Avacta Group (LSE:AVCT) — Final Results

0:03 Good afternoon and good morning, ladies and gentlemen, and welcome to the AVACTA PLC Preliminary Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Presentation. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investor.me company dashboard. Before we begin, we would like to submit

0:34 the following poll. And if you give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand over to Alison Smith, CEO. Good morning. Morning. Thanks very much, Mark. Morning, everyone. Welcome to our results for 2021. Thank you very much for for sparing the time to to attend.

0:56 You got myself and Tony on the line this morning. I think most of you are familiar with us. I'm chief executive. Tony is chief financial officer. We're we're just gonna turn our cameras off actually to make those slides a a little bit bigger as we move forward. Just do that. Great. Okay. So a few of you may not be familiar with the company. So a a brief little bit of background. AVACTA GROUP is formed of two divisions, the therapeutics division and the diagnostics division. Therapeutics division, now a clinical stage oncology drug company. We have actually some exciting news that we are colocating our research team that's been based in Cambridge for a number of years with the clinical development team in London. We'll talk a little bit more about that as we go through the presentation.

1:48 The diagnostics division based in Weatherby in in Yorkshire. Okay, Tony. Could I hand over to you to go through the results for 2021, please? Thanks, Thomas. Good morning, everybody. Just to take you through the results. So these are the results for the year end in December 2021. And just to to point out from the offset, these results are based on our continuing operations. As you would may well have seen, our our animal health division, was sold in March 2022. And from a financial reporting point of view, that's treated as a discontinued operation, even though the sale took place, after the the year end. So the results that you can see in front of you reflect the diagnostics and therapeutics divisions with the revenue for the year just shy of 3,000,000, up from 2.1 the previous year.

2:44 And as we just walk away down through the profit and loss account, you'll see the research costs is is the big area of development spend where we've got, obviously, the clinical and preclinical development costs for the therapeutics business together with all the product development costs of the diagnostics division, and in particular, the SARS CoV two natural flow test.

3:09 The manufacturing costs are reflected there, and those costs, which is a new cost during 2021, was the the costs of the technical transfer and production batches of the lateral flow test, which were made with our partners, Merlodiac and AVCTN Health. The cost of those was taken through the income statement in 2021 given the decision to pause the the tests, which we will pick up and cover later. Carrying on down the the the income statement, admin costs have increased during the year as we have scaled up both the diagnostics and therapeutics business with the diagnostics building up its regulatory and quality functions as it's now a fully ISO thirteen four eight five IBD company.

3:57 And also the therapeutics since it's transitioning to a clinical stage. The taxation line there is a credit of 2,800,000. And and as some of you have heard me talk about previously, we reclaim r and d tax credits, and that helps us continue with the development costs. So that 2,800,000 will come back as cash into the business later on this year. The retained loss for the year is just over 26,000,000 compared to 19,000,000 in the prior year. And that and that gives a loss per share of just under 10.6p per share compared to 7.3 in the previous year. I'll move on just in terms of the segmental analysis in terms of the different businesses.

4:46 So to give you a bit of a flavor around the the revenues of these teams. So the diagnostics revenue includes license fees from our partner Australia by separations. There are some custom asthma agent projects there and some revenues from the anti natural flow tests. Whereas the therapeutics revenues come from our collaborations and milestones with LG Chem, some licensing fees from Point Biopharma, and some FTE income from the collaborations that we've got with LG Chem and and AVACTAL, and we'll update you on progress on those later on. The research costs, as you can see, centered primarily around the the therapeutics business as the developments there scale up.

5:34 Just a brief note just to pick up on the animal health side. Obviously, that was sold in March. We receive an upfront payment of just shy of £900,000, and then there is contingent deferred consideration of up to a further 1,400,000. And that'll be based on the sales of that division as it combines with NextMeans UK business and over the coming twelve months. Moving on to the cash flows. So the cash flows during 2021 was a was basically an outflow of 21,000,000 covering all the development activities of the group. There was no fundraising that took place during the course of the year.

6:22 So from a cash perspective, the cash position at the end of the year was 26,000,000, moved on from the 48,000,000 that was there at the end of twenty twenty. We have net assets of 41,000,000, and that cash flow there takes us through well into 2023 to continue to develop the programs that we have. As you appreciate, there is a significant amount of discretionary and committed and noncommitted spend on the different development projects as we we move through those. So there's a there's a good opportunity to manage that cash flow very carefully as as we always have done. I will now hand you back over to Alastair to pick up on the therapeutics division. Thanks very much, Tony.

7:08 So, yeah, as Tony said, we'll focus initially on the the main driver of value in the group, the therapeutics division, and obviously focus on, AVACTA 6,000, the Precision platform. So, to begin with, I will for those of you not familiar with the, the Precision platform, let me just take a few minutes to, to introduce it. So, the the Precision technology is a method of, targeting, therapies to the tumor. AVACTA as we'll talk about in a moment, is a targeted a tumor targeted chemotherapy. There are other opportunities which we'll we'll mention, but AVACTA GROUP a tumor targeted chemotherapy using the Precision platform. Precision is what what's called a substrate.

7:56 So this is a a chemical moiety, that is specific to an enzyme called fibroblast activation protein alpha. Now that that enzyme is, upregulated in most solid tumors. You see on the right hand side of this slide, a range of different solid tumors and the, amount of, FAP alpha, FAP alpha, in those tumors. So you can see, for example, at the bottom, cancer of unknown primary, sarcoma, salivary, very high levels of FAP in those tumors and so on. So FAP is very specific to to tumor tissue. It is in much lower concentration in healthy tissues in in the body.

8:43 The key point about the precision chemistry is when a chemotherapy is modified, we'll see, in a moment on the next slide, when a chemotherapy is modified using the precision chemistry, it prevents it from entering cells. So that effectively renders it, inert, because it can't get into cells to to kill them. But the precision chemistry, because it's a substrate for FAP, is removed by FAP. And as you see on the right hand side, that will happen predominantly in the solid tumor mass because that's where FAP resides. So precision is a way of rendering a chemotherapy much less cytotoxic because it can't get into cells, and then activating that within the tumor mass when it encounters FAP.

9:35 Now that gives us an opportunity to play in a very, very large market. So chemotherapy market worth around $60,000,000,000 and a a solid growth rate, and all chemotherapies are limited in their efficacy and, and therefore, their commercial opportunity because of tolerability for patients. So these are effective drugs, but they have significant, toxicities and side effects making them difficult to tolerate. So the precision chemistry allows us to improve that tolerability and and open up some huge opportunities, not not just with AVACTA six thousand, but with a pipeline of other chemotherapies that we can modify. I'll take you through that in a in a moment. As I mentioned, the precision chemistry can also be used in in other ways. And although we won't dip into this today, we can use the precision chemistry in the linker of what's called a drug conjugate to allow the warhead to be released in the tumor microenvironment. On another occasion, we can talk more about AVACTA's TMAT program and the, the use of the linker in that, in that format.

10:41 And the final point on this slide, I'm sure you're aware that the Precision platform is exclusively licensed to AVACTA from Tufts University Medical School in in Boston in The US. So that that's the Precision platform itself, which can be used to modify chemotherapies. And then if we look at AVACTA 6,000 as an example, specifically, on the left hand side of this slide, you see the you see doxorubicin circled in blue. So that's the chemical structure of doxorubicin, which is generic a chemotherapy that have been around for many years and, first, second, third line for a number of different, indications. We'll talk about that a little bit more in a moment too. And there, attached it, modifying doxorubicin is the precision chemistry circled in red. So that's a small, small chemical that we, attach to doxorubicin, to make that, inner form, AVACTA 6,000.

11:42 Now when that is, in the circulation, it will, get into the tumor microenvironment through the circulation, and there it will, encounter, FAP alpha, fibroblast activation protein alpha, as we talked about, primarily on cells that are called fibroblasts in the stromal tissue. But it it is present in other cancer cells, but primarily in the fibroblasts. And when it encounters FAP, FAP will do what it does, which is it will cut the precision chemistry off doxorubicin releasing active doxorubicin. And as we saw on the previous slide, because the FAP is predominantly in the tumor mass and not in healthy tissue, that release of doxorubicin will be predominantly in the tumor and not in healthy tissue. So through that mechanism, AVACTA six thousand, and other precision drugs are designed to improve the safety and tolerability by reducing the systemic exposure of these, these powerful drugs.

12:52 So we'll have the opportunity, next week, actually, to, present, a lot more of the preclinical data for AVACTA six thousand, and I will take the opportunity to to present the the poster that is being presented by our team at the American Association of Cancer Research next week in New Orleans. I'll take the opportunity to present that in a a simplified form for for nonspecialists so that you that poster will be available online once it's been presented, and I will take the opportunity to to try and talk through that in a way to, you know, get the broader audience to understand the data and the conclusions. But just one, one, piece of that preclinical data that I think really illustrates, very well why we are so excited about, the Precision platform and its potential, to produce safer chemotherapies and really drive shareholder value over the coming years. So what you see in this figure, on the left hand side, so this this is a mouse model of cancer.

13:57 What you see on the left hand side is the amount of doxorubicin appearing in the heart and the tumor when the mouse is, dosed with doxorubicin. So as you would expect, you see exactly the same amount of doxorubicin appear in the tumor and the heart, because the animal's being dosed systemically with doxorubicin. And that, of course, is the issue. As we'll see in a moment, doxorubicin has, particularly severe cardiotoxicity, hence the focus on the heart tissue. So when the animal's dosed, with doxorubicin, you see effectively the same amount of doxorubicin appear in the heart and in the tumor, and that's the toxicity that we want to avoid. On the right hand side, the animals are being dosed with AVACTA six thousand, and you'll see at the bottom there actually being given six times the dose, the animals are being given on on the left. So a higher concentration of AVACTA six thousand than is possible with doxorubicin.

14:59 And because doxorubicin itself is being released in the tumor, we see a nearly 20 times increase in the amount of doxorubicin in the tumor compared to the heart. And and that difference is what we call the therapeutic window or the therapeutic index. And, obviously, it's dramatically improved in this model using AVACTA six thousand. So that that's one illustration. As I say, next week, the team will be presenting a lot of preclinical data at a very prestigious meeting in the in The US, sort of the the key meeting of the year, and I will take an opportunity to go through that with a wider audience next week sometime.

15:40 Okay. Quick word on doxorubicin. As I mentioned, it is a standard of care for advanced soft tissue sarcoma, second, third line for other cancers. It's generic. It's been around for many years. And as I mentioned, it has, very serious dose limiting toxicities, in particular, cardiotoxicity, but also, myelosuppression. And despite that, it's a billion dollar it's a billion dollar drug, even as a generic. So AVACTA six thousand presents the opportunity to bring a proprietary AVACTA's proprietary safer form of doxorubicin into this market. And we've done quite an extensive piece of work with external consultants, global life sciences, to try and understand what that market potentially is. And just in The UK and The US, so not even including the rest of the world. And just looking at three, cancer types, advanced soft tissue sarcoma, breast, and ovarian, the peak sales, should be around 1,500,000,000, dollars for that proprietary drug. So it is a significant commercial opportunity on its own.

16:57 But as I mentioned earlier, the the now one of the really exciting things about the Precision platform is that it can be widely applied to a range of other chemotherapies and, of course, the the drug conjugates that we spoke about. But just just focusing here, entirely on on chemotherapies, there are, numerous other forms of, chemotherapy that are appropriate for precision to be to be used to modify it and and improve the the safety and tolerability. One that we spoke about earlier in the year is we call it AVACTA three nine nine six. That's the next most advanced in our pipeline, and that is a precision form, of a proteasome inhibitor. The the main, proteasome inhibitor in the market is a a drug called bortezomib, or Velcade, which is a Takeda drug that has annual sales of around $1,200,000,000.

17:56 But as I mentioned, as with all chemotherapies, it has significant toxicities that limit its its tolerability for patients. And in the case of Velcade, it is only approved in multiple myeloma because of peripheral neuropathy and other side effects. So a v a three nine nine six is a precision form of a proteasome inhibitor, which is an analog of of Velcade. So very similar to Velcade, but not precisely Velcade. Just to step back in a v a six thousand, you will have seen that a v a six thousand releases doxorubicin actual doxorubicin. In the case of three nine nine six, it's a a very similar analog to Velcade.

18:41 We've now selected a v a three nine nine six for preclinical development, and that, will will carry on through this year, and we expect to file, CTA or IND, in the first half, first half of next year and hopefully dosing first patient later in 2023. So as I said on the right hand side, there is a a significant future pipeline, and and that's not exhaustive by any means. We we have made some very early progress with some of the other assets listed there, but VELCADE is the precision form of VELCADE, a AVACTA three nine nine six is by far and away our most advanced in the preclinical pipeline.

19:31 So AVACTA six thousand is in the clinic. As as you are aware, we are in the middle of the dose escalation phase, the phase one a. I'll talk about the objectives, the primary and secondary objectives of that in a moment, so I won't dwell on them here. We are dosing a patient population that is a broad range of different advanced and metastatic cancers, So not not specifically choosing any any particular cancer type other than FAP positive.

20:04 So we are in the second cohort. I'll give you a little bit more detail on on that in a moment. The first cohort, because of COVID, at the back end of last year, was a little bit slow, just just because of, clinical sites, having trouble keeping, keeping going. But we are now, as I said, in the middle of the second cohort, and we'll talk about that in a moment. So so I, expect we will finish by, the phase one a by the end of q two or possibly creeping into q three. That's how I've illustrated it there, just because of those earlier delays. But the middle of the year, we will see the the output of the dose escalation study, which I will go through in a moment. That will be followed after a a review of those data by the safety data monitoring committee.

20:54 We will progress into the phase one b dose expansion phase, which will focus on two or three particular tumor types with around 20 or so patients in each of those different each of those different tumor types. So that we can talk about more later in the year as we head into into the phase one b. So the progress of the phase one a dose escalation study, we have up to six clinical trial sites in The UK. Saint James is in in Leeds, the Royal Marsden in London, and the Christie in Manchester are all, active and dosing patients. The Beatsons in Glasgow is now open and screening patients, and we the Freeman in Newcastle and Western Park in Sheffield to be open in the second quarter as well and contributing to the dose escalation phase.

21:46 So the starting dose, as you saw on the previous slide, was eighty milligrams per meter squared of AVACTA six thousand, which is delivers just just below the the normal dose of doxorubicin. It's about 90% of the normal dose of doxorubicin, around fifty four milligrams per meter squared. And that first patient was dosed in August last year at the Royal Marsden. Since then in February, we reported dose escalation. So that follows a review of the data from the first cohort by the safety data monitoring committee, and we dose escalated by 50% to a hundred and twenty milligrams per meter squared. And we're in the middle of that second cohort now.

22:32 We have two we we filed an IND, and that was approved by the FDA in November 2021. And we have two US clinical trial sites that are being initiated now and should contribute to the dose escalation phase in in q two. So just to focus on the objectives of the phase one a dose escalation study, so what we will learn as we get into the the middle of the year this year. So the primary objectives, of course, are around safety and tolerability. That's the primary objective of phase one study, the phase one a, and to determine what's called the maximum tolerated dose and then the recommended phase two dose or the recommended dose for the phase one b expansion phase. So those are the two primary objectives for the phase one a study.

23:27 But then the secondary objectives are also well, certainly, first bullet point there is is very important, and the study has been designed to be very data rich because we are going to get an opportunity here to see how the precision platform behaves in human for the first time. So the the study's been designed to deliver a lot of information, which I've really just summarized, here. That's around what are called the pharmacokinetics. So, know, effectively, where is the drug and for how long in the plasma, in the urine, in the tumor. And what we'll be analyzing will be the presence of AVACTA six thousand, the drug that's delivered to the patient, the presence of the precision leaving group, so the bit that's removed by FAP, and of the active metabolites of AVACTA six thousand, which, of course, one of them is doxorubicin.

24:23 That's one of the the products of the, of the reaction is doxorubicin. And there are others, several others actually, such as doxorubicinol, and so on. And we'll be analyzing those in plasma, urine, and tumor tumor tissue when the drug is given as a monotherapy as we've described. Now the the the point here, think, is worth making is the is the information around the tumor tissue as well as the plasma and urine pharmacokinetics because it's very important that we also understand that doxorubicin is being released in the in the tumor tissue, and that we will get from biopsies, which are not not mandatory in the phase one.

25:10 But I'm confident we will get that that data and be able to say something about the release of doxorubicin as well as the PK of the other components that we just discussed there. So in certain tumor types where doxorubicin is an appropriate treatment, we we may also get an initial look at antitumor activity. Of course, the phase one b is more more designed to do that on the phase two, but we may get some early initial antitumor activity against some very standard criteria in those cancer types where where doxorubicin is an appropriate treatment. We're taking quite a broad range of of cancer types, and it's, you know, obviously very doxorubicin is specific to certain tumors. So so those are the primary and secondary objectives of the study, and we will have that data in the middle of the year, which is a really significant pivotal point for for Precision and for the company, of course.

26:10 Okay. So to move on to our partnered programs and and really focusing on the the two key programs where we are actively involved. Tony mentioned Point Therapeutics, which is a licensing deal. We're not practically involved in that activity with Point. They have a license to use the Precision platform in their own radiopharmaceutical setting. But the two partner programs where we are very actively involved are with LG Chem and Daeung through the joint venture we have in South Korea called AVACTAL. So let me just give you a quick run through those. I won't read through all the prehistory, but LG Chem is a is a a multi target deal. They are focused primarily on what's called a p d l one inhibitor, p d l one antagonist, which is a a checkpoint inhibitor.

27:05 It is an Afema checkpoint inhibitor, an ab Afema p d l one inhibitor, formed as a bispecific with an Afema half life extension, which we call XT. So this is a true Afema Afema, bispecific molecule, which last year, LG Chem, took the decision based on, preclinical data to take that asset through into full preclinical developments, and that triggered a a a milestone payment to AVACTA in autumn of last year. So really, really good progress with with LG Chem. I you know, now in preclinical development and hopefully heading towards I and d filing in the in the clinic. So successful preclinical development through this year will trigger further development milestones and, obviously, hopefully, one of the first, if not the first, Afema, into the clinic as we've said a number of times. So very, very good progress to LG Chem, a great partnership.

28:06 De Young and AVACTAL, similarly, actually, you know, real really good progress. So, the AVACTAL partnership is, is different. It is about harnessing the Afema platform to really enhance the therapeutic benefits of, cell and gene therapies. So very briefly, what we have demonstrated with Dae Young, is the ability to get, stem cells, in this case, to express, to make, and secrete Afema immunotherapy. So to be able to produce immunotherapies in the surroundings around the stem cell to to really augment the therapeutic benefits of the stem cell. And this gives us, through AVACTAL's the joint venture, AVACTAL, this gives us access into a very significant cell and gene therapy market, which is growing very, very rapidly.

29:01 And just I can't talk about a huge amount of detail, I'm afraid, at this point. Hopefully, there'll be some significant events this calendar year, which will give us an opportunity to talk about talk about these programs in more detail. But just to say that we, AVACTA, has successfully produced and characterized and and handed over to AFIXL, the first the AFIMS against the first two targets of interest. And AFIXL's team, where where obviously the stem cell expertise lies is currently focused on characterizing in vitro and in vivo the the stem cells and the Afema molecules to support the next stage in AVACTAL's development. So, equally, both of those partnerships going really well. I'm I'm very pleased with with how they're progressing.

29:53 So I mentioned well, for us, an exciting bit of news, a move into London. So it's a a fantastic opportunity for us to co locate the research team and the clinical development organization into a single single facility in scale space in White City in West London. So it's a part of Imperial College's campus. Gives us an opportunity to to mix with a whole bunch of really exciting companies, investors, potential partners. It's a really vibrant environment in West London Eye. You know, potentially, you know, we could run a, you know, an event perhaps around the science to to give people an opportunity to to see it firsthand sometime in the future. But it's a great a great environment for us to be in.

30:49 You see a few of the a few of the companies and organizations that are in the space. We we have about same space actually as we had in Cambridge, about 5,000 square feet of lab and office, and we are literally moving right now. So we should have completed that on schedule by the end of April. And yeah. So very, very exciting transition for us as we bring the whole company together within one facility. I won't dwell I certainly won't read through the text here on the slide, but just to I mean, certainly, another very important highlight for us during the year, appointments of two very eminent biotech executives to the board, Mark Goldberg and Christina Coughlin.

31:38 You can read, you know, their bios in in detail on the website, but, you know, a significant addition to the board for us as we move forward as a clinical stage biotech. Okay. So let me move on to the, the diagnostics division, and I I wanted to start by, just giving you, well, just giving you a little, a sort of run through of the key key trends in the diagnostic market and certainly what drive our decision making. And I think there's three key points that I want to to bring out. So the first one is the most important by a long way, which is the the very strong trend to decentralized testing. So by that, I mean testing outside of laboratory pathology hospital pathology laboratory, so centralized testing.

32:29 So it can include GP clinics and other forms of satellite health care providing as well as consumer home testing. And within the things that are driving that that move are are a significant increase in in chronic disease primarily, I'm I'm sorry to say, due to a a poor lifestyle, but, you know, significant need to monitor chronic disease, a a real desire to to do health screening to get early indications of disease to drive early intervention, which obviously improves outcomes, but also improves the health care economics. There's a big consumer push towards general health and well-being monitoring, so that pushes, you know, the home this the home testing market.

33:16 And that's being driven by the big tech companies as well through through, you know, wearables that provide some of the more physiological information to go alongside actual test results. There's the increasing availability of immunodiagnostic and also molecular, so PCR like molecular testing platforms to be able to do these types of measurements outside of big laboratories. The lateral flow test is a a one that's been around for many years in in the immunodiagnostic space. And, obviously, another big driver is the fact that the pretty much everyone in the world now is aware of, lateral flow testing, and has become very familiar with that. So that has opened up a a a market and a desire, to test for a lot more things. The other two points around digital connectivity, touched on very quickly. So there's an increasing use of AI. The these are not things AVCTRA is directly involved in, but using AI to combine the the wearable information with diagnostics to really produce actionable medical intervention.

34:22 That's a very hot area. And companion diagnostics, is about identifying patients that will benefit from certain drugs. It's a big focus in oncology because of the cost of the the drugs, but it is heavily driven by the pharmaceutical companies who obviously own the drugs. So it's a it's a a slightly challenging market. And, again, not not something we are specifically looking at at the moment. But those those are the key drivers, decentralized testing being absolutely fundamental to our thinking going forwards. And we are, I believe, uniquely positioned as a UK diagnostics company because of the AVACMA platform, which allows us to develop, as we've seen numerous times in the past, high performance, high quality proprietary tests that give us competitive advantage and, obviously, therefore, drive commercial and and shareholder value. So our strategy is to maintain a strong focus on that decent point of care testing as well as, in future, build the consumer home test market and to continue that that primary focus on developing our own products as well as looking at at partnerships. So very straightforward strategy to exploit the Afema immunodiagnostic platform.

35:42 So briefly mention, as Tony as Tony did earlier on, the you know, one example of an extremely sensitive an excellent perform test, the AVDX SARS CoV-two antigen lateral flow test. As I'm sure you're all aware, we had just achieved with our partners, Medusa 19, the consumer self testing CE mark in December as the Omicron variant was emerging. And there again, this is old ground, but you'll be aware that more than 30 mutations in Omicron compared to Delta. And and for information, more than 30 mutations difference between b a one and b a two, the the the newly emerging Omicron variant. So now the this challenge of constant mutation, as we've said many times, will be here for a for a long time as long as the the virus is is with us.

36:39 So So we took the decision to pause sales in January, as you're aware, because of the reduction in the performance of the test from from really good to to only satisfactory in our view and not really good enough to provide the detection of infectious individuals, which is what's needed. We are redeveloping the test to restore that performance, and we're doing it in a manner to be as robust as we can to those future variants because it will continue. So we'll, you know, perhaps talk about that a little bit more in a moment. The timescale, we've been asked many times about the timescale, and and I'm not being evasive at all. The timescale depends on the development process, which develop which depends on us producing a robust and high performance test. It's difficult to put a precise timeline on that, but it also depends on, regulatory requirements.

37:35 The introduction of the new IVDR regulations in Europe has an impact and so on. So as you know, when we have a clear timeline so that I can, update the market, we will. I can tell you we are very actively redeveloping that test. We are making good progress, actually, in in detecting b a one and b a two. So as soon as I can give a material update to the market, I will. Now that that broader diagnostics vision driven by primarily that decentralized testing trend that I talked about has driven us to focus in four key areas. So infectious disease and infectious respiratory, of which COVID, of course, is is one. I'm not gonna read through all of these, but infectious disease, chronic disease, as we as we mentioned, a big, big increase in chronic disease, as well as a big increase in infectious disease globally.

38:33 So these are good market opportunities for decentralized testing. And then those two markets around health screening and fitness and well-being driven both both from a health care perspective, but also a a consumer interest perspective. So these are the markets that we're focusing on, and we are developing products in house in these areas. We'll talk about that more later in the year as well as looking at opportunities to partner. So that brings me to the summary. So, I mean, I've said this several times. We've said it in the prelim presentation. It has been a transformational eighteen months for AVACTA with the the move from from a preclinical research therapeutics business to a to a clinical stage biotech and the dosing of first patients with with AVACTA GROUP that that first precision chemotherapy, and the launch of the first ever Afema driven in vitro diagnostic product.

39:35 So looking forwards, you know, therapeutics, is without doubt the key value driver for the group, and and and has been. AVACTA 6,000, we're in the middle of that phase one a dose escalation study in The UK, and we'll, get US sites, onboard in, in q two. And we expect, fully expect to see the readouts in in q three. And as I said, earlier on, very pleased with progress. I'm very encouraged by what we're seeing, so far. That that readout from phase one a will be pivotal for all the reasons reasons that we've, mentioned, pivotal for the precision platform because we'll learn a huge amount about the the PK of that in in in human and therefore pivotal for the group. So real really exciting few months ahead of us.

40:27 I'm I'm very pleased that we have a rich pipeline of preclinical precision and Afema assets as well as the AVACTA 6,000 clinical development to drive milestones through this year and next year. From a diagnostics perspective, we now have a fully ISO thirteen four eight five certified IVD product business, and that is developing IVDs, as I've mentioned, with a focus around decentralized testing as well as redeveloping the the antigen test as as part of that much broader diagnostics pipeline. As Tony mentioned, we're in a strong balance sheet position, so that's great. And and, obviously, with with the the progress in AVACTA 6,000, the potential for for partnering and licensed deals.

41:19 We have opportunities for nondilutive funding as well, but we have a strong balance sheet that takes us well through 2023. Okay. I will leave it there. And, Mark, if if we can perhaps take some questions. That's brilliant, Alastair. Tony, thank you very much indeed for updating investors this morning. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the right hand corner of your screen. I Just just while I ask Antonio to take a few moments to review those questions submitted already, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investment company dashboard. Alastair, Tony, as you know, we received quite a considerable amount of questions ahead of today's event, and they did kind of form into different kind of categories or themes. And just given the attendance on today's call, I guess, to make best use of the time, you've very kindly given me some of those that do cover a number of those topics. So if I may start with the first question.

42:13 AVACTA spoke of the need for biopsies in the last presentation. Appreciating that this is a very sensitive topic, has there been any progress in this regard? Thank you. Yeah. So we've touched on that a little bit, but, I mean, just just to sort of, point out that we we can't sort of answer this fully, I I e, we can't talk about the number of biopsies taken, and we can't give a a running commentary on on on the clinical study for obvious ethical reasons. But, I think it's worth just reiterating that point about the importance of the biopsies because the PK data will will tell us about, the the serum and and and urine levels of of AVACTA six thousand, doxorubicin, the leaving group, but it doesn't tell you about whether it's being, whether doxorubicin is being released in the tumor. So biopsies are not mandatory in phase one, but I'm confident we will obtain some tumor material, for analysis. And we've we've worked with, partners, to UK based. I mean, a world leading pathology laboratory in The UK, and we have put in place the, validated assays to properly analyze those very precious biopsy samples. So so there has been lots of progress, but I I can't sort of go into more detail than that. We will be able to, of course, when we when we talk about the full results from the phase one a study.

43:39 That's great. Thank you very much indeed. Couple of questions, more than a couple around perhaps the next inflection point. What do you see as the next major shareholder value inflection point? Well, I think without doubt, it is that point in the middle of the year where we have the full readout from the dose escalation phase, and, of course, the full review of that data by the safety data monitoring committee. So, you know, a positive readout, which means good safety, good PK data, as well as an indication, that doxorubicin is being released in the tumor tissue, That that not only adds value to AVACTALZ, but opens up a, you know, a broad pipeline as we've discussed. And that that creates all sorts of opportunity, obviously, for taking AVACTALZ forwards in the clinic, but but taking other programs through preclinical development and and potentially licensing some of those, some of those earlier programs as well. So genuinely pivotal, for for PRECISION and for AVACTA.

44:45 That's great. Thank you. Moving on, if I may, to the next question. Can you elaborate on the use of human tissue or cells, the PDX model, in the preclinical mice studies and explain how this makes the preclinical trials much more relevant to the current phase one in human trials? That's that's a really good question. And and I think it speaks to that whole point about, you know, how translatable are mouse models. Yeah? So, you know, it's it's just it's just not true to say that, you know, if you get these results in a mouse model, you're going to get them in humans. So that's we we never do that. But but, of course, the the the the PDX model, the patient derived xenograft model uses an actual patient tube cells from a patient tumor implanted into the mouse that has a reduced immune system so the tumor cells are not rejected.

45:39 So those those patient derived cells are sort of more diverse, more heterogeneous than than sort of, let's say, less realistic models. They've often got a a tumor architecture and look from a molecular perspective more like the original tumor. So so though those cells in the mouse do look more like an actual human, you know, patient tumor. So the PDX models are I think they're deemed to be the best models for translating, certainly in, know, many cases, the data from from mice to to human. But but as I say, there's obviously clear differences between rodents and humans. Right? So the you know, for example, the circulating FAP levels in rodent blood are higher than they are in humans. So there's a, you know, different a very relevant difference straight away. I mean, of course, that works in our favor because it's lower in lower in in serum in humans. So but the the we can be guided by the data from those PDX models, which is, I think, as I said, in the presentation, is why we're so excited. This is a very significant improvement in in therapeutic index.

46:57 Thank you very much indeed. How will AVACTA determine the maximum tolerated dose in p one a? They go on to say theoretically each dose escalation shows minimal side effects and could get to the maximum lifetime dose in one cycle. How would a maximum tolerated dose be determined? Okay. So this is very technical, but, you know, it's worth answering, you know, at some level. The the maximum tolerated dose is defined as the dose the dose just below that at which a third of the patients experience a a dose limiting toxicity. Okay? So so in other words, two thirds of the patients don't, a third of the patient do. The MTD is defined just below that that level. So, as the questioner points out, you know, it it may well be that a maximum tolerated dose is not identified due to a lack of, dose limiting toxicity.

47:56 And and then the recommended dose for phase one b will will that'll be based, on on a combination of the safety data, the tolerability, the PK data, and so on by the clinicians involved so that it it's not as simple as the the MTD of AVACTA six thousand being related to to docs' lifetime cumulative dose because AVACTAL is targeted to the to the tumor. So but the the the fine I think the question also asked about, you know, how how many cohorts, you know, are likely to be needed. And the final number of cohorts and the dose in each cohort, again, will be determined by the clinicians and the safety data monitoring committee. We we expect we expect to go through three or probably four.

48:47 And that's certainly the timeline that we've described to go through for four cohorts. Thank you very much indeed. When do you expect the two US sites to join the AVACTA 6,000 clinical trials and start recruiting and dosing their first cohorts? Okay. So I I touched on that in the presentation. So we expect those two sites to become active in q two. But I think it's an important question because it's it's important to make clear judging by the way the question's asked, it's important to make clear that those US sites will not run-in an independent fashion. They're not doing a separate study. They're not running independent cohorts. So there could be, you know, two patients in The US and one in The UK for particular cohort. So they are in the same study, and and the data, you know, is is is combined. So it's not not independent and additional in any way.

49:43 Thank you very much indeed. If I may turn to the next question, all three LFTs approved for use by the NHS are based on the nucleocapsid antigen. It appears that the spike protein of COVID-nineteen is very susceptible to mutation. So why doesn't AVACTA's LFT target target the nucleocapsid antigen rather than the spike protein antigen? Yeah. Good good question. So so both both the nucleocapsid and the spike proteins are susceptible to mutations, but it is true to say that the spike protein, particularly in this virus, looks to be more highly mutated. There are there are reasons so so there's a clear reason there for saying target the the nuclear capsid protein.

50:31 There are also reasons to target the spike protein because it's a more stable, more soluble, more easily retrieved from clinical samples and so on. But what I will say is that, you know, it it's clear that we we need to produce a robust test that is robust to mutations going forward. So despite the fact that some some nucleic acid tests have had their performance affected by these mutations, Our redevelopment strategy is is is to look at I can confirm it's to look at the nuclear capture target as well as alternative partners to the spike protein with with a view of delivering something that is robust going forwards, certainly as robust as we can. That's great. Thank you.

51:17 Can AVACTA explain what advantages the PRECISION platform has when compared to antibody drug conduits in targeting the chemotherapeutic agents? Yeah. So there's there is some similarity in the approach, given that both the drug conjugates and the Precision, chemotherapies are trying to target the the chemotherapy to the tumor. Antibody drug conjugates are are a combination of of using an antibody or, of course, an ephema, using an antibody or an ephema linked to the the chemotherapy. And ADC approaches are totally dependent on standard ADC approaches are dependent on the target being expressed on the tumor cell, like HER two, for example, five t four.

52:09 And when the drug conjugate binds, it's internalized into the cell to let the to let the the cytotoxin kill the cell. As an aside, that's that is what is novel and unique about the TMAC program that we use the precision chemistry in the linker so the warhead is released extracellularly and doesn't need internalizing. But but to go back to the point, you know, a comparison of precision chemotherapies and and ADCs, ADCs are complex drugs. Right? They're they're combinations of biologics, aphimas, or antibodies with with the cytotoxic. And and tumors actually evolve over time to reduce the amount of the the biomarker, which the ADC is is targeting.

52:55 So it's a really interesting area. It's a very hot area. But FAP is expressed both on tumor cells and in the tumor microenvironment, in the fibroblasts, and gives us an opportunity to be to be somewhat tumor tumor agnostic, so that you can target, high FAP expressing, tissues. So it's different, but it's similar in many ways. That's great. Question around funding, really, if I may. What funding options for further phases of of the Precision platform, both for AVACTA GROUP PLC, are a factor AVACTA considering, GROUP, will these be in the best interest of shareholders and create minimal dilution? Yeah. So we are, the company is very mindful of, utilizing nondilutive funding routes, wherever that is possible. Okay? So there there's clearly a number of potential funding options that include non dilutive as well as dilutive.

53:56 You know, right now, as we've said very clearly, we have a long cash runway, you know, well well through 2023 with with good AVACTA 6,000 data in the middle of this year, then then that will create, you know, obviously, value across the whole pipeline, the precision pipeline, and gives us an opportunity to think about commercial partnerships and licensing to provide that nondilutive funding. You know, that that is obviously attractive to the company as well as shareholders. So we're completely aligned in that in that way. Now licensing AVACTA six thousand, our lead clinical asset, is unlikely because we can generate a lot more value for shareholders by taking that further forward to ourselves. But really good data from 6,000 obviously creates value throughout that whole pipeline.

54:47 And, of course, licensing the Precision platform to let third parties modify their own chemotherapies. So so, yeah, we're very mindful of using those nondilutive funding routes. That's great. Thank you. Thank you very much indeed, Lester. Obviously, we're coming up to the hour, and thank you to all the investors that have presubmitted questions and indeed for all those that have been submitted throughout today's presentation, which, of course, all may be visible to the company. And obviously, we'll publish all those responses where it's appropriate to do so and notify you by email when they're ready for your review. Alastair, Tony, I know investor feedback is important to you both, and I'll shortly redirect investors to give you their thoughts and expectations. But before doing so, I wondered if I may, Alastair, just ask you for a few closing comments to wrap up with. And then as I say, I'll redirect investors to give you their thoughts.

55:40 Yes. Thank you. Yeah. Well, just to reiterate, mean, the company has gone through a a transformational growth period on on both sides. You know? The the obviously, everyone is disappointed with the emergence of the Omicron variant, the effect that had, but we will soon turn that round. The the diagnostic business is now much more advanced than it was and in a in a position to deliver a a pipeline of products as well as the the COVID antigen test. The real value drivers, I've said several times, is around the therapeutics and AVACTA 6,000, and we have a a very exciting summer ahead of us. So, thank you everyone for your time. Look forward to catching up, again soon. That's great. Alastair, Tony, thank you once again for updating investors, this morning. Ladies and gentlemen, please do not close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations.

56:38 This will only take a few moments for you to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of AVACTA PLC, we'd like to thank you for attending today's presentation, and may I wish you all a very good day.