Good afternoon, and welcome to the Novacyt Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated in the right corner of your screen. Just simply type in your questions and press Send. The company may not be in a position to answer every question it receives in the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to note the following poll. For the benefit of those joining us from France: I'd now like to hand you over to James McCarthy. Good afternoon.
Thank you, Alessandro. Good afternoon, everybody. Welcome to the Novacyt half year results. I should just start by showing the disclaimer. I'll just take that as read by everybody before we proceed. Okay. My name is James McCarthy. I'm the acting CEO of Novacyt, and have been since November last year. Prior to that, I had done almost two years as the CEO of the group. Delighted today to be joined by Steve Gibson, who's the finance director, and Lyn Rees, who's recently joined us from the Yourgene acquisition. Perhaps if I ask those two gentlemen to introduce themselves before we proceed.
Perfectly. Good afternoon, everyone. Steve Gibson, Group Finance Director. I've been with Novacyt for around six and a half years, and prior to that, I spent around 12 years at a blue chip IT company, working in a variety of different commercial finance roles. Lyn?
Thank you, Steve, and good afternoon, everyone. Real pleasure to be able to present to you today. My name is Lyn. I'm the ex-CEO of Yourgene Health, and I've been in this diagnostic market space for about 27 years now. So, real pleasure to be with you today.
Thank you, guys. So running over today, I'll take you through some of the kind of key highlights of the business performance for the first six months of the year. Steve will dive into the numbers in a little bit more detail. We've added a section in for Lyn to really explain and talk about the Yourgene business. I mean, some people might know it, but, I mean, we're assuming there's a lot of investors in Novacyt that may not know the business very well, so we thought it'd be a great idea to share some insights into the business we've just acquired. I'll come back and talk about how we're thinking about integrating the businesses, our thoughts on that. Obviously very early days. We're just not even three weeks into this.
And in the end, just do a wrap up for everybody. Okay? So just a, you know, a quick run through our strategic pillars, just to update everybody against how we've been performing against the strategic pillars in the first six months of the year. I mean, if I start with instrumentation, I mean, the instrumentation business has struggled a bit for sales over the last 18 months to two years. We've definitely seen a market that was fairly saturated post-COVID, we're beginning to see that change. So we're beginning to see the market opening up again. We were delighted with the progress we made in Q2. I mean, instrumentation sales will continue to be lumpy. They tend to come in kind of infrequent but large orders.
But I think we were getting some decent momentum there. The second thing really to call out is the whole product development. We've had a very intense six months in product development and deliberately so. We've been really working hard to build the non-COVID portfolio, and we've nine new non-COVID products, which we've developed in the first half of the year. And look, this is really important to us as we go forward, we still have a lot of work to do to commercialize those products. We've mentioned in our trading update in July that we're looking at going down a UKCA route instead of the full IVDR for some of those products, because it's the quickest route to commercialization, and that's a real imperative for us.
We're actually taking our Winterplex product, which is the IVD mark, through the IVDR process, that will be a clinical trial, which should complete largely towards the back end of this year, and then we'd submit that for submission. But that won't impede, you know, the sale of the product in any way. The product will be available on the market. In terms of commercialization, you know, the focus has been on the RUO business, as well as instrumentation, and really trying to rebuild our RUO business. I mean, you know, neglected during COVID, neglected by the market and certainly neglected a little bit by us, as we focus on other things. And I think we're busy trying to re-engage with customers, build customer solutions in specific verticals.
We've talked to you before about global fisheries in North America. You know, we're really pleased we've brought some of that progress closer to home. We're working with oyster farms in the U.K., so we really feel we can offer solutions and actually build sustainable, repeatable revenues in some of those spaces. Similarly, we're having success in Latin America, again, looking at solving problems for livestock testing, you know, across groups of farmers, and again, trying to build those repeatable sustainable revenues. And maybe finally in commercialization, just to remind everybody of, you know, our NGO business, and we still have good connections to NGO, and really had a really successful first half in terms of dengue, in particular. So that continues to be an important business for us.
I think, look, we're very proud of the products we develop for that market. And maybe finally, on the strategic pillars, on the business development, you know, we've talked to you over the last year or eighteen months of, you know, putting our balance sheet to work, looking for acquisitions, and clearly, Yourgene is a big step in that process. You know, it's a fantastic opportunity, I think, to put these two businesses together, and I'll come back and talk a bit more about the integration. But I think it's a very big step in the journey, but, you know, we will continue to look for, you know, acquisitions that make sense as we go forward, and I'll also come back to that later on.
So maybe for now, if I just hand over to Steve to talk you through the numbers in more detail, and I'll come back to some of the Yourgene integration questions later on. Steve?
Thank you, James. Good afternoon, everyone. It's great to be here with you today to chat through the Novacyt interim financial results. This all obviously covers the period January through to June 2023, so it doesn't include the financial performance of Yourgene Health, but instead, Lyn will touch upon the sales of that group in his presentation shortly. If we kick off from a revenue perspective, the H1 revenue totaled GBP 3.3 million, compared with GBP 16.5 million for the prior period. Now, this decline was driven by a reduction in COVID-19 sales as the pandemic has eased. If we look at revenue from a product mix perspective, our non-COVID portfolio has delivered over 80% of our revenue in H1, and it's also grown now for the third quarter in a row since Q4 2022, by around 10%.
If we look at revenue from a geographic perspective, we remain well-balanced in an internationally diverse business. If you look at our H1 sales, our top four regions all generated around GBP 700,000-800,000 of revenue, and those four regions were the UK, Europe, Americas, and the Asia Pacific region. Finally, on revenue, from a business unit perspective, Primerdesign continues to be the main revenue-generating business, and that delivered in excess of 80% of group revenue. If we, if we turn to gross margin, the gross margin has doubled since the prior period, from 24% up to 50%. However, it is still impacted by further stock write-offs as a result of lower than anticipated COVID-19 sales. If we move on to OpEx costs, we continue on this journey of right-sizing the cost base of our business, and we're making really good progress.
So from the prior period, we've reduced our OpEx costs by around 35% or GBP 4.1 million, taking our H1 OpEx cost down to around GBP 7 million. Now, the main driver for that was our group-wide restructuring program, where we reduced headcount from around 210 people in June 2022, down to around 120 staff at the end of June 2023. Our pre-acquisition headcount was around 120 staff. We do, though, continue to invest heavily in R&D, and we spent over GBP 1.2 million within that function to support bringing new products to the market. From a profitability perspective, the group reduced its EBITDA loss to around GBP 5.4 million, down from GBP 7.1 million in the prior period.
Now, this reduction was driven by GBP 4.1 million reduced OpEx costs, as we reduced the cost base of our business, offset by a GBP 2.3 million reduction in the gross profit contribution of the business due to lower sales. Now, in addition to the EBITDA loss, the group also incurred exceptional costs totaling around GBP 1.9 million. That was made up of three key buckets. The largest one was GBP 0.8 million of acquisition-related costs in relation to the Yourgene deal. Now, this is the cost that's been incurred until the end of June. It's not the full advisory cost of the deal. The second big chunk was around GBP 600k of costs in relation to the ongoing DHSC commercial dispute, and then the final bucket was around GBP 0.5 million of restructuring expenses that predominantly covered redundancy payments.
So all of that culminated in the group reporting a loss after tax attributable to the owners of the business of GBP 8.3 million, which is slightly ahead of the prior year results. Can you just go to the next slide? If we turn to the balance sheet, there's no real material changes since the end of the year, other than a reduction in cash, and cash has reduced broadly in line with our EBITDA performance. So what it meant is that we closed June 2023 with a cash balance of around GBP 81.7 million. That allowed us to fund the Yourgene acquisition from our cash reserves. Importantly, we remain debt-free as a business, too. Now, that was a quick run-through of the financial results of Novacyt, which have now been published on our website, if you would like to look at them for further details.
I'll now hand over to Lyn, who will walk you through the Yourgene business.
Thank you very much, Steve. We can go to the next slide, please, and the next one, please. So really, really excited to be here today. You know, James just mentioned that this is a fantastic opportunity. I absolutely believe that as well. So really excited in sharing a little bit more about Yourgene, who we are, what we do, and what you can expect from us as shareholders moving forward. So Yourgene's an integrated technologies and services for genomic medicine. What does that mean? It means we develop, we manufacture, and we take to market molecular diagnostic tests and screening solutions, predominantly in the reproductive healthcare and oncology market segment. So, moms and dads looking to have new babies and anyone that's, you know, with a cancer diagnosis, those are the two markets that we fundamentally address.
Two of the fastest-growing markets in the molecular diagnostic-
... space at the moment. I believe we have a complementary portfolio of in vitro diagnostic products, which includes our flagship NIPT, non-invasive prenatal screening, which checks babies around Down syndrome and other genetic disorders. When the baby is born, then we check for cystic fibrosis. We're either market leader or second in the main markets that we serve. We offer a follow-up product, an invasive, rapid aneuploidy test. So if you do have a high-risk result, that is the confirmatory test. And in recent years, and I'll talk a bit about this later on, we ventured into oncology and other market adjacencies to sweat the assets and the technology that we have within the Yourgene group. We were first established in 2013.
We are headquartered in Manchester, UK, with offices and facilities in Singapore, in Florida, and in Vancouver. Our revenues in 2022 were just shy higher than GBP 37 million, but that did include some COVID. And as Steve said, I'll give you a bit more flavor on where we are currently, a bit later on in the deck. We employ about 150 people, and we take over 100 products and services to a global marketplace. And when I say global marketplace, that is about 65 countries, where we're either selling direct or indirect through a distribution network. So that's a bit of a snapshot from Yourgene. If we flip the slide and look at the sort of timeline, the organization was set up in 2014, so very much at the forefront of next-generation sequencing.
That was when the first platform started to appear in the market. So really early adopters of this, you know, unbelievable technology, in terms of advancing, you know, kind of medical diagnosis. In 2016, we acquired a business in Taiwan, called Yourgene Biosciences, that we actually turned into the full name of the organization in 2018. And Premaitha was pretty much just around, you know, the reproductive healthcare market. We wanted a wider appeal as an organization, so Yourgene and Yourgene to manage your health is where we sort of come up with the name there. At the back of that sort of rebranding, we started to go on a M&A journey. So we acquired a company called Elucigene Diagnostics in 2019. They brought to the table a cystic fibrosis testing.
So up until that point, we were a pure play. As an organization, we only really had an NIPT test. And as the market develops and becomes more mature, it's very commonplace that the customers wanna buy more than one product off you. You know, the costs of running a relationship with a single product supplier is quite high when you consider all the regulatory hurdles and just the management of looking after that relationship. So the more products you can provide to the customer base, I think the better off you'll do in the long run. And Elucigene brought cystic fibrosis to go alongside our NIPT test. It also brought the confirmatory test to the NIPT test. So we sell the diagnostic, and if you get a high-risk result, we sell a confirmatory test.
So we're always looking to broaden the range of products and services that we took to market. Also very important from the Elucigene team and their brilliant R&D capabilities was launching our first DPYD assay, which is our first sort of move into the oncology space. And anyone that's unfortunately been touched by cancer, either themselves or through loved ones, will realize the earlier diagnosis you get, the better chance of a positive outcome. And this test really does support that journey, and I'll explain a little bit about that later on. In 2020, we were continuing to acquire. We bought Coastal Genomics, Ex5 Genomics, and Agenix. So mixtures of technologies, customers, and markets, which allowed us to really just springboard in 2021 into the U.S., where we put a lot more capability.
We'd licensed some of that technology we bought in 2020, specifically around the Ranger technology. And I guess over that period of eight years, Yourgene grew from sort of one product, a couple of people, no revenue, to GBP 37.6 million worth of revenue, and over 100 products. And even the core growth, you know, taking away that COVID was about GBP 15 million. So fast-growing organization, with a lot of ambition to put more products and services into the market. Next slide, please. To bring that a little bit more to light and look at the split of the organization, on the right-hand side of your screen, you'll see a circle. The green part of that circle is our services. This is where we receive samples into our own labs.
So we have a lab in Manchester. Until recently, we had a lab in Taiwan, where we would routinely receive samples and give results to patients. Now, predominantly around our reproductive healthcare options, you know, we're using our own products in our own labs to give our customers results. But we, we've broadened that offering into pharmacogenomics, clinical oncology, and we also do a lot of research work now in whole genome sequencing and whole exome sequencing. Again, really at the cutting edge of molecular technology and giving almost personalized diagnosis to patients. The services side of our business, you know, is about 10%-20% of our revenue in any given year.
While not the biggest revenue part of our business, but it creates an amazing structure to be able to try new technologies, to look at our own products, and validate them and verify them. You know, to be able to work on clinical trials, to build up big sample banks that allow us to bring new content, and continually looking at product improvements within our portfolio. It's a very important part of our business, and everything that sort of comes from that right-hand side ends up being products that we take to market. Our genomic technologies are where we send our customers a test, and they run the test in their own labs, and that's normally about 80% of the revenue of the business.
You'll see similar product categories within there, reproductive healthcare, NIPT, precision medicine, and Ranger. So everything you see on the right pretty much gets replicated on the left and taken out into the customer base. To bring some of those products a bit more to life, you know, if I look at our in vitro diagnostics product, you know, the little box you'll see in the top left-hand corner of your screen is a DPYD assay. DPYD is given to patients who are usually stage three or four of cancer treatment. So serious diagnosis, they're about to receive something called 5-FU, which is the most widely prescribed chemotherapy agent used globally. There's a couple of million scripts written for this each year throughout the world.
Unfortunately, up until us launching this DPYD product, about 1% of patients that would take that drug would die because they lack a gene which stops that drug from attacking every organ in their body. So normally, a patient would receive this 5-FU within 24 hours. If they lack this gene, they'd have serious sepsis, and as I said, 1% of that patient population would die. We launched this DPYD product a couple of years ago. It's gone from a very low base. It's now mandated in Wales, in England, in Scotland, in France, in Italy, in Belgium. We've just taken the product out into the U.S. We've got some initial sales. I think we're in two of the five main hospitals in Canada.
And I'm proud to say that it's a product that saves, you know, 1 in every 100 patients' lives, and for the other 99, gives them comfort that the, the difficult treatment that they're gonna have is gonna be, you know, risk-free. The little box underneath is our Ranger technology. That's a LightBench box. The blue and white box is, is, is really becoming quite a pivotal bit of technology in our portfolio. If you can imagine, you know, having a, a mum to be in, in, in a, in a healthcare setting, kind of about 8 or 9 weeks, and she wants to give a, a sample of blood to understand if there's any genetic risk to the, you know, to the fetus that she's carrying around with her. So we've got to get rid of mum's blood.
We've got to get rid of all the interfering substances and find a tiny, tiny little bit of cell-free DNA that has come from the fetus, that's traveled down through the, you know, into mum's bloodstream. This Ranger technology, basically, in layman's terms, allows you to clean up that sample really, really quickly. And it allows you to do it with automated machinery, so you can feed the sample in, and then a bit of time later, you get your cell-free DNA out, which is the stuff that you sequence to be able to give your patient a result. So it increases the speed of which you can give a patient result, and, you know, and, and in our market space, time to result is everything. And it reduces the cost because it's a fully automated system.
You don't need people sitting around waiting for the results to come through or adding bits of gel, or adding reagents into the process as it goes along. So we were an early adopter of that technology. Gosh, when we developed the last NIPT test about 4 years ago, and we thought it was so good, we bought it, and we've seen significant market opportunities from that coming through now. And as well as those sort of key products, as I said, we do a lot from a genomic services perspective. We're constantly increasing our product range and our service width there. And we're now looking at, you know, not just reproductive healthcare, but oncology, genomic medicine, hereditary risks, and really supporting some big pharma companies with their clinical trial works and the like.
Our next slide covers our sort of geographic reach, and as you can see from this map, we're pretty much everywhere. We spent the last four years heavily investing in the commercial team. We rely on a fantastic set of distributors in Southeast Asia, often sharing those distributors with Thermo Fisher. In Europe and America and South America, we've got dedicated sales organizations and experienced sales leaders that help us go direct in those markets. As you can see from the pie chart on the right-hand side, we've pretty got a good split there.
So we're not reliant on one market or one territory, and we've got good diversification within our customer mix, you know, to manage the ups and downs of the international markets and the reality that we operate under derived demand, where, you know, we can sell our products, but we need our customers to be able to find patients and test patients, to make it work. So hopefully, the map shows truly global, with a lot of commercial opportunity to bring in more products and more services. Excuse me. I think in terms of my last slide, just a bit of an update, as Steve said, with regard to where we are for figures. We finished last year, it's unaudited at the moment, at around about GBP 19.1 million pounds worth of revenue.
And within that, we had sort of the final hangover of the COVID markets, about GBP 2 million worth of business, so a core revenue of around about GBP 17 million. Within that mix, we had our Ranger product, that little special box I told you about earlier, that cleans up samples. That had doubled its growth by 100%, and is now, you know, a GBP 2 million product range. Our NIPT service, which is the flagship product within our range, it's the first product we brought to market. You know, that's got a CAGR of now 20% year-on-year, so back to the high double-digit CAGRs that we were experiencing pre-COVID, and is now generating, you know, close to GBP 9 million worth of revenue.
Our international businesses, again, really kick-started, and we saw the you know, fantastic recovery in APAC and North America specifically, where we see, you know, sales revenues increased by a minimum of 50% in those territories. And when we look at the period this year, and obviously, you know, Steve will explain that our calendar year. We, we're not a calendar year business, so we were sort of April to March as a financial year. But if we look at the first half of this year, so from January to June, we sat at about GBP 9.91 million worth of product, with an even smaller amount of COVID in there, you know, just GBP 0.5 million now.
So hopefully, that gives you a nice update on Yourgene, and I'm gonna hand back to James to discuss the integration further.
Thank you, Lyn. Let's move on more. So look, I think we've got a fantastic opportunity here, you know, to build a combined global diagnostics business. I think we've got a real business of quality in Yourgene. I think bringing the businesses together will give us more scale, which is very important. We're both smallish businesses, so putting us together builds strength. I think you can look at that strength through a few different pillars. One is obviously commercial. I think we both have a kind of global sales force. I think putting that together would be really beneficial. It will give us more reach on the ground, and probably mean we can penetrate more markets more quickly. You know, too fairly extensive R&D and product development departments we can put together.
Yes, there's some new technologies in Yourgene that Novacyt doesn't have, but there's also a molecular overlap. So we're quite excited about putting those two businesses together. And I think that will really support longer-term growth. You know, we've got more products, more services to offer customers, and we feel that will just build a more sustainable business going forward. And if we just talk about integration for a second, I mean, we are very early days. I think we're kind of two and a half weeks in, and we're really just starting to do the work in integration. But I think the principles or the objectives of what we're trying to do on integration are quite important.
And the first one for me is that, you know, the Yourgene core business has been growing very nicely, as it came out of the COVID period. There's a really, really good business in that, and, and kind of my first rule of integration is do no harm. So we want to ensure we do not distract that team, we do not lose momentum, and in fact, everywhere we can support, you know, that growth effort, we will do, to keep that momentum going. I think the, the Yourgene business is a more mature selling operation than Novacyt, so I think Novacyt can benefit and learn from the journey Yourgene has been on. And if you look at the commercial performance of Novacyt, you know, it has been challenged, over the last period.
So, you know, but we're hoping to be able to leverage Yourgene's expertise into Novacyt. We won't get anywhere unless we can build one organization. So that'll be really important, that we put the organizations together as quickly as we can, and that it works fairly seamlessly. And look, underpinning all of that will be a really good communication. I think we have to, you know, put different systems together, different ways of communicating and try and run this as one business. And, you know, we would all of that together has to build a compelling investment case. So clearly, there's growth opportunities here. We'll definitely try and accelerate the top line of both businesses. And there will be cost synergies.
As we put the business together, we expect duplication in back office and in all the parts of the business, which we will address. And we also see, you know, there'll be an economy of skills as well as an economies of scale, right? Where we can eliminate duplicate functions, et cetera. So, you know, we definitely see a compelling business case coming out of that. And so maybe just to recap, you know, the acquisition is a really significant step. You know, it's a step change for our business. The integration plans, you know, we're just beginning that journey. But, you know, this will start to gather momentum now around us. We normally come back to the market around the end of January to give an update on our full year of revenue trading.
I think it's a good milestone to come back and give the market a more detailed update on where we are on integration. We think it's around a 6-month project to do most of the heavy lifting, and it probably won't be all, but we should have made substantial progress in about 6 months. So by the end of January, we should be able to give everybody, you know, a pretty good update of where we are. I also just wanted to mention the Taiwan divestment, which I think was mentioned last, probably in, maybe in some of the acquisition documents. We still expect to complete that by the end of the year. It's not entirely in our gift.
I mean, there are some permits, et cetera, we've got to get from governments, but, you know, we're relatively confident all of that will happen before the end of the year. So, that's still the plan. So we're basically following through on the plan that Yourgene started. We've put guidance out there just for revenue at this stage. We will have a slightly strange year in that we'll have 3 and a bit months or 3 and maybe three quarter months of Yourgene revenue because we will consolidate from the date of the acquisition plus 9 months of—sorry, 12 months of Novacyt revenue. So a slightly odd year, but you'll have seen from, you know, what Lyn said, you get a feel for the run rate, the underlying run rate of the business.
I think just to recap, I mean, I think for Novacyt, the first half of this year was really about building out their product portfolio and, you know, very, very strong quarter in R&D, which will be really important for us. You know, we have to really focus on building this non-COVID portfolio. I mean, I think that's clearly been the strategy for us and clearly what we've been busy with, over the last period of time. And look, I think we remain focused on building out this global diagnostics business. Again, Yourgene is a big step towards that. And yeah, I think we're very, very confident that, you know, this accelerates us and puts us on, you know, a faster track to achieving that. So I think with that, we are going to now open for questions, I believe. Yeah.
Perfect. James, Steve, Lyn, thank you very much for your presentation. We have had a significant number of questions for today's meeting, so the company have grouped these questions together to try and address them, as many of those as possible. The first one reads as follows: What was the rationale for the acquisition of Yourgene? What are the synergies?
Okay, thanks, I'll take that one. Look, as you may expect, some of the questions will have been covered in the content of the presentation, so I think we'll still, I'll try and repeat myself a bit here. It's probably worth repeating some of this, but just bear with us. I mean, clearly, questions come in before people have seen the content, so you will get a little bit of repetition here. Look, I think the rationale for the deal, as we've stated publicly, you know, we've been on a trend track of organic development. In other words, building our own internal in-house solutions for post-COVID, but also looking at acquisitions and using our balance sheet. And we've been scanning the market, you know, for at least 12-18 months, looking for the right partner, the right fit.
And Yourgene as an established revenue-generating global diagnostics business was really perfect, right? I mean, there isn't that many of those businesses around, which would have been within our, you know, our sphere. So I think that really was, it was a fantastic acquisition for us. I think that really sets us off in building this kind of stronger global diagnostics business. And with the benefits of, you know, combined selling force, geographic reach, products, R&D, et cetera, as I've covered. And I think on synergies, I think I mentioned that, yes, there will be opportunities for synergies, but, you know, synergies isn't all just about cost. Cost will be important, that's something definitely we will chase down.
But look, I'm as excited about the, you know, the bringing skills together, you know, getting that synergy of putting, you know, different minds together. There's a lot of very, very bright people in both businesses, and I think we can do something really special with, with those two groups.
Perfect. Thank you very much. Next question here, reads as follows: How do Yourgene's products fit into Novacyt's diagnostic portfolio?
Yeah, and it's probably easier for me to take this one, James. I think the fact that we both work in the molecular space is first of all, really, really important. So we're working on the same sort of platforms, PCR, and next-gen sequencing. You know, then effectively what we've brought to Novacyt is a reproductive healthcare pillar and an oncology pillar to add to a very strong infectious disease pillar. So I think there's really good synergy there. And specifically in some of the more democratized lab settings, you know, thinking about, you know, Europe, LATAM, and APAC. You know, it's quite common to go into one hospital or one customer and be able to speak to one person that looks after all three areas: oncology, reproductive healthcare, you know, and infectious diseases. So I think it's a good complementary fit there.
I think when you look at the capabilities of the organizations, you know, we've got good instrumentation skills in both parts of the organization, so I'm sure those teams are gonna get on really, really well and get, you know, some great ideas and working practices together. You know, so I'm really, really confident about that. And then if you look at the product ranges, you know, this range of technology that I spoke about in my presentation, and being able to find, you know, a really clean sample, I think that's critical. I think that is critical for both sets of customers and both organizations. From a services perspective, we will obviously be looking and, as James said, we're only sort of 2.5-3 weeks into this process, so...
But as part of that, we'll be looking to see if there's any products or services that we can take from, you know, Novacyt and run them in our own labs and start generating data and revenues from that. And I think ultimately, it kind of makes, you know, this enlarged organization kind of platform agnostic. As I said, you know, we work on PCRs, we work in a range of embedded hardware that you'll find in most of the labs throughout the world, be it Thermo Fisher, be it our own systems. Our NGS runs on both Illumina and Thermo Fisher sequencing platforms.
For those of you not so au fait with the next-gen sequencing market, if you kind of think about it like a mobile phone market, you know, then you, you've got Apple and Android is basically Illumina and Thermo Fisher. They've got about 90% of the hardware that exists in the global marketplace. And if you think of Yourgene or now Novacyt as a company that makes apps or content to sit on that machinery, then we're the only organization in the world that runs NIPT on both Thermo Fisher and Illumina, which captures about 90% of the addressable sequencing market out there. So, yeah, I think they fit very well, in my summary.
Perfect. Thank you very much. And I think you just touched on this, but just to highlight again, the next question is: What is the market opportunity for Yourgene's products?
Yeah, I mean, if you know, I mentioned it in my deck, you know, NIPT is a fast-growing market, predominantly driven by the mums and the midwives. I mean, if you get asked you know, if you can come in and do a test at nine weeks as opposed to 12, 13, you're always gonna take that opportunity 'cause you get your results, and it can lead to a less stressful pregnancy. I remember when my wife was having our three daughters, and you know, I've been in healthcare for a long, long time. I couldn't quite work out if it was a higher risk to have the test or a higher risk to you know, for my wife to have a needle in her belly to take a bit of the fetus's blood.
So I think the fact that next-gen sequencing allows NIPT testing to be 99% specific means it's just getting adopted year-on-year, and our growth rate in that space is 20%. We spoke about the need to have real good clarity on the samples. And the quicker you can get that cell-free DNA, the bit of the DNA that you wanna sequence and get your result from, if you can clean that up quickly, you know, that's a massive market opening up there. And our Ranger technology does that, and as I mentioned earlier, it's got 100% year-on-year growth. DPYD saves lives. You know, the average cost of 5-FU treatment is about GBP 50,000 for a full course of chemotherapy treatment, and a DPYD test costs GBP 50.
You know, so I think any patient or any healthcare professional that's administering 5-FU and is aware of this DPYD assay, which will save the life in one in every 100 patients that they put through the you know, the chemotherapy programs, it's a bit of a no-brainer. So we're, we're seeing that growing like a weed as well. I think from a services perspective, you know, the market has changed. Everyone is aware now of molecular testing 'cause of COVID. You know, my mother knows what a PCR test is, bless her, after spending 25 years working in the market and not having a clue what I do. You know, I think the market is changing and advancements in medicine, trying to make medicine more bespoke to individuals, as opposed to sort of a hit-and-miss approach.
We try on something, if it works, we'll give you more. If it doesn't, we'll give you something else. Trying to get to this personalized medicine. I think all of these factors, you know, and the fact that from a genetic screening perspective, probably most of us have had our DNA read for a Christmas present with 23andMe or something in the last couple of years. I think it's just making the market more accessible, and we've got products and services that can certainly play a part in that, which give us confidence in the market opportunity ahead of us.
Perfect. Thank you very much. Does the acquisition of Yourgene indicate a change in strategy for Novacyt?
I'll take that one. No, I think it definitely changes the scope. So I think we've got a wider range of products now, but I think if the core strategy was about building, you know, organic products and, you know, accelerating attractive acquisition, I think it absolutely falls within that. And as Lyn said, there is some commonality even in the products we get. So I just see it as it changes... Definitely changes the footprint and the shape of the group, but absolutely moves us along that road of building global diagnostics business. So I don't see it as a major change.
Perfect. Thank you very much. The next question: How much investment will Yourgene require before the business reaches sustainable profitability?
I can take that one then, if no one is. So I think, hopefully not too much cash, right? But, in all seriousness, this is something that we'll look as part of the integration planning process. And as James mentioned earlier on, we're gonna come back in the January earnings release, and give you a progress update on how the integration is progressing. And we'll also give a strategic update as well, and set out some goals and targets then. But, but for me, you know, the key takeaway of the Yourgene acquisition is it's a really exciting acquisition. It's great to have them as part of the Novacyt group and family, and I think they're gonna be a key driver for accelerating the sustainable growth within the combined business in the future.
Perfect. Thank you very much. Next question here asks if there'll be any changes in the Novacyt senior leadership team.
I think as we've said, there are two new board members who joined us from Yourgene, which is John Brown and Lyn Rees herself, obviously subject to being ratified at the next shareholders' meeting. But look, for now, that's as far as we've got. I mean, as we walk through integration, we will figure out how we want to run the business. But look, on those two appointments, I'm delighted, and we've got two very experienced board members joining the group, and they're super important that we're getting that knowledge in onto our board, you know, of the Yourgene business. So I'm delighted we've got we've started there.
Look, I think we will come back to everybody when the integration is a bit more advanced about, you know, how we're running the business beneath that, so.
Perfect. What milestones can we expect in the next 12 months?
Look, I think the one I call out earlier is that, you know, we come back to you at the end of January. At that point, I think, yes, give you an update on how we're trading, right? How the revenue of both businesses is trading. That's important. I think also come back to you with how we're progressing on the integration, 'cause we should be fairly advanced by then. Look, I was talking to the employees in the business. I guess what I would say in terms of milestones is let's not get distracted. I mean, acquisitions can be new, shiny things sometimes. You know, we both have customers. The customers don't care about the acquisition. They want us to continue and improve our service.
So, you know, we need to keep focused on that. You know, we have lots of deals in motion. There's, you know, good pipelines and businesses. We need to keep focused on that. Don't distract anybody. So that's really would be my message, certainly the message internally, and, and something to share with you. You know, we want to remain focused, keep the momentum we have in the business, right? Build on that momentum and do the integration without distracting people. That really is going to be the focus for the next few months.
... Perfect. Thank you very much. Could you provide an update on the progress of your RUO strategy? When will your new multiplex test be commercially available?
Yeah. So look, we, as I said, we've developed quite a few products in the first six months of the year. And I mentioned about going down a UKCA route as opposed to full IVDR. The first two of those products is scheduled to complete towards the back end of this year. So, and then that they're ready for commercialization effectively from early 2024. And look, unfortunately, in the regulated market we're in, there is a long lead time between developing a product. Like I said, that's the easy bit, and it's not an easy bit, but there's a long lead time for developing the product and getting it out into customers' hands.
I think the other thing I would say on RUO is, and I mentioned in the main presentation, you know, we have a very, very broad portfolio, you know, a substantial portfolio. And I think the reputation of Primerdesign was, you know, a custom assay business. We really could turn assets around really quickly and solve customers' problems very quickly. And we don't want to lose any of that. We want to keep that reputation. But I think we also need to build some more category expertise. I think we are going to have to try and accelerate growth in the business. We have to become better in certain categories where we can build more sustainable solutions for customers, attract bigger customers, and build sustainable revenues. And that's really how we're thinking about RUO as well.
Perfect. Thank you very much. I think you mentioned this in your last response, but what's the difference between UKCA and IVDR, and how does the regulatory process differ?
Yeah. So I think the—for those who are familiar with this, the old IVDD process was replaced by an IVDR process, and IVDD is an in vitro diagnostics directive, and it's now been replaced by the in vitro diagnostics regulation. But what that means to companies, which is the only thing you're interested in, what does it mean to businesses like us? In the old regime, you could effectively build a product, validate it yourself, and say, roughly, that was a 6-month journey to market. The difference now, and I'm speaking very broadly here, it's of course more complex than that. The difference now is that you need independent clinical data to validate your product, right? So instead of it being a 6-month, say, program from development to commercialization, that's more like an 18-month process, right?
That's a big deal. That's a big deal for small businesses, because I said, you know, the difference between putting energy into launching a product or trying to solve a market need and actually getting that product out into the market is long. That's the difference. What the UKCA mark does, is the UKCA mark does effectively is keeps the old IVDD-type regime for the UK, for a period of time, but it's for me—for the next, I think it's four or five years, depending on your products. So as I said, it gives us a shorter route to market, which for us is... Which for us matters. I mean, that's important for us, so we can get to revenues quicker. So that's the difference.
Perfect. Thank you very much. The next question is really around M&A and asks if you're still looking or actively looking for M&A targets.
Yes, we are. I mean, what we have, you know, I think it's a favorable market at the moment. I think we still have a strong balance sheet. You know, I think we will still remain active in the market. If we see something that makes sense, that accelerates our strategy and fits, I'd like to think we will pursue that. Maybe not something quite as big as Yourgene, but, you know, there, there's a lot out there. So absolutely, we're going to remain focused on M&A.
Perfect. Thank you very much, James. The final question we've got here is, could you provide an update on the situation with the DHSC?
Yeah, look, as ever, I can't really say a whole lot on DHSC. I mean, this is a claim that's going through the courts. There hasn't really been any material update since I updated everybody at the full year results. The trial date is still the same. It's June 2024, which is in the public domain. And both sides in these processes are busy building their case and going through the various steps that the court puts you through. And to be fair, there's not a whole lot more I can say at this stage. That's where we are. No real change.
Perfect. James, Steve, Lyn, thank you very much for that. I think you've addressed those questions you can for investors, and of course, the company will review all the questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before we redirect investors, provide you with their feedback, which is particularly important to the company, James, could I just ask you for a few closing comments?
Yeah, look, I think if Yourgene was the big news, I guess, I mean, in the last month, I hope what Lyn was able to share with you a bit more insight into what this business is, what this business means, and you get a sense of the opportunity. I think we're all really, really looking forward to putting the businesses together. I think it's a really, really exciting opportunity. You know, I've spent quite a bit of time with as many of the teams as I can over the last couple of weeks. You know, I think the cultures are aligned. I think they are similar businesses, so I'm really optimistic, really excited. I think it'll be... It's a great deal.
And look, I kind of thank shareholders really for their patience, because, you know, you've been waiting for this for a while. It's been a difficult journey. I mean, it wasn't the quickest deal we've ever done. So I thank you for your patience. And I think we can really deliver. So, that would really be my closing comment on that, as example. Thanks.
Perfect. Perfect, James, Steve, Lyn, thank you once again for updating investors today. Could I please ask investors not to close this session, as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Novacyt, we'd like to thank you for attending today's presentation, and good afternoon to you all.