Ekf Diagnostics Share Discussion Threads

[wan] 19/4/2024 09:15

From my posts 15 & 16:

"Under their growth prospects, EKF have what they describe as a key partnership with global leader Fresenius Kabi, but in what degree and what products doesn't get mentioned (yet)."

"And just to reiterate, EKF describe (not yet on EKF's website) their new fermentation facility as the following:

'State-of-the-art' microbial fermentation facilities and downstream processing capabilities. Enable the production of top-tier diagnostic enzymes and customised products tailored for medical diagnostics, pharmaceuticals, and industrial applications."

So, to perhaps emphasise my main thrust:

About Fresenius Kabi

Fresenius Kabi is a global healthcare company that specializes in lifesaving medicines and technologies for infusion, transfusion and clinical nutrition. The company’s products and services are used for the therapy and care of critically and chronically ill patients.

Its product portfolio comprises a range of highly complex biopharmaceuticals, clinical nutrition, medical technologies, and I.V. generic drugs. Within biopharmaceuticals, Fresenius Kabi offers, among others, biosimilar drugs with a focus on autoimmune diseases and oncology. The company’s clinical nutrition offering includes a wide selection of enteral and parenteral nutrition products. In the segment of medical technologies, its offering includes vital disposables, infusions pumps, apheresis machines, cell therapy devices, and more. Fresenius Kabi puts essential medicines and technologies in the hands of people who help patients and finds the best answers to the challenges they face.

Following its strategy “Vision 2026”, which is a key part of the #FutureFresenius program of the Fresenius healthcare group, the company is furthermore committed to increase efficiencies in the therapy and care of patients and improve access to high-quality healthcare around the globe. Fresenius Kabi aspires to be leading globally in its product segments – all for the benefit of patients, its customers, and its stakeholders.


Currently, EKF do not appear, on the face of it, to have products that exactly fit that description or address those particular markets.

So, time will eventually tell, and perhaps a few more successful fermentation runs confirming the success in the "development of this fermentation process and scale-up" (confirming that it is a new state-of-the-art process) for the unnamed customers that will take up the majority of the capacity at EKF's South Bend facility.

Is the development of the new fermentation process the one that I highlighted in post 15 and fully owned by Fresenius? We may get confirmation this quarter.

[supernumerary] 14/4/2024 11:48

I've followed for years without ever really understanding what they do - shameful I know. Time for some more research I think...

[wan] 14/4/2024 07:55

Super...It's not specifically the GLP-1 agonists that caught my attention per se (but it is quite interesting), and it was more about enzymes specifically engineered for the purpose, and the development of new enzymes (and an extensive patent portfolio protecting the technology). And that someone has to manufacture the new specifically engineered enzyme used in the process.

The delays/pushed-out timescales (technology transfer/teething problems?) for EKF's fermentation facility have played its part in EKF's current low valuation. But does this shed some light on why the new 'state-of-the-art' fermentation facility with significant increased capacity and downstream processing capabilities does not yet feature on EKF's website? In other words, are the details perhaps sensitive (at this stage) and that the majority of the increased capacity is already spoken for so to speak?

Hence I am quite keen to see what detail we get from EKF's new website which is scheduled for later this quarter.

To my mind, and no matter how you dress it up, why would you not be openly promoting the increased capacity (even on the current website), and even if its validation has taken longer?

More patience is required, but in my view, the sun appears to be rising and not setting!

[supernumerary] 13/4/2024 10:55

wan - thanks for the info. Not sure if you're aware, but both liraglutide and semaglutide are in short supply.

-----

GLP-1 agonist shortage will last until end of 2024, government warns

The supply of glucagon-like peptide-1 (GLP-1) receptor agonists is not expected to return to normal until at least the end of 2024, the Department of Health and Social Care for England has warned,1 given the shortages caused by increased demand and off-label use.

Clinicians have been told not to prescribe GLP-1 agonists …
-----

Novo Nordisk have an oral version of semaglutide that they'd love to release - as you can imagine patients dislike self-injecting weekly - but unfortunately it uses 20x (!) the amount of sg that the injectable does.

[wan] 13/4/2024 08:56

And just to reiterate, EKF describe (not yet on EKF's website) their new fermentation facility as the following:

'State-of-the-art' microbial fermentation facilities and downstream processing capabilities. Enable the production of top-tier diagnostic enzymes and customised products tailored for medical diagnostics, pharmaceuticals, and industrial applications.

[wan] 13/4/2024 08:43

Under their growth prospects, EKF have what they describe as a key partnership with global leader Fresenius Kabi, but in what degree and what products doesn't get mentioned (yet).

The following recently caught my eye (amongst other aspects):
Enzypep applies the principles of Green Chemistry to develop a breakthrough technology for the synthesis of oligopeptides. Using enzymes specifically engineered for the purpose, the Enzypep technology is expected to become state-of-the-art in design and preparation of complex peptides, providing pharmaceutical products in higher purity, at lower cost, and in a sustainable, environmentally-friendly manner."

The following is perhaps under most radars:
Enzypep is now fully integrated in Fresenius Kabi. Enzypep originally developed Chemo Enzymatic Synthesis of peptides. The patents that are protecting the technology are now owned by Fresenius Kabi and are focused on proprietary technology for the synthesis of several long peptides like Liraglutide and Semaglutide as well as the development of new enzymes. Companies that are claiming access to Enzypep patents for Lira and Sema are not sending a correct message to the scientific and industrial community.


Point of interest - Novo Nordisk Inc's Saxenda® (liraglutide) is an injectable prescription weight loss medicine.

[wan] 13/4/2024 08:21

The US is legislating, via the Biosecure Act if passed (which has bipartisan support) -

and also through existing supply chain resilience measures: Fact sheet -

That US buyers should reduce their dependency on medical products sourced from China(and other countries of concern) and seek alternatives, ideally manufactured in the US in order to improve supply chain security and resilience. Many companies are therefore taking a closer look at their supply chains.

Importantly, the BIOSECURE Act applies to “biotechnology equipment or services,” which is broadly defined to include:

Equipment, components, accessories, software, firmware, or other digital components designed for use in the research, development, production, or analysis of biological materials – this includes genetic sequencers, mass spectrometers, polymerase chain reaction machines, or any other instrument, apparatus, machine, or device; or

Services for the research, development, production, analysis, detection, or provision of information, including data storage and transmission related to biological materials. This includes advising, consulting, or support services with respect to (1) the use or implementation of the equipment described above and (2) disease detection, genealogical information, and related services.


If the bill is enacted, one would expect it would have a sizable impact on the industry, as it would require companies that have (or would seek to obtain) contracts with the U.S. government to make significant and often complex changes to their operations and would increase demand for substitute equipment and services,” according to an alert from the law firm Ropes & Gray.


These aspects, overall, looks set to be, at the very least, a supporting factor for those with reliable ISO certified and US FDA approved manufacturing facilities, such as EKF's new US precision fermentation facility, and indeed products manufactured in EKF's European facilities (also considered a simplified, secure and reliable supply chain).

[wan] 10/4/2024 14:46

Strictly further food for thought (literally!) -

Keto Diet Prevents Early Memory Decline in Mice
Molecule From Diet May Play Key Role in Slowing Alzheimer’s Disease
by Amy Quinton March 19, 2024

Slowing Alzheimer’s
The new study, which follows up on that research, found that the molecule beta-hydroxybutyrate, or BHB, plays a pivotal role in preventing early memory decline. It increases almost seven-fold on the ketogenic diet.

“The data support the idea that the ketogenic diet in general, and BHB specifically, delays mild cognitive impairment and it may delay full blown Alzheimer’s disease,” said co-corresponding author Gino Cortopassi, a biochemist and pharmacologist with the UC Davis School of Veterinary Medicine.
Full story -

Ketogenic diet and BHB rescue the fall of long-term potentiation in an Alzheimer’s mouse model -

This suggests BHB is a pharmacological means to support Long-Term-Potentiation in Alzheimer’s Disease.

We suggest that KD, Ketone supplements, and BHB formulation are most likely to have an impact on this earliest MCI phase of human AD, and could potentially extend/rescue this phase in humans, as KD/BHB appears to rescue MCI in APP/PS1 mice. Furthermore, since KD is already consumed by humans, and since multiple ketone supplements are on-market and available, rapid translation to human clinical trials of efficacy for delay of this MCI initial phase of AD could occur.

[wan] 09/4/2024 09:49

Strictly as aside, most will have heard/seen the news flow surrounding weight loss drugs such as Wegovy and Ozempic (which is delivered via injection and has side effects) that have ignited a gold rush for pharmaceutical companies.

What has recently caught my attention, and again strictly as aside, is the use of beta-hydroxybutyrate (BHB, or derivatives of) as a clinically useful supplement.

Most will have heard of the ketogenic diet which is a high-fat, very low-carbohydrate, moderate-protein diet that will induce a state of ketosis, but because of its restrictive nature, some find it difficult to adhere to.

What I have come across is evidence that the use of beta-hydroxybutyrate may induce a state of temporary ketosis with less undesirable side effects, thereby promoting the benefits of ketosis but not via the ketogenic diet.

Interestingly, BHB supplements are starting to become available from the likes of Walmart, Amazon and even Mckesson, plus other pharmacy outlets in the US.

For an interesting read -
How Beta-Hydroxybutyrate (BHB) Affects Weight Loss

But what would happen if we chose to manipulate how our body uses its fuel? Often we do this by employing diets that limit our intake of certain macronutrients, thus making us more dependent on the other macronutrients. One of these diets is called the ketogenic diet — a popular diet that stresses eating an extremely limited amount of carbs (or no carbs at all) in order to burn more fats.

As a result of the ketogenic diet, or keto diet for short, the liver breaks down the fatty acids in fats, and creates ketone bodies as a result. These ketone bodies are individual, water-soluble compounds that serve as fuel for the brain, heart, and muscles in times when carbohydrates are in short supply. And the predominant ketone body that accounts for upwards of 78% of all ketone bodies in the blood is called beta-hydroxybutyrate, or BHB for short.

So why is this ketone body so important, and why do we produce so much of it? What purpose does it serve, and why should we care how much our bodies are making? To find out more, let’s dive deeper into the world of fats, ketone bodies, and BHB.
Full article -

There is also further emerging evidence, including in clinical trials, of BHB being utilised in various clinical conditions and again beyond its use in just the diagnosis of ketosis.

The main thrust, and strictly as food for thought for now, is that the market for BHB could be materially larger than its current use in the diagnosis of ketosis (which is already a large market).

Btw, I note Sekisui Diagnostics is also selling EKF's BHB products.

[wan] 08/4/2024 10:44

For those who have looked into precision fermentation and its prospects, most of the information/news flow is ultimately centred around fermentation as an alternative to food production, and its quite difficult to see past the plethora of information dedicated to that area, but there are correlations: Precision fermentation uses microbial hosts for producing specific functional ingredients. These ingredients typically require greater purity/downstream processing.

EKF's new website launching this quarter, and any subsequent news flow, will hopefully change that, but for now the two paragraphs posted in post 9 (from EKF's website) does concisely sum it up, but there is so much more to say about the precision process that can deliver novel diagnostics to target-based therapeutics (and more)!

[wan] 29/3/2024 11:38

During EKF's recent presentation, some will have picked up on the fact that EKF has a lactate product in development(for a long time). Importantly, this is a platform technology i.e. multi-test/multi-analyte product, compared to single analyte tests for most of EKF's current point-of-care portfolio.

Further capex is aligned to the development of this product in 2024 and is discussed at 48m 20sec into the presentation -


In my view, the new product is probably connected to the following, which has clearly taken longer (as mentioned in the presentation) -

4. Investment into Point of Care business to maximise
distribution network and diversify existing product portfolio
4a. Brand extensions and new product development

Launch EKF Response aimed at sepsis testing in critical care settings
Multi-parameter device based on next generation Lactate Scout sensor
Target US market. Parallel launch in US and Europe. Limited competition and high
demand for fast, accurate testing
Point-of-Care platform technology for use in critical care settings with additional
development plans into obstetrics and primary care
Lactate for use in patient pathway determination in suspected sepsis cases
Addresses unmet need in a $620m sepsis diagnostics market space that is expected to
grow 10% YoY. US market for sepsis in critical care is $49m
Delivery late 2022

2021 – 2024 Growth Strategy
Investor Presentation w/c 7 June 2021
Page 10 -

Obviously there is further to go in terms of development and authorisation etc, but a multi-test platform technology, if successfully delivered, would be a potential game changer.

The development appears relatively advanced, and understandably it's not currently reflected in EKF's share price.

To demonstrate the level of interest and value that a platform technology can create, the following deal which closes later this year, provides much food for thought -

Roche to pick up LumiraDx’s point-of-care tests through $350M deal
By Conor Hale
Jan 2, 2024

Roche has a plan to build out its point-of-care diagnostic catalog, with the goal of delivering more tests to homes, pharmacies, doctor’s offices and elsewhere. The company aims to acquire a selection of products from the flagging LumiraDx, including its shoebox-sized analysis instrument and a menu of specialized testing strips.

The deal, expected to take effect by the middle of this year, includes a payment of $295 million upfront. Another cache of up to $55 million has been set aside to reimburse LumiraDx and its backer BioPharma Credit for keeping its point-of-care business afloat until the handover is complete.

The company’s second-quarter 2023 financial results posted $21 million in revenue, down from $44 million during the same period the year before, including $9.2 million in non-COVID sales
Full story -

[wan] 27/3/2024 09:14

Two paragraphs added to the header, as I wanted to make sure that the 'precision fermentation' aspect was effectively highlighted and appreciated, as news here and elsewhere will likely feature going forwards. Including, a new EKF website that's scheduled for launch in the second quarter that will better reflect the dynamic global business, and better reflecting the cutting edge nature of EKF's Life Sciences and the global nature of EKF's Point-of-Care division:-

EKF Life Sciences is at the forefront of supporting global demand in precision fermentation, enzyme applications and research, providing innovative biotechnology solutions to deliver advancements in healthcare and medicine.

Utilising its unique technical expertise, EKF Life Sciences uses precision microbial fermentation and advanced downstream processes to isolate and deliver the highest quality enzymes and biomolecules that have been specially engineered to customer specifications.

[wan] 27/3/2024 05:39

Robow...It's certain funds associated to CM that have acquired over 132m shares, so it's unlikely to be their first purchase (or maybe even their last).

Pugugly...My thoughts are that EKF's current undervaluation may not go unnoticed, and CM would hopefully help thwart any low offers, even one at a 30% premium to todays price!

On the other hand, as EKF's highly cash generative Point-of-Care division returns to routine profitable growth this year, and Life Science scales up through 2024 and into 2025, CM's funds may support the right offer if it was at a significant premium to a recovered share price.

My preference is for EKF to continue growing, the Life Science division has a lot of exciting high growth opportunities to fulfil in 2024 and 2025 (and certain funds connected to Christopher Mills no doubt appreciate that).

[pugugly] 26/3/2024 21:35

Wan - Thanks. Interesting - Not yet enough to require an offer but (imo) enough to block a vulture bid. Thoughts?

"Under the Takeover Code, when a buyer acquires “control” of a target company it must make a cash offer to all shareholders offering to acquire their shares at the highest price paid in the last 12 months. The Takeover Code deems “control” of a target to arise when a buyer acquires shares carrying 30% or more of the voting rights."

An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make the offer, or any person acting in concert with that person, for any interest in shares of the company during the 12 months prior to the announcement of the offer.

[robow] 26/3/2024 16:46

Well spotted Wan. Is this his first purchase?

[wan] 26/3/2024 05:05

In case anyone missed or misses it, EKF RNS after the market close (5.15pm) -

EKF Diagnostics Holdings plc (AIM: EKF), the AIM-listed global diagnostics business, announces that the Board of EKF has been informed that on Friday 22 March 2024, certain funds connected to Christopher Mills, Non-Executive Director, purchased a total of 100,000 ordinary shares of 1 pence each in the Company ("Ordinary Shares") at a price of 25.78 pence per Ordinary Share.

Following this transaction, Christopher Mills' total direct and indirect interest in the Company is 132,350,000 Ordinary Shares, representing approximately 29.169% of the total voting rights over the Company's issued share capital.

[pugugly] 24/3/2024 08:48

Much appreciated.

[wan] 24/3/2024 08:00

Given that EKF's senior management team has successfully refocused the business back to pre-pandemic levels, and simplified the business by removing non-core, low-margin products from EKF's portfolio, which will result in increased profitability, it's worth looking at a few more comparisons from 2019 prior to the pandemic.

Towards the close of 2019 (prior to any effects of Covid), EKF shares were trading close to 35p

2019 Financial Highlights
• Revenue up 6% to £44.9m (2018: £42.5m)
• Gross profit up 4% to £23.7m (2018: £22.7m)
• Gross margin 52.8%
• Adjusted EBITDA* up 12% to £12.0m (2018: £10.7m)
• Profit before tax £5.5m
• Basic Earnings per share of 0.81p (2018: 2.21p), underlying Basic Earnings per share* of 1.20p (2018: 1.01p)
• Cash generated from operations of £6.5m (2018: £9.9m)
• Cash at 31 December 2019 of £12.1m (2018: £10.3m), net cash of £11.4m (2018: £9.4m)

2019 Analysers Sold - 14,167
2019 Tests Sold - 74,139,615


March 2024 Shares currently trading at around 26p

2023 Financial highlights
● Revenues of £52.6m in-line with market expectations (2022: £66.6m)
- Revenues (excluding COVID-related & clinical chemistry sales) of £48.7m (2022: £48.6m)

● Gross profit before exceptionals of £24.4m (2022: £30.8m)

● Gross margin improved to 45% (2022: 36%) and admin expenses reduced by £3.5m

● Adjusted EBITDA* of £10.4m (2022: £14.9m)

● A return to profit before tax of £2.1m (2022: loss of £8.9m)

● Cash generated from operations of £8.8m (2022: £12.7m)

● Group cash, net of borrowings (excluding IFRS 16 liabilities), at year end of £4.7m (2022: £11.4m), primarily reflecting cash generated from operations less £6.8m capital expenditure (2022: £4.4m) and £5.4m dividend payment (2022: £5.5m)

2023 Analysers Sold - 12,000+
2023 Tests Sold - 95 million+

In my view, this perhaps effectively demonstrates why Panmure Gordon says EKF looks circa 30% undervalued on the basis of the point of care division alone, which in turn implies a share price closer to 36p and is relatively achievable in the near term, if not already justifiable.

[cambridgedon] 23/3/2024 09:37

Thanks Wan!

[wan] 23/3/2024 09:19

As promised, I have created a new EKF thread which, as a consequence of notable investment, hard work, and the resulting developments delivered by the management, hopefully better represents where EKF is now and importantly where EKF is potentially heading.

[wan] 23/3/2024 09:18

As promised, I have created a new EKF thread which, as a consequence of notable investment, hard work, and the resulting developments delivered by the management, hopefully better represents where EKF is now and importantly where EKF is potentially heading -

[wan] 23/3/2024 09:07

EKF is a global diagnostics and biotechnology company delivers diagnostic technologies and biotechnology solutions that empower healthcare and medical providers to make informed clinical decisions through point-of-care testing and life sciences applications.

After rationalisations and investments made over the last two years resulting in a simplified structure of two divisions, Point-of-Care and Life Sciences, EKF is now well placed to deliver sustainable growth and improved returns.

In a buy recommended brokers note, Panmure Gordon said:
“EKF looks circa 30% undervalued on the basis of the point of care division alone, encouraging progress with customers in the new fermentation facility offers the potential for further upside. Emerging from its transitional period EKF is well positioned for a return to more consistent performance and a strengthening cash position.”


Singer Capital Markets broker note:
EKF’s FY23 results are in line / slightly ahead of expectations. Growth drivers remain intact in both Point-of-Care and Life Sciences and, with a greater focus on core products, margins should continue to improve from here. This is key to supporting a re-rating and we see considerable value at current levels. With profit forecasts unchanged, we roll forwards our valuation to FY24 and increase our TP to 36p, reiterating our Buy recommendation.
(full note available via Research Tree -

It's perhaps somewhat underappreciated that EKF has a well-established and comprehensive base of installed Point-of-Care diagnostic users supported by high-quality global distribution channels. In 2023, EKF sold over 12,000 Point-of-Care analysers, resulting in the sale and manufacture of over 95 million individual test consumables. The installed base of diagnostic instruments is currently delivering guaranteed recurring revenues of £35-40m, and is set for further growth in 2024 and beyond (cue Panmure Gordon's point-of-care comment above).

In Life Sciences, EKF has invested in a new facility with a full range of fermenters of different capacity, including increased downstream processing, offering contract fermentation services for clinically important enzymes and proteins.

EKF Life Sciences is at the forefront of supporting global demand in precision fermentation, enzyme applications and research, providing innovative biotechnology solutions to deliver advancements in healthcare and medicine.

Utilising its unique technical expertise, EKF Life Sciences uses precision microbial fermentation and advanced downstream processes to isolate and deliver the highest quality enzymes and biomolecules that have been specially engineered to customer specifications.

Customer onboarding has commenced with several fermentation runs completed that will generate revenue in 2024 and will lead to further growth in 2024 as the new customers scale up.

With a full range of fermenters of different capacity now online, EKF will look to scale up output throughout 2024 and to add additional customers throughout the current year.

EKF are also in active discussions with new fermentation customers for development and scale-up opportunities to come on-line late 2024 and through to 2025.

EKF's Outlook Statement:
• Investment in our focused core products within Hematology, Diabetes and β-HB will drive further, sustainable growth
• Strengthening relationships with key global partners and distribution channels to increase our existing market share in identified core product ranges
• 2024 will see the completion of the rationalisation process, resulting in a streamlined core business portfolio, and expansion of fermentation offering
• EKF is well placed to deliver growth and improved returns from the investments made over the last two years
Presentation -

Please conduct your own research when making investment decisions, as the originator, or the threads contributors, could be either wrong or inaccurate.

[earwacks] 21/3/2024 16:44

I don’t know tongosti. I only got in at the 27p level. Obviously that was the Covid periods lot of companies suffered then and Bailes was brought back in to sort it out. Time will tell as they say. This is probably the worst market in living memory without crashes. We have them daily now!

[tongosti] 21/3/2024 14:36

Clearly most of us would have been better off putting our money under the mattress or simply spending it on something nice!Lol. 3 years and counting but you've finally come around my good man!