Good day, and welcome to the Trinity Biotech First Quarter 2021 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator instructions] Please note, this event is being recorded. I would now like to turn the conference over to Joe Diaz of Lytham Partners. Please go ahead.

Thank you, Betsy, and thanks to all of you for joining us today to review the financial results of Trinity Biotech for the first quarter of 2021, which ended on March 31, 2021. Joining us on today’s call is Ronan O’Caoimh, CEO of Trinity Biotech; and John Gillard, CFO. At the conclusion of today’s prepared remarks, we will open the call for a question-and-answer session. Please be aware that statements made in the course of this earnings call may be deemed forward-looking statements within the meaning of federal securities laws. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in such statements. These risks include, but are not limited to, those set forth in the Risk Factors section of the Company’s annual report on Form 20-F filed with the Securities and Exchange Commission. Management undertakes no obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after today or the occurrences of unanticipated events. With that, I will now turn the call over to John Gillard, CFO of Trinity Biotech, for a review of the results of the quarter, who will be followed by CEO, Ronan O’Caoimh, for an outline of the progress in sales and marketing and the impact on revenue. John, please proceed.

Thank you, Joe. As Joe mentioned, I will now take you through the results for Q1 2021. Starting with revenues, total revenues for the quarter were $25.6 million compared to $21.2 million in Q1 2020. As Joe pointed out and is our typical approach, Ronan will discuss revenues in further detail later on the call. As such, I will move on to discuss other aspects of the income statement. Gross margin for the quarter was 42.6% compared with 43.8% in Q1 2020. This change in margin has been contributed to by sales mix changes and downward pricing pressure on PCR viral transport media products and associated collection devices due to lower demand, with some customer stockpiling supplies in Q4 2020 thus reducing market demand in Q1 2021. In addition, the increased rollout of vaccination programs as Q1 progressed reduced down the focus on COVID-19 testing with consequently reduced demand for PCR viral testing media and associated collection products. As ever, our gross margin remains susceptible to product mix changes, geographic spread, currency fluctuations and product level variation. Other operating income decreased from $14,000 in Q1 2020 and to $1,000 in Q1 2021 due to the suspension of small ancillary activities at our Irish sites due to COVID-19 public health restrictions. Moving on to R&D expenditure. This remained relatively flat compared to quarter one 2020 at $1.4 million. Meanwhile, SG&A has decreased slightly to $6 million. This reduction is primarily as a result of reduced selling and associated costs. These result in an operating profit for Q1 2021 up $3.1 million compared to $1.7 million reported in Q1 2020, an increase of over 81%. The $1.4 million increase in operating profit is primarily driven by increased revenues, partially offset by the lower gross margin and higher share-based compensation costs. Moving on…

We will now begin the question-and-answer session. [Operator Instructions] Our first question is from Paul Nouri with Noble Equity Funds. Please go ahead.

Your COVID revenue for the quarter, was it mostly PCR transport? Ronan O’Caoimh: Yes.

Okay. And the antigen test that you’re developing, is that going to be for the U.S. or mainly OUS? Ronan O’Caoimh: So Paul, if it will be for right around the world. So basically, the test will be manufactured in Ireland on the same automated equipment that we do Uni-Gold and that we’re about to do TrinScreen on. So we have a very efficient cost of manufacturing like under $0.50. So, we’ll be in a position to supply worldwide. So we go in the United States, we’ll go to the EUA route. And in Europe, we go CE Mark. And so that’s our intention. And yes, so it’s progressing well. Admittedly slowly, but it will be a very good test.

And you said you’re going to submit EUA for a rapid antibody test, right? Ronan O’Caoimh: Yes.

Yes. I was just going to ask, are they substantially used now, rapid antibody test? And the next question, I guess, would be, is the -- the primary setting for it be the hospital or? Ronan O’Caoimh: Right. So Paul, what we have is we have already developed a very excellent COVID-19 antibody ELISA test. So, that’s a test basically that runs on instrumentation in a laboratory, right? And that is basically at both EU and EUA FDA approval. So, we’re free to sell in each of those geographies. The actual sales that we achieved have been disappointing. I think everybody has seen that the level of antibody tests that have been expected didn’t actually materialize. And that the focus has been mostly on PCR testing. And then obviously, to a lesser extent, on antigen testing, but to a modest extent on antibody testing, so three more kind of population tests and that kind of thing, and so -- but in addition, in addition to that, we are about to submit to the FDA in the next -- under the EUA pathway in the next five weeks our antibody rapid test, right, which has, I think, which we believe would have greater potential for selling than the laboratory-based antibody test. Did that answer?

And then as -- at least for now, we’re shifting to reopening in the U.S. Different countries around the world are experiencing COVID in different ways. Some have lowered their COVID cases way earlier and some are actually still rising. So as you look at your markets, are there places where the revenues in your traditional businesses are back to where they used to be? Or is it pretty much across the world, that’s not the case. Ronan O’Caoimh: We’re experiencing basically that everything is down. I’m probably about 10% on that, say, if I was to average out. And it’s just that particularly in the case of diabetes, right, which is somewhat of a discretionary -- the A1c test that a diabetic would do every three months, there’s a discretionary element to it if you were to wait four months or whatever. So to some extent, we were finding that patients don’t present to the doctor in the middle of the pandemic. And that’s less the case in our autoimmune business. I think one of the principal targets we’ve had with HIV is that getting applicants -- it’s actually getting the product there because air cargo has become really, really precious and difficult to procure, particularly into remote areas of Africa. So -- but what we do believe is that all of those business components will normalize back to the previous levels as soon as the pandemic is largely passed and people are largely vaccinated.

The next question comes from Jim Sidoti with Sidoti & Co. Please go ahead.

Great. So I believe I heard you said the transport media COVID revenue was around $8 million, down from about $13 million, so about -- down about 40% from Q4. Can you give us a sense on where you think that will trend for the rest of the year? Is there a baseline level that you think continues even as the vaccines roll out? Ronan O’Caoimh: Well, just to say that, firstly, we didn’t say that the transport medium was $8 million. We said that all of the COVID-related products totaled $8 million, just to make that point, Jim. But given the many variables involved, including vaccinations and variants, it’s difficult to predict future demand for the COVID-related products. And therefore, we’re really not giving revenue guidance in the circumstances, Jim, just impossible to predict.

All right. But I mean it seems like it’s likely that it will decline from that $8 million level in the second and third quarters. Is that reasonable to assume? Ronan O’Caoimh: I think it is reasonable to assume. But again, we don’t really -- it’s reasonable to assume, but we don’t have great visibility on it. It’s reasonable to assume, but it may not happen, but it probably will. To what extent, we’re just not saying because we don’t really have the visibility on it, and again, with product new products coming through also.

Right. And then I assume some of those products are used in regions where the vaccine is still pretty dominant outside the United States, is that correct? Ronan O’Caoimh: Yes. Although most of our revenues actually have been in the United States, just make that point.

All right. You mentioned some hires in Africa in anticipation of TrinScreen. Can you give us some color, what type of folks you hired? Ronan O’Caoimh: Right. Yes, well, we basically were in a position to hire the most senior person really of our main competitor, basically. And our main competitor was involved in an acquisition in the last few years, a big acquisition. So, anyway, so we were able to basically make a really, really good hire of a very, very senior person. And then that person has brought in some of his previous reports. So, we have actually a really strong team in position to take on this TrinScreen challenge and indeed to increase our Uni-Gold market share, and indeed to sell the rest of our range of products. But our primary focus is on TrinScreen, 170 million tests per year.

So those folks are primarily sales and distribution type folks, it sounds like. Is that correct? Ronan O’Caoimh: Yes. This will be basically -- yes, sales guys. So it’s right across Africa.

Got it. Got it. I know I heard you. Okay. So I know the next two or three quarters is going to be very hard to predict because you’re not sure how fast the COVID business will trail off. But longer term, do you think the TrinScreen business has the potential to at least offset, if not become a larger business than your COVID business was in 2020? Ronan O’Caoimh: Well I mean, to deal with that, I mean, the screening market is 170 million tests per annum in Africa and the typical price -- and the price is $0.80, right? I mean that works out at about $140 million or whatever. And basically, we believe that we can take a reasonable market share. I mean the performance of our test in terms of sensitivity and specificity was staggeringly excellent, I could say that it is just remarkable. And so the test works very well. We know the market. We have a good reputation in the market. I mean we have been selling the gold standard, Unico test is basically commands the highest price in the market for the last 15 years. So we clearly have, I mean, a very good reputation in the market. And in addition to that, then we can manufacture the product in a very cost-efficient manner in Ireland on an automated system that can -- that has basically almost unlimited production capability. So -- and in addition to that now, we’ve beefed up our team with some serious hires from the very people that were selling the majority of that 170 million tests. So I think And in addition to that, I see no doubt, but that we’ll get WHO, World Health Organization approval. It’s only a matter of when rather than if. You take all of that into consideration and given an intention to marginally undercut the market leader, remember, the market leader has about 80% market share. We believe that we can take a reasonable market share. And if you ran the numbers basically, yes, the potential here is a lot greater than the COVID opportunity, which will probably gradually evaporate. So yes, the answer to your question is yes, Jim.

Okay, all right. And how quickly do you think you’ll see that sales pick up? Are there tenders that you need to win? And how often are they put out? And do you expect to start winning tenders this year? Ronan O’Caoimh: All right. So As I indicated, we believe that we will get approval sometime in quarter three. It’s possible it may be quarter four. We’ve sought to try and get clarification from the WHO on that. They’re being a little bit coy in terms of indicating what the timing will be. But I think we hope to get there in quarter three. The actual route to market in individual countries, it depends on being basically placed on the algorithm. So the algorithm will indicate which product would be the screen of what product we do confirm. And in some instances, the screening can be split. You kind of have a couple of kind of companies in there. So we believe that as the algorithms come up through renewal, and they basically tend to come every two years, that will be in every single time, we’ll be in there and we’ll win some and we won’t win other. And we’ll share some of it. So we believe it’s realistic to take sort of a 25% market share over the course of something like three -- between three and five years, that kind of thing. So in the context of our size, it’s a very, very significant opportunity.

Okay. And then the last one for me is on the A1c instrument that you plan on rolling out next year. What’s the strategy in terms of pricing? Do you charge the instrument? Or do you basically let the customer use the instrument in exchange for contract for disposables? Ronan O’Caoimh: Well, in fact, in essence, we’ll be primarily selling the instrument because the only markets in which we sell direct where we would actually place an instrument and carry the cost on our balance sheet, et cetera, is really in the United States and in Brazil. So in the United States, this instrument really won’t -- we may not even bother actually bringing into the market. The U.S. has typically bigger hospitals. So we’re really not focused at all in the U.S. So, yes, we will place some on our balance sheet and when we basically reagent rentals in Brazil, but the main focus where we will sell this instrument to our distributors right around the world who will then basically do the reagent rental themselves. So what we’re endeavoring to do here is to provide an affordable instrument and to place at large volumes. We don’t really endeavor to make any reality any serious money out of the actual instrument placement itself, but rather -- and so basically, we’re a razor-blade model. So we placed to raise or just marginally over cost and seek to profit from the sale of the blade, so the reagent. So it’s all about selling the reagent. So, basically, typically, our instrument at the moment, Premier goes into hospitals that will run, say, 10,000 or more tests per year. And the sweet spot for this instrument is between sort of 3,000 and 8,000 tests per year -- sorry, test per year. So it’s got a lot -- it’s a huge potential. I remember we’ve got instruments placed all over the world, all -- basically all over the second world, third world, and that will be primarily our focus.

[Operator Instructions] Our next question comes from Bill Lapp [ph] who’s a private investor. Please go ahead.

Things were pretty well covered. I have some questions though on why we’re spending the time on the rapid antibody test and the rapid antigen test? It seems like the market is pretty competitive, and it seems like we’re late. So, I’m wondering what the thinking is? I don’t think the autoimmune lab testing you did much. I don’t know if you said the sales were minimal. They were nothing. So can you explain why you’re pursuing the rapid antibody test and the rapid antigen test when there seems to be plenty of competitive products there and you haven’t even been approved for the rapid antibody test in the U.S. and you’re spending money for the rapid antigen test? Would you see a big market you’re going to capture? What’s the thinking for going forward on this? Ronan O’Caoimh: Bill, nice to hear from me. Just to say, by the way, Betsy will close the call after this question. But -- so I would hate -- I concede that the -- I would concede that the antibody test basically has disappointed in terms of the size of the market. Having said that, I think that there’s a greater market potential for the rapid antibody test than there is for the laboratory-based one. And it’s for that reason that we are actually finishing basically the launch of the product by submitting to the FDA in the next five weeks. But I would concede that, that part is unlikely, at least as we see things at the moment, to be a huge revenue generator. But in response in your question about antigen testing, I think that antigen testing will remain. And I mean, COVID -- although the populations will largely be vaccinated will be with us for the future. And I think the COVID antigen test would be a very important part of the armory of Trinity Biotech given our ability to manufacture sort of under $0.50 on an automated basis.

Okay. So you’ll be competitive with the Abbott test. And I just sent John, an article in Minneapolis paper about the testing that they’re doing here. But a lot of companies are requiring the test be given. So I’m just -- I just wondered if you think you can penetrate that market even though you’re a little late because of the rapidness and the cheapness of it, right? Ronan O’Caoimh: Yes. Yes. Yes.

Okay. And when do you expect that to be done, the rapid antigen test? When do you think you’ll have that ready? Ronan O’Caoimh: We we’re just basically not going to give a prediction on timing here that we don’t mislead. And so we’re just not committing a time line on it, but we’re working as quickly as possible on it.

Okay. And that will that be an EUA grant? Ronan O’Caoimh: We’ll be using the EUA pathway again. Yes. And then Europe, we’ll just CE Mark.

Okay. All right. All right. Well, I can see why you’re -- on the last call, you mentioned your most exciting thing was the WHO and the TrinScreen. And I think I understand why and what the volume that makes sense, so good luck on getting that in the third quarter. Thank you for allowing me to ask a question. Ronan O’Caoimh: All right, well, thanks to everybody for joining us this afternoon and for your support and interest. And so good afternoon, and speak to you at our next conference call. Bye-bye.

Thank you everybody. Thanks for your time.

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