Fusion Antibodies (LSE:FAB) — Interim results presentation

0:01 Good morning, ladies and gentlemen, and welcome to the FUSION ANTIBODIES PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They could be submitted anytime via the Q and A tab that's just 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 will review all of the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Adrian Kincaid. Good morning, sir. Good morning. Thank you very much. Hopefully, everyone can see us. Apologies if that wasn't possible last time. We had a few bandwidth issues, which caused a a sacrifice in the camera, but we'll leave the cameras on this time and take you through the presentation.

0:58 So I'm joined today by with James, CFO. Good morning. And,

1:05 yes, please do pop questions into the q and a, and we'll do our best to get through those towards the end. The more observant of you may have noticed on the the the holding deck that we have, we've made a slight change in the circle on the left hand side, and this reflects our change in strategy, which we'll take you through in much more detail throughout the presentation. But, essentially, it's bringing together various parts of what we already offer and combining them as essentially an end to end service to generate therapeutic antibodies for our clients. So that integrated offering has benefits for ourselves, but also for our clients, and it lays a a good solid foundation for further development of the business.

1:52 So we'll go into more detail on that in in a little while. So we also have to take you through the disclaimer, but we will take this as as read. It's, just the standard, sort of caveats that we have to have for being a PLC. So, opening the agenda in terms of introduction and highlights. About us and what we do. As I said, that there's, the various components that have been on offer, for the business to date, cover discovery, so finding antibodies against a particular target for which you may need us to generate, some of that target material in the first instance. We then go through a series of engineering.

2:39 And if the, antibody is is not a human derived structure, then we need to make it humanized. As many of you will already have heard about the Alzheimer's antibody that was in the press a few weeks ago, that in is an example of a humanized antibody. Some people describe it as taking the the fur, the ears, and the tail off of the animal original organism. It's a little bit more complicated than that, but humanization is obviously critical for any therapeutic that's going to be injected into a patient. Getting it right is also every bit as critical.

3:25 We also do affinity maturation and sequence optimization, to eliminate various risks. Some of those risks include aggregation or post translational modifications, which can make, manufacturing more problematic downstream. And indeed, in the final part of the supply of our end to end offering, we can take people up to cell line development, stable cell lines, which we can then take into manufacturing. We don't do the GMP manufacture ourselves, but we are working with collaborators, partners who have that as our business, and we connect as a front end to them and manage that process again through for the for the client. Bringing this all together then is, an evolution of what we've offered. So the integrated therapeutic antibody service is, a development of what we've already got. Very little risk. There is very little change in terms of the individual parts, but bringing together as an end to end process gives significant advantages, not least in terms of timing.

4:34 It's still attractive to the same partners that we've been working with in in the past. So biotech, drug discovery companies, some diagnostic companies, although that's a very small percentage of of what we do. It is attractive to large pharmaceutical companies even though they have many of the capabilities in house themselves, but it's particularly attractive really to those companies who don't have the infrastructure, want their investment to go into the project itself and developing the assets rather than building up, spending on capital equipment and building up teams, to take a small number of antibodies through. They come to us because we have the expertise. We are still differentiated in the marketplace because of our quality, our experience, our know how. We've fixed antibodies that other people have developed or discovered hundreds and hundreds of times, and, we've we've done an awful lot of problem solving and adding value across the board. We continue to do that, but we are using that now to sort of exemplify and justify that we are a safe pair of hands and probably the best pair of hands for people to place their faith in in, to develop a therapeutic antibody for them.

5:53 So some of the advantages that that brings, through the therapeutic, the integrated platform is is really in terms of time and derisking. When you have a process as complicated as, the development of a new therapeutic antibody, there are various phases through which the project needs to pass, and there is information that's generated in each of those phases which comes together and becomes critical in later stages. Getting that information right is important, and retaining it and passing it on to the later stages is important as well. So our ability to cover end to end means that we can capture, retain, and also think about the the challenges that's going to create. The more time we have to do that from start to end of a project gives us a better chance of making sure that those issues that may be faced by the client are headed off, we have resolution for them. So

6:56 we have a lower risk of problems coming out. We have a a smoother transition from beginning to end through the various phases, and we can also start planning and ordering in materials for a subsequent phase ahead of time so that there's a very smooth transition going through. Fusion antibodies is known amongst our clients as being very, knowledgeable, very accurate in terms of our timeline and cost prediction. So when we quote, we're very, very close to to reality for our clients in that. It's something that then derisks again and helps the client company get their funding and everything else allocated their budgets done and, again, derisks and make sure that the the whole process is as pretty much as good as it could be.

7:51 This approach is something that we have trialed. Some of you will have seen in the past an RNS that we put out about a particularly large project. It was sufficiently large that we had to put an RSS an RSS. An RS RNS, I beg your pardon, out about it, because it was $1,800,000, a big project over approximately two years, and we are continuing to work through that. So we have had that as a case study. It's gone very well. We've had good feedback from the client. And, essentially, what we're doing is we're setting ourselves up to do more of the same, more of what we're good at at higher values. So that's the direction in which this heads.

8:37 Essentially, though, it is an evolution of our process rather than anything particularly groundbreaking and new. So if we move to some of the highlights of, the period we're reporting on, we're introducing now the integrated therapeutic antibody services. It's a new approach for selling the combined services. I should also say that it's probably more efficient in doing that. Within that period, of course, I was appointed, so it's very nice to be considered a a highlight. But I've been on board now for just short of four months, and I think we're making very good progress and starting to move some things through, where I think we can move the the company in a slightly different direction with, better prospects going forward.

9:27 There has been continued success in the OPTIMAL program. However, there are some issues still with that, particularly about supply supplier issues and people delivering what they what they've been charged with doing, and that has held us back and slowed us down a little bit. But we've also had a look at that overall program and believe that we can extract or create more value from that than just the Optimal library. The Optimal library is very significant. It would be a very

10:05 pretty much a game changer for the business, but there are also some other parts of that program that we could extract and position for additional markets. And I'm looking really to the team to to look at achieving those elements as well in addition to the optimal library, which is is still very much a centerpiece for the internal r and d efforts. It is still in r and d. There are still risks associated with that as with any r and d program in the in the sector. There all have also been a small number of projects, although reasonably significant in terms of their value, that have been delayed by clients as they seek further investment.

10:52 Marketplace for our clients and getting that investment has been tough, but I'm pleased to say that at least one of those has found a new investor and has come back to us to to move that forward again so that's back on track. However, it did impact on the h one figures that we're reporting today. Hopefully, the others will follow suit and resolve their issues, and we will get things back on track again. So I'll hand over to James to highlights on the financial side. Thanks, Adrian. So revenues of 1,900,000, down a little bit from the same period last year. And as Adrian has just mentioned, there was a, or there were a small number of projects delayed by clients, which led to a slight softening in in the h one revenues.

11:44 And in addition, last year, we had our

11:47 first milestone of a £150,000 as well, which was recognized in that period. So, a little bit softer, but we understand why, and I'll talk a little bit more shortly, about revenues in in general. Expenditure on r and d was increased by 7%. Adrian has been talking there about particularly our continued, involvement with the OPTIMAL program and our commitment to staying at the cutting edge of, the industry, and OPTIMAL's key part, of our strategy in in doing so. Loss up on last year, again, a lot of that is a function of the revenue figure, and the increased expenditure in r and d.

12:38 Other administrative and selling costs have been retained and kept flat. So, really just a trading performance, measure there, and, that's just for the for the first half of the period. We would have have higher hopes for the second half. And cash position at the September 30 was 1,200,000, which is still a good solid figure. And, again, we'll come back to, some other figures on the the balance sheet later on. But, yes, we we utilized the 750,000,800,000 cash in the period. So I'll just go back to Adrian a bit as we're talking about revenues and and future strategy, evolving strategy on that. Yeah. Thank you, James.

13:30 So there's much on this slide that I've already discussed if we've gone through the various offerings that we have. But, the integrated therapeutic antibody service is a natural evolution of our offering. It's a very sensible thing to do. It's what a lot of, other similarly placed businesses do when they have critical mass, and can offer that end to end continuous process. That's where I believe FUSION is at at the moment, and, we should, I hope, be very successful in, moving the needle, on that. So each as we do more for a project, or more for a client on a project, then, obviously, the value of that for us in terms of immediate revenues increases. They have the benefit of reduced timelines from end to end, as I've I've mentioned, because we can phase work going from one project to the one phase of that project to the next more smoothly.

14:27 There's a reduced risk through that continuity of provision and the retention of knowledge and information around that within the team, which is also something which enhances the engagement. It's really appreciated by our team within FUSION to to be into the detail and working really as an extension of our client's r and d. The client does remain in control, so there are still go, no go decisions. That's essential. That's a requirement for this kind of business model. However, we can move things forward and be more specific about the what the measurables actually are to get a good figure on a feel for for when that project is gonna go forward and or if indeed it is gonna go forward into the next stage. That gives us better visibility on our pipeline, which is something that I think all of us would would certainly appreciate.

15:30 It also builds on a a very strong case study, as I've said, the $1,800,000 two year deal, which we've mentioned before. That's been very helpful in in acting as a template for everybody in pulling this this together. The continuous project management managed by FUSION is important. So if there are elements where we feel that it's best to outsource particular components of that, then that's something that, again, we can offer and and manage, and we will

16:00 work closely with partners with particular project specific tests in order to to bring that in to offer the client the best possible service. It retains the customer for more of the development work with FUSION so that we can get into the higher value areas. And it also allows us to build on that with more critical mass to be in a better negotiating position to secure milestones and royalties. So these are effectively a 100 profit to the business, but we need to have sufficient input really into the project to to extract those those values in future. So those are also strengthened, and I think that's a critical thing for the business.

16:46 So how would the other r and d projects that we're working on, including those that come from the or will come from the OPTIMAL program going to be incorporated? Well, essentially, that's one of the other reasons for doing it in this way. They slot in very well as options, if you like, into how we go about the program. They will act as USPs in several cases, particularly the optimal library would to secure that business from start to finish for us. But going from a one off library screen versus a whole integrated

17:23 therapeutic antibody development program featuring the OPTIMAL library, you can see that it will create much more value for us by positioning it and organizing it in this way. In addition to that, it will certainly help us, I believe, to get better penetration into the critical USA market, which is dominant in this field. So, again, it's something which I think will will help us in moving things forward.

17:55 Coming on then to the detail of the financial investment performance, I'll hand back to James. So, obviously, this presentation is coming on the back of the release of our interim results for the six months to September 30. And, we thought it was useful to put in this, chart, which, this is only the h one revenues. We would usually have a graph including h one and h twos in, the annual report. But we've pulled out the h one revenues just to show you the direction of travel. And you can see there there are a few overs and unders, but the trend line is, steadily positive. And, as already mentioned, softening this this year, last year's did include our our our first milestone of a 150,000.

18:51 And, we've weathered COVID, and we've weathered Brexit, and, we are now responding to, developing and, market and an emerging market, as Adrian says, with an evolving, sales strategy and to develop,

19:10 more leads. And, indeed, we've been, doing a lot more face to face meetings, over the recent period, and certainly, there have been, I don't think barely a week has gone by since Adrian's been here that we haven't been at at a conference. I think nine, ten over the last Ten. Three or four months? Yep. Ten up to the end of this week. Yeah. And the so the integrated service, hopefully, to do that. A very summary extract of the income statement, revenues of almost 1.9. Gross profit margin, certainly one to pick out and look at.

19:59 We are a growth company. We depend on building and adding capacity, and then filling that capacity. And as we said with the slightly softer revenues this half, then we have underutilized that capacity. So, the the gross profit suffers as a direct result from that, and I think that's a a temporary dip. And the other concern that people immediately have when they see margins in an inflationary margin erosion in a in a inflationary area would be, are we unable to pass price rises on? And that's not the case. We are absolutely able to pass our price rises on. There is some lag time because of prices which we have already quoted, and there's a time between quoting, getting a purchase order, delivery, and invoicing.

20:53 We have a very strong relationship with our clients, and and, we we trade on the quality of our services and our reliability and our dependability. So we have, been giving, advanced warning, and giving fair notice of of where we are with that. So there is a bit of a time lag on the price rises, as well, but those are coming through and generally without, any objection. But, I say, most of of what we're seeing there is underutilization of resources in the okay. Onto the balance sheet, and we've spoken about this already. A strong net current asset and current asset ratio, three times almost three times current assets to current liabilities and a deep cash exceeding current payables.

21:49 Noncurrent payables is not real borrowings. It's notional borrowings from the accounting standard on the capitalization of leases. So, not not a true liability in the sense of the world, certainly in in my classical accounting, standard. We're still having to retain a sizable quantity of inventories, that's consumable stock. Again, that's part of the reliability and dependability that we have with our customers as supply chains, continue to be disrupted. We've had Brexit. We've had COVID. We now have an element of strike and industrial action coming in there as well. So there's a lot of of outside conditions, and we're holding more stock, of consumables, I suppose, than we would if we were able to operate it just in time, but, it gives us the ability to continue and schedule our our client projects, as efficiently as possible and to the client expectation by carrying a little bit more than we we necessarily would in in perfect times.

22:58 And

23:01 cash, as said, cash movement in the period of eight hundred and fifty one thousand. Again, the the two lines investing and financing are more to do with accounting for leases, than anything else. So, the real case in point here is the cash used in operations. And 452,000, I think of that, was, r and d spend. So you can see that there's still a slight utilization of cash in this period, from the trading commercial activities. That's a slight change. In recent periods, we've had a a positive EBITDA if we add back the r and d, and we would expect to be back to that. So we've got a sustainable trading, commercial activity, which is contributing to our r and d activities along with, our continued and planned expenditure of, the funds which we raised in almost three years ago now, April 2020, to continue and to invest in, the Optima program primarily.

24:13 I think I'll hand back to you at that point, Adrian. K. Thank you very much, James. So if I can can recap, we're continuing the r and d program with a 7% increase in in r and d expenditure. We're wanting to push that ahead as quickly as as we can now. The time limits that we have on that are largely due to supplier issues. And I should remind people that what we're trying to do with the Optimal program is is really pushing the boundaries of what's been done before. And indeed, if if when the optimal comes to the market, I expect it to be a bit of a game changer and the first time that such an offering has been available to our client base.

25:05 Each stage of the optimal process, however, has been validated, and the integration is now being optimized. And part of that optimization process is is scaling up what we're doing. So we know that the component parts and indeed the process work. It's just showing that it can work at the the right amount of scale and the numbers are sufficient to meet market expectations and indeed optimize the output in terms of the number of hit antibodies and their affinities coming out of that process. So we're we're quietly optimistic about that, possibly too quietly for some people's liking, but that's because we do need to make sure that we've got everything correct and ready to go to to market when that does happen.

25:57 I assure you you will hear about it. What we have also seen as we've moved through this optimal program is that the technology is being developed to have wider application and additional markets that can attract more business for us, and possibly one of the easiest ways of positioning that is one of the benefits of Optimal is that we are starting with the end in mind, very much in line with fusion philosophy. But that means expressing an intact human IgG in HO cell on the surface so that when we can interrogate a target, it's the end product, really, that's or as close to the end product as we can get for the library screening phase, processed and presented by a cell line, which is a similar cell line to what will be used in manufacture.

26:59 So you're eliminating an awful lot of those risks. However, not everybody will necessarily want a intact IgG protein. Some people will actually want smaller fragments of those, and that's something that we could offer with the benefits of the library. So the design of the DNA that is behind the expression, but do it in a more traditional phage display process. We don't currently offer that, but we could, and it's something that I'd like to see happen. I think it maximizes the value that we can create from the library element itself. It covers enables us to attract additional marketplaces, and it's also somewhat defensive to stop people with phage display technologies encroaching into a space that's that really should be ours and optimals.

27:57 So there's additional options that we can come out of that. Similarly, the other part of the Optimal program is the mammalian display, and there's new and emerging markets for which that could also be significant attraction, which is additional to the core markets that the optimal library would be looking to go after. So we can use these benefits, and we can cast the net wider, and we can attract more clients addressing therapeutic antibody discovery in a number of different ways. So we're we're looking forward to doing some of that. Some of that, though, will require additional funding. It's not something we can necessarily do now, so you should look out for news on those sorts of issues as well.

28:45 We do, of course, make sure that we we can protect our investments, and we are anticipating further patentable inventions coming from our r and d work and that work with with clients as well. So we will look to expand our IP portfolio in an appropriate way in addition. In the meantime, we're also building up a body of data with a view to establishing various commercial relations for further validation as well. So, again, data driven and moving moving the business forward.

29:23 If I can round out then in terms of the summary, the key points from where we are and where we're heading, particularly what we're doing to improve the business is the implementation of the integrated therapeutic antibody service. It's a natural evolution of our offering, packaging it to make a a more significant critical mass that can we can help to penetrate additional markets or penetrate those existing markets much more significantly. We become a a more of a research partner with our customer. We offer them a reduced risk to the project through that continuity of provision, building on our expertise and the quality of the work that we do currently do for our clients.

30:11 There's enhanced ownership and drive that enables a much better relationship. And like I say, we've done this with the case study, if you like, for the the $1,800,000 two year program. But it also which has shown that we build up a knowledge of the target and indeed the customer's target product profile, their endpoint. So beginning with the end in mind, we've said all along. And like I say, it builds on a very strong case study for this performance, doing more of what we're we're known to be good at. Continuing the momentum on strong commercial performance and execution, the team are doing a good job there. We are going to need to add to that and do better as we move forward.

30:59 There has been some significant changes in our personnel within the commercial team. There have been some things due to COVID, etcetera, that have held us back. Those issues have now been removed, and the timing is right to roll out the integrated therapeutic antibody development service. We're continuing to seek new commercial partnerships, distributors, etcetera, and commercial alliances in order to expand our reach and our client base in some of the ways I've described to generate additional revenues. We're seeing leads coming in now from some of those partners that we're working with, and we're also looking to extend beyond the cell line development towards making sure that handover to the CMO, the contract manufacturing organization for our client, is is more successful, and we can retain or earn additional consultancy fees in doing so. We're not moving into the GMO sorry, the GMP manufacturer ourselves, but it is something that we can become more involved with having developed the cell lines and having a lot of expertise and know how and knowledge as to how those cells perform best.

32:21 We will continue to progress the r and d pipeline for service offerings and prepare for the successful launch of the OPTIMAL program and its various component parts of which the library is is the key, probably the most important one, but not the only one as new discovery service, and that will be supported best by the integrated therapeutic antibody service.

32:48 So that concludes the presentation for today. And I've noticed there's some good questions coming through. I'll Absolutely. Take some Adrian, James, thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to to submit your questions just by using the Q and A tab that's situated on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. Adrian James, we did receive a number of pre submitted questions ahead of today's event. And as you can see in the Q and A tab, we've also received a number of questions throughout your presentation itself as well. So firstly, thank you to everyone on the call for taking the time to submit their questions.

33:39 And James, Adrian, if I could just hand back to you to respond to those questions where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. Thank you very much, and thanks to everybody who submitted those questions either in advance or online today. I'll actually pick up with one that's come through today because it seems logical to do that. So question is, hi, Adrian. What's been your first impressions of the company since taking on the role? So in that very nearly four months, and what attracted you to join FUSION? My my impressions of the business are very positive. What's attracted me to it is I I had an excellent mentor who ran what he calls the three circle test. There are three things that we want to do with a business, and I think all of these apply to myself personally, but they apply to FUSION.

34:36 Those three three elements, and you've may have probably heard of these before, Are we passionate about it? So, yes, I am. I'm very passionate about development of therapeutic antibodies. It's what I have always wanted to to do in terms of making an impact on health health and well-being for people across the world. And that's something that antibodies do remarkably well. They make up a majority really of drugs in the pipeline. They make up a very significant proportion of best selling drugs as well, which suggests the second circle test after, are you passionate about it? Can you make money out of it? Which is highly important particularly for for investors.

35:24 And, yes, we can. We have commercial traction. Can we do better with that? Yes. We can. And that's something that I'm very keen to do with the business so I can see that I can add some significant value to the business. And, hopefully, we'll see that coming through in in the coming months and years. The third test is can you be the best in the world? I believe that FUSION already are the best in the world at a number of things that we offer, and we want to expand that portfolio to be best across the the area. Another way of asking that question is what's USP, and in our case, it's quality. We differentiate ourselves on quality. We are not competing on cost. We have clients who come back to us who have chosen the cheaper option and then come back to us and ask us to fix the issues or just start again because filled with regret that they went down the other route.

36:21 The development of therapeutics is one of the most difficult things that mankind has ever attempted. It's often compared to to the moon shot, but we know where the moon is. We know what the the numbers are. We can see the moon. We can do the calculations, and you can get somebody up to it. But, actually, developing a therapeutic is far more difficult in my opinion. And being the best at that is is something that drives us, and we want to do that much more. So if I had any regrets about joining FUSION, the only one would be that I didn't come sooner and join sooner. Maybe we could have had a smoother transition rather than the the something of a drop and change that, unfortunately, the business has had to contend with, though they have contended with that, in my view, very well.

37:18 So some of the other questions that we've had, maybe I can pass this one on to you, James, to get started. How are the board progressing? Board going to address the issue of the high likelihood that a fund raise will be needed. Well, I think it's worth saying that our projections indicate that we can reach breakeven without the need for further investment or further, cash raise in the immediate future. Yeah. I think it's also, important to bear in mind whilst we're talking about the potential for a fundraise is that there are we are making plans to address all eventualities, which include having the benefits of the integrated therapeutic antibody discovery platform, particularly increasing our presence in The US, which is our single most important market. It's the one where where we get more revenues from than any other single market and bring on the commercial benefits really from the ongoing optimal program in the various forms that we're wanting to manifest the outputs from that r and d effort.

38:28 To do that may require additional working capital. And if we're going to do that, we will be submitting plans to the board to review and decide on the best course of action, which may include fundraising to to tackle that much more rapidly and generate more value in the shortest possible time. Another question here. Why haven't you heard more about the optimal platform and what it offers for prospects of the business? This was presubmitted, so, hopefully, I've addressed some of those issues already. When will it be launched, and when will it start to generate revenue? What will the impact of those revenues have on future expectations? So the as I've said, the optimal program is still in the r and d phase.

39:13 There is a risk to things, but we we think those risks are now minimal. It's really a question now of scaling it to get the numbers right to meet market expectations and doing so in a an commercially advantageous way in terms of effort. So making that as slick a process as we can within reason. So, yes, there are continuing delays due to suppliers. And as I've said before, what we've asked them to do is something that's really quite complex, and they've struggled to to deliver that to time. But we have confidence that they will will get there, and those will allow us to make some developments in in the coming months. As I mentioned before, but I'll I'll reiterate again, there's also scopes to create more value from the research work that's already been done rather than just the optimal library per se, and we believe that this will further enhance be enhanced by the evolving strategy of the integrated platform that we're we're offering.

40:22 Did you have one that you want to suggest next? Yeah. Another presubmitted question I have here was where's the shareholder value getting? Let me do that one. Yeah. So the share price and market capital of the business, obviously, a multiple of the share price of the number of shares there are, is affected really by a relatively low liquid level of liquidity. So that in turn is caused because there is a vast number of our shareholders who hold their their shares and and don't don't trade them. And they the reason they do that is because they believe that more value is yet to be created. So that's a good thing, and we will commit.

41:07 But, of course, we're very mindful of the the share price from day to day. The longer term value, which is what we're focused on, is going to be created through continuing to do what we're doing. And I believe will be enhanced by this evolved strategy enabling us to increase, in particular, the average value of each project, improve the the visibility on our pipelines, and also enable greater success in the commercial side of securing those contracts. There's another one there that has come in today. Geographically, where are your sales the strongest, and do you see this changing as you grow? So I think I'll I'll start off, but I think you can add to this, Adrian.

41:59 The percentage wise, more of our sales come from North America, particular, The US than anywhere else. We also have a very strong base in EU countries beyond The UK, and then we have a significant contribution then as well from Asia. And we've announced, I think, couple of years ago, the appointment of several distributors in Japan, South Korea, and India in particular. We would have somewhere around the 10 to 15% annually, from within, these islands. But, obviously, the The US, I think, would be the biggest potential market for growth. Yes. It is. And that's a well established fact across across the business. Indeed, that's even rolling out more as different countries sign up to basically adapt or adopt the the FDA ruling.

43:03 So the FDA is deciding on which medicines are approved for different markets, and more countries are now saying, well, we'll if it's good enough to the FDA, it's good enough for us. So that puts even more emphasis onto The The US as a key market. In addition, there may be there have been challenges really from particularly China, the bigger political field, which I'm not going to comment on possibly puts that into some some additional doubt, but the focus is again increasing in The US. So we're going to I expect to see more opportunity in in The US and more revenues deriving from that, and I think that deserves an increasing effort from the commercial focus to to drive that through.

43:54 Again, one of the key ways of doing that is to get the critical mass to get attention in the first place, and the end to end offering of the integrated platform, I think, is key to doing that. I'll pick up on one here that's come on today. Do you have sufficient cash to fund your growth aspirations? What's planned r and d spend moving forward, and where is your focus here? We're in an enviable position really of having very significant aspirations and an awful lot that we could do, but we need to keep the balance right in terms of how much we invest in that. So I would like to do a lot more and move a lot faster. Time is the only thing that we can't recreate.

44:44 So I'd like to make sure that we make the most of the time that we have and push ahead as rapidly as we can in a coordinated and rational way according to a strategic plan. I think we've got the basis of that plan in place. Yes. I'd like to do more. The face display is just an example that I've mentioned before in terms of way of extracting or creating more value from the library design that we already have in terms of the DNA, but presenting it as antibody fragments. That's something that we would need investment for because we would have to do some generate additional lab space. We need to keep those separate from the other things because of biological reasons and the technical reasons as to how those need to be handled.

45:36 But I think it's something that we very much like to do. So I'd like to see the r and d effort at least maintained and although we would redirect it to additional projects. I think it's fair to say that phage display has been done before, so it should be a less risky process than we've we've tackled or are tackling at the present time. We've got one here. Have the planned demonstration beta test projects with Optimal started yet? How many of these are likely before this is ready for full commercialization? The internal run programs have been started. They are running now. We are extracting more value from that.

46:23 We would like to have been able to run it at the full scale as originally envisaged, but because of those supplier issues that I mentioned previously, that's not been possible to do just yet. However, the early indications are positive, and they encourage us to proceed as planned with those once those technical issues have come through. Once we we have that, then we can run full scale projects with external parties. We have quite a bit of faith in that. We have some prospects and some discussions ongoing there to make sure that when we are ready, we can move forward rapidly with those projects with external partners who are going to be in a good position to evaluate the technology and also add kudos to what we have and position us well for commercial exploitation in the fall. It will take time.

47:25 These processes these discovery processes are quite ex extensive commitments, But one of the advantages of Optimal when it when it works well is that it can move forward at a rate that is in line with the best in the marketplace, and that's what we're really trying to do here. We're trying to create the best best option for discovery of therapeutic antibodies. So, hopefully, that's answered that question. Do you want to ask this one? Yeah. Well, so the question, I think we've partly answered it already.

48:14 How can you consider a cash position as good when you lost 1,100,000 in six months? You'll need another cash injection, would you not? I think we read double that. We did not lose 1,100,000 in six months. We had a a a total cash utilization in the six month period of of about 850,000. And as I said already, our projections take us through to to breakeven, and we would expect to see normally a positive EBITDA from our commercial aspects contributing towards our our r and d spend. And we we've talked about cash injections and and plans and aspirations with with the credit resources.

49:06 Thank you. I'll just add to that that if we do want to do more than is in our plan, then we may need more working capital Yeah. In order to achieve that and do do more. Yeah. Are the costs associated for conducting an integrated therapeutic product service higher? No. Essentially not. There may be some additional marketing or a refocus of marketing, but, essentially, we've got all of the costs involved there. And it's it it it increases the value for us, but the margins that we'd have would be the same. And in fact, you'd probably get more efficiency because you're bringing in a higher value daily for each transaction.

49:53 So Yeah. And the added visibility allows us to smooth out the peaks and troughs and Yeah. A finish. Those better. So an improvement all around. There was a second part to that question. Would FUSION have to outsource some activities to third parties with such contract, and are there risks associated with this? We do not have to outsource anything more than we currently outsource. So we've managed those outsourcing relationships very well, and we know those partners extremely well. There may be some additional outsourcing that we would look at as the company evolves. That is a natural reflection of the changing nature of the biology of of the targets that our customers are going after.

50:41 Where there is the highest risk with those, the tendency is in other words, it's a difficult model by which to validate a therapeutic antibody. The tendency is that the client actually has that themselves, and so there's no risk to us. So long as their models are accurate, but the client's view on that is significant anyway. So it's not something that's a game changer. It's very much steady as we go with the plans that we have and using the partners that we do have. We are open to adding additional options to that moving forward. One case in point would be that and one of the reasons why the market like us is when it comes to cell line development, we are not tied to just one cell line, master cell line.

51:34 We have three that we typically use. They are products that come from partners who we would then advise clients whether they would want to outsource to them to do the manufacturing development under GMP for clinical trials. I'd like to add another cell line to that option just in case that's that's required or better and gives us the option to use three or maybe four if that's what the client wants to do. So adding to that and continuing to develop the business in the way that it's already planned is is a good thing, and I think that's how we're going to go. There's no significant overall additional cost.

52:21 What is the outlook for r and d expenditure going forward? I think we've answered that pretty much steady as we go. Yep. Yeah. Should we do this one? Why doesn't the company take more risk, make its own antibodies, and try to raise substantial funds to take them to the clinic with a partner? Isn't that the only way to create real significant value? So my immediate answer to the last part of that is no. There are other ways to create significant value, and indeed, that's what a lot of the venture capital companies do and spread their risk and take a stake in more programs, more discovery companies. I should point out that the investment raised to date is to support the CRO model.

53:09 So this would be a departure. And in the question itself, the term sub raise substantial funds, I think, underlies part of the the issue there. So our current investors have very kindly invested in us, yourselves some of yourselves included, and we need to remain true to what that money was to be used for. However, in terms of how do we create that significant value, it can be created through retaining a stake in those in multiple projects with clients, for example, through the royalties and milestones. And, again, the integrated therapeutic antibody discovery platform gives us the critical mass to put us into a better position to get more of those built into more projects and indeed at more favorable percentages and quanta to us.

54:08 That's very much central to our plan. And, again, like I say, supported and enhanced by that evolving strategy that we're using. It's a much lower risk platform and way to to build up that inherent diversification rather than if we were to start with a a drug program. We'd be basically doing all eggs in one basket. So I prefer this this model that we're evolving into, but I would like to see more value and more projects with royalties and milestones included in them. Okay. Said that there'd been some changes in personnel and the commercial team. Can you please explain more? So we've previously announced that we have a new head of a new commercial director.

55:01 He's been working through so he predates me. So I think he's now seven months into the job. And in that time, he's reviewed how we sell the tools that we use to sell and indeed the the way we're we're organized and set out. So the structure of the organization has changed somewhat. Some people have left. Some people have been replaced. New people on the team and some yet to be appointed, but due to start very soon. Natural evolution of the the commercial team, and I hope we'll be positioning us for a significantly more productive commercial team as we as we move forward.

55:47 Certainly, the rationale behind it, it's very sound. It's very solid. We buy into it. Everybody has agreed that it's the the way to go. And if the commercial team are the lifeblood of of the organization, then we will look to expand on that to create more success as and when required. Okay. Just conscious of time. I wonder I have to answer this one. Down to the last question. Yeah. We can use this one as the question. Question was you you mentioned the large contract, which I guess is the $1,800,000 two year contract, which is a case study for the new strategy. How's that project going? What feedback have you had? Project's going very well. It's one of the cases which I referred to earlier where clients appreciate that our forecasting in terms of timelines and costs are are accurate.

56:43 We've also built up a very good relationship because of the interactions that we had have with the the client and getting getting that back. So one of the key things that I've done as an individual is to have a one to one discussion with with their my my counterpart, the client the client, their CEO. And without we're not allowed to say who it is because they are in stealth mode, so I can't say his name or the company's name, which is frustrating. But he did say that for every criterion that quality criteria that we monitor deals by, we score a in every single one.

57:28 And he wrapped up the conversation by saying, you guys are awesome, which may indicate which nationality he is. But it's a brilliant piece of feedback. As I said before, it's been very positive. It shows that we are doing exactly the kind of thing that our customers want. And what we're looking at doing now is more of what we're good at. He did also say that he recommends us to everybody that we he speaks to, which is even more frustrating when he's in stealth mode, but, nevertheless, very good to move it forward. So finishing on a on a positive note in terms of the questions. Really very pleased with how things are progressing. I think what we're offering to the marketplace now as we evolve the strategy will reap benefits for clients and for FUSION and indeed for our investors. So on that point, thank you very much for your time.

58:31 I hope we've answered everything. Apologies if we missed one. Adrian, James, absolutely. And thank you very much indeed for addressing all of those questions that came in from investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you to review immediately after the presentation has ended to then add any additional response, of course, where it's appropriate to do so. Adrian, I was just going to ask you for a few closing comments, but I think you just well delivered those. So if it's okay, sir, what I'll do now is I'll redirect those on the call for feedback, which I know is particularly important to yourself and the company. So could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations.

59:16 This might take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of FUSION ANTIBODIES PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all. Thank you.