Exhibit
|
|
Description
|
|
|
|
TRINITY BIOTECH PLC
|
|||
Trinity Biotech plc
|
|||
(Registrant)
|
|||
By:
|
/s/ John Gillard
|
||
John Gillard
|
|||
Chief Financial Officer
|
Contact: |
Trinity Biotech plc
John Gillard
(353)-1-2769800
|
Lytham Partners, LLC
Joe Diaz
(1)-602-889-9700
E-mail: investorrelations@trinitybiotech.com
|
• |
Total revenue for fiscal Q2, 2023 was $13.9m (excluding Fitzgerald Industries, which was disposed of in April 2023). Excluding our Covid focused PCR Viral Transport Media (“VTM”) products and Fitzgerald Industries, revenue for the
quarter of $13.7m was 3% lower than in Q1, 2023.
|
• |
Our core franchise Diabetes consumables revenues increased 10% over Q1, 2023.
|
• |
Recurring Diabetes consumables revenue rebounded strongly in Asia, increasing approximately 70% over Q1, led by demand recovery in China. We expect this level of demand to continue for the rest of 2023 in one of our most important
markets. In addition, Diabetes revenues grew by over 10% collectively in our direct distribution markets, namely the US and Brazil.
|
• |
Clinical Chemistry, Chromsystems and Syphilis product lines continue to show positive revenue momentum despite key raw materials backorders in some Clinical Chemistry product lines.
|
• |
These revenue gains were offset by lower Infectious Disease revenues compared with Q1, 2023 and reflects the irregular order cycles in the business line. In addition, we phased out our non-core and difficult to scale transplant
activity at our Buffalo, New York laboratory during the quarter.
|
• |
Revenue outlook for Q3 is expected to be approximately $14m to $15m. In addition, order backlogs have increased substantially to approximately $1m (broadly double the run rate in the first half of 2023).
|
• |
Significant commercial reorganization, customer engagement initiatives and service quality improvements have
positioned the core Haemoglobins franchise for a strong second half and 2023 revenue performance. Strategic instrument placements and a focus on maximizing instrument utilization are gaining traction toward building an expanding,
recurring revenue profile for the business. Diabetes consumables are expected to increase over 20% in the second half of 2023 vs the first half.
|
• |
Diabetes Instrument placements for the second half of the year are accelerating and are expected to be up to double those placed in the first half of 2023.
|
• |
In August, Trinity Biotech received U.S. FDA 510(k) clearance for the Premier Resolution System, the automated analyzer for accurate & precise quantification of haemoglobin variants. Our intention is to retake the market leader
position in haemoglobin variants with this modern successor to the highly regarded Ultra2 platform. The Premier Resolution System builds on our Ion Exchange technology reputation of excellence and a market leading combination of accuracy,
speed and value. We also expect this important clearance from the FDA to drive further penetration and increased utilization of the Premier Resolution System in key global markets, including Brazil (where there is substantial scale in
blood bank screening), and allow us to begin the regulatory process for the Chinese market.
|
• |
The redevelopment of our flagship diabetes HbA1c platform, the Premier 9210, is on track for a phased roll-out in 2024. The final redeveloped system is expected to feature an improved, backward compatible column and reagent formulation
that should feature up to 3 times the current injection capacity and reduced calibration frequency, with improved user interface and lab system integration. Launch of the new column and reagent will be the first step in a
multi-generational product development plan aimed at expanding the target market into higher throughput segments, driving lower service downtime and cost, while significantly expanding operating margins.
|
• |
Our improved design, combined with a significant overhaul of supply chain strategy, are expected to yield significant reductions in instrument cost, cost of goods sold related to test volume, and cost of service and repair.
|
• |
These cost competitive actions are aimed at significantly expanding our total addressable market in the high growth global Diabetes space. We have initiated a program to manufacture a version of our core Diabetes instrument in China.
In addition to optimizing supply chain benefits, we believe it will enable us to double our reach to a very significant proportion of the Chinese hospital market that is limited to domestic manufacturers. We plan to obtain regulatory
approval for domestic market entry by late 2024.
|
• |
Efforts are at an advanced stage to significantly reposition and scale the commercial focus of our 50-state certified lab in Buffalo, New York. The Company continues to see significant potential in its proprietary Sjogrens bio-marker
lab developed tests, despite limited commercialization activities to date, with approximately 20% average annual growth since 2020 and annual revenues approaching $4m. A serious Autoimmune complication of the broader dry-eye market,
studies indicate that Sjogrens syndrome may affect over 3 million individuals in the US or 1% of the US population.
|
• |
We are entering into a strategic revenue-sharing partnership with Trusted Health Advisors to lead our commercial and business development activities aimed at maximizing the Sjogren’s opportunity. The team, comprising of ex-senior
executives from Quest and Mayo Clinics, brings decades of experience and extensive network in the industry.
|
• |
The partners intend to explore the opportunity to leverage the Reference Lab’s Autoimmune capabilities to jointly target proprietary biomarkers library expansion opportunities and serve as a centre of excellence for therapeutic drug
monitoring and companion diagnostics across multiple Autoimmune diseases.
|
• |
The Company is focused executing on the launch and distribution of its TrinScreen HIV screening test, following the announcement by the Kenyan Ministry of Health of the adoption of the new HIV rapid testing algorithm. This algorithm
establishes Trinity Biotech’s TrinScreen HIV as the standard screening test in Kenya under World Health Organisation (“WHO”) guidelines.
|
• |
Field evaluation of the algorithm was completed in June, the Ministry of Health has communicated procurement & use specifications to the procurement agencies, and we have shipped kits for training purposes.
|
• |
We, along with the Kenyan government, are addressing legal challenges to the HIV testing algorithm and related process changes introduced. We are anticipating resolution of court challenges in hearings being held in early October. Our
expectation, and the government's actions, indicate that we will receive significant orders in the 4th quarter upon resolution of these legal matters.
|
• |
The Kenyan HIV screening program is one of the largest in Africa, with up to an estimated 10 million screening tests annually.
|
• |
In Q2 and Q3 2023, management accelerated headcount reductions as a result of:
|
o |
process simplification initiatives that have been ongoing for the past number of quarters,
|
o |
the implementation of new software tools in quality/regulatory compliance and production planning, and
|
o |
lower than expected revenues, particularly considering delays to the TrinScreen HIV roll out in Kenya.
|
• |
Excluding the impact of the disposal of Fitzgerald Industries and limited hiring to support TrinScreen HIV manufacturing, these changes are expected to deliver an approximately net 20% reduction in
headcount by the end of Q4 2023 compared to Q1 2023, with a resultant annualised cashflow saving of over $4m. Overall, this would represent an over 35% reduction in headcount compared to Q4 2020 when we started this optimisation journey.
|
• |
The majority of these 2023 reductions are in back-office functions such as Finance, Quality Assurance/Regulatory, and Supply Chain, reflecting the impact of modernisation and simplification projects lead by
the key senior functional leaders we have hired over the past few years.
|
• |
We expect the financial benefit of these reductions to make a meaningful impact from Q4 2023.
|
• |
To support TrinScreen HIV manufacturing we have hired approximately 15 additional staff.
|
• |
Average revenue per headcount is a key KPI for management and we intend to continue to transform and optimise our operations to improve this KPI overtime.
|
• |
We are now at the final validation stages of our revised manufacturing process for our key Diabetes A1c testing column, the key consumable for our Premier 9210 instrument.
|
• |
Bringing this process in-house in an optimised manner is projected to reduce the cost of goods of our Diabetes A1c testing column by over 30%.
|
• |
Based upon our current run rate of production, this is estimated to deliver over $1.5m in recurring annualised cashflow savings once we have fully transitioned to the revised manufacturing process and
should also allow our Premier 9210 A1c testing system to be more competitive in lower price/high volume segments of the market.
|
• |
We expect the financial benefit of these reductions to make a meaningful impact from Q4 2023 with an increased savings level in 2024 as we transition completely away from the legacy manufacturing process.
|
• |
Over 12 months ago, we initiated a supply chain optimisation programme for our Diabetes A1c testing instrument, with the intent of reducing the cost and optimising the quality of the instrument by moving to
more competitive supply chain participants.
|
• |
This programme has progressed significantly, and we have already commenced securing materials savings of 20% per instrument. Given the success of this programme to date, we are now targeting savings of
40%-50% in materials costs for our Premier 9210 instrument which based upon our expected production run rate would deliver recurring annualised cashflow savings of over $1.5m when fully completed.
|
• |
These changes are already delivering a working capital benefit in terms of lower inventory costs and we expect the EBITDA impact to begin in late 2023 or early 2024 as inventory is converted into sold
product.
|
• |
In addition, this lower cost of production should allow us competitively target growth in segments of the Diabetes A1c testing market that are lower price but higher volume than our traditional focus
segments, whilst maintaining target margin.
|
• |
There is also significant component commonality between our Premier 9210 and our Haemoglobin variant instrument the Premier Resolution that recently achieved FDA 510k clearance – this means that many of the
savings achieved for the Premier 9210 instrument can carry into a meaningful lower cost of production for the Premier Resolution.
|
• |
As previously announced, we are developing an improved, backward compatible reagent column system that we expect will feature up to 3 times the injection capacity of the current system.
|
• |
This programme is at its final stages of development and technical validation.
|
• |
Subject to successful validation, we expect to launch this new reagent column system in early 2024 and estimate that this system should deliver recurring annualised incremental cost of goods cashflow
savings of over $1m whilst again facilitating us competitively targeting growth in segments of the A1c testing market that are lower price but higher volume than our traditional focus segments, whilst maintaining target margin.
|
• |
We have initiated a programme to optimise the location and cost of certain downstream manufacturing and supply chain activities related to our HIV products, Uni-gold and TrinScreen.
|
• |
Our initial assessment indicates that such a programme could well deliver several million dollars of annual cashflow savings while providing the Company with additional manufacturing capacity to meet
increased demand for TrinScreen as we roll the product out to additional countries.
|
• |
We expect this key project to start to deliver recurring savings in late 2024 and we will provide further updates on this programme as it progresses.
|
2023
Quarter 2
|
2022
Quarter 2
|
Increase/
(decrease)
|
|
US$’000
|
US$’000
|
%
|
|
Clinical Laboratory
|
11,812
|
13,576
|
(13.0%)
|
Point-of-Care
|
2,086
|
1,840
|
13.4%
|
Total
|
13,898
|
15,416
|
(9.8%)
|
o |
A higher non-cash accounting charge for share-based payments, which increased by $0.9m in Q2, 2023 compared to Q2, 2022, due to options granted since Q2, 2022.
|
o |
An increase in foreign exchange losses largely related to the accounting driven requirement to mark-to-market Euro-denominated lease liabilities for right-of-use assets. In Q2, 2022, the foreign exchange gain on leases was just under
$0.6m while in Q2, 2023, a foreign exchange loss of $26k was recorded, resulting in an unfavourable quarter-on-quarter variance of approximately $0.6m.
|
o |
External advisory & professional services costs, including third party market research and technical assessment consultancy services, were higher by $0.6m in Q2, 2023 as we seek to identify & pursue next generation biotech
opportunities for very significant growth in market segments with total addressable markets of real scale that can fuel Trinity Biotech's growth into a truly scaled global biotech company.
|
Q2, 2023
US$’m
|
Q2, 2022
US$’m
|
|
Term loan interest
|
2.5
|
4.0
|
Penalty for early settlement of term loan
|
0.9
|
3.5
|
Convertible note interest
|
0.3
|
0.2
|
Notional interest on lease liabilities for Right-of-use assets
|
0.2
|
0.2
|
Fair value movement for derivative balances related to term loan
|
0.0
|
0.4
|
3.8
|
8.3
|
$m
|
|
Operating loss
|
(14.9)
|
Depreciation
|
0.3
|
Amortisation
|
0.2
|
Impairment charges
|
10.8
|
Adjusted EBITDA for continuing operations
|
(3.6)
|
Share option expense
|
1.0
|
Adjusted EBITDASO for continuing operations
|
(2.6)
|
(US$000’s except share data)
|
Three
Months Ended
June 30, 2023
US$000
(unaudited)
|
Three
Months Ended
June 30, 2022
US$000
(unaudited)
|
Six
Months Ended
June 30, 2023
US$000
(unaudited)
|
Six
Months Ended
June 30, 2022
US$000
(unaudited)
|
||||||||||||
Revenues
|
13,898
|
15,416
|
28,727
|
31,090
|
||||||||||||
Cost of sales
|
(8,868
|
)
|
(9,835
|
)
|
(18,124
|
)
|
(19,527
|
)
|
||||||||
Gross profit
|
5,030
|
5,581
|
10,603
|
11,563
|
||||||||||||
Gross margin %
|
36.2
|
%
|
36.2
|
%
|
36.9
|
%
|
37.2
|
%
|
||||||||
Other operating income
|
71
|
1
|
71
|
1
|
||||||||||||
Research & development expenses
|
(1,233
|
)
|
(984
|
)
|
(2,093
|
)
|
(1,949
|
)
|
||||||||
Selling, general and administrative expenses
|
(7,905
|
)
|
(5,929
|
)
|
(16,537
|
)
|
(12,160
|
)
|
||||||||
Impairment charges
|
(10,815
|
)
|
(519
|
)
|
(10,815
|
)
|
(519
|
)
|
||||||||
Operating Loss
|
(14,852
|
)
|
(1,850
|
)
|
(18,771
|
)
|
(3,064
|
)
|
||||||||
Financial income
|
62
|
-
|
216
|
-
|
||||||||||||
Financial expenses
|
(3,823
|
)
|
(8,300
|
)
|
(6,374
|
)
|
(20,303
|
)
|
||||||||
Net financial expense
|
(3,761
|
)
|
(8,300
|
)
|
(6,158
|
)
|
(20,303
|
)
|
||||||||
Loss before tax
|
(18,613
|
)
|
(10,150
|
)
|
(24,929
|
)
|
(23,367
|
)
|
||||||||
Income tax credit
|
267
|
32
|
278
|
183
|
||||||||||||
Loss for the period on continuing operations
|
(18,346
|
)
|
(10,118
|
)
|
(24,651
|
)
|
(23,184
|
)
|
||||||||
Profit for the period on discontinued operations
|
12,358
|
412
|
12,854
|
1,199
|
||||||||||||
Loss for the period (all attributable to owners of the parent)
|
(5,988
|
)
|
(9,706
|
)
|
(11,797
|
)
|
(21,985
|
)
|
||||||||
Loss per ADS (US cents)
|
(15.6
|
)
|
(28.6
|
)
|
(30.9
|
)
|
(75.1
|
)
|
||||||||
Diluted loss per ADS (US cents)
|
(15.6
|
)
|
(28.6
|
)
|
(30.9
|
)
|
(75.1
|
)
|
||||||||
Weighted average no. of ADSs used in computing basic earnings per ADS
|
38,283,367
|
33,952,095
|
38,221,258
|
29,289,617
|
||||||||||||
Weighted average no. of ADSs used in computing diluted earnings per ADS
|
38,283,367
|
33,952,095
|
38,221,258
|
29,289,617
|
June 30,
2023
US$ ‘000
(unaudited)
|
March 31,
2023
US$ ‘000
(unaudited)
|
December 31,
2022
US$ ‘000
|
||||||||||
ASSETS
|
||||||||||||
Non-current assets
|
||||||||||||
Property, plant and equipment
|
1,869
|
5,496
|
5,682
|
|||||||||
Goodwill and intangible assets
|
15,756
|
21,330
|
35,269
|
|||||||||
Financial asset
|
-
|
1,500
|
–
|
|||||||||
Deferred tax assets
|
1,125
|
4,297
|
4,218
|
|||||||||
Derivative financial asset
|
214
|
152
|
128
|
|||||||||
Other assets
|
108
|
120
|
139
|
|||||||||
Total non-current assets
|
19,072
|
32,895
|
45,436
|
|||||||||
Current assets
|
||||||||||||
Assets included in disposal group held for sale
|
-
|
17,746
|
–
|
|||||||||
Inventories
|
22,584
|
21,532
|
22,503
|
|||||||||
Trade and other receivables
|
13,866
|
13,594
|
15,753
|
|||||||||
Income tax receivable
|
2,240
|
1,858
|
1,834
|
|||||||||
Cash, cash equivalents and deposits
|
14,228
|
3,532
|
6,578
|
|||||||||
Total current assets
|
52,918
|
58,262
|
46,668
|
|||||||||
TOTAL ASSETS
|
71,990
|
91,157
|
92,104
|
|||||||||
EQUITY AND LIABILITIES
|
||||||||||||
Equity attributable to the equity holders of the parent
|
||||||||||||
Share capital
|
1,972
|
1,967
|
1,963
|
|||||||||
Share premium
|
46,619
|
46,532
|
46,458
|
|||||||||
Treasury shares
|
(24,922
|
)
|
(24,922
|
)
|
(24,922
|
)
|
||||||
Accumulated deficit
|
(36,153
|
)
|
(31,140
|
)
|
(26,695
|
)
|
||||||
Translation reserve
|
(5,628
|
)
|
(5,787
|
)
|
(5,775
|
)
|
||||||
Equity component of convertible note
|
6,709
|
6,709
|
6,709
|
|||||||||
Other reserves
|
23
|
23
|
86
|
|||||||||
Total deficit
|
(11,380
|
)
|
(6,618
|
)
|
(2,176
|
)
|
||||||
Current liabilities
|
||||||||||||
Liabilities included in disposal group held for sale
|
-
|
1,386
|
–
|
|||||||||
Income tax payable
|
287
|
33
|
28
|
|||||||||
Trade and other payables
|
12,570
|
12,910
|
15,375
|
|||||||||
Exchangeable senior note payable
|
210
|
210
|
210
|
|||||||||
Provisions
|
50
|
50
|
50
|
|||||||||
Lease liabilities
|
1,643
|
1,561
|
1,676
|
|||||||||
Total current liabilities
|
14,760
|
16,150
|
17,339
|
|||||||||
Non-current liabilities
|
||||||||||||
Senior secured term loan
|
39,791
|
49,199
|
44,301
|
|||||||||
Derivative financial liability
|
1,526
|
1,517
|
1,569
|
|||||||||
Convertible note
|
14,137
|
13,936
|
13,746
|
|||||||||
Lease liabilities
|
11,547
|
12,026
|
12,267
|
|||||||||
Deferred tax liabilities
|
1,609
|
4,947
|
5,058
|
|||||||||
Total non-current liabilities
|
68,610
|
81,625
|
76,941
|
|||||||||
TOTAL LIABILITIES
|
83,370
|
97,775
|
94,280
|
|||||||||
TOTAL EQUITY AND LIABILITIES
|
71,990
|
91,157
|
92,104
|
|
Three
Months Ended
June 30, 2023
US$000
(unaudited)
|
Three
Months Ended
June 30, 2022
US$000
(unaudited)
|
Six
Months Ended
June 30, 2023
US$000
(unaudited)
|
Six
Months Ended
June 30, 2022
US$000
(unaudited)
|
||||||||||||
Cash flows from operating activities
|
||||||||||||||||
Loss for the period
|
(5,988
|
)
|
(9,706
|
)
|
(11,797
|
)
|
(21,985
|
)
|
||||||||
Adjustments to reconcile loss to cash used in operating activities:
|
||||||||||||||||
Depreciation
|
305
|
47
|
656
|
479
|
||||||||||||
Amortisation
|
179
|
214
|
430
|
442
|
||||||||||||
Income tax credit
|
(267
|
)
|
(29
|
)
|
(278
|
)
|
(180
|
)
|
||||||||
Financial income
|
(62
|
)
|
-
|
(216
|
)
|
-
|
||||||||||
Financial expense
|
3,823
|
8,300
|
6,374
|
20,303
|
||||||||||||
Share-based payments
|
975
|
122
|
2,339
|
319
|
||||||||||||
Foreign exchange gains on operating cash flows
|
(98
|
)
|
(191
|
)
|
(187
|
)
|
(149
|
)
|
||||||||
Impairment charges
|
10,815
|
519
|
10,815
|
519
|
||||||||||||
Gain on sale of business
|
(12,718
|
)
|
-
|
(12,718
|
)
|
-
|
||||||||||
Other non-cash items
|
(65
|
)
|
995
|
130
|
305
|
|||||||||||
|
||||||||||||||||
Operating cash (outflows)/inflows before changes in working capital
|
(3,101
|
)
|
271
|
(4,452
|
)
|
53
|
||||||||||
Net movement on working capital
|
(1,294
|
)
|
(2,217
|
)
|
(2,657
|
)
|
(3,481
|
)
|
||||||||
|
||||||||||||||||
Cash used in operations before income taxes
|
(4,395
|
)
|
(1,946
|
)
|
(7,109
|
)
|
(3,428
|
)
|
||||||||
Interest paid
|
-
|
(1
|
)
|
-
|
(3
|
)
|
||||||||||
Interest received
|
-
|
2
|
-
|
2
|
||||||||||||
Income taxes (paid)/received
|
(23
|
)
|
13
|
(26
|
)
|
1
|
||||||||||
|
||||||||||||||||
Net cash used in operating activities
|
(4,418
|
)
|
(1,932
|
)
|
(7,135
|
)
|
(3,428
|
)
|
||||||||
|
||||||||||||||||
Cash flows from investing activities
|
||||||||||||||||
Payments to acquire intangible assets
|
(413
|
)
|
(1,658
|
)
|
(768
|
)
|
(3,211
|
)
|
||||||||
Payments to acquire financial asset
|
-
|
-
|
(700
|
)
|
-
|
|||||||||||
Net proceeds from sale of business unit
|
28,426
|
-
|
28,426
|
-
|
||||||||||||
Acquisition of property, plant and equipment
|
(151
|
)
|
(143
|
)
|
(425
|
)
|
(305
|
)
|
||||||||
|
||||||||||||||||
Net cash generated/(used) in investing activities
|
27,862
|
(1,801
|
)
|
26,533
|
(3,516
|
)
|
||||||||||
|
||||||||||||||||
Cash flows from financing activities
|
||||||||||||||||
Net proceeds from issue of share capital including share premium
|
-
|
25,019
|
-
|
25,019
|
||||||||||||
Net proceeds from new senior secured term loan
|
-
|
-
|
5,000
|
80,014
|
||||||||||||
Proceeds for convertible note issued
|
-
|
20,000
|
-
|
20,000
|
||||||||||||
Expenses paid in connection with debt financing
|
-
|
(40
|
)
|
(147
|
)
|
(2,356
|
)
|
|||||||||
Repayment of senior secured term loan
|
(10,050
|
)
|
(34,500
|
)
|
(10,050
|
)
|
(34,500
|
)
|
||||||||
Penalty for early settlement of term loan
|
(905
|
)
|
(3,450
|
)
|
(905
|
)
|
(3,450
|
)
|
||||||||
Purchase of exchangeable notes
|
-
|
-
|
-
|
(86,730
|
)
|
|||||||||||
Interest paid on senior secured term loan
|
(1,834
|
)
|
(1,920
|
)
|
(4,401
|
)
|
(3,706
|
)
|
||||||||
Interest paid on convertible note
|
(75
|
)
|
(49
|
)
|
(150
|
)
|
(49
|
)
|
||||||||
Interest paid on exchangeable notes
|
-
|
(4
|
)
|
(4
|
)
|
(1,289
|
)
|
|||||||||
Payment of lease liabilities
|
(590
|
)
|
(729
|
)
|
(1,191
|
)
|
(1,500
|
)
|
||||||||
|
||||||||||||||||
Net cash provided by/(used in) financing activities
|
(13,454
|
)
|
4,327
|
(11,848
|
)
|
(8,547
|
)
|
|||||||||
|
||||||||||||||||
Increase in cash and cash equivalents
|
9,990
|
594
|
7,550
|
(15,491
|
)
|
|||||||||||
Effects of exchange rate movements on cash held
|
85
|
(153
|
)
|
100
|
34
|
|||||||||||
Cash and cash equivalents at beginning of period
|
4,153
|
10,012
|
6,578
|
25,910
|
||||||||||||
|
||||||||||||||||
Cash and cash equivalents at end of period
|
14,228
|
10,453
|
14,228
|
10,453
|