Ekf Diagnostics Share Discussion Threads

[tongosti] 31/3/2022 16:34

Agreed on IC. Have already been proven right from 80+ to 43. Now the question is will I be proven right for another plunge down to 33? Time will tel pal but that's my call. Very nasty reversal earlier this week from a max price of 55.

[wan] 31/3/2022 16:33

Cisk...I don't know about the IC track record in that regard, but one assumes they are aligning with the Singer note. Still, I suppose the wider market perception is currently coinciding well with the planned share buyback (effectively shares issued at 80p+ v buyback at 40p+).

Perhaps an example of how treasury shares could be reissued/utilized -

Additional consideration

Subject to the EBITDA performance of ADL Health for each of the three yearly periods ending on the first, second and third anniversaries of completion, additional consideration will be payable to the vendors of ADL Health (“Earnout Payments”).

Provided always that the ADL Health’s EBITDA (“ADL EBITDA”) for the relevant period (as set out below) is not less than $5 million, EKF shall make Earnout Payments to the vendors calculated as to:

30% of ADL EBITDA for the period from the day following completion to the first anniversary of completion; plus
20% of ADL EBITDA for the period from the day following the first anniversary of completion to the second anniversary of completion; and
10% of ADL EBITDA for the period from the day following the second anniversary of completion to the third anniversary of completion

The aggregate Earnout Payments are capped and will not exceed $60 million. The Earnout Payments will be satisfied by the further issuance of EKF ordinary shares covering 50% of each Earnout Payment, with the remaining 50% to be satisfied at the discretion of the ADL Health vendors in either cash or further EKF ordinary shares. The price per share issued to satisfy any Earnout Payment will be calculated using the average mid-market closing price of EKF’s shares for the five working days immediately preceding the issuance date of such shares. If the share price falls below 60 pence during the earnout period and subject to prior consultation with the vendors in good faith, EKF has the right to satisfy any Earnout Payments using cash only.

[cisk] 31/3/2022 15:55

Wan, no serious investor pays any attention to IC, in fact probably doing the opposite of what they say would probably yield better results!

But it probably mirrors wider market perception.

Regardless - us - the pro-EKF investor group, or the bears (Ton / mkt) will either be proved right or wrong in the fullness of time.

All I know is that if you follow the mkt, you're basically a tracker. As people post on this board, I'm assuming they hope to outperform the market!

[wan] 31/3/2022 11:18

I forgot to add this -

Element Launches the AVITI™ System to Democratize Access to Genomics
MARCH 14, 2022

Element Biosciences Inc., developer of a new and disruptive DNA sequencing platform, today announced the commercial launch of the Element AVITI™ System, a benchtop sequencer offering an unrivaled combination of performance, cost, and flexibility. Element’s proprietary Avidity Sequencing™ chemistries enable exceptional accuracy and cost efficiency that is unmatched by other benchtop systems. The AVITI™ System operates two random access flow cells that enable independent run start flexibility of each flow cell, and the AVITI™ operating software features tunable read throughput control for additional run time flexibility.

The launch of the AVITI™ System is the latest in a series of announcements that have highlighted Element’s key partnerships with established and emerging leaders in the NGS Library Prep and Bioinformatics segments, each of whom demonstrates powerful use cases for the AVITI™ System.

These partners include, in alphabetical order:

Agilent Technologies
Dovetail Genomics
Fabric Genomics
Genoox
Google DeepVariant
Jumpcode Genomics
New England Biolabs (NEB)
QIAGEN
Roche
Sentieon
10x Genomics
Watchmaker Genomics

Element is now accepting orders for the AVITI™ System, with shipments expected to begin in Q2 2022.

Full release -

[wan] 31/3/2022 11:11

I have followed up on part of CEO, Mike Salter's answer to one of my other questions with regard to EKF's customer base etc. As one example (I will look at others) he referred to the fact that EKF had been working with several small companies. One of those companies from the San Diageo area was working on forensic genomics and the plan was to manufacture products and as they grow, EKF would grow too. However, he went on to suggest that the dynamics have changed somewhat as a very large life science company had recently partnered with said small company and are taking on their products for global distribution.

I am reasonably sure the following partnership is what Mike Salter was referring to -

Element Biosciences and Jumpcode Genomics Partner to Validate Jumpcode’s CRISPRclean® Technology on Element’s AVITI™ System for a Broad Set of Genomic Applications
Press
Feb 24, 2022

SAN DIEGO, Calif., Feb 24, 2022 /PRNewswire/– Element Biosciences, Inc., developer of a new and disruptive DNA sequencing platform, today announced a collaboration and co-marketing partnership with Jumpcode Genomics that validates Jumpcode’s CRISPRclean technology on Element’s AVITI System. The partnership has already demonstrated the value of pairing the technologies, promising improved data quality and cost savings across various genomic applications.
Full release -

Another recent Jumpcode announcement -

Jumpcode Genomics Launches CRISPRclean Single Cell RNA Boost Kit

CRISPRclean® technology improves single cell transcriptional profiling, enabling scientists to discover and see signals that were previously obscured by abundant genomic sequences

SAN DIEGO, Calif. – March 29, 2022 – Jumpcode Genomics, a genome technology platform company focused on improving the understanding of human biology, today announced the launch of the CRISPRclean Single Cell RNA Boost Kit. The method leverages Jumpcode’s patented CRISPR-based technology to remove uninformative sequences from libraries, enhancing single cell experiments and enabling scientists to extract greater insights from genomic data. The technology has broad applicability across basic and translational research, clinical applications, infectious disease and oncology.

“As we’ve seen incredible growth in single cell analysis, it’s become evident that RNA sequencing can help fuel the discovery of rare cell types and development of new drug targets. However, historically, there have been many challenges in realizing the full potential of single cell RNA sequencing, including the presence of abundant uninformative transcripts that can mask impactful biological findings,” said Yaron Hakak, Ph.D., CEO of Jumpcode Genomics. “Jumpcode’s new CRISPRclean Single Cell RNA Boost Kit enables unbiased discovery by addressing this needle in a haystack problem, allowing scientists to see signals that have been previously obscured.”
Full release -

This is only one example, and to suggest EKF are heading back to pre-pandemic doldrums, and keeping it polite, is in my view, very wide of the mark!

[wan] 31/3/2022 09:22

Again appearing not to align with managements presentation regarding the prospects and rationale for the significant investment -

EKF heads back to the pre-pandemic doldrums

The diagnostics company intends to redirect the capabilities developed for Covid-19 into other activities

March 29, 2022
By Mark Robinson

Brokers will be reassessing forecasts in view of the chairman’s comments, though it’s fair to assume that headline numbers will pull back appreciably in the current year. There may be reason to think that the shares have been oversold, but we return to hold until details emerge of how EKF plans to redirect new clinical capabilities brought about by the virus. Hold.
Full article -

'Heading back to pre-pandemic Doldrums' implies stagnant growth and appears to be making comparisons to pre-pandemic levels of revenue with the same regard to the growth prospects, which are materially different to pre-pandemic!

In my view, headline numbers will pull back for the reasons highlighted in the Results, but let's be clear, EKF will still be generating revenue and cash materially above pre-pandemic levels as perhaps indicated by Q1 22 being inline with Q1 21, and because COVID testing is reducing not stopping, and also because other testing revenues will be coming on line amongst 'many' others e.g. IBD testing in Q2 2022 and introduction of NIPT testing in March 2022.

Plus, EKF are not the only diagnostic company awash with cash, with much larger diagnostic and healthcare players having enormous amounts of cash looking to be deployed and committed in materially expanding their portfolios. For example, cue the level of interest in EKF 'new' US fermentation facility and subsequently EKF have built a pipeline of 'new' accounts, with CEO, Mike Salter, saying there was limited competition in this highly specialised area, especially with the higher volume capacities EKF have targeted (and no doubt their 'partners' require).

So, I am taking the positive view, that EKF are in a much different place compared to pre-pandemic, and could well deliver above the current low expectations

[wan] 30/3/2022 10:31

Investors who listened to/read the presentation will have picked up on the fact that EKF supplied sample collection tubes and kits to public health customers in UK and Ireland.

There was no mention of preparedness presenting an ongoing supply requirement, but I note the following (excerpts follow) -

29th March 2022

Secretary of State for Health and Social Care Sajid Javid said:

Thanks to our plan to tackle Covid we are leading the way in learning to live with the virus. We have made enormous progress but will keep the ability to respond to future threats including potential variants.

Vaccines remain our best defence and we are now offering spring boosters to the elderly, care home residents and the most vulnerable – please come forward to protect yourself, your family, and your community.

Under the plans set out today free symptomatic testing will be provided for:

Patients in hospital, where a PCR test is required for their care and to provide access to treatments and to support ongoing clinical surveillance for new variants;

The government has retained the ability to enable a rapid testing response should it be needed, such as the emergence of a new variant of concern.

This includes a stockpile of lateral flow tests and the ability to ramp up testing laboratories and delivery channels.

Full release -

I am keeping this aspect firmly in mind, including the fact that some degree of testing is set to continue for the foreseeable............but moving on and now focusing on the multiple elements driving growth beyond COVID testing!

[tongosti] 30/3/2022 09:25

"we are therefore able to benefit from the lower share price."Really?! These (extremely expensive) words help perfectly explain every major blow up in financial history. Fighting a virulent trend is equivalent to fighting Newton's first law of inertia.

[wan] 30/3/2022 08:12

I should have added that, I am very comfortable for EKF to buy back the shares issued at a higher price to fund the acquisition of ADL Health, which as the CFO pointed out, obviously equates to reducing the dilution back levels prior to the acquisition, but also that the buybacks, at lower a share price, ultimately reduce the acquisition costs too. Overall, and also considering the increase in this years dividend, a good use of cash.

In this regard, and somewhat conversely, we are therefore able to benefit from the lower share price (compared to when ADL was acquired).

[wan] 30/3/2022 07:56

Although I have not got access to the full broker note, I don't disagree with James comment in post 2599, that things appear to be misaligned in terms of the presented prospects and rationale for the significant investments and the markets interpretation (some will of course state the market is never wrong!).

Singers price target of 62p, presumably a 12 month target, currently implies circa 40% upside, but that might prove conservative (no bad thing) when EKF are in a position to announce certain contracts that are, in my view, sat 'firmly' in the wings.

However, I also appreciate we are in transition, and in a different place in terms of market dynamics.

My question whether all of these investments and expenditures described can be delivered from existing and future cash resources without the need to raise additional funds, or investors incurring substantial dilution, or for the need to significantly increase debt, was answered by the CFO, Mark Davies (at 41.30 minutes). In short, everything that was announced and discussed yesterday, is able to be funded from existing resources.

This fact may not have been reflected by the market previously (time will tell), and as I alluded to, delivering on all of those elements from existing and future resources implies that there is indeed very bright prospects ahead (in terms of growth), and it's highly likely in my view that there are prospective contracts in the wings.

[buywell3] 30/3/2022 00:57

buybacks --- buywell has never been a fan of these

But the chart is somewhat direly placed at the moment regarding a chart support level

40p seems to be the line drawn in the sand for the buyback contest which might last for some time imo



free stock charts from uk.advfn.com


And consume a lot of cash in so doing

9M at 40p = 3.6M

4M is the max allocated

How long will that last is the question

Which is why perhaps this has been added in the RNS

Any repurchases made following the Company's next AGM being held on 18 May 2022 will be conditional upon a further shareholder approval of the Company's general buyback authority being obtained at that meeting and subject to the limit of 69,589,585 Ordinary Shares, or such other number as would represent approximately 15 per cent of the Company's issued share capital at the time of issue of notice of the 2022 AGM.
The Company intends to operate the Buyback from the date of this announcement until the earlier of the date on which purchase of 9,000,000 Ordinary Shares has been completed, the 2022 Annual General Meeting in the event further shareholder approval is not obtained, or 31 December 2022.


So a further limit of 69,589,585 looks set to soon add to the 9M

At 40p around 28 Million pounds plus the 3.6M = 31.6 M total

From results

Cash at 31 December 2021 of GBP20.3m (2020: GBP21.9m), net cash after borrowings of GBP19.6m (2020: GBP21.4m)

-----------------------------------------------------------------------------


Here we are wan

This could help with tracking the volume of shares being traded



Easily added to the header --- buywell is sure you know how

[dano15] 30/3/2022 00:45

Even if Covid is on the way out EKF seems to have positioned itself well for future growth. Sounds like some of you chaps haven't quite bought in. I would echo @wan, I also have interest to see what ADL Health can produce in the coming years. Given some time my expectation is this division will be the fastest growing in the company! EKF is way undervalued. The pros certainly outweigh the cons. I fully expect a trend reversal to the positive! Just my 2 cents.

[dano15] 30/3/2022 00:44

Even if Covid is on the way out EKF seems to have positioned itself well for future growth. Sounds like some of you chaps haven't quite bought in. I would echo @wan, I also have interest to see what ADL Health can produce in the coming years. Given some time my expectation is this division will be the fastest growing in the company! EKF is way undervalued. The pros certainly outweigh the cons. I fully expect a trend reversal to the positive! Just my 2 cents.

[buywell3] 29/3/2022 22:18

There are, to be fair, many companies that have had a couple of bumper years on the back of Covid-19

Very decent cash piles have resulted

It is what they do with that cash to grow the business that counts imo

[james188] 29/3/2022 19:47

The problem is that there is a huge disconnect between the upbeat management presentations and the pretty grim Singer Capital Markets note issued today. One of them has to be wrong - and I speak as a long term shareholder.

The SCM note assumes very subdued figures for the next few years despite very significant investment, whereas management is much more bullish. I suggested to the company today that they should consider promoting a more detailed broker note to guide potential investors. Look at the sort of much more detailed briefing that finncap provides for similar companies - but that question was not answered in the time available.As things stand, the market does not believe what the management team is saying.That has to be addressed.

[wan] 29/3/2022 13:59

I appreciate the pragmatic view being taken, which in turn probably represents a relatively conservative scenario for the current year given the longer-term contract that's (presumably) still in place (representing less than half of contract manufacturing revenues for PrimeStore MTM and PBS for the first half of 2021). And perhaps exemplified by the first quarter being in line with 2021, augmented by ADL contributing by significantly exceeding revenues recorded in the final quarter of 2021.

ADL Health is particularly catching my attention, with their wider testing offer, including their current and planned capabilities, as clearly having great potential to broaden EKF diagnostic offering. There is good reason to believe that this could also include producing results for non-COVID test collection kits for the consumer testing market (which they are effectively doing now for COVID testing), a global market which is forecast to experience good rates of long term growth.

Cue - "Having CLIA lab capacity in-house also provides us with a means to strengthen our customer relationships by providing wider testing services, and allows us to build synergistically on the relationships with industry leaders that we have developed over the last two years."

Perhaps it is enough to say for now then, that the combination of significant cash investments being made across the various business divisions, the share buyback (treasury stock can also be used for certain investments/acquisitions etc), the increased dividend, and continuation of a progressive dividend policy, consideration of additional investment in the existing stable of spin-outs and to explore other opportunities with MSIP, along with considering complementary earnings-enhancing acquisitions with key strategic value, effectively demonstrating the growth prospects on offer, and indeed further demonstrating the Boards confidence in the successful delivery of their resulting growth strategy (already being implemented).

So, an important question is, can all of this be delivered from existing and future cash resources without the need to raise funds (or a significant increase in debt), or incurring substantial dilution? If it can, and execution risk aside, it implies that very bright prospects lie ahead, and would appear to align well with Singer's view that any share price weakness as a strong buying opportunity.

I will endeavour to get that question (amongst others) put forward to the live meeting/presentation, as I am unable to attend due to a recent and unplanned change to a prior commitment.

[tongosti] 29/3/2022 11:56

Has any worked out the money one would have lost if acted on corporate cheerleaders' reports? The market is thumbing this down for the same reason it started to do so at 80. Namely, investors had sky high expectations on the business and they still do. No fundamentally driven approach captures this (and that's why 99% of fundamentally driven players get very mediocre results over the longer term).

[wan] 29/3/2022 09:10

Singer Capital Markets has published a new research note on EKF Diagnostics

EKF has delivered very strong FY21 results, ahead of upgraded expectations. The core business is performing well (+14% YoY) and the investment in expanding the offering is beginning to pay off. However, pandemic-related sales look likely to slow materially and ongoing sales into Russia are proving difficult. We rebase our forecasts accordingly, reducing our FY22E revenue & EBITDA by 26%/40% and by 17%/25% respectively in FY23E. We adjust our TP to 62p (from 86p) and would view any share price weakness as a strong buying opportunity.

[pugugly] 29/3/2022 09:05

Mr Market very unhappy with results - Down 12% One year low

[tongosti] 29/3/2022 08:47

Quite a paradigm shift indeed. Massive volumes resuming the trip south. As have said several times, 33 is the next target chaps (and chapesses). For the umpteenth time - listen to what the market is telling you.

[wan] 25/3/2022 07:46

With the paradigm shift in testing firmly in mind, I note an update within news from Myhealthchecked today -

Penny McCormick, Chief Executive Officer of MyHealthChecked Plc, said: " We are delighted with the strong performance that we've seen from The Genome Store business since becoming part of MyHealthChecked at the end of 2020. The acquisition was a natural fit and it gave us the expertise to meet the opportunities that the COVID testing market provided. From this we have established a trusted reputation with customers and built strong commercial relationships with the UK's top pharmacy retailers. We now look forward to further progressing an exciting pipeline of wider testing services for which we will commence commercialisation this Spring."

[wan] 24/3/2022 15:54

One example of demand for sample collection devices and kits (not necessarily COVID related) this side of the Atlantic -

PCR Sample Collection Devices and Consumables
A Tender Notice
by THE COMMON SERVICES AGENCY (MORE COMMONLY KNOWN AS NHS NATIONAL SERVICES SCOTLAND

Duration
23.5 month
Value
£-£40M

Published
16 Mar 2022
Delivery
To 08 Apr 2024 (est.)
Deadline
19 Apr 2022

Description
The supply of sample collection and transportation devices and related consumables, to support Molecular PCR testing platforms across all of NHS Scotland’s National Laboratory Estate.

Tubes are prefilled with a range of transport mediums, individually and also as a Sample Collection Kit (IVD peel pouch kit, containing prefilled tube + sterile swab), individual sterile swabs, replacement coloured screw caps, lysis buffer and associated consumables.

[faz] 24/3/2022 11:42

Buying ahead of results from a low position. Taken a few here (compared with what I used to own); I want to see a clear path for eps growth and an update on the new strategy.

[wan] 24/3/2022 09:18

Following on from my post 2578

Further food for thought -

We know from EKF's first half results that their major industrial partner represented less than half of their contract manufacturing revenues for PrimeStore MTM and PBS for the first half of 2021, and that EKF had already seen a shift to a wider mix of revenues from a broader customer base. With EKF expecting to see the share of revenue contribution from other customers continue to rise as they move through the year.

In addition, with the expectation that sales of these products will continue for the foreseeable future, EKF added two further factory units to their existing site in Cardiff which was opened in January, and have added off-site manufacturing space in Boerne in the US.

COVID-19 testing is only one 'taught' string to EKF's bow in terms of their shift to a wider mix of revenues from a broader customer base. But staying with COVID testing 'for now' (because we know that EKF are producing kits and components for COVID testing).

As an example of how the potential customer base is expanding, since January there has been (and still is!) a distinct increase in FDA Emergency Use Authorisations (EUA.s) for direct to consumer and home collection COVID PCR testing kits (with the latest being Quest Diagnostics, for 4 versions utilising PBS or UTM) -

Individual EUAs for Molecular Diagnostic Tests for SARS-CoV-2
This table includes information about authorized SARS-CoV-2 molecular diagnostic tests. These EUAs have been issued for each individual test with certain conditions of authorization required of the manufacturer and authorized laboratories -



The significant expansion of EUA's for home testing kits fits well with my previous prediction that we are entering a new era representing a paradigm shift where people are empowered to understand their own health in the comfort and privacy of their homes, which will also include consumer-initiated lab testing, in turn offering a very large global growth opportunity for non-COVID related products.

The foundations have been laid, and I purposefully repeat and predict, that such testing will predominantly (and hopefully) be made up of non-COVID related testing. And importantly, such an expanded and broad manufacturing base (able to shift and deliver specific test kit production) will also greatly improve overall pandemic preparedness and response.

[wan] 10/3/2022 15:37

Tongosti...You can in fact read my recent post two different ways! But I don't disagree that the market appears to be constantly giving EKF the thumbs down.

I will be pleased when we 'hopefully' get a clearer line of sight on things post the Results and post the live online presentation relating to the final results at 4.30 pm on Tuesday 29 March 2022.