General discussions, page-18

My guess is that TGA approval is effectively a condition precedent to a deal for distribution and sales in Australia. It flows that pretty much once the regulatory approval is obtained a commercial deal will be announced. For me, there are no half-measures with this product once it is approved, it either fairly rapidly replaces the government funded FIT testing regime or it withers. The glaringly obvious counterparty to any deal is Sonic HealthCare, for a couple of reasons I can think of:

1. A current Rhythm non-exec director, Lou Pannaccio, also is a non-exec director with Sonic.
2. I am fairly certain that the chair of Rhythm immediately before Otto was at the time in the Sonic top team - in other words, Sonic and Rhythm have an historical and continuing meeting of purpose.
3. As much as I can confirm Sonic still has the contract with the Commonwealth to provide the FIT program to Australians - if Rhythm does not sign with Sonic then they can expect a robust defence of the FIT regime from the incumbent.
4. Given Sonic's broad reach in Australia they can rapidly roll out a national program based on ColoSTAT.
5. Sonic also has international reach, and particularly in the US they may be the portal for ColoSTAT to become widely available there.

I suspect the only issue is how tough Sonic is in negotiating their advantage with Rhythm - hopefully the allure of the rollout of a multi cancer platform might encourage them to play fair with Rhythm.

Regarding the oppies affected by the 30 September deadline for TGA approval you will note that they were granted in November 2020, which was before the rush to get various types of RAT kits approved by the TGA began. I was told that during the worst of it the TGA set up a dedicated taskforce to expedite the work on the RAT kits which of course meant that applications for other devices were put on the back-burner. I do not know if this slowed the processing of the ColoSTAT applications but my guess is that it may have.

The good news is that only half the oppies are affected but the reality is that close to a couple of million bucks will not be going to the workers who ( other than all the delays with Clinical Study 7) have delivered in spades.