LumiraDx Limited

Good day, and thank you for standing by. Welcome to LUMERA's DX Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Melissa Garcia, Vice President, Corporate Council. Please begin.

Hello, everyone, and welcome to today's call to discuss LumiraDX's second quarter 2023 financial results issued earlier today. Joining us are LumiraDX's Chairman and CEO, Ron Swanziger, and Chief Financial Officer, Dorian LeBlanc. The press release announcing our financial results is posted on the investor relations section of the company's website at LumiraDX.com. Before we begin, I would like to caution listeners that any statements we make today, other than historical facts, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Please be aware that all such forward-looking statements involve risks and uncertainties, such as those detailed in our annual report on Form 20F for the year ended December 31, 2022, which was filed with the SEC on May 1, 2023, and in other filings that we make with the SEC. Any forward-looking statements that we make must be considered in light of these factors. Actual results may vary materially. Also, during today's call, we may refer to certain non-IFRS financial measures. Non-IFRS financial measures should not be considered in isolation from or as a substitute for financial information presented in compliance with IFRS. There is a schedule showing the reconciliation of these non-IFRS financial measures in our press release issued earlier today, which can be found on our website at lumiridx.com. I will now turn the call over to Ron Zwanziger for opening remarks and a general business update. We will then provide a financial update before answering questions. Ron?

Thanks, Melissa. Good morning, everyone, and thank you for joining our second quarter results call. In the United States, during Q2, we strategically positioned our North American business to take advantage of the upcoming respiratory season in the short term, while also focusing on expanding our testing menu for both short-term and long-term growth. We have three key updates. First, we extended our testing program with CVS to encompass numerous pharmacies across the U.S., complementing our existing partnership with the CVS Minute Clinics, which has been in place since 2020. The expansion leverages our current installed instrument base, allowing for strong operating margin on testing volumes within these new pharmacy sites during the upcoming respiratory season. Second, our COVID flu combo test has been submitted to the FDA Emergency Use Authorization. The EUA is part of the NIH's independent test assessment program, ITAP, Having already launched successfully in over 25 countries globally, obtaining the UA for our test should be a valuable addition to our US testing portfolio. We're actively engaged in discussions regarding their current status of our application. Third, as reported in a recent press release, we're excited to report our submission of our of a 510K application to the FDA for the clearance of our 5-minute COVID Ultra product. The innovative Ultra test strip design enables higher sample volumes, enhancing detection levels, and reaction times for more precise results. This marks a significant milestone for Lumira DX as we work to expand the markets for our SARS-CoV-2 Ultra test. The receipt of 510K approval from the FDA could also pave the way for expanding our testing menu in the U.S. on the Unifoint. on our unified platform. In Europe, our focus remains on the acceptance and expansions of our non-COVID portfolio, Non-COVID platform test volumes excluding seasonal respiratory products increased 50% sequentially. 26% of our customers purchased more than three assays during the second quarter in 23 versus 17% in the first quarter of 23, highlighting the positive impact of our menu expansion. A specific example of our unique NT-PRO BMP test following the January 23 launch of our NT-PRO BNT-STAT Q2 was dedicated to showcasing its lab comparable performance and user-friendliness to clinicians and key opinion leaders. By offering the only finger-stick NT-PRO BNTs at the point of care, we're able to gain access to key accounts for evaluation. Our efforts have been supported by peer-reviewed studies, including those from the University of Uppsala and the European Journal of Heart Failure, emphasizing the clinical and economic benefits of widespread anti-pro-BMP testing in primary care settings. The studies confirm the excellent performance of our test, the benefits of room-temperature storage, the utility of the same test strip, and method for samples of whole venous blood, capillary blood and plasma, and the short turnaround time of the test, 12 minutes. These published studies are a welcome addition to the body of evidence showcasing our laboratory comparable performance of our tests at the point of care setting. We remain committed to transforming healthcare by enabling early heart failure diagnosis in the community and plan to expand our approach globally. Further, with regards to Entipro BNTP, our collaborative work with Medtronic continues to develop positively. A follow-up event was run in Manchester in July, which continues to show excellent results and a direct impact for individuals being immediately referred for further testing due to elevated results. As a result of our second successful event, we plan to support further events with Medtronic in 23 and have spun this concept out into other mobile settings. one of which is a workplace benefit program being run in Ireland in the fall of 23 with expanded scope. It will not only be hard health checks with our NT-PRO BMP test, but would also support diabetes screening with our HbA1c test, which highlights our multi-menu approach. We plan to further expand on this model globally in an overall effort to broaden general access to such needed health checks in an overall effort to transform how healthcare is delivered within the community. Our CRP test has made significant strides, particularly in community-based settings like virtual wards in the UK. Partnerships like NHS Friendly Health have demonstrated the test value in real-time decision-making for antibiotic treatment, resulting in improved patient safety, experiences, and cost savings. The aim was to support real-time decision-making on the need for antibiotic treatment in frail, acutely unwell patients in an effort to avoid hospital admission, if achievable and desirable, rather than waiting several hours for lab results. This customer described our platform as small, portable, battery-operated, robust, and simple to use with room temperature reagent storage, ideal for community and mobile testing. The clinical and operational benefits were studied across various patients, and the results were very positive. In 50% of patients tested, the Limerida XCRP test improved the safety of care and helped to avoid the need for escalation to hospital care at a cost saving of up to 3,914 pounds per patient. If adopted more broadly, these benefits could lead to substantial savings for healthcare systems. We continue to deliver on our multiple as a menu platform offering as an example. We recently started working with a leading operator of care homes in Austria. They were looking for a more efficient way to test their patients at the bedside instead of sending them to hospitals hospital immediately saving money and reducing patient stress. We're initially starting to work with them in the Vienna region with 15 instruments. They're currently focused on CRP, D-dimer, and our broader respiratory portfolio, and have indicated that in the future, they expand to They may expand to our entire assay portfolio and may also expand geographically into additional regions throughout Austria where they have other customer locations. This is an excellent example of how easy it can be to transform community-based healthcare with the LumeoDx platform when one single portal of instrument can have a major positive clinical impact in nearly any setting. Coming into this year's respiratory season, we believe we're well-placed strategically to continue to grow the CRP business as a broader part of our respiratory portfolio. As the only platform available today at the point of care setting with CRP, as well as flu and COVID tests, we provide a turnkey solution for important clinical pathways that are aimed at curbing antimicrobial resistance by differentiating between viral and bacterial infections. For example, the UK primary care Respiratory Society recommends algorithms they have developed to rule out COVID-19 and flu, taking other symptoms into account and using the point-of-care CRP test if the prescriber feels antibiotics are necessary. Lumira DX has the only platform at the point-of-care setting that can fulfill the entire algorithm with just our one instrument, making both the patient and clinician experience more efficient and desirable to the alternatives. which would require the multiple POC instruments or having to wait hours for laboratory results. On the commercial side, we have expanded our reach to increase sales impact by entering into distribution agreement with Axon Labs, a major player in the industry for Germany and Switzerland, This distributor has already placed an initial order of instruments and assayed them tests and aims to start to roll out in these countries shortly. We also plan to appoint an additional distributor, additional distributors and other regions to increase sales reach and local customer support. The benefits of our broader menu are also felt in Africa. In Africa, we've been working with key stakeholders to drive uptake of non-COVID testing on our 5000 plus instruments installed with the Gates Foundation during the pandemic. We've now started shipping our HbA1c test to various African countries as well as D-dimer test to Zimbabwe. D-dimer has historically been underutilized as a marker of blood clotting in Africa, but the new features of the Ludumira DX platform enable access to this important test. These tests also show utility in high-risk TB and HIV population. This reflects the overall benefit of the platform for tests being deployed in African countries where they have traditionally not been tested in the community. We know that globally traditional healthcare models are being impacted in hospital setting due to funding and staffing restrictions. And as a result, innovations like our portable point of care instruments are needed to allow testing in the community. As we continue to innovate and expand our fortune portfolio, Lumiere DX remains dedicated to transforming healthcare delivery worldwide and contributing to such impactful change. Now, Dorian will further discuss our financial performance in the first quarter, Dorian. Thanks, Ron.

Quarterly revenues for Q2 were $21 million. $9.2 million, or 44% of total revenues, were from non-COVID-specific solutions, marking our highest quarter for our non-COVID revenues. These revenues included $4.4 million from our Lumira DX technologies and $4.8 million from our distribution business. Total adjusted gross margins for the quarter were a loss of $6.6 million. Adjusted gross margins exclude net depreciation, amortization, stock-based compensation, and restructuring charges. The decline in gross margin from Q1 was largely due to the new placement of more than 1,500 instruments in the U.S., primarily with our retail partner, to build testing capacity for the upcoming respiratory season. The full cost of these instrument placements were taken as a charge within Q2. Similar to Q1, the fixed cost base of our prior manufacturing investments pressure our overall margins at our current revenues. We do anticipate our significant capacity and low variable costs will enable seasonal revenues from the upcoming respiratory season to have a strong contribution margin to our gross margin and to our operating cash flows. As we approach the upcoming respiratory season, we have seen customer preference shift to our multiplex solutions for flu and COVID over COVID-only testing. We have seen the majority of our FAST Labs revenues migrate to our flu COVID offering. As a result, we did take further inventory reserves on raw materials related to COVID-specific tests in the period. Total inventory reserves for test strips, instrument returns, instrument components, and FAST Labs raw materials in the quarter were $3.8 million, Fast Labs COVID inventory reserves contributing $2.4 million. Excluding instrument placements in these inventory reserves, adjusted gross margins would have been approximately 10%. Our restructuring programs have reduced our operating expenses sequentially over the last five consecutive quarters since we exited the Omnicron wave and transitioned to endemic COVID. Since Q3 2022, when we initiated our cost reduction programs, we have decreased our annualized cost base by more than $100 million in line with our prior guidance. Our second quarter adjusted R&D expenses were $14.3 million compared to $14.8 million in Q1 of this year and compared to $42.8 million in Q2 2022. Our second quarter adjusted SG&A expenses were $17.6 million compared to $19 million in Q1 and $30.2 million in Q2 of 2022. The adjusted operating expense reductions from Q1-23 to Q2-23 are primarily related to decreased wages and other employee expenses. Adjusted operating expenses exclude depreciation, amortization, stock-based compensation, and restructuring charges. We incurred $2.9 million of restructuring costs in the quarter as we finalized most of our latest cost reduction program in June and anticipate additional cost savings in Q3 with the full benefit of these changes. At June 30, 2023, our cash balance is $25.3 million. On a cash basis, our quarterly cash interest paid reflects the payment of both the Q1 and Q2 cash interest on our senior debt within the second quarter. On July 20, 2023, we executed a ninth amendment to the loan agreement with our senior lender, which included an agreement to increase the loan facility with two new tranches of senior debt. On July 21st, we drew down the tranche B funding from the amendment for 15 million. We anticipate drawing down tranche C funding of 16 million before the end of August as we continue to manage our liquidity position. We will now pause for the operator to gather any questions.

Operator?

Thank you.

As a reminder, to ask a question, you'll need to press star 11 on your telephone. To withdraw your question, please press star 11 again. Please wait for your name to be announced. Please stand by. We'll compile the Q&A roster.

One moment for our first question. First question comes from the line of Matt Sykes with Goldman Sachs.

Your line is now open.

Good morning. Thanks for taking my questions. Maybe the first one. The ITAP submission for the flu-COVID combo in the U.S. market, could you just give us a sense for timing? Do you think that would be ready for the respiratory season in the U.S.? And you had mentioned some conversations you were having with them. Just how are those going? And any kind of color on timing would be helpful.

Well, that's always a tricky question. That's certainly the intent of the folks we're dealing with at the ITAP. And so that is the expectation. But, of course, there can never be assurance of that. But that is the expectation that we will have it in time for the quarter. And certainly we've got customers lined up on that basis.

Got it. And then maybe just two quick follow-ups. One, you had mentioned the press release, the divestiture of the INR Star business. And was there any kind of cash realized from that that you guys have disclosed?

Dorian?

No. No cash that we disclosed that we realized for that transition. That's a business that is monitoring patients on warfarin. And the software helps to provide the algorithm for the dosing. What we've seen with the warfarin patient population declining, that business was in decline. And it did require some significant investment to maintain the software. So it was more of an avoidance of future investment than to realize proceeds.

Got it. And just my last question, the relationship with CVS, which sounds like it's going well with some of the additional placements. Could you just maybe talk about some of your expectations for timing of rollout? I assume a lot of that's to capture the respiratory season in Q4, but maybe just talk about the expansion of that relationship and what it could mean from a non-COVID standpoint as we kind of go into the end of this year and into early 24?

Well, probably it's best to remind you that we had a relationship with CVS that preceded the pandemic where we had a plan with them and many of the product selection of the order in which we're launching the non-COVID test was agreed with them well before Well, before the, the, the, the pandemic, then, of course, there was this long hiatus and now we're coming back to it. So we're, we're really sort of simply evolving back to what was originally intended pre pandemic. And, of course, in the short term, that means. the respiratory, the first question you asked, flu A and B. And then, of course, there's other tests that will be coming through, both respiratory and non-respiratory. So there's a whole program of tests that we expect to go into that relationship now. I don't know if you've sort of picked it up, but the significance of what's been going on in the second quarter and the expansion of relationship is that we've taken it beyond the minute clinic and where traditionally The tests are not done in the regular pharmacies which do not have a minute clinic. And so we've had a large number of instruments now go into the regular pharmacy. So it's quite a change in behavior. And we think that that bodes really well for the future. There's quite a lot of tests which are needed in the community where you don't want to force people to go to just the minute clinics which are you know crudely speaking every 10th cvs where you want them to be able to to have more reach and to go into more stores so it's um it's quite uh it's potentially quite significant um change that we've had positive change great thanks ron and dory appreciate the questions thank you one moment for our next question please our next question comes from the line of jeffrey cohen with

Lattenberg, your line is now open.

Good morning, Ron and Dorian. A couple questions from our end. I guess, firstly, Ron, could you expand upon your commentary on Medtronic and talk about health checks with us a little deeper as far as what specific tests and what channels as far as coagulation and diabetes cardiovascular? Sure.

Sure. Well, the issue with Medtronic is that they have a program into the community to try and screen out people with heart failure. And of course, there is no community-based finger stick antipro BMP test. So when they have these programs, which They have them in various forms, but the one we're involved with is a mobile bus that literally goes into the community and they channel people through. So as soon as they heard about our test, they used it. And straight away, the impact was to identify Uh, people into into 3 groups, and this is repeated itself in the 2nd test. So, or you, you, you referred to diabetes, but this particular program. It started off at the moment. It's anti probate, but it could expand. So, so even in these early results, they immediately showed that. There's people walking out there. that are so severe that they're going to decompensate. And we've had an initial person sent directly from the testing to the emergency room. And then there were a bunch of other people which were sent to their primary care physician because it was elevated, but not yet in the critical state. And then, of course, fortunately, there's everyone else. So it showed the enormous benefit of actually being able to triage patients much earlier in the community and obviously therefore reduce the hospitalization. Or in the case of the person that went in, get the person in before they really deteriorate. So the point about this program that they're running is it shows how you can deal with congestive heart failure far more effectively than you are now. And I should say that other countries that we're working with are going down the same path in quite a number of countries, and there's a lot of key opinion leaders. everywhere. That's why we dwelt upon it on the prepared remarks where in a host of different countries they can see how having a finger stick test in the community can do just what we've already identified so early on in this program with Medtronic. So it really shows the power of our platform.

And Ron, is Medtronic driving this process and Are they distributed in that order?

There's no distribution in here with Medtronic. Just to be clear, there's no distribution because they have their own product in congestive heart failure. They have tremendous advantage of catching people early based on their own products, not tests. We just happen to be a mechanism which allows for earlier identification of people and catching people with congestive heart failure for much earlier treatment and therefore to avoid both deterioration of folks' health and also saving money for the system.

Okay, got it. And are they piloting this or they're doing this across the U.S. now?

No, this is all in Europe because where we have the registration, We will obviously bring this product into the U.S. We highlighted our prepared remarks that we've got our first 510K submission, which covers the instrument and the strips, and then the future submissions cover only the strips. And we're obviously going to do flu A and flu B, but NT-PRO is very early in the cycle of tests that we're going to bring into the U.S.

Okay, perfect. Okay, and then secondly for us, if you could just touch upon the 9.29 COVID with the composition of 4.4 technologies and 4.8 distribution. As far as the technologies go and the distribution goes, could you give us a flavor and perhaps call out the two or three or four tests that are driving that thus far and then what we would expect for the back half as well as any back half commentary on COVID revenue?

Well, even though it was almost a non-flu season quarter Q2, we had a lot of flu A and flu B testing in the quarter. But Dorian, maybe you can answer the question.

Yeah, we did. So just about half of that is still the respiratory testing. within the 4.4 of the Lumiere DX technologies, including a large portion for the FastLabs business, as we mentioned, that transitioning to the majority of that business being flu COVID testing. And on the distribution revenues, as you may recall, that's revenues for products that we don't manufacture, sold primarily outside of the U.S. in Latin America and Europe. for distribution agreements that we have in our sales organizations.

Okay. Got it. That does it for us. Thanks for taking the questions.

Thank you. One moment for our next question, please. This question comes from the line of Andrew Cooper with Raymond James. Your line is now open.

Hey, guys. Thanks for the questions. Maybe first, just a little bit more detail, if you could give some of the progress that's been made through the quarter in terms of strep and troponin. I think you had commented you expected to be in trials with strep later this year. And then, Ron, I think you said, you know, potentially kind of on the market, at least in trial phase with troponin in the UK this year. So just what has happened since the last update and anything else you could offer there would be great.

Well, actually, both. So in terms of new products, whether it's troponin or molecular strep, molecular strep, we expect to probably get out in the market in the fourth quarter in the UK. And we're also looking at the various clinical trials needed for IBDR and 510K. And troponin continues to move quite well, and I think our previous comment was that we expect we might be able to get it towards the very end of the year, and that's still the case. Okay, great. That's helpful. I'm specifically talking about in terms of self-registration in the UK.

Okay. Helpful. Maybe for Dorian, just the commentary about some of the run rate on expenses. Can you give us a flavor for sort of what's still to be recognized here in 3Q that wasn't fully baked in 2Q and kind of from the trajectory what we should expect there? And then should we think that 3Q gross margins look more similar to that 10% type level that you called out as sort of the normalized X increment, X? inventory reserve piece or more like what we saw in 2Q just now?

Yeah, so I'll take the gross margin piece first. You know, it does depend heavily on what happens with the start of the respiratory season and around the timing of a potential approval for the flu COVID test through ITAP in the United States. So obviously that high value, high margin respiratory product coming through in the end of the quarter, could have a material impact on where we stand. Absent a strong contribution from that, then yes, your comment around the 10% level at these revenue levels is on the mark. On the cost savings.

Most of the... I was just going to say, so we should expect more normalized levels from the kind of instrument drag perspective, and then you feel like the inventory piece is pretty well reflected after the last write-off?

We would expect that, yes.

Okay, thank you. And then, sorry, on the on the expenses.

Yeah, so we did incur the close to $3 million of restructuring charges in the quarter, and That's largely around severance for reduction in the workforce. Most of those employees left in May, June. And so there's the expense savings further on employee costs in the third quarter. But as we had mentioned previously, some of that will be offset by an increase in U.S. clinical and regulatory expenses. So we will get some additional marginal savings in Q3. But as we start the work on the US clinicals on the respiratory products and on the community-based products to bring the European portfolio into the US, we will be using some of that cost savings for the clinical trial costs.

Okay, great. I'll stop there. Thanks for the time.

Thank you. One moment for our next question. As a reminder, to ask a question, you'll need to press star 11. Our next question comes from the line of Mark Massaro with BTIG. Your line is now open.

Hey, guys. Thank you for the questions. Ron, the first question is for you. I'm curious as to your degree of confidence around the duration of the NIH ITAP program. Obviously, you submitted your COVID-Ultra test as a 510K, but your COVID flu is the EUA through the ITAP. I'm just curious if you have visibility how long the EUA pathway through ITAP will be available as opposed to submitting regular way 510Ks. And any thoughts on timing expectations for the COVID flu test?

Well, on your first question, there's been tremendous engagement and it continues to be. Probably, we don't know this for sure, but probably because ours is the only multiplex, high performance test And so we suspect that's the reason. And, of course, there's a lot of anxiety around because of the flu season. So, yes, so the ITAP program continued to interact with us, even though that in general there's obviously a sharp reduction in EUAs. But for this particular application, it still seems to be there. And so hence our comments before that we're hoping, well, there's no assurance, but we're hoping to be able to get it in time for the flu season. And we're working with the customers who are being patient, know the situation for that to happen. Your other comment, your other question about our first 510K, I think that will follow the regular path and it's always very hard to estimate 510k, particularly the first one on a new platform where you're submitting and the review process includes a great deal of focus both on the instruments as well as the particular stripping question. So it's a much greater amount of work than the second test you submit. But we submitted a very detailed and complete package. And so I think that, you know, there'll be a back and forth with the FDA. And I think the optimistic view might be before the end of the year, otherwise into next year. But I think it's not far away. It's not too far away.

Okay, great. And then maybe one for you, Dorian. You're now tracking low $20 million in the first two quarters of the year. Q3 is typically seasonally lighter. I don't think I heard you guide for Q3, but can you give us a sense for ballpark? Do you think we'll be down a little bit sequentially primarily due to seasonality, or are there other offsets that could keep you flattish?

Well, it's a tricky question to answer, Mark, because such a material impact around the timing of the flu COVID approval potentially in the US and customers waiting on purchases on the timing of that, on whether they'll utilize the 12-minute COVID antigen test in the US or the flu COVID test. So tricky to guide to exactly what Q3 will do. will land just because of such a material impact from the timing. Outside of that, we continue to see the non-COVID portfolio grow. And as we talk to the number of customers that are taking multiple tests and continue to go quarter on quarter, we see that trend will carry us through the rest of the year as the menu expansion really plays well in Europe. And that will drive the non-respiratory growth. But because respiratory is such a big contributor, hard to guide with the uncertainty around timing.

Okay. And then on the balance sheet, Dorian, I think you expect to draw $16 million by the end of next week. I think that'll take you to $41 million of cash. Is that cash sufficient in your view to get through the end of September? And just maybe how should we think about cash runaway?

Um, yeah, absolutely. The one other piece maybe to think about on cash runway is we do have a number of receivables on the books, not, not trade receivables, but particularly the tax receivables. So we have 25.2 million at the end of Q2 in tax receivables, largely from UK R and D tax credits. Uh, we do anticipate that coming through before the end of the year and contributing significantly to liquidity. And then we'll work on where we are with Pharmacon in future amendments and working through the overall liquidity for the fourth quarter. But the draw of $16 million will certainly take us through September.

Okay. Last question for me. Can you maybe explain what the measurements of the Covenants and the Ninth Amendment are? what that pertains to. I'm trying to get a sense for some of the details around the statement about the measurement there.

So right now, during the term of the Ninth Amendment, the only covenant that applies is the minimum liquidity covenant of $5 million. We have no other covenants that are in effect. When the Ninth Amendment ends, then we would return to the original revenue covenants that had us you know, that were set during the pandemic and therefore, you know, outdated would need to be negotiated with our lender.

Okay, perfect. All right, guys, that's it for me. Thank you.

Mark, I'll just add to the first question about respiratory and revenues. So, You made the comment that Q3 tends to be the weaker one, but actually Q2 tends to often be the weaker one than Q3, because Q3 sometimes gets the initial stocking orders for the fourth quarter flu season. But obviously, because of the ITAP program, we don't know where we stand with the US. That complicates matters. But then there's also the general complication of... uh the flu season in europe and japan as well making you know making um uh any comments very particularly particularly tricky yep that makes sense um i appreciate all the color okay thank you i am currently showing no further questions at this time i'd like to turn the conference back to mr ron wanziger for closing remarks uh okay thanks um so our our transition to a non-COVID product portfolio continues to progress, especially with the commercial launches of the A1C test and the anti-probiotic test on our platform. Customer responses continue to be positive, supported by external clinical validations. So again, bringing together multiple assays on a single easy-to-use instrument with laboratory-equivalent performance and a low cost of ownership is enabling a transformation in community-based care. Now, in parallel to the focus on our business and test expansion, we continue to work with various strategic advisors on the previously disclosed strategic review of our business with the support of our senior lender, which we're engaged in discussions with them about the terms of the loan agreement as amended to date, including the covenants in the ninth amendment, which is scheduled to be measured on September the 1st. While there'll be no guarantees about the outcome of the strategic review process or our ability to renegotiate terms of the loan agreement with our senior lender, we remain committed to preserving and protecting the value of our business while we continue to aim to deliver on product expansion into the U.S. and commercial growth of our approved tests internationally. Thank you for your time and for your support of Lumira DX. Bye.

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day. you Thank you. So, you

Good day, and thank you for standing by.

Welcome to Lumira's DX Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Melissa Garcia, Vice President, Corporate Counsel. Please begin.

Hello, everyone. And welcome to today's call to discuss LumiraDX's second quarter 2023 financial results issued earlier today. Joining us are LumiraDX's chairman and CEO, Ron Swanziger, and chief financial officer, Dorian LeBlanc. The press release announcing our financial results is posted on the investor relations section of the company's website at LumiraDX.com. Before we begin, I would like to caution listeners that any statements we make today Other than historical facts, our forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Please be aware that all such forward-looking statements involve risks and uncertainties, such as those detailed in our annual report on Form 20F for the year ended December 31st, 2022, which was filed with the SEC on May 1st, 2023, and in other filings that we make with the SEC. Any forward-looking statements that we make must be considered in light of these factors. Actual results may vary materially. Also, during today's call, we may refer to certain non-IFRS financial measures. Non-IFRS financial measures should not be considered in isolation from or as a substitute for financial information presented in compliance with IFRS. there is a schedule showing the reconciliation of these non-IFRS financial measures in our press release issued earlier today, which can be found on our website at lumiridx.com. I will now turn the call over to Ron Zwanziger for opening remarks and a general business update. We will then provide a financial update before answering questions. Ron?

Thanks, Melissa. Good morning, everyone, and thank you for joining our second quarter results call. In the United States during Q2, we strategically positioned our North American business to take advantage of the upcoming respiratory season in the short term, while also focusing on expanding our testing menu for both short-term and long-term growth. We have three key updates. First, we extended our testing program with CVS to encompass numerous pharmacies across the U.S., complementing our existing partnership with the CVS Minute Clinics, which has been in place since 2020. The expansion leverages our current installed instrument base, allowing for strong operating margin on testing volumes within these new pharmacy sites during the upcoming respiratory season. Second, our COVID flu combo test has been submitted to the FDA Emergency Use Authorization. The EUA is part of the NIH's independent test assessment program, ITAP, Having already launched successfully in over 25 countries globally, obtaining the UA for our test should be a valuable addition to our US testing portfolio. We're actively engaged in discussions regarding their current status of our application. Third, as reported in a recent press release, we're excited to report our submission of of a 510K application to the FDA for the clearance of our 5-minute COVID Ultra product. The innovative Ultra test strip design enables higher sample volumes, enhancing detection levels, and reaction times for more precise results. This marks a significant milestone for Lumira DX as we work to expand the markets for our SARS-CoV-2 Ultra test. The receipt of 510K approval from the FDA could also pave the way for expanding our testing menu in the U.S. on the Unifoint. on our unified platform. In Europe, our focus remains on the acceptance and expansions of our non-COVID portfolio. Non-COVID platform test volumes excluding seasonal respiratory products increased 50% sequentially. 26% of our customers purchased more than three assays during the second quarter in 23 versus percent in the first quarter of 23, highlighting the positive impact of our menu expansion. A specific example of our unique NT-PRO BMP test following the January 23 launch of our NT-PRO BMP Tech Q2 was dedicated to showcasing its lab comparable performance and user friendliness to clinicians and key opinion leaders by offering the only finger-stitched anti-proBNTs at the point of care were able to gain access to key accounts for evaluation. Our efforts have been supported by peer-reviewed studies, including those from the University of Uppsala and the European Journal of Heart Failure, emphasizing the clinical and economic benefits of widespread anti-proBNP testing in primary care settings. The studies confirmed the excellent performance of our test, the benefits of room-temperature storage, the utility of the same test strip, and method for samples of whole venous blood, capillary blood and plasma, and the short turnaround time of the test, 12 minutes. These published studies are a welcome addition to the body of evidence showcasing our laboratory comparable performance of our tests at the point of care setting. We remain committed to transforming healthcare by enabling early heart failure diagnosis in the community and plan to expand our approach globally. Further, with regards to NT-PRO BNTP, our collaborative work with Medtronic continues to develop positively. A follow-up event was run in Manchester in July, which continues to show excellent results and a direct impact for individuals being immediately referred for further testing due to elevated results. As a result of our second successful event, we plan to support further events with Medtronic in 23 and have spun this concept out into other mobile settings. one of which is a workplace benefit program being run in Ireland in the fall of 23 with expanded scope. It will not only be hard health checks with our NT-PRO BMP test, but would also support diabetes screening with our HbA1c test, which highlights our multi-menu approach. We plan to further expand on this model globally in an overall effort to broaden general access to such needed health checks in an overall effort to transform how healthcare is delivered within the community. Our CRP test has made significant strides, particularly in community-based settings like virtual wards in the UK. Partnerships like NHS Friendly Health have demonstrated the test value in real-time decision-making for antibiotic treatment, resulting in improved patient safety, experiences, and cost savings. The aim was to support real-time decision-making on the need for antibiotic treatment in frail, acutely unwell patients in an effort to avoid hospital admission if achievable and desirable, rather than waiting several hours for lab results. This customer described our platform as small, portable, battery-operated, robust, and simple to use with room temperature reagent storage, ideal for community and mobile testing. The clinical and operational benefits were studied across various patients, and the results were very positive. In 50% of patients tested, the Limerida XCRP test improved the safety of care and helped to avoid the need for escalation to hospital care at a cost saving of up to 3,914 pounds per patient. If adopted more broadly, these benefits could lead to substantial savings for healthcare systems. We continue to deliver on our multiple as a menu platform offering as an example. We recently started working with a leading operator of care homes in Austria. They were looking for a more efficient way to test their patients at the bedside instead of sending them to hospitals hospital immediately saving money and reducing patient stress. We're initially starting to work with them in the Vienna region with 15 instruments. They're currently focused on CRP, D-dimer, and our broader respiratory portfolio, and have indicated that in the future they expand They may expand to our entire assay portfolio and may also expand geographically into additional regions throughout Austria where they have other customer locations. This is an excellent example of how easy it can be to transform community-based healthcare with the Lumira DX platform when one single portal of instrument can have a major positive clinical impact in nearly any setting. Coming into this year's respiratory season, we believe we're well-placed strategically to continue to grow the CRP business as a broader part of our respiratory portfolio. As the only platform available today at the point of care setting with CRP, as well as flu and COVID tests, we provide a turnkey solution for important clinical pathways that are aimed at curbing antimicrobial resistance by differentiating between viral and bacterial infections. For example, the UK Primary Care Respiratory Society recommends algorithms they have developed to rule out COVID-19 and flu, taking other symptoms into account and using the point of care CRP test if the prescriber feels antibiotics are necessary. Lumair DX has the only platform at the point of care setting that can fulfill the entire algorithm with just our one instrument, making both the patient and clinician experience more efficient and desirable to the alternatives. which would require the multiple POC instruments or having to wait hours for laboratory results. On the commercial side, we have expanded our reach to increase sales impact by entering into distribution agreement with Axon Labs, a major player in the industry for Germany and Switzerland. This distributor has already placed an initial order of instruments and assayed them tests. and aims to start to roll out in these countries shortly. We also plan to appoint an additional distributor, additional distributors in other regions to increase sales reach and local customer support. The benefits of our broader menu are also felt in Africa. In Africa, we've been working with key stakeholders to drive uptake of non-COVID testing on our 5,000 plus instruments installed with the Gates Foundation during the pandemic. We've now started shipping our HbA1c test to various African countries as well as D-dimer test to Zimbabwe. D-dimer has historically been underutilized as a marker of blood clotting in Africa, but the new features of the Ludumira DX platform enable access to this important test. These tests also show utility in high-risk TB and HIV population. This reflects the overall benefit of the platform for tests being deployed in African countries where they have traditionally not been tested in the community. We know that globally traditional healthcare models are being impacted in hospital setting due to funding and staffing restrictions, and as a result, innovations like our portable point of care instruments are needed to allow testing in the community. As we continue to innovate and expand our portfolio, Lumiere DX remains dedicated to transforming healthcare delivery worldwide and contributing to such impactful change. Now, Dorian will further discuss our financial performance in the first quarter. Dorian?

Thanks, Ron. Quarterly revenues for Q2 were $21 million. $9.2 million, or 44% of total revenues, were from non-COVID-specific solutions, marking our highest quarter for our non-COVID revenues. These revenues included $4.4 million from our Lemur DX technologies and $4.8 million from our distribution business. Total adjusted gross margins for the quarter were a loss of $6.6 million. Adjusted gross margins exclude net depreciation, amortization, stock-based compensation, and restructuring charges. The decline in gross margin from Q1 was largely due to the new placement of more than 1,500 instruments in the U.S., primarily with our retail partner, to build testing capacity for the upcoming respiratory season. The full cost of these instrument placements were taken as a charge within Q2. Similar to Q1, the fixed cost base of our prior manufacturing investments pressure our overall margins at our current revenues. We do anticipate our significant capacity and low variable costs will enable seasonal revenues from the upcoming respiratory season to have a strong contribution margin to our gross margin and to our operating cash flows. As we approach the upcoming respiratory season, we have seen customer preference shift to our multiplex solutions for flu and COVID over COVID-only testing. We have seen the majority of our FAST Labs revenues migrate to our flu COVID offering. As a result, we did take further inventory reserves on raw materials related to COVID-specific tests in the period. Total inventory reserves for test strips, instrument returns, instrument components, and FAST Labs raw materials in the quarter were $3.8 million Fast Labs COVID inventory reserves contributing $2.4 million. Excluding instrument placements in these inventory reserves, adjusted gross margins would have been approximately 10%. Our restructuring programs have reduced our operating expenses sequentially over the last five consecutive quarters since we exited the Omnicron wave and transitioned to endemic COVID. Since Q3 2022, when we initiated our cost reduction programs, we have decreased our annualized cost base by more than $100 million in line with our prior guidance. Our second quarter adjusted R&D expenses were $14.3 million compared to $14.8 million in Q1 of this year and compared to $42.8 million in Q2 2022. Our second quarter adjusted SG&A expenses were $17.6 million compared to $19 million in Q1 and $30.2 million in Q2 of 2022. The adjusted operating expense reductions from Q1-23 to Q2-23 are primarily related to decreased wages and other employee expenses. Adjusted operating expenses exclude depreciation, amortization, stock-based compensation, and restructuring charges. We incurred $2.9 million of restructuring costs in the quarter as we finalized most of our latest cost reduction program in June and anticipate additional cost savings in Q3 with the full benefit of these changes. At June 30, 2023, our cash balance is $25.3 million. On a cash basis, our quarterly cash interest paid reflects the payment of both the Q1 and Q2 cash interest on our senior debt within the second quarter. On July 20, 2023, we executed a ninth amendment to the loan agreement with our senior lender, which included an agreement to increase the loan facility with two new tranches of senior debt. On July 21st, we drew down the tranche B funding from the amendment for $15 million. We anticipate drawing down tranche C funding of $16 million before the end of August as we continue to manage our liquidity position.

We will now pause for the operator to gather any questions. Operator?

Thank you.

As a reminder, to ask a question, you'll need to press star 11 on your telephone. To withdraw your question, please press star 11 again. Please wait for your name to be announced. Please stand by. We'll compile the Q&A roster.

One moment for our first question. First question comes from the line of Matt Sykes with Goldman Sachs.

Your line is now open.

Good morning. Thanks for taking my questions. Maybe the first one. The ITAP submission for the flu-COVID combo in the U.S. market, could you just give us a sense for timing? Do you think that would be ready for the respiratory season in the U.S.? And you had mentioned some conversations you were having with them. Just how are those going? And any kind of color on timing would be helpful.

Well, that's always a tricky question. That's certainly the intent of the folks we're dealing with at the ITAP. And so that is the expectation. But of course, there can never be assurance of that. But that is the expectation that we will have it in time for the quarter. And certainly, we've got customers lined up on that basis.

Got it. And then maybe just two quick follow-ups. One, you had mentioned the press release, the divestiture of the INR Star business. And was there any kind of cash realized from that that you guys have disclosed?

No, no cash that we've disclosed that we realized for that transition. That's a business that is monitoring patients on warfarin. And the software helps to provide the algorithm for the dosing. What we've seen with the warfarin patient population declining, that business was in decline and it did require some significant investment to maintain the software. So it was more of an avoidance of future investment than to realize proceeds. Got it.

And just my last question, the relationship with CVS, which sounds like it's going well with some of the additional placements. Could you just maybe talk about sort of your expectations for timing of rollout? I assume a lot of that's to capture the respiratory season. in Q4, but maybe just talk about the expansion of that relationship and what it could mean from a non-COVID standpoint as we kind of go into the end of this year and into early 24.

Well, probably it's best to remind you that we had a relationship with CVS that preceded the pandemic where we had a plan with them and many of the product selection of the order in which we're launching the non-COVID test was agreed with them well before the pandemic. Then of course, there was this long hiatus and now we're coming back to it. So we're really sort of simply evolving back to what was originally intended pre-pandemic. And of course, in the short term, that means the respiratory, the first question you asked, flu A and B, and then of course there's other tests that will be coming through, both respiratory and non-respiratory. So there's a whole program of tests that we expect to go into that relationship now. I don't know if you've sort of picked it up, but the significance of what's been going on in the in the second quarter and the expansion of relationship is that we've taken it beyond the minute clinic and where traditionally the tests are not done in the regular pharmacies which do not have a minute clinic and so we've had a large number of instruments now go into the regular pharmacy so it's quite a change in behavior and we think that that bodes really well for the future there's quite a lot of tests which are needed in the community where you don't want to force people to go to just the minute clinics, which are, you know, crudely speaking, every 10th CVS, where you want them to be able to have more reach and to go into more stores. So it's potentially quite a significant change that we've had, positive change.

Great. Thanks, Ron and Dorian. Appreciate the questions.

Thank you. One moment for our next question, please. Our next question comes from the line of Jeffrey Cohen with Lattenberg. Your line is now open.

Good morning, Ron and Dorian. A couple questions from our end. I guess, firstly, Ron, could you expand upon your commentary on Medtronic and talk about health checks with us a little deeper as far as what specific tests and what channels as far as coagulation and diabetes cardiovascular?

Sure. Well, the issue with Medtronic is that they have a program into the community to try and screen out people with heart failure. And of course, there is no community-based finger stick So when they have these programs, which they have, they have them in various forms, but the one we're involved with is a mobile bus that literally goes into the community and they channel people through. So as soon as they heard about our test, they used it and straight away, the impact was to identify Uh, people into into 3 groups, and this is repeated itself in the 2nd test. So, or you, you, you referred to diabetes, but this particular program. It started off at the moment. It's anti probate, but it could expand. So, so even in these early results, they immediately showed that. There's people walking out there. that um are so severe that they're going to decompensate and um we've had uh an initial person sent directly from from the testing to the emergency room and then there were a bunch of other people which were sent to um their primary care's uh position because it was elevated but not yet in the critical state um and then of course fortunately there's everyone else So it showed the enormous benefit of actually being able to triage patients much earlier in the community and obviously therefore reduce the hospitalization. Or in the case of the person that went in, get the person in before they really deteriorate. So the point about this program that they're running is it shows how you can deal with congestive heart failure far more effectively than you are now. And I should say that other countries that we're working with are going down the same path in quite a number of countries, and there's a lot of key opinion leaders. everywhere. That's why we dwelt upon it on the prepared remarks where in a host of different countries, they can see how having a finger stick test in the community can do just what we've already identified so early on in this program with Medtronic. So it really shows the power of our platform.

And Ron, is Medtronic driving this process? And Are they distributed in that order? There's no distribution in here with Medtronic.

Just to be clear, there's no distribution because they have their own product in congestive heart failure. They have tremendous advantage of catching people early based on their own products, not tests. We just happen to be a mechanism which allows for earlier identification of people and catching people with congestive heart failure for much earlier treatment and therefore to avoid both deterioration of folks' health and also saving money for the system.

Okay, got it. And are they piloting this or they're doing this across the U.S. now?

No, this is all in Europe because where we have the registration, We will obviously bring this product into the U.S. We highlighted our prepared remarks that we've got our first 510K submission, which covers the instrument and the strips, and then the future submissions cover only the strips. And we're obviously going to do flu A and flu B, but NT-PRO is very early in the cycle of tests that we're going to bring into the U.S.

Okay, perfect. Okay, and then secondly for us, if you could just touch upon the 9.29 COVID with the composition of 4.4 technologies and 4.8 distribution. As far as the technologies go and the distribution goes, could you give us a flavor and perhaps call out the two or three or four tests that are driving that thus far and then what we would expect for the back half as well as any back half commentary on COVID revenue?

Well, even though it was almost a non-flu season quarter Q2, we had a lot of flu A and flu B testing in the quarter. But Dorian, maybe you can answer the question.

Yeah, we did. So just about half of that is still the respiratory testing. within the 4.4 of the Lumire DX technologies, including a large portion for the Fast Labs business, as we mentioned, that transitioning to the majority of that business being flu COVID testing. And on the distribution revenues, as you may recall, that's revenues for products that we don't manufacture, sold primarily outside of the U.S., in Latin America, in Europe. for distribution agreements that we have in our sales organizations.

Okay. Got it. That does it for us. Thanks for taking the questions.

Thank you. One moment for our next question, please. This question comes from the line of Andrew Cooper with Lehman James. Your line is now open.

Hey, guys. Thanks for the questions. Maybe first, just a little bit more detail, if you could give some of the progress that's been made through the quarter in terms of strep and troponin. I think you had commented you expected to be in trials with strep later this year. And then, Ron, I think you said, you know, potentially kind of on the market, at least in trial phase with troponin in the UK this year. So just what has happened since the last update and anything else you could offer there would be great.

Well, actually, both. So in terms of new products, whether it's troponin or molecular strep, molecular strep, we expect to probably get out in the market in the fourth quarter in the UK. And we're also looking at the various clinical trials needed for IBDR and 510K. And troponin continues to move quite well, and I think our previous comment was that we expect we might be able to get it towards the very end of the year, and that's still the case.

Okay, great.

That's helpful. And then... In terms of the mTOR, I'm specifically talking about in terms of self-registration in the UK.

Okay. Helpful. Maybe for Dorian, just the commentary about some of the run rate on expenses. Can you give us a flavor for sort of what's still to be recognized here in 3Q that wasn't fully baked in 2Q and kind of from the trajectory what we should expect there? And then should we think that 3Q gross margins look more similar to that 10% type level that you called out as sort of the normalized X increment, X? inventory reserve piece or more like what we saw in 2Q just now?

Yeah, so I'll take the gross margin piece first. You know, it does depend heavily on what happens with the start of the respiratory season and around the timing of a potential approval for the flu COVID test through ITAP in the United States. So obviously that high value, high margin respiratory product coming through in the end of the quarter, could have a material impact on where we stand. Absent a strong contribution from that, then yes, your comment around the 10% level at these revenue levels is on the mark.

On the cost savings- Okay, but most of the- Sorry. I was just going to say, so we should expect more normalized levels from the kind of instrument drag perspective, and then you feel like the inventory piece is pretty well reflected after the last write-off?

We would expect that, yes.

Okay, thank you. And then, sorry.

On the expenses, yeah, so we did incur the close to $3 million of restructuring charges in the quarter. That's largely around severance for reduction in the workforce. Most of those employees left in May, June. And so there's the expense savings further on employee costs in the third quarter. But as we had mentioned previously, some of that will be offset by an increase in U.S. clinical and regulatory expenses. So we will get some additional marginal savings in Q3. But as we start the work on the U.S. clinicals on the respiratory products and on the community-based products to bring the European portfolio into the U.S., we will be using some of that cost savings for the clinical trial costs.

Okay, great. I'll stop there. Thanks for the time.

Thank you. One moment for our next question. As a reminder, to ask a question, you'll need to press star 1-1. Our next question comes from the line of Mark Massaro with BTIG. Your line is now open.

Hey, guys. Thank you for the questions. Ron, the first question is for you. I'm curious as to your degree of confidence around the duration of the NIH ITAP program. Obviously, you submitted your COVID-Ultra test as a 510 , but, you know, your COVID flu is the EUA through the ITAP. I'm just curious if you have visibility how long the EUA pathway through ITAP will be available as opposed to submitting regular way 510 s. And any thoughts on timing expectations for the COVID flu test?

Well, on your first question, The there's been tremendous engagement and that continues to be probably we don't know this for sure, but probably because ours is the only. Multiplex high performance. Test. And so we suspect that's the reason. And, of course, there's a lot of anxiety around because of the flu season. So, yes, so the ITAP program continued to interact with us, even though that in general there's obviously a sharp reduction in EUAs. But for this particular application, it still seems to be there. And so hence our comments before that we're hoping, well, there's no assurance, but we're hoping to be able to get it in time for the flu season. And we're working with the customers who are being patient, know the situation for that to happen. Your other comment, your other question about our first 510k, I think that will follow the regular path and it's always very hard to estimate 510k, particularly the first one on a new platform where you're submitting and the review process includes a great deal of focus both on the instruments as well as the particular stripping question. So it's a much greater amount of work than the second test you submit. But we submitted a very detailed and complete package. And so I think that, you know, there'll be a back and forth with the FDA. And I think the optimistic view might be before the end of the year, otherwise into next year. But I think it's not far away. It's not too far away.

Okay, great. And then maybe one for you, Dorian. You're now tracking low $20 million in the first two quarters of the year. Q3 is typically seasonally lighter. I don't think I heard you guide for Q3, but can you give us a sense for ballpark? Do you think we'll be down a little bit sequentially primarily due to seasonality, or are there other offsets that could keep you flattish?

Well, it's a tricky question to answer, Mark, because such a material impact around the timing of the flu COVID approval potentially in the US and customers waiting on purchases on the timing of that, on whether they'll utilize the 12-minute COVID antigen test in the US or the flu COVID test. So tricky to guide to exactly what Q3 will do. will land just because of such a material impact from the timing. Outside of that, we continue to see the non-COVID portfolio grow. And as we talk to the number of customers that are taking multiple tests and continue to go quarter on quarter, we see that trend will carry us through the rest of the year as the menu expansion really plays well in Europe. And that will drive the non-respiratory growth. But because respiratory is such a big contributor, hard to guide with the uncertainty around timing.

Okay. And then on the balance sheet, Dorian, I think you expect to draw $16 million by the end of next week. I think that'll take you to $41 million of cash. Is that cash sufficient in your view to get through the end of September? And just maybe how should we think about cash runaway?

Um, yeah, absolutely. The one other piece maybe to think about on cash runway is we do have a number of receivables on the books, not, not trade receivables, but particularly the tax receivables. So we have 25.2 million at the end of Q2 in tax receivables, largely from UK R and D tax credits. Uh, we do anticipate that coming through before the end of the year and contributing significantly to liquidity. And then we'll work on where we are with Pharmacon in future amendments and working through the overall liquidity for the fourth quarter. But the draw of $16 million will certainly take us through September.

Okay. Last question for me. Can you maybe explain what the measurements of the covenants in the Ninth Amendment are? what that pertains to. I'm trying to get a sense for some of the details around the statement about the measurement there.

So right now, during the term of the Ninth Amendment, the only covenant that applies is the minimum liquidity covenant of $5 million. We have no other covenants that are in effect. When the Ninth Amendment ends, then we would return to the original revenue covenants that had us You know, they were set during the pandemic, and therefore, you know, outdated would need to be negotiated with our lender.

Okay, perfect. All right, guys, that's it for me. Thank you.

Mark, I'll just add to the first question about respiratory and revenues. You made the comment that Q3 tends to be the weaker one, but actually Q2 tends to often be the weaker one than Q3, because Q3 sometimes gets the initial stocking orders for the fourth quarter flu season. But obviously, because of the ITAP program, we don't know where we stand with the US. That complicates matters. But then there's also the general complication of... uh the flu season in europe and japan as well making you know making um uh any comments very particularly particularly tricky yep that makes sense um i appreciate all the color okay thank you i am currently showing no further questions at this time i'd like to turn the conference back to mr ron wanziger for closing remarks uh okay thanks um so our our transition to a non-COVID product portfolio continues to progress, especially with the commercial launches of the A1C test and the antiproben test on our platform. Customer responses continue to be positive, supported by external clinical validations. So again, bringing together multiple assays on a single easy-to-use instrument with laboratory-equivalent performance and a low cost of ownership is enabling a transformation in community-based care. Now, in parallel to the focus on our business and test expansion, we continue to work with various strategic advisors on the previously disclosed strategic review of our business with the support of our senior lender, which we're engaged in discussions with them about the terms of the loan agreement as amended to date, including the covenants in the ninth mention, which is scheduled to be measured on September the 1st. While there'll be no guarantees about the outcome of the strategic review process or our ability to renegotiate terms of the loan agreement with our senior lender, we remain committed to preserving and protecting the value of our business while we continue to aim to deliver on product expansion into the U.S. and commercial growth of our approved tests internationally. Thank you for your time and for your support of LumerityX. Bye.

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.