Q4 2021 Trinity Biotech PLC Earnings Call
Ladies and gentlemen, thank you for standing by the conference will begin shortly please continue to hold and thank you for your patience.
[music].
Good day and welcome to the Trinity Biotech strategic investment and partnership review and financial results with Q4 full year 2021 .
All participants will be in a listen only mode.
Need assistant Lisa Miller Conference specialist by pressing Star then two.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchstone phone.
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Please note this event is being recorded.
I would now like to turn the conference over to Mr. Joe Diaz of Lytham partners. Please go ahead.
Thank you operator.
Thanks to all of you for joining US today, the management team of <unk> biotech well review the strategic investment and partnership with Nikko Limited that was announced earlier today and they will also review the financial results of Q4 and full year 2021, joining.
Joining us on today's call is thrown around what are your chairman and Chief Executive Officer, and John Geller, Chief Financial Officer.
The conclusion of today's prepared remarks, we will open the call for question and answer session.
Before we begin I must inform you that statements made in this conference call maybe deemed forward looking statements within the meaning of federal Securities laws.
Statements are subject to known and unknown risks and uncertainties that may cause actual results could differ.
Our implied in such statements.
These risks include but are not limited to those set forth in the risk factors section of the company's annual report on form 20-F filed with the Securities and Exchange Commission.
Bio Tech undertakes no obligation to publicly update or revise these forward looking statements to reflect events or circumstances after today or the current unearned.
Unanticipated events.
With that said I will now turn the call over to Ron or fitness.
Today's partnership announcement, he will be followed up by John .
He will also provide further details on the investment and partnership.
For variety of review of the results of Q4 and full year full fiscal year 2021.
With that let me turn the call over to Robert <unk>, Chairman and CEO , Bob Jack Ryan. Please proceed.
Thank you.
For joining us today.
And as you would've seen in today's press release.
<unk> entered into a strategic partnership with Mito limitation does occur.
Korean based conglomerate changes on the <unk> stock exchange and so on.
<unk> comprises principally.
This serves as the largest semiconductor companies in the world as well as the ceramics business, our renewable energy business and Mikko by image, which is a diagnostic company.
I will make an investment of $45 $2 million and has two components first lien me towards subscribe for $11 2 million shares at a price of $2 25.
For sure totaling $25 million, which will give them 29, 9% of the company. In addition to the.
They will invest $20 million and a seven year convertible unsecured notes with a fixed interest rate of one 5% on a conversion price of $303 24 per share.
Vertical well mandatorily convert into shares.
Share price of the company stays at or above $3 24 per share for five days.
So in the event of conversion totaled $17 3 million shares would be issued.
The average price of $2 60 per share, which is at 265% premium to the closing share.
Share price of Trinity Biotech last Friday night.
These funds will be almost entirely used to repay a portion of the company's $81 million term loan and it is expected that the company's annual interest cost will be decreased by in excess of $4 million per year.
However, the company also expects this investment will enable.
The elimination of the balance or the high yielding cash with lower cost bank funding.
And in the short term.
He is well advanced in this endeavor at this time.
The investment is subject to customary Korean central bank approvals.
Expected to close before the end of April .
Trinity Biotech has in their 30 year history, and the point of care diagnostics market and has a broad range also of template chemistry products across infectious disease, hemoglobin and awesome UMC and.
<unk> global market presence, providing strong platform on which it can expand its product offering through organic and inorganic growth to serve the needs of the changing diagnostic market.
Meanwhile, <unk> imagine it's an in vitro diagnostic company focused technology company with innovative technologies, including lab on a chip and the artificial intelligence based rapid point of care testing applications.
That are supported by a competitor of large scale manufacturing base in Korea.
In addition, it has a leading edge desktop molecular PCR test platform that has achieved impressive growth in Africa Asia, and South America with approximately 800 patients over the past two years.
It's not phone kinds of Covid test and an ever expanding range of infectious disease products I am, particularly excited that Tianjin would have access to this high quality molecular Pcr platform.
I'd say, that's an area of the Treasury has been endeavoring to enter.
For a number of years.
Through distribution and joint development agreement, which is intended that trends you will distribute Nico biomass molecular PCR and next generation of lots of diagnostic platforms introduced core markets, including North America, and Western Europe , providing.
Providing changing with the significant expansion of its private portfolio.
In addition, it is intended to meet the biomass boiler.
Obtain commercial rights to sell certain of Tennessee's products in numerous local market including countries within.
Asia Pacific region.
Partnership is also focused on other key areas of collaboration.
Research and development and global regulatory certifications and manufacturing synergies.
In summary, this strategic investment and partnership is intended to accelerate the growth of Trinity biotech, both organically and Inorganically.
Transformers into a diagnostic company of scale with a focus on innovative technology, driven care and the home diagnostic products and services.
The company will continue to be led by a senior management team, including John Gilbert, Our Chief Financial Officer, and a board member and myself as CEO .
And genuinely delighted and warmly welcome into the chairmanship of the company Mr. Sun to John Who's the founder and chairman of <unk> group of companies and its principal shareholder.
Despite these many other business interests. Some few would be committing significant time to Trinity and his determination to make it.
Global force in diagnostics.
Particularly would like to thank some jude for traveling to island today to join John and I saw the signing ceremony.
Like to say that.
How delighted I am to be entering this partnership with his company.
In addition, we are really pleased that Mr. Arris.
How do you and Mr. Michael Some soo Kim.
Have agreed to join the Trinity Biotech board of directors.
Michael sorry.
So Kevin has a wealth of financial experience, having spent the last three decades within international finance across areas, such as well excuse me asset management real estate investments Robo advisory and wealth management and I've held a number of senior executive positions.
Including CEO of Hyundai Securities.
And we are very excited to have someone with Mike and skilled personnel to join the board.
Harris.
It is a global experience dealmaker, having spent 30 years, which GE general electric and a number of senior roles, including five years as Ge's Chief investment officer from 2019.
Most recently ours was CEO of Icahn enterprises.
We are somewhat flattered that an individual parishes caliber and experience has agreed to join the board.
We believe the darts and Michael will bring new and innovative skill sets to the board.
And current directors, Kevin Pantry, and secrecy and James Marseilles will retire from the board upon completion of the transaction and I wish to thank them for their many years of dedicated service to the company.
We are really very excited to enter into this partnership with Mito and believe that this represents a new chapter in the history of the Trinity biotech.
Paul I'm going to hand over to John Clarke space. Thank.
Thank you Ron and good morning, everyone and thank you for joining.
I would take a few moments to further elaborate on the exciting strategic investment and partnership with Nikko group.
As Roger mentioned the investment is.
Approximately $45 2 million and consist of two parts.
The first part is the subscription for $11 2 million newly issued <unk> at a price of $2 25, better is pretty good yes.
As a result of Trinity having a total number of issued ATM says negative treasury shares of approximately 38 million.
Give me go at 29, 9% shareholding in the company.
The second part of the investment is it $20 million long term low interest rates convertible bonds with a one 5% annual interest rate and a seven year term.
The bond has a conversion price of $3 24 per avs and is mandatorily convert in certain circumstances.
If converted this should translate to approximately $6 2 million of additional andas.
As Warner mentioned.
He expects to use the majority of the $45 million investments to repay a portion of the $81 million to $5 million terminal that we drew down in January 2020.
Some of you may remember that a key feature of the term dash was the ability to repay it early in part or in full.
It would be subject to a premium on repayment.
This flexibility allows the company to repay a significant portion of the term dish, which currently has an interest rate of $12, two 5% and quickly reduce the companys expected annual interest cost by approximately $4 million or 40%.
In addition critically important.
Fact that this should allow us to reduce our leverage.
And interest costs.
And therefore.
Now the company the opportunity to refinance the balance of the company's days at.
At a substantially lower interest expense.
And as Ron mentioned, we have already started the process of engaging with banks on this matter.
The bond has a number of key features.
Including its comparatively low interest rates.
Relatively long term.
And the fact that is unsecured.
And we believe that these features will allow potential refining two banks do the convertible is sitting significantly below than the company's capital structure.
This is important.
<unk> facilitate the company securing new bank guess relatively competitive terms.
So, it's allowing us to repay the balance of the term dash.
Further substantially reducing the company's annual interest expense.
While we have started to engage with banks in this process, we do intend to be thoughtful and securing a new lending partner.
And we will provide an update on this process and then when completions.
In addition to the financial investment from lethal.
I am also very excited about the strategic partnership between the two companies.
Nico is a global group with a leading technology solutions across a number of sectors.
And we believe that this partnership will allow both companies scale and developed in the diagnostic space much faster than on their own.
As I have spoken about before we have Tracy biotech believe that COVID-19 has been a catalyst for a dramatic change in how people view and engage with health and wellness diagnostics.
Whereas in the past individuals' typically would seek diagnostic information only from their Doctor health care provider.
COVID-19 people have taken a much more hands on rolling their diagnostic journey.
Many people are now comfortable engaging directly with diagnostic providers.
Many of those are now very familiar with taking biological samples or sense for example for use in lateral flow test.
In that context.
It's highly unlikely that individuals and families who have gotten used to the rapid information and assurance that can come from frequent point of care diagnostics will not seek and expect the same type of diagnostic journey for other conditions in one of those parameters.
Very early on in our conversations with the <unk> team it became apparent that need to recognize is fundamentally shifted their diagnostic work.
With the change in diagnostic practices away from centralized lab based testing.
First testing it at home.
Point of care setting.
Do you agree that this change is leading to a need for a broader range of high quality technology enabled point of care at home testing products.
In services to support the expected global adoption of distributed diagnostics.
We collectively believe the Trinity biotech.
Its rich heritage and providing high quality diagnostic product.
Across a number of clinical areas.
And with a long experience of operating diagnostic laboratories to our <unk> subsidiary.
He is very well positioned to meet the needs of this changing market.
With the financial and technological collaboration with Nikko.
Turning to ability to rapidly execute against this opportunity would be vastly enhanced.
<unk> is well established global sales and regulatory functions.
Both of which are critical to the successful scaling of any new diagnostic technology.
As such we believe the Trinity can prove to be a very effective platform and scaling the adoption of these new diagnostic technologies and services.
Whether that is through organic development of new technologies their services or inorganic opportunities to scale the business.
As such we are very excited to welcome sung kyu Arris and Michael to the board and look forward to working with him and the broader mikko team driving trinity's success into the future.
I will now take you through the results for Q4 2021, and then the results for the full year 2021.
Turning first to Q1 2021 .
You will notice in the press release that a noncash impairment charge has been recognized this quarter.
The case in Q2, 2021 and indeed in prior years.
And this is disclosed at the end of the income statements commentary in the press release.
In addition in Q4 2021 the company recognized one off costs relating to a voluntary redundancy process. It's ran at our manufacturing plant in Ireland.
And loan commitments and professional fees incurred relating to the easy one to 5 million term loan we entered into in December 2021 .
I will give further details on these charges later in the call.
The income statement metrics I will initially cool exclude the impact of these three charges.
Starting with revenues.
Total revenues for the quarter were $20 million compared with $33 million in Q4 2020.
As is typically the case.
One of them will discuss revenues in further detail later on the call.
As such I will move on to discuss other aspects of the income statement.
Gross margin for the quarter was 37, 1% compared to 47, 8% achieved in Q2 'twenty 'twenty.
The reduction in gross margin is mainly due to the exceptionally strong sales and margins recorded in Q4, 'twenty 'twenty within our COVID-19 related portfolio of products with.
With the pricing for such products progressively falling over the course of 2021 .
As a result of lower demand as the pandemic so much subside subsides in North America, and the availability of greater supply from other manufacturers.
As ever our gross margin remains susceptible to product mix changes geographic spread currency fluctuations and product variation.
Other operating income decreased from $1 8 million in Q4 2020.
Two zero point $7 million in Q4 2021.
This income relates to a paycheck protection program loan.
By the company in 2021 totaling <unk> 7 million.
Was forgiven during Q4, 2021 and is there for being recognized as income this quarter.
The loan was treated as a short term liability at September 30th 2021 .
Moving onto R&D expenditure this decrease to 0.9 million compared to $1 3 million in Q4 2020.
Meanwhile, SG&A costs have decreased from $6 9 million in Q4, 2020 to $5 2 million in Q4, 2021 .
The company continues to focus on operating efficiency and cost control.
To reduce head count as it pursues greater automation and simplification of processes.
These resulted in an operating profit for Q1, 2021 a $1 7 million compared to $9. One reported in Q4 2020 with.
With the aforementioned production revenue and margin contribution from our Covid related portfolio of products in the main driver of that reduction in operating profit.
With these being somewhat offset by lower R&D and SG&A expenses.
Moving on to financial expenses.
It includes the quarterly cash interest costs for the exchangeable notes a $1 billion.
The remaining $200000 relates to notional finance charges.
Illustrated with lease premises.
These notes will finance charges are required by the relevant accounting standard <unk> 16.
You will note that there is also noncash financial net expense of 152000.
Which is made up of $10000 of fair value adjustments to the derivatives embedded in the exchangeable notes as required by the relevant accounting standards.
Less accretion interest of 162000, downturns and the accounting carrying value of the exchangeable notes.
As you may have seen from prior press releases in December 2021 the company entered into exchange agreement with holders of over 99% of the convertible notes.
<unk> or the early repurchase of the convertible notes.
And these exchanges took place in January 2022.
Profit after tax before impairments, one off items and noncash financial expense.
$1 7 million in Q4, 2021 compared to a profit of $8 6 million in Q4 'twenty.
As in prior quarters, and they said I was in the press release, we pulled earnings per 88, yes, effectively our equivalent of EPS.
Earnings per Avs have increased from a loss of 48% in Q4 2022 lots of six cents in Q4 2021.
Our unconstrained diluted earnings per ads have also increased in this case from a loss of 38 cents in Q4 2022 lots of 0.4 cents in Q4 2021 .
As I mentioned previously the company incurred impairment and one off costs and I want to provide you with more information on those now.
In Q4, the company recognized a noncash impairment charge of <unk> 9 million.
The impairment charge arises from an accounting standard we have an impairment review we are required to carry out onedrive race as.
As we have carried over from prior years.
In 2020 , one we undertook this review in Q4 and Q2.
In Q2. This process gave rise to an impairment charge of $6 4 million, which was reported as part of our Q2 results.
There are a number of factors taken into account in calculating the impairment.
Included in the company's period in share price calculation of the Companys cost of capital.
That asset value from future projected cash flows for individual cash generation units in the business.
In addition, the company examines individual project costs for indications for impairment.
Now moving on to the loan origination cost of $1 6 million.
As previously announced the company and its subsidiaries entered into an easy one to 5 million better senior secured term loan credit facility with perceptive advisors in December 2021 .
Q4, 2021 loan origination costs of $1 6 million we're encouraged.
Rising loan commitment and professional fees.
Costs are being expensed in the income statement in Q4 alone, but subject to shareholder approval and that approval was not received until post year end.
Finally, the company incurred $300000 of restructuring costs in Q4, 2021 .
Associated with the voluntary redundancy scheme undertaken at our Irish manufacturing facility.
Reduced our manufacturing workforce head count by 7%.
This was part of a broader and continuing move towards automation automation and simplification of our operations.
I will now move on to address some of the main balance sheet movements that we've seen since quarter three 2021.
Intangible assets increased by $1 7 million, which was made up of additions of $1 9 million somewhat offset by amortization.
Moving onto inventories you will see that these have reduced by $3 million.
As a result of its holding less inventory this year, and which is partially due to an increase in demand for VPN deliveries in Q4, which allowed us to ship almost all inventory of these finished goods.
Finally, I will discuss our cash flow for the quarter.
Cash generated from operations during the quarter with $3 9 million.
The company paid $2 million of interest on the exchangeable notes.
Well the main major cash flow for the quarter include the capital expenditure of $2 4 million in payments of <unk> 8 million relates to putting in place the new term loan with perceptive advisors.
Overall this resulted in a cash balance of $25 9 million at the end of 'twenty one.
I will now address the full year results for 2021.
Starting with revenues total revenues for the year were $93 million compared with 102 million for the prior year.
As I already mentioned vulnerable to gross revenues in further detail later in the call.
Such I would again move on to discuss other aspects of the income statement.
Gross margin for the year was 41%.
Compared to 47, 6% last year.
As I referred to above regarding Q4.
The gross margin in 2020 , one compared to 2020 is mainly due to comparatively higher sale prices for V. T. M. In 2020 causeway exceptionally high demand with prices and consequently gross margin reducing progressively during 2021.
Lower margins were also recorded in our Fitzgerald Lifesciences surprises in 2020 , one compared to 2020.
As the company made the strategic decision to pursue larger volume orders are typically has lower pricing are expected to add to overall profitability.
Additionally, the receipt of government payroll supports in 2020 related to COVID-19 helped the increase has to increase to grow margin in.
In 2020.
These support our nothing change in 2021 .
Other operating income increased from $1 9 million in $2024 7 million in 2021.
In both years. This income is almost entirely comprised of income received under the U S Government Cares Act.
Principally the paycheck protection program and it provides a really fun.
Oh, the Paycheck protection program loans received in 2020 and in 2020 . One have now been 100% would get forgiven by the U S government.
For PPP loans received in 2020, but not forgiven.
Until 2021 totaling $2 9 million are treated as short term liabilities at December 31st 2020.
Moving on to R&D expenditure is decreased from $5 1 million in $2024 5 million.
Alright.
Yes.
Two $4 5 million in 2021.
This reduction is mainly due to the closure of our western blot R&D facility in California in June 2020, the continued focus on cost control.
Selling general and administrative expenses decreased from $24 2 million to $23 4 million a decrease of approximately 3%.
In 2020, SG&A expenses were unusually low due to certain nonrecurring savings principally the furloughing of employees because of the.
Pandemic and government payroll support related to COVID-19.
Despite neither of these savings occurring in 2021.
Auction in SG&A cost was recorded due to a continuing focus on cost and efficiency.
SG&A head count reduced by approximately 7%.
Our share option costs increased from 800, K to $1 1 million in Q.
In 2021.
This resulted in operating profit before the impact of one off charges.
Of $13 8 million compared to $20 3 million reported for the full year 2020.
The main drivers of the decrease in operating profits will reduce revenues and gross margin somewhat offset by higher other operating income lower R&D costs and lower SG&A costs.
Moving on to finance cost.
Second piece of the annual cash interest costs of our exchangeable notes that have now been large exchange of $4 million and 800000 in relation to north with finance charges associated with lease premises again as required by the relevant accounting standard <unk> 16.
Yeah.
The company reported non cash financial income of 600000 for 2021 as a whole.
Which is made up of noncash accretion interest charge of 600000 offset by a $1 2 million gain in the noncash fair value adjustments to convertible aspects of the no.
As required by the relevant accounting standards.
Yeah.
Profit after tax before impairments one off items noncash financial items for 2021 was $9 2 million compared to $15 7 million reported in 2020.
The company recognized an income tax credit of just under $200000 in 2021, which is broadly flat with 2020.
As I already mentioned the company incurred impairments of one off charges of $2 8 million in Q4, and the previously recognized impairment charge of $6 1 million in Q2 2021.
As a result, an important impairment and one off charge cost of $8 9 million.
As such the company or the profit after tax of $875000 in 2021.
<unk> to a loss after tax of $6 4 million in 2020.
Earnings per <unk> for 2020, we'll have increased from a loss of $13.06 in 2020.
To a profit of $4 <unk>.
Constrained diluted earnings for Adi have also increased from a loss of <unk> <unk> to a profit.
I will now hand back to ruin and who were bringing to the revenues.
Thanks, John I'm going to really review revenues for the year before opening the call to a question and answer session.
Our revenues for 2021 were $93 million compared with $102 million in 2020, which is a decrease of eight 8% a point of care revenues increased from $9 2 million in 2020 to $10 3 million in 2021, which is an increase of 12%.
This was driven by higher HIV sales in Africa.
Non HIV point of care revenues, which mainly comprise shippers were broadly unchanged year on year. However, during the quarter. We received 70 HEICO approval for action screen HIV test.
Since then a number of country algorithms have come up for you in Africa, and we are deeply involved in the Devon to be selected as the screening choice in those countries.
We are very encouraged to make.
Such rapid progress so quickly after approval.
Clinical laboratory revenues decreased from $92 8 million to $82 6 million in 'twenty one.
Which represents a decrease of 10, 9%.
This decrease is entirely due to lower sales of our P. C. R Bard transport media product.
In 2020 demand for VPN products was exceptional.
And then the cat persisted manufacturing capacity has ramped up significantly throughout the world with a consequent negative impact on revenues.
While the situation in relation to COVID-19 products remains fluid.
The impact of the new burdens. The company has seen increased customer demand for Pts part of silver in recent months.
Company has retained the capacity to flex manufacturing volumes should market conditions warrant.
Meanwhile, we expect to gain CE Mark certification for our Covid rapid antigen tests during the month of May.
This product has exhibited excellent performance in the clinical trials and we are confident of successfully marketing the product throughout Europe .
Meanwhile, we will proceed with in the UAE with U S D. A.
And Additionally, mutual biomet will market the product in South East Asia, where its distribution channels are strong.
Moving on to diabetes testing.
'twenty one there was a partial return towards more normalized levels of hemoglobin testing.
Our COVID-19 public health restrictions remain in place in 2021, and many markets. These restrictions were not as severe as in 2020 and as a result, our diabetes related testing revenues increased 16% in 2021.
Turning to see increasing demand for these instruments and consumables as diabetic testing programs continue to return to normal.
Meanwhile, Fitzgerald as our life science business and our clinical laboratory.
Chemistry.
Product lines, both reported single digit revenue growth during 2021.
Moving on to our ultra immune.
Our revenues decreased by 1% compared to 2020, primarily due to lower revenues and a reference laboratory.
It relates to our New York reference Laboratory, which offers laboratory testing services also immune disorders, such as Shogun syndrome hearing loss celiac disease, lupus rheumatoid arthritis and systemic sclerosis.
Revenues for our proprietary Shoguns syndrome test increased by 46% as compared to 2020.
These were offset by a reduction in testing for other disorders due to fewer patients visiting their physicians for Anthony cruises and also due to the ending of certain testing that was paid out for high volume for high volume customer.
Demand for Shoguns testing it continues to grow as there appears to be commonality between shoguns symptoms and long COVID-19 .
In addition, we continue to focus on expanding the range of tests available.
At the reference lab, including testing panel, specifically aimed at bullish immune conditions associated with lung coalition.
So thank you and at this stage I'd like to hand back to you.
Operator for a question and answer session. Please.
Yeah.
Thank you we will now begin the question and answer Awesome to ask a question you May Press Star then one on you touched on the phone. If you are using a speakerphone. Please pick up a handset before pressing the key.
Is that any final question has been answered and you would like to withdraw your question. Please.
Thank you.
We will pause momentarily.
Uh huh.
Yes.
Okay.
Okay.
So Jim I think your line is zero.
Zero.
Yes can you hear me.
Yes, we can.
Yeah.
Hi, good afternoon around them and John .
The call today, thanks for taking the question.
Can you.
When looking at the <unk>.
Our <unk> business can you break out what the ATM revenue for the year was in 2021.
So you have to say that again, it wasn't great and airlines.
Can you break out what your Euro V. T. M revenue your your Covid related revenue was for 2021.
About 21.
Okay and.
Obviously as the pandemic starts to subside that should come down, but do you think that.
As we look into 2022 that the ramp up of sales with trading screens and some of the sales with the new partnership will that be enough to offset that ramp in 2022.
Oh, I'm, sorry, offset to decline in 2022.
Yeah, So I think game.
So we do expect some level of <unk> revenue to continue right.
<unk>.
You know there is some level of ongoing demand and with product and as Rhonda mentioned area or the <unk>.
You've all seen.
With the Varian situation it can pop up quite quickly. So what we've done is we've organized ourselves operationally in terms of raw materials that we're ready to flex that manufacturing capability has needs because you know that at when the best pricing is available in the markets and and.
Yeah.
That's really the way we think.
Decided to address that market in terms of the other products and yes, certainly we think.
In the medium term print screen.
Woods and have the ability to substitute.
For that income and that's not going to happen this year and in terms of being able to reach those levels.
It's really about us getting into a number of algorithms as they come up proving out the success of the product from a regulatory and performance perspective and building from there.
The area that there is the possibility for very very significant growth is around the COVID-19 antigen test.
And that's just such a large market.
And you know game, if we if we're successful at taking even a relatively small percentage of that Mark is then we would expect that yes, it would and it would I suppose.
Compensation for.
For a declining VTS markets.
And how about the the products that you'll start telling for me go into products that they'll be buying from you do you think that that is a relatively near term thing or would that be more 2023.
No I think it'll be near it.
It could be near term Jim absolutely.
But I think the.
Yep.
That is merely one component of the partnership right I think it's very important to understand that.
American versions with Nico.
Their investment in their partnership is focused on the long term.
This is really about building a platform business.
Serve the changes happening in the diagnostic market.
So rather than thinking about this as just saying you know what.
It was taking their existing products and theyre, taking hours, because it's really around taking existing technologies that both groups have.
And leveraging them across new disease types.
New diagnostic methods and of course geographically as well.
And I think one of the key strengths that equal identified with Trinity.
As you know we have a very very good regulatory and level of experience in the USA Western Europe really around the world.
And if they have saw the value in das and we think that gives us a very good tax form an advantage in building a platform to build out a much broader range of products.
So go back to your original question, Yes, we certainly would expect you know revenue accretion from being able to Marcus and <unk> products and vice versa, but I think that is just one aspect of the partnership here I think what we're what we're all collectively envisaging and striving for is something that.
A more substantial and more transformation.
So if you look at the near term, though and you factor in the you know.
The inevitable decline of the V T M as well as the ramp up of sales trend screen.
And Nico.
And then you factor in the expense cuts you've made do you think that you'll be.
About probably about breakeven in 2022.
Yeah, I would expect surgeon.
And then a follow up to that is if you are running at breakeven you have a lower leverage rate.
How quickly do you think you'll be able to refinance the remaining portion of that that 12% debt.
Yeah, we're moving to do it as quickly as we can but as I mentioned in my prepared remarks, we want to do that thoughtfully right. So aim.
We're looking for a long term partner.
And we're looking for the best commercial deal, we can get over over the medium term.
And but we've already progressed fast we've had a favorable response from the banking community.
Particularly in terms of how the <unk> deal is structured with the low interest rate convert aim being particularly attractive to the banks in terms of their position in the capital structure.
And so we're hopefully doing it quickly Jim but you'll forgive me if I if I don't say the timeline because we all know from dealing with banks and it's not all within your own gift in terms of timing.
But with $26 million in cash on the balance sheet now it doesn't appear that.
There's going to be any any issue as far as.
Careful management in the near term you have plenty of cash to fund the operations over the next few quarters. It seems to me is that is that the way you feel yeah.
Yeah, Yeah, absolutely I think the Nico investments and we we will choose how much of the perceptive debt to repay him as he said we're planning on paying a very very nice chunk of that and obviously.
Obviously, you know liquidity is critical and in terms of us being able to finance it.
Further development work on products, but also gearing up for the larger larger volume sales of print screen and the lateral flow test.
That will take some level of working capital investment from our behalf, but that's an investment well worth making.
Jim.
When you look at the convertible I mean in reality, it's quasi equity.
But you know the seven year term and one 5% interest and it's unsecured.
Until the circumstances, if you look at our EBITDA.
It's not a big ask to imagine that some of the biggest banks in the world that we're already speaking to would be quite interested in and basically putting us in a situation to eliminate.
The expensive debt that we have at the moment.
I think that May co investment today or to enable that to happen in reasonably short order. Although there is no certainty surrounding that.
So I know you're reluctant to give.
Any specific guidance and I know 2022 things will change quite a bit depending on how fast turns green ramps and how fast the VPN business.
Decline, but as you get past that and you look out to 2023 and beyond do you think that you can sustain a.
Double digit growth rate.
I think we kind of and I think I think it's important to look at the T. M. That's kind of a one off you know I mean I didn't write it down.
$31 million in.
2020, and $21 million in 2022.
It's not core repeatable business. So I mean, I think if you stand back and you look at if you look at our business.
The principal dynamics at the moment, you've got a hemoglobin business, which is growing again and growing strongly but it felt about 16% growth this year.
I mean, we're placing instruments again.
Basically people are doing agency testing again, so I think we.
We should be able to get back to a scenario, where we're replacing some of your two and 300 instruments a year. So that's clarity a big growth engine for us autoimmune business, we talked about we talked about lab testing children's et cetera, et cetera, and again, we're beginning to see what we're seeing that business basically getting back to the kind of growth trajectory that had previously had and it had a very.
Strong pretty good growth trajectory, and then upsell chemical chemistry business very solid without Fitzgerald business or is it a great cash cow.
And now to our rapid business. Our HIV business is doing just fine you see it was up 12% this year, but our HIV trend screen business. So having just got the transferrin approval I mean, I think has the potential for very significant growth and I made reference to the fact that you know we have very positive signals coming out of it.
Right at the moment one of the biggest eh.
And HIV market in Africa, I'm, hoping to get on the algorithm is the screener a choice and so we do believe as we said all along that we can basically take take reasonable market share from the leading the leading supplier to that market, which has always been our targets and I think we are very encouraged by the most recent.
So we've had in the last two months since we got approval.
And then that brings me onto a COVID-19 antigen test. So I know, we've been very slow to buy suddenly slow, but the fact of the matter is we have now developed a wonderful seriously wonderful wonderful performing a COVID-19 test and probe it hasn't gone away and we believe that we'll do well with that we are about four weeks away from a CE mark.
And which will enable us to sell throughout Europe .
Nicole are very interested and we'll take it in southeast Asia.
And we will go for EUA Apotex don't care, because the rules keep changing but we're reasonably confident of getting that product into the USA, although there's no certainty of that.
We're quietly confident doing so.
And so if you looked at that all the overall components of the business I think they're looking very promising and we now have a very strong partner well financed and very determined and very experienced and very successful and glamorous who are subscribed behind us with the with our chairman and founding director and principal shareholder in the building up.
The moment in the office next door or listening to this call.
A new chairman and so I think and basically we have significantly restructured our balance sheet, where our confidence of all basic completion that'd be structured but one of the structuring and one of them.
Leading banks in the world come in and basically eliminate the rest of the high yielding cash, but we think we're in a really really good position, Jim and where we're really excited and very very pleased today. I think this is a really big day, new beginning for Trinity biotech.
And then last one from me can you just remind me.
What the market is today for the HIV screening product in Africa.
About 117 million pets, a year, Chad 80, 590 cents test, although we will have we will come in but it will be at around the Asian Mark on that that's what we're positioning ourselves.
Dominated by one company.
Great. Thank you.
Hi, Thank you very much.
As a reminder, if you have a question. Please press star one to be joined into the queue.
The next question comes from Paul O'malley with Noble equity. Please go ahead.
Hi, good afternoon.
Or the Covid sales in the quarter.
About $2 million.
Sure.
Yeah.
And didn't you have or is there a status update on the new hemoglobin instrument.
The U S.
And yes, the Premier resolution, Paul we are expecting to submit it.
July .
June July .
Let's say July at latest.
You remember that remember we had the warning letter and that's what held it up that's all resolved now.
Maybe I should just add that so just to be without the warning that Arizona resolves itself and where I was just asked.
And that's why we can go ahead, now and submission and they've made resolution so Ed.
Three months it could be submitted that and I think you should go through reasonably quickly and I I think premier resolution will present, a big opportunity for organic growth within the USA. The product is already approved in Europe as you know.
Meanwhile of course, we've been unable to.
When she was in China because of the fact, we had to have origination country.
Approval so as soon as we get the FDA approval and then move into this into the into China wherever we have a very strong distribution base in a very big.
As you know premier a basement.
And so on and.
So I think a lot of possibilities there as well so basically you know that.
Yeah.
Premier resolution being submitted to the FDA opens up not just USA, but also China.
Okay, and the workforce reduction that was mentioned in the press release was that in the fourth quarter or prior to that.
That parents was in the fourth quarter pause, but that was I was kind of the last I would say in a broader a rationalization of our manufacturing workforce.
Here in Ireland. So we've over the course of the year. We went from about 180 people down to about 110.
In our workforce and at our Irish manufacturing plant and that those efficiencies are being driven by an increased focus on automation and simplification of processes.
So we can produce the same level of output power.
With a significantly reduced workforce.
We met at workforce reduction was primarily achieved through natural attrition and which we managed and then the last piece was a voluntary redundancy scheme.
To kind of get us to the numbers that we were we were focused on.
Okay and for the screening test you're going to be producing at mostly out of them or maybe exclusively out of Ireland.
This is a portrait screen autos.
Yes.
That's the intent PA, but I suppose back to the <unk> partnership.
So they have the facility for very large volume lateral flow of manufacturing.
In Korea.
So this partnership now opens up the possibility for us to manufacture that is very very large volumes.
Tends to be a lower price point, so we could well end of manufacturing at a port locations and.
It is approved for manufacturer here and in Ireland and.
It certainly will stay here.
The volumes back to the level that we expect and we hope then having high value highly automated manufacturing capability in Korea.
But to us on a contract basis will be very helpful for us in terms of.
Supporting our growth and ensuring that growth is profitable.
And in Europe , I'm, assuming you get the CE Mark for the antigen test are you allowed to sell it over the counter directly to consumers or is that a secondary approval you need for that.
Yeah, Paul So yeah. The primary did the CE Mark that will go to a bunch of guys for professional use they they are over the counter is it's an addendum dated so to further step.
And we're taking but it will take and take a number of months longer.
Okay.
And do you expect any trend screen sales in 2022.
Yes, I'd be hopeful of that but I mean, the indications so far are really really positive.
Uh huh.
There's no certainty in relation to that but I'd be extremely disappointed.
If we didn't have some.
Recent breakthrough in the short term.
Virtually immediate impact.
Could you talk like where.
Uh huh.
No go ahead.
But we're preparing to produce and sell.
In 2020.
It is our expectation for you James sorry.
And then could you broadly talk about the impetus.
For this.
Deal considering that you had cleaned up the balance sheet I know that the interest rate on <unk>.
The loan was high but you.
Did that financials lead the deal was it more strategic was this a discussion you had been having for the past couple of months and then I was just kind of you know the right timing to execute them.
No.
Discussions have come basically really very very recently, but but.
You know I mean, we were delighted to do the protective deal I think we needed to do it and clearly but Chad.
No disrespected perceptively, 12.25% of very high interest rates.
Any company to bear and I mean, I think clearly it was a it was more of an interim measure I think I could do it don't realize that so I I think what we've done today.
So that's a really really good move for Trinity.
I think that $45 million the effect of that that could be I think it's all effectively equity going to vendors and Ed mandatory conversion of $3 24, so to raise I think 45.
$45 $2 million that had an average price of $2 60.
I need I think by any anybody's agent glib day's work.
You add to that that you actually you know that you have gained a strategic partner with advantage of thing.
Molecular PCR platform, the Trinity biotech something that we've made.
Wishing far for a decade.
And that gives us access to cheaper southeast Asian manufacturing capabilities, a broader range of products and geographic spread for us.
Access into the Asian market.
And to the Asian markets, where we have typically not been so successful and then you know.
Also bring their products into the went into USA and Europe .
All such a thing of the management team with great strengths.
History of serious success within this kind of conglomerate Israel, so almost the ideal scenario and one that we're extremely pleased with.
I think the last piece of the puzzle is it should we think that the amount of equity that we've brought in.
On the balance sheet restructuring that that constitutes is enough basically check as well.
One of the leading banks in the World Congress, taking place over the line to basically eliminate all of the all of the high yielding very very short order. So it's a solution basically a total solution and we are really really pleased with.
With today's work.
And I'm very much wholeheartedly welcome Nico and in here and we believe that <unk> earmarked Trinity.
As the vehicle that they would like to use to it.
The words.
Class diagnostic company with.
Okay, great. Thank you.
Thanks very much.
I just suggest that we unfortunately, an hour on the phone and I think maybe and we've taken enough of your time. So I just wanted to ask the operator to pick just close off the call and say, thank you and good afternoon to everybody.
Alright, thank you.
That's one.
Thank you Frank.
Okay.
Thank you.
Thank you.