Yes, thank you operator. Ladies and gentlemen, good morning, good afternoon, welcome to the DiaSorin call.

We are going to be discussing the H1 results. And as usual, I will make comments on at constant exchange rate, so that we can take care of the exchange factor.

First of all, this is the first conference call, where we have expanded the DiaSorin family with DiaSorin Luminex family today. I was in Austin last week I believe we acquired a great company, full of opportunities and technologies.

We have got a lot of talented people. And during this call I am going to make some specific comments about the Luminex business.

Hi, thanks so much for taking my question. I’m curious if you could just talk a little bit about the COVID-19 first of all impact a little more.

I am wondering in particular, you talked about antigen testing volumes being lower than anticipated. Just wondering, if you can give us an update on your thoughts around the potential LabCore contracts whether or not has changed with regards to your changing outlook for the COVID business?

And also I am just thinking about the recent launch of the test, so Lumos platform, if you like in Italy the pharmacies could you then give us an update at all on how that’s going and initial feedback from your partners that are distributing that. And you know what your thoughts are on potentially expanding that pilot program, and I guess what the triggers are to potentially make that decision as to whether or not you are going to expand the program.

And then just a question on Luminex, if I can do, just on VERIGENE II, is there a risk, I guess, with the respiratory panels, that you’re this clinical trial, you’re running? Is that flu dependent at all or RSV dependent or anything like that, I guess, a reason that is a highly unpredictable season.

So if we assume that just COVID, I guess is going to be around, is it still viable to run that clinical trial? If you can just talk a little bit about some of the risks perhaps to VERIGENE II’s launch and whether or not you are happy with the manufacturing from that point of view for a potential, I guess, FDA inspection of the manufacturing pre the VERIGENE II approval?

Thank you.

Peter, it was very difficult to hear the last question. But let me start from the last question and then move forward.

Is the last question about the VERIGENE had to do with the FDA 483, there is no association whatsoever between the VERIGENE II and the 483, and so the problem is not the ability the site Chicago by the way, never received any injunction not to manufacture. The site has received an inspection with the regard to 483 that have been addressed and the company has been working with the FDA to close the 483 and we are waiting for the FDA to conduct an inspection, but you know and I know that for the time being the FDA unless it’s a very, very urgent matter, they don’t visit company’s.

Okay, so again disconnect from your mind 483 from VERIGENE II. Second thing as far as my comment head to the about the application and withdrawal of the original 510(k) for respiratory is much simpler than what you stated and nothing to do with quality issue, the problem was that until that day FDA was accepting EUA for respiratory panels and what Luminex did diligently, they prepared EUA submission.

A week before they submitted, the FDA approved the first 510(k) de novo, which was BioFire Respiratory Panel with COVID, and that – doing that, it reset expectations vis-à-vis EUA, so it started to reject EUA, forcing companies now to conduct clinical study for a 510(k). Now what’s the problem?

When you have a respiratory panel, and you need to have a blend of fresh prospective samples, you need to run your clinical during the respiratory season, and the respiratory season will start in September. And therefore, we say that, as far as, respiratory, it’s unfortunate that has been the move of the agency from EUA to 510(k), but you know, you bite a bullet and we need to – we are going to repeat during this season some of the clinicals necessary to get the data together and then we’re going to submit in quarter one next year.

As far as the antigen test, which I believe is your second question. Antigen test, there was part of the company’s strategy is that the portfolio of our products, which I remind you we developed seven products for COVID.

One of the tests needed was a high throughput antigen test to work on the LIAISON XL, which we did and we got the EUA and also the – with CE mark. As far as the use of this product, it was intended as a product to be used in parallel with molecular products to alleviate the need of some of the hospital and reference centers to run given an amount of molecular at very high price, and they could self-substitute with an antigen test that would work.

Almost as well, as far as, sensitivity clear antigen test and is not as sensitive as molecular, but certainly, certainly at the fraction of price and that was the assumption. Part of that assumption was also related to the fact that LabCorp that is our primary partner would participate in the U.S.

to the K12 program, reopening schools. That is a program that has been broadcasted broadly, but eventually is not coming too much in terms of businesses as you know as other companies did now is really – these are cut at a state level more than a federal level.

And when it comes to a state level, some of these states really prefer a rapid antigen test versus centralized antigen test. And this is why I’m saying, the comment was, we have certain expectations following the favorite LabCorp was participating to this bid, and there would be a program that nationwide was talking about 25 million tests per month, and that progress has been severely reduced and therefore we had to reduce our expectation from antigen tests as well.

As far as, the Lumos, which I think was your last question. The platform was launched recently in Europe, in Italy, where the two assays are serology assay that is intended to use for post vaccination monitoring, and swab antigen test.

As you can imagine the antigen market is pretty much flooded by a lot of products, and our idea was to bring to the market a product that would have lab quality versus some of the low quality stuff that is out there. Very recently, as you follow from competitors the volume for antigen testing has been significantly declined for this.

I’m talking about the rapid testing has been significantly declined, is a combination of lower incidence plus the fact of larger viability of molecular diagnostic testing spread across different geographies. And more lately, what the antigen test is now used for certainly is not more much for diagnostic, but more for in Europe, the green pass, which means that if you don’t have a green pass, so you didn’t get vaccinated.

Now, you need to provide the airline and/or the trains if you want to move in certain environment you have to provide proof of a test, and at the European level repository of approved test has been created, so that pharmacies could actually deliver a result of the antigen test. And according to an approved list of manufacturers trying to eliminate the cheap low-quality stuff that was out there, we got inserted in that list 2 weeks ago.

So now we have our antigen test approved, a proof of travel, and we can really initiate the program. So far, we have 50 flagships, pharmacies that have our system installed.

And we are deploying – so we expect that the deployment of this will continue through Q3 and Q4. Let me remind you again that the LIAISON IQ for us was an arrow that we really needed moving forward in the decentralization strategy.

We always said that we’re going to try to use this as an opportunity to learn the space and create an installed base. By the same token, we’ve also created a serology antigen test dedicated post vaccination that we expect is going to pick up after the summer, once they debate about antibody levels on fragile and certain population will now be determined to be relevant test to be performed.

So, far I think I’m happy from what we have done, we are at the beginning of this process, and we are learning the pharmacy space that certainly for us today is an unknown, but as said with the LIAISON – with the LIAISON NS, and that molecular is a platform, is going to become a segment that this company wants to play with.

Thant’s great. Thank you very much.

Hi there. Thanks for taking my question.

Two please. One on the potential for a new diagnostic in your COVID portfolio, and there is some initial data suggesting that the higher the antibody levels after vaccination, the less likely someone is to see fading vaccine efficacy.

Is that – just as you are planning on building if that’s something you want to produce. And then secondly, on COVID testing pricing across the portfolio, how is pricing holding up?

How is the competition faring, are we seeing some of – as you mentioned some of the low quality ? And just some of the bigger players remaining to some insights on that would be helpful?

Thank you.

So, if I understood correctly, your question about antibody level. Today, there is no evidence, but a certain minimum threshold of antibody is necessary to – for protection.

And there is none of the current and approved vaccines providing – provided data to prove that there is again as in other cases for example for Hepatitis B there is a cutoff level, which is necessary to hit with antibodies to be protected. I think it is going to require more time to come to the assessment, and I don’t think that – is it going to be responsibility of the diagnostic industry to do so.

However, what is very important is really to understand response to vaccination in different class of patients, because what data are proving today is that a 5 months after vaccination healthy individuals still carry antibodies but the titer is reduced 80% toward they had 21 days after the second shot. Okay, this is the first data point.

The second data point is that, you are now if you now look at different groups of patients, so unhealthy and you look at immunosuppressed at different degrees, if you look at certain patients that are taking certain drug regimen. Now, you discover that as expected there is a variety at the behavior in terms of the immunological behavior of these patients is very different.

And some group of patients as expected did not even develop an antibody titer. So today, I think that there is a certain usage of antibody testing.

As you saw, we are selling roughly €5 million of antibody testing per month. We see that there is a slight pick up on that, but what we believe is that the future opportunity with this is going to be, A, on follow-up on those patient groups where response to vaccine is not for sure.

The second thing is that once threshold cut off or immunity is going to be established then there is going to be more regular follow-up. And therefore, our effort today is to get, as much as, possible market share on the current market now to capture surge of testing when and if that is going to happen.

And I think we are with this new assay that we have designed, it is using the primary protein, the full-length protein and we are really becoming gold standard of in the industry about antibody testing. And we are enjoying market share that are coming from EDMA data in Europe that we are in most of the countries we are really #1 or #2 in terms of our market share.

About COVID pricing, it was very difficult to hear you. But again, I restate, I don’t see for the time being an effect of pricing, which comes from the fact that competitors in our segment, don’t forget, we don’t play any high throughput segment.

We play in a mid throughput segment, low throughput segment centrally not decentralized saving. We don’t see an effect of pricing at all.

So, I think we need to understand what is going to happen in the future, but all contracts that we have in place pretty much are holding the same price that were established 1 year ago when the pandemic started.

No that’s fine. Thank you very much.

Okay. Thank you.

Hi, good afternoon. I have just two quick follow-up questions to make sure that I got it right.

Carlo, you stated that throughout 2022 you are going to submit the data to the FDA for VERIGENE II. So, it would be prudent for us to assume that we should see only revenues starting to come through in 2023.

Would that be correct?

Do you want to ask me both? Hi, Maja, do you want to ask me both questions or…

Okay, sure. I can shoot.

I mean, did I get you right, that you mentioned that you are now selling or that you have now placed over 50 LIAISON IQs throughout Italy and that you are planning to placing a similar amount throughout Q3 and Q4. Is that correct?

Okay. Let me start from the IQ.

We placed 50, and I expect a pickup in Q3 and Q4, because just we – we just establish the – let me say, the distribution network. Now, we have three partners that are working with us with better coverage and now we got also the approval at the European level for antigen testing for green pass or it’s – I expect really that Q3 and Q4 should be better than this.

Keep in mind, I am in a learning phase Maja, this is not my – this is not my home base. And so we are learning.

And Maja, the way I can predict this is not as good as I am usually doing with the Excel or platform that I am more familiar with.

Sure.

Second thing about VERIGENE II, no, I think that we should expect – you should expect to have revenues coming from VERIGENE II starting from second half of next year.

Okay. Okay, understood.

And Carlo, just for my understanding, I don’t want to – I don’t want to take up topics that you will discuss at your Investor Day, but out of curiosity, would it be fair to assume that by 2022, you will be running another 5 tests, 6 tests on the LIAISON IQ?

I don’t know where you are taking this information Maja, and if I ever said it, my fault. I think that what we are now trying to understand is post-COVID what’s the positioning of the LIAISON IQ and funny enough.

And this is really funny for us. One of the most valuable products ex-COVID at pharmacy is Vitamin D.

Yes.

Because clearly the logic there is to be able to assess, the whether there is – you are insufficient and then provide you right there over-the-counter supplementation. So, I think the next product in line that you may see from us, and I would never bet this with you 2 years ago, it’s going to be another Vitamin D test.

Okay.

But so far, this is the only one that we clearly understood will make sense to have.

Okay, great. Thank you very much.

Yes. Thanks guys.

Three questions, please. So firstly, on your COVID business, I wonder if you could help quantify the serology contribution this quarter, and more broadly, perhaps share some geographic dispersion of your molecular diagnostic business.

And help us understand whether trends in the U.S. and Europe are any different, whether your expectation is any different.

Second question, please, related to Luminex. Assuming the warning letter disappears by the end of the year, which I think your comments were pointed towards, and you look to launch VERIGENE when the researchers’ panel is approving.

Can you help talk a little bit about the strategy here, because in North America this market is somewhat, shall we say penetrated and the say wide – the wide space is really in Europe and then Asia where much of the market doesn’t exist today. So, talk a little bit about how you expect to move into those segments and create a successful business there.

Last question on Luminex, please. Carlo, you referred to the LIAISONs part of Luminex being very profitable, very successful?

When we look to Luminex margins as a standalone company they weren’t that exciting. So, am I right in saying that the molecular diagnostic business was loss-making or not very profitable and provide much of the opportunity for you as a company to optimize?

Hi, Scott. Okay, I can see that you can do the math.

If I look at – let me start from your last question, right. Without even getting too much into the detail, but I have to say that you need to look at different component of the molecular business of Luminex.

Certainly, their Single Plex platform, the areas was not, let me say the best opportunity in terms of profitability. It was a subscale, very, very complex cartridge we are using, very complicated high cost.

And therefore the profitability was not there, certainly at the volume of sales that they are having, okay. Conversely, if you look at the multiplexing and you look at the VERIGENE and the xTAG line profitability is certainly there.

But you need to understand that I have to admit as an immunoassay person. In molecular diagnostic you are never going to get the same gross margin that you get from immuno.

I think that you are going to get, your EBITDA contribution from a lot of discipline under the gross margin, which is what we did when it comes to our MDX lines. We were able to get with focus more than 35% EBITDA, because we were very disciplined in the way that we integrated our molecular without immunoassay, right.

So, long story short, I believe that with our MDX technology and making an effort to be discipline and have automation on the VERIGENE II, you can turn also the automated – fully automated Luminex business back to where it deserves profitability. When you go – now if I move to the strategy on VERIGENE II, allow me to tell you that, first I am learning this business.

Second, I really want to provide market with reliable data and commitments by the company, once I had a chance to sit down with the Luminex management and after the integration of our commercial team, which is on the way and then provide you with better details. So, let me just pass on that.

When it comes to the COVID serology, as I told you we have around €5 million to €6 million per month of COVID serology, which is relatively stable. We got 90 accounts in the U.S., that 90 accounts in the U.S.

that today are using our serology product. In the U.S.

there is no claim allowed by the FDA on the use with vaccine, post-vaccination, whereas in Europe in the package insert we have all data to support antibody testing post-vaccination and all the different variants. When it comes to Europe, as I said before, in all the major geographies and you can verify it through the EDMA report, we are even #1 or #2.

So, very well-positioned vis-à-vis the fact that the test has been recognized as a standard and now the question is, is volume going to pick up or not. And as I told you before, I am positive about this, because I see from on the clinical studies, the real need on certain sub-populations to monitor what the heck happens.

And by the same token what we are also working on is a strategy on T-cell with our partner QIAGEN because we believe that the right algorithm to look at post-vaccination in certain population is really go to look at the combination of T and B. And if you think about it, this would be a unique algorithm that I think QIAGEN will be the only one able to really offer it to the market.

So, I am really looking forward to the development and launch of this product together without our B-cell. On the – again geographical split on molecular, we have not provided this data ever.

Let me say, if I may, that half of the business is North America and half of the business is ex-U.S., primarily Europe.

Right, thanks. Well, I will look at you for more color.

Now, I will jump back in the queue. Thank you.

So, you are back.

Maybe, just one last one someone is pushing on. Carlo, you just referred to a B-cell and of course, one of the major initiatives for the post-pandemic world for the DiaSorin is to expand upon this opportunity you got approval now for Lyme disease in Europe.

Help us understand a little bit the activities the company is pursuing to develop this opportunity with reimbursement agencies and practitioners both in Europe and maybe even in the U.S., already?

Okay. As you know, when it comes to this very innovative product, you have to go through two steps.

One is provide clinical evidence and the second one as a consequence to this to get a reimbursement, because the assay today the T-cell component of it, is pretty much off pocket everywhere, especially in Germany where that, this represents good chunk of the total market. I would say if you look at the Lyme disease market you are going to have over 60% of that market in Germany, and then the remaining is actually on the adjacent geographies.

And so, the Netherlands, then you have also, Slovenia and so forth, so it’s a Northern European say for the time being. Where we are today is that we have come back on that, we have agreed upon with German reimbursement system about what we need to achieve to get the reimbursement.

We have conducted the HTA study, so the Health Technology Assessment to prove that the algorithm actually provides not only clinical value, but also reduce costs vis-à-vis the current treatment we have a series of clinical studies that are conducted as we speak, because again it is a seasonal disease. So, now this is the season when you are collecting data from the patient.

And so – and we clearly launched the product. But we launched the product you cannot put this product sign, now it is in the hands of regular doctor.

We put it in the – together with the QIAGEN in the reference hospitals where, now they are using it, verifying it, and then hopefully we are going to be generating publication to support it. By the same token in the U.S., because if you know the difference with Lyme disease is that in the U.S., you have a specific strength.

We are now conducting the clinical study on the – in the East Coast, in the Appalachian region, where we are collecting the data to prove that the algorithm works also with the U.S. trend.

This is not the clinical study for FDA approval, this is the clinical study on the U.S. trend to gather the data or then to the FDA and show them the effectiveness and efficacy of this test, then to agree upon the clinical studies that it is going to be conducting in 2022.

So, to make a long story short, this is a market that you need to create. So, the need is there clearly.

But, you need to work on all these elements that eventually made the QuantiFERON, what – TB QuantiFERON, what it is today as a product. So, you need to be patient with us.

We are going to give you more updates. But I think we need to all focus on certain cornerstone right now, which is not revenue, but more supporting clinical studies the HTA and reimbursement, because then that is going to be triggering the vast opportunities that both us and QIAGEN has been discussing about.

Okay very good. Thanks so much.

Okay thank you, operator. Thanks everybody, and we will see you at the Q3 results and then clearly by year end when we will have our full disclosure of the plan on Investor Day.

Thank you. Thanks.