Ekf Diagnostics Share Discussion Threads

[faz] 05/8/2022 15:58

James, I think you're right, EKF doesnt have the money as its spending it on internal growth. SO it's a waste of Baines for sure. However it also does not have the money because I'd guess the idea was to sell the shares in RENX etc at a marvellous profit and use that to invest in new Sinai spin offs. The stories given when the three spin offs were made also did not indicate they were cash-hungry punts.

[wan] 05/8/2022 09:17

Hi James,

I don't disagree regarding the share performances, nor the fact it's 'hopefully' still too early to judge those spinout shares. But as I said back in April, for those of us still holding the extended family of EKF stocks, on the one hand we are still better off than we were without the in-specie shares (unless you participated directly), but the overall performance thus far is more than disappointing, to say the least! I also suggested that given the market backdrop, going forwards, one wonders if the spin-off model has any immediate candidates, or indeed any further legs at all.

In my view, Verici and Trellus (trading at near or below cash) are more likely to be acquired than require additional funding, but only time will tell. With regard to Verici, with strong IP and scientifically validated tests, it is worth noting that other related transplant players have IP issues, but plenty of cash and/or the financial firepower on tap.

On the one hand the market is hardly conducive or receptive to further spinouts atm, and perhaps especially so given the dire performance of the previous spinout shares. To my mind, one or more of those spinouts will have to perform and deliver before there is any appetite for any further opportunities.

Personally, I would like to see EKF invest and develop their own IP, or at least the development of proprietary products. In this regard, I repeat in part what I stated back in May as a result of an answer to my question at the AGM -

EKF are not developing proprietary tests/assays per se (or at least not yet), they will however produce both proprietary EKF enzymes as well as third party enzymes that can be produced in bulk scale for mass production of test kits, such as molecular testing, and indeed in other application areas too e.g. buffer formulations (watch this space👀).

So, proprietary, high margin, enzymes might be an example of an aspect that's underappreciated, as clearly, such enzymes could generate significant value, as well as providing potential to increase EKF's attraction to new and existing partners (already happening in my view), and as well as extending EKF's own moat.

In this regard, the partnership with ABEC to deliver customised, large-scale bioprocess equipment to EKF's specific manufacturing requirements is perhaps particularly worthy of note.

Elsewhere, I note development of a unique fermentation platform to 'sustainably' produce high-quality molecules through fermentation. Such 'bespoke and specialised' fermentation platforms will enable a consistent, scalable, and reliable supply of high-quality functional molecules.

In short, EKF are leveraging their extensive manufacturing capabilities and many years of experience to respond to demand-driven opportunities in a very specialised, attractive, high growth areas. With the recent Trading Update providing increased confidence in terms of core business recovery, expansion, and indeed the delivery of the Growth Strategy.

[james188] 04/8/2022 19:31

faz,

I think that you ask some legitimate questions in relation to the various companies that have been spun out of the Mount Sinai/EKF relationship. I should say that I am a reasonably long term investor in EKF.

The share price performance of the three companies that you mention has obviously been disappointing (ditto the EKF share price), but they are all cash hungry early stage entities and I think that it is too early to make a definitive judgement.

I do not think that EKF is large enough to financially further support these investments. They will all inevitably need to raise further funds and so there is a significant risk of dilution as EKF will struggle - and much more so its shareholders - to participate. EKF has much better use for its cash in growing the core business (which is doing well). It is worth noting that EKF has not spun out a further company for some time and rejected a deal that was put forward last year. That may signify a change in strategy under the new management team.

[faz] 04/8/2022 18:41

Dipping in here for the first time in months. Surprised the relationship with MOunt Sinai is seen as an asset (Techinvest). Where is it since Baines relinquished the CEO role to build on the relationship? And where, really is the value - RENX was a camaflaged nothing, verici and trellus have a lot to do to get anywhere near a break-even business. Exploiting the market (gullability) and using EKF as its mouthpiece gets Sinai a decent wedge when these companies get IPO'd, but a 1200% fall in RENX share price - from fluff to reality. ? No not an asset.

[rivaldo] 03/8/2022 10:51

Techinvest have published their new issue, so it should be OK to copy their Buy update on EKF from the July issue:

"EKF Diagnostics

EKF has announced the intention to distribute shares in its investment, Verici Dx, to the company’s shareholders who will receive one investment share for every 50 ordinary shares held in EKF. In order to maintain an orderly market in Verici’s shares following the distribution, the shares will be held in trust for shareholders for a period of a year. During the lock-up period, EKF Shareholders will not be permitted to transfer the legal or beneficial ownership of their Verici investment shares.

Verici is a developer of advanced clinical diagnostics for organ transplant. The company is one of three business that have emerged so far from EKF’s preferred partnership agreement to develop healthcare technologies alongside Mount Sinai Health System. The other businesses are Renalytix, which is currently trading on AIM and Nasdaq, and Trellus Health. Both Trellus and Verici are listed on AIM. EKF reported owning around 5.7% of Verici’s shares at the time of the company’s final results announcement in March. The partnership with Mount Sinai is proving fruitful and represents an asset that investors may be overlooking when valuing shares in EKF.

We feel that the company’s core business alone is somewhat undervalued by the current share price. Stripping out net cash of 4.6p per share, the shares trade on a prospective P/E of 14.1 for the current year, falling to 11.4 for fiscal 2023. Add in the projected value of the business investments in the Mount Sinai partnership and the stock looks excessively neglected. Buy."

[tongosti] 01/8/2022 13:06

Following from my 2855, the trend has finally reversed, in all probability. Time to go the other way folks.

[tongosti] 01/8/2022 12:12

As the wise man said - nothing like price to change sentiment. Our dear ramper has been firing on all cylinders once we turned above the 50dma.

[wan] 01/8/2022 07:11

New research/broker note -

Strong growth in core underpins FY expectations

EKF has reported a strong H1, with revenues of £37.5m and double-digit growth in underlying non-Covid related business. Management reports it is trading in line with expectations for the full year and we make no change to our profit forecasts at this stage. New growth initiatives are proceeding to plan and should lead to accelerated core growth from FY23 onwards. We continue to see substantial upside on successful execution with the shares trading on an FY23 P/E of 13.1x and an EV/EBITDA of just 6.8x, supported by a FCF yield of 6%. We stay at Buy, with an unchanged TP of 62p.
Research Tree -

[wan] 01/8/2022 06:32

An excellent Trading Update today!

And to aptly refer to CEO Mike Salter's comment, EKF is indeed entering a new chapter.

There are many points and subtleties one can repeat or refer to within todays TU, but ultimately EKF are delivering, the Growth Strategy is on track and it is all funded by internally generated cash flow.

Suffice to say, as the title to the threads header states, EKF Diagnostics for income and growth - A healthy, reliable combination!

[wan] 30/7/2022 07:37

To reaffirm my commentary above -

Core diagnostic growth offsets falling COVID-19 sales at Hologic, Thermo Fisher and Qiagen

Rising demand for core diagnostics offset better-than-feared declines in COVID-19 test sales, shedding light on the companies’ post-pandemic futures.

Published July 29, 2022

Hologic, Thermo Fisher Scientific and Qiagen reported quarterly financial results this week, revealing how rising demand for core diagnostics has offset better-than-feared falls in COVID-19 test sales. Here, we look at the key takeaways from each set of results.

Full article -

Readers will note the final paragraphs from Qiagen regarding their energy use in Germany, and from what I can tell electricity is EKF's main source of energy use too. Not to mention that healthcare related products are regarded as being critical and therefore it's a sector that gets prioritisation -

Planning for disruption
After measures like this have been exhausted, EU countries “may need to start curtailing partially or fully specific consumer groups” identified in the “emergency” stage of their national crisis plans.

Prioritisation of sectors is likely to differ between EU countries, but “it is advisable, to include the impact on health, food, safety and environment, security, and defence in their national prioritisation,” the leaked document says.

The demand reduction plan gives guidance to governments on how to determine which sectors to prioritise, with four considerations:

> “Societal criticality”: how important the sector or product is to society, particularly when it comes to health, safety, environment and security.

> “Cross-border supply chains”: to what extent the product is part of cross-border supply chains and would disrupt the smooth provision of essential societal services at the EU level.

>“Substitution and reduction possibilities”: whether fossil gas can be replaced or energy savings measures can be used.

> “Damage to installations”: what damage could be caused to industrial tools in the case of a temporary shut down and the cost of repair. This particularly looks at sectors that need to run continuously, like parts of the medical industry, pharmaceuticals, chemical processes, glass and steel.

One way of prioritising could be to look at the product level, rather than the sector. For instance, not all glass production would be prioritised, but glass for food containers, vials and syringes and renewable infrastructure might be, the document suggests.

Source Euractiv. Full article -

[wan] 29/7/2022 11:41

Large diagnostic companies continued their reporting in the US yesterday. Covid testing aside, core revenues rose. Thermo Fisher and Hologic being the standouts with both reporting mid double digit revenue growth, well above analysts' estimates, and both companies announcing an increase in full-year revenue guidance.

In my view, this is how I expect healthcare, in particular diagnostics, to perform, as they can still perform and grow even in a turbulent/challenging market environment given their solid installed bases and resulting recurring revenues.

Staying with diagnostics, a new EKF buffer formulation now looks imminent(and a topic that I was perhaps previously too premature in covering during the early stages of the pandemic) -

28th July 2022
Our amazing Development Scientist Francesca Cole is supervising the second Contract Buffer Formulation event for a new contract manufacturing customer, taking place in the Production Feasibility Lab in Cardiff.
👀 Keep an eye out next week when this product will be dispensed into tubes

[tongosti] 29/7/2022 09:15

Over the last few weeks one has seen definitive signs of accumulation. A break north of 39 would finally confirm the trend has reversed.

[tongosti] 28/7/2022 09:49

Very constructive price action over the last few days. First time (since Nov 21) where we see several days north of 50 dma.

[tongosti] 26/7/2022 10:30

As soon as our ramper reappeared the tentative advance came to a screeching halt.

[wan] 23/7/2022 08:28

Interesting comment given that another division of Octopus recently sold shares in EKF, but I appreciate the remit/investment criteria between divisions is probably different -

Friday 22 July, 2022
Octopus AIM VCT 2 plc
Half-Yearly Results

EKF Diagnostics and Gear4Music have both suffered from a re-calibration of profit forecasts after exceptional profits were made during the pandemic. However, underlying growth remains good and is not reflected in the current valuation.

[wan] 22/7/2022 06:53

Large diagnostic companies have started their quarterly reporting in the US. So far
core business revenue growth is the range of down slightly to mid-single digit growth, despite headwinds from COVID 19-related shutdowns in China, and with healthcare/diagnostics providing resilience in the face of any economic slowdown or recession.

Their forecasts for the full year being either broadly maintained, or increased in the low-single digit to high-single digit percent range. In this regard, Danaher was the standout, who's shares rose approximately 8 percent yesterday.

M&A is still very much part of Quest Diagnostics growth strategy.

In other news, Amazon made a large move in the healthcare sector, announcing its plans to acquire One Medical for $3.9 billion -

SEATTLE & SAN FRANCISCO—(BUSINESS WIRE)—July 21, 2022—Today Amazon (NASDAQ:AMZN) and One Medical (NASDAQ:ONEM) announced that they have entered into a definitive merger agreement under which Amazon will acquire One Medical. One Medical is a human-centered, technology-powered national primary care organization on a mission to make quality care more affordable, accessible, and enjoyable through a seamless combination of in-person, digital, and virtual care services that are convenient to where people work, shop, and live.
Full release -

[tongosti] 21/7/2022 09:25

Don't jinx it wan. This share was already tempting a comeback in the absence of daily ramping. Lol

[wan] 21/7/2022 07:12

Worthy of note -

PURISSIMA ANNOUNCES MULTI-YEAR PROCESSING AND DISTRIBUTION PARTNERSHIP WITH OPEN BOOK EXTRACTS
NEWS PROVIDED BY Purissima
Jul 19, 2022

SAN FRANCISCO, July 19, 2022 /PRNewswire/ -- Purissima, a leading, next-generation, biotechnology health and wellness company, announced today an exclusive, multi-year processing and distribution partnership with Open Book Extracts (OBX), a total solution provider for high quality cannabinoid ingredients, concept-to-market formulation services, and finished goods manufacturing for the industry's leading brands. This collaboration also marks Purissima as the first company to achieve commercial scale production of minor cannabinoids using Purissima's proprietary algae-based fermentation platform. Kicking off production in July 2022, the compounds are proposed to be available to manufacturers and sold to consumer brands before fall 2022.

Full release -

[se81] 19/7/2022 14:10

Attempt to bottom round II :)
Worth keeping an eye on RSI and the resistance in place since Dec 21

[tongosti] 14/7/2022 09:26

Resident ramper nowhere to be seen. Those who are long may consider this good news. There is a reason it makes sense to keep track of rampers in chief on these boards. Not content wise obviously as it doesn't matter at all what they say. Instead, they tend to be good proxies for crowd mood around key inflection points. Peak bearishness maybe?

[tongosti] 06/7/2022 09:10

£3.5k traded so far. Our Antigua based trillionaire building a stake maybe ...LOL

[tongosti] 03/7/2022 11:45

Love technical acronyms. As Peter Lynch used to say, there is a strong negative correlation between numbers of acronyms one employs (under the guise of "research") and the quality of their calls. This board is testament to that ain't it.

[wan] 01/7/2022 15:30

And of course it means that Quo-Test can be deployed in EKF/ADL US Labs

[wan] 01/7/2022 15:28

In the US EKF's Quo-Test is FDA 510K cleared for professional use in a clinical laboratory setting, so it will be very interesting to see if EKF's Link provides the catalyst for US sales of this analyser (and indeed increases sales across the EKF portfolio a whole).

[tongosti] 01/7/2022 14:43

70% down man - at some point we will get the inevitable bounce. Doesn't require much thinking that does it. You too have a good weekend old chap.