Trinity Biotech plc (TRIB) Q1 2024 Earnings Call Transcript

Trinity Biotech plc (NASDAQ:TRIB) Q1 2024 Results Conference Call May 23, 2024 8:30 AM ET

Company Participants

Eric Ribner – Investor Relations
John Gillard – Chief Executive Officer
Des Fitzgerald – Chief Financial Officer

Conference Call Participants

Jim Sidoti – Sidoti & Company

Operator

Greetings, and welcome to the Trinity Biotech First Quarter 2024 Earnings Call.

[Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Eric Ribner, Investor Relations for Trinity Biotech. Thank you. You may begin.

Eric Ribner

Thanks very much. Before we begin, please note that statements made during this presentation may be deemed forward-looking statements within the meaning of federal securities law. These statements are subject to known and unknown risks and uncertainties that may cause actual events to differ from those expressed or implied in such statements. These risks include, but are not limited to, those set forth in the risk factor statement in the company’s annual report on Form 20-F filed with the Securities and Exchange Commission. Trinity Biotech undertakes no obligations to publicly update or revise these forward-looking statements to reflect events or circumstances after today or the occurrence of unanticipated results.

And with that, I will turn it over to John Gillard, CEO of Trinity Biotech.

John Gillard

Good morning, everyone, and thank you for joining today’s call. We appreciate your interest in the company. This quarter, we are pleased to report significant advances are being made across our entire business. We are growing our revenue base while, at the same time, delivering higher profit margins.

We had almost 40% quarter-on-quarter revenue growth in Point-of-Care revenues driven by the successful scaling of rapid HIV test output. This was accompanied by a 360 basis point improvement to gross margins quarter-over-quarter.

We remain on track to achieve annualized revenues of approximately $75 million by Q2 2025 with approximately $20 million in EBITDASO. That is earnings before depreciation, amortization, tax and share-based compensation costs from our existing business.

Now let me walk you through some of the key achievements and provide more details across the 3 main priority areas for our new leadership team, which were: one, growing TrinScreen HIV revenue; two, moving from the planning to the execution phase for the key initiatives underpinning our comprehensive transformation plan; and three, progressing our main long-term growth strategy based on our newly acquired continuous glucose monitoring or CGM technology.

Firstly, let’s discuss growing TrinScreen HIV revenue. As I mentioned on our last call, we successfully ramped up production of rapid HIV tests, in particular, TrinScreen HIV in Q1. You can see in today’s results the financial impact of that increase with an almost 40% quarter-on-quarter increase in our Point-of-Care revenue.

A key priority of mine in quarter 1 was to increase production so we could meet our TrinScreen orders and therefore, prove to our customers, partners and indeed competitors that we could be a real player in the large volume HIV screening market as we roll out our new TrinScreen HIV product across multiple markets. I’m delighted to report that we have done just that.

And as we set out in our recent press release, we have been successful in securing more orders and increasing our 2024 revenue guidance from TrinScreen HIV. I have no doubt that our successful ramp-up provided us with the credibility to obtain those additional orders. And we are now further increasing production to meet these volumes and are on track to manufacture 4x as many rapid HIV tests in May this year compared to May last year.

Having successfully ramped up production of TrinScreen HIV, now our focus moves to increasing the efficiency of manufacture and driving further margin contribution. I was delighted that even with the margin percentage dilutive effect of the TrinScreen ramp-up, we are still seeing significant improvement on margin percentage quarter-on-quarter.

As you can see, our previously announced targeted price increases, supply chain optimization and headcount reductions all contributed to improved gross margins this quarter as did our in-house HbA1c consumer production. These initiatives are working.

As with any new production ramp-up in the earlier stages, investments in training were required as the new staff were trained. We added approximately 70 team members to our Irish site since January this year to facilitate this ramp-up. These staff are now fully embedded into the organization.

We expect TrinScreen HIV margin contribution to improve significantly with a, additional automation coming online in June through repurposing existing equipment; b, further supply chain optimizations; and c, the move to offshore downstream assembly, which is planned to be implemented and received regulatory approval later this year.

Outside of scaling production to meet incoming orders, our technical and sales teams are also very active in pursuing new commercial opportunities for TrinScreen HIV. As you know, before winning business in new countries, there are typically a comprehensive HIV test clinical evaluation program to be completed.

TrinScreen HIV is in various stages of these evaluation processes across several countries in Africa. We expect to further grow TrinScreen HIV revenues in 2024 and in 2025 from new wins across many of these evaluation process.

Now moving on from TrinScreen to our comprehensive transformation plan that I set out on our last earnings call. This plan is designed to deliver a much lower manufacturing and SG&A cost base, which will drive significant profitability from the growing revenues from our existing business and also importantly, provide an efficient, scalable platform to facilitate the next stage of the company’s growth.

This new management team is united in our vision that we can fundamentally improve upon the prior commercial and financial performance of our existing business through a series of incremental changes throughout 2024. As I set out before, we want to drive a step change in financial performance for 3 main reasons.

Firstly, the obvious point. Cash-generating businesses are generally more valuable, which increases value for our shareholders. Secondly, better-performing businesses strengthen our balance sheet and increase our access to capital. And thirdly, we believe that our newly acquired accessible and environmentally sustainable CGM technology provide a tremendous opportunity for significant future growth and that a strong balance sheet will permit us to capitalize on this opportunity more rapidly.

The transformation plan has 3 main pillars to optimize the existing business and prepare the company for our next stage of growth: one, consolidate an offshore manufacturing; two, optimize supply chain; and three, centralize an offshore corporate services. We have made significant improvements in our key objectives across each of these 3 pillars since I last spoke with you and have very much now moved from the planning stage to the execution stage.

Let me take a few moments to give you some examples of the key objectives we achieved in this period. With respect to Pillar 1, consolidate an onshore manufacturing, we focused on our 2 largest businesses, being rapid HIV test and Diabetes HbA1c testing.

In HIV testing, in addition to ramping up production as I set out earlier, we also completed training of our identified offshore manufacturing partner staff in the downstream assembly of our rapid HIV test. This allows them to prepare to take over these downstream assembly activity for our rapid HIV test, which will reduce our cost of manufacturing.

In Diabetes HbA1c testing, I announced on our last earnings call that by the end of this year, we were ceasing the main manufacturing activities at our Kansas facility. Since that announcement, we have made significant progress in executing on this closure.

We are currently moving many parts of the manufacturing of these products to our Irish facility, which will utilize their capacity created by the offshoring of HIV test assembly I referred to above while allowing us to maintain the highest quality of product. As part of this move, we are currently setting up the equivalent manufacturing line here in Ireland and expect to be up and running on that by the end of this summer.

We are also moving less complex manufacturing processes currently carried out in Kansas to lower-cost offshore locations. This is building on our previously announced manufacturing and supply chain optimizations in our hemoglobin business and will further support us building a business of significant value in this area.

In Pillar 2, optimize supply chain, this past — we prioritized optimization of our rapid HIV supply chain with increased volumes from TrinScreen HIV creating opportunities to negotiate with supply partners, resulting in double-digit percentage reductions in cost of goods. We also identified and engaged with a number of alternative suppliers that could facilitate further cost reductions. We’re confident there is further margin accretion in this area.

In Pillar 3, we have substantially progressed the setup of our centralized and offshore corporate services function. This is designed to provide us with an efficient and highly scalable corporate services platform to support growth while reducing our SG&A costs. We have signed an implementation agreement with a third-party outsourced partner, who is already hiring to staff up that offshore location.

To conclude, we are making very significant progress on all major fronts in delivering this step change in financial performance. And that gives us the confidence to reiterate our previous guidance of approximately $20 million of annualized run rate EBITDASO and annualized revenues of approximately $75 million by Q2 2025.

Now moving to our long-term growth driver, continuous glucose monitoring or CGM. As I’ve said before, in addition to strengthening our existing business, we aim to build a global business in wearable biosensors, initially with a focus on CGM. It is important to recap the context for this strategy.

When I took over as CEO in late December, I was aware that Trinity’s new product pipeline was insufficient to drive the kind of organic growth investors expect. It was, therefore, imperative to execute on a viable growth driver for the business that leveraged our existing strengths and resources.

We know today that data digitalization and artificial intelligence will play an increasingly important part in our health care and wellness management as they are beginning to in virtually all other parts of our lives. As such, for those of you on today’s call that may not be aware, just over 3 months ago, we purchased the biosensor technology of Waveform, including its existing CE Mark-approved CGM.

As many of you would know, CGMs have been shown to be very effective in helping people with diabetes manage their conditions, and their usage is growing rapidly. For example, the 2 main leading players in CGM, Abbott and DexCom have combined revenues of over $8 billion from CGM, and they are growing.

We are already a significant player in the global diabetes management market, supporting over 10 million people with diabetes annually with our quality HbA1c testing solution. We can see the massive increase in diabetes prevalence, especially type 2 diabetes all across the world with well over 0.5 billion people now suffering from a diabetic condition not to mention the many more in a prediabetic stage.

This creates a massive need for a highly effective nonpharma diabetes and prediabetes management solutions such as CGM that can be used alongside or instead of pharmaceutical therapy. That is why we are investing in this exciting and growing area but decided to enter into it in a derisked way by building on an established product.

Since we made the acquisition, we have been prioritizing progressing, a, further developing our commercial strategy around CGM and biosensors; and b, the design and development of the next-generation CGM device. Now let me take you through our main activities in these areas.

With respect to commercial strategy, since our acquisition, we have received a double-digit number of expressions of interest from potential commercialization partners across the globe. This is in addition to our existing relationship with Bayer for China and India.

It is clear that there is significant appetite in the industry for a more affordable and sustainable CGM that still delivers a great user experience. That has made us more confident than ever that our unique technology provides a great platform on which to develop a next-generation CGM that can truly disrupt the diabetes care markets.

For those of you who may be new to this area, our CGM technology is not some unproven noninvasive solution. Like the 2 main players, Abbott and DexCom, it uses a minimally invasive sensor wire. I think it is important that I take a moment to explain the importance of some of the technical differences in the Trinity technology and the valuable differentiated product features they facilitate.

Like the other CGMs I mentioned, in the Trinity solution, an ultra-thin sensor wire is inserted a few millimeters into the skin. And this transmit live data about the level of blood glucose in the body to a smartphone.

However, a critical distinction and benefit of our technology is that the sensor wire can be inserted into the body without the use of a needle. What this means is that our sensor can be inserted using a reusable sensor applicator.

The others require a single-use applicator that punctures the skin with a retractable needle. This leads to the entire plastic and metal applicator becoming nonrecyclable biohazard waste.

In contrast, our sensor applicator is reusable and lasts for years with all the sustainability and cost benefits that brings. While this might not sound like a big issue for every single person, using one of the leading products, over 2 years, they will generate over 11 pounds or 5 kilograms of nonrecyclable plastic and metal across 72 applicators.

This drives 2 big problems with the main CGM solutions on the market today. One is cost, which creates a barrier to broader adoption of this life-saving technology. And the second problem is the massive amount of nonrecyclable waste they create.

By contrast, over the 2-year period, our solution would use just one applicator. Our technology and approach greatly reduces the cost, environmentally harmful waste created by just this part of the solution, thereby solving 2 major problems with the current market-leading CGM.

But we are not stopping there. As part of our modular solution, we are combining this reusable applicator with a reusable transmitter, encompassing a rechargeable power source and electronics to further reduce the cost and harmful waste of our solution compared to the 2 main competitors on market today.

This powerful combination of reusable applicator and transmitter dramatically reduces the cost of our solution. And we believe that we can provide a CGM solution at a daily cost that is at least 40% less expensive than the current main product on markets.

We believe this gives us a very significant competitive advantage and a great opportunity to disrupt the market. We understand that this is a very large market opportunity for a company of Trinity’s current size.

And that is why since the acquisition, we have been focused on creating a team of world-class designers and engineers to design and develop a next-generation CGM solution focused on: a, usability; b, affordability; and c, sustainability. We believe that by creating a next-generation product around these 3 themes, we can reach as many people as possible with this life-saving solution.

Since we last spoke, we have now engaged a world-leading physical and digital product design consultancy based in London and California to lead the design of this next-generation solution. This group has designed a broad range of products from consumer electronic devices to carriers and are renowned for innovative and attractive designs.

This group is being supported by our internal technical team and our external international technical consultants, who have also been progressing technical developments and extending the stability of our glucose sensor wire while maintaining its high level of accuracy. Since acquisition, we have made a number of enhancements to the sensor technology, and we’ve applied for ethical approval to begin a pre-pivotal clinical trial in June 2024.

This pre-pivotal clinical trial will give us insights into the sensor optimization pathway, and we expect to receive ethical approval to commence the trial in the coming weeks. We intend to be providers of a digital health and wellness service to users, similar, if you like, to a subscription model technology company, an area I’m very familiar with.

We do not want to be just a hardware supplier to other commercialization partners. We believe that strategy will allow Trinity to capture a much greater share of the value chain, not just in the diabetes space, but also the broader health and wellness markets, including obesity and weight management.

That is why we are not just focusing on the physical product development. As part of our design focus on usability and differentiation, we are also concentrating on the insights the digital aspects of the solution can deliver to users.

As we can see with GLP-1 drugs such as Ozempic, people with diabetes and prediabetes can benefit massively from behavioral changes. However, in the case of GLP-1, that change is driven by pharmacological-induced responses.

The side effects of GLP-1 is becoming more and more understood. They are also very expensive drugs. We believe that CGM can be used to deliver key insights that can drive behavior changes that people with diabetes or prediabetes can really benefit from but without the need for long-term use of powerful drugs like GLP-1s and as part of an overall diabetes management program.

Conscious that our ambition for the CGM project goes much further than just monitoring and with the huge potential we see in AI around this whole area, we are partnering with advanced software companies like PulseAI with whom we just last week signed a strategic collaboration agreement. We are working with PulseAI in developing data-driven software solutions to support users, as I said, not just in the diabetes space, but also the broader health and wellness market, including obesity and weight management, developing the broader digital health and wellness solutions as part of our overall platform is a key focus for us over the coming months. We have also strengthened our team with the appointment of Avinash Kale as Continuous Glucose Monitor Program Director. Avinash is already bringing a new level of knowledge and experience in the design and large-scale manufacturer of advanced medtech devices to this project.

For those of you who wish to get further insights on our product vision for CGM, I invite you to visit our new CGM microsite that we just launched today at cgm.trinitybiotech.com. That’s cgm.trinitybiotech.com. We have also put that link up on our LinkedIn page. This microsite is designed to keep stakeholders updated on our product development progress.

On overall timing, we remain on track to enter into pivotal clinical trials of our next-generation CGM by summer 2025 with EU regulatory approval targeted by the end of 2025. We expect regulatory approval for further builder markets will follow the initial approval in the EU.

On the cost of development, I’m delighted to let you know we are reducing our expected development spend for 2024 to less than $2 million per quarter between now and the end of 2024. Over the past few months, we have realized significant efficiency benefits by leveraging Trinity’s established medtech business structure in developing the CGM platform.

This allows us to use existing resources in the business to support development. In addition, we have also found a very rich partner network with many of our existing suppliers and some large electronics and digital solution partners having developed components to support wearable medical devices. This is lowering the amount of work and spend we expect is necessary to develop this next-generation project.

We are more convinced than ever of the opportunity CGM represents for Trinity Biotech and are rapidly building the team and technology to deliver on that opportunity.

So to conclude, overall, I am very happy with the significant progress we have made over the past few months on our ambitious priorities. We have had some key wins on TrinScreen HIV, which provides us with growth and additional profitability, which really helps stabilize our financial position.

We are now executing at pace on our comprehensive transformation plan, which will support us delivering a step change in profitability in the coming quarters. And we can already see the beginnings of the impact of these and other profitability changes we introduced in late last year in driving increased financial performance.

Finally, we are really pushing ahead in developing a highly impressive but differentiated CGM solution that can disrupt this massive market, help millions of people globally and deliver very significant growth to Trinity Biotech.

I would like to thank you all for your attention, and I will now hand you over to Des to bring you through the Q1 financial results in more detail. Thank you.

Des Fitzgerald

Thanks, John. Before I speak to our financial results for the period, I want to take a moment to mention the most recent correspondence we received from Nasdaq around our continuing Nasdaq listing. On November 21 last year, we received a deficiency letter from Nasdaq notifying the company that for the preceding 30 consecutive business days, the market value of our publicly held shares remains below the minimum $15 million for continued inclusion on the Nasdaq Global Select.

At that point, we were provided a 180 calendar days to regain compliance. This 180-day period ended on May 20 of this year. And as expected, yesterday, we received a further notice notify enough that we have not regained compliance.

We intend to seek a hearing from Nasdaq. And that will put a stay on any further action until that year. We have appointed specialist adviser to support us in this manner, including the preparation of a comprehensive and compelling compliance plan.

The Board has determined that the company will remain Nasdaq listed. And I know from speaking with our top investor that they’re supportive of the company maintaining the listing. We’ll update shareholders throughout the process.

Now I will speak to our financial results for the first quarter of 2024. Our revenues for the first quarter of 2024 were $14.7 million compared to $14.8 million for the first quarter of 2023.

Our Point-of-Care business experienced a strong performance in the quarter with revenues increasing by $0.8 million or 38.5% to $3 million. This increase was driven by our HIV screening test, TrinScreen, which had sales in the region of $1.2 million as we shipped further products to Africa following our more initial shipments in December 2023.

In addition to this, we have received substantial orders for TrinScreen HIV post quarter end with our revenue for the year expected to be in the region of $8 million. Our clinical laboratory revenues decreased by 7.6% to $11.7 million compared to $12.7 million in the same quarter last year. Despite this drop, there is a strong performance from hemoglobin business, which experienced a 6.4% year-on-year increase in revenue. This, however, was more than offset by decreases in our lab services revenue due to previously reported — due to the previously reported loss of our transplant testing activity at our Buffalo lab in early 2023.

Our gross profit for the quarter was $5.5 million, representing a gross margin percentage of 37.6%, in line with gross margins in the same quarter last year. We recorded improved margins in our Hemoglobins business in the quarter on the back of the optimization of our instrument manufacturing supply chain and our revised in-house manufacturing process, which we fully implemented by the end of last quarter.

Offsetting this was the impact of our TrinScreen HIV test, which were achieving lower gross margins than our other products. Increasing sales of TrinScreen over the remainder of 2024 will continue to dilute our overall gross margin percentage, although we do expect TrinScreen HIV to contribute additional gross profit as we progress through the year due to the various cost-saving initiatives that are underway as detailed by John.

Additionally, we expect to realize further financial benefits of the previously announced cost-saving initiatives across our business throughout this year and into 2025, again, as John detailed earlier. Research and development expenses for the quarter were broadly flat.

Following on from our acquisition of the Waveform assets in January, we continue to progress the development of our CGM offering, in line with our communicated plan. Our overall spend in the quarter related to our CGM biosensor division, including what was capitalized in line with IFRS accounting standard was $1.3 million for the quarter with ongoing spend per quarter expected to be less than $2 million.

SG&A expenses for the quarter were $7.5 million, $1.1 million lower than the $8.6 million we incurred in Q1 2023. Key drivers of this improved SG&A expense include lower recurring salary and contractor costs in the last quarter versus the comparative period driven by headcount optimization activities in the latter half of 2023, together with other cost savings across our SG&A base due to the benefits of our cost-saving initiatives across the nonsalary expense base over the last 12 months.

All of the above led to an operating loss of $3 million in the quarter compared to $3.9 million in Q1 2023, a decrease in loss for the period of $0.9 million or 23%. Net financial expenses in Q1 2024 was $0.2 million compared to $2.4 million in Q1 2023, a decrease of $2.2 million. The reduction in financial expense this quarter is as a result of the renegotiation of the terms of our term loan with our main lender, Perceptive Advisors, in January 2024. We obtained a 2.5% reduction in the base interest rate for the term loan.

The amendment of the term loan is treated as a loan modification resulting in the recognition of a once-off noncash modification gain of $3.6 million in Q1 2024. This gain was based on the difference between the existing carrying amount of the loan as at the modification date and the revised carrying amount.

Additionally, the fair value movement to our derivatives associated with our term loan and associated warrants was $0.7 million in the quarter primarily driven by a fair value movement of the warrants granted towards [indiscernible] Perceptive. Offsetting the above was an increase in the term loan interest expense of $0.4 million when compared to Q1 2023, this was driven by a higher outstanding loan balance, albeit at a lower prevailing interest rates in [indiscernible] earlier.

Net loss from continuing operations was $3.3 million in the quarter compared to $6.3 million in the same quarter last year, an approximate 47% reduction. Loss before depreciation, amortization, impairments, tax, interest and share option charges, i.e. EBITDASO, was $1.5 million for the quarter compared to a loss of $2 million in the equivalent period last year, an approximate 25% improvement.

Basic loss per ADS was $0.37 compared to $0.76 in Q1 2023. Our cash balance increased from $3.7 million in Q4 2023 to $5.8 million at the end of Q1 ’24. Cash used by operations was $4 million in the quarter.

Our sizable core operations, during the quarter, the company had an investing cash flow of $14 million, the largest element of this related to the outflow for the acquisition of the Waveform assets at $12.5 million. Cash inflows from financing activities were $18.8 million in the quarter primarily driven by net proceeds from the January 2024 drawdown from our lender of $21.7 million. This is offset by our quarterly interest.

Now I will hand you back to Eric for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Jim Sidoti with Sidoti & Company.

Jim Sidoti

Can you talk a little bit, let’s start with the TrinScreen sales? Is everything of the 8 — is all of the $8 million in 2024, is that all to Kenya? Or do you expect to be — start shipping to other countries in 2024?

John Gillard

Jim, thanks for the question. For commercial reasons, we’re not going to give that level of detail at this point, right? But what I will say is we do expect to be shipping to other countries outside of Kenya in 2024.

Jim Sidoti

Okay. All right. And it sounds like there was a considerable amount of onetime on the costs in the quarter as you ramp up production. Can you give us — can you quantify that at all, the onetime costs to ramp up production for TrinScreen?

John Gillard

It’s less onetime cost, Jim, in terms of — like the CapEx is already spent. It’s really around training the staff and then them getting up to speed. The lack of efficiency, I suppose, comes from that space.

As I said, we’re introducing further automation in June, right? That will further increase our efficiency. And then we’re also getting much better pricing on our input materials as part of the work we’ve done in the supply chain.

So it’s really just a kind of transition as we move forward from initial scale up to kind of run rate manufacturing and run rate supply chain. But we do expect it will have a significant impact. And we always knew TrinScreen would have a lower margin contribution because of the lower pricing point in the screening market rather than the confirmatory market. So that was nothing that was not new to us or it’s not known to us.

But really what’s happened here is we’ve had to ramp up so quickly, which is a great sign of success, but that also brings our challenges as we would have expected it takes time for that to bed in. The flip side is these much greater volumes, not just in TrinScreen but across our rapid HIV products generally give us more leverage to negotiate with suppliers and get better pricing.

So overall, we’d expect better profitability contribution from our rapid HIV business as a result of this increase. And then obviously, with the move later in the year to assembly in an offshore location going live, we’d expect that to deliver further increases in margin contribution.

So overall, we do expect our margins to increase and not just in Point-of-Care but across the organization and our main revenue lines through the various initiatives that we’re putting through. And I think as I said in the last call that we would expect our margins to be 50%-plus in 2025, and we still expect that to be the case.

Jim Sidoti

Okay. All right. If we move over to the hemoglobin business, it sounds like you’ve made significant progress on shifting production and lowering the cost for that product. How about on product development side? Do you have everything in the market now that you expect to have in 2024? Or do you expect to have new versions of your premier system out there this year?

John Gillard

So our key next product development is around the new column and buffer combination. And that’s really what gives a higher number of injections per column, and the column is the main consumable that we sell. It also provides greater stability, requires less what’s called calibration, which is a kind of overhead that our users have to incur. So it has more usability, lower cost, lower consumption of key raw materials. So that, I suppose, Jim, is our next key innovation that we’re now bringing to the market.

In terms of the instruments, we have been making changes in the background on that. As part of our supply chain optimization, we’ve not just been looking to reduce the cost of those components. We’ve also been looking to increase the reliability.

So we carried out an analysis of what were the main parts of that component — the main part of that system that failed. And we’ve looked to change those out either through supplier changes and/or engineering design changes.

So that’s really, I suppose, Jim, what we’re doing to drive innovation within that. We continue to look at the medium throughput — low to medium throughput device, which we typically call the T-10 or the T-20, and that’s something we are continuing to look at in terms of the appetite for throughput through that instrument if and when we bring it to the market. And — but for now, our focus is really around rolling out the column and rolling out those changes in the 90 to 10 from a reliability perspective.

Jim Sidoti

Okay. All right. And then on the CGM side, you said development costs this year should be less than $2 million a quarter. Going forward, do you think that number ramps up in 2025 as trial activity continues? Or do you think that $2 million per quarter that stays relatively flat going forward, maybe not 2025, but in general going forward, should that number stay around that level?

John Gillard

Yes. So look, what I indicated in the past is we continue to spend on CGM while we continue to see real progress, right? And believe that we have a disruptive product that we can really make a significant contribution to the market. As I set out in my prepared remarks, we’re more confident that now than ever, right?

You’re absolutely right, Jim. I think in 2025, as we move to pivotal clinical trials, that will increase our expenditure. But we’ll only do that if we have a very high degree of confidence that the product would perform well in those trials and will support to getting regulatory approval.

What are the benefits of doing this within Trinity is we have a large, large degree of experience in taking products through regulatory approval processes, both from the Trinity team that have been here a number of years and also some of the more senior people we’ve brought in over the last couple of years.

So I think from our perspective, we wouldn’t — we would only go into that process, as I said, with a high degree of confidence. And from an investment and return perspective, Jim, that will be a very compelling proposition I would expect considering the size of the market and the opportunity we believe we have to disrupt it.

Jim Sidoti

Okay. All right. And the last one for me, interest expense. I know you had the onetime adjustment in the quarter this quarter. So going forward, though, for the remainder of 2024 with the new debt level and the new interest, what should we assume a good number is for interest expense?

John Gillard

It’s about 2.5 a quarter, I suppose, Jim, based upon that debt level, yes.

Jim Sidoti

Okay. All right. Well, it definitely sounds like you’ve made a lot of progress on the cost side. So that was good to see. And especially with the increasing revenue from TrinScreen, it should lead to much better operating results. So that’s very good to see. So I guess we’ll just have to stay tuned to see how development goes on CGM.

John Gillard

Yes, Jim. Look, we’re – as I said, we’re very happy with the progress we’ve had. We’re very happy with the team that we’ve built, and actually, to reiterate a point I made in my prepared remarks, was to be really enlightening for us is the rich partner network that’s out there in terms of people that have built already components, both from a physical perspective and a digital perspective for this type of industry.

And I suppose doing this development within an established company like Trinity, where in many cases, we have long, long relationship with these customers means that we’re much more credible than a startup in fostering those relationships and getting to a real point of traction with them. And we think that will really reduce down the amount of work and spend we need to incur in order to really move the development project forward.

So outside of the work we’ve done over the last couple of months, reiterating the significant market opportunity and how our differentiated solution can really help capture that, the partner network and our credibility within that has been very, very positive, both from a timing perspective and a cost perspective.

Operator

[Operator Instructions] Thank you, ladies and gentlemen. This concludes our question-and-answer session. I’ll turn the floor back to Mr. Gillard for any final comments.

John Gillard

Thank you, Melissa. And just for me, thank you for everyone for your continued interest in the company and joining today’s conference. We continue to be focused on execution on those key priorities that we set out. And I look forward to updating you all over the next coming weeks and months in terms of our further progress. Thank you so much, and have a great day.

Operator

Thank you. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.