Fusion Antibodies (LSE:FAB) — Final results presentation

0:01 Good morning, ladies and gentlemen, and welcome to the FUSION ANTIBODIES PLC Final Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. Will be available via your investment company dashboard, and we will send you

0:32 an email when they are ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit to the following poll. And if you'd be so kind as to give that your attention, we would be most grateful. And I'd now like to hand over to Richard Jones, CEO from FUSION ANTIBODIES. Good morning to you. Good morning. Thank you for that, Mark. Good morning, and good afternoon, everybody, depending where you are in the world, and a very warm welcome to you all. So as per the introduction, my name is Richard Jones. I am the CEO for FUSION ANTIBODIES, and I would like to thank you for joining us for our full year 2021 results. As mentioned earlier, you should have access to our press release and also the slides that you're seeing on the screen that we'll be going through later on will be accessible by going to the investors page of our website.

1:18 In order to enable you to fully see the slides, we'll actually now turn off our video cameras to enable you to be able to see them. So we'll turn them off now, but, obviously, we'll continue the the presentation.

1:31 Excellent. So before we begin, as always, please refer to slide two of our presentation, which is basically around the disclaimer statements. I won't go through this verbatim. I think everybody hopefully is fairly familiar with this. During today's call, as outlined in slide three, I'll provide some introductory remarks as well as the highlights overview. I'll then be handing over to James Fair, our CFO, who'll review the financial performance, followed by Richard Buick, our chief scientific officer, who'll provide a review of the r and d programs, platforms, and pipelines. And then I'll provide some summary remarks before we move on to the q and a portion of the call. Before I report on the full year 2021 performance, I thought it'd be a good opportunity to provide a short recap of who is FUSION, what are we about, what do we do. So FUSION ANTIBODIES was established back in 2001 and is a contract research organization, so effectively a CRO service provider, which is based in Northern Ireland.

2:32 We provide a range of antibody discovery engineering and supply services through to cell line development and have guided hundreds of projects through critical preclinical stages. Our scientists who are experts in early stage discovery of biologics are dedicated to the discovery and early development of antibodies to help bring about a positive change in the health care industry. And through our breadth and depth of experience, we have developed a number of our own proprietary platforms for antibody humanization or CDRX, affinity maturation or ramp, and developability optimization. Our world class humanization and antibody optimization platforms harness the power of the natural somatic hypermutation space, and we work with a range of pharma and biotech companies as well as numerous research institutes and world renowned hospitals as well.

3:22 In terms of our mission, so our mission is to enable pharma and biotechs, so effectively working with them to identify, successfully develop, and commercialize antibodies in a more cost effective way, quicker, with a higher probability of success, and ultimately with a more competitive profile as in when they come to market. This is enabled truly by the by the talented team of scientists we have working with FUSION who are dedicated and truly passionate about the antibody design and development, adapting a adopting a fully integrated approach and drawing on our extensive knowledge and expertise and also a wide range of services as well. Now moving on to the full year 2020 results, we are pleased to report strong progress was made in the year despite the challenges we all face with global pandemic, which really had an impact across all industries and all sectors across the world.

4:16 And we were able to develop the revenue deliver the revenue slightly ahead of market expectations. The strong result was driven by the continued commercial traction of our existing services as well as increasing interest and uptake of our new ramp services. Also, saw continued growth in the international markets, which included North America, in particular The US, in Europe, Japan, India, and Korea, which is part of the, what we call, the Asia Pacific region. Early in the year, we continued our strategy of investing for growth with a successful raise of £3,000,000 in order to further expand the r and d platforms and pipeline. And alongside our commercial strong group commercial performance, we continue to make progress in r and d and our strategic delivery of Optimal and also continue to maintain a strong cash position.

5:07 I'll now provide a high level summary of the key highlights for the year, that ended in the 03/31/2021. So as mentioned earlier, we're pleased to report that despite the headwinds from the COVID pandemic, we saw a 7% growth in the full year 2021 revenues, delivering 4,200,000, which as mentioned previously was marginally ahead of market expectations. In terms of r and d, the COVID nineteen program introduced as part of the Malian anti lie antibody library program, project, and there was also a 57% increase in r and d expenditure from the previous three year, which again further confirms our our continued investment into r and d. With regards to financial performance, we had a write off of deferred tax assets of 1,800,000, and 9,000,000 of taxable losses remained available to offset future profits.

5:59 And also during the year, as mentioned earlier, the 3,000,000 equity fundraise was completed in April, May 2020, and our cash position at the period end was 2,700,000, which puts us in a very strong position.

6:14 Turning to the commercial highlights for the year. We continue to make progress on our commercial execution, which again is a key key area of focus for us against what truly was a complicated external environment due to the global pandemic. As mentioned previously, we delivered sales of 4,200,000 with growth in both the first and second half of the year, coming from the expansion of our existing services and increased uptake in our ramp service platform. During the course of the year, we did see an increased number of active clients and also an increase in terms of the average revenue per project and per order. As you see in the graphic there, we see we continue to see revenue growth in the international markets with effectively more than 80% of our business coming from outside of The UK and with terrific traction both in The US and also in Europe. And we are seeing continued growth in Asia Pacific through our distributor partners.

7:10 So I'd now like to hand over to James to walk you through the full year 2021 pro financial performance. So, James, over to you. Thanks, Richard. So as Richard, said, has already said, it was a challenging year with the headwinds, with, government restrictions, not just in The UK, but worldwide. And and, as Richard also said, more than 80% of our revenues are from outside The UK. And so the changing pattern of restrictions, lockdowns, etcetera, has affected our different markets in different ways at different times. And so we are very pleased to report, 7% revenue growth, slightly ahead of market expectations in in a year which was, very strange. And certainly at the beginning of it, ourselves and our customers were all having to adapt very quickly to lockdowns which were imposed just before the start of the year, in sort of February and March 2020.

8:20 What is also, think, great to see is the improvement in the gross profit margin. We have said all along that we expect in in a normal year if there is have could be such a thing that our gross profit margin should be around the sort of 49 to 52% mark. The reason it has not achieved that in previous years is because we are spending, investing to increase capacity and capability ahead of our revenue. So so we're we're bringing in, costs, people, equipment, and training training folk up to have the capability and the capacity as the the the growing business comes in.

9:09 So not only do we we deliver ahead of market expectations on our revenue, but we came in, where where we sort of target, if you like, for for gross profit margin.

9:24 And you can also see there on EBITDA, EBITDA has become slightly more negative, and that is as a result of the continued investment. Strategy is to invest for growth and also to invest in the r and d platforms. And, we were able to invest more this year in r and d, particularly as a result of the fundraise at the beginning of the period. So so that's why EBITDA is is negative and continues to be negative as part of our strategy of investing those funds for future growth. Under the balance sheet, and I put the the top one there, the non current assets, we did write off, 1,800,000 of a deferred tax asset, which is really an accounting adjustment, as, Richard referred to earlier in the call.

10:26 The this is an accounting adjustment. It is not a reflection of, commercial, challenges or positions. And so although it it reduces our noncurrent assets, it has no, effect on the the day to day trading of the business. Quite a lot of of money there in in working capital. Inventory's up as we derisk the supply chain both for Brexit and COVID, carrying more stock to make sure that we have a continuity of of our services. And, receivables up, not really in the trade receivables, but but more in the in the non trade receivables side of that. And cash finished the year in a strong position of 2.7, million, which, enables us to continue with our strategy of investing for growth and capacity and to drive that onwards.

11:28 So that's that's that's great news. Again, an increase then in the cash used in operations. Some of that was working capital, and some of that was research and development. So absolutely in line with our plans and expectations and in line with our strategy for, investing the funds raised, to to drive, growth and and to add value to the business. Investing activities predominantly, purchase of new equipment, laboratory equipment to keep driving the business forward and the financing activities dominated by the 2,800,000 net, 3,000,000 gross fundraise in April 2020, which we are very grateful to our shareholders and investors for their ongoing support in supporting that fundraise and allowing us to keep driving that business forward through through our strategy.

12:34 I think I'll hand over now then to Rick Rick Buick to talk about the r and d investment that has been going on through the year. Yes. Thanks. Thank you, James.

12:49 So just I'll update you, first of all, on the optimal program, which is FUSION's optimized mammalian antibody library. And the development of that program is proceeding in line with the plans. We've included a COVID nineteen antibody discovery arm in the past year to work alongside our PD-one and TIGIT immuno oncology arms. At the moment, we've, run through control selections using, Herceptin, which is a well known commercial antibody, and and those have worked, very successfully. For the COVID-nineteen, we've designed, expressed, validated antigens for the different multiple variants to be used to pan the library, and that includes the original Wuhan variant, but also the alpha, beta, gamma, and delta variants.

13:49 So, we'll be screening the library against those different variants to obtain antibodies that are cross reactive against all of these different variants that are circulating. And then, of course, as I said, there's three library proof of concept projects underway, the COVID, PD-one, and TIGIT. But they're all actually they're all at the advanced stages of the antibody sorting stage to select high affinity lead candidates, and we're running them in in parallel just to ensure we're not just focusing on one target. The r and d team is being expanded as well. So we've been investing the additional fundraising and, increasing the size of the r and d team. We've actually only just recently recruited a team leader in molecular biology, and that's to focus on the next generation sequencing of the the library data and ensuring the library itself is fully as diverse as we expect.

15:03 We're also, with the antigens that we've been making and anticipating the antibodies that will come out of the library, We are exploring different commercial opportunities for those reagents, supply of the antigens to diagnostic groups, etcetera, and for the antibodies then coming from the proof of concept work. Those could be the immuno oncology antibodies, PD one antigen, for example.

15:34 Beyond the library program, we there are several other r and d activities ongoing within FUSION. We're setting up a scientific advisory panel of leading industry and academic experts, and that's to review the the different r and d programs to give foresight on the trends in the markets and see if there's there's any other markets, that that we can address as well. And that's being being set up, currently.

16:06 We're always looking at process development for all of our services and to increase the margins of those services to reduce the the outsourcing costs, to improve efficiencies within our services. So so within the r and d department, we are optimizing those services across the company.

16:31 And you may have heard and read about the NACADA project, which is a collaboration with Queen's University in Belfast. That's the Northern Ireland Coronavirus Antibody Development Alliance, and that's continuing to progress well. We're screening antibodies, at the moment as, potential for, therapeutic candidates, on on further development. And so that's an exciting collaboration, with Queen's University. And there are smaller, research projects ongoing. A couple of funded PhD programs, into therapeutic antibody development, and bispecific antibody development, which are are running in the the background.

17:13 And another collaboration with with q u b was the the knowledge transfer program, KTP, and that was for software development. Obviously, it's it's not a skill a lot of the scientists here in FUSION have. So we by bringing in that expertise and knowledge from the university, we were able to develop software or our own software to optimize the antibody workbench that we use for humanization. And then that then, increases the the productivity, and then the standardization of that process and that allows us to, to be able to perform humanization projects more efficiently for clients.

18:02 And with that, I'll I'll hand back to Richard to summarize. Excellent. Thank you for that, and thank you both James and Rick. So, I'll now close with considerations for the outlook for the new year, which is effectively this year, full year 2022, which is, in principle, continue to execute on our strategy for continued growth as you see there. So we will continue to expand and drive the successful commercial

18:33 performance, and indeed, that's one of the drivers for me coming on as a new CEO back in February this year, building on the existing core services as well as driving uptake of our ramp service platform. As As part of our focus on commercial execution and what I like to call commercial excellence, we'll continue to seek new commercial partnerships, distributor alliances and relationships, and other commercial alliances in order to generate those additional revenue streams.

19:01 Also, in addition to the what I call our base business, which is effectively the current fee for service revenue model, we've also looked to enter into collaboration agreement structures where possible in order to be able to share in the downstream commercial successes of the works that we do with our clients. And that way, we can unlock the intrinsic value that our service platforms provide to clients. And as we can see, that is a considerable value driver there. And finally, as mentioned by Rick earlier, we'll continue to progress the r and d pipeline of new service offerings and also prepare for the successful launch of Optimal, the mammalian antibody library programs, a new discovery service. And with that one, I will see that both RENT and also library effectively will become two key growth drivers for the continued growth of our business moving forwards over the next few years as well.

19:55 Many thanks for your attention. And with that, Mark, I'll hand over to yourself to open up the floor for any questions and answers that or any questions that come through. That's great. Richard, James, Rick, thank you very much indeed for your presentation and updating investors. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab that's situated on the right hand corner of your screen. Just while the company take a few moments to review those investor 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 Investor Meet company dashboard. Again, you'll get a notification by email when they're ready for your review. I'd also like to remind you that your feedback is important to the company. And immediately after this presentation has ended, you'll be redirected in order that you can provide the company with your views and expectations. Richard, James, Rick, obviously, investors have the ability pre submit questions ahead of today's event. And thank you firstly to those that took the time to do so. And I know you specifically addressed a number of those within the presentation.

20:53 But perhaps I could ask you, if I may, to expand on a couple of the questions that we received. The first one being, are there any plans to sell FUSION or interested parties making approaches? I'll take that question. So thank you very much, firstly, for submitting those questions. And, again, they've been very interesting, wide range of different questions that have come through. In terms of are we sort of potential sale of FUSION, obviously, that's not within our sort of immediate interest or area of focus. What we are looking to do, as mentioned earlier, is continue to invest into the company for continued growth, continue to grow our service offerings, continue to expand our commercial presence across the various different regions.

21:39 Obviously, if somebody does put forward an offer, at the end of the day, we are duty bound, you know, to our shareholders to evaluate that. But our immediate immediate strategic area of interest and focus really is just to continue to grow the business, to be able to, as I mentioned earlier, unlock the intrinsic value of what our services actually do for our clients, and overly and also, hopefully, a period of time, you know, look to become a considerable force in the antibody service industry, a viable, profitable, sustainable business generating,

22:13 a high level of revenue streams as well. James, do you want anything further to that? No. I think that's, think that's bang on. Yep. You very much. And thank you, guys. Just moving on, if I may. The next question that we pre received, if I may, reads as follows. Do FUSION still have a collaboration agreement with MAB Discovery?

22:40 Rick, do you want to take that one? I I can take afterwards, but do you want to start off with that one? Yes. I I can, certainly. We we we do, yes, still have collaboration agreement with, MABODIESCOVERY. The yeah. We're we've been, working on developing some stable cell lines, for MABODIES PLC, with the commercialization, of some of those antibodies, FUSION is due some milestone payments if MAB Discovery take those products further. So, yeah, we we still have an existing agreement with MAB Discovery. And so it's it's all dependent on the success of their R and D and and the success of their antibodies.

23:35 Thank you for that, Rick. I think that hopefully should cover the question. So in short, yes, we still have a continued relationship and obviously continue to collaborate with Map Discovery, but also with other similar type of partners as well. That's great, Richard. Thank you very much indeed. And and also, obviously, knowing that we touched on a number of the other questions that were pre submitted, thank you once again for those questions that were pre sent in. Richard, perhaps I could ask you, would you be so kind if you could open up the q and a tab? If I could ask you to read out the question, perhaps who it's from and where appropriate to give

24:06 a response, and then I will pick up from you at the end. Yeah. Thank you for that. So, again, thank you very much for everybody's interest and attention in today's presentation going through the full year 2021 results. So there's a question that's come through from Andy. So thank you for the question, Andy. And, again, thank you for your investment and interest. The question is, as management, what do you see as the biggest opportunity for the business over the next twelve months? Excellent question. So I think as mentioned earlier, the the biggest opportunity so there's a couple.

24:38 First is the continued uptake of Ramp. So I know there's a lot of interest on library, but we mustn't forget that, obviously, we have also launched Ramp last year. And that has been adopted by a number of clients. So we are seeing some increasing traction on that one. The second part of that one is also the fruition and the commercialization of library. So the two both like rent and library are seen as significant growth drivers for the future. The third part of this would also be continued expansion of our geographical presence. Now that doesn't necessarily have to be physical infrastructure. So we're not looking to start building out offices and sort of facilities across the world. But it is more in terms of setting up networks, setting up distribution agreements, relationships, alliances.

25:33 So that way, we're able to expand our

25:35 presence indirectly through these types of agreements and be able to increase the uptake of our services with a number of clients as well. So this is part of the commercial excellence. And I think the final piece is also, as mentioned earlier, fee for service revenue model obviously is our sort of stable bread and butter, as I like to call it. But where possible, and again, it depends on the nature of the project that we do, if we can enter into strategic collaborations, which will enable us to, gain access to the downstream value of the services that we do provide. Obviously, that is not guaranteed. At the end of the day, it's subject to, you know, the normal attrition rates that you see with any r and d type of projects. And I know that firsthand from having come from the client side myself.

26:22 But if you build that up over a period of time, I think that can lend itself very well to be able to enable us as FUSION to unlock the intrinsic value of what we of our service to provide to the customers. So thank you very much for that question.

26:39 That's That's fine. Anything further on that, or shall I move on to the next question? Please. If you could, that'd be great. Fantastic. Excellent. Okay. Yeah. There's a good number of questions that come through here. So I'm gonna try and unshare this a little bit. So So there's a question from Robin here. So I'll read the question. Thank you for the question again, Robin. Why was so much deferred tax written down? So great question. Let me hand over to James to answer that one. Yeah. So it was thanks, Robert. That was really an a technical accounting issue. So the it there were there was a £1,800,000 deferred tax asset, which is an accountant's way of assessing the value of accumulated taxable losses and the the future, benefit to them.

27:32 Now the accounting standard requires this to be shown as an asset on the balance sheet to the extent that the company can reliably forecast future profits. And as a result of the fundraise at the beginning of the period, we have extended our period of investment, cash burn, fees of investment in r and d and growth, and therefore, we're going to continue making taxable losses in the, near term. And because of that, we cannot make those reliable forecasts of profitability.

28:08 Not not that we're not intending to return profitability, but in terms of the accounting standard, what the reliability is is the standard of rigor required to be able to make those forecasts and retain the asset on the balance sheet. So what we've done is we've derecognized the asset that was previously on the balance sheet.

28:31 And I suppose there is a slight corollary to that question, which is around why did we write it all off? And the simple answer is the accounting standard doesn't allow for partial recognition. So you either recognize it all or you or you don't recognize it all. Obviously, we still have those taxable losses available to us to utilize in the future against future profits, And we we fully intend our return to profitability in the future to to to make use of those.

29:04 I hope that answers your question. Yeah. Thank you for that. And I think just to add, it's almost, in my mind, I see that as a bit of a technicality, isn't it, in terms of the reasons why it had to be done in that way? But excellent question. Thank you for that.

29:20 There's a question here from Alex. So, again, thank you for your question, investment, and interest as well. So does FUSION intend to increase marketing spending? In short, we have been increasing marketing spending. And, again, through me coming on board as a CEO, as you've probably seen in my background, I've got quite an extensive commercialization experience across different sectors, industry areas, and platforms as well. So one of the things I do bring to bear is that level of what, you know, sort of what what are the strategic drivers for increasing commercial performance. And part of that is obviously the right level of spend, not just spend as in put more money at the problem, but more spending in the right areas where you can get a good return on investment.

30:06 So in short, yes, one of the things that we've been doing this year is increasing and ramping up our specific commercial activities, how we go about commercializing our service platforms, how we go about preparing for the increased uptake of RAM, but also for the preparation for, the launch of of Optimal library, as well as making sure that we harness the power of marketing in the appropriate way to be able to continue to to increase the number of clients that we have. So in short, yes, we have been sizably increasing our marketing spend. Good question. Okay. There's quite a number of other questions that are coming through here. So there's another question from Tim. How many collaboration agreements have now been agreed with customers, and can you indicate how many of these are based on upfront payments only, royalties only, and up front payments and royalties.

30:56 So, again, thank you, Tim. That's a really good

30:58 question. So, as we mentioned in the report, obviously, we've got a defined number of existing collaboration agreements today. I can't, because the commercial sensitivities, give you specifics in terms of the split between upfront payments, royalties, or the mixture of the two. What I can say is that, obviously, where possible, we'd be looking to try and enter into agreements where there is some element of milestone payments, and it doesn't always have to be front ended.

31:32 What we're trying to do is avoid things that are too back ended for the obvious reasons because, obviously, that's subject to, you know, a high level of risk and uncertainty. Where possible, if we can enter into agreements where there are some type of milestone payments that could either be successful completion of the project, either entering into the clinic or successful delivery of, what I call sort of finite

31:57 compelling phase one data or phase two data. Obviously, regulatory approval is very much a a key milestone. And then royalty subject to worldwide sales, net value, and the normal type of, architecture that you look to put in place. So I think, in short, the way I can answer that question is, where possible, yes, we'd like to go for option three, which is some mixture of milestone payments and royalty payments. But again, as mentioned before, these are not guaranteed. And as we well know, the probability of success of any development of any project, to be honest, irrespective whether it's antibodies, small molecules, gene therapies, cellular therapies from early drug discovery stage, preclinical all the way through to regulatory approval, and commercialization, that there is obviously a you know, there's there there is an element of uncertainty around it. But that's a good question, in short.

32:49 Thank you.

32:52 Okay. There's a few other questions here. So let me see if I can yeah. Okay. Hi, Paul. Paul Warwick. So I've made a question from Paul Warwick, and I think there's a there's a few from yourself, Paul, here. So there's one here. How are you planning to create the significant value to shareholders as suggested? So, again, thank you. Good question there, Paul. So I think what we're looking to do, as mentioned earlier, is continue to focus and invest into our our continued growth, investing into r and d because at end the day, whilst we're commercializing our existing services, we must never stand still. The move the world does move on, and we need to ensure that we future proof our service offerings as well. So, obviously, the continued focus and investment into r and d, that will make sure that we continue to deliver shareholder value not just for now, for the present, also in the future as well.

33:47 As mentioned earlier, also the focus on commercial performance and commercial excellence to make sure that the service offerings we have today, we're maximizing the value that they represent as well. We're always mindful that ultimately it's an investment, and what we're looking to do is to deliver that return in investment to shareholders. The other piece of this is also, as highlighted earlier, fee for service is our bread and butter, but also it won't be something that materializes immediately. But over the course of the year, as we continue to build the book on these types of collaboration agreements where there is some sharing in the downstream value, And then we'll be looking to try and apportion how those milestone payments are actually staggered out so that over a number of years, we'll actually be able to start almost reaping the rewards in terms of those types of collaboration agreements as well.

34:40 And the other piece, as mentioned earlier, is finding a way through various sort of setting up distribution agreements, alliances, partnerships as well, where we effectively can expand our geographical reach. Again, just to be clear, it doesn't necessarily mean we have to invest into physical infrastructure. But if we can enter into agreements or alliances with other CRO organizations or with distributors similar to what we have in some of the Asia Pacific regions as well, that enables us to expand our reach to client bases, and obviously be able to increase the uptake of our services there as well. So I think it's, one on multiple fronts. Investment into r and d, focusing on the revenue model, looking to go into collaboration agreements, commercial execution, and also continuing to basically build on the business that we currently have today.

35:33 James, do want to add anything further to that? No. I think I I think I think that's absolutely right. It it is a combination of those. And and, obviously, the collaboration agreements, the potential milestones, potential royalties, these things do have a value, but are very much dependent on the further r and d and development and commercialization of these activities by the main developer researcher who is our our client and, therefore, well outside our control. So while we can do our best and play our part in that development program, it's very much dependent on their future development plans and and ability to take that through, to full commercialization.

36:28 Excellent. Thank you for that. There's another good question here from John S. So do you have an estimate of the magnitude of the impact of COVID disruption on workflows on reported 2021 revenues relative to your internal forecast made before March 2020? Do you have a value of the order book at present? So okay. But very interesting question. I think in terms of COVID, so I think the reality is I mean, last year was a very difficult and challenging year globally as a result of the COVID pandemic. And we mustn't forget that this had a major impact, just on on sort of the life science industry, but it but it had an impact globally and also across multiple business sectors.

37:13 And it continues to have those impact even as we speak today. I think there's been different numbers cited. So one of the numbers I that sticks in my mind is that major economies lost at least 4.5% of the GDP, translating to a loss of around 4,000,000,000,000 US dollars and almost cited as one of the worst since the Great Depression of nineteen thirty. So it, yeah, it it did have a profound disruption, not just professionally, but also personally as well. You know, many number of people lost their lives as a result of this. In terms of our sort of service sector, so in, again, more data points for you. So in April 2020, more than 2,850 trials and nearly a million patients enrolled in clinical trials were in partial or complete lockdown.

38:00 If you recall, that was at a period of time when where almost the last place you wanted to be was actually in a hospital. Also, this had an impact on pharma and biotech. So more than 50% of pharma and biotech clients actually paused clinical trial recruitment for those reasons. And indeed, also, some of the r and d laboratories, you know, r and d laboratories of of pharma and biotech actually reduced their capacity because of the restrictions and remote workings, etcetera. But, however, despite all this, I'm proud to say that, you know, FUSION was able to maintain the site open, and this is very much thanks to all the staff, which meant that we're able to continue to progress and deliver on our client projects as well, which is very different to some other CRO organizations that had to go into almost full lockdown as well.

38:49 And obviously, as a result of that, we're able to continue to generate revenues and also progress our r and d projects as well. In terms of the quantification of that, did we lose any business? I think the reality is probably the word trials associated with some of the works that we were doing, which had some level of impact. But the main thing is that we were able to continue to do our duties, continue to perform the services, continue to generate revenues, and, obviously, we're able to meet the market expectations in terms of revenue as well. James, Rick actually, Rick, do you want to add anything further from your perspective in terms of sort of the the operations during the the COVID period? Yes. Yeah. Certainly. Well, operations wise, we we did instigate a a COVID plan to have a a safe and secure working environment.

39:42 We were they're making sure people were wearing masks if they had to work within a two meter distance of each other at the bench. We were we had a lot of different and and and a lot of different COVID secure processes within the building, such as a one way system around the the different corridors. So by doing all of that, we actually we're we're very good at preventing any outbreaks of COVID within the company. And, we had very minimal numbers of staff having to self isolate, over the the past year. So there there has been, in terms of outputs from the labs, just it has a had a minimal impact. The obviously, anybody who didn't have to work on-site was working from home.

40:44 So, again, minimizing the the chance of people coming into contact with, someone who is potentially, positive. So is it it has obviously, we've measures to prevent any outbreaks within the company. And as a result of that, we've continued to be able to work successfully within the labs over the past year. Thank you for that, Rick. There's a couple of other interesting questions. So there's another one here from Paul Warwick. So why do why does FAB, sorry, FUSION ANTIBODIES, not develop their own potential targeted antibodies to take to clinic? So that's a very good question, and it basically reflects two very different business models.

41:35 So what do we mean by that? So one business model is an early stage drug discovery by tech company, pharma company, where you almost live and die by the success or failure of your lead drug candidate or your asset that's being developed. That asset normally is either IP that's being spun out of a university or is being acquired. But effectively, it's an early stage drug discovery biotech company. What FUSION is is different. FUSION is a contract research organization. We're a service provider, and what we do is we provide services to pharma and also biotech companies to enable them to successfully develop their, their antibodies antibodies or their assets. So, again, my own personal experience, I've worked on both sides of the fence as it were.

42:23 So I've worked in pharma and also both big and small pharma and biotech companies leading those early stage drug discovery programs as well as on the CRO service organizations. So, effectively, that's two different business models. So our business model is we support the pharma and the biotechs to develop their own proprietary antibodies or assets, as I like to call it. We don't own those assets. We don't own the IP. Our IP is effectively our service technology platforms, but it isn't the actual antibody that's being developed. In 2001, when FUSION was first established, it actually was the business model. So we were an early stage drug discovery biotech company, but then we pivoted strategy back in 2011 and then moved away from that and then moved more into the service provision.

43:16 The reason being is actually you're derisking because one of the things and, again, I noticed firsthand, as mentioned earlier, you almost live and die by the success or failure of your assets. If you have a whole pipeline, six, seven, eight, nine different programs or products or assets within different development programs, then you're effectively sort of spreading your bet. And then it's really a question of continue the development and ultimately partner them with another company or potentially even commercialize them yourself. However, that is subject to risk. There is a high level of attrition, and we know of many pharma companies and biotech companies that have had failures in their r and d programs. And that's the reason why or one of the reasons why FUSION pivoted strategy in 2,011 to focus more on providing services. So in short, yes, we don't we don't develop our own, targeted antibodies to take to clinic because, really, our business model is providing those services.

44:11 That will take a shift in terms of our business model. Potentially, yes, in the future, you could almost arguably think about can you spin things out, But that's that's a that's a completely separate discussion, to be honest, but a very good question, so thank you for that. James, do sorry. Do James or Rick, do you want to add anything further to that? Well, I was just gonna say that that the proof of concept work in the, library project, may give rise to potential therapeutic agents, which we could out license. That's a thing. And that's also, I see, a question there from Tim. Thanks, Tim, for that as well. So these are potential, but these are things which, under our current business model, we would, aim to out license at an early stage rather than investing huge amounts of money to to carry on and develop them. We would we would seek to license them out to partners who who would, whose business model is to to develop these things and take them through to commercialization.

45:20 And, so so there there is potential there, and there always is potential from our work that we will, come across these things. However, the main thrust or the main strategic aim of developing Optimal was to to create a platform, a discovery platform that we will offer to our customers. Yeah. I agree with that. Our our actual skill set lies in the discovery engineering development of these therapeutic antibodies, but but not in taking them through clinical trials or or even performing preclinical assays on the antibodies.

46:08 So definitely, we we could develop an antibody to a very early to the early stage and then out license. But, no, we we wouldn't even have the the skilled staff to to take these through to commercialization. Yep. Yeah. I think for that change, Rick. And, effectively, as sort of mentioned earlier, it is a different business model in short because if you do early stage direct discovery, you have to have the right capabilities, infrastructure, resources, etcetera, be able to do the successful early stage discovery components and then move it into the clinic. I think if there are things arising from Optimal or library, then as mentioned by, I think, by both James and Rick, then potentially, yes, we could look into into collaborations or out licensing those for another company to be able to successfully take those through to the clinic.

46:59 So I think building on that one, there's two questions that are almost interlinked. So one from Alex, which was how will the OptimaL library be successfully monetized into various revenue streams? And there's another one from Tim, which was, you mentioned, look at commercialization of the antibodies arising from proof of concept Optimal, where you'd be looking to out license these as therapeutic agents as well as for use in diagnostic applications. So thank you. Two good very good questions and are very much interlinked, and I think we partially answered the last bit of it. So, yes, in short, in terms of Optimus, as mentioned earlier, we will be looking to do the launch preparations for the successful launch, in the coming year. And I think my personal point of view is I think the platform will actually provide significant scientific and commercial advantages to drug developers.

47:54 And the reason I say that is if we can reduce the time it takes to develop an asset, so from the various stages that you normally would typically go through, That then means you also get a reduction in terms of the cost of actually the development. And the cost that go into any drug discovery programs is sizable, tens and tens of millions with a with a high level of attrition as well. Also, because of the nature of Optima, we firmly believe that this would also potentially enable the drug developers to be able to increase the clinical therapeutic efficacy, or what I like to call the clinical the risk benefit profile or or window, if you will, which means you potentially can also have an increase in overall probability of success.

48:43 So what what does probability of success mean? It means as you go through the various sort of milestones from phase one to phase two to phase three to regulatory approval, potentially, this would actually lend itself to having an increased chance of being of being successfully developed, obtaining the successful clinical data that's required to be able to be approved by the FDA, EMA, or other regulatory authorities as well. And through all of that, I think, yeah, the commercialization potentially may be under a licensed type of arrangement or collaboration arrangement. As mentioned earlier, I think the value that library represents to the client is considerable. So it shouldn't just necessarily be a fee for service revenue model. It should be beyond that one. And, I as I, you know, draw in my personal experience being on the client side, any savings you can make in terms of development time, development cost, if you can increase the clinical signal, if you can reduce any off off target hits. So in other words, reduce the side of you reduce the number of side effects.

49:52 So that means you get a cleaner type of product. And also, potentially, you can actually get the product to market quicker. And in particular, this is of considerable value to pharma or or biotech if they are competing against other companies. And how many times have we seen almost a race to the games where it's been one company launching a product one month before another even though they've been developing the that particular asset for tens of years. So I think, yes, the the way we will consider that being successfully monetized into various revenue streams would be under fee for service, but also with some share in terms of the downstream value of what the services actually provide to the company as well. Right. Do you want to add anything further in terms of what you see as intrinsic benefits of library?

50:39 Yes. Well, it's just expanding what you said. Reducing the time these are human antibodies within the library to begin with. So there's limited engineering required. All knows we have reduced any liabilities within the library design. So again, as you said, they've better clinical profiles reduced manufacturability issues going forward. So we definitely, you know, there are benefits of using antibodies from a library like this, which have been designed based on natural human antibodies.

51:29 Yep. Thank you for that. Just seeing if there are any other Mark, sorry. Handing over to you. Are there any other questions that are coming through at the moment? Yeah. I I must admit I there were three pre submitted questions that as I turned over, I realized that I hadn't post to you. And in the interest of time, perhaps I could submit these three to you for your response. The first question was when, stroke, are you planning to raise more cash? Excellent question. I'll hand over to James to answer that one. Yep. Thanks for that. We have no immediate plans to raise more cash, and our plans don't indicate any need to. However, we also remain alert to opportunities for additional investment in the sector, and so we we we don't say never.

52:21 We just say that there's there's no plans at the moment. The cash burn in recent years has been a strategic investment. We raised money at IPO in 2017 and again in April 2020 from a follow-up tracing, and that has been a deliberate and planned burn of cash, and and our current plans are that we we that will be sufficient to get us where we need to go. Thank you very much indeed, James. Next question was why are the losses up so much this year? Well, again, I think that is really if you're looking at the absolute bottom line as a result of the large derecognition of the deferred tax asset, which, really give a sort of 2,000,000 hit to the bottom line.

53:14 I think a much more useful thing to look at is loss before tax, which increased by 200,000 from 1.1 to 1,300,000, and that's a direct result of investment in the higher investment in the r and d, which which, again, came as a result of the the fundraising April 2020. And, it's also a factor of those that ongoing figure is, again, someone had a question earlier about investing in in in marketing. I mean, we're investing in in growth by increasing our capacity, our capability, our r and d offering, but also, through our sales and marketing, team to to to grow the thing. So, yeah, I think I've I've already sort of done the the the tax accounting standard to death, but the the derecognition was to do that. And therefore, it's not really a commercial or a feeling impact at all, the increased losses.

54:15 That's great. Thank you very much indeed, James. I am mindful. Obviously, we're coming up to the hour, and I and I can see a couple more questions have just popped into the q and a tab. So I guess before maybe a few closing comments, if I could just ask Richard, is there anything further here that during the meeting we we can address? Or obviously, of course, we can make everything available to you post the meeting as well if there's anything that requires attention. But just mindful of time. Is there any further questions in the live q and a that that that come out at all? Yeah. There's a there's a few which I probably will ask James to answer. So there's been a fair number of questions around the the spread on the buy, sell price, liquidity, market capitalization, etcetera. So, James, do you want to do you want to take those ones that I can add to it?

55:10 Yeah. Certainly. Thanks, Richard. The I think the question on liquidity of the shares, and then there's another question there from Neil about the spread between the buy and sell price. Well, I think the high spread is due to the illiquidity in the shares. Now we are fortunate in many respects to have had the support of lots of institutional investors and many of our other previous investor investors before we, had the shares admitted to IAM, and those investors were buy and hold and are still there holding. So, predominantly, there aren't that many shares, being traded on a on a daily or a weekly basis.

56:01 So there's not much we can do about that. We are very grateful to, the loyalty of our shareholders and and those only until some of those big investors start to to reduce their holdings and increase, more more diverse shareholdings, in the marketplace, that is something entirely outside our control. I say we we are very glad of the support of our shareholders, through two fundraisers, the IPO and and then in April 2020. And and and we're we're not gonna criticize them for buying and holding, if they see a a potential for growth. Yeah. I think just to add to that, obviously, there's certain things outside of our direct involved, especially when it comes to market forces.

56:53 And as mentioned by James, it's just, you know, this is just a fact a feature or a factor of the of the sort of the shareholders, etcetera, that we've got in place as well. Excellent. Mark, are there any other questions that have come through? No. I Richard, there there, you know, there have been a number of questions that were pre submitted. I know you you you made a conscious effort to address those throughout the presentation along with taking the time we are coming up to the hour. And I do know that feedback is important to to you and the company. So firstly, thank you once again to all the questions that have been submitted, and we will make every question available to the company post the meeting in case there's anything that we didn't touch on throughout. So perhaps, Richard, before I do redirect investors to provide you with their thoughts and expectations, I could just ask you for a few closing comments. Yeah. Thank you for that. Firstly, thank you to everybody on on the presentation online for your interest and continued investment into FUSION.

57:48 I generally do see there's a huge potential with the company, and and that's the reason why I joined back in February earlier this year. I think the the service offerings that we provide are truly world class. The people that we have in place are absolutely remarkable. Every single person in the company, ranging from the scientists to the senior scientists to the team leaders to the departmental directors to the commercial operations people, to the business development folks, to the, what I call, the back office staff, which is, in short, sort of the finance, legal, HR. Every single person is absolutely outstanding. And as a result of that, we have been able to deliver on the market expectations last year.

58:33 Our service offerings are truly remarkable. And, again, have you know, having worked on the client side, indeed, having myself personally commissioned CRO organizations to conduct services on the development of antibodies, I recognize that we generally have world class pioneering services that we continue to develop. And, also, we do have a increasing number of clients as well. I think what we're looking to do, as mentioned earlier, is to be able to unlock the intrinsic value of the services that we do provide. And, again, we mustn't forget that all of this ultimately is to make a meaningful difference in the life of a patient. So if you think about all of the different antibodies that are being developed and the different therapeutic applications ranging from oncology, so cancer, neurological disorders, neuromuscular disorders, rare diseases, orphan diseases, infectious diseases, viruses.

59:35 I mean, obviously, the COVID pandemic shone the spotlight on industry about what more we need to do as a society around combating these types of conditions as well. And it's truly humbling that we, FUSION, can actually play a key pivotal role enabling pharma and biotech companies to be able to successfully develop and make available to patients who generally need these types of treatments around the world. And also with that, we'd be able to generate a return to our investors, to our shareholders, and create the value. And the value in my mind is scientific value because of the r and d programs and pipelines that we have, financial value through the revenue streams that we're able to generate and continue to build on our commercial performance, and shareholder value to all of our shareholders through the fact that we've been able to monetize the investment that's been made and to be able to deliver a return on investment to shareholders as well.

1:00:34 So, I I generally see that there's a huge potential for the company. Obviously, it's not something that's gonna materialize tomorrow, but that's something we'll be continuing to work on, as mentioned earlier, as part of our strategy of continued growth for the future as well. The other piece is also moving forwards would be and, this is just part of feedback, so which we've taken on board. Moving forwards, we'd be looking to provide regular updates as the business progresses. And, obviously, you know, as and when we have something of substance to be able to communicate, and concurrent with this would be more regular engagements with our shareholders. So, thank you for your attention. Thank you for your time. I wish you all a fruitful and profitable rest of the week as well. I look forward to continuing the dialogue, so thank you for that. Richard, Rick, James, thank you once again for updating investors today.

1:01:22 Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of FUSION ANTIBODIES PLC, we'd like to thank you for attending today's presentation. That now concludes today's session, and good afternoon to you all.