Genetic Signatures : Quarterly update and Appendix 4C
GSS.AX
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ASX Announcement
21 January 2022
Quarterly Activities Report and Appendix 4C
Highlights
Genetic Signatures Limited (ASX: GSS) recorded strong quarterly sales of $9.5 million, a 17% increase on 2Q FY21. The total sales for 1H FY22 was $21.8 million (unaudited), 16% higher than 1H FY21. Receipts from customers of $12.1m was a quarterly record.
Figure 1: GSS Qtrly revenue (A$m)
28.3
5.4
21.8
4.2
9.5
8.2
11.3
7.0
4.9
10.5
12.4
1.5
1.8
1.1
1.0
1.2
1.5
1.0
FY19
FY20
FY21
1H FY22
Q1
Q2
Q3
Q4
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Genetic Signatures CEO, Dr John Melki said, "The discovery of the Omicron variant saw a surge in PCR testing, which has led to continued and strong demand for our 3base® EasyScreen™ SARS-CoV- 2 Detection Kits. With the substantial scale-up of the company's manufacturing capacity and uplift in our company's capabilities, Genetic Signatures is well placed to meet present and ongoing global customer demand, and to date we have been able to fulfil all purchase orders.
The company continues to place value on collaborating closely with customers to obtain feedback on our products, workflows, and support. The development of our SARS-CoV-2 Variant Detection Kit, as well as the development of a Saliva-based protocol, is a testament to this collaborative approach and the Genetic Signatures team in acting quickly to meet new challenges and demands.
The pandemic has stressed the need to adopt fast and accurate diagnostic techniques, and molecular PCR technologies have now proven their superiority. We are confident Genetic Signatures' 3Base® technology will see increasing demand in laboratories globally far beyond COVID-19 testing."
Sales in Australia for the quarter were strong again with SARS-CoV-2 testing continuing to be a driver of volume. Testing numbers contracted early in the quarter after a stellar performance in 1Q FY22 but picked up dramatically again in December after infection rates rose with the Omicron variant outbreak. This has continued into the new year. Enteric test kit sales are tracking at pre-pandemic levels.
There was a trend of slower rates of SARS-CoV-2 testing in the first quarter of FY22 in Europe, however testing volumes increased in the 2nd quarter and this may continue as Omicron cases rise, and we are already seeing evidence of this from our testing sites. European contribution to sales was 10% of the total in 2Q FY22.
The European sales team is actively engaged with current and potential customers to promote the broader range of 3base® EasyScreen™ detection kits, and the first order from a second European customer of the Enteric Protozoan Detection Kits was received during the quarter. Other sites are concluding internal trials with the view of adopting the enteric tests also.
The US region was disappointing with no revenue recorded in the quarter. This is attributed largely to both reductions in testing numbers in the USA coupled with easing of supply chain constraints from the customers' primary suppliers. This meant that secondary testing methodologies implemented to supplement or ensure capacity was no longer required. Genetic Signatures has enhanced its sales team over the last 6 months and the team has been charged with establishing a ready market for the 3base® EasyScreen™ Enteric Protozoan product once it clears FDA, building relationships with KOL's, and identifying other revenue opportunities.
As awareness of Genetic Signatures and its 3base® technology continues to grow globally alongside its SARS-CoV-2 Detection Kit, interest continues to extend to other EasyScreen™ products. Laboratories in Europe, and by extension the USA, which were previously slow to adopt new technologies, represent promising new avenues of revenue for the company beyond COVID-19.
SARS-CoV-2 Update
Following detection of the new highly transmissible SARS-CoV-2 Omicron variant at the beginning of December, Genetic Signatures announced that its 3base® EasyScreen™ SARS-CoV-2 Variant Detection Kit could detect the new strain and all known variants. The surge in local SARS-CoV-2 strongly contributed to revenue for the quarter, and the demand has continued into the current quarter.
Emergence of the new variant presented an opportunity for laboratories to differentiate Omicron and Delta variants prior to sequencing to prioritise suspected Omicron patient samples for genomic sequencing and epidemiological studies. The company collaborated with customers to develop the 3base® EasyScreen™ SARS-CoV-2 Variant Detection Kit, which is being offered for research use.
At the National Reference Laboratory conference in October 2021 Genetic Signatures' Senior Principal Research Scientist, Dr Rohan Baker, presented results that showed the use of saliva swabs for COVID- 19 testing were as good as, if not better than, nasopharyngeal swabs when using the 3base® methodology. In December a South Africa study1 demonstrated that Omicron could be more effectively
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detected via saliva swabs than nasal swabs in PCR tests. This was due to the higher viral RNA load in saliva as compared to nasal samples. This was different to previous variants, which were more reliably detected by nasal swabs. At the beginning of January, the company announced that the Therapeutic Goods Administration (TGA) registered its EasyScreen™ SARS-CoV-2 Detection Kit for saliva samples. Some of Genetic Signatures' local customers have already adopted the new protocol and further laboratories are expected to follow.
As PCR testing will likely continue to play a major role in pandemic control policies, Genetic Signatures will continue to work in collaboration with its customers to develop and improve its products to provide the most effective and highest quality tests.
Enteric Protozoan FDA Progress
Clinical trials continue for the company's US FDA product clearance (510k) application, which requires Genetic Signatures to submit data from three clinical sites and a minimum of 1,500 patient samples. The completion of the trials was unfortunately delayed as laboratories had trouble sourcing adequate numbers of samples or lacked capacity to process samples due to COVID-19. Expectations are for these trials to complete recruitment by the end of the current quarter.
Genetic Signatures is targeting 40% of the available Enteric Protozoan testing market within five years of launch, with potential for up to US$88 million revenue per annum from the US.
Corporate
As at 30 December 2021, the company has $37.5 million cash at bank. The Group recorded cash inflows of $4.5 million during the quarter, and $7.4 million for 1H FY22. This is the fourth quarter in the last six that Genetic Signatures has reported positive cashflows. Payments of fees to directors, including the CEO, were $213,000 for the quarter and are included in 1.2(e) - staff costs of the Appendix 4C.
Capital Management Plan
Over the next two years, COVID-19 permitting, Genetic Signatures will invest its cash in various high value additive projects that will see increased expenditure offsetting positive cashflows. GSS has embarked on development of a next generation sample to result instrument which has progressed through the initial concept and design phases and is ready to transition to the next phase. The project is expected to cost $10-$12m over this period.
The USA represents the largest molecular diagnostics market in the world, but there are strict criteria governed by US FDA to meet before products may be sold. Costs can be significant to satisfy these criteria including engaging consultants and undertaking clinical trials in the USA. Genetic Signatures estimates an expenditure of up to $2.0m per product and is aiming to advance three or more of its current products through this process commencing this year.
Additionally, the Group has been increasing its headcount and will continue to employ more people, particularly overseas in sales, field support, regulatory and clinical roles. R&D activity will continue on current and new, as yet undisclosed, products and technologies. The launch of the new platform and products will also make demands on working capital.
- END -
Announcement authorised by Genetic Signatures' Board of Directors
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For further information, see our website (www.geneticsignatures.com) or contact us:
Dr John Melki
Peter Manley
Chief Executive Officer
Chief Financial Officer
T: +61 (0)2 9870 7580
About Genetic Signatures Limited: Genetic Signatures is a specialist molecular diagnostics (MDx) company focused on the development and commercialisation of its proprietary platform technology, 3base™. Genetic Signatures designs and manufactures a suite of real-time Polymerase Chain Reaction (PCR) based products for the routine detection of infectious diseases under the EasyScreen™ brand. Genetic Signatures' proprietary MDx 3base™ platform technology provides high-volume hospital and pathology laboratories the ability to screen for a wide array of infectious pathogens, with a high degree of specificity, in a rapid throughput (time-to-result) environment. Genetic Signatures' current target markets are major hospital and pathology laboratories undertaking infectious disease screening.
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Rule 4.7B
Appendix 4C
Quarterly cash flow report for entities
subject to Listing Rule 4.7B
Name of entity
GENETIC SIGNATURES LIMITED
ABN
Quarter ended ("current quarter")
30 095 913 205
31 December 2021
Consolidated statement of cash flows
Current quarter
Year to date
$A'000
( 6 months)
$A'000
1.
Cash flows from operating activities
1.1
Receipts from customers
12,084
22,424
1.2
Payments for
(a)
research and development
(1,054)
(1,903)
(b) product manufacturing and operating
(1,423)
(2,880)
costs
(c)
advertising and marketing
(50)
(92)
(d)
leased assets
(61)
(120)
(e)
staff costs
(2,362)
(4,754)
(f) administration, corporate and other
(2,375)
(4,877)
costs
1.3
Dividends received (see note 3)
1.4
Interest received
80
88
1.5
Interest and other costs of finance paid
(4)
(9)
1.6
Income taxes paid
-
-
1.7
Government grants and tax incentives
-
-
1.8
Other (provide details if material)
-
-
1.9
Net cash from / (used in) operating
4,835
7,877
activities
2.
Cash flows from investing activities
2.1
Payments to acquire:
(a)
entities
(b)
businesses
(c) property, plant and equipment
(252)
(280)
ASX Listing Rules Appendix 4C (17/07/20)
Page 1
+ See chapter 19 of the ASX Listing Rules for defined terms.
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Disclaimer
Genetic Signatures Ltd. published this content on 20 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 January 2022 22:41:07 UTC.