Hvivo (LSE:HVO) — Company Presentation

0:01 Good afternoon, ladies and gentlemen, and welcome to the HVIVO PLC Investor Update. Throughout today's presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Please simply type in your questions at any time and press send. Given the attendance on today's call, the company may not be in a position to answer every question they received during the meeting itself. However, the company can review your questions and we'll publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over to CEO, Mokar. Mo, good afternoon. Good afternoon or good evening. Thank you very much for for the kind introduction, and welcome to everyone out there in the audience. You are here to listen to our 2024 update and also the the announcement of our first acquisition in our m and a strategy.

0:50 So without further ado, we'll drill straight into it. This is our normal compulsory disclaimer. I'm Yami Mohan. I'm the CEO of HVIVO. I've been here just just under three years. Like, my anniversary is coming up in the next couple of weeks. I'm here with Steven. So I'm Steven. I've been with the company for now eight years. So we've we've had a good year. And he's our CFO. Yeah. Okay. So just drilling straight into presence. So you already know we have a fairly large presence here in in The UK with our 50 bed facility in in in London where we're sitting at the moment. We also have Ben Life Sciences with presence in in The Netherlands and also in France, in Paris. Now we've just completed the acquisition of two clinical research units from a German full service CRO called CRS.

1:46 The first unit is in Mannheim, which is a a 96 bed unit just south of Frankfurt. The second unit is in Kiel, just North of Hamburg in North Germany, which has around 24 beds. So as part of our strategy, we will always reiterate it that we will be looking to acquire the right phase one unit to complement the the phase two services we currently provide to our clients so we can find a much broader, broader end to end integrated clinical development services. And, you know, I'm very pleased that the CRS is is fully on board. We think that, you know, we can help CRS in broadening their level of services. CRS can also help then life sciences and also HVIVO to broaden their level of service. And together, we will form a formidable partnership and company under the HVIVO umbrella to be one of the prominent early stage clinical development providers in Europe.

2:47 So who is CRS? So CRS was founded in 1977. They've run just under 2,000 clinical trials to date. They have, over the last six years, inoculated, well, treated 7,000 patients and volunteers in their trials. They They have a long history of providing quality service all done with people of technical expertise with high level of safety. Even last year, they were inspected by the FDA from The US and they passed the audit with flying colors. And we as a company were aware of them a long time now because our Ben colleagues have previously worked with them to provide some phase one services. And they're renowned within the industry for delivery of quality service.

3:36 They have gone through some hard times with regards to sustainable margin levels. And on the back of that, we've been able to acquire the company around for around €10,000,000, which is less than 50% of the of the total annual revenue of the company. And Steven will give a little bit more color on some of the the financials. The two units, so the one in Manheim, the larger unit, focuses on phase one trials and also on proof of concept phase two trials in a number of different therapeutic areas, including cardiometabolic, dermatology and immunology trials. The unit in Kiel is a very specialized unit, one of the the leaders in Europe in providing clinical trial services in patients with renal and hepatic impairment. This is a very specialist skill set, very technical, and they're one of the world leaders in that. And one of the reasons why we have acquired CRS is, you know, not only to broaden the services we offer, but get the specialty of services and also being part of a much bigger market than the human challenge trial. Because remember, every drug developer has to run a phase one and a phase two trial to get to marketing, whereas human challenge trials are not a requirement from a regulatory point of view.

4:54 So I'm very pleased the fact that we've been able to acquire a company that has a long successful history in running these trials. So the lack of experience they have, the relationship they have with the big pharma clients and the repeat business of over 50% speaks volumes to the capabilities and experience they have in this field that we are looking at. So why CRS? So the number of reasons why we felt that CRS is the right asset for us over the last couple of years. We've been reviewing a number of potential assets for acquisitions, and for one reason or another, they've not fitted the bill for us. But we felt that CRS takes most of the box that we're looking for. So first of all, they can provide phase one capability, includes first in human. They also do a lot of trials in patients for proof of concept. They've got multiple sites, thereby if you add them to what we offer here in The UK, now suddenly you're offering multi site international clinical site capabilities. So we can run phase two and phase three trials in five locations.

6:04 It also gives us access to up to 200 beds across the two companies. We also know that as Phase one and a Phase two provider, CRS currently is not able to provide full breadth of service. So with the addition of Van Life Sciences consulting services and Van France's biometric services, we can now offer a much broader full service. So as an example, CRS typically outsources its biometric services. So every clinical trial they win, they have to look for a partner or a subcontractor to conduct the data management, the biostats, and the medical writing services. Now we have those services in house as part of when life sciences offering. So going forward,

6:48 CRS will be able to offer the full spectrum of clinical trial services to any clients going forward. So this automatically will bring our margins higher. And secondly, of course, it improves the level of service we provide to our clients because we will be in fully control of all the services we're providing rather than working with third parties and potentially getting issues and problem. And also from client point of view, no client wants to work with multiple vendors for one project. So having that one project all being outsourced to a single entity means that they will get a better level of service, as I said. But also, as most of the clients they work with biotech, it helps them from a resourcing and managing point of view to make sure they don't need large teams to oversee the delivery of these clinical trials across the group.

7:36 They also bring to us a new group of clients. 80% of our clients are US based, 99% of CICE clients are European based. So it adds a whole new pool of potential clients that we can now approach and cross sell to. In addition, for better life sciences, they can provide the early drug development services to the clients that are looking to get into phase one. Because prior to phase one, of course, there's some preclinical work and better life sciences offers preclinical consulting services as well as CMC and clinical PK and so on. All those fit really well with regards to the services that currently CRS offers to the client. So overall, a number of reason why we felt CRS is a is a good asset to target and a good partner, and we've had town hall calls with them today. We introduced ourselves to them, and they're very excited and very proud to be part of the HVIVO family. And we're very pleased to have them on board. And this, of course, is the start of our M and A strategy, and we were to continue to do further bolt on acquisitions as we move forward.

8:46 So this gives you a little bit more details on the different service lines that we are currently offering. On the right hand side, you can see the building icons, which indicate whether that service is currently being provided by VEN Life Sciences, HVIVO, or CRM. And so you can see we're not adding any new service lines. So our goal here is to acquire an asset that provides adjacent services to what we currently offer. So we can basically use the same system and the same infrastructure to develop and grow this service line. But also it means that they've given us greater breadth. So you can look at the addition in the purple boxes of new therapeutic areas, new increased database of healthy volunteers and and patient, new types of studies. So for example, where we only conduct human challenge trials, CRS has the ability to conduct phase one and phase two, but also single ascending dose trials, multiple sending dose trials, drug drug interaction, bioequivalence trials, PKPD studies. So a much broader variety of phase one and phase two trials than we currently offer. I think that says speaks a lot to how it complements with us. So for example, any PKPD studies will require pharmacokinetic programming analysis, and our vital licenses are world leaders employing that level of service. So combined together, there'll be a force of nature in going to biotechs and pharma who look for early stage clinical development program services. So for for a whole wealth of reason,

10:17 I believe that this could be a very, very good acquisition for us. And also on the other hand, a very good partner for CRS in their plans to grow the company across all of these service lines. One of the key reasons we also looked at Germany, Germany being the third largest market when it comes to clinical research. So it's up there with the highest country in Europe, but they're renowned for early stage, early phase clinical trials. The quality the level of quality and the level of safety is one of the key reason why that is. The German authorities are also keen to attract more clinical research at this stage of the development programs to the country. And with that, they've almost halved the timelines for the regulatory review of new protocols for Phase one trials. So they're trying to incentivize, attract more trials coming into the country. And you can see from the bottom left, we're adding to the therapeutic areas that we are currently working with at HVO by adding the CRS capabilities on top of that. We're also, of course, enlarging the potential pool of volunteers and patients who have access to by adding the Mannheim Metropolitan and the Kiel Hamburg Metropolitan Area for future clinical trials.

11:44 We of course, we're broadening the revenue stream as I talked about. So you can see the number of clients that have worked with the longevity of some of these clients. The loyalty is great. As I mentioned, over 50% of their clients are repeat clients, which is really a good sign of the quality of their deliverable. On the right hand side, those couple of doughnuts, if you focus on the the the green segments on those two doughnuts, you can see it's increasing from the last five years or so to the recent couple of years. That basically means that the number of trials they're running with patients is increasing, which is great news for us. So one, patient trials typically have larger contract value because they tend to be more complex and of course, it costs more money to recruit a patient to a study than a healthy volunteer.

12:33 Secondly, patient studies can typically be run-in multiple sites, whereas healthy volunteer Phase one trials tend to be a single site. So this basically gives us the potential to run the studies CRS are running in Germany, also in London with HVIVO. So you're basically multiplying the number of sites that are running the same trial, thereby recruiting more patients and increasing overall the group revenue. So this also speaks volume to the why we have decided that CRS is a good company for us to acquire. Diversification in clients and in therapeutic areas. So if you look at it by revenue, so this is by basically how much revenue we generate per therapeutic area. As you would imagine, we are dominated by infectious diseases through our human challenge trial concepts. We we we conduct it, but they have a whole rainbow, a whole variety of therapeutic areas. So it gives us the potential to access these clients and cross sell when live services and HVO services, including patient recruitment, for example, field studies, and and lab h h lab services, the the laboratory laboratory services we launched late last year. And if you look at the right side, it illustrates the point I was making earlier.

13:48 We're dominated by US clients. They're dominated by European clients. So although we do have some overlap in clients, in large, we are we are working with different clients. So there's no reason why we can't we can't approach our clients and CIS approach their clients and pitch the service of each other to offer a more fuller service to the existing clients for each party. I'll now ask Steven to give you an update for on the financials for 2024 and more details on the financials behind the acquisition. Thank you, Moe, and good evening, everyone. So 2024 was a record year for this business, both financially and operationally. A lot was delivered operationally, and Moe touch on that later in the presentation.

14:40 And from a financial perspective, the metrics are really good. We delivered 62,700,000, up almost 12% on last year. Some of the key factors behind that is we did have a a record number of inoculations during the year. We introduced a new service, a field trial work. We won a contract in June, and we delivered it in q four. 817 vaccinations, pretty much unheard of in the industry in terms of one unit delivering that amount of patients, participants in the study, in such a short space of time in six weeks. And Moe will touch on that a little bit more detail. I think also it's fair to comment on the fact that the 62,700,000 does include some facility funding, and we've discussed this in the past. It's really a fee that that Big Pharma paid us to deliver their study on time, and we've used this fee to deliver a Canary Wharf, our new facility.

15:38 So and that was 4,300,000. So when you move that onto the EBITDA margin, you've got you know, we've increased from 22% to 26%. Obviously, that fund facility funding is falling through, but it's also having to fund the overlapping of facility costs. We had three facilities running all the way up in well, two yeah. Three running up until June, and then we had two up until the end of August running at this stage. So if you net if you strip both the overlapping facility costs, which won't repeat, obviously, because we only got one facility in Canary Wharf at this stage in Plumbers Row, We the accelerator funding fee, we have an underlying performance, EBITDA performance of 23%.

16:23 Still very healthy, very good for this type of business. I think the other thing we've been highlighting was that and certainly, in terms we highlighted that, you know, we could see the recruitment efficiencies coming through. We have invested in the BMS system. We have a very good team that do all the recruitment work for us, and they've got smarter and more efficient on using advertising spend. And that was in the first half of year. But in the second half of year, what we really saw was some some clinic operational efficiencies come through. And the key thing here to highlight is that year on year, total recruitment costs and total clinic operational costs are flat despite the increase in revenue, and it's a significant performance. So very you know, the team had done very well in there. And do not forget that in the 23%, underlying 23%, we still continued spending, money towards our new models. We have, invested more in our HVV model, which is quite prevalent, with our clients in our pipeline.

17:21 We have, a new h three n two flu model, and we new have a new RSVV model all being developed this year, and a large portion of that cost flows through the p and l. We continued investing in our technology systems. We're rolling out LIMS. We're rolling out an ESOLE system, and both of those go live next month, first week of February. And, but we also have invested in our own recruitment system. And and yeah. So that's you know, we've continued investing that perspective. I think to highlight, you know, clearly, you know, cash is 42 44,200,000, still up from last year. Clearly, we are a strong cash generation business, and that continues. Going on to what have we bought. So CRS, the financial highlights. So traditionally, this business and the two units that we've purchased.

18:16 Well, last year in 2024, they delivered 19,900,000 in 2023, eighteen point six, and it was more or less around that in 2022 as well. And and EBITDA, they made a loss of 1,800,000 for 2024, and they made a loss of 1,600,000 in 2023. So and and then we bought a a contract order book of 11,100,000 for 2020 as of the end of December twenty twenty four. There's no debt. The liabilities are less than 500,000, mainly some pension liability and also a deferred revenue liability. So that's what's driving that. So in what we paid, it was 10,000,000 for this business. It's definitely got to be a very decent price.

19:05 I think we've got a good deal, very good deal because it's less than one times revenue. In fact, it's 50% of revenue because we're expecting this business to deliver some €20,000,000 for 2025. Now you might question on that why is that not much bigger than 2024 is because they've changed their BD team, and that that BD team is beginning to produce results, and some of that will and so we expect a a kick up in 2026 rather than in 2025. Restructuring and transaction costs will be circa about 2,500,000, and our EBITDA the EBITDA loss for 2025 will be more or less in line with 2024, probably a little less than the 1,800,000 that they they delivered in last year, 2024.

19:55 So but we expect because it's a very similar business, and this is the type of business that's very akin to what we do in in in many respects, we believe we can turn this business around and make it earnings accretive in 2026. So to that point, what are the sort of things we're looking at to doing? The top three services here, realization of synergies here, the top three, biometric services, medical writing services, or PK analysis. Quite a bit of that work is all outsourced currently by CRS, but we have a Venn consultancy and life sciences business that does all that work. So immediately, that will not be outsourced going forward, and we'll be doing that internally. And that should I mean, last year in 2024, they did some 800 just over €800,000 in, these services.

20:49 And, obviously, we will be able to take on that work, with very little additional cost, and that will obviously flow through to the bottom line and and improve margins immediately. And quite a few things on operational planning. They you know, we are quite we've learned to be very agile with with HVIVO. We have a very agile team. We we double book. We almost triple book,

21:14 clients into slots, whereas they are a little less this is an aspect where we think we can put across onto them is to double book and to be a little more flexible in how they schedule clients so they don't have empty space. In that way, I think we can get a lot more utilization out of their facilities. Project management, they have good project management team. Have a good project management team, and there'll be some synergies there as well. Key thing here is the business development. They have a good team. They've just created an a a pretty strong team on the business development area. In the beginning of the year in h '1, the RFPs was minimal. Most of the pipeline has actually been delivered in the second half of the year with the new team, and we expect that to continue. So, I mean, I would have commented on that the order book was a touch low relative to amount of revenue that we're achieve in 2025, but that's definitely improving, and we expect that the order book as a percentage of revenue going forward will get much better going forward.

22:13 The other thing in business development, some things is pricing. They've actually started changing their pricing. The existing management team have started recognizing that they have been underpricing quite a bit, And we think we can help them on that pricing much faster because we bid for the same type of work to some extent, and we'll be able to leverage our pricing with their pricing and get a stronger unit of a better pricing out to the market faster. Quality insurance, they have a strong quality insurance. They have a great team that, you know, they've done very well in their quality. They've come out with very good shining audits from that perspective. So back end services option. I think one of the thing on back end services is the finance. The financial information is very limited. It's entity driven. You know, you get a management accounts, which is telling you the performance of that company. It doesn't break it down into divisions or departments. It doesn't add KPIs to it. They don't track the units and the delivery and trying to make mix, the costs of things with the number of units delivered to see how they're performing going forward. And with that sort of enhanced sort of information that we do in HVIVO being stretched across to them, we'll be able to identify efficiencies and and and improve operations.

23:29 So we we're not expecting to invest huge amounts of money and such, may need some time, definitely. We do have very good systems. We have CRM system, which we will leverage and and shift across to them. We have a recruitment system where we know it's paying off and doing very well, and we will want to leverage that and use and and stretch that across the system. So we're deploying our existing systems. We're not actually recreating it. Yes. We'll have to spend a little bit of money probably to accelerate that work, and that that delivery of those new systems into, into, CRS. We have, we are launching a a clinical e source system. It goes live in the first week of February, and we will be looking to deliver, stretch that into CRS. It will be a very good opportunity to test that system and and move that forward.

24:19 And a few couple of words on high on our on our culture. I mean, HVO, we are very, well, very KPI KPI orientated. Every every team has and every function has sort of a KPI, a key measure of performance. We monitor it. We discuss it every single month. We we debate why what's changed, what's improved, and and how we're gonna fix it going forward. We have a business project program, which we meet on also on a monthly basis. We look at that. We track it. We take tasks and actions, and we follow-up and deadline it. And we empower our team to deliver more and to take ownership of what they are delivering. We're very transparent in our operations and our business performance. We have quarterly meetings, but we also share the information that what's happening in the business very well.

25:10 And I think all that will, you know, will work very well within business. They're a great team, and I think that they'll be very interested in this area in this type of initiatives that we do. And and finally, I think most important, we believe in rewarding all employees for their success, and that's something we'll roll out to them. And with that, I'm going to hand you over back to Moe, and he'll give you the highlights of our business for 2024. We are the world leading human challenge trials, and we have run over 70 of these types of trials. And we are effectively broadening the the number of pathogens that we can run these trials with. And we're also updating the portfolio of pathogens that we we we are running these trials with. So 2024 was a was a milestone, a transform year for us. So we moved into this new 50 bed state of the art Canary Wharf facility, which is the world's largest human child trial facility, which is a great flip for us considering the numbers that we also deliver at the same time. We also added a range of new challenge models and updated the challenge models.

26:35 We launched three new service lines, HLAB, field studies and patient recruitment. And I will go into detail in a couple of those as we move forward. We built a new HMPV challenge model. So HMPV is human metapneumovirus, which is recently hit the news with its increase in prevalence in China earlier this year, I think. We also launched and completed the world's first human challenge trial in flu B. So a lot of work from an operational point of view was delivered in 2024 at a really good efficient level because that's what given us that's what has given us these remarkable EBITDA margins. As we look forward into 2025,

27:22 we still believe that the human challenge trial market is going strong. We totally understand and appreciate that in the second half of last year, there was a decline in signings. Wasn't due to lack of interest or drop in queries. It's purely due to the life the sales life cycle taking longer. So our customers and the industry, generally speaking, they weren't committing to projects and putting pen to paper and signing these contracts. And a number of reason for this so there was the issue with the the US elections, the the assignment of RFK as as the head of health services was also another pointed reason why this happened. But late last year, towards the end of last year and beginning of this year, we've already seen this trend as bucked, and we've seen the we we signed in that 11,000,000 plus RSV contract.

28:18 Late last year, we signed the lab contract. We signed the LOI for ILLiad for the Phase three trial. And we have a few hot opportunities we will be signing in the next couple of months. So it has turned around. We have seen positive signs that clients are more committed to funding these trials and starting to negotiate contracts, whereas previously, they've really been on hold. And as we look forward to the market, we see increase in interest in the challenge models in mucosal vaccines. So these are the vaccines you take either orally or through a nasal spray antivirals, especially RSV antivirals, we've seen an increase in interest for those.

29:03 HMPV, as I mentioned, our brand new model is something else we are looking at. And we're also currently working on developing an Omnicom challenge model too. So all of this combined, I feel very bullish that the challenge twelve month will continue to grow and develop. I do want to say at this stage that people would have seen the drop in share price, and this has been mainly due to the fairly flat year on year core business revenue if you remove the 4,000,000 facility fee we recognized in 2024. But you have to remember, this is basically a delay in one single contract signature because our challenge for our contracts, as you know, have grown in size. So if we had signed that RSV contract six month earlier, we have recognized majority of that contract in 2025, and we've had double digit growth. So I don't want you to mistake a delay in signing of a single contract and say, this is a trend in the in the human challenge to our market. It's not. We we've seen the number of inquiries coming in, the the proposals that we have sent out to clients, the sales pipeline, all of those metrics remain strong. The the one gap that we we we're now seeing a turnaround in is from sending out the proposal to getting signed, and we have seen shortening of that. We expect to see improvements in our signings and in our order book going forward.

30:31 So I do wanna mention this the ILIAD contract we the LOI we we recently signed for a phase three Bordetella testis or whooping cough challenge trial. And there's there's a number of reason why this is important. I think that the market has somehow missed the the importance of of this trial. So first of all, from HVO's point of view, it will be our last largest ever challenge trial that we've run with regards to the number of inoculation we expect to achieve. Secondly, it will be our first bacterial challenge trial, so that's huge. It's also our phase phase three trial. We've run 70 odd trials as I mentioned before. All of them have been at the phase two stage. This is a phase three. And thirdly, it's a pivotal phase three trial. What does that mean? Well, that means that for the first time, as far as I'm aware in the history of challenge trials, the client has got support from the FDA that if they run this challenge trial and design it as they're looking to design it right now, the data from this challenge trial, if positive, can be used to support their marketing authorization.

31:40 Now 's huge, not just for HQ, but also for the challenge trial market. So just think about that for the moment. So remember, every other challenge trial we have run to date is not mandatory. So it's a phase two proof of concept where the client is either looking for more scientific data or they're looking to see which vaccines to exclude from further development or they're looking to find out which endpoints to use or derisk the phase d program and so on. All good reason to do a challenge trial, but not mandatory. This is a mandatory trial that has been supported by the FDA. So this is why I feel that this could be a huge milestone for the challenge trial market. And we, as the world leader in doing this type of work, really are in front of the queue to take advantage of any change in the market. And this is something that, of course, I'm not going to predict the future today, but the signs for this and the fact that this sets precedent with regards to a regulator is really key.

32:44 And that's why I'm very bullish that going forward, we could see more of these type of trials. And these trials are much larger than your typical phase two trial. And just to kind of point this out, a phase three trial in the field with indication such as a whooping cough would cost at least 10 times more than what it costs to run it as a challenge trial. So financially, it makes total sense. From timeline point of view, this takes less than half the time of a traditional field trial. So now I'm not saying here that the the FDA and the EMA and the MRJ are tomorrow and go are gonna go and change all their regulated guidelines and put challenge trials at the front of the queue for future pivotal trials, but this is a is a first great sign. And I always talk about the fact that we are advocating the regulators to use challenge trials in a much more intrinsic way. And this is a first sign and it's a great sign for us that we are able to partner with Iliad to do this trial and get this much needed vaccine to patients faster.

33:53 Whoopi cough is is a terrible disease, very debilitating, especially for for young kids. And the fact that, you know, two hundred thousand people die of this almost every year and the fact that the current vaccines are are decades old and their impact is waning, it's important to do this challenge trial, hopefully get good data, and then get approval to get this vaccine to patients who need them badly. The field study. You know in September of last year, we launched our clinical site activities in order to do non challenge field studies, basically recruiting healthy volunteers, give giving them the vaccine, and then following them through. And we ran this trial late last year. We signed this 55,000,000 plus contract, our first major field study contract. And please say, we we we delivered over 800 volunteers in a very short time frame in just over six weeks.

34:49 And you can see on the bottom left here a quote, a very positive recommending quote complimentary quote from from the client stating how well we have performed. And not only have we delivered operationally, but to a really good level of quality, which is great to say. And the back of that, we assigned a number of other trials, albeit at smaller contract value, but it does show that we are capable of doing this, and we are now using this vaccine case study as a way to market these services to new customers. So we're looking to increase the field studies offering we have in London. But also in combination with the sites in Germany, we should be able to offer a much bigger pool of volunteers and patients to our clients moving forward.

35:36 Our HLAB brand, which we also launched in September of last year, has its own website now. We've also created a booth so that they can attend their own conferences and promote the the the HLAB business. Very pleased to announce earlier this year already a good hefty contract when it comes to the size of laboratory contracts. So this was acting as a as a central lab for a for a global influenza trial. So very pleased to see success as CRS do more phase one and and phase two trials. We have the opportunity to potentially pitch virology and immunology, laboratory services to those clients when and if relevant. Our lab here in Clerium Wolf, it has got the CL three status. It's been approved by the HSE and it's fully functioned and everything is working as it should be. And having triple in size now gives us the capability to not only cater for the in house challenge trials we run, but also do standard on lab work. And that's something we will look to build going forward. And together with field studies, add additional portfolio of service line to the organic growth model we have at HVIVO.

36:51 The pipeline is getting better. So we have 67,000,000 of net order book for the combined group. This, by the way, excludes the the the the Iliad potential contract because we as I said, we signed the letter of intent, so that still remains in a pipeline, and we can see the pipeline being distributed across different service side, and we expect that continue to grow. The challenge to our pipeline does dominate this. The key reason for that is, one, the typically much larger contract. Two, the sales life cycle is much longer because it's a much more of a technical sale compared to CRS or or van life sciences or the lab work for that matter. So so at any given time, the challenge trial pipeline would always be much bigger because they stay in the pipeline stage for much longer. In September, I also communicated to you that we had £40,000,000 worth of near to midterm opportunities. I'm pleased to say £15,000,000 of those are already signed, and we have 25,000,000 remaining, and we are confident we will sign all of those in the first half of twenty twenty five.

37:57 But just to be clear, we have added additional opportunities on top of that 40,000,000 that we are currently working on. So the pipeline of work remains strong and we continue to grow that. But of course, our drive has to be to convert that pipeline into order book, into revenue and margins. So what is the outlook going forward? So we gave the forecast for 2025 in our RNS. We said we will look to achieve GBP 72,000,000 in group revenue, inclusive of CRS. It will be weighted towards second half, but you will expect that considering the slowness of signatures I pointed out in the second half of last year. People have seen a poor reaction to the share price as a result of this announcement, but we believe that's been mainly due to the fact that it's a flat year on year core business revenue. But if you and if you remove the facility fee, you'll see it's a robust revenue we're for 2025.

39:02 But I'm bullish going forward as with this increased signature in challenge trials especially, we expect to grow the revenue. We expect to get double digit core challenge trial revenue in 2026. If if you're a loyal shareholder, I'm I'm very happy and very pleased that you are, then don't look at us as a short term opportunity. Our goal is to achieve a 100,000,000 target by 2028. And right at the moment, I feel we are ahead of where we think we would need to be to achieve that target. This year, of course, with the CRS acquisition, you will see a dilution in our EBITDA margins. But even then, we are looking to do mid to high teens, which is a very respectable EBITDA margin in our industry.

39:49 Going forward, we will look in 2026, we'll look towards targeting 20% margin with a combined group as we continue to improve CRS and make them profitable. And it doesn't take a lot of work to turn that around in the sense that they provide services that we are already well aware of, but also with the additional capabilities we're giving to them, they can keep more work in house and that would, of course, improve margins. We are still a cash generative business. We're still at the end of last year, we had around GBP 44,000,000 in cash. Of course, we have used some of that to fund this acquisition. But as we move forward, we expect to generate more cash. Our HLAB business is going really well. Our site facilities is going great. Benel Life Sciences, we expect a boost as we move forward, especially with the help of the CRF business.

40:41 We will continue to look at additional bolt on acquisition if the fit is right and the service is right and the price is what we think a fair value. But as we move forward, I remain confident of our mid to long term goals of GBP 100,000,000 in revenue by 2028. That's you a lot. Thank you very much for your attention. That's great, Mo. Stephen, thank you very much indeed for updating investors. Hey, Sheldon, please do continue to submit your questions just using the Q and A tab on the right hand corner of your screen. So I'll move Stephen to take a few moments to take those questions that you've submitted already. I'd just like to remind you, recording this presentation along with a copy of the slides and the published Q and A will be available on your Investor Day property dashboard. Moe, Steven, you've had a number of questions from investors, so thank you to everybody for your engagement. If I may, Moe, just hand back to you. If you could take us through the q and a, and I'll pick up from you at the end.

41:31 Thank you. Thank you for that. Okay. Let's get get through as many of these questions as we possibly can. So I think that there are a number of questions why the the share price has reacted the way it has. I hope I I have answered that question. I I do think the market has missed the the importance of the the phase three trial. That's for one thing. Secondly, the the recent announcement of the signature contracts, I think, shows a good trend, and I'm confident we'll get a few more signatures in the coming month. So that will signify a turnaround, let's say, in the signings. But the number of inquiries we're receiving still remains strong, and that's why I am bullish. The 2025 guidance of $73,000,000 can you confirm if this includes the new facilities announced today?

42:23 Yes, it does. I can confirm that. Are you concerned about what appears to be a decline in human challenge trials work? So no. I'm not concerned. I think this is one of the reasons why I I mentioned that don't confuse the lack of signatures with a drop in the challenge trial market. I mean, as I mentioned, it it basically takes one contract of around 11,000,000 to be signed six months late to have this impact on the revenue guidance. And if that contract was signed six months earlier, as I said, we would have given double digit growth in our core human challenge trial guidance. So I don't see this as a trend in the market because the number of new requests we're getting, it continues to increase.

43:10 And now we're seeing some of those pipeline being converted into order book. How do you plan to manage your growth strategy through acquisition given the inherent risk and time and cost of integration? That's a really good question. So one of the one of our strategy has always been to add the m and a to the organic growth. So we we we we started up with that mindset, and so we we are basically executing on that strategy. The second part of the strategy has been to only look at assets that have adjacent services to what we deliver. So we don't want to look at assets that provide services that are not linked to what we already provide.

43:55 So if you look at CRS, so phase one and phase two trials, we do clinical trials already. Okay? So if you look at our e source system, if you look at our volunteer management system, if you look at our, what's called, the electronic trial master file systems and other system like that, we expect just to expand the system we have here at HVIVO and make them available to our CRS colleagues. So we're not looking to implement completely new systems or new domains or anything like that. So that helps with the integration. Secondly, a lot of these projects are standalone projects. In other words, they they can't be done by one entity. So those projects will continue. Thirdly, CRS can now utilize Venn for the consulting services and also for the biometric services I talked about, whereas previously they use a use a third party. So if you think about that, the fact that they were able to integrate with a third party, now you bring that in house, That should make it much more easier, much more streamlined to deliver these services.

44:59 So I'm not saying this is all going to be easy. My my point being is that we're not acquiring a company that's providing completely different service. Their services are well aligned to what we already do, so we will look to integrate them into what we do. We have to work with their sales and marketing team, for example, and integrate that as well as HR, finance, IT, and so forth. Of course, we do. There's no no doubt about that, but I'm very confident in the fact that the they hired some new salespeople late or mid last year. And in q four of last year, they had the highest number of proposals come into the pipeline. So that sales team is already working. They're doing well. They're already seeing an upside to the number of RFPs coming in the request for proposal. So we just wanna make sure we maintain that momentum and give them opportunity for growth. So we said to them, want to invest in people, invest in systems, and invest in infrastructure to make them the world's leader in what they do.

45:59 How will HVO process? This is one for you, Steven. How will HVIVO process the German business in financial reporting, I e finance in euros and different tax regulations to The UK? So we've in in terms of doing the deal, we are going to structure it in a tax efficient way. We've had some good advice from our German colleagues in setting the way to set up this group probably through a loan system to so we'll lend them the money to grow and to do what we need to what they they need to be done. And then it's it's being set up. You know, we're taking the advice. We're implementing it. I'm not gonna go through the detail of how we are setting that up just yet because it's just being finalized as we speak.

46:48 Otherwise, we will be reporting the business in Sterling ultimately to to our investors and shareholders, but we'll always highlight the and the at the if there are any changes or drivers due to the currency change. But we will expand we expect to sort of leverage our existing financial approach and systems. Certainly, they don't have a project accounting system, and we want them to have a project accounting system because that it gives us much better information, and we'll be transferring our existing system to their to their to them. Thank you. Okay. This is a long question, so I'm gonna break it down to each one. So the first question refers to the CRS profit margin. CRF has been loss making for the past couple of years, correct, and will be earning diluted to HVO this year, correct. How long will it take you to turn the business around?

47:43 Well, we expect the business to deliver 5% to 10% EBITDA margin come 2026. What profit margin progression you anticipate in the next two to three years for CRS? And what midterm sustainable margin can we expect? Do you want to cover that one, Stephen? Yes, Sure. So, I mean, yeah, so HVIVO is delivering, as I said, 23%. CRS can get close to that figure, but it needs some scale. And I think with the new BD team on board, I'm expecting a kick up in the revenue performance and the utilization of their facilities to get close to that figure in the future. We are expecting 2026 that we you know, our margins will improve and we'll get close to 20%.

48:31 Thank you. On contract signings, how much progress have you made in converting the 40,000,000 of pipeline opportunities for this year? Is the recently announced LOI included in the 40,000,000? So we signed 15,000,000 to date, 25,000,000 is outstanding. The those are still near to midterm opportunities, and the LOI we signed is part of the 25,000,000 unsigned portion of the work. So that is still in the pipeline, not in the order book. What is holding back clients from committing signing contract? So the market had a lot of uncertainty, as you know, generally speaking, you know, depressed biotech funding, the US elections, and so on. But we've seen that improve now. So funding, know, to be blunt, was the major hurdle in clients making the decisions to sign or not to sign, and that has improved significantly.

49:23 And that's one of the reasons why we see increase in signing as we move forward. How will you beat 2025 guidance? Well, beating our $73,000,000 revenue target and beating our mid to high teens EBITDA margins. That's how we would do it. And look, run more challenge trials. We have the capacity to do that right now. That will be one key. Win more work for CRS and Ben, you know, because they have the capacity to do a lot more phase one and phase two trial even with their existing infrastructure. So we don't think they need to invest a lot of money to grow the revenue. And as I'm sure most of you are well educated in these type of work. So as you increase the revenue and you fund all your fixed costs and you continue to increase your revenue, the high portion of revenue, suddenly you will see a huge exponential growth in the margin on that portion of revenue deliver. So that's the key goal in improving our EBITDA margin for CRS.

50:29 As I understand it, HVO pay upfront and nonrefundable fee, correct? Will the same terms apply to new acquisition? For certain contracts, yes. But also please note that the the value of each contract for CRS will be lower than the typical challenge trial contract. Challenge trials are very complex because of the inoculation process and the the quarantine facilities you need and the isolation you you need for the healthy volunteers. So that's why the value is much higher. But, yes, similar algorithm will effectively apply to anyone booking the the phase one unit at CRS, either Manheim or Kiel. Can bacterial challenge be used for testing new antibiotic nogis vaccine?

51:18 Yes, but not for all antibiotics. It depends on the severity of the disease. Our key criteria for selecting which virus or bacteria we can use in a human challenge trial really rests on that we don't cause disease that's too severe. There are no long lasting impact of the disease, and the disease is measurable and is approved by the ethics committee and the regulator. If all those kind of boxes are ticked, we can consider that bacteria or virus for potential challenge trial. Okay. Do you think a new U. S. Administration will look to reduce regulatory cost of drug approval and this could lead to more customer interest in HCTs as seen in Gilead.

52:10 Somebody's been reading up, so I I totally agree with you. So this is one of the facets we are exploring. So the new administration has talked about streamlining the FDA and other government bodies. And I think even yesterday, I think there was announcement that they were offering eight month redundancy severance payment to people who were willing to resign from these government bodies. And to your point, human challenge trials are a much shorter, slimmer way of collecting the same data as you would in a large scale phase three trial. So imagine the data that you need to make a decision whether drug is effective or not that you get from a human challenge trial is identical to what you would get from a a phase three trial. The only difference, in a challenge trial, you need less than 10% of the patient population.

53:06 So the amount of data is a lot less, but it's powerful enough if you can show a difference between the active and the placebo group to make a decision of whether a certain drug is effective or not. So this is a very astute point by whoever this person is. What else? How would you beat target revenue per year for HLAB? So we we we we do want to beat that. Right? So so one thing is to improve on the portfolio assets we're offering to the clients. We are looking to hire a BD person. In fact, we already hired somebody, but we're just waiting for them to join towards the end of this quarter. Secondly, we're gonna invest in more marketing material, including presence at conferences and also key events.

53:54 And secondly, we're also open to acquiring small bioanalytical labs to help support our portfolio lab services we currently offer and and potentially expand and diversify that. So all of those initiatives we're looking at to continue to explore our HLAB. But even in the last three months, we've seen really an explosion in the number of pipeline of work we have seen for HLAB and of course, we converted a large contract. Can you confirm the whooping cough challenge trial will be the largest value contract HVO have signed based on it being the largest amount of volunteers? So unfortunately, I cannot confirm because we are bound by comfort confidentiality with with the client, but I'm sure you can come to your estimation at, you know, what the the largest trial we have done to date says about the potential value of this type of study.

54:55 Do you or any senior management in HVO have any experience of working in Germany or closely with German companies? So I, in my previous role as as as head of operations, I used to look after the German affiliate in Munich. I I worked with German team for over eighteen years and managing them. We we used to run, I mean, can't remember now, hundreds of clinical trials in Germany through my tenure. So I have a very good experience in running clinical trial business there. In fact, some of the people working in CRS I know from history through working with German affiliates. One for you, Steven. Any plans for shareholder distribution this year and midterm?

55:43 Yeah. We've committed to paying a sort of a nominal dividend. We pretty much set out the policy roughly around just over six times EPS cover. So dividend cover by EPS is just over 6.2 times. So we expect to continue that program. We have committed to paying a dividend. It will be nominal because we still want to keep the cash because we have plans on our M and A activity and we have a strategy around that and we're looking to grow this business further and beyond maybe the $100,000,000 target we have set ourselves. Thank you. Any other phase three challenge that is being worked up? No. I mean, as I I would love to say yes, but, I mean, it's very soon. Right? So we just had one signed up. So we we we at least the LOI signed up. So we're we're looking forward to more, but not right now, but hopefully in in the future.

56:42 Is there scope to add HLAB in Germany to support the units? Of course, there is scope to do that. It depends on what type of assays we we provide. I think you mentioned here in your question about hematology and biochemistry. So these are very low cost assays, hematology and biochemistry. For example, even here in the in The UK, we use the NHS provider for those these type of assets because they're they're the routine, there's you know, they do hundreds and thousands of these every day, so the cost is very low. We typically keep in house the more complex assay that costs more money, more time, require a higher level of technical expertise to run. So thank you for the question. I think we're done. That's great. Mo, Steven, thanks once again. And thank you to everybody for your engagement this afternoon. Mo, Stephen, I know investor feedback will be particularly important to you. I'll shortly redirect those on the call to give you their thoughts and expectations.

57:40 But before doing so, Mo, if I may just come back to you for a couple of closing comments, and then I'll send investors for feedback. First of thank you for your time. I hope you find both Stephen and I very transparent in what we state. We have an ethos of under promising and overdelivering. We've been very plain and honest with all our holders, retail or institutions. We have a very loyal institution holders who are supporting us in our strategy and expecting us to continue the mid and long term strategy in growing the challenge trial concept and going through acquisition. The CRS acquisition, think, is very fitting with what we are providing and meets our strategic goals to get to 100,000,000.

58:26 We've seen good investment in human challenge trial portfolio. So we will see expansion of that and we want to be able to expand into new areas such as HMPV and I expect to deliver some good news in that hopefully this year too. The share price, I appreciate has taken a little bit downturn fairly recently. But look, I'm very bullish with what we do. We have a very strong foundation we've laid in 2024 with new infrastructure, new building, and now with a new acquisition. We've seen strong examples of large contracts we signed recently for both challenge trials and lab and other hot opportunities we're working on. So I'm very confident in our long term goals.

59:12 And as I said, I feel at the moment we are ahead of track on our 2028 goal of delivering 100,000,000. Thank you, everyone. That's great. Moe, Stephen, thank you once again. If I could please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order the company can better understand your views and expectations. This may take a few moments to complete, but I'm sure it'll greatly valued by the company. On behalf of the management team of HVIVO, we'd like to thank you for attending today's presentation. Good evening to you all.