Trinity Biotech plc Q1 FY2024 earnings call

• Growing TrinScreen HIV revenue: Successfully ramped up production of TrinScreen HIV, achieving almost 40% QoQ revenue growth in Point-of-Care. Expect further revenue growth in 2024 and 2025 from new wins in HIV test clinical evaluations across Africa. - Comprehensive transformation plan: Moved from planning to execution phase. Pillar 1: Consolidate offshore manufacturing - trained offshore partner staff for HIV test downstream assembly, moved Diabetes HbA1c manufacturing to Ireland, and shifted less complex processes to lower-cost offshore locations. Pillar 2: Optimize supply chain - negotiated with supply partners for double-digit cost reductions in rapid HIV supply chain. Pillar 3: Centralize offshore corporate services - signed implementation agreement with third-party outsourced partner. - CGM development: Received expressions of interest from global commercialization partners. Engaged world-leading design consultancy for next-gen CGM. Applied for ethical approval for pre-pivotal clinical trial in June 2024. Expect to enter pivotal trials by summer 2025 and EU regulatory approval by end of 2025. Reduced expected 2024 development spend to less than $2 million per quarter.

In the first quarter of 2024, Trinity Biotech's Point-of-Care business saw strong performance with revenues increasing by $0.8 million or 38.5% to $3 million, driven by the TrinScreen HIV test. Clinical laboratory revenues decreased by 7.6% to $11.7 million, but the hemoglobin business experienced a 6.4% year-on-year increase in revenue. Gross profit for the quarter was $5.5 million, representing a gross margin percentage of 37.6%, in line with the same quarter last year. The Hemoglobins business saw improved margins due to supply chain optimization and revised in-house manufacturing, while TrinScreen HIV, with lower margins, contributed to the overall gross margin but is expected to improve as cost-saving initiatives progress.

• Reiterated annualized revenues of approximately $75 million by Q2 2025 with approximately $20 million in EBITDASO from existing business. - Increased 2024 revenue guidance for TrinScreen HIV due to successful ramp-up. - Expect TrinScreen HIV margin contribution to improve with automation, supply chain optimizations, and offshore assembly later in the year. - CGM development timeline: Pivotal trials by summer 2025, EU regulatory approval by end of 2025, and reduced development spend to less than $2 million per quarter in 2024.

• Nasdaq listing deficiency: Received a deficiency letter from Nasdaq in November 2023 regarding publicly held shares market value below $15 million for continued inclusion on Nasdaq Global Select. The 180-day compliance period ended on May 20, 2024, and Trinity did not regain compliance, intending to seek a hearing from Nasdaq to stay further action.

Q: Can you talk a little bit about TrinScreen sales, including if all of the $8 million in 2024 is to Kenya and if other countries will start shipping in 2024?

A: Jim, for commercial reasons, we're not going to give that level of detail at this point, but we do expect to be shipping to other countries outside of Kenya in 2024.

Q: Can you quantify the onetime costs to ramp up production for TrinScreen?

A: It's less onetime cost, more about training staff and lack of efficiency initially. CapEx is already spent. We're introducing further automation in June and getting better pricing on input materials as part of supply chain work. Overall, we expect better profitability contribution from the rapid HIV business as volumes increase and offshore assembly goes live later in the year.

Q: On the hemoglobin business, how about product development? Do you have everything in the market now that you expect to have in 2024?

A: Our key next product development is around the new column and buffer combination, which gives higher number of injections per column, greater stability, and lower calibration overhead. We're also making changes to increase reliability of instruments through supplier and engineering design changes. Focus is on rolling out the column and improvements in reliability.

Q: On the CGM side, do you think development costs will ramp up in 2025 as trial activity continues?

A: In 2025, as we move to pivotal clinical trials, expenditure will increase, but we'll only do so with high confidence. We have experience in taking products through regulatory approval processes and a rich partner network, which will help reduce work and spend. Based on debt level, interest expense is expected to be around 2.5 a quarter.