and it's not health care and provider-driven either. So again, this is very much kind of focusing more towards the consumer side of our business. And I think the key thing I hope to go through this presentation as well is the great opportunity for rapid growth in this business. And maybe you've noticed from our announcement today to help achieve this, Jag Grewal has actually -- we've refocused Jag and he's now taken full responsibility for driving this division forward to deliver the exciting opportunities that we have in front of us. In terms of our Global Health division, it's focused on Advanced HIV Disease segment in the market. And obviously, with CD4, our unique CD4 test really at the heart of that. And in terms of our CD4 test, it is unique. It is the only instrument-free CD4 test, and it's been designed specifically for low-middle-income countries to improve the lives of people living with HIV. And obviously, that part of our division is where our COVID opportunity sets, where we offer both antigen and antibody lateral flow test and has been the reason for our significant site expansion over the past year. At that point, I'll just hand over to Kieron and he'll run you through the financial numbers.

Thanks, Colin, and good afternoon, everybody. So our revenue for the year ended March '21, it was down 11% to GBP 8.7 million, and that is down to an early impact of the pandemic. If I just split that into H1 and H2. So in H1, we actually did GBP 3.2 million of revenue. And in H2, that grew to GBP 5.5 million of revenue. So we do see that as an early sign that we are recovering to near prepandemic levels. One of the products that was impacted by the pandemic, it was our highest-margin product, in fact, that was most impacted. And in essence, that's run its way through all these other KPIs that you can see on the screen. So gross profit in absolute terms down to GBP 4.5 million and the gross profit percentage down 51%. And clearly, an EBITDA position that's moved from positive in the prior year to the GBP 2.2 million of loss that we indicated in the February trading update that we issued. In terms of our Health and Nutrition sales, they're dominated by the 2 key flagship products of foodprint and Food Detective. And you can see in that top chart that it's foodprint that dropped from GBP 5.7 million of revenue in the prior year, down to just under GBP 3.3 million in the standard. For those that are familiar, foodprint is our lab-based test using a Microarray platform that can test for your food sensitivity to over 220 foods. Being lab-based, it's obviously used in a lab environment, and that is the environment that we saw that was most impacted from the pandemic, whereas if you look at the bottom half of the slide, Food Detective, which is a food sensitivity test for 59 common foods. That is more of a consumer-facing product, and that only dropped by 4%. Health it has to be said by the food panels we launched in China in the prior year and in the year just ended, our Chinese partner brought over 100,000 tests generating GBP 1.2 million, so just under half the total revenue of GBP 2.5 million. In terms of Global Health, so we did total sales in Global Health of GBP 1.9 million, and I'll try to split that out to you into some product groups here. So reading from the left, we have our VISITECT CD4. I mean, clearly, it's a relatively low level of sales just now, doubling from GBP 50,000 in the prior year to 100 -- just over GBP 100,000 for the year just ended. That's not what we had originally anticipated would be the level of sales for the year ended March '21. And it is fair to say that the rollout of the test itself has been impacted by the COVID pandemic, but we are now starting to see some momentum gains and Colin will further some detail on that as we go to the presentation. There's GBP 900,000 of revenue that was generated from Omega being a member of the U.K. Rapid Test Consortium, which was brought together at the request of the government. And led by Abingdon Health to come up with a lateral flow antibody test. And of that revenue that we generated, just over GBP 500,000 was from Omega selling product to Abingdon, so that Abingdon could meet its commitment to supply DHSC with its 1 million tests, which was the first order that the government placed. As most people will know, the government didn't place any further tests, further orders beyond that. And Colin will also touch on that later on. The other GBP 400,000 of revenue to take us up to GBP 900,000. It's Omega supplying Abingdon so that Abingdon can carry stocks to meet demand that is expected from other third-party commercial opportunities. Then we have just under GBP 0.5 million of revenue from a subcontracting activity, which was owned, in effect, just using its plant facilities and people to undertake some activity on behalf of third-party companies that approach Omega. It's obviously not a particularly large number, but it made sense to just cover some costs whilst we have people and equipment available. Then there's just a GBP 250,000, which came from the ELISA antibody test, which we started to use. And in reality, I think what's happened with that one is as you'll hear later on, focus has switched away from antibody testing as it was in the earlier days of the pandemic more towards antigen testing. So that product opportunity did not go as we originally anticipated. And then in terms of the other category, it's a combination of some of the legacy infectious disease products that we sold to Lab21 in 2018. We are still recording some sales to the extent that our Indian subsidiary has sold some products from Lab21 to still service the Indian market. And in our prior year figure, you can see on Slide 9, GBP 700,000, that also includes a discontinued product range, which cover the range before the new products. And then Slide 8 is just -- it's basically a snapshot of where across the business we generate money, where we spend money and where we deploy our people. So you can see with our Health and Nutrition division, it generated overall sales of GBP 6.8 million and had a positive EBITDA of GBP 1.2 million. The majority of that GBP 6.8 million comes from foodprint and Food Detective that was positioned on Slide 6. In addition, there are lower levels of revenue, which come from selling food ELISA product and also the CNS lab service offering, which is run from our Littleport facility. And then we have Global Health, which generated GBP 1.9 million of revenue, which I detailed on the previous slide. And that had an EBITDA loss of GBP 2.2 million. And then we have the corporate costs and the costs of being a plc. So over on the right-hand side, you can see the overall EBITDA loss of GBP 2.2 million, which I detailed on the first of my slides. In terms of development spend, we spent GBP 900,000 on development activities. This is spend, which is capitalized on the balance sheet. So what that means is that the activities we undertake have to comply with 1 of the international accounting standards, IAS 38. And if all the criteria met, then we are required to capitalize that spend on the balance sheet. And that GBP 0.9 million, it's about half of what we did in the prior year, which was around the GBP 2 million level. And then really the bottom half of the slide just details the movements of cash that you would see on the cash flow. So you've got working capital movements, money coming in from some asset financing, which part financed GBP 2.2 million of CapEx. We -- you can see the issue of equity shares on the penultimate line, that covers the placing and open offer proceeds for June 2020. And we did repay the overdraft March 2020, which was GBP 0.6 million. So at the end of March '21, the cash that we had on the balance sheet was GBP 5.8 million. And at this point, I will hand it back to Colin.

Thanks, Kieron. So then just moving into sort of more detailed updates in terms of our 3 business units. So starting off with Health and Nutrition. The -- in terms of the -- where we are just now, I think, as Kieron alluded to, I think last year, it was severely impacted by the pandemic, revenues down from GBP 9.2 million to GBP 6.8 million. I think what's really encouraging though is that in terms of quarter 4, we did see a recovery in terms of GBP 2.4 million during quarter 4. But I think probably even more encouraging is actually what we've achieved in quarter 1, the -- in terms of GBP 1.7 million, which is actually 97% higher than last financial year, but probably even more encouraging is actually the fact that it's 5% higher than FY '20 equivalent, which is obviously prepandemic. And I think what's happened in quarter 4 and the movement in quarter really gives us the confidence that we believe that our revenues for our Health and Nutrition business will recover back up to pre-pandemic levels around the GBP 9 million mark in this financial year. I think also in terms of last year, there was a couple of other key things that have helped drive the business for not just in terms of next year, but or for this year, sorry, but also in terms of mid- to long-term growth. In terms of China, clearly, really, really great news that we got their approval in November last year for the self-test or partnered anyway. And I think what's encouraging there is -- and just to point out is that our partner is the only -- is the only self-test that is actually approved in China for food intolerance or sensitivity testing. So clearly, our partner has a first mover advantage here. And given the time it takes to get approvals, you're looking at a clear runway for 18 months to 2 years that they have to generate the market, grow the market and to be successful. And really just want to reaffirm, basically, our partner still remains committed to the forecast it provides us, which was by calendar year 2023, they will be procuring in the region of 1 million tests. And if you remember that selling price per test is around about $30.5, a reasonable margin as well. That's a significant uplift to our revenues as we look forward from China. And then in terms of -- I think the other thing I just want to point out is that clearly, the pandemic did have an impact in the business, but our sales team has done a really great job during that time, we actually identified 7 new customers, which resulted in 7 installations of our footprint system into new laboratories, which has taken our total installed base to 223 in over 43 countries. So I think that's exceptional in terms of -- and really underlines our belief that this division has huge potential to generate significant revenues as we move forward. In terms of how we're going to achieve that, we really see this in 3 areas. We have a large and existing customer base, organic growth that we see. And we also see it being driven through geographic expansion. And then also, as I alluded to at the start in terms of why we've moved to Health and Nutrition as well, we do see a menu expansion opportunity as well to further and further enhance growth. In terms of the organic growth and what we've been doing a lot in the last year, and we set up a Health and Nutrition training academy. We've delivered webinars to over 1,000 health care and nutritionist providers to obviously help educate them and drive that awareness. As I said at the start, this product is sort of consumer-driven. So really making our brand aware and getting our -- people who buy our products and obviously ultimately deal with those end customers, making them more comfortable with something that we're really focused on in the last 12 months to help drive demand as we move forward. Additionally, look, clearly, in terms of digital, it's quite key and customers are expecting deeds to be transferred digitally. So it's something, again, that we're working on the back with customers is on that digital technology platform to enhance that. And we do see that as an opportunity for us to leverage flow of demand as we move forward with our existing customer base. And then finally, we've been working with these customers to increase marketing, especially our own digital marketing brand awareness in country. And I think, again, we're starting to see some of those benefits, I think, in those quarter 1 numbers. In terms of geographic expansion, really sort of 3 target areas here. In terms of what we're looking to do is in terms of the coverage that we have already is trying to not just increase our coverage by product line or by segment. The -- and that's an area where we've really tried to focus a lot again in the last 12 months. And as an example, those 7 installations I referred to were actually achieved in Europe, which, again, we've always taken the view that, that's a relatively mature market. But what we are doing is we're identifying opportunities even within existing channels to expand that and expand our product offering, which is obviously will help drive demand as well. We've already touched on China. In terms of the U.S., again, this is where we see a large opportunity for us as we move forward. The U.S. is probably unlike the rest of the world, and there is actually quite an established market for food sensitivity testing. And it is the largest market for this product range. The -- just now in terms of the products that -- how the customers are serviced through labs, those labs actually have a technology called ELISA. And what we're doing is we're targeting these labs and offering our footprint system, which is far superior in terms of the lab management. It's a lot easier to use for lab staff than ELISA, and it's also a lot quicker and could offer more feeds as well. So we're targeting those customers, potential customers, those labs to convert over. In addition, that training academy that I touched on in terms of that awareness in the market and our brand, we're looking to roll that out into the U.S. And what we've done in the last few months is actually appoint someone in the U.S. to try to help us drive that demand, as I said, as we see this as a huge opportunity for us. And so I'd expect in the coming financial year that we'll make further progress in the U.S. And obviously, we'll keep you updated as we progress in this key market. And in terms of menu, really what we probably see as, say, opportunities in the wider gut health area. So it's particularly in areas called microbiome, nutrigenomics and micronutrients, which is hard for me to say. The -- but I think these 3 areas are good opportunities for us to -- and we've identified potential products, looking to partner with companies and then take those products and put them through our existing customer base and obviously help expand sales that way as well. So I think overall, in terms of where I see this is that we've got huge opportunity. I do expect us to recover to pre-pandemic levels in this financial year. And then as I look over the next 3 years, I do expect that -- I'd be extremely disappointed if we didn't get to somewhere around about GBP 18 million to GBP 20 million of revenues given the opportunities that we have to grow that in these 3 areas. And then from there, I think we've then got a base where we can actually achieve strong double-digit growth year-on-year after that. So that's kind of our Health and Nutrition business. Moving on into our Global Health division, starting with our flagship product, which is obviously VISITECT CD4. I think as Kieron alluded to, they were slightly -- sales were slightly lower than we expected as a result of the pandemic. But I think we have made significant progress in the market development over the last 12 months. And just as a reminder, in terms of this test, we're not going in and replacing an existing market. This is part of a World Health Organization initiative to drive down the number of people dying of HIV every year, especially in these low middle income countries. And what's identified is the Advanced HIV disease is the key reason for these deaths. And in terms of the centerpiece of this policy is CD4 testing because that's effected the gatekeeper and the people with HIV will be tested to see if their levels are below count of -- CD4 count of 200. And if they are, they would then be offered additional tests to try and get the recovery. So this is really at the center piece of the World Health Organization policy. They basically appointed Unitaid and CHAI to administer this and then drive this implementation across all low middle income countries. So clearly, when we signed that agreement with Unitaid and CHAI last year, it was significant for us as they are a key gatekeeper to driving this test implementation. And I should say, in terms of CD4, our test is the only test that's included in that agreement. The reason for, as I mentioned earlier, is we are the only instrument-free lateral flow test available, and it is patented and protected as well. So a very unique position and at the centerpiece of this important World Health Organization drive. In addition to that, obviously, we achieved WHO prequalification in August, and that's really the green light for NGOs to be allowed to procure our test. So it's obviously a critical milestone for us. In addition to that, what's quite key is making the product -- awareness of the product. And one way that you achieve this is through clinical studies and evaluations, and in particular, independent clinical studies and evaluations where people publish on our test. Where we stand today, we have over 40 clinical studies underway. And some of the studies that have already reported back from Africa, Latin America and Asia Pacific, feedback in terms of excellent clinical performance and doing exactly what the test is designed to do in terms of these -- getting into these settings as well in terms of remote settings. The other thing that we did, obviously, it was partly we'd always planned to do this, but obviously facility -- due to the pandemic was we have a global learning center, which is an interactive online training course that we offer as we roll the test out. This is -- we've had some very encouraging feedback from stakeholders in terms of what we've done here. And I think that's something that we will look to build on as we move forward in the coming years. So all that work that we've been doing, what we're now -- where we stand today is that we've got initial demand from 15 of the 37 strategic countries that we've targeted. And we remain confident that what we stated before is that in terms of those Unitaid, CHAI projections of 4 million to 6 million tests per annum, that we will be in a position to deliver that within the next 3 to 5 years. In terms of -- again, our selling strategy is very similar to previous slides that we've used before. There are really 3 key areas where we see this drive. In terms of Unitaid, I've touched on there, obviously, the company that's rolling out this initiative, where they've got to just now is they'd identified 7 target countries that they wanted to sort of use as a test bed to then learn from them and then roll out. They've got -- currently they've implemented in 5 of those 7 countries, and we expect they'll have 2 more to come on board in the coming months ahead. Key to this is that once those sort of -- the initial implementation is complete, there is the potential then to obviously roll that out to over more than 130 countries that are eligible under this agreement with WHO and Unitaid to procure the test. I think I've mentioned before in terms of what Unitaid are doing, they're really the implementation partners. They're not long-term funders for the test once it's established in the country. But what they do, they try to do is they work with other NGOs to ensure that once the test is implemented, that's then backed up by these long-term funders. And really, one of the organizations that's quite key to this is PEPFAR. PEPFAR, the U.S. government funds the largest donor for HIV care in the world. And so clearly an important stakeholder that we want to manage. And really encouragingly, they have come out and said that they will only purchase an inexpensive lateral flow CD4 test. And remember, that there is only one test available and that's outs and so that's within their guidance. We had expected demand to start coming from PEPFAR from October going forward. That's the start of their new budget year. What's encouraging is that one of those implementing countries that Unitaid and CHAI have been working in, have received support from PEPFAR and they have actually placed an order just recently for an initial order to -- which is actually obviously pre -- the budget starting in October as well. So I think that obviously gives us real confidence and shows the excitement that PEPFAR have and believe they we have in our test. So in terms of -- actually where we started with that was NGO, that segment. In terms of MSF, they've obviously -- they have been a long-term supporter for VISITECT CD4. They obviously helped us with achieving WHO through that multicenter study. And again, just recently, we have now received demand for initial 5 countries that they plan to roll out and implement and there is the potential with them being active in more than 70 countries that this will then roll out further as we progress throughout the year and in subsequent years. Then finally, in terms of the UN piece, and this was -- we always view this as a longer-term play just because of the time lines that are involved with working with these agencies. And crucially, what we have received, just again, just in the last few weeks is that the test has been included in the UNICEF catalog. And what that allows us is not just for UNICEF, it's for all UN in agencies to actually issue RFQs and then, obviously, from the RFQs ultimately purchase orders. And the good thing about the RFQs and purchase orders that come from these agencies that tend to be longer-term agreements and also give you a lot more visibility in terms of future demand. The -- in terms of where we expect the time line for this, I would expect that during this financial year, where we start to see RFQs coming out and all going well, we'll start to see purchase orders coming in from the UN agencies as well. So I think that, I hope, gives you a feel for in terms of underpinning our confidence in getting up to those levels of 4 million to 6 million tests in the period as we look forward. In terms of COVID opportunities, I think in terms of -- clearly, we all expect the demand to be higher than what it is, revenues to be higher than what we achieved in the last financial year. I think if I look back 12 months, we obviously expect our UK-RTC to deliver significant revenues during that period. And clearly, that didn't materialize. That said, I still remain extremely confident that in terms of future demand coming to Omega whether it be through the DHSC contract, which is still active, and obviously I will touch on that in a minute or antigen -- VISITECT antigen test or indeed the UK-RTC antibody test. In terms of the antibody test, I guess one question is, what happened here? I think if you rewind time, the back to April time, I think it was quite clear that the government policy at that point was trying to get to a point it believed that you get herd immunity through natural infection. And part and key to that was using antibody testing and to prove that immunity was like the linchpin of the strategy, and hence, why the rapid test consortium was put together. And obviously, with the expectation of government demand. Clearly, the COVID had different ideas in terms of how it was -- how the pandemic unfolded. And clearly, infection rates rising -- became higher then obviously hospitals start to become under pressure. So the focus really then became on trying to identify people that have the infection rather than identifying people who have had it. Hence, why during last year, there was definitely a switch away in terms of the U.K. Anyway, the need for antibody testing and really it just became being, in effect, what the 1 million test is being used for is for more surveillance purposes rather than routine use. So that kind of explains why where we've got to. I think as a consortium, we still are excited about the prospects for this test. Clearly, the U.K. is probably not a market where we'll see a huge amount of revenues for the reasons already given, plus also the fact that the vaccination program that's been rolled out has been done at such pace that is different from a lot of countries around the world. And clearly, it's very being -- very much focused on driving that vaccination and just getting people jabbed as quickly as possible. And that's because the government had procured large volumes of vaccines. Clearly, not every other country in the world is as fortunate as we are in the U.K. in terms of vaccination programs, and that's really where we see the demand and where the interest that we currently have for the test is in those countries where the vaccination programs are nowhere near as robust as what we have in the U.K. And in terms of the use cases, what we see the use cases being similar to what I said previously, where they will use it to either prioritize the rollout of vaccinations, identify people who would perhaps already have natural immunity, or antibodies, and therefore, give the test to other people. It's also a case on the booster side of things as well. And when booster starts to get rolled out in certain countries in terms of trying to identify people that need a booster and we don't, especially when you're moving into these one-term ones. And then also, there is data start to come out from the recent publications that the consortium put on last week, that's started identifying the fact that indication of immunity as well, which is obviously a strong use case as we move forward. So where we are commercially is that we still have those 7 or 8 Tier 1 customer countries that we're targeting. And that pipeline has been built in, but in terms of sort of near-term demand, there are probably 3 countries where we're just waiting on final registrations to go through. Once they are complete, there is the expectation that the demand will come and it will be significant demand as well from these countries from what we've been led to believe. And hence what has Kieron alluded to in terms of those COVID revenues for RTC earlier in the presentation, 60% obviously went to the government, but there was 40% that was -- that has been manufactured, we obviously continue to manufacture during quarter 1 that we've sold to Abingdon and the expectation is that those tests will be used in the very near term. So that's antibody testing, it's still a huge opportunity for us as we look forward in the coming months ahead. In terms of the antigen lateral flow test, clearly, we have seen our teams started the commercialization process. I think in terms of the commercialization process, I noticed some questions that came in early on. I think in terms of a commercialization process for a diagnostic test is not -- it's not something like an iPhone where you launch and people are queued up outside the shop to buy. There are processes you have to go through. If you're targeting existing customers, they want to evaluate the product to make sure that it's equal to or better than the product that they're currently using, for example. And so there are natural time lag from starting a commercialization process to receiving those initial orders. We do expect to see some orders coming in for our professional test in the near term. The -- but I think where we see the real demand for this is actually in the U.S. and through the self-test marketing, especially in the U.K. In terms of the FDA, we obviously submitted that to the FDA and we're also awaiting the approval process coming through. The reason I believe that the U.S. is a significant market is that it is slightly different from a lot of other markets. A lot of other markets, there are a lot of competition in these markets, especially with products coming in from the Far East. What's different with the U.S. is they obviously have the FDA regulatory process that is slightly more stringent. You do have to get U.S. clinical studies done before you can submit. And that does act as a barrier for a number of companies. So the actual number of companies that are currently approved in the U.S. is actually quite low in comparison to the rest of the world. There's also -- I think it doesn't -- it still surprised everybody on the call that in terms of the U.S., there's not a huge desire to buy from the Chinese market, and they would prefer to buy other products. And I think -- and the feedback we've had from our partners there is that coming in with a U.K.-developed and manufactured test as a strong marketing opportunity to realize some significant value in the U.S. So that's why we're confident in that strategy in terms of the U.S. In terms of self-test, the -- clearly, we CE-marked the professional test. Once we completed the CE mark, we started to realize, especially in the U.K. with the way that the government had moved to issuing free test to the public that the market was actually moving to self-test rather than professional testing. And that is the same in some of other European countries as well. The -- so basically, although the cassette itself hasn't changed, and it's the same manufacturing process that we undertake to make the lateral flow test, what is different and what we spent time working on is the professional version that we had when we've done internal studies using nonprofessional users, it was clear you could get inconsistencies with the test. And given that you've got to go through a process and ensure that it's consistent, we clearly had to do something to improve that. So what we undertook to do was we basically identified the -- putting the liquid into bottles was an area of which people quite often got wrong, et cetera. So we identified a supplier that can produce large volumes of taking our buffer -- producing our buffer and filling it at large scale. We obviously received samples from that. We completed testing and confirmed that we were happy that basically, what we can -- internally, we believe that with this new format that we can get consistent results with non-trained staff or non-trained professional staff using the test. We've now engaged with a notified body. So we're going into the European Union. We have a notified body who we obviously agreed for the protocols, et cetera, where we've now just recently commenced the usability study to confirm basically what we found internally. Assuming that we do get confirmation of those results, then we do expect to submit to a notified body by the end of this month. And we're working with a notified body to -- trying to accelerate the process of approval for this. So once that approval comes in, we do expect to see a significant demand for this product, especially we have opportunities, not just in the U.K., but in other European countries as well. Then in terms of the DHSC contract, clearly, it was significant in terms of signing that agreement. What I think is maybe worthwhile doing is just taking a step back in time a little bit in terms of when the government adopted the policy to start procuring antigen tests. At that point, the combined U.K. lateral flow manufacturing capacity was nowhere near what the government needed. And at that point, there was no test -- U.K.-developed test available either. Hence, why they went to China. China, obviously, had the -- the pandemic started there, so they've always been ahead in terms of developing, whether it's vaccines or whether it's diagnostic tests. So they had an early jump on everybody else. And they also are the largest manufacturer of lateral flow tests in the world today. And so hence, why we are where we are. But I think the government clearly wanted to have U.K. manufacturing to secure that supply. They've invested significantly in buying equipment, and they purchase it and has been installed in 3 companies in the U.K. I think when we signed that agreement with the Department of Health in January or February this year, there was a clear indication or expectation that we were going to be -- both ourselves and GAD would be manufacturing the Mologic test. Clearly, that's not how it's unfolded. In terms of the contract that we have with the Department of Health, it is test agnostic, which is important. So when the realization was that it's unlikely to be that Mologic test, the Department of Health have now introduced us to several companies who we're now in discussions with in terms of see if we can manufacture their test for them. Crucially in terms of these companies, they have gone through Department of Health process for approval, and they also have self-test approval as well. So I think that's quite key in terms of the companies that we're discussing with. In terms of where we stand, clearly, what we wanted to do was make sure that whatever products we manufacture, we're capable of manufacturing in volume. We've done a lot of technical diligence in the last few weeks looking at the test, and I think we're now in a stage where we're confident that we can manufacture the test and manufacture them at scale. I think the other key point to mention here is that unlike the VISITECT transfer, which did take a little bit longer than we expected, the reason for that is that transfer was taking a product from a developed product. And then obviously, we needed to manufacture at scale, and that's quite took a little bit longer. These tests are manufactured at scale today. So again, what gives us encouragement that when we start that transfer, we will introduce these tests a lot quicker. -- where we are now because we're now looking at a commercial terms with these companies, and I expect to conclude also as quickly as possible. And then we'll be in a position where we will be supplying DHSC with one of these tests. And clearly, what we're doing is we're not just discussing with 1 company, we're trying to keep our options open here. And I would just finally just stress as well that if we get VISITECT self-test approval, there is an opportunity as well that that would become available through the Department of Health as well. So I think hopefully what I've done here is give you a feel that, yes, it's been disappointing in terms of where we currently are. But COVID hasn't gone away. It's going to be with us. There's multiple use cases for antigen testing as we move forward. What I would also just highlight is that the demand in sort of May, June time for lateral flow test was even greater than now and combined capacity of all U.K. manufacturing sites, and that's with those upscale capacities. So even though that demand is likely to come down, there is quite a large scope, a large delta difference. So hence, why we are confident that in terms of what we can produce for the Department of Health, we will get that demand coming through and it's just a case of concluding these commercial discussions, which clearly we are doing as quickly as we humanly can do. So that's kind of where we are with COVID. The -- in terms of the global health expansion, I touched about CD4 be a key test in the advanced HIV disease space. What we have is that when -- I said when the test is run, there's probably somewhere around about 30% to 40% of people with a CD4 count below 200. Those people will then require further testing. And these tests that you can see in front of you are the tests that are typically would be one to confirm if they have these infections or not. What we're aiming to do is -- over the next 3 years is basically a position where we have all these tests available under the VISITECT brand. We'll achieve this either through our own development, we started with crypto already, or partnering with other companies where we'll adapt strategic relationships with them and look to bring them under the VISITECT brand and, obviously, use the capacity that we have built up in Alva as well going forward. And again, just to give you a size of this potential opportunity here as well to say, if you do the math, there's 4 million to 6 million tests that are being run, roughly 30%, 40% of those will end up needing these additional tests. So I think where we see this market potential, including CD4, once it's fully commercialized in sort of 3 to 4 years' time, would be somewhere around about GBP 45 billion to GBP 50 million revenue business. So very significant, and we would be -- we'd have a market-leading position in terms of advanced HIV disease management. So that's where we really are focusing our efforts as well to grow the business in the midterm. So finally, just to sum up. I think in terms of our Health and Nutrition business, I think encouraging signs that we'll get back to pre-pandemic level this year, and we have a strategic plan that will deliver significant growth over the next 2 to 3 years. In terms of VISITECT CD4, momentum is building now, and we remain confident that we will get to 4 million to 6 million tests within the time frame that we have established, which is somewhere between GBP 12 million to GBP 18 million revenues. And we have a long-term strategy around creating a market-leading position in global health, specifically around advanced HIV disease management. And then finally, in terms of COVID, we remain confident in delivering significant value for the DHSC, and we expect the approvals for the U.S. on self-test to drive demand for VISITECT. And we also expect near-term opportunities for the UK-RTC test as well. So overall, I think in terms of this financial year, we expect this to be a transformational year for Omega. And then as we look forward beyond that, we have exciting growth opportunities as well within the business to make a really successful and large-scale diagnostic business going forward. So that's really me. I'll hand back over to Mark, and I will take some questions. I am conscious that it is -- there's only about 10 minutes left I can overrun a little bit to take further questions. So hopefully, if you guys can steal on the call and listen to the questions that we can take. I probably can overrun it by about 5 or 10 minutes, but I do have another call that I must take in round about 1:45 p.m. So with that, I'll hand back over to Mark.

Colin, Kieron, thank you very much, indeed, for updating investors. [Operator Instructions]. But I just want the company take a few moments to review some of questions. I'd like to remind you the recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your Investor Meet Company dashboard and assumes the company have taking the time to review the questions, we'll notify you by e-mail when they're ready for your review. I'd also like to remind you finally that your feedback is important to the company. And immediately after this presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the management team can really better understand your views and expectations. Colin, just touching on the -- a number of questions on which we pre-submitted. Perhaps if I could just read these out, and I think this touches on a number that are being submitted as well during the live event. But the first 1 really as follows, "After the Food Detective test has gained Chinese authorization, has the company applied for other jurisdictions around the world such as the U.S., India or South America?"

Yes. Okay. Thanks. I mean, I think in terms of the -- our food sensitivity business, I think we actually sell today in over 70 countries worldwide, which includes actually India and so it's approved in India, and a number of South American countries we are, and these are approved as well. In terms of the U.S., obviously, the good thing about the U.S. market is actually, we don't have to go through an FDA approval for the way -- so we wouldn't take Food Detective, for example, into the U.S. because that would require going through that 510(k) process, but where we see the opportunities actually with our foodprint systems, as I alluded to earlier. And the way that you get approvals for the foodprint test is actually it's the lab itself that gains the approval, and they work with the local FDA. So it's is basically their own lab approval, so you don't have to go through that full 510(k) process, which is obviously -- makes it easier for us to get into that market. The -- so I think that probably -- hopefully, that actually deals with that question. I think we are well established in a number of countries.

Sorry, ladies gentlemen, we're just waiting for Colin just to come back in. Colin, if you would be so kind just to click back on the link. That was 2 browsers open, so that will be just 1 or 2 seconds. And Colin, if you could just come back in as you did before, that would be fantastic. As I said, just while we wait for Kieron, the ability to provide feedback will be greatly appreciated by the company, and you'll be redirected on conclusion of the Q&A. Kieron, I'd be grateful if you could just assist Colin in just notifying him that he's connected and -- he has been disconnected from the meeting. If he could just reconnect, I would be most grateful. Thank you for your patience, ladies and gentlemen. We're just, as I say, waiting for Colin to come back into the room. Unfortunately, his Internet was disconnected. Thank you, Colin. If you be so kind just to literally just connect through using the processes before and then that will bring you straight back into the room. Just click on that microphone symbol and then continue to webinar and that will bring you back through, Colin. Thank you once again.

Hi, Mark.

Colin, no apologies for that, I think, for some reason you were disconnected. Just if I may, if I just jump on to the next question, just obviously mindful of your time as well. And then maybe I can look back at the question that you've just answered and add anything there if necessary. The second question we received is what is happening with the AbC test and why hasn't the MHRA signed off home testing?

Okay. I mean I think I'll probably answer what's happening with AbC test. And just to repeat, I think we do see opportunities for demand outside the U.K., and those approvals are very close and demand should -- significant demand should be imminent. In terms of the question around MHRA side for self-test. Basically, within the U.K., the DHSC didn't receive a derogation from the MHRA for the use of the 1 million tests that we supplied and so, obviously, they were allowed to use them for home use, which is part of that surveillance study. But within the U.K., you can only get a self-test approval if there is -- currently, if there is DHSC demand for COVID tests. So just to repeat that. So in terms of COVID tests, within the U.K., the -- in terms of getting self-test through the MHRA, they will only approve -- MHRA, will only approve self-test use if there is demand from the DHSC. And clearly, currently, the antibody testing is not a requirement, hence, why we've not been able to get the full sign-off on home testing. So hopefully that answers that.

There's obviously been a number of questions submitted around Directors in trading of shares. The question is as follows, "Why was there multiple Directors selling in Q1 of 2021? Were they aware of the delays to contract issues? They managed to sell at a very good price and helped in no small part by tweets that happened to increase significantly around this time." Perhaps I could leave that with you.

Yes. Thanks, Mark. I guess in terms of the -- to answer this question, I think in terms of, obviously, in the lead-up to the Directors selling, it was obviously in a close period and that close period had been in place for a number of months. And I think given the nature of the business, especially just now, we're very -- we're often -- very often going in, in and out of basically the close periods due to the sort of discussions that we have at any one time. So they're quite often on narrow windows of opportunities for Directors to sell. And obviously, the timing in terms of February was one of those times where that was actually 1 of the few times this year we actually had an open period, and that's why we decided to sell either their shares or their options. In terms of picking up the other question in terms of were they aware of any delays to contracts and issues, et cetera. I really want to put this to bed. There was no indication of -- that these delays that we've encountered was likely to happen. I think at that point, both ourselves and the Department of Health were very clear in the messaging of where our expectation was at the end of April, May time frame that we will be producing tests. And as I've alluded to, that expectation was that it would be a Mologic test. Clearly, that's not how it's impacted. But I think that there was absolutely no awareness at that point that there was going to be any delays to the contract. If there had been, there was no way that they would have come out our close period. So I just want to put that to bed that there is -- at that point, those were sold in good faith with the expectation that by the end of April or May, that we will be producing test for the Department of Health. I think in terms of the next point in terms of tweets, et cetera, again, at that point, it wasn't just Mologic, that we're tweeting, it was -- we had -- we had a number of Department of Health tweeting as well all around that time. So there was a lot of positivity around this year's and around the company, sorry. And clearly, with the expectation of producing tests by the end of April or May, hence, why there was a significant increase in social media as well. So it wasn't just all about -- it was all about responding to government notifications as well that we're tweeting. So hopefully that answers the question and put that to bed in terms of there is certainly no -- none of the Directors -- none of us were aware, and neither were the Department of Health expecting anything other than us producing tests April and May this year.

Thank you very much, indeed, Colin. Next question reads as follows: "Why was there over 2 months gap between VISITECT LFT CE-marking in the U.K.? And initiation of the conversations with EU and U.S. about registering the project there for professional and home use, did you hope that all tests will sell in the U.K. and there'd be no need to undertake registration in any other markets?

Yes. Thanks for that question. I think it's a good question. Hopefully, I've already answered in terms of what was required to get the self-test approval. So to answer the last point, no, we weren't just focusing totally on the U.K. We've always had plans for the site antigen test to be a key part of our sales strategy. We had obviously expected in the early part of commercialization that we would be able to achieve private U.K. sales. But clearly, the decision by the government to issue free tests killed the private market by doing so. And the -- in terms of the delays I've already alluded to the fact that the work that's required to submit and self-test because there is a very large difference between a self-test CE mark approval and a professional CE mark approval. A professional CE mark approval, the company can CE mark itself and build up the technical files, CE mark it and then register it. And then obviously, it's then subjected to audits from its ISO auditor to make sure that these trials are appropriate. In terms of the self-test, the notified body reviews those technical files. So you've got to put them in place. And a key part of technical file for self-test is the ability to prove that nonprofessionals can run the test. So that's clearly why we're doing this work just now. So that's really the reason for it taking a little bit longer. There was work that was required to convert a professional test to self-test. And then similarly with the U.S., it is a professional test that's going in -- that has gone into the U.S. But as I alluded to, I think, earlier, but if I didn't, I'll just reaffirm this, to get approval in the U.S., Mologic had to undertake studies in the U.S. So the key thing with the U.S. is they will not just accept data from other countries. They want to see the test being one on a population based with Americans. And that study obviously had to get -- find those study sites. We then had to get those study sites up and running, agree protocols, et cetera, and then run the studies, get the data, analyze the data, then submit to the FDA. Hence, why there is a lag between CE marking and the next steps in these processes. So hopefully, that answers that question.

We received a number of questions during the live event. I'm just reading one now from [ Guy Keith ]. Around capacity, the one that we received ahead of today's event read as follows, "Has full capacity of 2 million tests per week ever been reached? And if so, when, and for how long?"

Okay. Again, I think it's a good question and worthwhile clarifying. So in terms of the 2 million tests per week, we have the infrastructure in place. The facilities are -- so in April, the facilities and equipment were in place. We have the scientific staff in place to be able to manufacture 2 million tests. The one thing that -- what we took the decision to do was with our semi-skilled staff was -- go via our agency rather than employing directly. Two reasons. One is quite a lot of administration burden given the number of people that we were bringing in. But two, also it allows us to, if the demand is fluctuating, allows us to flex that demand. So what we have is a number of agency staff in play, and we try to cycle them as well to get to upskill so that as capacity as the mine picks up, we then increase it. Clearly, in terms of the 2 million capacity, most of -- a large percentage of that demand was obviously aimed at the Department of Health. So I think it's fair to say that we haven't actually delivered on 2 million. But I think what is clear is that we have the capabilities, both in terms of facility equipment and scientific staff and the ability to pull in staff from agencies at a very short notice to be able to get up to those levels. Hope that answers that question.

Next question reads as follows: "How are you keeping the 250 workforce gainfully employed whilst waiting for HMG orders to arrive?

Yes. Again, another good question. In terms of that workforce, I think you can see from Kieron's slide, at March we're slightly actually under 250. We obviously -- we're actually now slightly above 250. There's obviously a number of staff that's involved in our Health and Nutrition business, and they remain focused on that. In terms of the -- if you look back the slide that Kieron has in terms of headcount, any significant number -- it has increased from that from the end of March to where we are now, has been increasing and Alva are predominantly in those scientific staff that came in in April and, obviously, the agency staff as well. What we have been doing is, obviously, the workforce Ely had been busy making Food Intolerance tests. And in Alva, we've been busy making CD4 tests. We have been making UK-RTC antibody tests and obviously producing VISITECT antibody -- sorry, antigen tests and readiness for commercial orders. And finally, I think we announced previously in announcements that we have been undertaking some work for the government in terms of cassetting and pouching activities for a third party. And clearly, what we've been using that for is we obviously do make a margin on it, but it does obviously cover the cost of those staff that work in those areas and would be really used now as a training aid to upskill our staff so that when that demand comes, whether it be from the DHSC, whether it comes through large orders from the UK-RTC or large orders from VISITECT antigen test, we will be in a position to be able to respond to that very quickly. So hopefully, that answers that question.

Just obviously, mindful of time, perhaps a couple of final questions, if I may. The first one is, "1 year ago, the company was very active on social media, but in the past 3 months, there's been radio silence. As some has suggested, is their background NDA, which is restricted to communication and potential updates?"

Yes. Okay. Again, I think it's -- I have sensed that from some e-mails that I've noticed coming in from shareholders as well in terms of questions prior to this. I think in terms of the overall communication, yes, I agree, it has been quieter in recent months. There's a number of factors at play here. Clearly, yes, there are some contracts that we have you've got to be careful about what we're allowed to communicate and that includes working with the World Health Organization, et cetera. And the -- and also the governments as well, but also customers as well. We do have contracts that all these contracts have confidentiality clauses, et cetera. It doesn't stop us from doing it. It just means that we've obviously sometimes got to get approvals before we can communicate. But I think generally, in terms of the -- we try to improve our social media presence. And I think, obviously, we increased the amount of money we're spending in that area as well to try and improve the service we are providing. And in the early part of the year, as I've already alluded to, there was a lot of communication, not just from Omega, but from wider sources as well around the antigen test, and then there was a new pause around that. Clearly, we were feeding off of that and sharing that with investors as -- or through our social media platforms. What we have found is that since April or May, May, June time, I think there has been a drop off, and even from the Department of Health, in terms of the covers around lateral flow testing. But then also, we were conscious that there were delays in the contract and first, I didn't think it was appropriate to start promoting what was happening in the U.K. with the lateral flow test pause that we're still trying to work through what tests we would have that would move forward. Now I would expect that as we move forward and we get these issues resolved successfully, that we would start to be more active again on social media. So I think there was some conscious decision around being a little bit quieter, especially given the sensitivities around where we were, but the Department of Health contract as well. But just in general, there has been a little bit less news coming from us as opposed to earlier in the year.

Obviously, finally, in the interest of time, and thank you to all the investors that both pre-submitted questions and those who have submitted questions during today's event. And as Colin has said that they will review all questions, and we will notify you when they're ready for your review. But Colin, perhaps we could end with the final question here, which reads, "Please, can we have clarification on the preproduction payment, what it covers and what time scales does it need to be repaid?"

Mark, I thought, well, maybe just Kieron to answer that question given that it's probably more a financial and give me a chance to drink a tea.

Can you hear me?

Go ahead, Kieron.

Yes, can you hear me?

Yes, sir. All good.

Yes. So the preproduction payments, what it was designed to cover was money from the DHSC to enable Omega to undertake the facility upgrade in advance of, one, signing the contract with DHSC in February; and two, to cover off the fact that, as everybody knows, we don't have the test at the moment. So they -- the DHSC, put the government -- sorry, DHSC, put the company in funds to enable it to undertake all that facility refurbishment, which we have undertaken. The intention from here on is that once a test is finalized with DHSC and Omega starts supplying it, DHSC has the right to treat that GBP 2.5 million as, if you like, a discount on future orders. And the time period over which that money will be claimed back by DHSC is something which in the contract, it was agreed that we would agree the period over which it was discounted at some future point in time when we know what the test is. So -- and in terms of what might happen to that money. If in the downside scenario of DHSC not ordering a test, so if order is not at full, that money is not returnable because it has been used for the facility upgrades, as I mentioned. The only time it would be returnable by Omega, if Omega was at any point in the future in breach of the contract. And clearly, that's not our intention. We remain ready and willing to supply DHSC once the test coming from the commercial opportunities that Colin described earlier, is finalized.

Thank you very much, indeed, Kieron. Colin, just obviously, again, thank you very much, indeed, for updating investors and indeed, for taking the time for the Q&A and agreeing to obviously review all these questions. Perhaps before I redirect investors to provide you feedback, the chance to give you their views and expectations. I could just hand back to you just for a few closing comments.

Yes. Thanks, Mark. I see -- I hope that what this presentation has given in terms of existing holders that you now have the comfort and confidence that we will -- we are -- that this year will be transformational for the business. And to non-holders who are listening, that you see this as an excellent investment opportunity, both in terms of the strong growth potential plus the coming opportunities that clearly we have in front of us, especially with the Department of Health. Again, thank you for listening, and apologies for the overrun.

Absolutely. No problem at all. Colin, Kieron, thank you once again for updating investors. Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Omega Diagnostics PLC, we'd like to thank you for attending today's presentation. That now concludes the presentation.