Q1 2024 Trinity Biotech PLC Earnings Call
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Operator: Greetings and welcome to the Trinity Biotech first quarter 2024 earnings call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Eric Ribner, Investor Relations for Trinity Biotech. Thank you. You may begin.
Speaker Change: Greetings and welcome to the Trinity Biotech first quarter 2024 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
Eric retina: I would now like to turn the conference over to your host Eric retina.
Eric retina: Investor Relations for Trinity biotech. Thank you you may begin.
Speaker Change: Thanks very much.
Eric Ribner: Before we begin, please note that statements made during this presentation may be deemed forward-looking statements within the meaning of federal securities law. Such statements are subject to known and unknown risks and uncertainties that may cause actual events to differ from those expressed or implied in such statements. These risks include, but are not limited to, those set forth in the risk factor statement in a company's annual report on Form 20-F filed with the Securities and Exchange Commission.
Speaker Change: Before we begin please note that statements made during this presentation may be deemed forward looking statements within the meaning of federal Securities law.
Speaker Change: Statements are subject to known and unknown risks and uncertainties that may cause actual events to differ from those expressed or implied in such statements.
Speaker Change: These risks include but are not limited to those set forth in the risk factor statement.
Speaker Change: Company's annual report on form 20-F filed with the Securities and Exchange Commission.
Eric Ribner: Trinity Biotech undertakes no obligations to publicly update or revise these forward-looking statements to reflect events or circumstances after today or for the occurrence of unanticipated results. And with that, I will turn it over to John Gillard, CEO of Trinity Biotech.
Speaker Change: The biotech undertakes no obligations to publicly update or revise these forward looking statements to reflect events or circumstances after today or.
Speaker Change: The occurrence of unanticipated result.
Speaker Change: And with that I will turn it over to John Gallard C E O Trinity biotech.
John Gillard: Good morning, everyone. And thank you for joining us on today's call. We appreciate your interest in the company. This quarter, we are pleased to report significant advances are being made across our entire business. We are growing our revenue while at the same time delivering higher profit margins. We have almost 40% quarterly-on-quarter revenue in Point of Care Revenue, driven by the successful scaling of rapid HIV test outcomes. This was accompanied by a 360 basis point improvement in gross margin, quarter over quarter. We remain on track to achieve annualized revenues of approximately $75 million by Q2 2025, with approximately $20 million in EBITDA. That is earnings before depreciation, amortization, tax, and share-based compensation from our existing business.
John Gillard: Good morning, everyone and thank you for joining today's call. We appreciate your interest in the company.
John Gillard: This quarter. We are pleased to report significant advances are being made across our entire business.
John Gillard: We are growing our revenue base, while at the same time delivering higher profit margins.
John Gillard: We had almost 40% quarter over quarter revenue growth in point of care revenue.
John Gillard: Driven by the successful scaling of rapid HIV test outputs.
John Gillard: This was accompanied by a 360 basis point improvement to gross margins.
Quarter over quarter.
John Gillard: We remain on track to achieve annualized revenues.
John Gillard: Approximately $75 million by Q2 2025.
John Gillard: With approximately $20 million and EBITDA that is earnings before depreciation amortization tax and share based compensation costs.
John Gillard: From our existing business.
John Gillard: Now, let me walk you through some of the key achievements and provide more details across the three main priority areas for our new leadership team, which were, 1. Growing Trendscreen HIV revenue; moving from planning to the execution of the key initiatives underpinning our comprehensive transformation; and three, progressing our main long-term growth strategy, based on our newly acquired Continuous Glucose Monitoring or CGM technology.
Speaker Change: Now, let me walk you through some of the key achievements and provide more details are cut across the three main priority areas for our new leadership team.
Speaker Change: Which war.
Speaker Change: One <unk>.
Speaker Change: Growing trend screen H I V revenue.
Speaker Change: To moving from the planning to the execution phase for these key initiatives underpinning our comprehensive transformation plan.
Speaker Change: I'm sorry.
Speaker Change: Progressing our main long term growth strategy.
Speaker Change: Based on our newly acquired continuous glucose monitoring or CGM technology.
Firstly <unk>.
John Gillard: Let's discuss growing Trinscreen HIV revenue. As I mentioned in our last call, Trinscreen successfully ramped up production of rapid HIV, in particular transgreen HIV, in Q1. You can see in today's results the financial impact of that, with an almost 40% quarterly-on-quarter increase in our point-of-care revenue. A key priority of mine this quarter was to increase production, so we could meet our trend screen order and therefore prove to our customers, partners, and indeed competitors, that we could be a real player in the large volume HIV screening market, as we roll out our new Trinscreen HIV product across multiple markets. I'm delighted to report that we have done just that.
Speaker Change: Let's discuss growing trend screen H I V Ravi.
Speaker Change: As I mentioned on our last call, we successfully ramped up production of rapid HIV tests in particular transferring in HIV in Q1.
Speaker Change: You can see in today's results the financial impact of that increase.
Speaker Change: But then almost 40% quarter over quarter increase in our point of care revenues.
Speaker Change: A key priority of mine in quarter, one was to increase production.
So we could meet our trade screen orders.
Speaker Change: And therefore prone to our.
Speaker Change: <unk> partners and indeed competitors that.
Speaker Change: But we could be a real player in the large volume HIV screening.
Speaker Change: As we rollout our new trend screen H I V products across most of our markets.
Speaker Change: I'm delighted to report that we have done just that.
John Gillard: And, as we set out in our recent press release, we have been successful in securing more orders and increasing our 2024 revenue guidance from Transgreen HIV. I have no doubt that our successful ramp-up provided us with the credibility to obtain those additional orders. And we are now further increasing production to meet these values and are on track to manufacture four times as many rapid HIV tests in May this year compared to May last year.
Speaker Change: And as we said I was in a recent press release, we have been successful in securing more orders and increasing our 'twenty 'twenty four revenue guidance from transferring HIV.
Speaker Change: I have no deaths that are successful ramp up provided us with the credibility to obtain those additional orders.
Speaker Change: We are now further increasing increasing production to meet these volumes.
Speaker Change: And are on track to manufacture four times as many rapid HIV tests. They made this year compared to may of last year.
John Gillard: Having successfully ramped up production of Trenspreen HIV, now our focus moves to increasing the efficiency of manufacture and driving further emerging contributions. I was delighted that even with the margin percentage dilutive effect of the TrinScreen Rample, we have still seen significant improvement in margin percentage quarter on quarter, as you can see.
Speaker Change: Having successfully ramped up production uptrend screen HIV, no our focus moves to increasing the efficiency of manufacture and driving further margin contribution.
Speaker Change: I would realize it but even with the margin percentage dilution effect of the trend scream ramp up.
Speaker Change: We are still seeing significant improvement in margin percentage quarter over quarter.
Speaker Change: As you can see.
John Gillard: Our previously announced targeted price increases, supply chain optimization, and headcount reductions all contributed to improve gross margins this quarter, as did our in-house HBA1C consumer production. These initiatives are working. As with any new production ramp-up, in the earlier stages, investments and training were required as the new staff were trained. We added approximately 70 team members to our Irish site since January this year to facilitate this ramp-up. These staff are now fully embedded in the organization.
Speaker Change: Our previously announced targeted price increases and supply chain optimization and head count reductions.
Speaker Change: Contributed to improve gross margins this quarter.
Speaker Change: As did our in house change be even see consumer production.
Speaker Change: These initiatives are working.
Speaker Change: As with any new production ramp up in the earlier stages.
Speaker Change: Earlier stages investments in training where required.
Speaker Change: The new stuff where trade.
Speaker Change: We added approximately 70 team members to our Irish size since January this year to facilitate this ramp up.
Speaker Change: These staff are now fully embedded into the organization.
Speaker Change: Yeah.
John Gillard: We expect transgreen HIV margin contribution to improve significantly, with additional automation coming online in June through repurposing existing equipment, b. Further supply chain optimization, and the move to offshore downstream assembly which is planned to be implemented and receive regulatory approval later this year, outside of scaling production to meet incoming orders. Our technical and sales teams are also very active in Pursuing New Commercial Opportunities for Transcreen HIV. As you know, before winning business in new countries, there is typically a comprehensive HIV test clinical evaluation program to be completed. Transcreen HIV is in various stages of these evaluation processes across several countries in Africa.
Speaker Change: We expect trade screen H I V margin contribution to improve significantly.
Speaker Change: Wait a additional automation coming online in June through Repurposing existing equipments.
Speaker Change: B further supply chain optimization.
Speaker Change: I didn't see the move to offshore downstream assembly, which is planned to be implemented and receive regulatory approval later this year.
Speaker Change: Yeah.
Speaker Change: Outside of scaling production to meet incoming orders our technical and sales teams are also very active in pursuing new commercial opportunities for trade screen HIV.
Speaker Change: As you know before we think business a new country. There is typically a comprehensive HIV tests clinical evaluation program to be completions.
Speaker Change: Transferring HIV is in various stages of these evaluation processes across several countries in Africa.
John Gillard: We expect to further grow Transcreen H.I.R.E. revenues in 2024 and in 2025 from new wins across many of these evaluation processes. Now, moving on from transferring to our comprehensive transformation plan that I set out on our last earnings call. This plan is designed to deliver a much lower manufacturing and SG&A cost, which will drive significant profitability from the growing revenues from our existing business and also importantly, provide an efficient, Scalable Tech Forum. Transcripts provided by Transcription Outsourcing, LLC.
Speaker Change: We expect to further grow trend screen H I V revenues in 2024 and in 2025 from new wins across many of these evaluation process.
Speaker Change: Yeah.
Speaker Change: Now moving on from transferring to our comprehensive transformation plan.
Speaker Change: That I said I was on our last earnings call.
Speaker Change: Yeah.
Speaker Change: This plan is designed to deliver a more slower manufacturing.
Speaker Change: And SG&A cost base.
Speaker Change: Which will drive significant profitability from the growing revenues from our existing business.
Speaker Change: And also importantly provide an efficient scalable platform.
Speaker Change: Facility the next stage of the company's growth.
John Gillard: This new management team is united in our vision that we can fundamentally improve upon the prior commercial and financial performance of our existing business through a series of incremental changes throughout 2024. As I've said before, we want to drive a step change in financial performance for three main reasons. Firstly, the obvious.
This new management team is United in our vision.
Speaker Change: But we can fundamentally improve upon the prior commercial and financial performance of our existing business.
Speaker Change: Through a series of incremental changes throughout 2024.
Speaker Change: I think I've set out before we want to drive a step change in financial performance for three main reasons.
Firstly the obvious point.
John Gillard: Cash-sharing businesses are generally more valuable, which increases value for our shareholders. Better Performing Businesses, Strengthen Our Abilities and Increase Our Access to Capital, and Turdy. We believe that our newly acquired, accessible, and environmentally sustainable CGM technology provides a tremendous opportunity for significant future growth and that a strong balance sheet will permit us to capitalise on this opportunity more rapidly. The transformation plan has three main pillars to optimize the existing business and prepare the company for our next stage of growth. 1.
Andrew: Sure Andrew businesses are generally more valuable which increases value for our shareholders.
Andrew: Secondly, better performing businesses strengthen our balance sheet and increase our access to capital.
Andrew: And third we believe that our newly acquired accessible and environmentally sustainable CGM technology provides a tremendous opportunity for significant future growth.
Andrew: And then a strong balance sheet will permit us to capitalize on this opportunity more rapidly.
Andrew: The transformation plan has three main pillars.
Optimize existing business and prepare the company for our next stage of growth.
John Gillard: Consolidate offshore manufacturing, 2. Optimize the supply chain, and 3. Centralize an offshore corporate service. We have made significant improvements in our key objectives across each of these three pillars since I last spoke, and we have very much now moved from the planning stage to the execution stage. Let me take a few moments to give you some examples of the key objectives we achieved in this period with respect to Pinner One.
Andrew: One consolidated in offshore manufacturing.
Andrew: To optimize supply chain I'm, three centralized and offshore corporate services.
Andrew: We have made significant improvements in our key objectives across each of these three petters since I last spoke with you.
Andrew: And I'm very much no move from the planning stage to the execution stage.
Andrew: Let me take a few moments to give you. Some examples of the key objectives, we achieved in this period.
Andrew: With respect to pier one.
John Gillard: Consolidate and Offshore Manufacturing. We focused on our two largest businesses, being rapid HIV tests and diabetes HbA1c tests. In HIV testing, in addition to ramping up production, as I said earlier, we also completed training of our identified offshore manufacturing partner staff in the downstream assembly of a rapid HIV test. This allows them to prepare to take over these downstream assembly activities for our rapid HIV test, which will reduce our cost of manufacturing. I announced on our last earnings call that by the end of this year we were ceasing the main manufacturing activities at our Kansas facility. Thanks for those.
Andrew: So holiday and offshore manufacturing, we've focused on our two largest businesses being rapid HIV tests a.
Andrew: Diabetes H P M C testing.
Andrew: Yes.
Andrew: N H I V testing in addition to ramping up production as I set out earlier, we also completed training of our identified offshore manufacturing partner stuff.
Andrew: In the downstream.
Andrew: The assembly of a rapid HIV tests.
Andrew: This allows them to prepare to take over these downstream assembly activities for our rapid HIV test, which will reduce our cost of manufacturing.
Andrew: In diabetes, H B, a one C testing.
Andrew: I announced on our last earnings call that by the end of this year, we were ceasing the main manufacturing activities at our Kansas facility.
Andrew: Since that announcement, we have made significant progress in executing on this culture.
John Gillard: We have made significant progress in executing on this closure. We are currently moving many parts of the manufacturing of these products to Ireland, which will utilize spare capacity created by the offshoring of the HIV test assembly I referred to above, while allowing us to maintain the highest quality of product. As part of this move, we are currently setting up the equivalent manufacturing line here in Ireland and expect to be up and running on that by the end of this summer. We are also moving less complex manufacturing processes, currently carried out in Canada, to lower cost offshore locations.
Andrew: We're currently moving body parts of the manufacturing of these products to our Irish citizen.
Andrew: Which would utilize spare capacity created by the <unk>.
Andrew: Offshoring of H I V Test Assembly I referred to above.
Andrew: While allowing us to maintain the highest quality of product.
Andrew: As part of this move we are currently setting up the equivalent of a manufacturing line here in Ireland and expect to be up and rolling them back by the end of this summer.
We are also moving less complex manufacturing processes Curry that currently carried out in Kansas to lower cost offshore locations.
John Gillard: This is building on our previously announced manufacturing and supply chain optimizations in our hemoglobin business and will further support us in building a business of significant value in this area. In Pillar 2, Optimize Supply Chain. This past quarter, we prioritized optimization of our rapid HIV supply chain, with increased volumes from print screen HIV creating opportunities to negotiate with supply partners resulting in double-digit percentage reductions in cost of goods. We also identified and engaged with a number of alternative suppliers that could facilitate further cost reductions. We're confident there is further margin accretion in this area. It is imperative.
Andrew: This is building on our previously announced manufacturing and supply chain optimization in our hemoglobin business.
Andrew: It was further supports a spending a business of significant value in this area.
Andrew: Impair it too.
Andrew: Optimize supply chain.
Andrew: This past quarter, we prioritize optimization of our rapid HIV surprised you.
Andrew: With increased volumes from print screen, H I V, creating opportunities to negotiate with supply partners, resulting in double digit percentage reductions in cost of goods.
Andrew: We also identified and engaged with a number of alternative suppliers that could facilitate further cost reductions.
Andrew: We're confident there is further margin accretion in this area.
Andrew: And parents free.
John Gillard: We have substantially progressed the setting up of our centralised and offshore corporate services function. This is designed to provide us with an efficient and highly scalable corporate services platform to support growth while reducing our SG&A costs. We have signed an implementation agreement with a third-party outsource partner who is already hiring to staff that offshore location. To conclude, we are making very significant progress, on all major fronts, in delivering this step change in financial performance. And that gives us confidence.
Andrew: We have substantially progressed, the setup of our centralized and offshore corporate services function.
Andrew: This is designed to provide us with an efficient and highly scalable corporate services platform to support growth.
Reducing our SG&A costs.
Andrew: We are selling to an implementation agreement with a third party outsource partner, who is already hiring to staff up that offshore location.
Andrew: To conclude.
Andrew: We are making very significant progress.
Andrew: On all major fronts.
Speaker Change: In delivering this step change in financial performance.
And that gives us the confidence to reiterate our previous guidance of approximately 20 million of annualized run rate EBITDA. So.
John Gillard: To reiterate, our previous guidance of approximately 20 million of annualized run rate EBITDA and annualized revenues of approximately £75 million by Q2 2025. Now, moving to our long-term growth driver, continuous glucose monitoring or CGM. As I've said before, in addition to strengthening our existing business, we aim to build a global Ware of a Biotech, initially with a focus on CJ.
Speaker Change: I realized revenues of approximately 75 million by Q2 2025.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Now moving to our long term growth driver continuous glucose monitoring or CGM.
Speaker Change: Okay.
Speaker Change: As I've said before in addition to strengthening our existing business.
Speaker Change: We aim to build a global business in wearable biosensors.
Speaker Change: Initially with a focus on C J.
John Gillard: It is important to recap the context for this strategy. When I took over as CEO in late December, I was aware that Trinity's new product pipeline was insufficient to drive the kind of organic growth investors expect. It was, therefore, imperative.
Speaker Change: It is important to recap the context for this strategy.
CEO: When I took over as CEO in late December I was aware that trinity's new product pipeline was insufficient to drive the kind of organic growth investors expect.
CEO: It was therefore imperative to execute on a viable growth driver for the business that leverage our existing strengths and resources.
John Gillard: Execute on a viable growth driver for the business that leveraged our existing strengths and resources. We know today that data, digitalization, and artificial intelligence will play an increasingly important part in our healthcare and wellness management, as they are beginning to in virtually all other parts of our lives. As such, for those of you on today's call that may not be aware,
Speaker Change: We know today that data.
Digitalization.
It's an efficient intelligence will play an increasingly important part in our health care and wellness management.
Speaker Change: As they are beginning to.
Speaker Change: In virtually all other parts of our lives.
Speaker Change: As such for those of you on today's call that may not be aware just.
John Gillard: Just over three months ago, we purchased the biosensor technology of Wave, including its existing CE Mark approved CGM. As many of you will know, CGMs have been shown to be very effective in helping people with diabetes manage their conditions, and their usage is growing rapidly. For example, the two main leading players in CGM, Abbott and Dexcom, have combined revenues of over $8 billion from CGM, and their goals. We are already a significant player in the global diabetes management market, supporting over 10 million people with diabetes annually with our quality HbA1c testing.
Speaker Change: Just over three months ago, we purchased a biosensor technology of wasteful.
Speaker Change: Including its existing CE Mark approved CGM.
Speaker Change: As many of you will know see James have been shown to be very effective at helping people with diabetes manage their conditions.
Speaker Change: And their usage is growing rapidly.
Speaker Change: For example, the two main leading players in CGM Abbott index come have combined revenues of over 8 billion from CGM and they're gone.
Speaker Change: We are already a significant player in the global diabetes management market supporting over 10 million people with diabetes annually with our quality H P. A one C testing solution.
John Gillard: We can see the massive, and Diabetes Prevention, especially type 2 diabetes, all across the world, with well over half a billion people now suffering from a diabetic condition, not to mention the many more in a pre-diabetic state.
Speaker Change: We can see the massive increase in diabetes prevalence.
Speaker Change: Especially type two diabetes all across the world.
Speaker Change: With well over half a billion people now suffering from a diabetic condition not to mention the money more in a pre diabetic stage.
Speaker Change: Yeah.
John Gillard: This creates a massive market for highly effective non-pharmaceutical diabetes and pre-diabetes management products, such as C.J., that can be used alongside or instead of pharmaceutical therapy. That is why we are investing in this exciting and growing area, and we decided to enter into it in a de-risked manner by building on an established product. Since we made the acquisition, we have been prioritizing progressing a, further developing our commercial strategy around CGM and biosense, and B, the design and development of the next generation CGM. Now, let me take you through our main activities in these areas.
Speaker Change: This creates a massive need for highly effective non fibre diabetes and pre diabetes management solutions, such as T J that.
Speaker Change: That can be used alongside or instead of pharmaceutical therapy.
Speaker Change: That is why we are investing in this exciting and growing area.
Speaker Change: But decided to ensure intuition in a derisked way.
Speaker Change: By building on an established product.
Speaker Change: Since we made the acquisition we have been prioritizing progressing eight.
Speaker Change: Further developing our commercial strategy around CGM, and biosensors and be the design and development of the next generation CGM device.
Speaker Change: Now let me take you through our main activities in these areas.
John Gillard: With respect to commercial strategy, since our acquisition, we have received a double digit number of expressions of interest from potential commercialization partners. [inaudible] This is in addition to our existing relationship with Bayer for China and India. It is clear that there is significant appetite, and Leander, for a more affordable and sustainable season that still delivers a great user experience. That has made us more confident than ever that our unique technology provides a great platform on which to develop a next-generation CGM that can truly disrupt the diabetes care model. For those of you who may be new to this area,
Speaker Change: With respect to commercial strategy.
Speaker Change: Since our acquisition, we have received a double digit number of expressions of interest.
Speaker Change: Potential commercialization partners.
Speaker Change: Ross the Gulf.
Speaker Change: This is in addition to our existing relationship with Bayer for China and India.
Speaker Change: It is clear.
Speaker Change: That there is significant appetite.
Speaker Change: In the industry for our more affordable and sustainable CGM.
Speaker Change: That still delivers a great user experience.
Speaker Change: That has made us more confident than ever that our unique technology provides a great platform.
Speaker Change: Which to develop a next generation CGM that can truly disrupt the diabetes care matters.
Speaker Change: For those of you, who maybe new to this area.
John Gillard: Our CGM technology is not some unproven, non-invasive solution. Like the two main players, Abbott on Dexcom, it uses a minimally invasive sensor wire. I think it is important that I take a moment to explain the importance of some of the technical differences in the trinity technology and the valuable differentiated product features they facilitate, like the other CGMs I mentioned. In the Trinity solution, an ultra-thin sensor wire is inserted a few millimeters into the skin, and this transmits live data about the level of blood glucose in the body to a smirk.
Speaker Change: Our CGM technology is not so on proven noninvasive solution.
Speaker Change: Like the two main players I bet on decks Com uses a minimally invasive sensor wire.
Speaker Change: I think it is important that I take a moment to explain the importance of some of the technical differences in the Trinity technology.
Speaker Change: And the valuable.
Speaker Change: Different creative product features they facilities.
Speaker Change: Like the other CGM as I mentioned.
Speaker Change: The treasury solution, an ultra thin sensor wire isn't searches a few millimeters into this game.
Speaker Change: And Thats transmitted live data.
Speaker Change: About the level of blood glucose in the body to a smartphone.
John Gillard: However, the Critical Distinction and Benefit of Artechno is that the sensor wire can be inserted into the body without the use of a needle. What this means is that our sensor can be inserted using a reusable sensor applicator. The others require a single-use applicator that punctures the skin with a retractable needle. This leads to the entire plastic and metal applicator becoming non-recyclable biohazard waste
Speaker Change: However.
Speaker Change: A critical distinction.
Speaker Change: And benefits.
Speaker Change: Of our technology is that the sensor wire can be inserted into the body.
Speaker Change: The use of a need.
Speaker Change: What this means is that our sensor can be inserted using a reusable sensor applicator.
Speaker Change: Yeah.
Speaker Change: The others require a single use applicator that poultry is the skin with the retractable needed.
Speaker Change: This leads to the entire plastic and metal applicator, becoming non recyclable biohazard waste.
John Gillard: In contrast, our sensor applicator is reusable and lasts for years, with all the sustainability and cost benefits that bring. Well, this might not sound like a big issue, but for every single person using one of the leading brands over two years, they will generate over 11 pounds, or five kilograms, of Non-Recyclable Plastics and Metals across 72 applications. This drives two big problems with the main CGM solutions on the market today. One is caught, which creates a barrier to broader adoption of this lifesaving technology. And the second problem is the massive amounts of non-recyclable waste they create.
Speaker Change: In contrast, our sensor applicator is reusable and last for years.
Speaker Change: With all the sustainability and cost benefits stop right.
Speaker Change: Yeah.
Speaker Change: While this might not sound like a big issue.
Speaker Change: For every single person.
Using one of the leading products.
Speaker Change: Over two years, they will generate over 11 pounds are five kilograms.
Speaker Change: I've, not recyclable plastic and metal.
Speaker Change: Cross seven shoe applicants.
Speaker Change: This drives two big problems with the main CGM solutions on the market today.
Speaker Change: One is cost.
Speaker Change: Which creates a barrier to broader adoption of this life saving technology.
Speaker Change: And the second problem is the massive amounts of non recyclable waste they crashed.
John Gillard: By contrast, over the two-year period, our solution would use just one applicator; our technology and approach greatly reduce the cost of environmentally harmful waste created by just this part of the solution, thereby solving two major problems with the current market-leading CGMW. But we are not stopping there; as part of our modular solution, we are combining this reusable applicator with a reusable transmitter.
Speaker Change: By contrast over the two year period, our solution would use just one applicator.
Speaker Change: Our technology and approach greatly reduces the cost environmentally harmful waste created by just this part of the solution.
Speaker Change: Thereby solving two major problems with the current market, leading CGM device.
Speaker Change: Well, we are not stopping there.
Speaker Change: As part of our modular solution, we are combining this reusable applicator with their reusable transmitter.
John Gillard: Encompassing a Rechargeable Power Source and Electronics, Transcribed by https://otter.ai, This powerful company of reusable applicators and transmitters dramatically reduces the cost of our solution, and we believe that we can provide a CGM solution at a daily cost that is at least 40% less expensive than the current main products on the market. We believe this gives us a very significant competitive advantage and a great opportunity to disrupt the market. We understand that this is a very large market opportunity for a company of Trinity's current size.
Speaker Change: Encompassing a rechargeable power source and electronics to further reduce the cost and harmful waste all bar solution compared to the two main competitors on market today.
Speaker Change: This powerful combination.
Speaker Change: Reusable applicators.
Speaker Change: <unk> dramatically reduces the cost of our solution.
Speaker Change: And we believe that we can provide a CGM solution at a daily costs that is at least 40% less expensive than the current main products on markets.
Speaker Change: We believe this gives us a very significant competitive advantage and a great opportunity to disrupt the market.
Speaker Change: We understand that this is a very large market opportunity for a company of crazies parents thought.
John Gillard: And that is why, since the acquisition, we have been focused on creating a team of world-class designers and engineers to design and develop a next-generation CGM solution focused on A. usability, B. affordability, and C. sustainability.
Speaker Change: And that is why since the acquisition, we have been focused on creating a team of world class designers and engineers to design and develop a next generation C. G M solution focused eight usability.
Speaker Change: B affordability and see sustainability.
John Gillard: We believe that by creating a next-generation product around these three teams, we can reach as many people as possible with this life-saving solution. Since we last spoke, we have now engaged a world-leading physical and digital product design consultant based in London and California to lead the design of this next generation solution. This group has designed a broad range of products. Consumer Electronics Devices, to C.A.R.R.Y., are renowned for innovative and attractive design.
Speaker Change: We believe that by creating a next generation product.
Speaker Change: Around these three teams.
Speaker Change: We can reach as many people as possible with this life saving solutions.
Speaker Change: Since we last spoke we have now engaged a worthy doing physical or digital product design consultancy.
Speaker Change: Based in London in California to lead the design of this next generation solution.
Speaker Change: Yeah.
Speaker Change: This group has designed a broad range of products from consumer electronic devices to Kurt.
Speaker Change: I never know for innovative and attractive designs.
John Gillard: This group is being supported by our internal technical team and our external international technical consultants, who have also been progressing technical developments and extending the stability of our gluco-sensor wire while maintaining its high level of accuracy. Since acquisition, we have made a number of enhancements to the sensor technology, and we have applied for ethical approval to begin a pre-pivotal clinical trial in June 2024. This pre-privatal clinical trial will give us insight into the sensor optimization pathway, and we expect to receive ethical approval to commence the trial in the coming week.
Speaker Change: This group has been supported by our internal technical team.
Speaker Change: And our external international technical consultants.
Speaker Change: Who have also been progressing technical developments and extending the stability of our glucose sensor wire, while maintaining its high level of accuracy.
Speaker Change: Yeah.
Since acquisition, we have met a number of enhancements to the sensor technology.
Speaker Change: And we've applied for ethical approval to begin a pre pivotal clinical trial in June 2024.
Speaker Change: Okay.
Speaker Change: This pre pivotal clinical trial will give us insight into the sensor optimization pathway and.
We expect to receive ethical approval to commence the trial in the coming weeks.
Speaker Change: Right.
John Gillard: We intend to be providers of a digital health and wellness service to users, similar, if you like, to a subscription model technology, and an area I'm very familiar with. We do not want to be just a hardware supplier to other commercialization partners. We believe that strategy will allow Trinity to capture a much greater share of the value chain, not just in the diabetes space but also in the broader health and wellness market. Turing Obesity and Weight Management
Speaker Change: We intend to be providers of digital health and wellness service to users.
Speaker Change: Similar if you like to a subscription model technology company.
Speaker Change: Area I'm very familiar with.
Speaker Change: We do not want it to be just a hardware supplier to other commercialization partners.
Speaker Change: We believe that strategy will allow <unk> to capture a much greater share of the value chain.
Speaker Change: Not just in the diabetes space, but also the broader health and wellness markets.
Speaker Change: Fueling obesity and weight management.
John Gillard: That is why we are not just focusing on physical product development. As part of our design focus on usability and differentiation, we are also concentrating on the insights the digital aspects of the solution can deliver to users, as we have seen with GLP-1 drugs such as azepine. People with diabetes and pre-diabetes can benefit massively from Behavioral Changes. However, in the case of GLP-1s, that change is driven by pharmacologically-induced responses. The side effects of GLP-1 are becoming more and more understood.
Speaker Change: That is why we are not just focusing on the physical product development.
Speaker Change: As part of our design focus on usability and differentiation. We are also concentrating on the insights the digital aspects of the solution can deliver to users.
Speaker Change: As we can see with G O P. One drugs such as those I think.
Speaker Change: People with diabetes and pre diabetes can benefit massively from behavioral changes.
Speaker Change: However, in the case of G. L. P was.
Speaker Change: That change is driven by pharmacological induced responses.
Speaker Change: Okay.
Speaker Change: With the side effects of G O P ones.
Speaker Change: Coming more and more understood.
John Gillard: However, they are also very expensive. Nevertheless, we believe that CGMs can be used to deliver key insights. It can drive behavior changes that people with diabetes or pre-diabetes can really benefit from but without the need for long-term use of powerful drugs like GLP-1 and as part of an overall diabetes management program, conscious that our ambition for the CGM project goes much further than just monitoring and what the huge potential we see in AI around this whole area.
They are also very expensive drugs.
Speaker Change: We believe that CGM can be used to deliver key inside the.
Speaker Change: They can drive behavior changes that people with diabetes or pre diabetes can really benefit from.
Speaker Change: But without the need for long term use of powerful drugs like GOP ones and it's part of an overall diabetes management program.
Conscious that our ambition for the CGM project cause much further than just monitoring.
Speaker Change: And with the huge potential we see in AI around this whole area.
John Gillard: We are partnering with advanced software companies like Posea, with whom we just last week signed a strategic collaboration. We are working with Pulse AI in developing data-driven software to support users, not just in the diabetes community but also in the broader health and wellness markets, including obesity and weight management.
We are partnering with advanced software companies like posed to us.
Speaker Change: With whom we just last week signed a strategic collaboration agreements.
Speaker Change: We are working with pulse AI and developing data driven software solutions to.
Speaker Change: To support users as I say not just in the diabetes space, but also the broader health and wellness markets, including obesity and weight management.
John Gillard: Developing the wider Digital Health and Wellness, as part of our overall platform, is a key focus for us over the coming months. We have also strengthened our team with the appointment of Avinash Kail as Continuous Glucose Monitor Program Director. Avinash is already bringing a new level of knowledge and experience in the design and large-scale manufacture of advanced medtech devices to this project. For those of you who wish to get further insights on our product vision for CGM, I invite you to visit our new CGM microsite that we just launched today at cgm.trinitybiotech.com. That's cgm.trinitybiotech.com. We have also put that link up on our LinkedIn page.
Speaker Change: Does that I think the broader digital health and wellness solutions.
Speaker Change: As part of our overall platform is a key focus for us over the coming months.
Speaker Change: We have also strengthened our team with the appointment of Avinash Kant is continuous glucose monitor program director.
Speaker Change: Avenaceous already bringing a new level of knowledge and experience in.
Speaker Change: The design and Lifescan a manufacturer of advanced Med Tech devices to this project.
Speaker Change: Yeah.
Speaker Change: For those of you who wish to get further insights on our product vision for CGM.
Speaker Change: I invite you to visit our new C. G M micro sites that we just launched today I see Jim Dog Crazy biotech Dot com.
Speaker Change: That's C. G M Dot crazy biotech Dot com, we have also put that link up on our Linkedin page.
John Gillard: This microsite is designed to keep stakeholders updated on our product development and overall timing. We remain on track to enter into pivotal clinical trials of our next generation CGM by summer 2025. EU Registry approvals are targeted by the end of 2020. We expect regulatory approval for further global markets will follow initial approval in the EU.
Speaker Change: This micro site designed to keep stakeholders update is on our product development progress.
Speaker Change: And overall the timing we remain on track to enter into pivotal clinical trials of our next generation C. G. M by summer 2025, with EU regulatory approve their targeted by the end of 2025.
Speaker Change: We expect regulatory approval for further build their markets with following the initial approval in the EU.
John Gillard: On the cost of development, I'm delighted to let you know we are reducing our expected development spend for 2024 to less than £2 million per quarter between now and the end of 2021. Over the past few months, we have realized significant efficiency benefits by leveraging Trinity's established medtech business structure in developing the CGM platform. This allows us to use existing resources in the business to support development. In addition, we have also found a very rich partner net, with many of our existing suppliers and some large electronics and digital solution partners having developed components to support wearable medical devices.
Speaker Change: On the cost of developments I'm delighted to let you know we are reducing our expected development spend for 2024 July.
Speaker Change: Less than 2 million per quarter between now and the end of 'twenty 'twenty four.
Speaker Change: Over the past few months.
Speaker Change: We have realized significant efficiency benefits by leveraging <unk> established med tech business structure in developing the CGM platform.
Speaker Change: This allows us to use existing resource in the business to support that.
Speaker Change: In addition, we have also found a very rich partner network.
Speaker Change: Many of our existing suppliers and some large electronics and digital institution partners, having developed components to support Wearables medical devices.
John Gillard: This is lowering the amount of work and spend we expect is necessary to develop this next-generation project. We are more convinced than ever of the opportunity CGM represents for Trinity Biotech and are rapidly building the team and technology to deliver on that opportunity. So, to conclude, overall.
Speaker Change: This is lowering the amount of work and spend we expect isn't necessary to develop this next generation project.
Speaker Change: Yeah.
Speaker Change: We are more convinced than ever of the opportunity. She CGM represents for trains you biotech.
Speaker Change: In a rapidly rapidly building the team and technology to deliver on that opportunity.
Speaker Change: So to conclude overall.
John Gillard: I am very happy with the significant progress we have made over the past few months on our ambitious priority. We have had some key wins on Trinscreen HIV, which provides us with growth and additional profitability, which really helps stabilize our financial position. We are now executing at pace on our comprehensive transformation, which will support us delivering a step change in profitability in the coming quarter. And we can already see the beginnings of the impact of these and other profitability changes we introduced since late last year on driving increased financial performance.
Speaker Change: I'm very happy with the significant progress we have made over the past few months on our ambitious priorities.
Speaker Change: We have had some key wins on trend screen, HIV, which provides us with growth and additional profitability.
Speaker Change: Which really helps stabilize our financial position.
Speaker Change: We are now executing at pace on our comprehensive transformation plan.
Speaker Change: Which will support us delivering a step change in profitability in the coming quarters.
Speaker Change: And we can already see the beginning of the impact of these and other profitability changes we introduced since late last year and driving increased financial performance.
John Gillard: Finally, we are really pushing ahead in developing a highly impressive but differentiated CGM that can disrupt this massive market, reach millions of people globally, and deliver very significant growth to Trinity Biotech. I would like to thank you all for your attention, and I will now hand you over to Des to bring you through the Q1 financial results in more detail.
Speaker Change: Finally, we are really pushing ahead in developing a highly impressive both differentiated CGM solution that can disrupt this massive market.
Speaker Change: Had millions of people globally.
Speaker Change: And deliver very significant growth to Trinity biotech.
Deb: I would like to thank you all for your attention and I will now hand, you over to Deb to bring you through the Q1 financial results in more detail. Thank you.
Deb: Okay.
Deb: Okay.
Deb: Hum.
Deb: Thanks, Sean.
Des Fitzgerald: Before I speak to our financial results for the period, I want to take a moment to mention the most recent correspondence we received from Nasdaq around our continuing listing on NASDAQ. On November 21st last year, we received a deficiency letter from NASDAQ, notifying the company that for the preceding 30 consecutive business days, the market value of Republic E Health shares remains below the minimum $15 million for continued inclusion on the NASDAQ Global Select. At that point, we were provided with 180 calendar days to regain compliance.
Before I speak to our financial results for the period I want to take a moment to mention the most recent correspondence we received from NASDAQ around our continuing NASDAQ listing.
Deb: On November 21st last year, we received a deficiency letter from NASDAQ notifying the company that for the preceding 30 consecutive business days.
Deb: The value of our public you have shares remains below the minimum $15 million for continued inclusion on the NASDAQ was flat.
Deb: I'm not quite sure I provided a hunter Navy calendar days to regain compliance.
Des Fitzgerald: This 180 day period ended on May 20th of this year, and as expected, yesterday, we received further notice notifying us that we have not regained. We intend to seek a hearing from NASDAQ, and that will put a stay on any further action until next year. We have appointed specialist advisors to support us in this manner, including the preparation of a comprehensive and compelling complaint.
Deb: This 180 day period ended on May 28 of this year.
Effective yesterday, what are your favorite if I didn't know if that's notifying us that we have not regained compliance.
Deb: We intend to figure hearing from NASDAQ and that would put a stay on any further action until last year.
Deb: We have appointed specialist advisers to supports us in this manner, including the preparation of a comprehensive and compelling complaining.
Des Fitzgerald: The board is determined that the company will remain ASIC listed, and I know from speaking with our top investor that they are supportive of the company maintaining it and will update shareholders throughout the process. Now I will speak to our financial results for the first quarter of 2024. Our revenues for the first quarter of 2024 were $14.7 million, compared to $14.8 million for the first quarter of 2022. Our Point of Care business experienced a strong performance in the quarter, with revenues increasing by 0.8 million, or 38.5%, to $3 million.
The board has determined that the company will remain not that gets it and I know from speaking with our top investors out there are some parts of the company and maintaining that.
Speaker Change: Well I'll say shareholder throughout the process.
Des Fitzgerald: This increase was driven by our HIV screening test, Trnscreen, which had sales in the region of $1.2 million as we shipped further product to Africa following on from our initial shipments in December 2023. In addition to this, we have received substantial additional orders for Trinsicreen HIV post-quarter-end, with our revenues for the year expected to be in the region of $8 million. Our clinical laboratory revenues decreased by 7.6% to $11.7 million compared to $12.7 million in the same quarter last year. Despite this decline, there was a strong performance from Rahim Oglomou's business, which experienced a 6.4% year-on-year increase in revenue.
Speaker Change: Now I will speak to our financial results for the first part of 'twenty 'twenty four.
Speaker Change: Our revenues for the first quarter of 'twenty, 'twenty, four or $14 $7 million compared to $14.8 million, sorry first quarter of 2022.
Speaker Change: Our point of care business experienced a strong performance in the quarter with revenues, increasing by airplane 8 million or 35.
Speaker Change: $2 million.
Speaker Change: This increase was driven by our HIV screening tests transcript, which I'd say is in the range of $1 $2 million as we shift further product to Africa. Following on from our initial shipments in December 2023.
Speaker Change: In addition today, we have received substantial additional hardest for transplant H I V post quarter end whatever revenue for the year expected to be in the region of $8 million.
Speaker Change: Our clinical laboratory revenues decreased by $7 six defense to whatever $97 million compared to 12 $7 million in the same quarter last year.
Speaker Change: Despite this drop there was a strong performance from our hemoglobin business, which experienced a six 4% year on year increase in revenue.
Des Fitzgerald: This, however, was more than offset by decreases in our lab services revenue due to the previously reported loss of our transplant testing activity at our Buffalo lab in early 2020. Our gross profit for the quarter was 5.5 million, representing a growth margin percentage of 37.6%, in line with growth margins in the same quarter last year. We recorded improved margins in our hemoglobin business in the quarter on the back of the optimization of our instrument manufacturing supply chain and our revised in-house manufacturing process, which we fully implemented by the end of last quarter.
Speaker Change: This however was more than offset by decreases in our lab services revenue due to previously reported due to the previously reported loss of our trials testing activity our Buffalo.
Speaker Change: In early 2023.
Speaker Change: Our gross profit for the quarter was $5 5 million representing a gross margin percentage was 37, 6% in line with gross margin in the same quarter last year.
Speaker Change: We recorded and played with margins thinner hemoglobin with business in the quarter on the back of the optimization of our Astro manufacturing supply chain I don't know.
Speaker Change: If enough manufacturing process, which we fully implemented by the end of last quarter.
Des Fitzgerald: Offsetting this was the impact of retrench green HIV cells, which are achieving lower growth margins than our other products. Increasing sales of Trinscreen over the remainder of 2024 will continue to dilute our overall growth margin percentage, although we do expect Trinscreen HIV to contribute additional growth profit as we progress through the year due to the various cost-saving initiatives that are underway, as detailed. Additionally, we expect to realize further financial benefits from the previously announced cost-saving initiatives across our business throughout this year and into 2025. Again, as John details,
Speaker Change: Offsetting this would be what the impact of our transmitting HIV status, which are achieving lower gross margins than our other products.
Speaker Change: Increasing sales of translating over the remainder of 'twenty 'twenty four will continue to sell these are off our gross margin percentage, although we do expect transferring HIV country meet additional gross profit I think he progressed through the year due to the various cost saving initiatives that are underway.
Speaker Change: Good job.
Speaker Change: Additionally, we expect to realize further financial benefit of the previously announced cost saving initiatives across our business.
Speaker Change: Throughout this year and into 2025 again ask John to each other.
Des Fitzgerald: Research and Development Expenses for the quarter were broadly flat. Following on from our acquisition of the Waveform assets in January, we continue to progress the development of our CGM offering in line with our Communicator plan. Our overall spend in the quarter relating to our CGM biosensors, including what was capitalised in line with IFRS accounting standards, was $1.3 million for the quarter, with ongoing spend per quarter expected to be less than $2 million.
Speaker Change: Research and development expenses for the quarter were broadly fast.
Speaker Change: Following on from our acquisition of the way format in January we continue to progress the development of our C. G M offering.
Speaker Change: And what I communicated plan.
Speaker Change: Our overall spend in the quarter relating to our C. G M Biosensor division, including what was capitalized in line with all your friends attacking offender was ballpark 3 million for the quarter with ongoing spending per quarter are expected to be less than 2 million.
Others.
Des Fitzgerald: SG&A expenses for the quarter were $7.5 million, $1.1 million lower than the $8.6 million incurred in Q1 2023. Key drivers of this improved SG&A expense include lower recurring salary and contractor costs and the last quarter of the rest of the comparative period, driven by headcount optimisation activities in the latter half of 2023, together with other cost savings across our SG&A base due to the benefits of our cost saving initiatives across our non-salary expense base over the last 12 months.
Speaker Change: SG&A expenses for the quarter was $7 5 million daughters won't buy $1 billion lower than the $8 6 million incurred in Q1, 'twenty China trade.
Speaker Change: Key drivers of this improved SG&A expense include lower recurring Saturday and contractor cost in the last quarter or the rest of the card period, driven by head count optimization activities in the latter half of 2020 trade together with other cost savings across our SG&A base due to the benefits of our cost saving initiatives across our non salary expense base off of.
Speaker Change: The last 12 months.
Des Fitzgerald: All of the above led to an operating loss of $3 million in the quarter compared to $3.9 million in Q1 2023, a decreasing loss for the period of 0.9 million or 23%. Net financial expenses in Q1 2024 were $0.2 million compared to $2.4 million in Q1 2023, a decrease of $2.2 million. The reduction in net financial expense this quarter is as a result of the renegotiation of the terms of a terminal with our main lender, Perceptive Advisors, in January 2024.
Speaker Change: All of the above led to an operating loss of $3 million in the quarter compared to $3 $9 million in Q1, 'twenty 'twenty trip.
Speaker Change: A decrease in loss for the period of fear of five 9 million or 23%.
Speaker Change: Net financial expenses in Q1, 'twenty 'twenty four with airports 2 million compared to $2 4 million in Q1, 2020 trade a decrease of $2 2 million.
Des Fitzgerald: We obtained a 2.5% reduction in the base interest rate for the terminal. The amendment of the term loan is treated as a loan modification, resulting in the recognition of a once-off non-cash modification gain of $3.6 million in Q1 2024. This gain was based on the difference between the existing carrying amounts of the loan, as at the modification date, and the revised carrying amounts.
Speaker Change: The reduction in net financial expense this quarter is that sort of thoughts if they weren't doing a renegotiation of the terms of a terminal what our main lender attached to the White House in January 'twenty 'twenty four.
Speaker Change: To obtain a 2.5% reduction in the base interest rate for the terminal.
Speaker Change: The amendments of the term loan is treated as a loan modification.
Speaker Change: And the recognition of a once off noncash modification gain of $3 $6 million in Q1, 'twenty 'twenty four.
Speaker Change: Scanning with based on the difference between the existing powering them up with the loan modification day under our vice cashless.
Des Fitzgerald: Additionally, the fair value movement toward derivatives associated with our term loan and associated warrants was 0.7 million in the quarter, primarily driven by a fair value movement of the warrants granted to our lender. While selling the above was an increase in the term loan interest expense of $0.4 million when compared to the Q1 2020 trade. This was driven by a higher outstanding loan balance, albeit a lower prevailing interest rate to note a little earlier.
Speaker Change: Additionally, the fair value movement towards derivatives associated with our terminal and associated work, what's the airplanes 7 million in the quarter.
Speaker Change: Primarily driven by fair value movements on the wires and brackets.
Speaker Change: That's it.
Speaker Change: Yeah.
Speaker Change: Offsetting the above was an increase in the term loan interest expense with Europe on 4 million when compared to Q1 2023.
Speaker Change: This was driven by a higher I suddenly know about albeit at lower prevailing interest rates at all.
Speaker Change: Yeah.
Des Fitzgerald: Net loss from continuing operations was 3.3 million in the quarter compared to 6.3 million in the same quarter last year, an approximate 47% reduction. EBITDAFO was $1.5 million for the quarter compared to a loss of $2 million in the equivalent period last year, an approximate 25% increase. Basic loss per ADS was $0.37 compared to $0.76 in Q1 2020.
Speaker Change: Net loss from continuing operations was $3 3 million in the quarter compared to $6 3 million in the same quarter last year.
Speaker Change: And the 47% reduction.
Speaker Change: Loss before depreciation and amortization impairments tax interest and share option share options charges by EBITDA awful.
Speaker Change: Well, it's $1.5 million for the quarter compared to a loss of $2 million in the equivalent period last year, an approximate 25% of them permanent.
Speaker Change: Basic law for any assets 27 cents compared to 76% in Q1 2023.
Des Fitzgerald: Our cash balance increased from $3.7 million in Q4 2023 to $5.8 million at the end of Q1 2024, while cash used by operations was $4 million in the quarter. On the core operations side, during the quarter, the company had investing cash flows of $14 million, the largest element of this related to the outflow for the acquisition of the waveform assets at $12.5 million. Cash inflows and financing activities were $18.8 million in the quarter, primarily driven by net proceeds from the January 2024 drawdown from our lender of $21.7 million. This is all set by our quarterly review. Now, I will hand you back to Eric for
Speaker Change: Our cash balance increased from $3 7 million in Q4, 2023 to $5 8 million at the end of Q1 'twenty four.
Speaker Change: Cash used by operations of $4 million in the quarter.
Speaker Change: Outside of our core operations during the quarter the company had investing cash flows of $14 million.
Speaker Change: Largest sentiments and death related to the outflow for the acquisition of the way far enough with that 12 five got it.
Speaker Change: Cash inflow from financing activities or anything for $8 million in the quarter, primarily driven by net proceeds from the January 'twenty 'twenty four drawdown from our lender off trade off like that.
Speaker Change: This is offset by our quarterly interest.
Speaker Change: Now I will hand, you back to Eric for questions.
Speaker Change: Yeah.
Operator: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Jim Sidoti with Sidoti and Company. Please proceed with your question.
Speaker Change: Thank you at this time, we'll be conducting a question and answer session.
Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question can you.
Speaker Change: You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Our first question comes from the line of Jim Sidoti with Sidoti <unk> Company. Please proceed with your question.
James Philip Sidoti: Hi, thanks for taking the questions. Can you talk a little bit? Let's start with the trim screen sales. Is everything, you know, all of the $8 million in 2024, is that all to Kenya? Or do you expect to start shipping to other countries in 2024?
James Philip Sidoti: Hi, Thanks for taking the questions.
James Philip Sidoti: Can you talk a little bit what's going with the troops Greenfields is everything.
Speaker Change: As all of the $8 million in 'twenty 'twenty four is that all to Kenya or do you expect to be stewardship into other countries in 'twenty 'twenty four.
John Gillard: Hi Jim. Thanks for the question. For commercial reasons, we're not going to give that level of detail at this point, right? But what I will say is that we do expect to be shipping to other countries outside of Kenya in 2024.
Speaker Change: Hi, Jim Thanks for the thanks for the question for commercial reasons, we're not going to give that level of detail at this point right. The way I will say is we do expect to be shipping to other countries outside opinion in 2024.
Speaker Change: Okay.
James Philip Sidoti: All right. And you know, it sounds like there was a considerable amount of one-time costs on the cost in the quarter as you ramped up production. Can you give us, you know, can you quantify that at all? The one-time cost to ramp up production to change the screen?
Speaker Change: Alright, and you know it sounds like there was a considerable amount of one time costs.
Speaker Change: As you ramp up production.
Speaker Change: Can you give US you know can you quantify that at all.
Speaker Change: The one time costs to ramp up production could turn screen.
John Gillard: It's a less one-time cost, Jim, in terms of, like the capex is already spent, you know, it's really around training the staff and then them getting up to speed. The lack of efficiency, I suppose, comes from that space. And, you know, as I said, we're introducing further automation in June, right, and that will further increase our efficiency. And then we're also getting, you know, much better pricing on our input materials as part of the work we've done on the supply chain.
Jim: It's less the one time cost Jim in terms of like the Catholics has already spent you know it's really around training.
Jim: Training the staff and then them getting up to speed the lack of efficiency I suppose who comes from that that in that space.
Jim: Hey, you know as I said, we're introducing further automation and in June right and that will further increase our and.
Jim: Further increase our efficiency.
John Gillard: So it's really just a kind of transition as we move forward. But really, what's happened here is we've had to ramp up so quickly, which is a great sign of success. But that also brings our challenges, you know, as we would have expected, it takes time for that to bed in.
Jim: And then we're also getting much better pricing on our input materials and as part of the work we've done on the supply chain.
Jim: So it's really just a kind of a transition as we move forward from.
Jim: Initial scale up to kind of a real rate manufacturing and run rate supply chain and but we do expect it will have a significant impact and you know we always knew transfer you would have a lower margin contribution and because of the lower pricing point in the in the screening market rather than the confirmation so that that.
Jim: Nothing nothing that was not new to us and I was not known to us.
John Gillard: The flip side is these much greater volumes, not just in Trendscreen but across our rapid HIV products generally, give us more leverage to negotiate with suppliers and get better pricing. So overall, we'd expect better profitability from our rapid HIV business as a result of this increase. And then obviously, with the move later in the year to, you know, assembly at an offshore location going live, we'd expect that to deliver further increases in margin contribution.
Jim: But really what's happened here is we've had to ramp up so quickly which is a great sign of success, but that also brings a challenge as you know as we would've expected. It takes time for that debate in the flip side is these much greater.
Hmm.
Jim: Volumes not just in train screen, but across our rapid HIV products generally gives us more leverage to negotiate with suppliers and get better pricing. So overall, we'd expect better profitability contribution from a rapid HIV business as it will go to this increase and then obviously with the move later in the year or two.
Jim: And you know assembly in an offshore location going live we'd expect that to deliver further increases in margin contribution. So overall, we do expect our margins to increase and not just in point of care, but across the across the organization and you know our main revenue lines to the various initiatives that we're putting through.
John Gillard: So overall, we do expect our margins to increase, and not just in point of care but across the organization and, you know, our main revenue line through the various initiatives that we're putting through. And I think, as I said in the last call, that we would expect our margins to be 20% to be 50% plus in 2025. And we still expect that to be the case.
Jim: I think as I said in the last call that we would expect our margins to be 20 to be 50% plus in 2025, and we still expect that to be the case.
James Philip Sidoti: Okay. All right. If we move over to the hemoglobin business, it sounds like, you know, you've made significant progress on the product development side. Do you have everything in the market now that you expect to have in 2024, or do you expect to have new versions of your premier system out there this year?
Jim: Okay.
Speaker Change: Alright, if we move over to the hemoglobin business. It sounds like you're you know you've made significant products progress on.
Speaker Change: Shifting production and lowering the cost for that product.
On the product development side do you have everything in the market now that you expect to have the 'twenty 'twenty four or do you expect to have new versions of your premier system out there this year.
John Gillard: So our key next product development is around the new column and buffer combination, and that's really what gives a higher number of injections per column, and the column is the main consumable that we sell. It also provides greater stability, requires less what's called calibration, which is a kind of overhead that our users have to incur. So it has more usability, lower cost, and lower consumption of key raw materials.
Speaker Change: So our key next product development is around the new column and buffer combination aim and that's really walk is a higher number of injections per column on the economies. The main consumable that we said.
It also provides greater stability requires less what's called a calibration which is.
Speaker Change: Which is kind of overhead that our users have to incur so it has more usability lower costs lower consumption of key raw materials.
John Gillard: So that, I suppose, Jim, is our next key innovation that we're now bringing to the market. In terms of the instrument, we have been making changes in the background to that. As part of our supply chain optimization, we've not just been looking to reduce the cost of those components, but we've also been looking to increase their reliability. So we carried out an analysis of what were the main parts of that component, the main parts of that system, excuse me, that failed.
Jim: So that I suppose Jim is it is our next key innovation that we're now bringing to the market.
Jim: In terms of the instruments, we have been making changes in the background on dash as part of our supply chain optimization, we've not just been looking to reduce the cost of those components. We've also been looking to increase the reliability. So we carried out an analysis of what were the main parts of that component the main parts of that.
Speaker Change: Excuse me and that failed.
John Gillard: And, you know, we've looked to change those out either through supplier changes or engineering design changes. So that's really, I suppose, Jim, what we're doing to drive innovation within that. You know, we continue to look at the medium throughput, low to medium throughput device, which we typically call the T10 or the T20. And that's something we are continuing to look at in terms of the appetite for throughput through that instrument if and when we bring it to the market. But for now, our focus is really around rolling out the column and rolling out those changes in the 90 to 10 from a reliability perspective.
Jim: And you know we've looked to change there was it was either through supplier changes I'm door engineering design changes. So that's really I suppose Jim what we're doing to drive innovation within this we continue to look at the medium throughput at low to medium throughput device, which we typically called the T churn or the T 20.
James Philip Sidoti: Okay. All right.
Jim: And that's something we are continuing to look at in terms of the appetite for and through push through that instrument, if and when we bring it to the markets and but for now our focus is really around rolling out the column and ruling out those changes in the 90 to 10 from a reliability.
Jim: Active.
Speaker Change: Okay, right and then.
James Philip Sidoti: On the CGM side, you said development costs this year should be less than $2 million a quarter. You know, going forward, do you think that number ramps up in 2025 as trial activity continues? Or do you think that $2 million per quarter stays relatively flat going forward? Maybe not 2025, but in general, should that number stay around that level? Yeah.
Speaker Change: On the C. G. M side, you said development across this year, we should be less than $2 million a quarter.
Speaker Change: Going forward do you think that number ramps up in 2020 five as trial activity continues or do you think that that 2 million per quarter. That's stays relatively flat in 'twenty, you know going forward, maybe not 2025, but in general going forward should that number stay around that level.
John Gillard: Yeah, so what I indicated in the past is we continue to spend on CGM while we, as I said out of my prepared remarks, you know, we're more confident now than ever, right? You're absolutely right, Jim. I think in 2025, as we move to randomized clinical trials, you know, that will increase our expenditure. But we'll only do that if we have a very high degree of confidence that the product will perform well in those trials and will support us getting regulatory approval.
Speaker Change: Yeah. So look what I indicated in the past is we've continued to spend on C. G. M. Why we why we continue to see real progress right.
Speaker Change: And believe that we have a disruptive product that we can really make a significant contribution to the America is.
Speaker Change: As I said I was in my prepared remarks.
Jim: We're more confident that now that the neighbor right aim you're absolutely right Jim I think in 2025 as we move to pivot if he could.
Speaker Change: You know that would increase our expenditure, but we all know when you do that if we have a very high degree of confidence that the product will perform well in those trials I'm going to support just getting regulatory approval.
John Gillard: You know, one of the benefits of doing this within Trinity is that we have a large, large degree of experience in taking products through regulatory and regulatory approval processes, both from the Trinity team that have been here for a number of years and also some of the more senior people we've brought in over the last couple of years. So I think from our perspective, you know, we wouldn't, we would only go into that process, as I said, with a high degree of confidence.
Speaker Change: One of the benefits of doing this within Trinity as you know we have a large large degree of experience in taking products through regulatory and regulatory approval processes. Both from you know the the trilogy team that had been here a number of years and also some of the more senior people we brought in over the last couple of years.
Speaker Change: So I think from our perspective.
Speaker Change: We wouldn't we would only go into that process as I said with a high degree of confidence and from an investment and return perspective Jim.
John Gillard: And from an investment and return perspective, Jim, you know, that will be a very compelling proposition, I would expect, considering the size of the market and the opportunity we believe we have to disrupt it. All right, and
Speaker Change: That would be a very compelling proposition I would expect considering the size of the market and the opportunity. We believe we have to disrupt it.
Speaker Change: Okay.
Speaker Change: And.
James Philip Sidoti: Unknown Speaker The last one for me is interest expense. I know you had the one-time adjustment in the quarter, this quarter. So, you know, going forward, though, in the remainder of 2024, with the new debt level and the new interest rate, what should we assume a good number is for interest expense? It's about 2.5 a quarter, I suppose, Jim, based upon that data.
Speaker Change: A last one for me on interest expense I know you had the the onetime adjustment in the quarter this quarter, so going forward, though.
Speaker Change: The remainder of 2020 for.
Speaker Change: With the new debt level and the new interest rate what should we.
Speaker Change: What should we assume a good number for interest expense.
Speaker Change: About $2 five a quarter I suppose Jim.
Speaker Change: Based upon that debt level.
Speaker Change: Okay.
John Gillard: Right, well, it definitely sounds like you've made a lot of progress on the cost side. So that was good to see, and especially with the increasing revenue from TrimScreen, it should, should lead to much better operating results. So that's very good to see. So I guess we'll just have to stay tuned to see how development goes on CGM. Yeah, so thanks, Jim. Look, as I say, we're
Speaker Change: Right well it definitely sounds like you've made a lot of progress on the cost side. So that there was good to see and especially with the increasing revenue from from trim screen. It should.
Speaker Change: Shouldn't lead to much better operating result, so that's very good to see so I guess, we'll just have to stay tuned to see how development goes on CGM.
John Gillard: Yeah, no, thanks, Jim. Look, we're, as I said, we're very happy with the progress we've made. We're very happy with the team that we've built. And, actually, to reiterate a point I made in my prepared remarks, what has been really enlightening for us is the rich partner network that's out there. And in terms of people that have already built components, both from the physical perspective and a digital perspective, for this type of industry.
Jim: Yeah. So thanks, Jim look at where as I said, where we're very happy with the progress. We've had we're very happy with the team that we've built.
And I'd actually you know to reiterate a point I made in my prepared remarks, while it would be really.
Jim: And lighting for US is the rich partner network, that's out there and in terms of people that have built already components, both from a physical perspective, and a digital perspective for this type of industry.
Jim: And I suppose doing this development within an established company like Trinity where in many cases, we have long relationships with these customers means that we're much more credible than a startup in fostering those relationships and you know getting to really point to traction with them and we think that will really reduce that.
John Gillard: And I suppose doing this development within an established company like Trinity, where, in many cases, we have long, long relationships with these customers, means that we're much more credible than a startup in fostering those relationships and, you know, getting to a real point of traction with them. And we think that will really reduce the amount of work and expenditure we need to incur in order to really move the development project forward.
Speaker Change: The amount of work and spend we need to incur in order to really move the development project forward so outside of.
John Gillard: So, you know, outside of the work we've done over the last couple of months, reiterating the significant market opportunity and how our differentiated solution can really help capture that, the partner network, and our credibility within that, has been very, very positive, both from a timing perspective and a cost perspective. All right, well, thank you. Thank you.
Speaker Change: The work we've done over the last couple of months.
Speaker Change: You're reiterating the significant market opportunity and how our differentiated solution to really capture that.
Speaker Change: The partner network.
Speaker Change: Our credibility within that has been very very positive.
Speaker Change: Both from a timing perspective, and a cost perspective.
Alright, well thank you.
Jim: Thanks, Jim.
Operator: Thank you. Ladies and gentlemen, as a reminder, it's star number one to join the question queue. We'll pause for a moment to allow for other questions. Thank you, ladies and gentlemen. This concludes our question and answer session. I'll turn the floor back to Mr. Gillard for any final comments.
Speaker Change: Thank you, ladies and gentlemen, as a reminder, its star one to join the question queue will pause a moment to allow for other questions.
Jim: Yeah.
Jim: Yeah.
Jim: Yeah.
Speaker Change: Thank you ladies and gentlemen, this concludes our question and answer session I'll turn the floor back to Mr. Gerard for any final comments.
Speaker Change: Thank you Melissa and.
John Gillard: And just for me, thank you to everyone for your continued interest in the company and joining today's conference. You know, we continue to be focused on execution on those key priorities that we set out. And I look forward to updating you all over the coming weeks and months in terms of our further progress. Thank you so much, and have a great day.
Unknown Attendee: And just for me. Thank you for everyone for your continued interest in the company and joining todays conference. We continue to be focused on execution on those key priorities that we set out and I look forward to updating you all over the next coming weeks or months in terms of our further progress. Thank you so much and have a great day.
Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.