Hvivo (LSE:HVO) — Company Presentation

0:01 Good afternoon, ladies and gentlemen. Welcome to the HVIVO investor presentation. Throughout this recorded 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. Just simply type in your questions at any time and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review your questions submitted today, 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 as usual, I'm sure the company would be most grateful for your participation. And then I'd like to hand over to the management team from HVIVO, Mo. Good afternoon. Good afternoon. Thank you, Mark. Good morning, good evening, Tehran, wherever you are in the world. So it's my pleasure to welcome to our annual trading update, beginning of, January here in 2024.

0:49 We will be providing a trading update summary on on the on order results for 2023. Both Steve and myself are currently at home and due to the train strikes. Hopefully, the the home Internet speed will behave and will be able to go through this smoothly. Let's move forward through the normal disclaimer. And I myself, Yamin Mohan, I'm the CEO of the company. I've been with the company for just under two years right now. I've got over twenty five years in the CRO industry, and I joined OpenOpen as it was then as a nonexecutive director and took over the role of the CEO in February 2022. So it's my pleasure to welcome you here. Steven, would you mind giving me a brief intro to yourself? I'm Steven Picketton. I was

1:39 became CFO on October 2022. I've been with the company for seven years coming up to eight years. And prior to that, I I worked for Thomson Reuters in eleven years in in in the financial industry. Thank you very much. Today, what we'll do we'll do is give you a brief highlights of some of the top numbers. Steven will give you a little more more color on our our financials, and I'll talk about our 2023 performance as well as some of the key targets and objectives that we have going forward into 2024 and beyond. But before we get into that, for those of you who may be new to HVIVO, I hope you've had the opportunity to go to a website and see what we actually do, which is human challenge trials, which is a fairly unique business in the sense that we do provide contract research organization services, but we are different to almost every other CRO because we intentionally inoculate individuals with a pathogen or virus, and then we test either a vaccine or antiviral. So majority of our clinical trials are in the ID or respiratory space.

2:46 At HVIVO and the group, we have two subsidiaries. HVIVO services, that's the human challenge trials, which is done by recruiting healthy volunteers and then keeping them in quarantine and collecting the data. We also have a second subsidiary called VEN Life Sciences whose major presence in Is Netherlands and in in Paris, France. And what they do is that they're able to provide early clinical development consulting services as well as provide the the start and the and the back end services in conducting human challenge trials. In 2023, we did open a small new office for the for for well, life sciences in Leiden near the biotech part. And this year, we will be moving to a new facility with regards to our quarantine and the corporate headquarters to Canary Wharf from Whitechapel to Canary Wharf come towards the end of this half of the year.

3:43 Getting straight onto the numbers. Very pleased to hear that we've delivered fantastic results this year with £56,000,000 in revenue. This is a 15% year on year increase in revenue, and this does not include the the 2,600,000 in other income on top of that. We've also improved our margin, so we've gone to 22%. And with regards to absolute EBITDA, this is a a a more than 30% increase in EBITDA. And on top of that, we've improved our cash balance to £37,000,000. As as I said, Steve will talk through the numbers in a little bit more detail in subsequent slides. From operational point of view, we had nine different active trials going to quarantine this year, which is a great number.

4:32 We've also had a 100% increase in our laboratory assays, so our lab capacity has basically be basically being fully utilized, and it's one of the reasons why we are moving to a bigger facility this year. Our recruitment arm, our flu cap arm has also done an amazing job in generating more than a 140,000 leads onto our website with new healthy volunteers. As we move forward, we want to continue to build on what we have and deliver better efficiencies and enhanced margins. So to that, we are consolidating our services into one facility at Canary Wharf. We're also diversifying our portfolio of services and challenge agents, adding at least two, if not more challenge agent to our portfolio and diversify into new services, including laboratory, clinical site, and patient recruitment services.

5:23 We believe we are well positioned for growth as we move forward. We're guiding for £62,000,000 of revenue in 2024 as well as having £80,000,000 of order book. And this is a net weighted order book. So this is a key foundation and probably the primary forward looking indicator when you look at the company performance as we go into 2024 and beyond. On top of that, we are giving guidance now. In five years' time, we expect to hit £100,000,000 in revenue, and this will be formed mostly of organic growth through expansion of our human challenge trial work, adding new services, but also some m and a activity. And I will touch on that in a in a little bit. But before we go into any of anything else, I'll ask Steven to give an update on the numbers for 2023.

6:14 Thank you, Moe. It's a good evening, everybody, and it's a pleasure to present another set of record numbers. So as Moe said, revenue is 56,000,000 for 2023, and it's a 15% increase. Some of the highlights behind this is we should just remember just to highlight is that this time last year, we gave a guidance of 53,000,000. And in September, we gave an upgrade to about 55,000,000. So I thought 56,000,000 was a very good response to our our guidance in the first place. A few highlights. Other highlights we've had is that we had three bespoke full service contract wins. So just a reminder, full service contracts means where we have unusually large contracts where we have are contracted to manufacture a challenge agent, characterize it, and then do a challenge study.

7:05 So we've had three new ones signed this year. But, also, remember, we also had two that signed in 2022 that carried us over in the current year, and one of them actually only completes in 2024, h 01/2024. Of the three that we've just signed this year, I believe one or two will actually close in q one twenty twenty five. So having such big contracts is always useful to have a strike a a length of work and visibility of that work going forward. We did start the year with 76 a a a weighted book of 76,000,000, which obviously helps you to sort of operationally plan for the full year. We ran multiple studies concurrently, and by this, we also mean is that we overlap our studies. We book more than one study at the same time entire unit. So in a sense, we we double book because these studies do move around and things do change. And that allows us to provide make sure we don't have any gap in our in our revenue or in our delivery.

8:14 And to the point in the revenue, I think one of the statistics we should highlight is that our volunteers were increased by 31%. So so we up increased our volunteer through the unit by 31% in the current year in 2023. Then EDS sort of what our early clinical services business in Netherlands had a fantastic year. They delivered over 30% growth, and that business is really doing well. We have met I think Moe will allude to that a little bit more in detail where we have really sort of focused this year on driving the performance of that business. So MHRA, I don't know if everybody knows the market, but MHRA is the medical health regulation authority that approves all our contracts and all all our studies is at such not the contracts, the studies themselves, the protocols.

9:10 And we did incur a few delays, but because we had larger studies, the impact was very kept to a minimum. And we also received facility acceleration fees. Now a reminder on that is that a few clients have paid us an additional fee to accelerate their study, and we are using those fees to, effectively deliver the Canary Wharf, unit, and and and I'll move to Canary Wharf. However, we have to start, but those fees are recognized in relation to delivery points, to those, to those clients. So we did recognize some of that revenue in 2023, and we will recognize some revenue in 2024. But they don't necessarily link to the amount of spend in setting up the setting up the the new facilities.

10:06 The next slide. So EBITDA, we had a great EBITDA. Grew from 18.7 to 22%. And I think just to go back a little bit on this, when Moe joined, I think what we have done is change the management team and brought in more strong stronger operational management team. And they have delivered quite a lot this year, and they're very focused on getting efficiencies and and streamlining the processes. And consequently, they have improved our efficiencies and our utilization, and we're getting a much better margin on the on the delivery of of this of our contracts. Again, the other aspect is the multiple studies that we run concurrently.

10:57 And here, whilst we only had nine only, we had nine studies on the go in actual quarantine. There were more contracts that we're managing in terms of starting and completing and from starting completing phases or in a manufacturing phase. But those units that were in the quarantine unit and those contracts that were in the quarantine unit, all nine of them, were across six different variants. Right? See and we mean by that, we mean six different strains. And so that allows us to recruit a hell of a lot more efficient efficiently. So if every lead and every recruitment opportunity that can every lead that we get from a volunteer who's interested in joining one of our studies, we our chances are increased by six fold on getting that individual onto a study. And that is probably the main driver in our efficiencies to date, but we are expecting more as we consolidate into Canary Wharf. We'll get some upside going forward on the operational side, but we are delivering on the operational clinical operations.

12:08 It's also becoming a lot more efficient than it used to be. But to date, recruitment efficiencies are definitely prevalent. So greater volume, as I said, we had 3031% greater more volunteers through the unit, and that was obviously better use utilization of staff and facilities. So that is I think, obviously, the facility the EBITDA is slightly more improved because we did recognize some facility acceleration fees and the cost of that is actually sitting on the balance sheet rather than there's a direct cost to it. So that is also benefit. But it'll be a benefit this year, and it'll be a benefit next year as well. And then in 2025, we'll have the new unit, which should obviously improve again, be another step change in the margin potentially.

12:58 So as we move on to cash, cash is strong. It's grown from 28,400,000 to 37,000,000, and this is after the dividend of 3,000,000 or or just under 3,100,000 that we paid in June this year. We don't have any debt. A couple of things is that of that 37,000,000, 31,000,000 is held on deposit earning about 5%, and we earn about a million pounds worth of interest in the year on it. The other aspect is of that $3,737,000,000 roughly 17,000,000 relates to cash receipts that we received in advance of delivering to our clients. So that leaves you with 20,000,000 behind, which is really for our working capital or for any m and a or inorganic growth that we're looking to do.

13:50 So, yes, we have received a a large portion of our facility accelerated facility fees from our clients, but we've also spent a good portion of that on on Canary Wharf. And that will come more prevalent when you when we announce our preliminary preliminary results in in April. But it's not not that significant in in in in the totality of things over here. The other reason for the cash is the order books continue to growing, so your working pack capital working capital continues to being positive. We're hitting our contract delivery milestones, and we our margins are improving. So that's all adding to additional cash and the growth of our cash position.

14:36 We're looking to deliver an annual dividend. We are looking to pay an annual dividend regularly from 2024 onwards. And the details of that and the quantum of that will be confirmed in in April. And we also set up the policy at that stage too. I think the next slide is sort of a slide why we always wanted to make sure that people understand why we're cash positive. And and and as we grow and we continue delivering, this business will continue generating cash upfront. This graph that you see in front of you is a typical in fact, it's of a single study, one of our single studies, which is very typical challenge trial. And what we're looking here is that the cash receipts versus the revenue, and this is the life cycle of a study. The green line is the revenue revenue recognition in our accounts, and the red and the dark green black line is the cash that is the cumulative cash that we have received over the time period of that challenge trial.

15:44 And then as you can see how we move on that challenge trial through the different phases, phase one being where we sign the issue a, we we take up a booking fee. Remember, it is nonrefundable. So if the client pass cancels or postpones, we we keep that catch. So they also pay us a sort of a services fee for designing, doing the synopsis, and doing the the protocol. Then the phase two, we move into once the protocol is approved, we move into the recruitment phase, and we get more money upfront because this is actually one of the most expensive parts of of a delivery of a study. It's about 35% of the contract value is the recruitment element of of any challenge trial.

16:32 So we've received the cash, and you can see as it goes into the quarantine phase, both recruitment and quarantine phase are the bulk of where we are earning our money and what we are delivering for the client. And right at the end, you could where it flips around where we've recognized a little bit more revenue than we received cash. But it's no more than about £200,000, and it's very minor when you think about the profit and the margin that we're making on the study. So it's it is, you know, why overall, you know, a a a typical challenge trial, this graph reflects why we are pretty cash generative in the study. And then with that, I'll hand you back to Moe who will take you through some of our operational highlights. Thank you. Thank you, Stephen. Just to kind of reiterate, these are unaudited results trading update. The full audited results will be available in April of the year, which, of course, will be a lot more detailed.

17:30 So what have we done? What have we been up to? So 2023, on the right hand side, you can see some of the key milestones that we hit, some of the kind of objectives we we we have achieved. So we had a very good year in sales, which has resulted in a in a a growing order book even though we have recognized more revenue than ever before in the history of the company. We've also been able to attract new clients. We signed MSAs, master service agreements with some of our clients. We've had a record number of patients, a volunteer coming to our screening, also into our inoculations and quarantine unit. We're developing more challenge models than ever before. Again, a huge sign of success at the current year as in 2023, but also looking forward as we get these new challenge agents into clinic and start generating more challenge trial revenue from these. We've also started the construction at Canary Wharf, which again is a is a huge step for for us as a company.

18:28 We've also upgraded our IT cybersecurity, and we formalized the the ESG group within our company. On the left hand side, the reason why I wanted to show you this chart because it it shows you that the number of clients who are contributing more than £1,000,000 in a given quarter to our revenue is increasing. This means that we are getting bigger trials. It also means that we are now doing more trials concurrently than ever before. And this is very a a big step for us because it means that we can do more. We can increase our utilization of our staff, also our capacity, but also improve the efficiencies at which we conduct these trials. Because as I as I will describe later, we can screen one volunteer for multiple different pathogens or multiple trials at the same time. Our voluntary recruitment arm is going strong as ever, and we've seen an increase in order book. But I I will describe below, we we've also seen a greater diversification of the order book, be it by challenge agent or by number of clients we're working with.

19:36 One of the things that Steven alluded to is the fact that we are doing more and more what's called full service trial. These full service trials have three distinct steps. So one is the the manufacturing of the virus. This is this is what we start. We're taking a swab sample from a person who has a a cold or flu, whichever pathogen we're trying to study. We basically isolate isolate that. We grow it. We then take it to a GMP facility and grow it so it's ready for human clinical use. Once we complete that step, what we then next to do we have to do next is to determine what dose of the pathogen to use to basically get a a stimulated infection from an individual. So we do what's called a a a calculation study, which is effectively a small challenge trial to find the right dose to get the right number of infectivity rates in our target patient population.

20:28 Once we've done that, then we actually do the the main human challenge trial. Now these projects, typically, they last longer because of the different step, but also the the contract value of these projects is also much higher. So we have four of these that are almost coming to completion or some are just starting and some are are midway through. But the key thing here is that once we finish that main challenge trial with our client, we are then free to use that challenge agent in subsequent trials trials for other customers. And this basically means that we are diversifying and increasing our portfolio of challenge agents we can use. And we are unique in the world to have so many different challenge agents that are ready for human clinical use, but also we have data on these challenge agents from their exposure to human beings.

21:21 And that's a key step when we look to win new projects or use the data to design new clinical trials. The biggest single single biggest talent in clinical trials is recruitment. Patient recruitment results in about 80% of the delays that happen in clinical trial delivery. For us, we, of course, have to focus on mainly on on healthy human volunteers as well as asthmatics. We have a a flu camp brand platform that we use to recruit these patients, and that's been hugely successful. We we have made some changes in the management team. We have implemented a a new CRM, basically, a system to be able to manage the voluntary experience, and we have seen significant success. In in fact, we've been able to reduce our advertising spend to get to the target volunteers even though we are now recruiting more and more volunteers compared to historic years. And you can see from some of the numbers here, we've got very good feedback from the volunteers.

22:24 We have great ratings on CrestPilot. One of the key changes we made last year was that we bring the the kitchen in house that the volunteers are now getting, you know, freshly cooked food, and they really appreciate that. On the back of that, I think we've seen a lot more people recommending us to to their families and friends. And our main channels are Instagram and TikTok, which are contributing significant numbers into our volunteer database. We screened 17,000 healthy volunteers last year, and we'll continue to build on that. And and just remember, we we have to do this in a certain way. So we we have to have every ad advert we produce that direct it to our healthy volunteers has to be approved by an ethics ethics committee. All our trials are approved by the MHRA, The UK regulator.

23:15 Then life sciences have had an amazing year. So it with regards to just looking at revenue year on year, they've increased by over 30%. So a really good year for them to continue to build on what we had they they have already done. They also, of course, had a an increase in headcount by 18%, and the great business model for Ben is that they have a high level of repeat business. In fact, it goes up to 75% of the customers that come back to them year on year. We also know from our customer survey that we ran last year that 100% of the clients will be willing to come back to us or recommend us to someone else. And the other key milestone for Van Life Sciences this year was to add an office at Leiden. So Leiden is a small city in the North Of Netherlands, but it has a a very big biotech park. So we've been able to place ourselves at the center of that. So Better Life Sciences typically targets small up and coming biotech companies that are either in preclinical or early clinical state. And that biotech part is is a great place to locate themselves to be able to increase their exposure and build on to these clients who may start with small projects, but, of course, as these clients grow, the project size grows, and we get larger clinical work from these guys.

24:35 So what are we gonna be up to in the next twelve months or so? So for me, the most important forward looking parameter that you should really focus on is the order book. Okay? We currently have £80,000,000 in the weighted order book. And you may remember the weighted order book, it it consists of the gross order book multiplied by the probability of whether that contract, that project will go all the way to the end. So this may be a little conservative, but in the in the past two years, when I've delivered these numbers, we've always hit our numbers, and this is key to us. So every clinical trial that we run, every clinical trial company that's out there, they see this volatility where clinical trials get canceled or they they reduce in size or they get pushed out. So just to make sure we cover that contingency, we only report on the the net order book. And that 80,000,000 order book effectively means that we are over 90% fully contracted for for 2024, and we have good visibility going into 2025.

25:38 The right hand chart shows you how the gross order book, it it aligned as it as it burns through the next twenty four months. Now this is giving us long term visibility compared to what we've seen in the past. In fact, this is the the best visibility we've had in the history of the company. So this is what gives me confidence that not only have we been able to deliver the numbers we promised in in '22 and '23, but these are really good foundations that we will be able to deliver our numbers in in 2024. In fact, we are already building a pipeline of work going into 2025. And this comes from the human challenge trial and the existing models we have. But in addition to that, the new challenge models we are we are adding almost every other month these days.

26:29 The second point on the order book is that it's very well diversified. Historically, there may have been two or three clients that dominated the order book, so that increases your risk. So for example, if one of clients suddenly cancels or goes in trouble and reduces their pipeline of work, it could have a major effect on the provider or the vendor. We've now been able to diversify that risk. And as you can see, the number of clients contributing to our overall order book is significant. Client a and b, for example, are two large pharma, so some of the most stable companies in in the market. Client c is a biotech. Client d is a midsized pharma. So you can see from the middle chart, we're really well diversified between biotech and and big pharma. And for us, this is important because we don't want to rely on one group of industry to fuel our future growth. We wanna make sure that we diversify across as many clients in the biotech and in in the pharma sectors. And on top of that, we've been also being able to diversify the order book into different pathogens. Again, we're not relying on one specific pathogen to deliver our order book. I remember when GSK and Pfizer received the marketing authorization for the RSV vaccine in May and June of last year, we got the feedback from some investors that is this the end of RSV human challenge trials? Well, that's not been the case.

27:53 As you can see, RSV has the largest component with regards to future looking work. This is the order book. The work we have contracted are not yet conducted yet. So on the back of the the authorization of the two vaccines that are now currently available, I think more and more customers or pharma and biotech companies have realized there is a vaccine out there that they can actually discover, produce, and and bring to market. And now they can bring up a vaccine that has a better stability, maybe a better route to administration better than what's currently on the market. So I believe RSV will continue to grow. Influenza is also key. We have a new flu b coming through, human methanemavirus. And and that's not to say that, you know, we are still talking to some of clients with regards to SARS CoV two two.

28:46 So with regards to this order book, I wanted to show you how this order book aligns to the number of healthy volunteers we need to inoculate into our studies by month. Okay? And the key thing to look at this chart really is the different colors in the bars because the different colors indicate that we are recruiting patients into different viral challenge models. So for example, if you look at January, the the top dark green section, this refers to RSV volunteers. The middle brown part refers to influenza, and the bottom yellow part refers to a a human rhinovirus or or the common code. And this is important because typically when we screen one healthy volunteer, they maybe have a a fifteen percent chance to being suitable for one particular pathogen.

29:34 Now if you're running three different challenge trials at the same time, you can screen the same blood across the three different protocol that you're running, the three different viruses, you automatically increase your chance of recruiting that person into one of these trials by almost up to three times. This basically means that we want to keep the the number of web leads or the number of patients we're screening level at top, but increase the number of patients we're inoculating and putting into quarantine. And this has been our goal. One of the first thing I

30:08 said to the team was we I want to have at least three pathogens in a given month. So you basically have three times the chance of putting somebody into a clinical trial compared to when we ran one single trial in a given month. And this has helped us in improving our margins significantly. A huge milestone for us in 2024 will be our move to a new a bigger facility to Canary Wharf. All the paperwork is signed. We have the the planning permissions. The work has has started. In fact, all the floor plans and the designs are all done. As you can see on the on on the bottom left here, we've got the the the walls that have been put up, the ventilation is in place, flooring, planting, lighting, has all been placed. The the facility looks amazing, and you can see some of the pictures on the right hand side. And some of the quarantine rooms view will be pretty well, some of the best views in all of London. On the top right hand side, I know it's a small picture, but hopefully you can make out. This is a plant room that helps in the ventilations and making sure that the the negative pressure is maintained within the rooms and within the corridor.

31:19 One of the key differences between this facility and where we're at right now is that the Canadian wall facility will have a will be a c l three level compatible. This means that we can work with higher risk pathogens such as COVID. It also will have a a c l three dedicated lab, so we can run all our assays on-site rather than shipping them up to a different location. It will have an outpatient unit, and all the corporate officer officer will also be located here. The screening facility in Whitechapel will remain in place as it's close to some really good transport links, and we will also have the the Manchester screening facility also in place in Manchester. The key thing to remember again, for this facility that is largely funded by our our clients, it increases our revenue cap to 90 to £95,000,000, which is significant.

32:13 It increases our bed capacity to 50, but each bed is a quarantine zone on itself. We currently have, in the current facility, three different groups of quarantine zones. This basically means that you cannot run different pathogens within those zones. But because the new facility, we basically have 50 different quarantine zones, we can run up to 50 different challenge trials at the same time. A second key action point for us in 2024 is to increase automation, adopt IT into how we run our trials and become as as much as paperless as as we can. So in that, we have already started implementing a laboratory information management system or LIMS.

33:00 This basically would mean that we will be barcoding all our tubes that we have scanners and be able to track all the samples as they're taken from the healthy volunteer and scan through the different laboratories. And this is a key for us to improve efficiencies and and also on top of that, improve quality. The second one I mentioned briefly already, we have already in place a new management system to help our Flukem colleagues. Remember, there are about around 40 FTEs dedicated to Flukem in ensuring we we recruit the right candidates, we screen them appropriately, and we communicate them and manage their experience through the whole journey from the first contact and going into completing the quarantine unit. And finally, we will be looking at adopting a new tool to consent individuals using electronic iPads, for example, or the tablets as well as using eSource. This basically replaces the the paper medical notes, and we collect all the medical data electronically.

34:00 And this, again, will improve the the efficiencies as well as improve quality. We've also then have it linked to what's called the electronic data capture, which is used to analyze the data we collect during the study. So we talked about our medium term goal is to get to £100,000,000 of revenue by 2028. Majority of this will be achieved through organic growth, both by human challenge trials, expanding the portfolio of challenges we have, as well as growing better life sciences subsidiary and the consultant services they provide. On top of that, we will be adding new services to our portfolio. This is again, it will be organics.

34:46 This includes growing our lab services. In the current space right now, our our our lab space is basically filled. So once we move into the Canadian wall facility, we'll have bigger capacity to conduct more lab work and we will be targeting more nonchallenged lab work. We'll also be targeting field based phase two work work as a clinical site and also using our Flukem platform to be able to recruit more patients into non challenge trials or help other CROs into recruit patients or, well, healthy volunteers into their studies. On top of that, as we have this huge cash file, we will also be looking at conducting some m and a activity. Now this is something we will not rush into. We we we will wait. We'll wait, make sure we have the right target. So we're announcing this plan because we will be starting the process, but don't be worried if this would happen tomorrow. For us, the key thing is that we have the the right asset that's gonna give us synergistic efficiencies with what we already do. So we're not looking to acquire a company to put us into a completely new area of service. What we want to do is maximize the utilization of what we already do and try to monetize that. So I'll give you an example.

36:05 A phase one unit. A phase one unit has a a challenge when it comes to recruitment. Now we know 99% of the people we screen are not suitable for human challenge trials, but they could be suitable for phase one trials. So as an example, we will be able to ramp leverage our Flukem capabilities into fulfilling that. But there are also other areas. For example, patient recruitment company that can, again, work with Flukem, small to mid sized consulting companies that could sit well with Ben Life Sciences. So we have a number of areas we are targeting, but we will wait to make sure we get the right target before we execute. Going forward, this is our our outlook for 2024.

36:51 We are guiding towards 16,000,000 £62,000,000 in revenue in this year. As I mentioned, over 90% of this is already contracted, so we we have good confidence in being able to deliver this number. We also have visibility going into 2025. Again, as I mentioned, the the highest visibility we've seen in the history of the company, and this is supported by the 80,000,000 weighted order book that we currently have. So just to sum sum this all up, with regards to what we've done in 2023, I hope you feel that we we we've held to our commitments. I my my key ethos really is to under promise and over deliver, and I think this is the second year we we've been able to do that, and we wanna continue to to build on that. And I think the growth has been very good, very strong, but it's based on good foundation. It's not just going for two years as a blip, but growing at continue continue sustainable levels, and that's what we will see as we move forward. We are scaling up already. So the new Canary Wolf with the c r three capability, you know, adds to that that scaling up.

37:58 We're adding new challenge agent. We have new services that will be become active during the next twelve months. As we move forward long term, of course, we're looking at £100,000,000 in in revenue in 2028. We have a very strong order book. On top of that, we have a very strong pipeline of new queries that we are talking to our clients about that hopefully will sign in the next six, twelve months. Thank you very much for your attention. That's your luck for today. That's great, Moe. Stephen, thank you very much indeed for updating investors this afternoon, ladies and gentlemen. Please do continue to submit your questions using the q and a tab situated on the right hand corner of your screen. But despite the guys take a few moments to review those questions submitted already, I just like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investment company dashboard.

38:47 Moe, Steven, you can see you've had a considerable number of questions as usual from investors throughout your presentation. So thank you to everybody for your engagement. If I may, Moe, just hand back to you. If I could ask you just to read out the question and give response where it's appropriate to do so, I'll pick up from you at the end. Absolutely. No. Thank you, Peralta. I'll I'll and go through as many of these as possible. After the welcome increase and the share, I sold half of my position at twenty seven p. I want to understand and become more comfortable that the company can scale. At first sight, there is a capacity limit. Please explain why growth is not restricted by physical bed availability. Well, it is restricted by physical bed bed availability, and that's why we've increased the number of beds. Not only that, because we increased the number of quarantine zones, we should be able to increase the percentage utilization of the bed. So this basically gives us a a much higher cap in our revenue. So we we estimate that we can hit without m and a 90 to £95,000,000 in revenue if the capacity or the bed capacity at today will was fully utilized. So that that to me is is is a strong message, but you're absolutely right. There there are three key factors that limit our growth. One is the number of beds. We have addressed that. We have increased the capacity. In fact, if the demand continues to grow, we can add more beds to our credit for credit for facility.

40:13 Second is the number of volunteers. We may need to make sure we can recruit enough volunteers to fill the beds. And as I mentioned earlier, we've actually reduced our advertising spend because we're able to hit our targets at the rate we need them to. The third one is the order book. So we need to grow the order book, grow the demand, and continue to do more challenge trials. So those are your three key rate intercept to our growth. In a presentation last year, it was strongly indicated that cash would be used to acquire compatible profit enhancing company. Any update on this? Hopefully, I've I've addressed that on the presentation. We will be going out in the field and looking for certain targets. But, we we're we're not in a rush. We have a a very good business concept. We know what we do. We do it really well. We are the world leader. We have 90% plus share of the market. We are world renowned for doing human challenge trials. So we we just wanna make sure that remains our core business, but we will add to that in the coming months, at least twelve to eighteen months, let's say.

41:19 As you have 90% of the human challenge trial market, that's very up, I guess, where is growth going to come from? Well, first of all, the market is growing. Okay? So you you you already seen that from our order book. So year on year, you've seen the growth in the order book, which basically means that not only are we recognizing more revenue each year, but we are selling even more. That that's one place. Secondly, we are increasing the portfolio of challenge agents that we are we we we are we are selling. So this means that, basically, twelve months ago, for example, we we we didn't have a human metapneumo virus. But come towards the end of this year, we will have fully phased HMPV challenge model. So now if there are clients who are working in the HMPV space, suddenly, they're our target clients. So that's another way of expanding that. We will be adding new services. That's another way. We also will be increasing the the better life sciences consulting portfolio services they offer. So there's lots of different ways we're looking to address to expand and grow the the human challenge trial services.

42:22 I'm also interested to hear about how you are faring against the competition, including ergamet now that they will be presumably pushed by Premier. So we're not really a competitor of ergamets. Ergamets do not do human challenge trial. They conduct normal field based non challenge trials. So we we are fairly unique in what we do. So they're really not a competitor. And as as I as I mentioned earlier, the more trials we run, the more data we have on our challenge agents, the better vendor we become for our clients with regards to human challenge trials. Okay. What use do or can you make of artificial intelligence doesn't make easier for competitors to challenge you?

43:11 No. It doesn't make it easier for for our competitors. So one of the key restrictions for our competitors is the actual the the challenge model, the virus. Okay? Now each virus takes about 5,000,000 pound to manufacture and to characterize. But the key thing is you need to have human data on that model, on that virus to be able to use in your clinical trial, and we have an abundance of that. We've done over 70 challenge trials. We've inaugurated over 4,000 healthy volunteers. So we are unique in a unique position, and no amount of artificial intelligence can overcome that. We are using AI. So for example, one of the ways that we are looking at that is to basically scan and and take certain data points from our healthy volunteer medical records and to use to database that and use that to target the DRIVE trials for them in the future.

44:08 Could you take us through a typical project? What are the problems? How do you recruit the volunteers? Who conducts the inoperation? What are the primary challenges? Oof. A lot of a lot of questions in one there. So so Steven has already taken you through the financial profile of the project. So we basically start with writing a protocol, which is done by Ben Life Sciences. We then put together a a whole plan, and now we use Flukem to screen and recruit these patients. We have a screening facility in Manchester in London. They screen the volunteers, make sure they are eligible for the trial. They are recruited into our our quarantine where we have doctors and nurses who basically make sure they are they are legible. They're free from every other pathogen. So for example, there's a 17 pathogen screening platform we use before they're allowed to go into quarantine.

45:02 We knock at them using a pipette, and then we basically keep them in house for ten to fourteen days depending on the trial. And we monitor them, make sure they're safe, they're well. We collect the data. That data is then analyzed by Ben Life Sciences Ben Life Science Group, and then they produce the final clinical study report that goes to a client. I hope that gives you a a brief overview. That's a big question, to be honest, to cover in this form in this form. You have target of 100,000,000 revenue for 2028. Maybe I think, Steven, you can answer this. Do you have a target of £100,000,000 revenue for 2028, but the capacity of career of OFF is limited to £90,000,000 as you as per your interview today.

45:50 Do you have an option to extend your capacity at Canary Wharf, or will you look at other locations? I can I can take that? Yes. So we do have a a first right refusal on another floor in Canary Wharf. So if we need to really expand big, we can take another floor quite easily at Canary Wharf. We've also set up at the the office area in Canary Wharf. Is easy more easily able to convert to an additional 20 beds. So we could we can take a you know, we have a couple of options there to look at. So, yes, I we do have those options available to us. And, course, we can go to a different country or expand elsewhere in the world.

46:39 Thank you. Timeline for new facilities generating revenue, question mark. So we will expect to generate revenue from Clear and Wolf in q two of this year. Although we will have the official opening later on, but we will have healthy volunteers in Clear and Wolf in q two of twenty twenty four, and we will generate revenue. Will prospective purchase of a bolt on company be with shares or cash or combination? It it depends on the case. It it may impossible for me right now to be able to answer that question. We have a significant cash reserve here at HVIVO. We were not expecting to make huge, large acquisitions. We we we want to be able to fund any acquisition with with the cash we have. Unless we find a spectacular opportunity, then, of course, we we we would act on that. But generally speaking, you know, we will want to fund that with the with the money we have already in place.

47:35 Did the dividend attract any institution that fund? Yes. It did. We we've seen a a higher percentage of institutions on our shareholder register. I'm sure most of you guys are probably more apt than I am going on the the the FTE website, for example, or the Morningstar website, and and you can check on the different institution that now hold equity in our company. And as you can see, the percentage of which effectively held by our is is by the institution is continued to increase. What unique features are looking for in respect of bolt on acquisition? So I think I've already covered this. So, basically, an asset that where we can use our current services we're offering to leverage more revenue. So as I mentioned, the the volunteers that we can't place into our clinical trials, can we place them into a different trial? And what company would we need to monetize that as an example?

48:40 Generally, have you seen an improvement in the biotech financing environment? No. I have not. Me personally, anyway. I mean, we have a large contingent of potential clients that is still looking for funding. But people say the signs are there that it is improving, but I'll be lying to you if I said, yes. It's already happening. And has the fill has this filtered through to your weighted order book? So so I know I mean, our order book really is is made up of our pharma clients or biotech companies who are well funded. You must remember that every contract we sign, a client has to commit 15 to 20% upfront of nonrefundable fee. So for them to be able to sign the contract, they must really be sure that they've got funding in place to run that trial. So we we we will not have issue of cancellation, for example, as much as a typical nonchallenged trial CRO who do not have the the luxury of a nonrefundable upfront payment.

49:45 Is Canadian Wharf not a strange location for a business like Human Trials? I'd have thought there was plenty of location in The UK or abroad that will be lower cost. So we wanted to keep The UK because, I mean, we we we can only recruit healthy volunteers that have a UK GP registry. And, also, we really have an amazing platform in Flucamp, and the brand name established in the in the target audience really well. And we we really utilize that, I mean, amazingly well. And I think in my earlier slide, you could see our performance against some of our competitors when it comes to traffic on the web traffic of new volunteers. So we're there's no way we would want to lose that. Honeywell has a goal to become the next life science hub. So I'm sure you may have already seen this, but going forward, there will be further announcements of of new biotechs, new pharma, new laboratory companies moving into clinical work.

50:48 Are there any current blocks in approval by the MHRA as happened last year? So, thankfully, no. So we actually got an approval this month early this month for a clinical trial, which is right on time as we got as we should have got it. So, yes, we we we we are good. Will the dividend be only a nominal maybe one for you, Steven. Will the dividend be only a nominal dividend, or will it be a nominal plus special dividend? It will be a sort of a regular we're looking to set up a dividend policy, so it is based on our regular performance. So as our EPS improves, so will the dividend improve. We've yet to confirm with the board precisely what that policy will look like. We're erring towards more of an nominal type of dividend, but there will be an annual dividend that will be scalable to the growth of the business.

51:39 Thank you very much. How well insured is the company in case of severe adverse effect in subjects in a trial? We are very well insured. So there's kind of different levels of insurances we have have in place. So one is, for example, errors and omissions with regards to our own stuff. We also have an insurance of any ill effect or side effect of the channel agents that we use. And there's also an insurance insurance which is taken by taken out by our our pharma or biotech customers for any ill effects due to their product or their their drug. And some of these insurance are compulsory, and they have to be submitted to the MHRA prior you before we can start a human clinical trial. So, absolutely, we we have sufficient insurance in place across for the for the different scenarios.

52:32 I'm reading about China doing further work on oh, that disappeared. Oh, no. I'm reading more about China doing further work on coronaviruses. Could HVIVO have a role in defense to counteract any biological warfare? I'm not sure I'm I'm the right person to ask that question. We we do clinical research to bring drugs faster to patients. That's our our goal. We wanna make sure that any vaccines or anti antivirals that are being developed by our customers are tested rigorously and in a in a in an accelerated manner so that they they can get to the patients faster than they could otherwise. That's our goal.

53:18 We're we're not really into this part. Could you franchise the concept? So we have looked at this, and we've had queries. We feel that our challenge agents are our own IP, so we wanna make sure that we we protect that. We also have methodology and and the way we work, the way we conduct these products, which is the written protocol. That's fairly unique to us. So I I rather continue to build that ourselves rather than going to a franchise model. One for you, Steven, here. In terms of margins, is 22% the new base going forward? And what might the margin profile look like in full year '24 and beyond? Okay. Well, in terms of 2024, you've got to recognize that we are managing three different facilities. So there's an overlap of the old facilities, and there's the setup of the new facility.

54:13 So there's an overlap of costs, so I wouldn't expect any improvement on the margin. Is the margin 2020 new base? Most likely, you could say so. Certainly, when you get to 2025, we'd hope to have an uptick on that. Thank you very much. I think we'll finish soon. Couple more question maybe. You have talked about having multiple studies running concurrently. We do. What sort of utilization factor have you been at, and how would that change with the move to Canary Wharf? Well, we we typically do not publish the utilization, but you can rest assured by doing multiple studies concurrently in different pathogens, Activator Wolf will definitely significantly increase our revenues. So you can I mean, you can, to a certain extent, work it out yourself? So we're going from 43 beds to 50 beds, but a cap is going from about 65 to 90. So you can see the difference in the beds isn't proportional to the difference in the revenue, and that's mainly driven by the fact that we have 50 different quarantine zones at the at the Canadian War facility, thereby improving the utilization rate.

55:29 Okay. Last question. Oh, that's an easy one. Who owns FluCap? HVO owns FluCap. You. Thank you very much for all the questions. That's great, guys. Perfect timing as we just come up to the hour. So thank you once again to everybody for your questions and for your engagement. And, of course, we'll make all questions available to you post today's meeting. Moe, I know and Steven, I know investor feedback is particularly important to you both. I'll shortly redirect everybody on the call to give you their thoughts and expectations. But, Moe, perhaps I could just ask you for a couple of closing comments. Well, thank you for that. Absolutely. So I myself have been here for for two years, and and and Steven and I have got together, and we've basically said to everyone that we will set the right expectation, but we will deliver to those expectations. And we have done that in in '22 and '23.

56:14 We have good challenging goals for 2024, but the work that the team has done, the expanded team within HVO has done with regards to putting together a very efficient operating model, with regards to the sale of the marketing activity we've done and the recruit more healthy volunteers, I'm very confident and very bullish as we go forward. I'm very confident we will hit the £62,000,000 in revenue for 2024 and then build on that to get to a 100,000,000 within five years. Hopefully, you'll continue with us on this very, very good journey. Thank you for your time and efforts. That's great. Moe, Steven, thank you once again for updating investors. Could I please ask those on the call not to close this session as we now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations?

57:02 It's only 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 HVIVO, we'd like to thank you for attending today's presentation, and good evening to you all. Thank you.