Hello, everyone, and welcome to the Quarter Two report from Atomo's FY 2024 period. I'm John Kelly, the Managing Director of Atomo, and welcome this morning. Before I jump into the quarterly, I just wanted to, I think, step back 12 months to the Q2 period for FY 2023. At that stage, we had just come out of the COVID pandemic, and Atomo, like a number of or most diagnostics companies, had seen a fairly abrupt end to COVID revenues, and there was a lot of uncertainty in the market around the future growth opportunities for diagnostics companies more broadly. And I think that uncertainty was reflected, as well as the loss of COVID revenues, was reflected in a lot of pressure on diagnostic companies' share prices.
Atomo, at the time, said to shareholders that we were looking to refocus on our core business, which was essentially blood-based testing, and that we knew two things. One, that our blood tests were best in class and there would be a return to demand for them as our existing customers and future customers continued to look to opportunities beyond COVID. And secondly, and I think strategically more importantly, that the landscape for testing had completely changed, and that the technologies that Atomo had developed were increasingly applicable to decentralized and at-home testing, with the advent of testing in the home really taking hold during COVID.
We also at the time said that that transition would take some time, and I think 12 months later, we're now reporting our Q2 FY 2024 results, and we're starting to see the fruits of that restructuring and that focus back to core business. We expect to see that continue as we now build momentum in the business. In terms of the highlights for the quarter, obviously, significant opportunities in the reemergence of our HIV business, and encouragingly, that growth coming from developed markets where we generate significantly better dollars per test, and as a result, better margins. I think that margin improvement's now been seen across the blended margins for the business, and we'll talk about that in a little bit more detail, as well as where we think that might get to over the medium term.
That growth in HIV businesses was driven primarily from two main events. One is our restructuring of our commercial partnership arrangements in the U.K. to move to Newfoundland Diagnostics, and with that, a significant uptick in demand that they've been able to bring to us for the European market, including a very valuable partnership with Tesco's, where we see our HIV test now across Tesco supermarkets in the U.K. And hopefully, that's the first of a number of tests that, Newfoundland can help us put into the U.K. market. And that's been recently followed by some launches in Germany.
Additionally, Newfoundland ordered 220,000 tests, which brings the total that they've ordered under the first year of the contract to 420,000, which is a very big step up on our previous distribution arrangements and bodes very well for the future of the partnership, and we'll be looking to extend that agreement for a five-year period in the coming months. We've also seen significant improvements in the underlying HIV business here in Australia. That's a result of a number of activities over the last 12 months. The push into pharmacies, we're now in several hundred pharmacies across the country, as well as the setup with Atomo being instrumental in a number of pilots in terms of vending machine programs, as well as at-home ordering through a pilot run by NAPWHA. We've seen those pilots be very successful.
They've generated a lot of interest, a lot of demand, and with the sponsorship of Grindr for awareness, we're starting to see some real benefits in terms of demand through those pilots. That's very timely because on World AIDS Day, the Australian government announced that HIV self-testing policy was now formally part of their toolkit for managing HIV, and we do expect to see that public health demand grow materially over the coming year and into next year. That, as I mentioned, has been driving not only improved HIV revenues, but HIV margins in the business. If we go back to our reflection on where we were 12 months ago, we weren't really seeing 12 months ago, ordering from our existing OEM contract partners.
That's because they had been, like all diagnostic companies through COVID, focused on COVID testing, not on blood-based products and not on new products. We've now, luckily, been able to show a return to ordering from those partners. Not only are they ordering again, but they're making good progress in the registration of those products, both FebriDx, with Lumos and the NG Pregnancy blood test in a number of markets and pushing into markets, and we're seeing increased demand from them over the medium period for those products. But more importantly, we're also now seeing the success that they're having in entering markets, securing contracts and partners, and also securing regulatory approvals. That's been very helpful in us being able to use them as, as examples of the success that can be had with Atomo platforms driving usability and regulatory approval.
That was, I think, reinforced by the July 510(k) approval of FebriDx, which allowed us to go back to a lot of inbound inquiries from prior to that period and confirm that we now had a 510(k) and we're able to move forward with a more defined and less risky go-to-market proposal for partners looking to launch in the U.S. We think that is an extremely valuable milestone for the technology and for the business, and one that we're looking to capitalize on for the rest of 2024 into 2025.
So if we look then at products coming behind HIV, we obviously are very excited about the opportunities for partnering with NG to bring their pregnancy test to markets where Atomo can go directly into market in Australia, as well as find and secure go-to-market partners in territories like the U.S. and Canada. And we'll provide a little bit of an update on where we are in those, in those respective journeys. If we look at the actual revenues for the quarter, at just over AUD 700,000 in revenue unaudited, bringing the revenues for the first half of this FY 2024 period to just under AUD 2 million, which is significantly better than the corresponding period for FY 2023, when we exclude COVID.
And I think that talks to this, this reemerging, core business that we have for HIV, as well as the reemergence and growth of our OEM sales business. Cash receipts for the period were just under AUD 2 million. That's AUD 1.1 million in receipts from customers, as well as an AUD 761,000 R&D rebate from the government, and that allows us to put total receipts for the half to just under AUD 3 million. Better again than this time last year. And that improvement in underlying cash coming into the business, along with a reduction in our cost of doing business, which we'll talk about in a moment, gives us an end-of-quarter cash balance of approximately AUD 6.5 million and no debt on the books, as well as a reducing burn rate for the business moving forward.
We're very focused on that and very, committed to, to make sure that that transition to a reduced burn rate continues. In terms of HIV, obviously, Newfoundland have been, fundamental to allowing us to really reconsider what revenue expectations look like for Europe. They have recently launched through pharmacy chain, MePro, into Germany, and that's off the back of success in the U.K. with Tesco, Tescos. We received just at the end of the period, an order for 220,000 tests. The first tranche, 50,000, already manufactured. The remaining tranches to be manufactured, and invoiced during this second half of FY 2024.
That has fulfilled their obligations and allowed us to then move forward with a longer-term agreement that both parties are happy to move forward with, given the level of confidence that now exists in the arrangement, the relationship, the product, and their supply chains into Europe. This image we wanted to share was for Colombia. It's Newfoundland's innovative consumer self-test store in Bogota, the first one in the world. We think it references not only the opportunities for consumer health globally, but also, I think, showcases how innovative Newfoundland are. We're an innovative company. We pride ourselves on delivering new, innovative, and best-in-class solutions to market, and I think Newfoundland feels like a really good strategic fit for us.
They're ambitious, they're proactive, and they think outside the box in terms of how to bring these types of products to market. We're very excited about the opportunity, not only to bear down our relationship with them in markets outside of Europe, as we did this year with an extension to cover Colombia, but also with additional products that they've expressed some interest in. And we're looking to see what we can do in terms of extending the menu that we can offer to Newfoundland in Europe and other markets, such as in South America. In Australia, we've had a lot of success working with NAPWHA and Grindr to promote awareness for HIV self-testing. That pilot kicked off in early October.
It's been a very big success in large part to the work done initially by Atomo and NAPWHA to get the pilot up and running and debugged. And then, more recently, with the promotion from Grindr of awareness to their users who are very focused on their health and increasingly interested in HIV testing within the community. That has coincided well with being able to provide, obviously, the government good evidence of the success of these pilots, and we were extremely pleased to see the federal government announcing on World AIDS Day, December 1st, this year, just finished, that HIV self-testing will be an integral part of the Australian response to HIV. We've had follow-up meetings with the federal government, as well as engagement with various states, to really understand what that will look like in terms of policy implementation.
We've been encouraged by the feedback that we've had from government, and we remain very confident that HIV self-testing and the procurement of HIV self-tests in Australia will form a large part of the government's response to managing HIV. If we look at the sales that we've seen in Australia, we've seen obviously a general trend upwards as these pilots have gained some momentum, but obviously a significant boost in December after the government raised the awareness for self-testing through their policy change. We do expect that growth to continue into and beyond 2024 as the government brings out, we hope, long-term funding arrangements for self-test, as well as the increased awareness of the availability of tests through awareness programs, such as the one being implemented by Grindr.
What that means, I think, for our HIV business, is not only do we see significant expectations for growth in revenue, we're also seeing that revenue occur in markets where we generate better dollars per test and better gross margins. So that means a blended margin that is less dependent on sales in global health markets, and that allows us to not only improve the revenue line expectations for HIV, but to ex- also continue to see an improved gross margin across the business, with HIV being the initial driver of that. In terms of our point of care business, obviously, we mentioned that we've now seen a return to ordering from our customers. The FDA approval of the FebriDx product mid-year was a milestone for Lumos, also for Atomo.
It's the first time that an Atomo device has received a full 510(k) approval as part of a product, and that now opens up a predicate device, a channel for other partners looking to access the platform. It de-risks it for them from a regulatory perspective. Also, commercially, it points to the fact that approvals and market entry can be supported with best-in-class novel products. They're, you know, companies are no longer being a guinea pig when they choose to partner on the Pascal device or any of Atomo's devices. And we think that adds an awful lot of validation to what we're offering the market. We're continuing to focus on growing OEM.
We will be representing the business at two conferences this month in the U.S., one at MD&M West on the West Coast, which is a large conference for manufacturing and design technology with medical devices and diagnostics. And it's one where we expect to be able to generate a lot of inbound interest, particularly now that we've shown that we can get regulatory approval and offer a range of different solutions to partners. After that, we'll be going to participate in a conference being run by a company called DCN in San Diego, and they're a leader in the development of new assays and a leader in the U.S. market for bringing new tests to market.
We've got a booth at the conference, as well as doing one of the keynote speeches around usability, and we'll be using that platform to really explain to the market the benefits of moving to a more consumer-friendly solution. Those benefits are not just in terms of user satisfaction, but increasingly in terms of being able to get your product approved in markets where self-test approval is not easy, as we've done in Australia with HIV and onto shelves in leading retailers and pharmacies, which is where we believe over the next 5-10 years, the market is most definitely transitioning to. That OEM engagement and traction and progress has been recognized by the wider industry, and the awareness around Atomo's devices, I think, is increasing.
We've noticed an inbound increase in inquiries that have led to a number of ongoing discussions with partners who are very interested in the platforms we have. Interestingly, a lot of those inbound inquiries are for custom versions of the platform, in particular, companies that are looking to deliver small point-of-care reader solutions to market outside of consumer health in doctor office, pharmacy, and clinic settings, particularly in developed markets. The ability to quantitate results, run multiple assays, and to have a level of traceability on results for both patient follow-up as well as reimbursement is increasingly important, and that's where these readers are now considered almost mandatory for entry into those markets.
Atomo has now looked to partner with a number of developers of readers and also, more recently, we entered into discussions with test developers looking to bring readers to market to make sure that our platforms are compatible with their readers. And we're looking at some, in some cases significant, but in other cases minor, redesign to mechanically clip our devices into readers and make sure they're compatible. I think that gives us a whole new revenue stream outside of consumer health. And encouragingly, those partners are willing to pay for that development work because they get a custom solution that we can then license and supply them.
I think what that means for the business moving forward is that we can continue to not only develop new products, but to develop them at the expense of our partners, rather than relying on Atomo shareholder capital to fund that. So we've done the heavy lifting with the design work, the initial set of tools, the qualification, and the validation of Galileo, Pascal, Elion, and to a certain extent, the swab device. What we're looking to do now is to take those products through as customer-specific variants and to have the development partners that we partner with fund that work so that we're becoming a lot more sustainable in our development work, and that part of the business starts to pay for itself rather than being a cash drain on the business.
I think it's a testament to the value that the products that we've developed now have in the market, that we can look to get those types of agreements in place and get purchase orders off customers, rather than us having to do that work at risk to try and secure some commercial interest. In terms of the current revenues, we've seen obviously an increase in sales over the period, that compares well with earlier in this FY period, 2023, as well as the prior period, 12 months ago. I think that talks to an improvement in the fundamentals of the business as HIV has started to reestablish and grow, as OEM contract sales have come back and new potential customers have come onto the radar and starting to place orders for development fees.
More importantly, I think we've seen a significant improvement in the overall gross margins for the business, 39%-46%. In the case of HIV, that's gone from 35%-46%. So we're very excited to see that, and we think the more sales we can make in developed markets, particularly in Australia, the better that overall gross margin is going to be. It's also probably worth mentioning that over the period we've been very focused on bringing down costs associated with running the business. We have pulled out nearly AUD 2 million in annualized OpEx over the last 12 months... That is a significant reduction in the cost of running this business.
And as a result, our burn rate for the quarter was AUD 340,000, and we expect that to continue to trade towards zero as we pull additional cost out of the business and continue to see sales growth and development fees come in. Just to give you some idea of the improvement, that's about half the burn rate we had this time 12 months ago. So we are very focused on not only growing sales revenue and improving gross margins, but also reducing down OpEx for the business so that pathway to a break even and sustainability and growth come sooner rather than later.
In terms of our use of funds, obviously continuing to maximize the opportunity now here in Australia as the government looks to transition to public health procurement, Atomo being the only HIV self-test on the market here, and we've gone to a lot of effort to get the pilots established to be able to showcase to government how these pilots would work and give them something already established that they can plug into and fund. Continuing, obviously, to support the partnership with Newfoundland, supporting them as they look to get other product variants launched in Eastern Europe, as well as versions in South America, using the Colombian version of the product, and continuing to discuss with them what other products beyond HIV are of commercial interest to them.
For new OEM business, we are looking to obviously leverage off the FDA approval of Pascal to build a sustainable new pipeline of customers looking to access the platforms, and we're also looking to and making some progress in finding partners interested in funding the completion of the swab development work. There may be some developments in the coming months that we can disclose around progress on that aspect of our platform development.
And that leads into a continued engagement of the market to show the benefits of these products, the fact that they've been significantly de-risked, the fact that regulatory approval now underpins the ability for partners to enter markets, relatively low risk, and all of that, we believe, will build a sustainable pipeline for the business as the market now continues to recognize that point of care and consumer testing is where the growth is, and Atomo continues to validate and demonstrate that it has the best blood testing products to support that market. With regard to the Australian market, we have invested time and effort into building up our direct-to-consumer channel through pharmacies. We're looking to expand the product menu to include pregnancy. We received a response in this period from TGA.
We've gone and worked over the period with NG to generate some additional information and data that the TGA had requested, and we'll be submitting that response this week. We're still hopeful of approval for both the professional use version as well as the self-test version of the pregnancy tests here in Australia. That blood-based pregnancy test, we believe, has significant opportunity as a test that can be used reliably in the early phases of pregnancy. Noting, of course, that the approval dates for the professional and self-test versions may well diverge at some point in that process, but, but confident that they both still will be secured in this calendar year and launched in this calendar year. That then supports, obviously, our plans to go to market in the US. We had an FDA pre-sub in partnership with NG in December.
There is a follow-up, second, and we hope, final Pre-sub meeting in a number of months, and with that, we expect to be able to then close out that regulatory go-to-market budget and timeline, and that would then be, we think, the enabling piece of the puzzle to allow us then to close out some commercial partnership agreements off the back of that go-to-market plan. That's really an update on the quarterly. I will jump into our Q&A box to see what Q&A questions have been received. None have been received yet in this session. We did receive a couple before the session landed by way of info at Atomo. I'll just run through those. One was: What does our top 20 look like in terms of shareholders?
I just wanted to say that we did publish that in the annual report for FY 2023, that came out, I believe, late September. So that's still relatively up-to-date. If you wanna refer back to that report, you should find that there. We will look to update that list at some point moving forward, but the one that we have issued previously is the latest one that's on record. We were also asked to provide a little bit more flavor on where we're at with our U.S. business. I hope I've done that to some degree in this update, but just to talk about that U.S. market, there is no blood-based device that has as yet received OTC approval for at-home blood testing.
Most of the work in terms of building that market in the U.S. still focuses on home collection and lab testing, and that's because getting OTC approval for blood from the FDA is an extremely hard task. We believe that the Pascal device, with its self-test usability evidence in Australia and in other markets, Europe in particular, provides a really good starting point for an engagement with them. We're also very encouraged that the platform has a 510(k) approval and potentially moving forward, CLIA waiver approval, and that all allows us to sit down with not only FDA to discuss that go-to-market plan, but also with partners that we look to partner with to help with funding of regulatory and go-to-market, because in the U.S., that is a capital-intensive business.
So that proceeds, as planned, and after that second pre-sub, we do expect to be able to provide further updates to market on what that go-to-market looks like on the other side of that plan being finalized. We are very encouraged about the inbound interest from U.S. customers post the 510(k), and we again, will be looking to provide an update to market on success at the two conferences that we're looking to, present at in this month. And with that, an expectation that we can start to roll out new OEM partners as we roll through this FY 2024 period. But I do think that getting the pregnancy test launched successfully in Australia will go a long way towards helping validate that commercial opportunity and generating, locked-in commercial interest from U.S. partners that see what we've done here in Australia.
There doesn't seem to be any further questions having come in, so I would like to thank everyone for taking the time to, to join us today. We're very excited about the momentum building in the business. We think the fundamentals of the business are significantly improved versus this time last year. Increasing revenue, improving gross margin, reduced cost of business, and that all leads us to having to sell less tests and make less dollars to reach profitability. And we think with that, reducing burn rate, we're in a good position to run the business through calendar year 2024 and into 2025. I'm very excited about the new customers that we're looking to line up and announce as we roll through this year. So thank you all for your time, and have a good day.