Good morning. Welcome to the Trinity Biotech Fourth Quarter and Fiscal Year 2019 Earnings Call. All participants will be in a listen-only mode. [Operator instructions] After today’s presentation there will be an opportunity to ask question. [Operator Instructions] Please note, that this event is being recorded. I would now like to turn the conference over to Ronan O'Caoimh. Please go ahead.

Good afternoon, everybody. Good morning in the States, and welcome to our conference call. I’m joined here by Kevin Tansley, CFO; and I am Ronan O'Caoimh, CEO. So, without further ado, I am going to hand over to Kevin who will run through the quarter and the year end.

Thanks, Ronan. Before we begin our prepared remarks, I will submit for the record the following statement. Statements made by the management team of Trinity Biotech during the course of this conference call that are not historical facts are considered to be forward-looking statements subject to risks and uncertainties. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for such forward-looking statements. The words believe, expect, anticipate, estimate, will and other similar statements of expectation identify those forward-looking statements. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, but not limited to, the results of research and development efforts, the effect of regulation by the United States Food and Drug Administration and other agencies, the impact of competitive products, product development, commercialization and technological difficulties, and other risks detailed in the company's periodic reports filed with the Securities and Exchange Commission. Forward-looking statements reflect management's view only as of today. The company undertakes no obligation to publicly release the results of any revision to these forward-looking statements. In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it will have on the company's operations, the demand for the company's products, global supply chains and economic activity in general. Now, I’ll move on and take you through the results for quarter four and then the results for the full year 2019. You will notice in our release, that there is an impairment charge being recognized this quarter, which was discussed at the end of the income statement segments. In the meantime, the metrics I'm going to quote will exclude the impact of this charge. I'll begin with an outline of the results for the quarter and then I’ll move on to the results for the year as a whole afterwards.…

Thanks, Kevin. And I'm going to review our quarter for revenues and our revenue for the year before opening the call to question-and-answer session. Total revenues for quarter four were $21.3 million, which compares with $24.5 million in quarter four of 2018, which is a decrease of 13%. Point-of-care revenues decreased by 46% to $2.2 million from $4 million in the previous year. This was driven by lower HIV sales in both the U.S.A. and Africa. The decline in the U.S.A. was attributable to the decision to exit this market, which has been in decline for a number of years, whilst African sales were lower due to the normal fluctuations in ordering patterns have characterized that market. Clinical laboratory revenues decreased from $20.5 million to $19.1 million, which is a decrease of 6.5% compared to quarter four of 2018. This decrease was due primarily to lower infectious disease revenues, which included lower Lyme sales due to the migration away from Western Blot testing and lower life for sales reflecting the older nature of this technology. Looking at the year as a whole, total revenues for fiscal 2019 were at $90.4 million, compared with $97 million in 2018, which is a decrease of 6.8% year-on-year. Point-of-care revenues decreased from $14.8 million in 2018 to $11.4 million in 2019, which represents a decrease of 23%. African sales were down modestly in 2019, compared to 2018 due to normal fluctuations have characterized this market rather than just any loss of customers. The bulk of the decrease arose in the U.S.A. as a reduction in funding for public health HIV testing programs and also the CDC recommendations in favor of force generation antigen testing has led to a situation that volumes have declined to the extent that when manufacturing and marketing costs are taken…

[Operator Instructions] Our first question is from Paul Nouri from Noble Equity. Go ahead.

Hey. Good morning.

Good morning.

I was wondering, what percentage of the cost of goods sold is directly related to the product versus factory overhead and employee pay?

Yeah. It obviously varies Paul quite a lot. But on average, you’re talking about 20% for materials and of the remaining 80% broadly split evenly between labor and overhead.

Okay. And have you pretty much kept all your employees on so far?

At this point, yes, we've continued to manufactured in fold.

And the Fitzgerald unit has not benefited from any COVID antibody sales this year?

Not significantly at this point, no.

Okay. And you noted that part of the reason for the increase in inventory was an increase in HIV tests even though you're exiting the U.S. market, maybe you can reconcile that for me?

Yeah. We -- it's -- and possibly I should have said there that it's for the African test market, which is a bigger part of the HIV business anyway was a multiple of the U.S. part of the business. And that business as we used to have manufactured in China and recently have taken back to Ireland and have been steadily building up safety stocks. So as we've become more adept at manufacturing the products in question, we become -- our output levels have been going up and we've been in position to put a safety stock in place.

Okay. And then keeping in mind that you're exiting a couple of lines of business going forward, do you have an estimate for what your baseline is for, I guess, the African point-of-care market and then the clinical lab business?

I think, our baseline for Africa would be about $11 million and then just for the other -- for the rest, just reluctant to give you an exact number in the current circumstances and -- but for Africa about $11 million.

Okay. And so of this -- all of this remaining business, how much of it is recurring revenue for tests versus placing instruments?

I think all of our business virtually, apart from Fitzgerald, and our African business is recurring and basically instrument-based business. And indeed and our Fitzgerald business is very much a recurring business because, for example, if you take an FDA approved product, it may have a Fitzgerald source to antibody as its base and therefore to change that product will require a new FDA submission. So in effect, business is very much a repeat business and movement increases or decreases are very gradual. And really, I suppose the only non -- the only fluctuating -- significantly fluctuating component of our business is our African business and then I'd characterize that as having about 70% to 75% of the entire confirmatory market in Africa, which we've held for upwards of 15 years to 17 years now, without any significant movements or gains or losses of countries. So -- and we believe that’s with invasive, more and more effective to entry retroviral treatment that the benefits of testing are ever increasing, and therefore, we don't see a situation where HIV testing in Africa reduces, but we think that's a very stable business. So we're confident of maintaining that kind of $11 million worth of revenues, approximately $10 million or $11 million worth of business. And then on top of that, as you know, we're now entering the screening market, which is a market of a multiple times bigger and dominated by Abbott and we hope to take a share in that market our confidence of doing so. With the advent of TrinScreen and its imminent WHO approval.

Okay. Thank you. And my last question, just in terms of liquidity is maybe you could talk about any credit availability that you have in terms of a credit facility and whether or not there's any consideration to take out mortgages on any of the properties you have as a way of showing up cash and if you are considering selling the Carlsbad plant and if so, if you have a value for it at all?

I’ll take those in reverse order and the facilities that the company operates on and by and large they are leased. We own two buildings, one in Jamestown, New York, we have two buildings there, the factory building we own. We own premises in Burlington, Ontario in Canada. I would I think, be safe and assuming that neither of those buildings are particularly valuable on their own. They're very essential to us, but they are particularly valuable monetary, I don't think we would secure a mortgage on those to any great extent. We don't at present have any credit facilities in place, but that's something that we are working on.

Okay. Thank you.

Our next question is from Jim Sidoti from Sidoti & Company. Go ahead.

Good afternoon. Can you hear me?

Hi, Jim. How are you? Yes.

Great. So I'm to found of digging to the new test you're developing now for the COVID-19 virus. You said the first one, which is, the clinical laboratory tests, you said, you're through -- pretty much through development and moving to production. So what does that mean with regards to the FDA? What do you think the timeline will be to get approval for that?

Well, Jim, we're expecting that we'll get emergency use authorization from the FDA. And so it’s a very significantly shortened process. And basically, instead of going through a kind of exhaustive clinical trials, you're really involved in effectively validating the product. And then basically, getting -- requesting emergency use authorization, which in circumstances, one believes -- we believe we would get. I think subsequent to that, after one releases the product in the market, there's an element of kind of enhanced trialing of the product subsequent to that. But you would have seen some examples of this happening. It's called the EUA approvals and that's what we expect will happen. So basically, as we stand at the moment is that, we have a factory in Jamestown, which is expert at ELISA manufacturing. And I mean for example, it's supplied until sort of I think about seven years or eight years, the opposite seven years or eight years ago. It supplied all of Quest and LabCorps infectious disease requirements across all viruses actually. So though and it is expert in basically high volume manufacturing has all the abilities to do that. So we're transferring this product, which by the way is an IgG product. So it detects antibodies and can detect them from about sort of 12 days, 14 days after infection. And so, we're transferring that into production, and in meantime, I am going through the validation process to support in EUA and we're quite confident of getting the product to the market very quickly. And please don't ask me to be exact of this in terms of defining very quickly, but that's our expectation. So, basically, we have the product and we have the ability to manufacture it in volume. And we believe we have an excellent product, and as I instance that, we are very practiced at mass production of infectious disease, vaccines and of infectious disease viruses.

All right. And just to be clear, this test -- this could be performed on the existing equipment now that's at the LabCorp and Quest kind of facilities, is that correct?

Yeah. And -- yeah. I mean basically, every laboratory in the world will have -- has virtually, I think, without exception, the ability to analyze the test. We’ll have the instrumentation in place, whether it be Labite or Plabs, DX, DS2, washers, leaders and whatever. Yeah, every laboratory in the world will have a debut might be using it for the moment for either territory but they all have the ability. So, basically, yeah, and there will be no product in terms of instrumentation it being readily available in the laboratories to run this test.

Okay. And then similar for the point-of-care test you're working on now, whose equipment would that test run on?

Well, I mean, our point-of-care test won't require an instrument. I mean, it just imagines in your mind, it's like -- it’s exactly like our HIV test or exactly I suppose really like a pregnancy test in the sense that you just get a color on the control line and then a color, if it's positive, and no color if it's negative and so in that sense. So it's just a standard lateral flow test like a pregnancy test or like HIV test or lateral flow, and basically, that. So it doesn't require any instrumentation whatsoever.

Okay. Because I do believe the Abbott test, it just received approval that has to run on their test system. So this would be an advantage over that because you wouldn't need to have a test system?

Well, they're doing different things, I mean, in the sense that the Abbott tests has just been approved is a molecular test, right? And basically so -- so basically that is testing -- that test in the antigen. So that can pick up an infection virtually immediately. The antibody test that we are -- we have developed and are developing in the case of the rapid is an antibody test, right? So, of course, you'll only actually develop the antibody a number of days after infection. But typically, the IGM you'll get after -- the IGM antibody you’ll get after about three days and the IgG maybe after kind of day seven maybe 7 days to 10 days. But, of course, to give you an example, some of the importance of -- some -- I mean in any event, most people aren't being tested, actually, ironically until many days after they actually are infected. But leaving that aside, but what's happening if you look at the statistics that we're seeing at the moment, of course, they're complete monstrously understating the actual number of infections. And if I just take an example of the U.K., right, beside us here and they really only testing people when they're really, really sick, so there is lots of people, younger people, and indeed some older people who are getting sick and getting over, and of course, they would never get a test unless they get really sick. And of course, it comes to a point then where they say it's very useful to know if in fact, you actually did have the condition and if you have developed the antibodies, because if you have developed the antibodies, you can go into any environment without a mask, whatever and are safe. So you're safe to go back to work and you're safe maybe to the healthcare worker, et cetera, et cetera. So as this whole thing moves forward antibody tests are going to become really an essential component of this whole thing, whole battle. And the other, yeah, and of course, there are a lot less expensive as well and bearing in mind that our antibody test, ELISA will run on blood, with blood and our rapid run with whole a large on the fingerstick loaded lancet. Another important point to bear in mind by the way is that it’s not really being said, but the molecular tests, although, they're very accurate. The swabs that are being got sometimes aren't actually as accurate in the sense that they're not getting a good enough sample. So our estimates are that may be really they're only, 80%, 80%, 85% accurate, because -- not because of the underlying technology is in good enough, but rather because the quality of the samples that's been procured by people have sometimes, limited check and experience isn't good enough.

Okay. All right. And now with regards to R&D expense, it sounds like you're working pretty hard on these in the first half of this year, should we expect a material picked up in R&D spending in the first half of 2020?

No. I don't think so, Jim. I mean, you've already heard Ronan say that the testing question is largely developed from the ELISA point of view and that will be modest expenditure on that and the rapid tests come a little bit afterwards will require maybe a little bit more. But no, I don't regard there is a significant uptick.

Basically, we've just redeployed people.

Okay. All right. And then you mentioned in the press release that the valuation for the TrinScreen test is on hold temporarily. I know it's hard to look into a crystal ball and see when this whole, COVID-19 starts to come back to -- starts to get under control. But is it reasonable to assume that TrinScreen will be approved at some point in 2021?

Yeah. I do believe so. I mean, so our Ivory Coast trial is finished whereas South African Kenyan trials we just close them down. We were just finishing though, I mean, I can't guess when they will be commenced, but, let’s assume and then just as guess I think it will constitute like a two month delay some of that.

All right. Then the last one from me. Just want to make sure I got my math right. On the two discontinued products the U.S. HIV test and then the Lyme test. You said you expect about a $5 million decline in revenue, but about a $2 million increase in cash flow. So it's safe to assume that operating expenses at that California plant were roughly $7 million?

No. Not really. So the figure we quoted there, it's a little bit of apples and oranges going on. But the $4.6 million of reduction in revenues was the amount of revenues that those products contributed to 2019 revenues, and obviously, they won't go to zero entirely in 2020 because we're still producing some of the Western Blot line products and we'll sell those throughout the year. Whilst, ultimately that $4.6 million if you want to think about is in 2021 one will have all disappeared. The products were declining anyway. So when we get out of the Carlsbad facility as such, we will -- we estimated that we probably would have had about $3 million of revenues between the two products at that particular point in time. And the costs associated with Carlsbad were about five and that's where the two comes from.

Okay. So…

Yes. Bear in mind is that there was not the product being manufactured in Carlsbad as well, which we've had to move to other factories, it wasn’t just as simple as you know.

Okay. But for 2021 we should assume operating expenses down around $5 million from 2019 levels as a result of the…

Yeah.

… facility being closed. Okay. All right. Thank you. That's it for me.

Thanks, Jim.

Okay. Thanks, Jim.

[Operator Instructions] Our next question is from Walter Schenker from MAZ Partners. Go ahead.

Two questions only. Hello, Ronan, and hello, Kevin.

Hello, Walter.

First, on the ELISA test, you can make millions of these, I mean, you said volume you did two very large labs, I'm just trying to get an understanding of making it in volume is thousands, tens of thousands millions?

And yeah, we could make millions, basically, then… Q Yeah.

Yeah.

Secondly, what you talked about…

[Inaudible] Yeah.

What you talked about only testing or initially testing people in the healthcare or emergency providers and stuff as people go back to work. One of the concepts is to in fact test people for antibodies, because they would not be at risk, which would make a much larger market. This would be applicable to anybody who to check if in fact they have antibodies, correct?

Yes. That's correct, Walter, yeah.

And just the last on that, then I have a growing question. Not trying to rip people off, but other type of antiviral test you may have done in the past are $1, $10, $20, I'm not asking you why you're going to price it, just an order of magnitude of what a test might go for that you sell?

Well, I mean, really that varies, but, I mean, if you take a test for measles, for example, an ELISA test for measles is kind of like it was kind of bottom of the barrel. And what I mean, they are very simple, simple test, it probably would be failing out of company like Trinity Biotech for $1 a test or something like that and.

Okay.

But then other tests more esoteric might be up at $5 or $6. So it would depend. But, certainly, yeah, this, I mean, yeah, it would be, I'm not sure what the pricing would be, but it would be more the latter than the former.

Okay. And then, Ronan, we've had discussions over the last couple of years, about the place of 100 or under $100 million medical testing company, which has to carry public company expenses, worldwide marketing and research expenses, given how many countries you operate in? You would generally still be the view of management and the Board, I know you can speak for the Board, you can speak to yourself as a large holder and part of management that on a long-term basis, say, $100 million or less revenue company, which operates on a worldwide basis, just can get very profitable?

I mean, you're saying that's not me. I don't really know how to respond to that.

Well, okay, I'll ask the question differently. We have a couple years out a bond payment coming due and which the company is going to have to address, history of the last five years would argue that $100 million we can't make a lot of money. So the company either has to be meaningfully bigger or pursue other strategic alternatives. That's a question not a statement?

Yeah. Okay. And I would accept that. And I think, we're very conscious of the fact that we have a bond maturing of $99.9 million in 24 months time. And we're extremely conscious, listen we may have to take steps in looking at all our options and it could include a sale of part of the business or indeed all of the business, there's many possibilities here and I want to kind of unsettled and even my employees who are listening on the call or anything like that. But, yeah, clearly, we have to look at all of those kind of options.

Okay. Thank you very much, Kevin.

Thanks, Walter.

Our next question is from Jonathan Sacks from Stonehill Capital. Go ahead.

Hi. Very interesting to hear about your development of COVID antibody test, can you just tell us a little bit about the potential competition for that test? Are there lots of other companies developing tests for that purpose now is it difficult to do and is Trinity differently or uniquely positioned versus others by virtue of capabilities or manufacturing capacity or otherwise?

Jonathan, I think if you Google kind of COVID-19 tests, you get a very long list for molecular tests and for ELISA test rapid and whatever. Most of them are probably, Chinese, but there are a lot of people involved and I think it's reasonable to assume that an awful lot of companies are working on this, some talking about it and some not talking about it. And so, all I can say is that, we have developed a test, an IgG test that we think is very good. We have the pedigree in the sense that we've done it before, we know we're at we have the production capability and we have a reasonable market capability. So and -- but let's be no doubt there will be a lot of people very busy working until the test at the moment. And I'm not going to start speculating as to who is where and that whole process. But just looking at ourselves and we've developed a good test. As I mentioned, we were the sole supplier -- virtually sole supplier to Quest and LabCorp to the number of years ago, virtually their entire infectious disease and ready to test for that detected various viruses. And so, clearly, we have the capability and the experience. So and -- so we'd be quietly confident that this can be successful, I mean, I think, there's two things, the two things that are going to basically the question marks over is whether we can get the approvals that we require and whether we can gain the custom that we have required. I have no doubt about that we have a decent product and I've no doubt that we can manufacture then we've ticked those two boxes with no doubt in the next two boxes over I think there we have to wait and see. But we’ll be quite confident we gain the approvals.

And in terms of the approvals, would you think the United States is the first place or would act the fastest or someplace else, if you could help us think about what regions might have the fastest track for approval of these products?

Well, I mean, that’s -- I think our concentration basically would be CE Mark for Europe and then FDA with and emergency use authorizations. I mean, they are our primary focus right now. I mean, I think, armed with that, all of their markets would open up you know.

And I certainly understand you don't know exactly when those things can get approved and I'm guessing that months’ not weeks, but that you'd likely be hopeful that it's something you could be selling in this calendar year in 2020. If approved, is that a fair way to think about it?

Yeah. No. No. I'm very much talking about this calendar year absolutely. I'm talking short months.

Okay. That's very helpful. Thank you.

Thanks, Jonathan.

Thanks.

Our next question is from William Lap [ph], a Private Investor. Go ahead.

Good afternoon or good morning guys. Hi.

Good morning.

Hi, Bill.

Hi, Bill.

Hi. How are you? I -- based on Jonathan's question, I think, you're correct based on what I've been hearing on television and others that the FDA is going to move this as fast as possible. And I think I don't think you'll have much problem getting this approved. If it does what you say it will. There are other tests out there in fact, Mayo was developing some tests. You may want to look at it came in? And the Star Tribune this morning, you may want to Google that and see what they're doing. But I think you have the right approach on this. But is your -- is Abbott also looking at something like this developing this test you know?

Well, I mean, Abbott got approval, I think, yesterday or day before, I think, two days ago.

Yeah. But that's not the same kind of test they got approval on and is it?

Exactly. Yeah. That’s molecular test.

Yeah. So, I think, you’re also talking about the antibody, the same type of test you have. So I guess, but there must be -- there will be enough demand that more than one test would be good, right?

Yeah. I mean, Bill, with no doubt look at what the other companies will develop antibody tests there.

Okay. And so, in Africa, for your other the screening test ---- you never finished in getting all the sites and all the data done. So you could finish the submission is that correct, because Kenya was closed down, is that what you said?

Yeah. So, basically, there were three sites, so South Africa, Kenya and Ivory Coast. So Ivory Coast is finished and South Africa and Kenya were just virtually on the point of completion. But they've just closed down the past 10 days. But I'm guessing here and estimating that, they'll open up again, I'm sure of the timing, but I mean, somewhere between, I don’t know, two months and three months, probably…

Okay. … and so it. And I think so that's the extent of the delay. And I think following that then we can submit to the WHO, and hopefully, we'll get an approval before the end of this year.

Okay. So we're still pursuing that and that's still something that looks good for us if we get it, right? I mean, there's still demand for it?

I mean, there is -- no, to be very clear our TrinScreen strategy is core of more importance to the future of the company. We've invested significantly and as we're strong believers in this and we think that we can succeed there. We already basically dominate the confirmatory market and we’re established producer of rapid HIV test regarded as gold standard in Africa and we think we can leverage that and take a decent market share in screening market.

Okay.

And we’re confident of doing that.

Do you have any feeling of I know it's early, do you have any feeling what kind of tests, what kind of volume you could do in the COVID tests? Have you -- have any doing at all?

I’d better resist it. I don't want to kind of -- I only -- expectations unreasonably here. If you don't mind I won't do that. I won't get involved in that other than to say that there is huge logic and the concept of screening at some point in time, to ascertain who basically has been infected who hasn’t. There is so much advantage to knowing that. And there are many people. I mean in the U.S. you’re earlier in the whole pandemic than some of the European countries. But in reality there are many many people who have been infected and quietly recovered and never basically been to the doctor.

Yeah.

And no I know numerous such people. But bear in mind at the moment as for example, just take the U.K. as an example. I mean, you basically have to be really sick before they really even give you a test.

Yeah. While the U.S. the goal is to get everybody tested, yeah?

But they're saying otherwise just self-isolation, self-isolate then you’ll recover and then you're never part of the statistics.

But you still may have it you don't know.

Yeah.

But once you develop that does that -- the question is will it stay so that it will be that your immune system is such that you are, okay, and it won't come back, but I think?

Yeah. I think there is debate, but, yes, I mean, yes you are immune, I mean, this question mark as to how long you're immune.

Right.

I mean, for most viruses if you think the whole concept -- the whole vaccination concept you’re immune for life. But I mean there is speculation that you’re immune for two years or three years. But I don't think anybody suggesting that you're immune for less than that. So as a point of view of this pandemic and you can regard somebody who is had it as being immune.

Okay. Well, this test could be good for Trinity, if we can make some money with it that will be good, other than the fact that.

Thanks so much, Bill.

Thank you for taking my question.

Thanks. And, okay, so listen, thank you very much. I see there's no more questions. And so, I think we close the call and thank you for your support and interest. And we look forward to speaking to you soon on our quarter one conference call. Good afternoon.

Thank you.

The conference call has now concluded. Thank you for attending today's presentation. You may now disconnect.