Lumos Diagnostics Holdings Limited (LDX) Earnings Call Transcript & Summary

Hello everyone, welcome to the Lumos Diagnostics' FY '25 results investor briefing. My name is George Kopsiaftis, and I'll be your moderator for today. The webinar is being recorded today and will be made available on the Lumos website over the next couple of days. With us this morning, we have Lumos Diagnostics' CEO, Doug Ward. We have CFO, Barrie Lambert, Paul Kase is the Senior Vice President of Commercial Operations; and Annie Bell, is our Vice President of Medical Affairs. Good morning to you all.

Good morning, George.

Morning.

So the format for today is for the team to walk you through the presentation that was released to the ASX this morning. The presentation should take around 30 to 35 minutes. And this will then be followed by a question-and-answer session. [Operator Instructions] That concludes housekeeping for today. So I'd like to now hand it over to Doug to get us started. Thank you, Doug.

Thank you very much, George. Hello, everyone. Really pleased to be with you today to go through our year-end 2025 financials, and a number of other updates that we've had and announcements that we've made over the last few weeks. This, quite frankly, I think, is one of the most positive webinars that we've had to date. And we're really excited to bring in this today, and I'm really pleased to have both Paul and Annie with us given some of the detail in regard to sales as well as our clinical studies, I wanted to get them in front of you so that they can talk about the specifics of what we've actually accomplished today and talk also about what's to come. So with that, why don't we move forward, Barrie. And then so as always, I think for those of you new to Lumos and hopefully, we have some new potential investors on board today or at least some new investors that have just joined us here after all the great news messages that we've announced over the last few weeks here. But who is Lumos? I like to think of Lumos as a diagnostic point-of-care company that's transforming the practice of medicine. While certainly, we develop, we manufacture, we distribute and we bring products to market, that's terrific. But really, what it's all about is helping physicians and patients in real time to impact therapy in the treatment of care for those patients. So we are very, very passionate about that. And hopefully, you'll glean a lot of good information here about what we're doing to deliver on this mission of ours as a company. Next slide. I won't spend too much time on this slide except to talk a little bit about the share price, especially since July, later on, Paul is going to go through just what I'd call stairway to heaven of great accomplishments that we've had over the last -- since probably end of last calendar year, until now, and I think we're starting to really see that in our share price and the confidence that the market has in us saying what we're going to do and then actually delivering on that and then getting the momentum behind our share price. So we're really, really pleased that certainly, as of last week, we were a little bit over -- or a little bit under $100 million from a market cap standpoint at $0.125. I know we -- a few times now have gone up to probably about $0.14 share here over the last few days on occasion. So thank you very much for the positive trust that you're placing in us, and the corresponding increase in our share price. We really appreciate that. Next slide, Barrie. So just to talk really quickly, 6 key highlights that I'd like to talk about. Number 1, last year's financials. Barrie will go into a little bit more in depth on a few slides for all of you who want to talk about it more in a detailed fashion. But the bottom line is to see us, right, increase our sales growth year-on-year, 11%, up now over USD 12 million here in revenue per year. And we've also improved our EBITDA loss as well by 12%. So I think we're seeing that positive momentum translate more and more into financials, which is really a critical area of priority for the organization. So we love seeing that. And certainly, we expect this type of trend to continue for the organization here in 2026. One of the biggest items since we actually announced our numbers in July. We signed our exclusive distribution arrangement with PHASE, I'm not going to talk more about it other than to say, listen, I think it's a transformative event, right, to have a method by which it should translate to a minimum of $317 million in revenue dollars coming in over 6 years. It's just totally changes this company forever. And Paul can talk a lot more about that as he was really the architect behind this deal to begin with, and did a great job in executing and bringing it home. Next is CLIA Waiver, we did announce that we completed the study and that we did submit to the FDA. That's terrific news. Really, what that does is it puts us on a path to secure CLIA Waiver here. Probably sometime let's talk about November to probably February right, of 2025/2026, very exciting. Again, I think just another transformative event for this company going forward. Annie is going to talk more about details around that. So I'll let that go from there. And likewise, you would have seen this week another just great partnership with BARDA in funding in a non-dilutive manner, USD 6.2 million toward study for children 2 to 12 for -- to have that in our label going forward. So Annie will talk more about that as well. Our services business continues to perform very well. You'll see some of the financials around that. It's just a rock solid part of our business and has been right, the foundation prior to CLIA Waiver being obtained. And it continues to impress, and we continue to deliver. We'll talk more about what's going on with the fFN project with Hologic plus, on Monday, you would have seen the announcement for Aptatek for a new deal for USD 1.5 million in a project with them. So we'll talk a little bit about that later on. And lastly, we -- as we announced 2 great investors in -- Ryder and Tenmile and working with us to just basically give us an opportunity to access capital if we were to need it prior to CLIA Waiver being announced, if we needed it, they wanted to stand up and say, hey, we're going to stand with you. We have confidence in you in a -- they signed a binding term sheet to give us access to $5 million if we were to need it, Barrie can talk a little bit more about that as we go. So with that, I think, Barrie, I'll turn it over to you, I believe.

Correct. Thank you, Doug. I'm just going to go through -- just briefly, I'm just going to go through the income statement, balance sheet, cash flow and then just a quick comment on the loan agreement. Look, the annual report is on the ASX platform. So I'm sure everyone can grab that or has already grabbed that and been through it. So I won't go through every single bullet here, but I'll just touch on a few points. So just to remind everyone, again, these are all in U.S. dollars, which is our reporting currency. Start with the income statement. And as Doug said, the revenue for FY '25 was $12.4 million, up 11% over the prior year. It's the same number we reported in the Q4 quarterly update. So no change to that revenue number. The split between the $12.4 million, so around $10.6 million from the Services business, up 7% over the prior year, and Products revenue was $1.8 million, up 46% over FY '24. And within that number, FebriDx was actually up around 158%. So really positive movement on that product. Gross profit was $7.8 million for the year, up 10% over the last year and a really healthy 63%, basically the same as the prior year, and we expect that margin to sort of continue going forward. Other income was $1.5 million, and most of that is made up of the BARDA ground. So that's where we're reporting the grant monies we received from BARDA. So we're not offsetting it against OpEx, it actually goes in that other income line. And OpEx was up a little bit over the prior year. And if you look in the annual report, you'll see a breakdown on that. So regulatory and medical affairs was actually up $1.2 million over the prior year, and that's the cost related to the FebriDx, CLIA Waiver study. There was an increase in employee cost of around $0.4 million, which is mainly medical insurance expense and a small cost of living adjustment for employees. Adjusted EBITDA improved 12% so that was $3.4 million loss for the year. A quick comment on finance costs. It was much lower than the prior year because obviously, we didn't have the convertible note expenses. And net loss was $7.2 million for the year, which is a 16% improvement over the prior year. Just a couple of comments on the balance sheet. It's pretty straightforward, very clean, really not a lot to say here. You can see cash at 30 June, we reported $2 million. I'll talk a little bit more about the cash flow on the next slide. Inventory is around $0.5 million now, and we've sold through any remaining inventory we had on ViraDx. The trade and other receivables includes $0.3 million -- $300,000 of BARDA receivable we had at the end of June, and we did receive an additional $1.2 million from BARDA after year-end are related to the last -- not the last call, the 2 additional milestones related to the CLIA Waiver study. Contract assets is mainly accrual of revenue on the Hologic agreement. And just sort of final comment on the balance sheet. Contract liabilities is balance -- mainly the balance of the IP agreement with the Hologic, you might remember, we received $10 million from Hologic in FY '24. We've been recognizing that revenue each month as we go along. Just a couple of comments on the cash flow. So first thing I would mention is just the receipts from customers, you'll see the $6.4 million compared to $12.4 million revenue recognized. The main difference here is related to the Hologic agreement. So as we accrue the revenue based on the work we do and recognizing the IP revenue, doesn't always equate to the amount of cash we received related to that project because we received most of the $10 million in the prior year. Payments to suppliers and employees, I've already mentioned the cost -- the additional cost for the CLIA Waiver study. I think that's just, I guess, the last comment, the total cash burn for the year was $10.3 million. The main difference to the prior year was obviously the $10 million we received from Hologic on the IP agreement that was included in FY '24. And just, I guess, a final comment on cash flow. So at the end of June, it was $2 million. Since the end of the year, we've received $3.5 million from PHASE Scientific, and Paul will talk more about that. We received $1.5 million from BARDA, so that was a $300,000 that was owed at 30 June, and an additional $1.2 million for 2 milestones for the CLIA Waiver study. We received some payments from Hologic. And we also received some payments from SBCs, which many of you remember was 1 of the convertible note holders. They've been exercising $12 million of their options so far, which equated to about AUD 0.8 million, about USD 0.5 million we received since the end of the year. And you'll see those announcements on that ASX platform as well. And final 1 for me, just an update on the loan agreement with Tenmile and Ryden Capital. As Doug said, we're very appreciative of their support. The documentation is nearly final. We expect to sign that in the next couple of weeks. And there's no change to the terms of that agreement. Obviously, it was a binding term sheet, so you wouldn't expect a lot of change. So the loan agreement will be exactly the same as the term sheet. And final comment there, given the receipts we've had over the last few weeks, we're feeling very good about our current cash position. And as Doug said, it's great to have this facility in place. But at this point, we're not quite sure we don't anticipate to draw down on that facility anytime soon. So feeling very comfortable with the current capital that the company has. I think that's it on finance. I'm happy to take questions at the end. But I'm going to be handing over to Paul, who's going to cover products.

We'll go to the next slide here. So first of all, I want to thank everyone who's live on the webinar right now. I also appreciate everyone who's watching the recording. Time is valuable and we appreciate everyone's support. This particular slide, I just want to focus on the title for a second when we say Lumos is first of its kind point-of-care test. And I think it's important to know, I firmly believe I've been in the point-of-care diagnostic business for over 25 years now. And you -- this is a -- I'm going to argue a once-in-a-lifetime opportunity. You're lucky if you get a novel test that the market is just ready for based on pent-up demand, the need, the extended runway, it's just prime for FebriDx at this point. You might get very lucky and have, say, 2 in your lifetime from the standpoint of a commercial launch. But it needs to be said that Lumos fully understands how special this opportunity is. Now I'll talk in about 3 slides here, walk through the incredible year it's been with the milestone achievements but it's almost vital for me to make sure everyone understands that it's not as though the Lumos -- our Lumos employees, our leadership team and everyone in the organization is sitting back now going, "You know what, that was a great year. It's time to take a nap", or, "hey, that was an awesome year. Let's go on holiday right now." It's actually the opposite. Our foot is on the gas. And I believe our success throughout this past year is fueling are -- even at a higher level of determination and passion for this product. So we're on our way. This is happening. And it's -- from a standpoint of the pride I have in organization is off the charts, but also the outlook, the journey, I've never been more bullish about a product and the journey it's going to have in the U.S. marketplace. It's just absolutely incredible. So just -- it needs to be said. The -- for those of you, again, I'll just walk through a couple of bullet points real quickly here. Obviously, we're looking at a majority of acute respiratory infections caused by viruses and those do not require antibiotics. This is up to 50% of the time, okay, so FebriDx is positioned well from the standpoint of antimicrobial stewardship. It's the first, and again, hear these words, 2018, first and only rapid point-of-care test instrument free. Host immune response using fingerstick blood. It's important to know that. I believe the more success you have with a product like FebriDx, the more activity you create in the field. And so we've experienced some comments that make it sound like maybe we weren't the first, but we are the first and we're going to stay the first and that we're really proud of that. And also then finally, the rapid results at the point of care can increase confidence in that last bullet point. Not only confidence in physicians, okay, but every physician I talk to, every single 1 has been looking for a way to provide that same confidence to their patients. And that's a really important point. So when a patient, and I'll just use my -- an example of my physician last week. I was just in for my annual checkup, my yearly checkup, and he asked me all the time because he has a waive lab, and he asked me when he could start using FebriDx. And I said soon, but in the meantime, he said, you do know why I'm asking you this? I asked him to elaborate, he said because, it's so easy for me to hit a button to prescribe an antibiotic. It goes right to the pharmacy for that patient, instead of the 15 to 20 minutes that's going to take me to tell that patient why I don't want to write them antibiotics. He's got 45 more patients to see that day. He's just not -- and I believe most physicians -- that doesn't mean he's irresponsible, it just means that he's not really able to provide a solution to a patient and explain why he's not going to write the antibiotic when it can only take him 2 seconds to hit a button and just move on. So FebriDx absolutely addresses that need. It's outstanding. Okay next slide. So simple. unique. The test itself -- we've worked on that test procedure, made it very easy to interpret. All in 1 test, extremely important to know. Now realize in the U.S., it's bacterial versus non-bacterial, and outside the U.S., we use the words viral infection, both synonymous. And as you can see, after the test is run with 1 fingerstick, again, a fingerstick in 1 drop of blood, 5 microliters, the results because it's a visual read test, it does not need a reader or an instrument. As you see at the bottom there, if we go left to right, your bacterial infection with your CRP and your control line, your viral is either CRP and MxA, or just MxA. So CRP, obviously, is the inflammatory marker elevated with any infections nonspecific and then MxA as your marker addressing senior viral or nonbacterial infection, again, all based on symptoms of an acute respiratory infection. Next slide. So the takeaway from this, and somebody who have probably seen this slide before, is the 211 million antibiotic prescriptions issued in outpatient settings each year. So it needs to be said, we are not anti-antibiotic. We're not saying antibiotics have to be reduced, this is crazy. All we're saying is that the appropriate use of them. It's all about appropriate use of antibiotics. There's nothing -- I'm a huge fan of antibiotics, actually, Lumos is well. But why not use them appropriately, why not provide tools so that we're not overprescribing because those tools don't exist, right? So on the right side, you'll see it especially on the acute respiratory side, it accounts for about 58% of all antibiotics prescribed. So that's our market. and that's what we're addressing. Next slide, please. So we talked about, Doug had mentioned the stairway to heaven, Doug actually first time I heard -- fantastic term. So that this stairway to heaven, has been an incredible journey. Everything from the CLIA Waiver study, the PLA Code, getting Medicare and Medicaid recognition, 500 patient -- I mean the list -- if you guys -- I know the font is a little small, I apologize, but we're talking about then now your major partnership with PHASE, your funding agreement with shareholders, your CLIA Waiver application, it's been a crazy year. And the best part, as I said in the opening slide is we're just getting going. We are absolutely on a roll, and we are -- there's just no -- there's no hesitation because, the dotted line that starts after this most recent , which again, we're very proud of, Annie did a fantastic job in the pediatric study, is obviously obtaining that grant for CLIA Waiver, grabbing that $5 million from PHASE Scientific based on the contract we have, and we keep going. So again, I'm so proud of the achievements, and I -- we just -- as I said, we're not letting up. We're going to keep moving here. Next slide. So let's talk about partnerships. PHASE Scientific is an outstanding partner. They've already proven to be. We've gotten off to a great start. The agreement, again, is an exclusive agreement in the U.S., AUD 487 million over 6 years. Important to know when we first announced this partnership, I believe the words were up to, and we probably shouldn't have used up to because it sounded like it's capped. But no, that the USD 317 million or AUD 487 million over those 6 years is obviously based on the granted CLIA Waiver, but it's based on the MOQs in the agreement. We're actually hoping to eclipse that and move forward. So there's really no cap on this agreement, okay, it's important to know. The MOQs, we believe will ramp significantly from years 2 through 6 based on our market -- our go-to-market strategies that the 2 companies have combined on. And why PHASE? Well, their expertise, especially during COVID, and their leadership is very highly respected. Their commitment to not just the agreement but also their go-to-market strategy, the funding of conventions, shows, marketing. This is not one of those -- this is a very robust partnership, not a simple manufacturer distributor. This is -- everyone has the goal. And that goal is to make FebriDx extremely successful in the U.S. and what it's going to take on a daily basis to get that done. So we're very pleased with that. And then their strong network of subdistributors, end-user customers negotiations continue with those agreements. It's important to note that based on this partnership, our agreements with Lumos and the agreements we had with distributors do not novate through this. So PHASE will be setting up their own distribution channels and in the -- and currently working with the major channels and the subdistributors as well. So those conversations are ongoing, and results will be coming very soon. Let me just, if I could quickly go back, Barrie, to just on the right side to show the -- so as you could see, the exclusivity fee, I believe, Barrie and Doug, you mentioned this was the $1 million we've received that. We received a $1 million prepaid purchase order. We just received a $1.5 million, and now with the grant of CLIA Waiver would be $5 million and then the aggregated total order quantities is $308.5 million. That's the 5 years after year 1. Okay, thanks, Barrie. So another partnership, which we're extremely proud of as well is our partnership with PRO-spectus, this is pivotal to the economic story around FebriDx. PRO-spectus, is a leader in the reimbursement world of working with manufacturers, customers and payers. And so they're going to support all of our sites on the front end before they post or make a claim after they've run FebriDx, they bill for that, okay, so PRO-spectus works with them on the front end and PRO-spectus will then work with them if any of those claims are denied and how to then basically resubmit those denials. And so basically, as I mentioned, as far as the path of a code, you first obtain it. Then we've had our success with CMS, with establishing on the clinical lab fee schedule at USD 41.38 per test. We then have had tremendous success with the Medicare administrative contractors. That number actually is 7 out of 7 when it comes to every MAC tying FebriDx to the clinical lab fee schedule, it's now 7 out of 7, but we're still working with the remaining MAC on a local coverage contract. So more to come there, but we're unbelievably pleased and I just want to make sure when I saw that, that I noted that it's not as though we're not getting that seventh MAC. It's just there's a little more detail around the local contract with them, local coverage. We then now have identified pilot sites that will be billing for FebriDx and working with PRO-spectus so we can get a lot of utilization moving through the field, and we actually want to see some denials so we can address them. And at that point, PRO-spectus, creates that conversation with those private payers. It's -- they do an excellent job. So we then go through that payer review, and we work for a policy adoption around that PLA Code. And so it continues to just gain momentum, right? It's like a -- an evolution, if you will, of 1 Medicare, Medicaid than your private payers. And as you get -- as you increase that success, then over time, which, call it, a year or 2, 3, you're suddenly experiencing success every month, and it just continues to gain momentum based on new policies and payers. Next slide. So this slide probably should have been called the path to, say, a novel test introduction in the U.S. And so first, you start on the clinical benefit side. So hopefully, I've addressed some of this on the -- discussed in the first 2 or 3 slides. But it's the only test, again, novel is great, right, but novel is even better when you're addressing a need, a pent-up demand, if you will, for nothing else that exists on the market. And the test is just, I would say we're distinguishing bacterial and nonbacterial, acute respiratory infections in the U.S. There's about 80 million of those a year. in the U.S. So we're enabling physicians to prescribe these antibiotics appropriately, again, appropriate use of antibiotics. So we're very pleased that FebriDx is addressing that clinical benefit. So let's give it a check, and we move on to the second, just as important is an economic benefit. So in getting our clinical lab fee schedule at placing FebriDx at $41.38, that's really big, okay? It helps create a sustainable margin for Lumos, it creates a margin for PHASE, and it creates a margin for physicians who are performing the test, there's obviously administrative costs, other things that go into it, and so the physicians need to see a margin too, but that economic benefit based on everything, the milestones we've achieved for FebriDx in this category have been achieved. So we'll give that a check now, too. All right. And the third is our operational efficiency. So under this, you look at FebriDx as almost triage test, okay? So when you go into an urgent care in the U.S. and you have signs and symptoms similar to COVID and flu or RSV, they're going to instantly triage you, okay? The importance of FebriDx is, yes, is it -- should it be performed, say, first and then reflex test. It means test now for, say, an antigen test like COVID and flu, great. But most importantly, is we're not disrupting the workflow. It already exists. We're just adding an additional tool into that workflow. We're not changing physician behavior. We're not having to create a brand-new story. And we -- and so that's when novel tests get difficult when you're actually changing physician behavior. In this case, we're adding another tool to -- a lot of the point-of-care rapid say, 10-minute tests that are out there with now just an added benefit to looking at how do we decrease or appropriately manage the antibiotics. So we're really proud that FebriDx targets operational efficiency as well. So check. And now we move next slide, Barrie, please, to the economic flow. And I'm not probably -- I can't list each 1 of these, but I'll just paraphrase here by saying with a value chain and economic flow for FebriDx, what you want to make sure is that you've kind of tackled say, catering everything towards volume adoption and reimbursement coverage, right? And so from a manufacturer, bringing the gross margin of, say, 60% and targeting an even higher based on future volumes that we expect, right? You then have a distributor like phase that can also bring in a healthy margin, call it, 35%, 40% or so. So they're able to achieve what they need to achieve. And then your health care providers and physicians, as I talked about, not only do they achieve operational efficiency, okay? But they, from an economic side, want to make sure that they're not losing money. And that's where the PRO-spectus partnership comes in. That's where the reimbursement is vital and evolves as time goes on. And then the payers themselves, right? They're going to want to see medical necessity which we've already put together that dossier of claim denials and medical necessity around FebriDx and have our key opinion leaders write those letters and kind of create that conversation to get the coverage written so that we don't even have to deal with future denials around the test. So the takeaway is that there's enough from a standpoint of margin for all the organizations to benefit. Okay. So at this point, I believe I am sending it off to Annie to talk about kind of the power of CLIA Waiver and all the tremendous success that she's been leading with the submission and the pediatric trial.

Thanks, Paul. So just wanted to explain why this CLIA Waiver is so important to FebriDx. So in the U.S., laboratories have -- Clinical Laboratory Improvement Amendment, that's stands at -- that's what CLIA stands for, and it's basically quality standards that labs must adhere to, and they're designated based on complexity. So there's the waive test can be -- are very simple and can be -- have a low risk of air. And the waive setting is where most primary care physicians practice, like Paul was mentioning his primary care physician is -- has a waived lab. And that's where most patients with acute respiratory infection are seen. And so by having this waived designation for FebriDx it allows more access to FebriDx for physicians and patients and clinicians who are seeing patients with respiratory infections. So it really expands access for the patients who need it most. And so that's why it's important to us. And so we partnered with -- go the next slide, Barrie. Lumos partnered with BARDA, which is a government agency under the Health and Human Development division, and it stands for the Biomedical Advanced Research and Development Authority. So they've been great partners to us. They make -- they support companies that have, in our case tests that are supporting biomedical countermeasures. So antibiotic resistance is considered a threat in the U.S. And so FebriDx can detect and determine if patients have a bacterial infection and can rule that out. So BARDA has interest in that as a biological countermeasure and have been great partners to us. So we have an entire team dedicated to Lumos and to FebriDx that are all made up of experienced individuals who have industry experience in diagnostics and regulatory expertise as well. So they have been great partners for us in designing the CLIA Waiver study, helping us to execute that study and then helping us to prepare the submission. So we started that study in December, finished that study in August, and we exceeded our preset acceptance criteria. So the study was designed to compare untrained operator performance of FebriDx to a trained operator. So a trained operator would have laboratory experience, an untrained operator has less education, less experience and no laboratory experience. So basically, we demonstrated with a high degree of accuracy that FebriDx could be performed in the hands of untrained operators with low -- in our case, almost no risk of air. And that's what the FDA is looking for in order to grant the waivers. So we feel confident in our submission. We submitted our application in August, and we expect to hear feedback between November and February. And as Paul, Barrie and Doug mentioned, the submission trigger a payment from BARDA of $1.2 million and a payment from the PHASE of $1.5 million. We go to the next slide. So that's successful partnership with BARDA led to exercising the option for the pediatric claim extension. So currently, FebriDx is cleared in patients who are 12 to 64, and we're looking to expand that claim to patients under 12 years and over 2. So we are preparing that study now, again, with the support, the financial support, the strategic support and the scientific support of the BARDA team that we worked with on the first study, and they are now supporting us on the second phase of this partnership with BARDA. And so we are looking to -- the study design, in this case, is different, but it's similar to our -- it's different than the CLIA Waiver study, but it's similar to our first 510(k) submission. So where FebriDx will be -- is a clinical study and FebriDx will be compared against a composite algorithm. So we feel confident in the study design because we've already executed a successful study doing this approach. BARDA also has confidence that we can execute this study with success. And when we spoke with the FDA, we're looking to have the same size and performance as the first study. So we feel that because we've executed this in the past, we will be successful in this population. So BARDA is exercising the option at $6.5 million, and we will be paid throughout 12 different milestones as we achieve them throughout the study, and we anticipate like I said, starting in October and running through the respiratory season. So we're in a race to get started here. Okay. I think actually, I'm turning it back to Doug. You're on mute Doug.

Thanks, Paul. Thanks, Annie. Greatly appreciate it. Great update. Very, very exciting times for FebriDx and looking forward to anticipate a CLIA Waiver, hopefully here toward the end of the year. But listen, I just wanted to talk about 2 more things, if you don't mind. One is just Lumos other branded products. So yes, we have our FebriDx product, and that's terrific. But we want to continue to build out our franchise, right, of additional products that we could bring to market. And the idea is, okay, how can we bring the product, bring to market. Products that have, once again, the biggest transformational potential for patients. So we've looked at various areas within the point-of-care environment. And what we've landed on is, hey, we really think the best opportunity here is for us to drive hard after bringing unique products for women's sexual health going forward. Next slide, Barrie. The reason that we think is such a big opportunity again, whether it's the GP office and/or the OBGYN office, today, what happens is while a woman will go in for a visit with the physician, they have very, very limited testing that they do on site in these CLIA waived environments. Okay. So right, you have your classic clinical physical examination some places, as you see here, almost 50% or above 50% have microscopy capabilities. But the vast majority don't do any additional pathogen testing at the GP or OBGYN site. In fact, what -- to do that type of testing they'll send it off to the lab, and that will be a 1 to 5 day process depending on the type of testing they're doing, the geography and so forth. So our whole thesis around this just like you would with say FebriDx and so forth is how do we bring these tests closer to the patient? How do we help that physician help that patient. So by bringing in test that can be done at the point of care in a very quick, while the patient is there with the physician make a -- an aid to their determination of potential diagnosis and then ultimately in their treatment decisions, next slide. So where we are is we've -- we're looking at a nice little menu of tests that we're trying to bring to the market in the future. But there's 2 specific ones that we're really moving along from a feasibility standpoint. In fact, just the update to provide people who have seen these slides before, is that these 2 tests are now ready, we've commissioned to have actual samples, human clinical research samples brought in so that we can test for feasibility in these prototype assays. And if those are successful, then we can start to think about moving this actually into early development, into early product development for these tests. So very exciting time as we continue to progress along with these additional test branded Lumos test for the future. Go ahead, Barrie. We'll go now into the commercial services. Listen, there's a few slides here. I'm just going to say a few things because given our time and so forth. The key is that, hey, we're a one-stop shop, we're well, well thought of in the space. A lot of people look to create assays with us, whether they develop them or we develop them, we can manufacture them and we can do that for assays or readers or connectivity. So again, a one-stop shop, and I think we're just a really great partner when it comes to this part. Next Barrie, in regard to our Hologic partner, I'll just refer to 2 really comments here. One is that, in Phase II, we've just recently added additional assay feasibility work that's going to take an additional 3 to 4 months. The great news is that that's bringing in almost $1 million in additional fees to the business. So I just wanted to highlight that again, the object is going really, really well. And I think the partnership from Hologic's view as well as ours is that it will continue to progress nicely over time. And then the last item is just to say that we have paused part of the assay prototype delivery. That's the instrument side, while we continue to bring out some of the new assay work that they want to do. And that's just so that the assay is really ready. At the same time, the instrument is ready. The instrument's basically there kind of pausing that, waiting for the additional development work on the assay to come along, then we'll merge those back together and do the assay prototype as 1 system, if you will, going forward. Next slide, just from a standpoint of what that looks like. You can see what the next-generation mockup looks like, obviously, pretty state-of-the-art compared to the current system that's on market. And really on the right-hand side is to say, yes, we're doing this work now with them and the feasibility then once that's done, we'll go into what's called late-stage development due to the verification validation, we'll sign up a new contract for that, then we'll do manufacturing. That product will then be used in the clinical study to get their PMA and then we would start on the second test is they want to develop with us around this reader. So that's your update on Hologic. And then last slide on our services work, you would have seen on Monday, we announce this terrific new project with 1 of our existing Aptatek partners. We did some initial work on this project for PKU home monitoring, and that would be using our instrument and our processing of the sample as well as our cartridge, so we just signed a $1.5 million contract with them, and we put that out there in an announcement on Monday, and we'll be starting that work here later on this month. So a very, very exciting time for this opportunity as well. And then Barrie, I'll just wrap it up with a summary of our priorities here. So again, number one, we're really excited to get the FDA decisions around FebriDx. We're expecting and we're highly confident that we'll be granted our CLIA waiver. We could hear very early. But what we communicate to the market is that technically, they have a 90-day window to give us feedback. So that would mean as early as we probably hear is November, could be earlier, but we think to be conservative in what we tell you guys, November is probably the earliest, and it could take a couple more months. So then you could end up in February. Now we've announced on the market through Q1. That's just to say our most conservative estimate, but we're expecting this in the November to February time frame, just so that you guys have an understanding of where we think we'll land on this. We've already talked about the PHASE deal. Now it's all about execution, which Paul and his counterpart at PHASE, spent a lot of time. We're focused on driving coverage with the work with PRO-spectus. And ultimately, right, the more reimbursement coverage we get that will also help drive value, especially associated with CLIA Waiver. So these 2 go hand in glove, if you will, and then, as Annie talked about in the pediatric study that will start in October, this will further expand the market opportunity. Certainly, moms and dads, parents who take their kids in with respiratory typically push that doctor hard for antibiotics and by having a test that can really give them an aid to help them make that decision. We know that pediatricians really are looking forward to having this test to help aid in their diagnoses of pediatric patients going forward. Like I just said, things are going well with Hologic. We'll be giving you updates as we continue to deliver on the various phases and the milestones within that contract. And then lastly, we hope to be able to provide some progression around, hey, how are those prototypes doing in real-world samples so that then we can say whether we can bring those into the product development process going forward. So very, very exciting. A lot of good news will be coming forth here over the next few months. And like I've said before, it will be a transformative time for not only Lumos but for patients and for doctors going forward. I'm really looking to changing the way medicine is practiced and the way doctors think about when they should give those antibiotics or not. We want it done appropriately, and we want to be a big aid to help those physicians do that. So thank you, everyone, for listening to us today. And now, George, we'd be happy to take any questions people may have.

Right. Thanks, Doug, and thanks, guys, for a pretty detailed update there. I've got a couple of questions that were sent in earlier through the week. So I'll just read some of these out. Since the change of the exclusive distribution to existing suppliers and resellers need to sign new agreements with PHASE that they already had with Lumos and will we get updates on these deals if they occur?

I can take that one, team. So the existing contracts did not novate to PHASE. So basically, PHASE will be signing new agreements with both major distributors and regional distributors. And if it's material, we will certainly announce those updates and those agreements that PHASE makes.

Thanks, Paul. You might want to answer this second question. Are we likely to get update if any major agreements are signed with hospitals, GPOs, military and other now that PHASE is on board and ramp up is likely given the CLIA Waiver.

Was it -- you said updates on customers like -- what was that, George?

Yes, I think just to take some -- to keep it going here. So yes, George, absolutely. If it's like what Paul had just said, if those are material absolutely, we'll be making sure that those are announced, whether they're through us or through a joint release with PHASE, for sure, we'll let the market know of that.

This one is in relation to CLIA Waiver, there's a few questions. I'll try and summarize it into 1, it says, from my understanding, initial receipt letter is provided from the FDA within a week of submission, has this been received? And is there any information from the FDA at this stage? And then it says, is March time frame, a worst-case scenario. I believe you answered that earlier, Doug. But in terms of the first part of the question, have you received the letter? And has there been any feedback from FDA at this stage?

Go ahead, Annie.

So we have received an acknowledgment that our application was received. However, there's been no feedback regarding specific questions or request for additional information. To the best of my knowledge reviewing our application.

Great. Thanks, Annie. Next question. So it says are the prepaid amounts for the PHASE agreement based on 50% of the full purchase order requirement e.g. a $1.5 million of fee this admission is based on a total purchase order of $3 million, making the total upfront prepaid purchase orders at the, say, at the ballpark value of USD 14 million at 100%.

I can take this one, George. I wish they were, but they're not, is the answer. So the numbers that Paul went through on the PHASE slide. So the exclusivity fee $1 million that's 100% of the fee. The first prepayment of $1 million, that's 100% of the prepayment. The second prepayment of $1.5 million, that's 100% of the prepayment. So the numbers are -- that's the entire amount of the dollars from PHASE.