Hello. Thank you, and welcome everyone for the Atomo quarterly activity report. Myself, John Kelly, and Will Souter, our CFO, are presenting today. We're in different locations, 'cause I'm in the US attending AACC which is the large US clinical chemistry and diagnostics conference, and we'll talk a little bit about what we're doing here and the progress we've been making later in the presentation. First, just to run into the quarterly highlights themselves, we'll start with our main product, HIV Self Test. We're seeing significant interest in the product across a range of different territories and categories, continued sales in global health, and expectations around some larger tenders coming out of that process as HIV screening gets back on track post-COVID in global health.
We're seeing some significant opportunities emerge in the Australian market, quarter-on-quarter growth in the first half of this calendar year. We're expecting to see that continue as we roll into more pharmacies, and we have pilots, like the vending machine pilot program expanded, and obviously, more recently in the quarter, a sizable order from Newfoundland, our new retail-focused channel partner, that's in the U.K. retail market. A sizable initial upfront order, nearly a million dollar worth of sales, and expectations for follow-on order later this calendar year. That order will be shipped and invoiced in this quarter.
We did have to get a additional certificate for their branded version of our product in Europe, and that came through very recently. The first 50,000 have been built, and we'll be looking to follow through with the next 150,000 as we roll out to them this quarter. Very excited about the HIV business opportunities. We also have been at IAS up in Queensland, the International AIDS Society Conference, to meet with our partners there in global health, but also, more importantly, to meet with some senior government people in both federal and state governments.
We're seeing now a recognition by Australian government that self-testing is a critical part of the HIV response, to drop-offs in testing through COVID, and we're very excited about the feedback from them and the engagement with them, and we're very hopeful of some government support in a number of areas as we roll through the rest of this calendar year. I think the message is that our HIV business is, we expect it to grow materially, quarter-on-quarter over the next two or three years, and we see it recovering from the dip that we saw during the COVID pandemic. Beyond HIV, we're encouraged by our OEM business return to business. Obviously, when the market and all the diagnostics companies pivoted to COVID, our OEM blood test cassette sales fell away.
We're now back in supply with our two partners, NG Biotech and Lumos Diagnostics. We'll talk a little bit about their plans for expansion on the platform. We're also now pleasingly able to offer potential US partners an FDA-approved cassette by way of the Lumos 510(k). That really significantly reduces a barrier to adoption for products in the US market. In addition to that, we've also recently entered into a number of OEM partner referral agreements, where we are partnering with companies that specialize in the development and commercialization of new assays in market. That allows us to get in at the ground floor with assays being developed on our platform, so that they can go through regulatory approval and launch. That's much easier than trying to get an existing product re-qualified on our platform.
There's a much larger barrier to entry for existing products in market converting than there is for new products. By being able to partner with the key providers of those services in the market, we're able to really expand our network and the availability of our platform, and we're very excited about the opportunity to deliver OEM contracts through those relationships. Our recent expansion into retail markets in the U.K. through the Newfoundland deal, as well as the 510(k) approval here in the U.S., really underpin that offering, and these guys are very excited about the opportunity to really start to offer that cassette now to their existing customer base. A large part of that, as I mentioned, is based on the 510(k) that Lumos secured for FebriDx. we're congratulating them on that significant achievement.
That's allowed them, obviously, to look to bring that product to the U.S. market, and we're keen to see that progress over the coming quarters. Equally and potentially for us, more importantly, that platform now has a predicate approval pathway for other applications beyond FebriDx, and that's a pathway for not only our own finished products, including the blood-based pregnancy test, but also, platform products for other OEM customers. Our opportunity now is to move beyond the 510(k) into OTC. Self-test approvals in the U.S. at present, there are not rapid test kits approved the way they are in Europe. The requirements for approval in the U.S. are significantly higher in terms of usability, and that's where our Pascal platform now has an opportunity to be, to become the first test platform to secure blood-based OTC approval.
We'll be looking to move forward with pregnancy as the first platform application to really test that hypothesis, and that's because of the large addressable market for pregnancy, as well as the fact that it's a well-established self-test category and provides a lower level of regulatory hurdle for us, compared to, for example, HIV. Very excited about the FebriDx opportunity, not only for sales of cassettes for FebriDx, but the broader acceleration of our products in the US market off the back of that. Pregnancy, I've mentioned being the first one. We did, as shareholders may remember, a deal with NG Biotech of France for a blood-based pregnancy test. They have launched that on Pascal, with CE Mark. They're selling in France, they're selling in the UK, they're looking to close out an agreement for Spain, Italy, and Portugal.
They've launched in Brazil. We're working with them to launch in a number of other territories, including Australia, where we submitted to the TGA more than three months ago, and we're hopeful for approval later this year. That will also be used to register in New Zealand and some other Southeast Asian markets. In parallel with that, we're working with them, and a regulatory consultant here in the U.S., to put together a pre-sub to FDA, that we hope to then support a meeting later this year, that will give us a clear pathway to market for that blood-based pregnancy test in the U.S. market. The opportunity there is, we believe, significant. Blood-based pregnancy tests detect earlier than urine.
That makes them very important for ultra early detection, which is now critically important in a large number of U.S. states, as well as also offering a more accurate test in that early phase of pregnancy. For a lot of women who really, really want to be pregnant, or really, really don't want to be pregnant, that extra period of detection, and that extra reliability in the early phase of pregnancy, is critically important, and we're very confident we can get a premium for that product in the market. The feedback we've got from pharmacy groups in Australia would tend to support that.
We think that the outlook for the business over the coming year is extremely positive, and we're very keen to get on with growing that HIV business, bringing new products to market, expanding the OEM customer base, and continuing to establish our platform as the leading self-test solution in the global market.
Just coming to the numbers. Total revenue for the quarter was close to AUD 600,000, and we're just starting to see quarter-on-quarter revenue growth picking up again in the post-COVID environment. That brought us to AUD 2.6 million in revenue for the full year, which was predominantly HIV, close to AUD 1.6 million in HIV sales. Close to AUD 400,000 in COVID sales. That was right at the beginning of the financial year, a last gasp of orders that came through in Australia, and since then, there's been no COVID business.
We have been rebuilding and building on top of that, and that is now starting to show through in continued OEM sales growth, and that accounted for around $600,000 of the $2.6 across the year. Importantly, as we've gone through that transition away from COVID, and really started to rebuild those other parts of the business, the pipeline for Q1 for FY24 is looking really strong, and is essentially underpinned by purchase orders and product under production, as John mentioned, for Newfoundland. There's a significant order to go out to them over the course of Q1. NG Biotech and Lumos, we've got purchase orders in hand across all of those.
There's also a significant tender that Viatris is participating in, which would be a a game changer in terms of numbers compared to last year, across the whole year. There's some really, really positive developments coming through in Q1, and that's as a result of the work that was done over the course of the year, as everyone got back to business post-COVID. In terms of cash receipts from customers during the quarter, just under AUD 400,000, finishing the quarter with no debt and AUD 6.5 million of cash on hand, and cash receipts from customers over the year of around AUD 3.3 million. That balance of AUD 6.5 million is before the capital raising, that people will be aware that we launched a couple of weeks ago.
It was to source some top-up funding to help us with some of these activities that John's described, and in particular, to accelerate our entry into that U.S. market. You know, funding is required to do that, and funding on top of what we had in hand at the end of the period was, what seems a really useful way of accelerating that and underpinning that growth. The placement itself was for AUD 1.25 million. We had a further AUD 1 million commitment to take up any shortfall that might come from the SPP. I guarantee AUD 2.25 million across that raising, with a target of AUD 4 million. The SPP is still open, so I just wanted to remind everybody of that, and what that looks like.
The placement was done at AUD 0.036 a share. The SPP will be priced at the end of the offer period, which is on the 1st of August, and it will be the lower of AUD 0.036 or a 2.5% discount to a 5-day volume weighted average price of the stock as it's traded. As a participant in the SPP, you're guaranteed of receiving either the placement price or a discount to the recent trading price. There's no opportunity to be out of the money at that point when you invest. We would encourage everyone to invest. The details are contained in the quarterly on our website.
There's a button on our homepage, and most people, I'm sure, would have received some communication directly from us, and so you can access the SPP that way. We'll just talk a little bit about what we're planning to do with those funds, and what the key priorities are for FY24. I'll hand back to John for that, and then we'll go to some questions after that.
Yeah. Thanks, Will. I mean, I think the question is what what's someone looking to potentially invest in through the SPP? I think the answer from our perspective is a best-in-class consumer use platform that's now validated across key markets and across key aspects of risk, regulatory, consumer demand, channel partner validation, and now regulatory approval in the U.S. Our key focus for the coming year and beyond is actually quite simple. The pivot now into the new landscape for rapid testing is clear. We wanna continue to grow the HIV business. We still see a lot of longevity and growth in that business. We have one of the best HIV self-test products available in the world, the only one approved by the TGA. That quality is now starting to get recognized.
We're looking at opportunities for U.S. commercial partners to help with funding of that, and the only reason we haven't done that to date is because as a PMA, it's a very expensive exercise. There is talk of FDA downgrading that to a 510(k), which would make it significantly easier for us to bring that product to the U.S. market. That notwithstanding, we're seeing significant growth in Europe. I met with Newfoundland last week in the U.K. They're very excited about launching into Tesco and into Germany. They've had a lot of interest from Eastern Europe, and some other markets outside of Europe that we're considering giving to them in exchange for some commitment. That's a hugely important retail channel partner for us, not just for HIV, but for other products coming behind HIV.
In Australia, we're very encouraged by the government engagement, by the openness of government to look at pilots like the vending program, online, distribution to high-risk people, and other activities that are being established overseas and now being brought back to Australia with us as a very motivated partner to work with government to make that happen. Outside of HIV, our OEM business is now starting to grow again. We're seeing interest from new partners, more importantly, our partnerships with Lumos and Engie are starting to really bear fruit, across the products that they've launched on our platform.
We're expecting to see growth over the next couple of years through those 2 partners, as well as an expanding pipeline of new partners that are starting to see 2 things: 1, that consumer testing is a growing channel, and we've got the best solution for that, and 2, that we now have a platform that sees risk for the U.S. market. I can't underestimate the, the importance of both of those.
By way of an example, we had a quite large diagnostic company, not top tier, but probably second tier, come to us at AACC asking for a meeting. We were told by them that they had approached one of our channel partners with a view to swapping their existing bits and box format over to this company's own format of portfolio products, and they were told by our channel partner that if they wanna be considered for that, they really need to come back with the products on our platform. That's the market validation that we just didn't have before the pandemic. I think it really now will drive significant uptake of the platform as we start to prove the utility of the device in the market.
The agreements with Newfoundland Diagnostics and the approvals in the U.S. are fundamental to that validation, so we're very excited about that. We're also very keen to work with other partners to bring new menu options to the platform. It's a blood-based platform, but very flexible across multiple applications. Outside of infectious disease, hugely excited about wellness, vitamin, thyroid, testosterone, anemia. There's a whole range of applications where people be interested and take ownership of their health, particularly in places like the U.K., where it's now taking up to 3 weeks to get an appointment to see a GP. That opportunity to grow consumer health is only gonna continue with large efforts being made by retail partners and diagnostics companies to enter that market, and we've got now, I think, a well-proven, ready-to-plug-in platform that really addresses those needs.
I think that OEM business, although slow to get going post-COVID, will show significant growth over the next three to five years. We now have a real focus on some key products that we think we can own the market with in terms of the full value chain. HIV is one, blood-based pregnancy is another, and aside that, iron deficiency and vitamin deficiency are associated with pregnancy and make a very attractive business unit by way of women's health, and it's one that we're starting to get a lot of interest from large retailers who see diagnostics and women's health intersecting at a really attractive point in the market. We're very excited about the priorities for the business and the use of funds, not surprisingly, reflect that.
We are looking to, as Will mentioned, accelerate efforts to get that pregnancy test into the market. We're continuing to engage at conferences to show the platform and make sure it's widely available. We're supporting those 3 reseller channel partner providers to make sure that the OEM opportunity is fully scaled into the market through their efforts. That gives us essentially an outsourced and relatively cost-effective way to scale that OEM business, because they're doing their normal daily business, but they're now offering our platform into that. It saves us having to invest significant capital and resources into doing that ourselves.
Outside of that, obviously, making sure we get the pregnancy test approved in Australia and the ferritin test approved into Australia and Europe, as well as securing U.S. partners once we get the 510(k) converted into a CLIA waiver and OTC approval. I think that's the update on the future focus. Will, happy to maybe move on to some questions now.
Yeah, sure, John. We've had a few questions come through. There's a couple that I'll bunch together about the FDA process, why we haven't started that yet, what the costs are associated with that, and what the program might be for that, specifically for taking the blood-based pregnancy test through to an approval.
Right. I mean, why we haven't moved forward with FDA prior? I think the only product we had to do that with was HIV. HIV is a PMA, and it's very expensive. The market opportunity didn't warrant the return on investment for a small company with limited capital. We've waited for the right opportunity, and that right opportunity is pregnancy, because of the very large addressable market, the fact that a blood test has very significant and easily defined benefits over urine, and also the fact that we're entering a market that's well accepted for home testing in pregnancy. That is a low-hanging fruit entry for us and one that is significantly more cost-effective to engineer than the equivalent entry for HIV. I think once that product's on the market, that platform approval will then allow us to expand into other applications....
such as ferritin and vitamin D and others. We hope that the FDA downgrade HIV to a 510(k). We could also get HIV through that channel as well.
Okay. There's a couple of questions here, which I'll answer about our presence in the Australian market and what our channels are in the Australian market. The question is about whether we are or will be in Chemist Warehouse, Priceline, Coles, and Woolies with our products. Just to go back a step, the HIV Self Test approval we originally received from the TGA didn't allow us to sell through pharmacy or retail. We had to sell direct, we were not able to advertise, it was a very restricted environment in which we were operating. All of that changed as a result of COVID, the TGA took those restrictions away.
We've only been able to directly access the market over the course of the last 9 to 12 months, and obviously, it's taken a while for us to penetrate that market, particularly with HIV, which is a very specific product. We have gone direct to many hundreds of pharmacies, particularly in high-risk areas and in the target areas where the HIV issue is at its largest. The reason for launching tests like pregnancy and iron deficiency is obviously that's a much broader market, a much bigger audience, and so all 6,100 pharmacies in Australia could stock those and would be interested in stocking those tests because it's much broader appeal.
When we launch pregnancy, we will be going to a much, much wider target market, specifically pharmacies and also obviously online and direct. We'll be doing that in partnership with a contract sales group that markets certain products to that pharmacy network. Very, very experienced over many years, and with dedicated salespeople that will be selling the Atomo products. That will give us an opportunity to launch fairly quickly into a much broader range of pharmacy chains. To do that, you need to get in at the parent company level, at the buying group level, as well as at the individual level. You need to take that two-tiered approach.
That's our plan for the launch for pregnancy, as well as obviously continuing to drive awareness about the uniqueness of that test. HIV will follow along from that as well. We're expecting to get broader reach with our HIV test, and then that model will be rolled out with additional products like iron deficiency thereafter. They're big markets. I mean, the Australian market for pregnancy testing is around north of 5 million tests a year. It doesn't take very much penetration for us to pick up our part of that market, and for that to be significant to Atomo in terms of potential contribution to revenue. That's just one test in one market. We then wanna look to roll that out elsewhere.
As John said, New Zealand, other parts of Asia and then the U.S., clearly that's magnitudes larger. We've seen what happens to Aussie companies when they get U.S. FDA clearance, we would expect a similar response in terms of shareholder value if and when we're able to get through that process in the U.S. Really, there's significant leverage to take the existing and proven platform technology, the existing and proven products, and launch those out into various markets. Clearly, that takes some time and some work and some resources, but that's that's the clear focus of the company at this point.
Any other questions in, Will?
A couple more questions coming through here. Perhaps I'll just follow on. There's a question about cash burn and the strategy for getting to breakeven. I think that's what we're talking about. The money that was spent over the first 10 years of the company's existence or more, was very much focused on R&D and building out the production capability to support that, getting the approvals, getting the patents, and all of those things that take a very, very long time. We've done that now what we're doing is leveraging that. That's what this is all about. That's what FY24 is all about. It's about driving sales, leveraging. T here's a fixed cost base of running a company like ours, which is pretty lean compared to a lot of our peers.
obviously with a platform-type business, the more we can leverage sales, without having to grow necessarily that OpEx base, the closer we get to breakeven. You know, we don't give forecasts, but that's the path now. As I say we can reach that with our existing installed cost base and production capacity and facilities. John, there's a question here that I might throw over to you, which is. You know, we're talking about, a lot about self-test and consumer, but clearly, that's only part of the business. The question's about whether we could be doing more in emergency settings and in professional settings. I think maybe people aren't as aware that we do that as well. You know, that's part of what we're.
Yeah
what we're doing in the background. Maybe just a bit about that.
Yeah, I mean, that is still a focus for our business. One of the challenges in Australia is that rapid testing is at a significant disadvantage because of the way reimbursements run through lab channels, and we did raise that with the government as a reason for the slow adoption of point-of-care tests when they're appropriate in Australia, and antigen versus PCR was the the starkest example of that. Outside of Australia, there's more scope for point-of-care testing and better reimbursement.
One of the channel reseller partners that we're partnering with, has worked with us to look at a reader system for point of care, that's now compatible with the Pascal device unmodified, which means that customers who move on to our Pascal platform now can have a FDA-approved, small point-of-care reader format compatible with it, and that then opens up the smaller clear way of doctor office, MinuteClinic, and increasingly pharmacy clinics. We are focused on that. HIV is an obvious example of professional use opportunity. Blood-based pregnancy in doctor offices is a very exciting opportunity because when you go to a doctor with a urine test, they don't use another urine test for confirmatory purposes. They use blood, and that's one of the benefits of blood. At the moment, it's really a phlebotomy and lab confirmation.
We'd be very keen to make the Atomo blood test rapid, that in-office pharm confirmation test. You know, the feedback we've had, particularly from pharmacists, is that they're looking to move into more testing on site, and our test saves them having to send out to a lab. I think that professional use market is still very much part of our focus. The consumer channel is really where our product offers partners an approval and a market entry that they can't otherwise get, and that's really where we see the real value. You know, we recognize that a large part of the market by volume is professional, and we are focused on making sure our products are in that, in that market.
Yeah, I think to add to that, obviously, the higher volume enables us to get our costs down even further, that leverages the better margin environment where we're selling into into retail and into consumer markets. That, those things work hand in hand, and that's why it's nice to be able to produce the same HIV Self Test to sell into global health markets as we sell in the pharmacy in Newtown and Sydney. It's the same test, just a different box and a different regulatory environment and approval, the costs are the same for us. Having that high volume, through professional use is extremely helpful for the overall manufacturing and production of our products. I think they're all the questions we had.
Just to come back to the SPP and remind people about that. As I said, that's open until Monday, the pricing is designed to encourage shareholders to participate, and it's designed to give all of our shareholders an opportunity to participate on the same or better terms than the institutions that participated in the placement. We would like to see everyone take up that opportunity. You know, as we talked about at the beginning of this session, it is top-up funding. It really is helpful for us to be able to push the button on some of those external costs, like some of the work that's required to support the approval process for pregnancy in the US.
that's that's what the funding is designed to do. It's designed to do what we talked about in terms of really leveraging the existing customer base, growing new customers, and trying to move the company as quickly as we can through to through to breakeven and cash flow positive. I think if you look at where we are in terms of a market cap and valuation, and what opportunities there are in the pipeline, to be rerated through revenue growth, through new product launches, through approvals, and through U.S. market entry the valuation entry point looks extremely effective.
The fact that the whole market for small cap healthcare stocks is undervalued at the moment, because we're in that phase of the cycle. You know, there'll be a cyclical move as well that'll see these stocks in these markets get back to where levels that they were at before in terms of multiples and so on. There's a number of different ways that the shareholder value will be growing over time, and here's an opportunity to participate in that. We appreciate everyone's support so far. Jump on to the website and click the link, and access your information there. You can invest up to AUD 30,000 as a shareholder in the SPP.
As I say, it closes on the 1st of August. John I don't think there's any other questions. I don't know if you want to wrap up?
No, I was just gonna say, I mean, obviously, it's up to each individual shareholder, whether they wish to participate, but certainly the use of funds we've outlined, we believe is a successful way for us to implement the growth of the business, and certainly the opportunity for the products that we've developed now is clear, and the interest, particularly in AACC, palpable. We would encourage everyone to give it some consideration, and obviously, if we can deliver those deliverables that we've set out over the next 12 months, we would expect to see a significant re-rating of the business as a result of that. Thank you for your time and your consideration, and I think we'll leave it there.
Thanks, everybody. Bye now.