Fusion Antibodies (LSE:FAB) — Interim results presentation

0:00 Good morning, and welcome to the FUSION ANTIBODIES PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time by the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Adrian Kincaid, CEO. Good morning, sir.

0:31 Thank you very much, Lily. Good morning. Good morning, everybody, and thank you very much for taking time out to hear what we have to say about the period. It's just ended on September 30 this year.

0:48 So I need to do the the usual disclaimer, which I will take as as read. I'm sure you're all speed readers. And what we're going to talk through today is just an introduction to the company for anybody who hasn't, come across FUSION before. Some of the highlights, financial performance, which is the the meat of the presentation, where I'll hand over to my colleague, Steven, a strategic focus update, and then a quick summary, and then we'll move through to as many of the questions as we can get answered in in time. So as I've been introduced, my name is Adrian Kincaid. I'm pleased to be the CEO of FUSION ANTIBODIES.

1:38 We are an organization, a contract research organization or CEO, CRO, that offers antibody services. We're really specialists in antibodies, very important class of proteins, means that we can get to know, all the ins and outs of antibodies or awful lot of the problems that they can sometimes create. And we're really specialists, so we we can ensure that we can deliver the best possible antibodies for a client's needs. The services that we offer include discovery. So finding the first antibody in the first instance, something to to work with. So it typically is found to bind to an antigen, sometimes particularly a given binding site on that antigen or target protein.

2:31 Once we've discovered those antibodies, we can make them the best possible that they can be where we use molecular biology engineering, changing the gene sequence, changing individual amino acids, changing the fold of the protein, making them a little bit more manufacturable, sometimes engineering out potential liabilities, which might be metabolic liabilities if they're a therapeutic and need to be injected into a living organism. And all of those different issues, that very much means tailoring them to be the best possible antibody for the particular application in question. We can then do supply of those antibodies, particularly as proteins. We do preclinical supply.

3:17 So the materials that we're provided for are really for the research phases going into potentially animal models, but not going into human subjects. To do that, people will need a stable cell line and take it through a very heavily regulated GMP or good manufacturing practice procedures. We can take them up to that stable cell line, level, and then we pass over, and a CMO or contract manufacturing organization takes it up from that point. So our clients, come to us really from any stage. They they have maybe a target in mind. Maybe they're partway through the process. Maybe they've got an antibody already, but they've had some problems with it and need it fixing, or maybe they come to us and just want a high quality sample with which to really get some high quality results.

4:18 The clients themselves typically are drug discoverers, but also include diagnostic companies, and I should also add even research antibody reagent providers as well. We work with biotech companies focusing with their core expertise on on the biotechnology side of it, but also pharmaceutical companies, including some of the largest pharmaceutical companies, which I'm sure you're all very familiar. At the other end of the spectrum, we have startups, spinouts, virtual companies who don't necessarily have their own labs. Because ours are all up and running and ready to go, so there's no capital investment required on their part. They can tap into all of the expertise and as well as that capital investment. The other opportunity that we give them, the advantage that we give them is that we have all of the expertise that they need already there and ready to go with their project.

5:16 We do work at the cutting edge of science. There are some targets which are very new, and a lot of those are still with research institute institutions doing fundamental research. So it may be producing first antibody that's ever been produced for a particular target. And, also, we shouldn't forget that as well as human beings and and sicknesses that we all get, our pets, and animals get, sick too. So veterinary medicine is increasingly an area where they not only need therapeutics, but also, diagnostics. But there, you're looking at a different target. It's gonna be the the dog protein or the cat protein rather than the human one. So, again, the same principles apply, but we're looking at caninization and working with with dog antibodies or felinization working with with cats and the relevant targets.

6:14 So our clients vary. Their needs vary. Our expertise is very much around antibodies, and you'd probably have to go quite a long way to find anybody who knew antibodies better than FUSION does. We have world leading expertise and knowledge and technologies that we can back this up. So what we're trying to do for our clients is really get the best antibody possible into the clinic more rapidly or for research reagents onto their catalog more rapidly. It's trying to make that sure that they have the best possible. And in some regards, being the best in the world with an antibody is not necessarily good enough. It has to be the best possible.

7:02 Otherwise, its position in the marketplace could easily get usurped. Maybe not easily, but it could get usurped. So we are always striving to make the best possible that we can, provided that, fits with the client's needs. So accelerating that progress through to the clinic is is what we're all about. There's a lot of skills that are required along that route, and we've got those really well covered. So people need experts. People need experience, and they come to us to to leverage that.

7:38 The first part of generating an antibody is to discover it and have an antibody lead which to to develop and take that forward. We also have switched our focus. We've been very well known for engineering. But over the last two years also, we've been switching our focus onto the discovery part of things. And one of the key reasons for doing that is our client journey.

8:04 If we start discovery, we can hold on to them through engineering and into that supply right up to hopefully that stable cell line that they they need, so that we can build up that relation longer term arrangements, and we can get better results for them by covering more of that process. And, of course, that helps to generate more stability in our client base and also more revenues for us as well. So the key to that is really getting them at the discovery phase. And, again, two, three years ago, really, we were, using just the bottom two, techniques in this table. Mice hybridoma, we raise antibodies in the mouse and then fuse the antibody producing cell with a cancer cell line to make a hybridoma cell line, which effectively is ever growing, doesn't die out, or at least we hope that they don't.

9:02 And you can continue producing stable the same protein stably for a long period of time. But it's mouse, and it's produced in animals in the first instance. Similarly for B cell cloning, typically there, we're using rabbits. Similar sort of process, but we're actually cloning the B cell itself in that process. Neither of those are really proprietary. They're very well established techniques, and they did play to our strengths in terms of humanization of sequences from either the mouse or the rabbit, which we can convert into human antibodies, human sequences so that they are then appropriate for use as human therapeutics.

9:48 The top three, though, are really proprietary discovery platforms that FUSION ANTIBODIES has brought to the marketplace or is in the process of bringing to the marketplace. And the flagship for that is our Optimal platform. I think of this in two different ways. There's the Opti part, the library design, which is based on the human immunome. It's very closely modeling how humans produce antibodies. Excuse me. The library itself is a theoretical design library, and it's absolutely vast. It's about 10 to my 10 to the 45, so that's one with 45 zeros on the end. Mind blowingly huge.

10:34 And, obviously, we can't make all of those combinations. No human being makes all of those antibodies. It's the gene base from which they can be sampled. So we're making a naive library, as we call it, one that's not biased in any way and would be suitable for screening against any particular target.

10:53 We would select from that between 10 to the eight and ten to the nine or a billion sequences that we would then make cells for that the from that optimal library. So the library itself is only ever sampled, which means every time we sample it, we're actually choosing a different library. It's very much in the same way that I might produce some antibody against a given target. Steven would produce a different one. That means that as far as clients are concerned, we're never exhausting our library. So if they've if we find a hit with one client and then generate a new library for another client, there's no worry about overlap. They're not exhausting. They're we're not reducing the value of that optimal platform.

11:42 And that's an important point that makes us different from many of the other libraries that are available. So that's the Opti part of Optimal. The second part, the MAL bit, is mammalian antibody library. So it's what we're actually doing in this process is using a proper platform called mammalian display, and we're expressing the full antibody molecule itself. We're beginning with the end in mind. We are presenting a full antibody molecule and looking to see how that binds to the given target. So by doing that, we've got human sequences in the Opti library. They're mammalian display. They are fully intact antibodies. We're looking for the end product as it were.

12:27 And in doing it this way, using mammalian cells to display them, we're proving that they can be expressed relatively easily by those mammalian cells, which is, of course, an important part in manufacturing antibodies as particularly therapeutics for use downstream. So we're also building in that confidence in the antibodies that we find that they are manufacturable as well. So it makes it a very attractive product. As I said earlier, our clients come in all sorts of different shapes and sizes, and it may not be that they it may be that they don't actually want all of the benefits from Optimal. They may be looking, for example, for a fragment, or they may be looking to really focus in on a particular area.

13:14 So there's a couple of other discovery platforms that we've offered, which are related to Optimal and the technology that we've developed there. We can come up with sequences that are generated in silico using very advanced artificial intelligence and machine learning algorithms. They will design an antibody in silico to theoretically work against the target. What that would typically do is produce many, many thousands, tens of thousands to millions of potential hits, and you either take the top few, say, 100 sequences, have each one of those made synthetically, and then make a 100 antibodies and see how they perform.

14:03 Or if you have a little bit less confidence in the the ranking of those sequences, which is all based on theoretical and no actual physical testing, If you wanna go a bit further through that, then you can display you'd want to display a library of combinations of those different sequences and where one ant amino acid might be changed for another. We'll have a look at all of the different combinations or a

14:34 big proportion of the combinations that are in that top part of the selection process. So in order to do that, you want a much more focused library, a smaller library, say 10,000 or a million cells sequences. Sorry. But you want to examine the full IgG molecule, and that really fits very well with our mammalian display platform, which we generated for for Optimal. But here, we're looking at much more focused libraries that we can we can run much more rapidly.

15:11 So the combination of the mammalian display from Optimal and the AIML platforms is very potentially very powerful, and we call that platform AIMLab, AIML, artificial intelligence machine learning, AB for antibody AIMLab. Other clients actually don't want a fully intact IgG molecule. They might want just a fragment. They might be looking for a smaller particle that can penetrate deeper into cancer tumor, for example. And for them, optiphage would be potentially that platform of choice. So here we use a process known as phage display, which is somewhat more restricted. It can only display a much more smaller part of of a protein.

15:59 Typically, it's just the sticky bit on the end of of the antibody, something that we sometimes call as the SCFV or single chain variable fragment of an antibody. But it's also that phage display is pretty much an industry standard platform for discovery of antibodies. So we're really trying to meet the market on things that they're looking for. But, of course, our differentiation here is that we have our design of the Opti library packaged in phage display to take that forward. Of course, if we can upsell them to doing the full IgG molecule, then we can take those leads and talk them up to to doing Optimal.

16:49 Importantly for us, though, these top three discovery engines, which all have their advantages, are proprietary. If people want to use them, they need to come to us, differentiates us in the marketplace so we can potentially command better margins, be more profitable off the work that we do, which is obviously an important factor in in building business. So with that introduction in mind, I'll just move on to the financial performance. And before I let Steven take over, I'll just do some of the operational highlights that we we've achieved in the last six month period or the six month period up to the September 30.

17:38 So we did have our first contract for that Optiphage platform. The contract in this case, because we hadn't been promoting Optiphage at that stage, They heard about it, and the client was really quite well, very interested in in having a go. They had a different perspective on it, though. They very much liked the Opti design of library and all of the expertise that we put into that, but their problem was that they wanted it for a nonhuman species. So we we spoke to them. We built a project plan, which they asked us to execute. So we had the first contract to do that. And we've been working on doing the Opti design, but on this other species, so not human. And it shows again that the approach that we have is is highly valuable. The output and why they would want to do it is really targeted towards research antibodies and diagnostics, but it's important that that the platforms that we have can be repurposed. And we always engage with our clients, find out what it is that they need.

18:48 And if they're asking for a particular, in this case, species, we will do what we can to to meet them with that. So we are really doing custom service much more than crank the handle fee for service model. The other things that we've done in operational achievements is we have continued to make some progress with our optimal library despite the fact that we've had to cut back on levels of r and d resource that we've had. We have to live within our means, so there's less resource to do that. But we've been working very hard to further develop and optimize the optimal library. Some excellent progress being made to make it more robust,

19:36 easier to run, lower cost of running it, etcetera, etcetera, and that's that's great. Many of you will already be aware that we had an agreement with the National Cancer Institute to run a validation study, a trial of of the Optimal platform. And we were in in discussing things with them. They've asked us actually to

20:02 also use our humanization expertise to work on some preexisting Camelid nanobodies that they already had for various targets, really exciting targets. They've been the subject of nature papers already, and we're very pleased to do that humanization work for them. It's very easy for us to run that through our process. It's a very slick process, so it didn't take too much time on our part. Those humanized sequences have been handed back to the National Cancer

20:33 Institute for further progress, and we look to be named as coauthors on the next nature paper giving us that that kudos and association with a really excellent institute. The National Institute Cancer Institute itself is part of The United States, the US National Institutes of Health. It's extremely well funded.

20:59 Absolute experts in the field that they do, really excellent people. And the individual that we're dealing with, a chap called Mitchell Ho, is recognized as being a world expert in mammalian display and application for generation of therapeutics therapeutic antibodies. So we couldn't really wish for a better partner. I do share some of the the excitement that the client that you as investors have and would really want to move things more rapidly, but that's kind of the the penalty to play pay in some regards with the National Cancer Institute. They are governmental organization. They do move at the pace and through the processes that that they have to.

21:48 So things do take some time, and we need to be patient with them before we can really come to the conclusion of that arrangement. But I'm pleased to say it's continuing to progress and things going well.

22:04 Back to the sort of more business operations, we also reported just before this period started master service agreement that was announced with a major diagnostics company. It'd been the intention of the com of FUSION to really engage better with diagnostics companies. A lot of them have made a lot of money out of the COVID pandemic and need to reinvest that money into their particularly in antibody based diagnostics. This client of ours is in one of those companies that aligns with that. They have a very wide range of diagnostic assays in the marketplace at the moment and a lot more that they're they're working on developing.

22:50 And they were looking for some assistance in antibodies in general. So we were delighted to sign them up with a master service agreement in order to run many projects with them. And those other projects have been coming to us. So we have a really strong pipeline of projects that we're running for this this partner, this client, and the relationship is building. Really getting that established, and I look forward to that further developing for many years to come as we provide them with all of the antibody expertise they need as a leading global leading diagnostics company. We'd like to replicate that with other businesses in a very similar way. So real good example of the kind of business that FUSION is looking to to bring in.

23:46 We've also had further successful development of that mammalian display platform. Again, a client came to us, another diagnostics company, to say, could you use that platform to produce nonantibody proteins, which we did, and I'll give a a little update on with how we've gone with that. But, again, it looks at that responsive nature of FUSION, the position in the marketplace, our credibility with our client base such that we can look at new opportunities and ways of working and really understanding what our clients need and delivering them solutions. Steven, would you like to pick up and take us through the financial slides?

24:37 Yeah. Thank you, Adrian. So by way of introduction, my name is Steven Smith. I am the interim chief financial officer at FUSION ANTIBODIES PLC. We're looking at the income statement extract for the six months to September 30. Revenue booked for the six month period was just over 1,200,000. That was up 666,000 or a 123% on the corresponding six month period last year. In fact, the current six month revenue number exceeds the entirety of, fiscal twenty twenty four by, 71 k.

25:24 While these headline statistics sound impressive, it's important to remember that, fiscal twenty twenty four was a very poor year and a better benchmark for the current year performance is that it is in line with both internal and analyst forecasts. Gross profit for the period was £325,000, yielding a margin of 27%. EBITDA for the six months to September 30 was a loss of 734,000. Again, these are all in line with, with forecasts at this point in fiscal twenty twenty five. Turn to the summary financial position.

26:11 Noncurrent assets, that's made up of the company's fixed assets, that have a book value of £97,000. There have been no additions in, the first half of fiscal twenty twenty five. So the movement, from a 158,000 at the previous year end is, purely depreciation. Inventories, stood at 230,000 at September 30, down 50% from where they were at the previous year end. The reason for this decline is twofold. Firstly, as activity has picked up, the company is using its stock faster. And quite honestly, given that a stock balance of circa 500,000 was just too high, for a company of our size.

27:05 A concerted effort has been made to manage down, stock levels. And secondly, the company has made a policy change to no longer recognize a value for stock that has already made its way into the lab. So previously, we can't warehouse in lab. Now given the fact that it's already in the lab, its proximity to being used is, is very, very short. We no longer, recognize the value for stock that's sitting in the lab. Receivables, sat at 762,000, at September 30. This number comprised of a 103,000 of accrued income, 85,000 of prepayments, £80,000 of a tax credit receivable, 37,000 of a VAT receivable, and 450,000,457,000 actually of trade receivables.

28:11 While 457,000 of AR seems high, we don't believe there are any collection issues, within that balance. And in fact, 257,000, 56% of that has already been collected, from, the October 1 to date. Cash sits at, 439,000 at September 30. And assuming the accuracy of current revenue projections and the continued collection of AR, the cash runway previously stated to September 2025 remains unchanged. Current payables sat at 440,000 as of September 30.

28:59 Again, this number is made up of 85,000 of deferred income, 44,000 of accruals, 44,000 of PAYE pension and holiday pay accruals, $22 of, the current portion of our higher purchase liabilities, and £244,000 of, accounts payable or trade creditors. Again, these are all, there are no aged amounts in our, trade creditors. Everything is, is current and, and up to date. Noncurrent payables, the 29,000 is our ongoing £20,000 provision for our leasehold dilapidation.

29:48 And the non current portion of higher purchase liabilities makes up the second 9,000, Leaving total equity at the end of September being 1,059,000. Return to our statement of cash flows, which is relatively simplistic. Cash burned in operations for the six month period to September 30 was 752,000. We had interest income of 4,000. HP interest expense of 13,000, leaving a negative cash movement in the period of 761,000.

30:38 So that concludes the the financial slides, Adrian. I'll pass it back to you. Thanks very much, Steven. So I'll now move on to sort of strategic focus update. And one of the key things which we changed since the whole market, the whole global market suffered in particularly calendar year 2023, financial year '24, really tough headwinds. We reinvigorated our commercial strategy. We decided to to go for a slightly diff a very different way of engaging with with clients. And that approach worked very well in the first instance. It continues to bear fruit.

31:24 We believe that we're selling ourselves in a in a much improved way. There has consequently been the growth in revenues that that Steven has has reported on. We also wanted to exploit what you might call adjacent markets to the the primary market, which remains therapeutics, But diagnostics is really an important area of that, and we have seen growth in revenues from from diagnostic clients. Not just the the one that I referred to earlier with the master service agreement, which is hugely important, but also, other diagnostics, companies and clients as well. So that's, really, important.

32:10 The key difference in how we sell, now compared to how we were selling before is that we really seek to get better engagement with our clients at an early stage on a scientific level, get into the nitty gritty of what our clients are wanting to achieve and what problems they have in them In order to get them comfortable enough and to have their respect that they're willing to engage with us and disclose what challenges they're facing really shows that you have to engage them on a scientific level and earn that trust, and that's really what's what that focus is for the initial points of contact. So we we've been doing that with focusing on face to face meetings on a scientific level, discussing posters, etcetera, to get them first included. So at the conferences, we use posters quite heavily or have been as well as some podium presentations where they can be achieved.

33:14 And when we discuss people or have meetings with people, we wanna get to that scientific level and engage very very much in the detail. And that's that's working very well. I'm pleased that it would that it has been because it's it's a different way of engaging clients to the more transactional sort of selling that many companies do. And I think it is one of the reasons why we've enjoyed this significant increase in in revenues and will continue to do so. We've also been, as I suggested earlier, been improving the positioning, increased prominence of our proprietary flat platform. So I spoke earlier about OptiMal, Optiphage, and AIMLAB as well as display Mammalian display for which came out of Optimal, but has been used for other proteins as well. The fifth one on this slide is ABILITY, and I know that some of the shareholders and interested parties have picked up We've, for example, had posters on the ability for engagement with with clients.

34:26 So I thought it'd be worthwhile just explaining what that is. Really, it's a new wrapper for some of our engineering services that we've been offering for a while, but really putting it together in a in a package that shows the things that we can do. So it's really targeted at assessing the capabilities and liabilities of an antibody, particularly if it's one that a client has. Not necessarily one that we've seen before, but it's a good way of engaging them with them. We earn a lot of credibility from it. We've done an awful lot of work with other people's antibodies, particularly humanizing them to make them suitable for for new applications, but also removing liabilities from them.

35:22 A lot of this can evolve not not not just around the effectiveness of that antibody in the scientific context, but really how commercializable it is. So can it be manufactured in large quantities at low costs? Can you get high concentrations of it before it crashes out of solution? And you really want what's sometimes called well behaved antibodies to be able to exploit that. So before things get locked down, it's important to really consider the properties of an antibody, and that's what we do with ABILITY. It also acts as an way in to then fix any of the liabilities that we find with a with a partner, with an an antibody sequence, and so sell those engineering services to get them further forward. The kind of clients that we look for, yes, they can be progressing their antibody through their process and wanting to look forward and think about its commercialization at the appropriate point. That's absolutely brilliant.

36:31 But, also, there are transactions within the industry, obviously, where antibodies are major assets and need to be transferred from one organization to another, sometimes very considerable amounts of money. And both the the seller wants to make sure that they can't be beaten down on the on price and valuation, so it's a bit like having a survey done on on the antibody to show that what its true value is. And equally for the person acquiring that antibody, we can point out what liabilities they may have or do the due diligence, which gives it a clean bill of health. Really, the the idea for this came in some part from feedback that we had from one of our clients who had effectively run through this process with it with us, although we didn't call it Ability at the time.

37:24 And they came back to say that their contract manufacturing organization, so it's a therapeutic approach, really high value antibody for them. And the CMO said it was the best behaved antibody that they have ever seen. And given that they were reported to be one of the top three CMOs in the world, then it was they we can assume that they've seen a great many antibodies. So with that accolade, it really shows that we have that world class capability of making the best possible antibodies. Even if they're the best in the world currently, there is scope for improvement and securing their position as real commercial reagents to drive revenues for a long period of time after regulatory approval.

38:15 Each of these platforms, as I've said before, are proprietary and strategically for us in terms of the commercial strategy. That's important because it provides us route for improving improving margins and taking taking things forward so that we can not face price based competition as much. I'd much rather be the best in the world at what we do rather than competing on price. So I did promise you also an update on the mammalian display as part of our strategy. So as I mentioned earlier, mammalian display was developed by FUSION as part of the OPTIMAL platform.

39:01 It provides surface expression of an antibody, typically an antibody, on the surface of mammalian cells. A client came to us, and as I mentioned before, they asked us if we could use it for other proteins. They contracted us to do that first with one and then with a further two proteins. And the results that we had were orders of magnitude or an order of magnitude improvement over the expression levels that they asked us to look at. So between ten and thirty fold improvement on the first three proteins that we looked at. It doesn't work for all of them. We have done further proteins for them, so it was one further contract. We have had one where it didn't show an improvement, which we will have a look at and see whether we can tweak things to to bring this significant advantage to play. But clearly by where it does work and we can do such a large increase in expression levels, there's clearly a commercial advantage, particularly in their cost of goods for these these proteins. And I should say that these proteins are currently produced for marketed diagnostic assays. They're very important proteins.

40:16 So and the client that we're working with is a a major diagnostic organization, really important player in this this field, so we really wanna take that forward. Now producing more of a protein is is one thing, but it also needs to work in the same way as the protein that they produce before the quality has to be there. So I can update you to say that the feedback we've had from that client is preliminary assessment in terms of quality of those proteins, and it's equivalent to what they were producing before. So not only the quantity improvements, but no sacrifice in in quality. So we're really optimistic about taking this further. Continue to work with the client on that. I'm pleased to say we're continuing to win contracts from them to do more and more proteins.

41:10 So in summary, before we get to the questions, h one of f y twenty twenty four went to plan. In some regards, this is a bit of a dull update because pretty much everything that we said we would do, we have done slightly ahead in the revenues. We managed to bring some of the revenue forward from what we thought was b h two into h one. Some of that reflects that some of the breaks that we had experienced from clients progressing from one stage to the next had come off, at least for these projects. So we were happy to to bring that revenue forward, or recognition forward. There were no unexpected major shocks from the market.

41:59 Thank goodness because we had enough of those in the previous periods as did everybody in the world in this marketplace. So, really, things going to plan. It's tracking the way we wanted it to. The benefits of the cost reduction exercise that we went through, which were quite extensive, continue to provide work through in the in the finances, and we're looking forward to continuing those see those benefits and reduce the the burn rate. The new platforms have been commercially launched, some of them only with early adopters and beta testers, but that's strengthening the USP differentiation and crucially feeding in to that credibility that we have with all of our clients, whether they want to use these platforms or they just want some humanization work done or whatever.

42:56 It's giving us that prominence, that credibility with them that they trust us with their projects going forward, and that's really, really valuable for us. The antibody markets themselves remain highly valuable. FUSION has the world leading expertise in that. Q one of FY twenty five in particular showed a marked increase in revenues over the period, so an acceleration in revenues and prospects. We we're onto a steady track now, and hopefully, things will continue with a steady recovery. It will take some time. We don't want to get ahead of ourselves in in the forecast. I think we've got it spot on with what we've done. Figures suggest we have.

43:43 We were forecasting a cash runway to h two of twenty twenty six, FY 2026. So we see no reason to change that. Everything's progressing on track. Within that period, it's an objective of the business to achieve cash flow breakeven without any need for an equity raise, and that remains the priority. I meant to say on the value of the antibodies that we do, I I just reposted on LinkedIn a very recent sort of observer summary of some of the deals that have been going through. So you can find that on LinkedIn. There's just some good examples of recent transactions that occurred within the industry, well, therapeutic industry for antibody assets, and it really puts this into context as to how valuable antibodies are and why people would want to make the best possible antibody we're failing that the best in the world.

44:47 So without much ado, I will remind you that further information and the opportunity to ask questions about announcements that we have is on Investor Hub. Scan the code. Do register if you haven't already, and we will do our best to look after you throughout and as part of our investor community. But on that note, I'll hand back to you, Lily, and and come to a conclusion. Adrian and Steven, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, 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 by our investor dashboard.

45:37 As you can see, we received a number of questions throughout today's presentation. Please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Thanks, Sylvia. I could probably take the first one of the presubmitted questions, Adrian. Question one, can you update investors on whether the the debt reported at around 400 k has now been paid and reflected in an improved and revised cash balance? And are you still forecasting cash to reach h two for fiscal twenty twenty six? So just for absolute clarity, there there is no debt in in the company. I'm ref I assume this question is referring to the collection of accounts receivables, which I actually spoke about during my presentation. So as I said, to repeat that, we had 457,000 of AR, as an updated number at the end of September, of which we have collected 56%, 257,000 between the October 1 and now. And given that most of our most of our customers are on sixty day terms, that's a fairly healthy collection rate.

46:53 And, again, to hammer home the, the view that we don't believe we have any collection issues, within the, the remaining, $200 there that was, left uncollected, from September. Adrian? Thanks. I'll just add to that that, as I was just saying, we were very pleased to be able to bring forward some of the forecast revenue into h one. And as we'd caught that before the September 30 and recognized that revenue, that also speaks to the fact that there's that it's a bit more in terms of debt balances to be paid because we just completed the work.

47:40 I should also sorry. I should also answer the second half of the question, which I neglected to do so. Are you still forecasting cash to reach h two for fiscal twenty twenty six? Yes. All, internal forecasts, suggest that is still the case, and we have no reason to change it. Brilliant. Thank you, Steven. Okay. I'll move on to some of the other questions. So the next one was, can you comment on your sales opportunity pipeline and order book? Last time you reported, it was around 3,000,000 pipeline and point point $75,000,000 of the order book. So, yes, when we reported on those factors, it was in the context really of seeing some green shoots in what was at that time a pretty desolate market place.

48:32 So we could see these things and these opportunities coming through. It was rather to do with that than a routine reporting of where we are on those factors. They were somewhat subjective because what counts as lead and what doesn't. It's not a hard fact that's measurable. But I'm pleased to say that you can see the benefits of those in the results that we have reported today. So the relevance really was that it was about a turning point, and that was the reason why we mentioned them in in the past. To be clear, I don't intend to report on that level of detail on a regular basis. However, what I can say is that both order put order book and the sales opportunity pipeline are tracking very much in line with expectations, and it supports our belief that there is a recovery in the sector.

49:33 We feel it's commensurate with us meeting our targets. So it feeds into everything that we we've said. The next question was, can you update us on the work you use to use mammalian display? So this is a presubmitted question in a different way. In other words, those different proteins. Have you scored any contracts to do this since the last update? So I've spoken about mammalian display in this additional application at some length already today. So just to summarize very briefly and answer the second part of the question, have you secured any contracts to do this since last update? Yes. We have. We're looking at more proteins with with that partner. We want to make sure that it works with them. There is the potential to spread that out to other partners for sure.

50:22 So we want to make sure that the the quality is what our client wants it to be and then take it forward from there. So, yes, we've got enhanced yields, and so far, they are matched by positive, albeit preliminary QC data. So things progressing well. Next presubmitted question was, please, could you brief investors on the relative importance of different marketing channels to the company and plan activity plans in this regard? I have a slight feeling that this might not be an investor, but someone pitching for some marketing services, but it is relevant. I think it's very relevant given that we changed our way of engaging with clients.

51:10 I think this is best addressed really by that kind of interaction that we're seeking to have with clients and especially the prospective in client clients. Existing clients, we deal with on a routine basis. We have regular updates with all our clients, and we foster a very collaborative spirit in our work with them and the communications that we have. And that is the most important channel in terms of maintaining and building our credibility with that client. So marketing to them as such or using marketing channels is arguably of less importance. We look forward to more repeat business from our client base as we go forward. The objective for potential clients is to engage them on a scientific level of, like I've said several times already today, and tailoring the engagement to their specific interests and needs and for us to gain credibility as we do so.

52:12 Their very interest varies widely as antibody applications vary. Some clients will be seeking human therapeutics, others veterinary diagnostics, and still others research reagents. So there's it's difficult to get single marketing channels or crude marketing channels that address all of that. We really wanna get into that level of detail. So what we we have to engage with them on a more one to one sort of basis. The commonality is for us to gain knowledge about their particular needs and to do so whilst enhancing our credibility. So this is best achieved by getting those face to face really scientific discussions as rapidly as we can, Range of different marketing channels to support that, but perhaps most effective, as I mentioned earlier, in many ways, most cost effective too is poster presentations and really discussing things with those attendees. So it's conferences who have come to the poster because it's relevant to the work that they they are doing acts as a filter.

53:21 The next question, presubmitted as well, was a slightly worrying one for some. Bird flu has crossed species. It's reported in wild mammals, US dairy herds, UK for the commercial flocks, and some human cases. What is the opportunity for FUSION to be proactive in seeking partnerships with health and government agencies and preparing biotech responses? Really good question. First of all, health and government agencies tend to be slow moving. I gave an example earlier today. And, also, it's fair to say I think that they're not overly generous with their cash. They aren't necessarily the optimal profile for potential clients that we would want to to work with for those regards. We are a commercial organization after all.

54:18 Therefore, interactions with those groups is likely to be linked in some way with government grant calls, for example, which we're very happy to engage with either directly as applicants for those grants or as subcontractors for for the grant applicant applicant. But specifically to with regards to flu and bird flu in particular, I would expect that the UK government response would be to lead with a vaccine based approach as is the case with other forms of flu. I've had flu jab myself. And that approach was obviously very successful where the disease was out of control. In other words, COVID, which we all know about.

55:05 However, not all governments are going to necessarily think the same way as the UK government in promoting vaccines. And if they don't want to provoke vaccines, then it's probable that antibody therapeutics are gonna be the next line of approach. Vaccines, after all, prompt the immune response in the vaccinated recipients so that they generate their own antibodies. It's the antibody that is the effective agent. And if that vaccination isn't done or in the cases where vaccinations have not been successful because there's no guarantee, not a 100% generate an immune response, then antibodies from a different source, should we say, would be a potential logical alternative.

55:58 So antibody therapeutics would have to pick up where vaccinations weren't able to to meet the need. The rapid development of such human antibody therapeutics is likely to be really important in the case of particularly infectives like bird flu, and it's one of the potential features of Optimal. The reason for that is that the starting point, the thing that we find in OPTIMAL is a fully intact human antibody. So the development pathway should be should be much shorter. Discovering them might take a little bit longer in some regards, but the development pathway is shorter because you start with the end in mind. What you want is a is a human antibody, and that's a fully intact one, and that's what we find.

56:50 However, I don't anticipate government bodies leading on antibody generation. It's likely to be the biotechs and the pharmas, which are the focus of our commercial engagement. We should also, however, not forget, and I think this is the point of the last part of the question, that point of care or point of detection diagnostics such as the lateral flow devices and the nasopharyngeal swabs that we're all sick of are really important when faced with a contagious disease. And, of course, these use antibodies, and we are focusing on diagnostic companies for those reasons. Moving on. Another presubmitted one. Can you update us on the work of The USA based business development contract that you employed, and is that delivering benefits still?

57:46 We have enjoyed some success successes from that initiative. We believe we can do better, and we are exploring alternative approaches. So don't want to say too much more than that, but we're looking to do better. Can you provide any update on the NCI work? There's nothing more that I can put into the public domain at this time. Things are progressing, and the NCI have deployed some more resources or people to that project. So that's a positive sign. However, the output is hopefully going to form the basis of some publications in very prestigious journals, and it's gonna take time for all of this work to come through and be ready for release putting into the public domain.

58:46 K. So on the questions received today, Adrian, I can take the first one. Can you explain the statement as it totally contradicts your statement in the r and s that you don't need to raise funds, and then that is followed by a going concern to boilerplate note. So I don't think it's any secret this company is still, in its recovery phase. We've had a going concern emphasis emphasis of matter, statement in our audited financials for the last two years that will be present again, next year, until we are, cash neutral and beyond, making profit on a monthly basis, there will always be a going concern note, attached to our financials.

59:34 Yep. Thanks, Steven. Next question. Could you provide more details on the strategic importance of the first contract for the bespoke Optiphage library, and how does that position you in the market? Yeah. So it is strategically very important. In fact, we weren't progressing Optiphage as we haven't really launched it. It was a client that came to us having heard that it was on our to do list and said this is really relevant to what they were wanting to do and could we bring it forward. So, effectively, they were offering to fund our research and development, which is fantastic.

1:00:21 So I was really pleased to engage with that. We haven't had a phage display option on available to us, so it's great to to have that and to be active on it. Strategically, that opens up a whole part of the the market where clients are looking for face display, gives us the opportunity to upgrade them, gives us the opportunity to engage with them. More specifically for that particular project, they're really good client, which is why I was prepared to move a few things around. By that, I mean, they're a very significant client. Their application, very large organization.

1:01:08 Their application was really good. Potentially, lots of follow on benefits to be had. And the other thing that we really need as a scientific organization, and I'll come back to that point about having scientific credibility with our clients, is to generate case study data. And here was an opportunity to do exactly that. So really delighted that we we have that opportunity. We're working through that project. It's coming into its latter phases now, so look forward to hopefully updating on that in due course. Next one. Do you wanna do that one, Steven? Yeah. We're on, sorry, number 12?

1:01:58 Yep. Yeah. So, how much of the 800 k? But the answer to this will be similar to some of the other ones coming up. How much of the 800 k revenue needed in h two, have we, you know, to meet our analyst targets has been booked in October, November. I I'm not going to talk about forward looking, numbers or numbers that aren't in the public domain on this call other than to say, as I said in my statement earlier, that we are forecast to be both in line with internal expectations and analyst forecasts. Okay. I'll take the next one, although it's about revenue as well.

1:02:45 What proportion of the revenue currently is currently derived from what might be described as higher margin activities such as Optiphage versus lower margin activities. So I'm gonna pull this apart slightly. I haven't read out all of the wording here. Where do you hope the gross margin will get to by year end? So first of all, the the benefits of the higher margin activities, the proprietary offerings that we have have not worked through yet. Our client base is conservative. It wants to see data. Some people, as the client I mentioned about, willing to work with us and effectively fund research and make a contribution towards research.

1:03:34 And that's that's brilliant where we can come across, and we have a lot of credibility with them, obviously, for them to to take a punt on a new technology. So I expect that it will take many years for all of these benefits to really come through. It's the beginnings of a significant growth rate phase for for each of these technologies, at least the ones that work out the way we we hope and expect. The bits that I skipped on that question suggested that there was lower gross margin to be derived from diagnostics or veterinary medicine clients.

1:04:22 Actually, it doesn't work that way in the kind of revenues that we're talking about at at this stage. We're talking about fee for service revenues, the immediately recognized revenues. And in those cases, there is really no difference in in the margin. If someone says, well, I'm wanting to sell it at a very low value, and therefore, I can't afford what you need to do it, then I'm afraid they're not a client. Good luck to them. Hope they do well, but our services are really premium services. It's up to the client how they recruit that investment in the products that we make for them. Now there is a difference when it comes potentially to royalties and milestones as a project progresses through, but we're not reporting on. We had none of those in this period.

1:05:23 And there, yes, there is some differentiation, but that's a long way in the future, certainly further for for therapeutics and the higher values than we're we're seeing now. So I think that answers the the questions there. The next one was, do you manufacture ongoing supply of the reagents for the diagnostic companies? We can. Yes. And potentially a good process going forward. Some of those diagnostic companies stipulate and require GMP, which we don't do. So in those circumstances, we wouldn't or or wouldn't at this stage.

1:06:17 But certainly for diagnostics and other diagnostics where GMP isn't required and indeed research reagents, we're perfectly capable of producing to the required standards and actually making very high quality components for for sale there. So you may well see more of what we might call secure supply agreements where it's built into a process that we will be the the supplier of those reagents going forward. We do let me make this clear. We do supply currently to existing clients antibodies which go into the manufacturing process and make diagnostic tests that are currently marketed.

1:07:05 So we're already doing it. Oh, there's a tricky one here on oh, sorry. I I think I've skipped. Sorry. The next one I've got on my list is 15. Are there plans to scale r and d investment into to further enhance innovation and competitiveness? It is a fact of life in a commercial organization that we live need to live within our means. Therefore, we will scale r and d according to what we can afford to invest. That is difficult for us, and it's difficult for a lot of our our team team and sometimes frustrating as well.

1:07:50 But it is an accepted fact of life that we need to live within our means. If we had more resources, there's much more that we could do, and therefore, we will seek additional resources through non dilutive grant funding, etcetera. And as I've given examples before, engagement with clients a little bit earlier, eyes fully open, expectations managed where they are willing to contribute to towards r and d costs. So we have much more flexible approach. As with r and d, we have so much potential, but we need to live within our means and some tough decisions are required. I think we're making the right choices and doing a lot in a lot of work with the resources that we've got.

1:08:45 Next one, are you expecting any milestone payments in the short term? I'm afraid that is almost impossible to answer because we only get alerted when things have happened. Obviously, that information would be price sensitive for the other organization. So we can't say that we are expecting any that doesn't mean that they're not on their way. Have I missed any, Steven? Please look out. I think we're on eighteen now. Yeah. I think eighteen. Okay. So eighteen is straying outside of my area of expertise. Thank you for the update. Very helpful. Have the recent results in the USA presidential election had any impact on your plans, risk assessments, confidence, etcetera?

1:09:42 It's always easier to deal with knowns than when it's an unknown and you don't know how things work out. So political events such as elections fall into that category, and now we know what's what's happening and what's to deal with. I think the most likely, which I tried not to mention in specifically in an earlier answer, most likely impact would be in terms of direction of the US government of the health provision within The USA given that the nominated candidate to lead that is known to be skeptical about vaccines. So I'd refer you back to the answer I gave some time ago on on that and the opportunities that that presents.

1:10:31 Interest rates are important to the factor. And, again, I think with stability and knowledge around that, then interest rates will go down. That makes it easier. The US presidential election in particular, one of the main factors for the result being the way it was was The US population voters had more confidence in the economy that way. So you'd argue that that's going to be have a positive influence on interest rates, which are a major factor in r and d spend for the industry that we're we're in. So we don't know. The risk assessment still get done. Confidence, I think, overall, now we know what we're dealing with, is actually edged up.

1:11:25 Oh, there's one blast from the past. So number 19 on the list. Do you manage manufacture aptamas? So for people who don't know, aptamers are not antibodies. They're sometimes called antibody alternatives. They're made out of DNA and RNA and or RNA, and they're short sequences that are used because they have the potential to bind as antibody alternatives. We don't we could. We have no intention of doing so at this stage. I think on this point, it's worthwhile pointing out that so far as therapeutics are concerned, I believe, and I may be out of date here, there was only one product that made the market for as a an Aptima based therapeutic.

1:12:16 It's called MakuGen. It hasn't been followed up so far as I know, at least for a number of years afterwards by that. Whereas if you look at the top 10 selling therapeutics on the market today, five of them are antibodies kind of why would we? If there's a business case that goes there, we could go into but it really isn't a priority for us. We specialize in antibodies. Antibodies are the reagent of choice. So the molecule of choice for the things that our clients are trying to address. We will compete with other similarly minded companies that really focus on antibodies as the leading molecule class.

1:13:07 Full disclosure, I have worked with Aptamaz in the past. Okay. I think we've got one left, which is can you discuss the current value of the order book and how it has changed over the course of the year? I think we've already said that we can't go into that level of detail or would choose not to, so we'll politely decline to answer that for obvious reasons. Adrian, Steven, thank you for answering all those questions you care from investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. Just before redirecting investors to provide you their feedback, which I know is particularly important to the company, Adrian, could I please just ask you for a few closing comments?

1:13:54 Given that we're over time because of the number of questions, and I really wanted to get through with them all, I'd just like to thank everybody for who's still with us for for seeing it through to the to the end. It's not a bitter end. It's a very sweet end, and we're on importantly doing exactly what we wanted to do. So we're in exactly the place that we want it to be. So if I summarize that in four words, we are on track. Thank you very much. Adrian, Steven, thank you for updating investors today. Now please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may only take a few moments to complete, and 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, and good afternoon to you all.