Good morning, everyone. My name is John Kelly. I'm the CEO and Managing Director of Atomo Diagnostics.
Hi, everyone. I'm Suzy. I'm the Financial Controller at Atomo Diagnostics.
Thank you for joining us this morning for our half-year FY 2025 results. We put the results out on Friday to market, and we wanted today to take this opportunity to step everybody through the presentation and provide a little bit more context. Okay. Just for anyone who's new to the story or new to Atomo, we're an Australian-headquartered, ASX-listed medical device diagnostics company, and we came into the diagnostics market with a focus on the device side of the market and really focused on usability and delivering a next-generation level of ease of use and repeatability in that market. As that market transitions more to decentralized and at-home testing, we felt there was a real opportunity to disrupt the market. We have a range of products and a range of business units that we focus on for revenue.
We have a point-of-care finished products business where we are the listed manufacturer and are responsible for taking that product all the way through to regulatory approval and commercialization. We have a technologies OEM business where we provide our assembled devices to other diagnostics companies that put their own assays in there, and they take those products to market. There we get to participate in those channels without bearing the costs around regulatory and clinical. That gives us the ability to focus on core areas. The two core areas that we focus on initially were sexual health with an interest in expansion to women's health, and then outside of those segments, more willingness to OEM partner.
The technology that underpins the business is based on a belief that bits-in-box rapid testing kits are not fit for purpose, and we've tried to develop and commercialize solutions that really meet user needs, integrate the functionality required to do the test into a single device, deliver that functionality in an automated manner so that the user is not having to second-guess whether they've done the test correctly or whether the result can be trusted. We've delivered very successfully on that brief, and we have been able to support the performance of the cassette as best in class against standard kit formats. That is recognized, I think, by clinicians and regulators who provided approvals in different regions of the world. More importantly, I think as we transition to consumer health, that is recognized by the user, by the end user.
We have got a greater than 90% user preference over those kits. I think that is going to continue to be the main driver of our success and success of our technology longer term. In terms of a sort of summary of Atomo's position in the market, obviously, we are a disruptive innovator in terms of usability in rapid testing. We have focused on lateral flow, point of care, although our patents and know-how and capabilities extend beyond lateral flow. We have seen off the back of COVID, reemergence of some of our channels, particularly HIV and OEM Pascal sales, and that has seen us grow the business FY 2024 versus FY 2023. We are continuing to see growth in our HIV business in particular, which we will talk about later in the presentation.
We're in large addressable markets, infectious disease testing, particularly sexual health and women's health are two of the major segments in diagnostics, and we think that they provide scale. They provide a competitive benefit in a short or narrow range of applications, which means we don't have to try to bring 20-25 products to market to get into those larger aggregated market addressable markets. The technology itself is very user-friendly. It's well proven for blood testing. We have a swab solution that also has gone through proof of concept, works well. The modalities that we're focusing on for revenue are both pharmacy retail as well as increasingly public health funded procurement, particularly in HIV. We see that trend expanding beyond HIV. We'll talk a little bit about that. It's really been our user-centric design and delivery of usability to the end user that's driven that success.
We've supported that with some approvals in different markets, both for our own products as well as supporting our customers in their approvals. That now gives us a fairly established regulatory pathway for a range of different applications into a range of different markets. That means that we also have sales now coming from regions around the world. I think what that means longer term is we're not dependent on any one product. We're not dependent on any one country for revenue. We have a sort of diversified product mix. Technology is now commercially validated. It's no longer proof of concept. We've gone through that. We've supplied more than 7 million devices to the market, either as Atomo finished tests or devices to partners. We do see significant growth in margin at further scale.
We have an installed capacity base that allows us to scale our volume supply and revenue without a significant additional CapEx investment. The whole business is underpinned by a very extensive patent portfolio, including five valuable patents in the U.S. market. Behind that, obviously, know-how and trade secrets and a lot of development expertise around how we bring these types of solutions to market. We do see, I think, for the business longer term, some demand and some interest around our capabilities outside of the channel that we've currently focused on for lateral flow. I'll hand over to Suzy, who's going to take you through the half-one results.
Hi all, and thank you for joining us again. It's a pleasure to present our financial results and provide you with an update of our performance. Today I'll be covering the key highlights from our profit and loss statement, balance sheet, and cash flow activities for the half-year period ended 31 December 2024. Starting with the profit and loss statement, we've seen a positive performance this period with growth in our top-line revenue increasing by 7%, bringing revenue for the period to over AUD 2 million. This is made up of our two core revenue streams, HIV self-test accounting for AUD 1.3 million, and OEM technology sales contributing a further AUD 500,000. Also in this half-year period, our sales mix included revenue from development fees for AUD 160,000. Whilst our sales mix has shifted, overall consistent quality of margin at 45% has been maintained period on period.
That has been driven by improved customer demand, in particular in our HIV domestic Australia market. This growth has allowed Atomo to absorb top-line revenue movements that have occurred in the LMIC market, which the impact on the overall gross margin has therefore been minimal and absorbed by higher yielding sales from the U.K. and Australia market. Furthermore, Atomo has continued to assess the impact on the short and long term on the LMIC procurement agencies following the recent USAID announcements regarding funding policies. On the cost side, we've kept our expenses under control with OpEx continuing to come down, most notable in employee expenses reducing more than AUD 500,000 this period. This reflects our continued focus on operational efficiency and strategic investments aimed at positioning the business for future growth.
As a result, our bottom-line EBITDA has improved 16% in the comparative period, with half-year loss coming down under AUD 2 million. Turning to the balance sheet, we ended the period with just under AUD 3 million in the bank with no debt. Our balance sheet asset base remains relatively consistent with prior period. The main uptick in liabilities that I'd like to highlight is in other liabilities. This relates to the upfront funding that we have received from the CRPC Grant for AUD 485,000, of which AUD 40,000 has been recognized as other income for the grant activities undertaken for the active syphilis development grant program that was awarded to Atomo in October last year. This brings me now to the cash flow statement.
In terms of the cash flow activities for the period, we have experienced a continued reduction in monthly cash burn average, reducing more than half from AUD 333,000 a month to AUD 133,000. It has been driven by the following key cash movements. Receipts for the period totaled just under AUD 4 million, which was made up of AUD 2.6 million from customer receipts, AUD 750,000 from R&D rebate, and AUD 485,000 from our first milestone grant funding payment that was received for the active syphilis grant program, while outflows totaled about AUD 4.6 million for stock and operating expenses. Overall, from where we started in our cash position to where we ended for the six months, our cash burn was just under AUD 800,000.
Taking a step back and looking at our financial trends, our revenue has not only increased and continued to grow, but also the quality of margins and sales mix has continued to diversify and grow. Where the average margin over the years has increased from roughly 39% to what we are currently averaging at 45%, we continue to make progress in growing revenue whilst also continuing to bring down our OpEx footprint. As shown on the downward OpEx trend in this graph on the right, we started off, we went from going AUD 900,000 per month average OpEx burn in the historical FY 2022 period, whilst the company was still coming out of the building core capability space, and stepped down to AUD 630,000 in the half-year one FY 2024 comparative period to our current average of AUD 570,000 a month.
As we move forward, we continue to focus on the growth, operational efficiency, and expanding our portfolio to support our target to reach break-even in the medium term. I'll pass back on to John as well just to run through in more detail the products and pipeline opportunities.
Thank you, Suzy. Before I do that, I just wanted to add a few of my thoughts on this. I think obviously we continue to be focused on reducing the OpEx to run the business. You can see that's a clear trend and an ongoing focus, and we expect to see further improvements there. Obviously, in terms of sales growth, a couple of points to note. As we do less business in global health and more business in developed markets, we expect to see our margins, our gross spending margins improve over time and get into the 50s. They've come up from the high 30s to the 40s. We're confident we can get them into the 50s with some scale and an increased focus on developed world business.
We're also starting to see, as we get more recognition for the value of the technology in the market development and we hope soon licensing fees coming through, they are directly contributing to gross margin. They continue to show a demand for a product that we can convert into licensing arrangements, take-or-pays, and development engagements. That helps underpin the cost of scaling our revenue while at the same time bringing OpEx down. Obviously, the view is to get to profitability as soon as we can. In terms of the product menu that's going to take us there, I'm going to go through just a summary of where we're at with our commercialized products, where we are with our current funded development programs, and then we'll talk a little bit about some opportunities that we have ready to go, subject to capital to support them.
This table shows the products in market as well as products in development. We obviously have our HIV self-test product now sold in a number of regions around the world. We have seen strong growth in the market for HIV over the last year. We expect to see continued expansion in that business. We will talk a little bit about what is driving that expansion and why we are confident that that is going to be the case. Outside of HIV, we have the Pascal device commercialized now through a number of customers in a large number of countries. We will talk a little bit about expectations around further expansion of that business, particularly in the U.S., where we see significant upside over the medium term.
In terms of products that we're looking to actively bring to market that are funded, the two that I'm going to talk about in a bit of detail is the Florey blood cassette device that's used as an accessory or will be used as an accessory to existing tests on the market. That is because it does not require its own regulatory approval. It can be easily integrated into existing workflows. We're very excited about the scope for that product in the market and the size of the addressable market that that product can go into. As well as that, we've obviously been focused of late as a priority on syphilis rapid test that we think delivers a level of specificity for active syphilis that doesn't exist in the market with the current rapid tests out there.
Those tests on the market also typically require high volumes of blood and are not really that suitable for self-test use. We have two potential key benefits for this test. One, it is on the Atomo Pascal platform, making it really attractive into home consumer markets and public at-home procurement programs, as well as obviously delivering a level of clinical specificity for active syphilis detection that allows for potential test and treatment single visit, which at the moment is not currently available because of limitations with existing tests. We will talk about that. We have the Curie swab cassette that functions very similar to Florey, except for swab delivery. We have a couple of early-stage engagements around partners that have some interest in that. Beyond that, we have spoken previously about the ferritin test to screen for iron deficiency and the blood pregnancy test.
Both of those are tests that focus on women's health, not exclusively. Obviously, pregnancy is exclusively women's health, but ferritin is primarily focused on young women and pregnant women. There is certainly a link there to those two tests. Both of those tests have had a level of development already validated. In the case of the ferritin test, we have access to a test that has been validated on a standard format. We have done the dossier work to get it to a point where we now need to really just finish a clinical study, and we will be able to submit into regulation approvals for, we expect, TGA and IVDR for Europe. Similarly, with the blood pregnancy test developed in partnership with NG, they have already launched it in a number of markets.
We know that the test works, that it's viable, that they have found customer channels, particularly some recent success in Spain, Portugal, and Italy through a pharmacy partner. We have the rights for that product for Australia, and we have the rights for that product for the U.S. In the case of Australia, we will have to go back to the TGA with additional clinical data that they were specifically looking for that was not required for the European approval. We've been working with NG on a dossier plan and a protocol to do that. We've been engaged with an IVF company here in Australia that can deliver that early pregnancy data. Both of those tests, ferritin and blood pregnancy, are ready to go, subject to us getting that additional work done, and that's subject to obviously having capital available to fund that.
Florey essentially has some proof of concept work done and does not have a significant cost to go to market because it is a partner-based product. Similarly, with Curie, and then obviously with active syphilis, we are prioritizing that, not just because of the size of the addressable market, but also because that is now for us a fully funded program through the CRCP Grant that we received in November. Suzy has already talked about that first payment being received, and that is a key priority for the business over the coming 12 months. The success of the business moving forward is obviously underpinned by the validation that we can show for the usability and clinical approvals and regulatory authorizations that we have got. They support our HIV business globally, as well as pointing to opportunities in other markets for new customers that are interested in Pascal.
We know that the Lumos FebriDx test has secured a 510(k) and is moving forward under a CLIA waiver clinical program that we're obviously focused on. We believe that that CLIA waiver for that test not only expands the addressable market for FebriDX very significantly in the U.S., but it opens up a sizable addressable market for Pascal more broadly. We're in the process of looking at some engagement with potential U.S. partners on that basis with CLIA waiver hoped for later this calendar year. The HIV business, as I've said, is expanding consistently, and we expect that expansion to continue. We have successfully now entered the Australian market. We have the test sold in more than 300 pharmacies around Australia. We helped establish and expand a number of programs outside of pharmacy retail. One was the NAPWHA program.
We saw an order just before Christmas for nearly AUD 500,000 of product for that at-home program. That is funded government money to come out of the May budget from 2024. We also were a leader in helping pilot vending machines in universities, on sex premises, as well as community outreach programs. That is now being funded again by the federal government for national expansion. We are expecting to see a sizable order come in to the rollout of that program. The reason for the delay in that program versus the NAPHWA program is obviously the vending machines need to be manufactured and installed before they can be used in the field. There has been a bit of a lead time to get those machines in the field.
We understand that those machines are now in the field, and the first order is expected in the near term. Very excited about that because that means that outside of the pay-for-your-own-test pharmacy market, we now have an emerging public health funded channel. That reflects, I think, the fact that governments, not just in Australia, but around the world, are starting to recognize that sending rapid tests home to people who need to test is a much more efficient, much more cost-effective, and much easier scalable solution than trying to build 20 more sexual health clinics and have people funded through facilities-based treatment. We are seeing that as a trend, not only in HIV, but sexual health more broadly. We are supporting our partner, Newfoundland, with some engagement with the National Health Service on a similar basis.
We're using these programs in Australia not only to generate revenue, but as a case study for other markets where public health can start to really be involved in testing for HIV. When we talk about Newfoundland, we recently announced a five-year extension to our agreement. It's worth more than AUD 5 million in contracted volumes. That's really driven by their success entering the U.K. pharmacy retail market. Tesco and Boots are the two main channels there, two leading retailers in the U.K. Obviously, if Newfoundland can get into the NHS channel, then we would expect the contract volumes to be significantly more than the contract numbers we have currently. That's something we're very focused on supporting them. Outside of that, they have launched into Germany and Holland. Latest order came through for Poland and the Czech Republic. We are seeing some expansion there.
The latest version of the agreement was non-exclusive outside of the U.K., which means we also have scope to look at other options and channels and markets where Newfoundland may not be well established. Moving forward, we do expect to see continued growth in HIV self-test. A large part of that, I think, is just the cannibalization of the existing facilities lab testing market by self-testing. That is a trend that I think was established when COVID antigen testing took over a large chunk of PCR testing. I think that trend continues, and I think it continues for the same reason that rapid tests are more cost-effective. They have a quicker turnaround on result time. In the case of blood testing on the Atomo device, it's reliable and easy enough to use at home and deliver good performance.
We're expecting to see continued growth in both the pharmacy retail and public health channels. We're also looking, we hope very soon, to be able to announce a launch into New Zealand through one of the leading pharmacy channels in New Zealand. We have import approval, and we're on the New Zealand register. We'll be looking to announce that as soon as we can finalize those arrangements. We're also looking at options for U.S. approval, both CLIA waiver off the back of momentum we're showing around the world in other markets, and the possibility of being a self-test approved blood device for HIV self-test. At the moment, there are none in the U.S. market. The only test that has approval is an oral swab test.
We're looking also at fourth-generation HIV opportunities that would allow us to get into the pharmacy clinic market, where generation four tests are preferred by clinicians because of that slightly earlier window of detection. We've had some discussions with companies that have test strips that are compatible with Pascal for that very purpose. Beyond that, in terms of medium-term opportunity, I think one of the big ones is to start to have self-test use approved as part of the PrEP negative test algorithm. At the moment, if you're on PrEP, and there's about, I believe, 70,000 people in Australia alone on PrEP, they have to test four times a year to stay on PrEP. At the moment, that has to be done in the clinic. That's a real burden for people to come into a clinic every 12 weeks.
It also ties up a lot of capacity in clinics. Around the world, in different markets, there are pilots now showing that people can test occasionally at home very effectively for that program. That would obviously see for us a very significant step up in volume in Australia if we were able to get even one of those four annual tests funded through that PrEP channel for home use. Moving beyond HIV, obviously, we continue to see growth in the OEM Pascal business. We hope that that growth will expand significantly off the back of U.S. market penetration driven primarily by CLIA waiver for the platform, hopefully later this year. The device itself performs very well. Customers are very happy with it. The regulators are satisfied that it delivers the type of performance needed for approvals like CLIA waiver and in some markets, self-test approval.
I think that offers a significant benefit to market. We have three established customers on the platform. That shows that we can support a range of different tests and support approvals in a range of different countries. That obviously is critical to establishing scale for the platform more broadly. Outside of that, we're very excited about the syphilis test that we're developing. As you can see on the bottom right-hand side, the test delivers a level of specificity that's just not in the market currently. Other rapid tests will be reactive for syphilis, so they are sensitive. If you've had prior treated syphilis, you will show up reactive even if, on this occasion, you're negative for active syphilis. That obviously leads to a lot of confirmatory testing, a lot of misdiagnosis, a lot of delays in getting treatment.
This test being much more specific for active versus prior has got a lot of clinical utility. There is a lot of demand now for syphilis testing. More than 7 million cases in 2022. Rates in Australia have gone up, I understand, by 300% in the last 10 years, in the U.S. about 400%. It is a significant and emerging public health challenge and one that I think this test provides a significant solution for. We are very excited about the commercial opportunities. I think the fact that we got the Grant shows that the Australian government certainly recognized the scale of the threat from syphilis.
We're very excited about not only getting that product through approval, but obviously supply opportunities back into the Australian government, as well as pharmacy retail scale up through our existing channel, which we believe is very feasible because the distributors and the customers that we've got for HIV are the same customers that are also at risk for syphilis. There is a very good fit there in terms of those two tests in the market. The Florey device, we're very excited about. I mean, obviously, it's still in development, but what it essentially does is deliver the blood and buffer usability performance of Pascal, but in a format that allows for an existing standard cassette to be clipped into the device. We deliver that Atomo usability.
By having the usability separate to the cassette, the test cassette itself is not impacted by these changes, which means it does not need to be reapproved. There is an internal validation step, but it does not become its own medical device. It does not require its own IVD approval. That means the barriers to adoption that we have seen with Pascal for large volume products that are already in market are greatly diminished with this solution. We are very excited about that ease of adoption in terms of minimal disruption to someone's operations for the standard cassette and minimum disruption to their existing regulatory approval.
Also, one of the challenges we had previously with Pascal when we were looking at tests that were used in clinics through a small desktop reader, clip-in reader, was that the cassette dimensions for a standard cassette and the cassette dimensions for Pascal did not match, which meant that readers in the field would have to be modified to accept Pascal. With this solution, the cassette can clip into our Florey device, run the test, and it can be easily taken out and inserted into an existing reader on change, which means that we are fully compatible in principle with all the readers in the system. There are hundreds of thousands of them. That is particularly in the U.S. CLIA waiver market, a large part of the volume and a large part of the value.
We do not want to overpromise on what this device might do, but we are very excited about the addressable market size that it covers. We are very excited about the fact that we can deliver Atomo usability into the market without having significant regulatory and clinical revalidation risk and effort attached to that. We will keep you, the market, certainly advised of progress on that. The swab device does a similar job, but it has been optimized using our core IP and capabilities for swab testing. Originally, we developed it with a view to improving the ability to support better performance for COVID rapid antigen testing. The COVID market dropped away and pricing dropped away, so that device was not commercialized.
For other applications like sexual health, chlamydia and gonorrhea in particular, as well as sort of flu combo tests, there is some utility and some performance improvements that the device we believe can deliver. We think there's an opportunity there for that test alongside Florey in the market as a user accessory to improve performance, simplify workflow, and improve results. In terms of where we're at now and moving forward and what our priorities are, we're obviously mindful of the capital available to the business. We're being very strategic in where we focus our efforts. Obviously, expanding the HIV revenue for the business becomes and remains our core focus because it's the quickest way for us to scale revenue and margin and get to break even. I've spoken at length about our plans to do that.
We think there's plenty of opportunities for upside, for deliverables, and for growth. We see Atomo now established as a leader in that market. We're focused on making sure that the business efforts that we prioritize are in developed markets where we get better margins from government and also a bigger and more valuable pharmacy retail opportunity. Outside of that, getting syphilis to market alongside HIV is a primary focus. That program is funded. We're looking to move forward with development and get it into clinical data this year. We'll certainly be prioritizing submissions for Europe and Australia and also looking at partnership opportunities to fund the U.S. clinicals to support a U.S. go-to-market. Outside of those two core products, which really establish us in sexual health, we are looking to continue to grow our OEM device. I think twofold.
One, continued expansion of Pascal, hopefully off the back of a CLIA waiver in the U.S. to support growth in the U.S. market, and also finding partners and customers for our accessory devices, Florey being the primary focus given the size of the market that we think we can access with that test. Florey would be customized to meet a partner's cassette dimensions, and they would get essentially a custom version of Florey. That gives us opportunities for development fees to support product to market, as well as licensing fees and possibly tech transfer arrangements or a traditional supply agreement similar to Pascal where we supply the device assembled. Very excited about that opportunity, and we'll certainly keep the market informed of progress as it transpires. In the meantime, I'd like to thank you for listening today to our presentation. We haven't had many questions.
The one that we did have related to our plans for blood pregnancy, I hope we've answered that. We are still interested in taking that product to the TGA, and we're also interested in partnership opportunities for that product in the U.S. Obviously, we need to have the programs fully funded through the approval. That was the only question we received. I'd like to thank everyone for the time. I'd like to thank Suzy for presenting the financials, and thank you to the.