Ekf Diagnostics Share Discussion Threads

[tongosti] 16/5/2023 06:39

When the market is against you the smart thing to do is reevaluate your original thesis not go harder on it. Do not a crisis go to waste pal - will you ever learn?

[wan] 11/5/2023 14:43

Clearly the post was predominantly about the lack of specific capacity, which EKF have flagged previously.

So, on top of EKF's significant investment, capabilities and expertise, you clearly think that the significant investment made by one of EKF's large customers in their South Bend facility, and the customer onboarding processes/technology transfers and associated contracts, is short term due to competition. I don't think so!

Not to mention, the specific proprietary input (not to be underestimated), technology and capabilities required for the production of diagnostic enzymes in the 'molecular' and clinical chemistry markets for customers that EKF have established relationships with, and who are well advanced in the process of transferring to EKF's enzyme contract manufacturing services and delivered from their two US sites in Indiana.

[sharw] 11/5/2023 13:45

So this is all about Liberation Labs who are "set to become operational by the end of 2024" and hit EKF with competition.

[wan] 11/5/2023 11:37

Aligning with EKF's previous commentary regarding lack of capacity, and thought provoking in view of EKF's investment in precision fermentation technology and the advanced stage of their expansion in fermentation capacity and capabilities (not to mention customers advancing onboarding processes) -

Yesterday
If you’re headed to #synbiobeta later this month, you won’t want to miss our CEO and co-founder Mark Warner on a keynote panel on #biomanufacturing scale up.

While #synthetic #biology applications have the potential to substitute a third of the global supply chain and unlock a $30 trillion bioeconomy, we are nearing a crisis of fermentation capacity.

Billions of dollars have gone into the front-end technology development, while precision fermentation capacity/capability continues to decline. In fact, we have had a net loss of capacity, especially within the US, over recent years.

We need purpose-built facilities, designed for the organisms of today. The existing network is very dated, averages ~50 years old and was built for other purposes, primarily pharmaceuticals. It is not capable of producing the products we are developing at the required price points.

Mark will share his thoughts and identify several approaches to solve this dilemma.


The Biggest Synthetic Biology Industry Conference is Back
Oakland Marriott, California May 23 - 25, 2023

[wan] 03/5/2023 10:16

All in good time I am sure as the audits are key to securing new contracts, and also no doubt another integral element to customer onboarding processes, e.g. as previously guided by EKF that 3 customers were advancing onboarding process for the larger fermenters.

[james188] 03/5/2023 08:36

Agreed, but I would far rather hear about secured revenue generating contracts with customers. We have not heard much on that score.

[wan] 03/5/2023 07:50

Very pleased to see that key audits at South Bend have been successfully completed (as guided), and that EKF's 'increased capacity' remains on track to be operational and revenue generating over the summer.

[wan] 27/4/2023 11:23

Large players (such as Roche and Thermo Fisher) have been reporting recently. And it's no surprise that the reduction in pandemic-related revenues have impacted their results accordingly. However, and as EKF reported, their core businesses are performing very well.

An underlying theme that has caught my attention is, as a result of the COVID-19 pandemic, the very strong expansion of the diagnostic companies installed instrument base (laboratory and point-of-care), which has been a growth driver of diagnostics base businesses. But what's perhaps less appreciated is that those very large global installed bases (to Quote Roche) will serve as an "engine for future growth and menu expansion". Their base businesses are being guided for revenue growth in the mid-to high-single digit percent range for 2023.

A good example of what that could mean for EKF is the reported increased interest and demand generated from their US distribution partners for central laboratory products, and the potential for additional private label opportunities with major US/Global pharma distribution/IVD companies, and also highlighting encouraging late-stage negotiations for further private label deals. Not to mention that EKF expect their Life Science division to become a larger contributor to Group performance.

[tongosti] 14/4/2023 21:54

Some posts are mere riddles that are wrapped up in mystery, inside an enigma. Nothing to do with making money - that's for sure.

[comsack] 12/4/2023 15:18

I agree with you James. Wan, thank you for your posts.

[james188] 12/4/2023 15:08

I am not in favour of discouraging posters. It is easy to skip posts that are of no interest - or to block specific posters. I would rather have the information available and then decide what to do.

[smithie6] 12/4/2023 14:49

Can anyone be bothered to read posts that are so long & where it is difficult/impossible to quickly see what is the main point being made ?

[wan] 10/4/2023 05:26

Some companies are focusing on genetic changes that affect the ability of yeast to produce proteins and other biological products, with potential to provide unique products and to even disrupt industry. With that in mind, and for those who are interested/have been paying close attention, the following provides much food for thought -

CRISPR-Made Greener Products and Processes in Industrial Biotechnology
April 3, 2023

By Eric Rhodes, CEO at ERS Genomics‌

CRISPR/Cas9 genome editing is fast becoming the essential tool for industrial microbial production and chemical synthesis by virtue of its speed, precision, and versatility. CRISPR can drastically improve the efficiency of industrial biotechnology through enzyme engineering and pathway modification and is already being put to work to change chemical manufacturing. Here we run through some of the most exciting applications of CRISPR.

Challenges in industrial biotechnology
Microorganisms have long been used in the synthesis of products that are useful for human societies. Yeast, for example, have been used in the production of beer and wine for millennia, with the underlying process of fermentation uncovered in the 18th century by Louis Pasteur, who was the first to show how yeast convert sugar into alcohol.1 Following the discovery of penicillin, industrial microbiology took off as the antibiotic was mass-produced to support the war effort.2

Today, microbes are being used to synthesize diverse products, from foods and drugs to cosmetics and biofuels. By 2026, the global synthetic biology market, covering tools, technologies, and applications, is expected to grow to more than $30 billion, with medical and industrial bioproduction leading the way.

Yet, challenges remain in translating advances in bioengineering into efficient mass production of products. Engineering new microbial strains for production is often time-consuming and expensive, requiring extensive optimization. This is further hindered by the speed at which microorganisms grow and the time it takes for complex biosynthetic reactions to complete, which can slow production and limit yields.

Other complicating factors include navigating the complexity of cellular metabolism, the requirement for large amounts of substrate, which may include precious natural resources, and excess byproduct production.3

CRISPR: a game-changing tool
The entry of CRISPR/Cas9 gene editing technology onto the commercial market has made it an indispensable tool in industrial microbiology. Discovered in bacteria by Nobel Prize winners Emmanuelle Charpentier and Jennifer Doudna, CRISPR/Cas9 makes precise cuts in DNA, using natural cellular repair mechanisms to inactivate a gene, delete a section of DNA, or even insert new genetic information.

Enzyme engineering using CRISPR
One of the major applications of CRISPR in industrial biotechnology is the engineering of enzymes. CRISPR-guided DNA polymerases can be used to target nucleotides for mutagenesis, offering an extremely high targeted mutation rate and introducing a range of novel mutations that may be beneficial to enzyme function.

This approach has been used in E. coli, where the engineering of a new enzyme involved in amino acid synthesis increased the production of tryptophan—widely used in the food, feed, and medical industries by almost 40%.4,14

Full story -

Both articles offer a longer read than the excerpts above, and in my view they both offer an insightful but undemanding read for interested investors.

[wan] 07/4/2023 10:10

Some reading for Easter that provides an overview and perhaps a 'flavour' of things to come from EKF's Life Sciences via their increased capacity for 'precision' fermentation.

A number of the essential and important boxes, from an investment and validation perspective, are already and imminently to be ticked (perhaps unnoticed by some) -

Overlooked and Underfunded: Are Climate Tech Investors Missing Out On Precision Fermentation?
ALT PROTEINALT DAIRYCELL-BASED NEWS
By Green Queen Team Last updated Apr 7, 2023

The investors’ journey: important aspects to unpack during diligence

So what should an investor look for during diligence? While there are many angles to be evaluated such as market opportunity, team, competitive landscape, IP, and moat, among others, commercial traction is most likely not going to be available at this stage.

In order to address the intricacies of this nascent industry and its specific requirements, we unpack the key points that investors should take into consideration when performing diligence on a precision fermentation company.

Customer Validation
While it’s true that early-stage companies will have little to show in terms of revenues and customer traction, the next best thing to review is customer validation. Investors can and should talk to potential customers and validate that the product is actually solving a real need.

Some companies will have LOIs, initial partnerships and customer trials; they may even have surveys that can provide an indication of what a potential customer is thinking. That being said, a phone call with a potential customer in your network is still advisable, not only to understand how important that solution really is but also to evaluate their willingness to pay for such a solution.

Proof of Concept and Scalability Mindset
As mentioned, many companies in the precision fermentation space are currently at lab-scale/ R&D phase. In the very earliest stages (lab-scale, where most companies are), they will be creating prototypes and proofs-of-concept and producing a few grams to a few kilograms per batch and using fermenters under 20L and likely between 1L and 5L.

As they progress and move to pilot, demo, and commercial scale, quantities produced, and size of fermenters increase accordingly but one important thing that some investors forget, is that not all products are created equal. If a precision fermentation company is targeting products that represent a small percentage of the final food formulation, such a company will be able to go to market with a higher price point than one whose product makes up the bulk of the final food formulation, and therefore their path to a viable commercial scale is shorter. Investors should be aware that a viable commercial scale can vary in size significantly depending on the target product.

In all cases, investors should always look for founders with a “scalability mindset”. In other words, no matter how early a company is in its journey, founders should be thinking about scalability from the start. This is shown through each of their decisions during technology & process development. For example: Are they frontloading their cost analysis while building their process? Did decisions around inputs take into consideration availability and supply chain resiliency? Are they already planning for their equipment needs and establishing partnerships?

Scaling is one of the trickiest parts of the success of this industry. In addition to scaling up the technology itself and accurately forecasting budgeting needs, companies face an additional challenge: the bottleneck of little-to-no-fermenter availability, both from a co-manufacturing standpoint or direct purchase. Many fermenters available today are currently prioritized to produce high-value, lower volume pharmaceutical grade vaccines and drug compounds. Companies are purchasing biomedical infrastructure or fermenters from biofuel facilities or other industries and attempting to repurpose them, which is far from ideal.

However, we expect and hope to see a positive change in this space in the near future given not only the surge of new companies tackling this problem but also the increasing interest shown by governments around the world through regulation and potential investments targeting the development of the industry.

Process Feasibility, Efficiency & Optimization
This is an important part of diligence: investors need to dig in and understand where the company’s process is at and how efficient both the upstream and downstream processes are. A critical aspect here is to ascertain how much final product you get at the end of the process and how long that takes from start to finish. This involves getting at how much product the microorganism secretes, how fast, and how much product is recovered after purification.

Investors should not only be clear about where a company is today, but also where it’s going tomorrow and when it will be profitable, which is why reviewing its optimization plans and efficiency targets is vital, much like they would financial projections. All assumptions embedded in these plans should be checked to ensure they are realistic and reasonable.
Full story -

[wan] 01/4/2023 13:00

About Cardinal Health -
Approximately 46,500 employees worldwide
$181.4 billion revenue in fiscal year 2022


We deliver products and solutions to improve the lives of people every day.
We serve nearly 90% of U.S. hospitals, more than 60,000 U.S. pharmacies, and more than 10,000 specialty physician offices and clinics.

We provide more than 3.4 million patients with more than 46,000 home healthcare products.

Our digital ecosystem to support medication adherence currently reaches more than 23 million patients and more than 60 payers.


Perhaps worthy of note that Cardinal Health got a brief mention during the recent presentation re: β-Hydroxybutyrate (BHB) (LiquiColor is an EKF registered name) -


EKF offers a Peer Group QC platform for BHB controls
available to all Cardinal Health customers -


Encouraging then that the following was included in the recent EKF Presentation, implying there are further opportunities (plural) presenting -

Potential for additional private label
opportunities with major US / Global pharma
distribution / IVD companies
• Encouraging late-stage negotiations for further
private label deals
• Private label agreements would also drive
geographic expansion in LATAM and APAC
• Dominant position in area of limited
competition

[james188] 29/3/2023 18:36

I hope so, but I think that a sustained period of performance with no further nasty surprises is needed - and tangible evidence that there are contracts in place for users of the fermenters.

Stable management is also an absolute must. Julian Baines made it crystal clear in the IMC presentation yesterday that he is only a temporary fix. Securing a very competent CEO is a priority. Add to that a strong Chairman. There is a lot to do.

[wan] 29/3/2023 09:10

James, re: US listing, in my view medium term maybe (2025 onwards?).

Clearly if the market were to apply a conservative sector multiple of 12.5, EKF's shares would be materially higher today at circa 46p, which may well happen as news re South Bend validation and commissioning, and new contracts and market expansion in Point of Care and Life Sciences divisions emerge, but in any regard, I think there will be at least some form of positive rerating in reaction to the Presentation and in anticipation of the delivery of various milestones and updates etc.

[james188] 29/3/2023 08:33

One year or so ago after an INC presentation, I asked the company about the possibility of a US listing, as it seemed an obvious thing to consider doing. Management dismissed the idea out of hand and said that there was no chance that they would do that. I am relieved that this is at least back on the table.

[wan] 29/3/2023 08:09

I would also add that someone asked certain questions that has been on my mind for some time, that being the corporate structure and the potential of a US listing. With 60% of revenues derived in the the US, which looks set to materially increase, it's already quite clear (to me at least) that EKF would be valued very differently to the current 7 x 2024 EBITDA!

[wan] 29/3/2023 07:59

James...I respect your opinions, but the potential insolvency angle appears extremely wide of the mark, especially so given the 'potentially' very small loan amount, which Julian responded to by saying that they realistically do not see it being utilised.

Other than that, and not necessarily directly, and in my view, overall your questions appears to have been effectively answered.

Having just listened to the Presentation (I could not make the live event), the management have clearly laid out the issues and detailed the solutions and their impacts.

It will thus be interesting to see how the market responds to the presentation and the fact that there is a very strong growth story and value proposition.

[james188] 28/3/2023 19:58

I completely disagree that the points I raised were covered.

They did not set out the stated worst case scenario for drawing down the NA loan (actually fairly small). Clearly, this would not be limited to the Russia exposure. It goes to potential insolvency and so is very worrying.


As to the ongoing fermenter revenues, we have little or no insight as to the committed revenues. Talk of USD 1 million investment from one customer is peanuts compared to the EKF investment. This is a big play by management and the last one was a disaster. The mess that management obviously made of the ADL deal was not explained. Not learning from serious mistakes is a real issue.

As I said, I am not looking to drag the company down - it is completely opposed to my interests. Pretending that all is great is just ridiculous.

[sharw] 28/3/2023 19:55

Interesting chat between Iain Staples of Schroders and Paul H just before these results here:



My own take is that this was a classic case of the Peter Principle but at least they have let him return to what he was good at.

[darlocst] 28/3/2023 19:42

James - they answered points 1 & 2 on the IMC call this afternoon and talked around point 3 from what I recall

[james188] 28/3/2023 19:36

Sadly, I saw little or no sign of contrition for the serial bungling over the last couple of years. I have always highly rated Julian Baines, but I think that shareholders were owed a big apology. It did not happen. A King Canute strategy will not wash.

[cisk] 28/3/2023 19:30

Does anyone have a breakdown of the 17.5m exceptional items?

Clearly that blew a huge hole in the finances. Even without any investments / share buybacks, there was 14.3m cash outflow v 12.7m cash inflow. Obviously it's early in the FY, but they're going to have to go some to even maintain the current dividend (assuming consistent taxation / Capex).

Reading the report, everything looks hunky dory - but as we know the reality is very different.

I've always known Julian Baines to be a straight talker - those that attended the call did you get the impression that they recognized the mis-steps over the past 12-18 months? And learnt from them?

I'm getting a real deja-vu from the presentations I attended in person back in 2014-16, where much humble pie was consumed after the Stanbio acquisition - for sure EKF are in a better position now than post-those events - but let's hope history doesn't repeat itself in another 8 years...