Novacyt S.A. (ALNOV) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Novacyt Interim Results Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. And for the benefit of those joining us from France, [Foreign Language]. I would now like to hand you over to James McCarthy. Good afternoon.

Thank you, [ Alexandre ]. Good afternoon, everybody. Welcome to the Novacyt half year results. I should just start by showing the disclaimer. And I'll just take that as read by everybody before we proceed. Okay. So my name is James McCarthy. I'm the acting CEO of Novacyt since November last year, and prior to that, I've been almost 2 years as the CEO of the group. Delighted to be joined by Steve Gibson, who is the Finance Director; and Lyn Rees, who recently joined us from the Yourgene's acquisition. So perhaps if I ask those 2 gentlemen to introduce themselves before we proceed?

Perfect. Good afternoon everyone, Steve Gibson, Group Finance Director. I've been with Novacyt for around 6.5 years. And prior to that, I spent around 12 years at a blue chip IT company, worked in a variety of different commercial finance roles.

Thank you, Stephen. Good afternoon, everyone. Real pleasure to be able to present to you today. My name is Lyn, I'm the ex-CEO of Yourgene Health and being in this diagnostic market space for about 27 years now. So a real pleasure to be with you today.

Thank you, guys. So [indiscernible] today, I'll take you through some of the kind of key highlights of the business performance for the first 6 months of the year. Steve will dive into the numbers in a little bit more detail. We've added a section in for Lyn to really explain and talk about the Yourgene business. I mean, some people might know, but I mean, we're assuming there's a lot of investors in Novacyt that may not know the business very well. So we thought it would be a great idea to share some insights into the business we just acquired. And I come back and talk about how we're thinking about integrating the businesses, our thoughts on that. Obviously, very early days, but just not even 3 weeks into this. And in the end, just do a wrap up for everybody. Okay? So just a quick run through our strategic pillars. Just to update everybody against how we've been performing against the strategic pillars in the first 6 months of the year. I mean if I start with instrumentation, I mean, the instrumentation business has struggled a bit for sales over the last 18 months to 2 years. We've definitely seen a market that was fairly saturated post COVID and we are beginning to see that change. So we'll be going to see the market hopping up again. We were delighted with the progress we made in Q2. Instrumentation sales will continue to be lumpy. They tend to come in infrequent but large orders, but I think we're getting some decent momentum there. The second thing we call out is the whole product development. We had a very intense 6 months in product development and deliberately so. We've been really working hard to build the noncore portfolio and with 9 new noncore products, which we've developed in the first half of the year. And this is really important to us as we go forward. We still have a lot of work to do to commercialize those products. We've mentioned in our trading update in July that we're looking at going down in UKCA route, instead of the full IVDR for some of those products because it's the quickest route to commercialization, and that's a real [indiscernible] for us. We're actually taking our Winterplex product, which is demarked through the IVDR process. That will be a clinical trial which should complete largely towards the back end of this year and then we submit that for submission. But that [indiscernible] to impede the sale of the product in any way. The product will be available on the market. In terms of commercialization, the focus has been on the RUO business as well as instrumentation and really trying to rebuild our RUO business. I mean, neglected during COVID -- neglected by the market and it's also neglected a little bit by us as we focus on other things. And I think we're busy trying to reengage with customers, build customer solutions in specific verticals. We've talked to you before about global fisheries in North America. We're really pleased with -- we've brought some of that progress closer to home. We're working with oyster farms in the U.K. So we really feel we can offer solutions and actually build sustainable, repeatable revenues in some of those spaces. Similarly, we're having success in Latin America. Again, looking at solving problems for livestock testing across groups of farmers and again, try to build those repeatable sustainable revenues. And maybe finally in commercialization, just to remind everybody of our NGO business, and we still have good collections to NGO and we had a really successful first half in terms of dengue in particular. So it continues to be an important business for us. I think look, we're very proud of the products we develop for that market. And maybe finally, on the strategic pillars on the business development. We've talked to you over the last year or 18 months of putting our balance sheet to work looking for acquisitions. And clearly, Yourgene is a big step in that process. It's a fantastic opportunity I think, to put these 2 businesses together, and I'll come back and talk with more about the integration. But I think it's a very big step in the journey, but we will continue to look for acquisitions that make sense as we go forward, and I'll also come back to that later on. So maybe for now, if I just hand over to Steve to talk you through the numbers in more detail, and I'll come back to some of the Yourgene integration questions later on. Steve?

Thank you, James. Good afternoon, everyone. It's great to be here with you today to chat through the Novacyt interim financial results. This obviously covers the period of January through to June 2023. So it doesn't include the financial performance of Yourgene Health. But instead, Lyn will touch upon the sales of that group in his presentation shortly. If we kick off from a revenue perspective, the H1 revenue totaled GBP 3.3 million compared with GBP 16.5 million for the prior period. Now this decline was driven by a reduction in COVID-19 sales as the pandemic has eased. If we look at revenue from a product mix perspective, our non-COVID portfolio has delivered over 80% of our revenue in H1 and it's also grown now the third quarter in a row since Q4 2022 by around 10%. If we look at revenue from a geographic perspective, we remain well balanced in an internationally diverse business. And if you look at our H1 sales, our top 4 regions all generated around GBP 700,000 to GBP 800,000 of revenue and those 4 regions are the U.K., Europe, Americas and the Asia Pacific region. Finally, on revenue. From a business unit perspective, private design continues to be the main revenue-generating business, and that delivered in excess of 80% of group revenue. If we turn to gross margin, the gross margin has doubled since the prior period from 24% up to 50%. However, it is still impacted by further stock write-offs as a result of lower-than-anticipated COVID-19 sales. If we move on to OpEx costs, we continue on this journey of rightsizing the cost base of our business, and we're making really good progress. So from the prior period, we've reduced our OpEx costs by around 35% or GBP 4.1 million, taking our H1 OpEx cost down to around GBP 7 million. Now the main driver for that was our group-wide restructuring program, where we reduced headcount from around 210 people in June 2022, down to around 120 staff at the end of June 2023. Our pre-acquisition headcount was around 120 staff. We do though continue to invest heavily in R&D and we spent over GBP 1.2 million within that function to support bringing new products to the market. From a profitability perspective, the group produced its EBITDA loss to around GBP 5.4 million, down from GBP 7.1 million in the prior period. Now this reduction was driven by GBP 4.1 million, which is OpEx costs as we reduced the cost base of our business, offset by a GBP 2.3 million reduction in the gross profit contribution of the business due to lower sales. Now in addition to the EBITDA loss, the group also incurred exceptional costs totaling around GBP 1.9 million, now it's made up of 3 key buckets. The largest one was GBP 0.8 million of acquisition-related costs in relation to the Yourgene deal. Now this is the cost that's been impaired until the end of June. It's not the full advisory cost of the deal. The second big chunk was around GBP 600,000 costs in relation to the ongoing DHSC commercial dispute. And then the final bucket was around GBP 0.5 million of restructuring expenses that predominantly covered redundancy payments. So all of that culminated in the group reporting a loss after tax attributable to the owners of the business of GBP 8.3 million, which is slightly ahead of the prior year results. If we turn to the balance sheet, there's no real material changes since the end of the year other than a reduction in cash and cash has reduced broadly in line with our EBITDA performance. So what it meant is that we closed June 2023 with a cash balance of around GBP 81.7 million that allowed us to fund the Yourgene acquisition from our cash reserves. Importantly, we remain debt-free as a business too. Now that was a quick run-through of the financial results of Novacyt which have now been published on our website if you would like to look at them for further details. And I'll now hand over to Lyn, who will walk you through the Yourgene business.

Thank you very much, Steve. We go to the next slide, please. And the next one, please. So really, really excited to be here today. James just mentioned that this is a fantastic opportunity. I absolutely believe that as well. So really excited and sharing a little bit more about Yourgene, who we are, what we do and what you can expect from us as shareholders moving forward. So Yourgene's an integrated technologies and services for genomic medicine. What does that mean? It means we develop, we manufacture and we take to market molecular diagnostic tests, screening solutions predominantly in the reproductive health care and oncology market segment. So those of us looking to have new babies, and anyone that's with the cancer diagnosis, those are the 2 markets that we fundamentally address 2 of the fastest-growing markets in the molecular space at the moment. I believe we have a complementary portfolio of in vitro diagnostic products, which includes our flagship NIPT, noninvasive prenatal screening, which checks babies around Down's syndrome and other genetic disorders when the baby is born. Then, we check for cystic fibrosis. We're either market leader or second in the main markets that we serve. We offer a follow-up product, an invasive rapid aneuploidy test. So if you do have a high risk result, that is the confirmatory test. And in recent years, I'll talk a bit about this later on, we've ventured into oncology and other market adjacencies to swap the assets and the technology that we have within the Yourgene. We were first established in 2013. We are headquartered in Manchester, U.K. with offices and facilities in Singapore. In Florida and in Vancouver. Our revenues in '22 were just shut higher than 37 million, but that did include some COVID. And as Steve said, I'll give you a bit more flavor on where we are currently that we are draw in the deck. We employ about 150 people, and we take over 100 products and services to a global marketplace. And when I say global marketplace, that is above 65 countries where we're either selling direct or indirect through a distribution network. So that's a bit of a snapshot from Yourgene. If we took the slide and look at the sort of time line. The organization was set up in 2014. So very much at the forefront of next-generation sequence, and that was when the first platform started to appear in the market. So really early adopters of this unbelievable technology in terms of advancing kind of medical diagnosis. In 2016, we acquired business in Taiwan called Yourgene Biosciences that we actually turned into the full name of the organization in 2018. [indiscernible] was pretty much just around the reproductive health care market. We wanted a wider appeal as an organization. So [ Your Genes and Yourgene ] to manage your health is where we sort of come up with the name there. At the back of that sort of rebranding, we started to go in on M&A journey we acquired a company called Elucigene Diagnostics in 2019. They brought to the table cystic fibrosis tests. So up until that point, we were purely as an organization. We only really had an NIPT test. And as the market develops and becomes more mature, it's a very commonplace that the customers want to buy more than one product off you. The cost of running a relationship with a single product supplier is quite high when you consider all the regulatory hurdles and just the management of looking after that relationship. So the more products you can provide to the customer base, I think the better off you do in the long run and Elucigene brought cystic fibrosis to go alongside our NIPT test. It also brought the confirmatory test to the NIPT test. So we sell the diagnostic. And if you get a high risk result, we sell a confirmatory test. So we're always looking to broaden the range of products and services that we took to market. Also very important from the Elucigene team and their brilliant R&D capabilities was launched in our first DPYD assay, which is our first sort of move into the oncology space. And then you are not so unfortunately been touched by cancer themselves or through loved ones, we realize the earlier diagnosis you get, the better chance of a positive outcome, and this test really does support that journey and I'll explain a little bit about that later on. In 2020, we were continuing to acquire. We bought Coastal Genomics, X5 Genomics, [indiscernible]. So mixtures of technologies, customers and markets, which allowed us to really the springboard in 2021 into the U.S., where we put a lot more capability. We licensed some of that technology we bought in 2020, specifically around the [ range of ] technology. And I guess, over that period of 8 years, Yourgene grew from sort of one product, couple of people, no revenue to GBP 37.6 million worth of revenue and over 100 products. And even the core growth, taking away that COVID was about GBP 15 million. So a fast-growing organization with a lot of ambition to put more products and services into the market. Next slide please. To bring that a little bit more to light and look at the split of the organization. On the right-hand side of your screen, you'll see a circle. The green part of that circle is our services. This is where we receive samples into our own labs. So we have a lab in Manchester. Until recently, we had a lab in Taiwan where we would routinely receive samples and give results back to patients, now predominantly around our reproductive health care options. We're using our own products and our own labs to give our customers' results. But we've broadened that offering into pharmacogenomics, clinical oncology. And we also do a lot of research work now in whole genome sequencing and whole exome sequencing. Again, really at the cutting edge of molecular technology and giving almost personalized diagnosis to patients. The services side of our business, is about 10% to 20% of our revenue in any given year. So whilst it's not the biggest revenue part of our business, but it creates an amazing structure to be able to try new technologies to look at our own products and validate them and verify them, to be able to work on clinical trials to build a big sample banks that allow us to bring new content and continually looking at product improvement within our portfolio. So it's a very important part of our business and everything that sort of comes from that right-hand side ends up being products that we take to market. So our genomic technologies are where we send our customers a test and they run the test in their own labs, and that's about 80% of the revenue of the business. You'll see similar product categories within there. Reproductive health care and IPT precision medicine and Ranger. So everything you see on the right pretty much gets replicated on the left and taken out to the customer base. To bring some of those products a bit more to life. If I look at our in vitro diagnostics product. The little box you'll see in the top left-hand corner of your screen is a DPYD assay. DPYD is given to patients who are usually stage 3 or 4 of cancer treatment. So serious diagnosis. They're about to receive something called 5-FU, which is the most widely prescribed chemotherapy agent used globally, couple of million scripts written for this each year throughout the world. Unfortunately, up until as launched in this DPYD product, about 1% patients that would take that drug would die because they lack a gene, which stops that drug from attacking every organ in their body. So normally, a patient would receive this 5-FU within 24 hours. If they lack this gene, they have serious sepsis. And as I said, 1% of that patient population would die. We launched this DPYD product a couple of years ago. And from a very low base, it's now mandated in Wales, in England, in Scotland, in France, in Italy and Belgium. We've just taken the product up into the U.S. We've got some initial sales. I think we're in 2 of the 5 main hospitals in Canada. And I'm proud to say that it's a product that saves 1 in every 100 patients' lives. For the other 99 gives us comfort that the difficult treatment that they're going to have is going to be risk-free. The little box underneath is our range of technology, that's a [indiscernible] bench box. The blue and white box is really becoming quite a pivotal bit of technology in our portfolio. If you can imagine having a mum to be in a health care setting kind of about 8 or 9 weeks and she wants to give a sample of blood to understand if there's any genetic risk to the fetus that she's carrying around with her. So we've got to get rid of numbers blood. We've got to get rid of all the interferon substances and find a tiny, tiny little bit of cell-free DNA that's come from the fetus as this travels down through the -- into mom's bloodstream. This range of technology, basically in layman's terms allows you to clean up that sample really, really quickly. And it allows you to do it with automated machinery. So you can feed the sample in and then a bit of time later, you get your cell-free DNA out which is the stuff that you sequence to be able to give your patient results. So it increases the speed of which you can give a patient result. And in our market space, time to result is everything. And it reduces the cost because it's a fully automated system. We don't need people sitting around waiting for the results to come through or adding mix of gel or adding reagents into the process as it goes along. So we were an early adopter of that technology. Of course, when we developed the last NIPT test about 4 years ago, and we thought it was so good, we bought it, and we're seeing significant market opportunities from that coming through now. And as well as those sort of key products, as I said, we do a lot from a genomic services perspective. We're constantly increasing our product range and our service with that. And we're now looking at not just reproductive health care, but oncology, genomic medicine, hereditary risks and really supporting some big pharma companies with their clinical trial works and the like. Our next slide covers sort of geographic region, as you can see from this map, we're pretty much everywhere. We spent the last 4 years heavily invested in the commercial team. We rely on a fantastic set of distributors in Southeast Asia, often sharing those distributors with Thermo Fisher in Europe and America and South America. We've got a dedicated sales organization and experienced sales leaders that help us go direct in those markets. And as you see from the pie chart on the right-hand side, we've a pretty good split there. So we're not relying on one market or one territory, and we've got good diversification within our customer mix to manage the ups and downs of the international markets and the reality that we operate and the derived demand where we can sell our products, but we need our customers to be able to find patients and test patients to make it work. So hopefully, the map shows truly global with a lot of commercial opportunity to bring in more products and more services. I think in terms of my last slide, just a bit of an update, as Steve said, with regard to where we are for figures. We finished last year, it's unaudited at the moment, at around about GBP 19.1 million with the revenue. And within that, we had a sort of the final handover of the COVID markets about GBP 2 million worth of business. So a core revenue of around about GBP 17 million. Within that mix, we had a range of products, that little special box, I told you about earlier, the cleans up samples, that had doubled its growth by 100% and is now a GBP 2 million product range. Our NIPT service, which is the flagship product within our engines, the first product we brought to market, that's got a CAGR of now 20% year-on-year. So back to the high double-digit CAGRs that we were experiencing pre-COVID and is now generating close to GBP 9 million worth of revenue. Our international businesses, again, really kick started. I wish a fantastic recovery in APAC and North America specifically, where we see sales revenues increased by a minimum of 50% in those territories. And when we look at the period this year, obviously, Steve will explain that. Our kind -- we're not a calendar year business. So we were sort of April to March as a financial year. But if we look at the first half of this year, so from January to June, we sat at about GBP 9.91 million worth of product with an even smaller amount of COVID in that year just about GBP 0.5 million now. So hopefully, that gives you a nice update on Yourgene, and I'm going to hand back to James to discuss the integration further.

Thank you, Lyn. Let's move on. So look, I think we've got a fantastic opportunity here to build a combined global diagnostics business. I think we've got a real business of quality in Yourgene. I think going the businesses together will give us more scale, which is very important. We're both smallish businesses. So putting us together builds strength. And I think you can look at that strength through a few different pillars. One is always commercial. I think we both have a kind of global sales force. I think putting that together will be really beneficial and give us more reach on the ground and probably mean we can penetrate more markets more quickly. 2 fairly extensive R&D and product development departments we can put together. Yes, there are some new technologies in Yourgene that Novacyt doesn't have, but there's also a molecular overlap. So we're quite excited about putting those 2 businesses together. And I think that will really support longer-term growth. And we've got more products, more services for customers, and we feel that we'll just be a little more sustainable business going forward. And if we just talk about integration for a second, I mean, we are very early days. I think we're kind of 2.5 weeks in, and we're really just starting to do the work on integration. But I think the principles or the objectives of what we're trying to do on integration are quite important. And the first one for me is that the Yourgene core business has been growing very nicely as it came out of the COVID period. That's a really, really good business in that. And kind of my first rule of integration is do no harm. So we want to ensure we do not distract that team. We do not lose momentum. And in fact, everywhere we can support that growth effort, we will do to keep that momentum going. I think the Yourgene business is a more mature selling operation than Novacyt. So I think Novacyt can benefit and learn from the journey Yourgene has been on. And if you look at the commercial performance of Novacyt, it has been challenged over the last period. So we're hoping to be able to leverage Yourgene's expertise into Novacyt. We won't get anywhere unless we can build one organization. So that will be really important that we put the organization together as quickly as we can and then it works seamlessly. Underpinning all of that will be a really good communication. I think we have to put different systems together, different ways of communicating and trying to run this as one business. And we would -- all of that together has to build a compelling investment case. So clearly, there's growth opportunities here. We'll definitely try and accelerate the top line of both businesses. And there will be cost synergies. As we put the business together, we expect duplication, back office and in other parts of the business which we will address. And we also see there'll be an economy of skills as well as in economies of scale, right, where we can eliminate duplicate functions, et cetera. So we definitely see a compelling business case coming out of that. And so maybe just to recap. The acquisition is a really significant step. It's a step change for our business, the integration plans. We're just beginning that journey but this will start to gather momentum now in earnest. We normally come back to the market around the end of January to give an update on our full year revenue trading. I think it's a good milestone to come back and give them out in more detail based on where we are in integration. We think it's around a 6-month project to do most of the heavy lifting. It probably won't be all but we should have made substantial progress in about 6 months. So by the end of January, we should be able to give everybody a pretty good update of where we are. I also just wanted to mention the Taiwan divestment, which I think was mentioned last probably maybe in some of the acquisition documents. We still expect to complete that by the end of the year. It's not entirely within our grips. I mean there are some permits, et cetera, we've got to get from governments. But we're relatively confident all of that will happen before the end of the year. So that's still the plan. So we're basically following through on the plan that Yourgene started. We've put guidance out there just for revenue at this stage. We will have a slightly strange year and that we'll have 3 and a bit months of, maybe, 3/4 months of Yourgene revenue because we will consolidate from day to the acquisition plus 9 months of -- sorry, 12 months of Novacyt revenue. So slightly odd year. But you'll have seen from what Lyn said, you got a feel for the run rate, the underlying run rate of the business. And then just to recap, I mean, I think for Novacyt, the first half of this year was really about building out the product portfolio and a very, very strong quarter in R&D, which will be really important for us. We have to really focus on building this noncore portfolio. I mean I think that's clearly been the strategy for us and clearly what we've been busy with over the last period of time. And look, I think we remain focused on building out this global diagnostics business. Again, Yourgene is a big step towards that. And yes, I think we're very, very confident that this accelerates us and puts us on a faster track to achieving that. So I think with that, we are going to now open for questions, I believe.

Perfect, James, Steve, Lyn. We have had a significant number of questions for today's meeting. So the company grouped these questions together to try and address as many of those as possible. The first one reads as follows. What was the rationale for the acquisition of Yourgene. What's the synergies?

Okay. Thanks, [indiscernible]. I will take that one. Look, as you may expect, some of the questions will have been called in the content of the presentation. So I think we still are trying to repeat myself a bit here. It's probably worth repeating some of this, but just bear with us. I mean clearly, questions come in before people seeing the content, and so we get a little bit of repetition here. Look, I think the rationale for the deal as we've stated publicly, we've been on a trend track of organic development; in other words, building our own internal in-house solutions post-COVID and also looking at acquisitions and using our balance sheet. And we've been scanning the market for at least 12 to 18 months looking for the right partner, the right fit. And Yourgene is an established revenue-generating global diagnostics business was really perfect, right? I mean those and that many of those businesses around, which would have been within our in our sphere. So I think that really was a fantastic acquisition for us. And I think that really sets us off in building this kind of stronger global diagnostics business. And with the benefits of combined selling force, geographic reach, products, R&D, et cetera, as I've covered. And I think on synergies, I think I mentioned that, yes, there will be opportunities for synergies, but synergies is not just about cost. Cost will be important. That's something definitely we will chase down. But look, I'm as excited about the bringing skills together, getting that synergy or putting different mines together. There's lot of very, very bright people in both businesses, and I think we can do something really special with all 2 groups.

Perfect. The next question here reads as follows. How do Yourgene products fit into Novacyt's diagnostic portfolio?

Yes, it's probably easier for me to take this one James. I think the fact that we both work in the molecular space is, first of all, really, really important. So we're working on the same sort of platforms, PCR and NexGen sequencing. Then effectively, what we brought to Novacyt was a reproductive health care pillar and an oncology pillar to add to a very strong infectious disease pillar. So I think there's really good synergy there and specifically in some of the more democratized lab settings. I'm thinking about Europe, LATAM and APAC. It's quite common to go into one hospital or one customer and be able to speak to one person that looks after all 3 areas: oncology, reproductive health care and infectious diseases. So I think it's a good complementary fit there. I think when you look at the capabilities of the organization, we've got good instrumentation skills in both parts of the organization. So I'm sure those teams are going to get on really, really well and get some great ideas and working practices together. So really, really confident about that. And then if you look at the product range, as you know, this range of technology that I spoke about in my presentation and being able to find the really clean sample. I think that's critical. I think that is critical for both sets of customers and both organizations. From a services perspective, we will obviously be looking and as James said, release sort of 2.5, 3 weeks into this process. So -- but as part of that, we'll be looking to see if there's any products or services that we can take from Novacyt and run them in our own labs and start generating data and revenues from that. And I think ultimately, it kind of makes -- there's enlarged organization kind of platform agnostic. As I said, we work on PCRs, we work in a range of embedded hardware that you'll find in most of the labs throughout the world, be it Thermo Fisher, be on our own systems. Our NGS runs on both Illumina and Thermo Fisher sequencing platforms. And for those of you not so okay with the next-gen sequencing market. If you kind of think about it like a mobile phone market, then you've got Apple and Android is basically Illumina and Thermo Fisher. They've got about 90% of the hardware that exists in the global marketplace. And if you think of Yourgene or Novacyt as a company that makes apps or content to sit on that machinery, then we're the only organization in the world that runs NIPT in both Thermo Fisher and Illumina, which captures about 90% with the addressable sequencing market out there. So Yes, I think they fit very well with [indiscernible] summary.

Perfect. And I think you just touched on this, but just to highlight again. The next question is what is the market opportunity for Yourgene's products?

Yes. I mean, I mentioned it in my deck, NIPT is a fast-growing market, predominantly driven by the mums and the midwives. If you get asked -- if you can come in into a test at 9 weeks as opposed to 12, 13, you're always going to take our opportunity because you get your results and it can lead to a less stressful pregnancy. I remember when my wife was having our 3 daughters, I've been in health care for a long, long time. I couldn't quite work out if it was a higher risk to have the test or higher risk to have a needle in the belly to take a bit of the fetus' blood. So I think the fact that NexGen sequencing allows NIPT testing to be 99% specific, means it's just getting adopted year-on-year-on-year and our growth rate in that space is 20%. We spoke about the need to have real good clarity on the examples. The quicker you can get up cell-free DNA, the bit of the DNA that you want to sequence and get your result from, you can clean that up quickly and then that's a massive market opening up there and our range of technology does that. And as I mentioned earlier, it's got 100% year-on-year growth. DPYD saves lives. The average cost of 5-FU treatment is about GBP 50,000, for full course of chemotherapy treatment and a DPYD test costs GBP 50. So I think any patient with any health care professional that's administering 5-FU and is aware of this DPYD assay, which will save the life in 1 in every 100 patients that they put through the chemotherapy programs. It's a bit of a no-brainer. So we're seeing that growing like a weed as well. I think from a services perspective, the market has changed. Everyone is aware now of monocular testing because of COVID. My mother knows what a PCR test is. But after spending 25 years of working in the market, I'm not all that clear what I do. I think the market is changing and advancements in medicine, trying to make medicine more bespoke to individuals as opposed to sort of a hit and miss approach. We try on something. If it works, we'll give you more. If it doesn't, we'll give you something else, trying to get to this personalized medicine. I think all of these factors on a fact that from a genetic screening perspective, probably most of us have had our DNA read for Christmas present with [indiscernible] or something in the last couple of years. Things just making the market more accessible and we've got products and services that can certainly play a part in that, which give us confidence in the market opportunity ahead of us.

Perfect. Does the acquisition of Yourgene indicate a change in strategy for Novacyt?

I'll take that one. No, I think it definitely changes the scope. So I think we've got a wider range of products now. But I think it's a core strategy is about building organic products and accelerating our [indiscernible] acquisition. I think it absolutely falls within that. And as Lyn said, there are some commonality even on the products we get. So I just see it as it changes -- definitely changed the footprint and the shape of the group, but absolutely moves us along the road of building global diagnostics business. So I don't think it's a major change.

Perfect. The next question, how much investment will Yourgene require before the business reaches sustainable profitability?

I can take that one then, if there's no other answers. So I think hopefully not too much cash, right? But in all seriousness, this is something that will look as part of the integration planning process. And as James mentioned earlier on, we're going to come back in the January earnings release and give you a progress update on how the integration is progressing and we'll also give a strategic update as well and set out some goals and targets then. For me, the key takeaway of the Yourgene acquisition is it's a really exciting acquisition. It's great to help them as partner of the Novacyt group and family. And I think they're going to be a key driver for accelerating the sustainable growth within the [indiscernible] business in the future.

Perfect. Next question here asks if there will be any changes within the Novacyt senior leadership team?

I think as we've said, there are 2 new Board members who joined us in Yourgene which is John Brown and Lyn Rees himself, and obviously subject to being ratified at the shareholders' meeting. But look for now that's as far as we've got. I mean as we walk through integration, we will figure out how we want to run the business. But look, on those 2 appointments, I'm delighted, and we've got 2 very experienced board members joining the group and super important that we're getting that knowledge in onto our Board of the Yourgene business. So I'm delighted we've got -- we've started there. And look, I think we will come back to everybody when the integration is a bit more advanced about how we're running the business within that. So.

Perfect. What milestones can we expect in the next 12 months?

I think the one I called out earlier is that we'll come back to you at the end of January. At that point, I think, yes, give you an update on how we're trading, right? How the revenue [indiscernible] businesses in trading, that's important. I think I'll also come up -- come back to you with how we're progressing on the integration because we should be fairly advanced by then. Look, I was talking to the employees in the business. I guess what I would say in terms of milestones, let's not get distracted. I mean, acquisitions can be new shiny things. Sometimes, we both have customers. The customers don't care about the acquisition. They want us to continue and improve our service. So we need to keep focused on that. We have lots of deals and motions and good pipelines and businesses. We need to keep focused on that. Don't distract anybody. So that's really would be my message, selling the message internally and something to share with you. We want to remain focused, keep the momentum we have in the business, build on that momentum and do the integration about distracting people. That really is going to be the focus for the next few months.

Perfect. Could you provide an update on the progress of your RUO strategy? When will your new multiplex test be commercially available?

Yes. So look, as I said, we've developed quite a few products in the first 6 months of the year. And I mentioned about going down the UKCA route as opposed to full IVDR. The first 2 of those products is scheduled to complete towards the back end of this year. So -- and then they're ready for commercialization effectively from early 2024. And look, unfortunately, in the regulated market we are in, there is a long lead time between developing a product. I'd like to say that's the easy bit and it's not an easy bit. But there's a long lead time for developing the products and getting it out to customers' hands. And I think the only thing I would say on RUO is, and I mentioned in the main presentation is we have a very, very broad portfolio, substantial portfolio. And I think the reputation of [indiscernible] was customer asset business. We've really [indiscernible] asset on really quickly and solve customers' problems very quickly. And we don't want to lose any of that. We want to keep that reputation. But I think we also need to build some more category expertise. I think we are going to have to try and accelerate growth in the business. We have to become better in certain categories where we can build more [indiscernible] solutions for our customers, attracting customers and build sustainable revenues. And that's really how we're thinking about [indiscernible].

Perfect. I think you mentioned this in your last response. But what's the difference between UKCA and IVDR? And how does the regulatory process differ?

Yes. So I think the -- for those who are familiar with this, the old IVDD process was replaced by an IVDR process and IV Disease In Vitro Diagnostics Directive and it's now been replaced by In Vitro Diagnostics Regulation. But what that means to companies, which is the only thing you're interested in, what does it mean to businesses like us? In the old regime, you're going to effectively build a product, validate it yourself and say roughly that was a 6-month journey to market. The difference now, and I'm speaking very broadly here is, of course, more complex than that. The difference now is that you need independent clinical data to validate your product, right? So instead of it being a 6-month program from development to commercialization, that's more like an 18-month process, right? And that's a big deal. That's a big deal for small businesses because I said the difference between putting energy into launching a product and trying to solve the market need and actually getting that product out into the market, it's not. That's the difference. But the UKCA and AFDA effectively keep the old IVDD type regime for the U.K. and for a period of time, but it's for the next, I think it's 4 or 5 years depending on your products. And so as I said, this is a shorter route to market, which for us matters, I mean, that's important for us that we can get to revenues quicker. So that's the difference.

Perfect. The next question is really around M&A and ask if you're still looking or actively looking for M&A targets?

Yes, we are. I mean, we have -- I think it's a favorable market at the moment. I think we still have a strong balance sheet. I think we will still remain active in the market. If we see something that makes sense, that accelerates our strategy and fits, I'd like to think we will pursue that. Maybe not something quite as big as Yourgene, but there's a lot out there. So absolutely, we've got to remain focused on M&A.

Perfect. And the final question we've got here is, could you provide an update on the situation with the DHSC?

Yes. Look, as ever, I can't really say all out in the DHSC. I mean this is a claim that's going through the courts. There hasn't really been any material updates [indiscernible] really in the full year results. The trial is still the same, it's June 2024, which is in the public domain. And both sides and these processes are busy building our case and going through the various steps the court puts it through. And to be fair, there's not a lot more I can say at this stage. That's where we are. No real change.

Perfect. James, Steve, Lyn. I think you've addressed those questions you can from investors. And of course, the company will review all the questions submitted today and will publish those responses on the Investormeet company platform. Just before redirecting investors to provide you with that feedback, which you know is particularly important to the company. James, could I just ask you for a few closing comments?

I think Yourgene was the big news, I guess. I mean, in the last month, I hope that Lyn was able to share with you a bit more insight into what this business is, what this business means and you get a sense of the opportunity. I think we're really, really looking forward to putting the businesses together. I think it's a really, really exciting opportunity. I've spent quite a bit of time with as many of the teams I can over the last couple of weeks. I think the cultures are aligned. I think there are similar businesses. So I'm really optimistic, really excited. I think it's a great deal. And look, I kind of thank shareholders really for their patience because you've been waiting for this for a while. It's been a difficult job. I mean it wasn't the quickest deal we've ever done. So thank you for your patience. And I think we can really deliver. So that would really be my closing comment, [ Alexandre]. Thanks.

Perfect, James. Steve, Lyn. Thank you once again for updating Investor's Day. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only a take a few moments to complete and I'm sure it will be greatly valued by the company. On behalf of the management team of Novacyt, we'd like to thank you for attending today's presentation, and good afternoon to you all.