Hvivo (LSE:HVO) — Final results

0:01 Good evening, and welcome to the Open Orphan PLC Final Results Investor Presentation. Simply type in your question and press send. Due to the number of investors joining the company today, we may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Mo Khan, CEO. Good afternoon. Alright. Thank you for that. And good afternoon, everyone, dear investors. I'm very pleased to present our full year '21 financial results. These are this is my first presentation on annual results, so I'm, you know, even more pleased than normal to be talking to you.

0:49 We'll go through the the slides, present you the key highlights for '21. We'll also provide a a very thorough financial overview, and then we will finish by going through the q and a. We have already a large number of q and a already submitted previous to the call. I'm sure we'll get more questions as we go through this call. But without further ado, we'll go to some of the slides, the normal disclaimer. I'm Yamin Khan, also known as Moe. I'm the CEO of the company. I joined as a a nonexec for OpenLoven in October of last year, took on the CEO role on the February 24. I have a a long history in working in CRO and biotechs, helping growing CRO businesses and also getting them acquired to private equity firms.

1:40 I'll ask Leo to quickly introduce himself now. Good evening, everyone, and very happy to be here tonight. My name is Leo Toole, CFO. I've been with the company since September 2019. I have over fifteen years of experience in life sciences across med tech, pharma, and most recently in the clinical research space. And before that, I spent some time in FMCG across Europe. Dimo? Thank you, Leo. So straight on to the the numbers as we move forward. So our 2021 numbers, I believe, were excellent. I'm not saying that that's our goal going forward.

2:26 But if you look at the the the change from 2020 to '21, I think you'll agree it's a a tremendous increase. So we had recognized a £39,000,000 worth of revenue. That's a 76% increase year on year, which is indeed good news. We had £2,900,000 of EBITDA. That's a 9,000,000 turnaround in EBITDA. Now these are very good numbers compared to year on to year, but, of course, I consider these to be baseline numbers and something to build on, and we expect to improve on both of these numbers by the end of twenty twenty two and beyond. We had £15,700,000 in cash at the end of the last year. So all of these results really are in line with the guidance we provided in the quarter three of last year.

3:18 We are the leaders in challenge trials. Without doubt, we have more than 60 studies to date in execution. We have over nine active challenge models across the respiratory, anti infectives, and and also parasitic models. And we have to date inoculated over 3,000 healthy volunteers. All of these numbers are are record breaking and world leading with regards to performing challenge trials across the industry. On the operational excellence and on the delivery side, as you know, recruitment of healthy volunteers is is one of the key challenges. We have Flukem, a very influential platform to recruit healthy volunteers.

4:05 We screened over 84,000 healthy volunteers last year through this platform. Typically, the challenge studies are valued between five to 10,000,000 pounds. We've seen an increase in the number of subjects required to complete the challenge study because the sponsors, our clients are beginning to see the benefits of the data from the challenge studies, and they're now actually conducting more and more complex studies and increasing the sample size. In other words, recruiting more subjects per study. And the other great advantage of the challenge trial compared to a typical field based, a phase two trial, is that they can be completed within a ten month period. So the sponsor is able to get really good efficacy signals for their products within a year and we are able to recognize that revenue within the same timeframe.

4:59 As we move forward, I believe we are well positioned for growth. We have increased our bed capacity. So we currently have a total of 62 beds and this includes beds to conduct phase one trials and we plan to conduct non first in human phase one trials as we move forward this year into next. We have increased our capacity in March by moving to a new screening facility, and we're now capable of screening up to 1,000 healthy volunteers per week. Our current backlog as the at the June 1 is £64,000,000, which is a record for the company. We have 100% commitment from our clients for the revenue we have projected for the end of this year of 50,000,000, but we have also already got a significant portion of revenue signed up for 2023.

5:57 For those of you who may be new to OpenOpen, OpenOpen consists of two subsidiaries. First one is HVIVO, which was acquired in 2020. HVIVO really focuses on conducting human challenge trials, and I'll go through what a human challenge trial is in a few minutes. The second subsidiary is VEN Life Sciences, and VEN Life Sciences really focuses on the early clinical development for clinical trials and for for for products, both small molecules and larger biologicals. Between the two companies, we are able to offer a fully integrated phase two challenge program. When life science partners are based in Breda in The Netherlands and in Paris, they provide protocol design and also the biometric services for the challenge studies as well as providing standalone services to their respective clients.

6:49 HVIVO, the main hub being in East London in Whitechapel, includes the two quarantine facilities with q in QMB as well as the Whitechapel Hotel and the screening facilities in Plumbers Row, which is open in March. We also have an additional screening facility in Manchester. So we are expanding the reach of the flu camp initiative to be able to recruit and screen patients from a a greater breadth of area. So where does HVO come from? Well, the HVO dates back to the mid forties when the common cold unit was formed. Two of the leaders of the Common Cold Unit in the late eighties went on to form a company called Retroscreen.

7:36 Retroscreen changed its name to HVIVO, which was eventually acquired by OpenOrphan. So we have a lot of experience, a lot of history in conducting human challenge trials. In fact, the common cold units was conducting cold challenge trials back in the forties and the fifties and so on. So for us, we have a long history. We know how to work with the regulators and the ethics committee to get approval. We know how to conduct these challenge trials safely. We've had an excellent safety record over the last thirty years that we have been conducting challenge trials. We were the first CRO to conduct a a SARS COVID two challenge trial globally, and that was conducted very safely with some excellent data. In fact, that study was published in Nature, a leading scientific journal. We also utilized FluCamp, as mentioned, to recruit our patients.

8:27 We have a number of indications already. These include influenza, RSV, malaria, asthma, and COPD. So we're continuously expanding the indications we're working on to be able to tap into an increased market. We've already seen an increase in the number of clinical trials conducted in RSV and influenza. But on top of that, we're trying to tap into the respiratory market and be able to conduct challenge trials in areas such as asthma and COPD. We currently have a large asthma trial ongoing. The UK really is a great place to conduct the challenge trials. We have a very favorable regulatory framework compared to The United States or The EU. In The United States, you require an IND to manufacture a challenge agent and also to conduct the characterization or the dosing study. In The UK, you don't have to do this. And also in The EU, again, the characterization study needs to go through a a regulatory framework. This delays and costs more with regards to developing a challenge agent. Again, in The UK, we have the MHRA and we work with the MHRA very closely.

9:35 We don't need to obtain regulatory approval for the first part, but of course, we conduct the studies under amateurized guidance and regulatory approval for the actual challenge studies.

9:49 So what is a human challenge? Well, a human channel a challenge that involves three phases. First, there's a screening phase. So we have to ensure that the healthy volunteers that we are screening are fit and healthy and able to sustain the inoculation of a potential virus and the quarantine period. Once a healthy volunteer goes through the screening period and passes that, then if there is a vaccine trial, they will get vaccinated. And thirty days later, they'll go they'll go into quarantine and be inundated. And during that period, they'll be observed very, very closely on a daily basis. Once the quarantine period is complete, the third phase includes the follow-up periods. For antiviral studies we conduct, we inoculate the healthy volunteer first with the viral agent, and then we treat them with the antiviral drug, and then we monitor them as before.

10:44 We conduct these studies here in in London. We have a a genetic screening program where we're able to screen patients on an ongoing basis five days a week, sometimes seven days a week depending on the demand. We stratify the volunteers into two groups, so the active group and the placebo group. And at the end of the day, when our Venn colleagues in Paris, they collect the data, they analyze the data, and they compare the two groups to find out whether the study drug was effective or not. We can do this within a ton ten month period in a challenge study, which typically would take maybe between two and a half, three years in the field. So this is a really a fast and efficient way for a client to get a really early indicator of the efficacy, the effectiveness of their drug in a given indication.

11:38 So why do pharmaceutical companies do challenge studies? Well, there's a a huge wide array of reasons and which are listed here on this slide. I'm not gonna go through each one, but I'll mention some of the key highlights. One is that these clients can derisk a phase three program. So as an example, Novavax was a company. It's a company that kinda conducted a a phase three RSV vaccine trial, which failed in phase three. Bavaria Nordic were not too far behind them, but they decided to postpone their phase three program and instead conduct a challenge study to get a firm view of whether the drug was effective or not. Following the positive results of the challenge trial, they were able to obtain breakthrough status within the FDA. Okay. Which means effectively, they saved up to two years in regular timelines and increased their marketing period for their drug. On the back of that, we've seen an increased interest in similar studies. So we have clients coming to us now us now wanting to do RSV challenge trials to get the same data and to be able to get breakthrough status or fast track status with the FDA. We have done this a number of times. It's one of the key reasons why there's been an increase in interest in challenge trials as a as a study program. We've also been able to save significant time by conducting challenge trials for our clients.

13:01 And also, in some cases, a client is able to obtain emergency use authorization by conducting a challenge trial only. And lastly, for our biotech clients, the smaller clients, they're able to move into phase two much more faster and be able to increase their valuations in the market. Actually, there's one more important point in pharmaceutical development. If a drug fails, you want that failure to happen early, not at phase three state. And our challenge studies are really good way of ensuring that your drug works before you spend the big bucks on a phase three program. So again, challenge studies have proven to be a very useful tool for sponsors, both big pharma and small biotechs in their vaccine and antiviral development.

13:50 We're now expanding this model to respiratory and parasitic research too. I briefly mentioned FluCamp. FluCamp is our recruitment platform, and we have invested heavily in a software and technology used to be able to recruit and engage our healthy volunteers. For those of you who have any knowledge of clinical research and clinical trials, you know that 80 of the trials that are delayed are delayed because of poor recruitment. In fact, more than half the trials that are canceled are canceled due to lack of patient enrollment. This is a key obstacle in clinical research. There are not enough people in the world willing to take part in clinical trials. And this is the main reason why we have invested heavily in the recruitment platform.

14:38 And as you can see from the two charts shown here below, that we have seen excellent results. So far, 100% of our studies have been completed on time with regards to recruitment, and we want that to continue to happen. Our genetic screening keeps our quarter million active volunteers in an existing database. As I mentioned earlier, we're able to now screen over a thousand healthy volunteers per week, and that's a huge amount. One of one of the constraints of challenge studies, of course, is that you have to have serious serious stability to be able to enter the trial. In other words, you can't have antibodies against the challenge agent that we are studying. For this reason, we typically lose 80 to 80% of our healthy volunteers. One of my key goals going forward is to be able to monetize these healthy volunteers.

15:29 And I'm pleased to say that we have this year been awarded a site study. A site study is basically a field based nonchallenged trial and doesn't have the same restrictions for sales suitability. So we're able to utilize the same resources and the same facilities to be able to conduct a nonchallenged trial in a phase two field based environment. And this is this is something we had aimed to do this year, and I'm pleased to say we have delivered. And now we have an ongoing nonchallenged phase two trial in the company. Our client base is extensive and and variable. We work with four of the top 10 big pharma on a repeat business.

16:14 They have been loyal customers and have got really good results from the challenge studies we've done to date. There's a whole variety of small to mid sized biotechs and biopharma, both in HVIVO and also in men life sciences. And finally, we also work with some leading academic sites and nonprofit organizations who have shown keen interest in our scientific knowledge and expertise that we use to build our models. One of the key things about challenge studies is that the powering of the sample size and the design is really key. And we have over thirty years of experience and over 60 studies, which we use to make sure that we optimize for the design and make sure the clients gets the most out of a challenge trial. Okay? We have over 60 clients that

17:00 we serve last year and 80% repeat business. Again, excellent numbers. One of the things I'm extremely pleased with that we have started doing is the fact that we are now cross selling between VEN life sciences and HVIVO. Two of the challenge trials that we have been awarded this year have been previously VEN life science clients, and that's wonderful to see. We're also now utilizing VEN life sciences resources in conducting the challenge trials, both in protocol design and also the biometric, the data management and the biostat services at the back end. Again, as I mentioned earlier, I'm also pleased just that we were able to get our first site study awarded.

17:45 This will make sure that we're able to recognize additional revenue from the same resources and facilities as I mentioned, but also through the same screening process more or less. And I think this is key for us. We wanna build on this and continue to add more revenue streams and improve our profit margins moving forward. Some of the added value we're bringing into the company. We've added the malaria model as as as mentioned earlier. We're now aggressively marketing this across the different companies working in this area, and we hope to have a a parasite related study either this year or maybe towards the beginning of next year. We're also working on additional recruitment strategies to make sure that we can monetize the eighty five percent, not just by doing our own site study, but also maybe working with third parties and selling some of those leads and volunteers.

18:44 We also launched our phase two site services as mentioned and expanding our laboratory services. So one of the key things a key skill set really is that we have a very extensive and knowledgeable laboratory staff, especially when it comes to virology assets and biomarker development. And this is something I'm looking forward to developing further. We are looking to get the cap certification in Q3 of this year followed by UK certification. As soon as we have the first certification,

19:14 we'll be able to sell our lab services to third parties in non challenge trials. At the moment, most of the work conducted by our lab services is done through our challenge studies. This is something we can expand. There's no reason why our lab cannot perform assays for non challenge studies on behalf of third parties. Finally, we're making sure that we are complementing the HVIVO and the One Life Science services. And one of the things we're also adding is ATMP services or advanced therapy medical practice services, medicinal product services to their armory. This is something that we know the market will continue to grow and then life sciences is placed in the right time to make sure that they make the most out of this area.

20:07 I'll now hand over to Leo to give an update on the financial aspects. Thank you very much, Moe. So this slide gives a snapshot of our key financial performance that we touched on at the top of the presentation. Firstly, revenue, we delivered £39,000,000 in revenue, up from 22, million pounds in 2020, and that represents a 76% revenue growth year on year. And we'll touch on the drivers of that in a moment. In relation to EBITDA, as well as been driven by revenue growth, we also, worked hard to deliver a restructuring that we had started in 2020 and deliver additional productivity gains, which drove a swing of £9,000,000 in terms of of EBITDA.

21:05 And we'll touch on that in in a few moments. All told, that led to a net an operating profit of 600,000 and significant improvements on our earnings per share. Our year end cash was £15,700,000. Again, very, very healthy balance to work with as we go forward. That was down from the prior period, and that reflected some one off costs related to the capital reduction that we did in June last year, as well as cost related to the spinout. It also reflected CapEx, normal maintenance related CapEx for our facilities and some equipment we we acquired for, our trials and the normal cycle of cash and timing related to r and d tax credits and and client payments.

21:59 Lastly, in relation to our order book, we finished in a very strong position of £46,000,000, and that number is actually increasing right now to £64,000,000 at the end of May and puts us in a very, very strong position going forward to, deliver revenue for the end of twenty twenty two and into 2023. Lastly, just to note, as I touched on a moment ago, we completed a distribution in species, to the company's shareholders, by spinning out assets that eventually became part of, Poolbeg Pharma. Now just to give a little bit more color on our revenue growth of 76% year on year.

22:49 So critical to this was the broadening of our client base in HVIVO as well as ongoing steady growth in the VEN business. All told, we had 10 active studies in 2021, versus five active studies in '20, '20, and that drove the significant growth. Now COVID, our work with the UK vaccine task force with Imperial College was an important contributor to that growth, but it was far from the only elements that drove the growth, last year. So while it while COVID was an important part of our mix, we are not dependent on COVID going forward into 2022.

23:36 And therefore, we're now focusing on our broad portfolio of, challenge models and other service lines going forward. I touched on Venn a moment ago. Now Venn, if we stripped out some of the old clinical operations revenues that we restructured, the Venn business grew a single digit solid single digit growth last year. And both of those businesses in Paris and in Breda are contributing strongly to help us deliver our challenge models and are delivering important cost savings to the bottom line. So more graphs here just to give a flavor, or more color on revenue.

24:23 Clearly, our mix shift has changed. HVIVO is now 80% of our mix. The VEN division is 18% of our mix, but contributing very, very strongly as I noted a moment ago in relation to doing data management and biostatistical services. Importantly, we are also seeing our existing client base within the Venn division as being an important source of of leads for challenge work in London. And that's really seeing that that's what we had expected when we merged both businesses, this notion of cross selling. Another important measure that we're seeing is the profile of our client base is is improving steadily over time. We now have 11 clients who are doing in excess of £1,000,000 in revenue, and we expect that to continue as we we broaden our client base, as we maintain and build these recurring relationships with big pharma. So that's that's a really important measure as we go forward.

25:28 Similarly, we're looking at our revenue per employee growing 50% year on year, and that's really important because it's demonstrating that we're getting increased billability of our employees. We're getting increased utilization across our employee base. And over time, we're also working on how we drive increased productivity, of our teams, and I'll touch on that in a moment. So again, to to touch on our net EBITDA performance. Overall, we delivered £2,900,000, in EBITDA, for the year for 2021. That reflected, an important swing of £9,000,000 year on year.

26:17 Now that £2,900,000 represents an EBITDA margin of about 8%. And standalone, we're that is not where we want to be, and we want to continue to drive and grow that EBITDA margin, notwithstanding that we had an important turnaround year on year. Now our target for the coming year is to deliver double digit percentages in terms of EBITDA margins and continue to grow that progressively over time. We're gonna do that by focusing on driving utilization

26:54 of our facilities, driving utilization of our core team, and driving productivity of our core team. If as we look to grow revenue, we're also gonna be trying to keep our our overheads and SG and A flat as much as possible. And in so doing, we get really strong operating leverage on our business, and that will further contribute to to to drive our EBITDA margins up over time. So, we're happy with the progress made to date, but we're but we think there's a lot more to come as we target to grow, our EBITDA margins, in in in the near future. So I'll now pass back to Moe to share some perspective on market opportunities.

27:48 Looking at the the potential market opportunity. One of the things you need to be aware of that the challenge that is in itself, you know, we are creating the market as we go along. We are educating, you know, academia, scientists, well as pharmaceutical companies into the usefulness of the data that the child studies are providing in the development of antiviral and vaccine and other products. And this is something we're now seeing in the field. So I mentioned the three companies that have already obtained fast track or breakthrough status with the FDA following good challenge study data. So overall, infectious diseases, the market is market continues to grow. In fact, the infectious disease clinical trial market currently stands at $5,500,000,000.

28:33 And we've seen two key triggers for increase in child studies. One is a change in the regulatory attitude with regards to child studies and the ability for clients to shorten their timelines when it comes to registration of their product by using channel study data. But secondly, the COVID pandemic. Okay. The COVID pandemic has raised the profile of viruses and antivirus and vaccines to the highest level possible. We've seen an increase in funding from biopharma pharmaceutical companies, nonprofit organizations, and so on. And the number of clinical trials currently being conducted in this area is higher than ever, and we think this will continue. I believe that the increase in interest in influenza and RSV has been triggered by the COVID pandemic.

29:19 Most scientists agree that a potential future pandemic will be due to an influenza variant, And this is one of the reasons that we've seen a huge increase in the number of influenza studies we are conducting. And I think this will continue for the foreseeable future. So looking at this growth in vaccines and antivirals. So you can see before the COVID pandemic, because the COVID pandemic itself has increased the the sales market of the year, the antivirus and vaccine. But prior to the pandemic, you can see vaccines and antivirals were always second to oncology. So already, we have a a large market base. So the number of clinical trials in phase one and phase two in antivirals and vaccines is huge. Now this is our key market.

30:10 We target medicinal products, antivirals or or vaccines that are in early phase. And from this, we look at what indications these products are in. And you can see on the right hand side, the four key areas that we look to work in. So there's currently a 144 influenza vaccines in the pipeline. Hundred and four so hundred and forty four in influenza, hundred four in COVID, thirty nine in malaria, and over thirty in RSV. So we have a a large pool of potential studies to work at. On top of that, we know the number of challenge studies per product is also on the up. So this is where I see exponential growth in the number of channels that are being conducted. Our pipeline at this moment in time is the highest it's ever been. And I think that says a lot due to the COVID and also the FDA change in view, we're now able to increase the number of trials we are seeing.

31:11 So a quick summary. So we're giving a guidance for year end of £50,000,000 positive EBITDA. We expect the EBITDA margin to be double digit percentage wise, and we're continuing to drive efficiencies and increase productivity to achieve that. Of course, my goal my main message to you is not to say that 2021 was a wonderful year. No. It it wasn't a wonderful year, but it was a great step from 2020 to '21. It's a major step in the right direction, and we hope to build on that going into 2022. And that's where we'll begin to see better margins, increased margins, able to show higher revenue and also higher EBITDA.

32:02 So my last slide is really an investment, a case of why invest in OpenOpen. Well, OpenOpen is the world leader in this field. There's nobody who comes close to what we do. The scientific expertise we have, the number of years of experience we have in conducting challenge trials, the number of challenge trials, the portfolio of challenge agents, and the number of healthy volunteers we have been updated is second to none. We are, without doubt, the world leader in designing and executing challenge trials. There's now an increased adoption of challenge trials globally, and we're seeing clients both from Europe and from The United States. We have already a developed infrastructure. We know that the market entry hurdle is really high for someone to come in to develop a challenge agent, to establish a quarantine facility, and then to be able to get enough data to show that the challenge model actually works is very hard. And we have already shown multiple times that our challenge models work, and we have been able to show that the drug is effective or not in some cases. Okay. But we know the challenge model does work and we use that to assess the efficacy of our product. We continue to expand our recruitment efforts with regards to flu camp and also the the screening capacity.

33:22 Our client base is really has good variety. We're not relying on any one single client to provide us with with major amount of revenue. We have breadth across both small biotechs and mid pharma as well as large pharma. On top of that, we also are currently working with some really key leaders in academic sites. With regards to growth, I mentioned with regards to our pipeline, our backlog is 64,000,000 as as of June 1. That is significant. Okay? We now, of course, need to work on ensuring we deliver those studies. But as a starting point, this is the best position that OpenOpen has been in its history. And on top of that, we're now able to identify new revenue stream and recognize revenue on top of what you already have with the same infrastructure, same resources.

34:16 I'm talking about the site studies that we're going to be running. And that is the end of the presentation. Thank you. That's fantastic. Moelio, thanks indeed for the presentation. Ladies and gentlemen, do please continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. Just while the team take a few moments to review those questions submitted today, I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. And, obviously, due to the number of investors on the call today, we have had quite a few questions come through. So the team may not be able to get around to answering all of those, but, of course, we'll review them. But, Leo, as I say, we've had a number of questions submitted both prior to the event and throughout today's presentation. Thank you to everyone for submitting those. Can I please ask you just to read out those questions and give responses where appropriate to do so, and I'll pick up from you at the end?

35:06 Absolutely. No. Thank you for that. Okay. So we have kind of multiple pages of questions, to be honest. So I'll be surprised we'll be able to go through all of them, but I'll I'll try my best with the with help from Leo. So starting with this one, so how are you going to increase margins in the core business? The one for you, Leo. Thanks, Moe. Well, we we touched on it in in the presentation, but really there's two things. Firstly, driving operational efficiencies by increasing quarantine occupancy, increasing productivity of our work, and using new technologies to speeding up the way we work. And we're continuing to invest in technologies in our labs and in our recruitment processes. The second area is really, as as Moe as Moe touched on earlier, how do we broaden our services and get better utilization out of our facilities?

35:59 Site services covering, how that we can utilize our resources, using new accreditation for labs and working to sell unused recruitment leads. Mo? Thank you, Leo. Second Second question we have is considering the previous announcement of a 7,300,000 influenza contract. I see this was part of a potential £75,000,000 weighted pipeline. Have there been any discussion with new contracts outside of this weighted figure? But I think you you have to kinda appreciate, understand that the weighted pipeline is is a living document. It changes literally every day. So new proposals are added, a loss is removed, as well as proposals that we are converting to an award. So it really depends on the current status. So I can assure you that the current pipeline is the highest it has has been. The current pipeline is also the highest it has been in the history of OpenOver. So we're in a healthy position. But I think the backlog figure is especially significant in the fact that that assigned work that we have in house that we now have to execute on. So I think we have a very healthy pipeline.

37:17 I have visibility over the next nine months with regards to ensuring we have sufficient utilization of the capacity of the beds we have. So I I believe in the short to midterm, we are in excellent position. Of course, that doesn't mean we rest on our laurels. We'll continue to sell aggressively and continue to build on the pipeline and the backlog as we move forward. As regards to the 7,300,000 influenza contract recently awarded, will there be any more of its value to be signed this year? Well, after the 7,300,000, we did sign a 14,700,000 contract. Now this was the largest single contract in the history of OpenOrphan. This contract included a characterization study and also a challenge study.

38:05 On top of that, a month before this, we also signed a manufacturing contract with the same client. So all in all in all, we have the contract to manufacture the challenge agent, conduct the characterization study to find the right dose, and then conduct the actual challenge study. Now this is a first in in the industry as well as the first for open open. And I think this is something that shows that the big pharma have got real confidence in our abilities, not only just to conduct the challenge studies, but to be able to also to manufacture the actual challenge agents. Nobody else as a single provider can perform all these services in house. I think this is one of our key USPs. Another one for you, Leo, I think. How is open often being affected by inflation?

38:53 Where are costs increasing in the company? Yeah. Thanks, Moe. Look, everyone's aware of the macroeconomic environment right now in the context of of coming out of the COVID pandemic and, the situation in Ukraine. We're we're monitoring that situation very, very carefully, and, you know, we are seeing some pressures across our cost base. Our reaction to it is twofold. Firstly, where possible and we're and we are adjusting our pricing and our bids to make sure we're maintaining our our appropriate margins on on our contracts. And that's working with our clients and working doing that proactively.

39:39 Secondly, very, very importantly, prudent cost management across all business areas, and that that's just business as usual for us. And and we judge that those those two actions will help us mitigate inflation as much as possible. Thank you, Leo. Next question is, will demand for challenge studies drop off if a recession hits? How much of an essential cost are the studies for health care companies? So the answer to the first question is, don't believe that at all that the recession will have a major impact because of the current pandemic and the the potential for a future pandemic. I think infectious diseases is one area where we'll continue to see increase in funding, both commercial and noncommercial.

40:27 So I do see a sustained growth in further research in vaccines and antivirus especially. And with with regards to the essential cost for the biopharmaceutical companies when they conduct a challenge trial, I guess the the real the answer is what are the future benefits? So if you look at companies like Bavarian Nordic who are able to cut their development timeline by two years, how much is that worth? So you argue that a year in marketing a blockbuster drug is a billion dollars. So that's a potential additional revenue of $2,000,000,000 based on a a challenge that is spent of between 5 and £10,000,000. So you can see the return on investment is potentially huge.

41:15 When roughly will the CAP and UCaaS accreditation be recognized? So CAP audit will happen in July, and we expect to get accreditation within sixty days of that. The UCaaS audit is currently penciled in for q three, so we hope to have that certification by the end of the year. Next question, why have investor comms gone so quiet over the past six months? What's stopping the progress in business? So I I hope I haven't been so quiet. I think we we we've got 20 RSS already this year. That compares to 29 for the whole of last year. We've announced six different contract awards.

42:03 But going forward, though, we will be more selective with regards to our announcement because I think we are now mature as a company. We need to behave as a mature professional company, and we'll make announcement on key significant milestones, not everyday signings with regards to 1 or £2,000,000 contracts. And that's something we want to do going forward. We want to attract institutional investors in addition to our our our retail loyal investors. But going forward, we will be more selective in the RNS announcement. And that's not to say we wanna communicate with you less. We wanna make sure we give you quality rather than quantity. As regards to the World Vaccine Congress, the an investor show even event lately, are we likely to see anything as regards to potential new business or institutional investors buying shares?

42:57 So, yes, the the World Vaccine Congress, in fact, was a very positive event for us. We talked to a lot of current clients as well as new customers. I attended that myself. It was also the first global congress on vaccines where challenge studies were discussed at the main stage. So I think the big step with regards to the acceptance of challenge studies in the vaccine arena. For your second question with regards to institutional investors, I'm glad to say that we have a new nomad on board, Liberum. I have met with them already a number of times. And with their help and our other brokers, we will be targeting institutional investors this year. So watch this space. We we hope to have more institutional investors on board.

43:46 This one's a a fairly direct question. Where are the malaria contracts? Okay. So the malaria model is something new to us. It was finished developing in the q one of this year. We're currently and aggressively marketing this. Of course, as you can imagine, this is a a new model for us, so it takes a while to win a first contract. But I have no doubts that in the near future, we will be able to obtain malaria or any other parasitic related studies. And this is something that, you know, we're looking forward to develop and continue to work on really hard. Where are the COVID contracts? So I just wanna state that we're not a COVID only CRO.

44:33 I don't believe that 2022, for example, will be a year where a substantial amount of our revenue will come from COVID. COVID did help us in the way that it highlighted the the fear of a pandemic through a virus potentially and an increase in research in RSV, influenza, and and other such indications. But I don't believe that COVID will be our mainstay. We will be working more on COVID in the coming months and years, but I still see in the short term influenza making a major contribution as well as RSV. And on top of that, I've I've talked about the asthma, the malaria, and the size studies to generate additional revenue too.

45:22 RNS June 1 includes the phrase, the study who is which is sponsored by HVO, please explain. When we conduct the characterization study, we typically sponsor that study. It's not a freebie. It is still a fully funded by the by the client. Okay? But we act as a sponsor for regulatory terms. So we act as a sponsor in in the fact that we take responsibility for the delivery of the study, but it's totally funded by our customer. If I'm not mistaken, the move to the current location was not a budget ary matter, lower rent, larger service area. It was also the intention to bring together the entire team in one location. How did the synergies work out, and does this have consequences for future profits?

46:08 So absolutely correct. So the reason behind the move, one was to increase capacity. So now we are able to screen over a thousand healthy volunteers a week. We have consolidated the office space. So I'm, for example, sitting a floor above our screening facility, which is downstairs, and I go down there on an office basis just to make sure everything's going okay. We also have a QMB facility and the White Chapel across the road. Our rent now is lower than before, and we have a a larger area. And with the move, we're now being able to add the site services I talked about earlier. So all in all, I think the the move has been very successful. And on top of everything else, I do expect to see synergies and hopefully increased productivity because we are located in same office.

47:02 As regards to a bed capacity mode, do we need do we have enough to turn around business in a timely manner? Also, as regards turning over more revenue to increase profits. So our current bed facilities are sufficient to make sure we hit our revenue targets for this year. Going forward, I believe for 2023, you know, we have yet to finalize our revenue target. But when we do, I think we have sufficient capacity. One thing to note though is that in early twenty twenty one, we were able to build and implement a completely new quantum facility within a four month time span. Now typically, a new challenge study takes six months from award to quarantine. So we will be able to build and fit a new quantum facility in time if the demand requires it. So I don't believe that capacity will be a constraint in increasing our revenue.

47:59 Okay. Next question. Will you be looking for more facilities to grow to support revenue growth? We always have a pre identified list of facilities that we we know we can move into. So we have a a facilities group in house, and that's one of their jobs is to make sure that they have a a list of pre identified facilities nearby that we can move into or convert to quarantine at a a fairly short notice. So absolutely, this is something we're always on the lookout for. But as I mentioned, right now, there's no such demand. These are some of the questions on the on the share price. What concrete steps are you going to take to get the share price back on the road and deliver shareholder value?

48:45 What would you call a success a new c what would you call a success as new CEO regards getting back open, open, on track. So my goal is to make sure we have a sustainable, steady growth in revenue, a sustainable, steady growth in EBITDA and profit. I believe if we can deliver this quarter by quarter, year on year, it will be reflected in the share price. As you guys know, share price has a lot of external factors that we can't control. Okay? But what I can control is us converting our current backlog into revenue, getting new sales, more studies in, and increasing revenue, our profit margin. And I believe at the end, the market will reflect that. Our share price will increase if we're able to show a sustainable delivery.

49:39 '21 was a good year. I'm hoping '22 will be a great year, and '23 even better. Why has there been no share buyback or dividend? But partly speaking, I I I I don't think this is a good idea at this stage. We believe we have some really good strong initiatives going forward that will help us to return, you know, on investment that be greater than giving back dividends. So we've invested in new models. Malaria, for example, we are building the COPD model. We have built a new revenue stream inside services. We're investing in labs. We're hoping the increased capacity in lab will generate more revenue, especially after we've received the certification for the accreditation.

50:28 A few questions for Leo on finance. EBITDA was 2,000,000 at six months. Full year, it was 2,900,000. Can you explain why we only generated 9,000,000 in h two? Alright. 900,000 in h two. Look look, as as context, in terms of revenue, last year was a record year and we you know, 75% up on on the prior period. So that's really, important context. Within that year, it probably the the growth was slightly more heavily weighted towards h one than h two. So when you look at the balancing of of the profit performance, h one was gonna perform slightly better than h two, and that's reflected in the in the in the net margin numbers.

51:21 Now we know that we actually could have done better in q four because we had a postponement of a challenge study into 2022 because of slightly delayed regulatory approval. So right now, what we've been working on this year is how do we make sure we're we're overbooked in terms of the amount of pipeline or amount of orders that we have so that if there is a delay in in any particular client, study, we can replace that with a study that's already ready to go, and therefore, we mitigate that risk. And what's critical here is that we're trying to load balance our studies more evenly across the year so that we don't have the the highs and lows that can affect our profitability numbers.

52:09 So that's what's that's what drove this slight imbalance on profitability, between h one and h two. Second question, what will you do with your cash? I think, Moe touched on it in terms of new models, potentially new facilities, and new revenue drivers. And we wanna really explore how we drive revenue going forward, and we think that that will deliver very strong returns for investors in due course. Has the company now received sufficient orders to achieve 2022 revenue target of 50,000,000? Yes, we have. We're we're now a 100% contracted for 2022 revenue. We're now focusing really on the important recruitment work and staffing work in our facilities to deliver those, those studies.

53:05 What are your projected revenues, profits for 2023? If you want to get a PE ratio comparison to your peers, that is needed. Well, that's a really, really good point. I mean, we know the benchmarks in the market. And while we've had a good year in 2021 relative to earlier years, we're not satisfied with with where we are, and we want to continue to grow. So firstly, we are very well positioned for growth, in 2023, and we're gonna guide on that across, towards the end of the summer. We touched on profitability as well, a few moments ago. We're targeting to improve, our productivity and our operations to deliver, double digit percentage EBITDA margins and continue growing those into the long term.

53:56 So we're not satisfied at all with where EBITDA is, and we're going to continue working towards improving that. Mo? Thank you, Leo. A couple of more questions. Well, there's a number of questions on spin out. So I'll give you a brief summary. So why have the other spin outs not happened yet? What is causing delays? Considering the economic climate, will actually anything be done this year as regards to spin offs? Look. I think the current market is very difficult when it comes to IPOs and spin offs, and I'm I'm sure you guys are very educated in that. So I don't know whether anything will happen this year in fact. But one of the great things of me coming on as CEO is that Cajal is now free to concentrate on spinout. So I know he's worked been working diligently on making sure that we have the the right offerings when it comes to an IPO or spinout in the future. And he will be working very hard to make sure that the next spinout comes out. Of course, the current market really isn't optimal to do this IPO and spin out spin out right now. So this is something that, you know, we'll wait and see. When the market changes, we'll be ready to go.

55:10 When do you think we will list on Nasdaq? Again, to be honest, maybe a boring, but a similar answer. I think in in the current market, I don't think I expect to see something happen in that in the short term. But we are focusing on assuring we deliver the key fundamentals on the business. I think that's that was all of the previous questions. We've got a large number of questions on on the current. So I I tried to go through as many of these. I don't think I will be able to, unfortunately. So good news on the increase in EBITDA, but there was also cash burn in 2021. Can you explain uses of that cash?

55:55 Leo, do you wanna take that? Yeah. I I I will. I touched on that in my piece. Look. We had some one off stuff related to the capital reduction and the spinouts, and we had a reasonable spend on CapEx related to, you know, maintenance on our facility and some equipment that we were using for for our studies. And on top of that, you had some timing differences in terms of r and d tax credits that we we recognized as revenue, but the the cash for that was only gonna come, this later on. And you've also just some normal ebb and flow in terms of cash receipts from from clients. Some questions down the road is how how how's cash right now? Look. Our cash outlook is is very good. It's very strong behind the client wins that that we have had in recent in recent weeks. The the 14,700,000 contract is gonna give us a really strong cash contribution because of the prepayment element there.

56:56 We're, well on track in terms of managing cash with our clients. Our receivables are in good shape, and we see the normal cash cycle, is really healthy in line with the improved performance of our business. So we feel we're in good shape there. Mo? Hi, Helio. How many new challenge models are you anticipating to have by the end of this year? Well, look, we we're ongoing in our development of challenge models. I'm not gonna give a number. To be honest, I think that's a competitor intelligence in a way. So suffice to say that, yes, we have ongoing development with regards to new challenge agents. We have a very strong scientific team that have, you know, over thirty years experience develop developing these challenge agents. So we'll continue to look at this.

57:47 The the 14,700,000 contract we signed, well, that was a a new challenge agent that we developed for that. So that was the last one we've done, but there there will be more on this. The question is, what is The US IND regulatory constraint? So to develop a challenge agent in The US, you have to submit what's called an investigational product, Dustio, effectively, because they treat a challenge agent like a study drug. So effectively, you need to collect and submit all the documents that you would as if you were developing a new drug. In The UK, those regulations do not apply. So a challenge agent is not considered a study drug. That's the main difference. Is the nonchallenge phase two trial being used as a test and learn or is the ambition to build this as a regular offering?

58:39 No. There's definitely ambition to build this as a regular offering. That is not to say it will become our core business. We are and will always be a challenge to the CRO, and that's key. Okay? Because that's a greater strength. But there's no reason why we cannot bolt on and add on additional revenue streams. You mentioned using recruits that wouldn't be eligible for challenge trials due to antibodies for phase two. Can you please elaborate? So so effectively, to conduct a challenge trial, let's say in influenza, we need to make sure that individual doesn't have antibodies in their body against influenza. Because when they go into the quarantine and we inoculate them with or expose them to an influenza virus, they will not become infected.

59:26 So effective, they can't take part in trial. So as part of a screening process, we exclude all healthy volunteers who have antibodies against the challenge agent we are studying. These patients or these healthy volunteers can now be diverted into a field based phase two trial, which doesn't require the anti which doesn't have the antibody restriction. Please indicate the trajectory of growth of cost per employee versus growth of revenue per employee? I'm sure Leo can add to this, but just to say that the the revenue per employee is increasing at a much steeper level than the cost per employee. But you wanna add anything to that, Leo? Yeah. Look.

1:00:13 We we're focused on driving billability of our our our our permanent employee base, driving utilization across the piece, and driving productivity. And our goal is to continue to drive our overall EBITDA margin up even while growing revenue. So net net cash EBITDA, so to speak, or absolute EBITDA will be impacted by not only revenue growth, but the increase in margin. So they all go hand in hand. And that's that's how we know that we're delivering, the real the real impact of those productivity improvements. Thank you. Double digit growth in EBITDA could be welcomed, but still modest at 10 to 11%.

1:00:58 There was early talk of a target of 30% for '22. Are you planning near the former or near the latter? Okay. So look. I'm gonna be very realistic here. I don't want to overpromise and underdeliver. I rather underpromise and overdeliver. But realistically speaking, from where we're coming from, okay, to never being able to show a profit to a 2,900,000 EBITDA and this year increasing that margin even further. Okay? I don't believe we'll get to 30% this year, but we're push well into the double digits. That's our goal. So long term, there's no reason why we can't push towards the twenties and thirties. Okay? But this is not a short term strategy. I think we have a good base. We need to make sure we we win more studies. We execute more efficiently.

1:01:48 Every department has KPIs and targets. So we are monitoring what we're doing, how long it takes us to do this. I want us to be a very efficient service provider, and that's key. Once we're able to do that and deliver our studies on time to budget, we'll be able to realize much greater EBITDA and profits. How much is Cajal involved in the business? He's very involved. He sits in the office next to me three days a week. We talk on a on a regular basis. The day to day running of OpenOpen is left to me, but we talk on a strategic level to see what we're going to do for with the company. He is especially focused on the on the spinouts, as I mentioned, but, yeah, he is still very heavily involved.

1:02:35 But I take responsibility for the day to day running of OpenOpen. When will Mo buy shares in OpenOpen? Very soon. I I'm talking to Cajal and Nomad to see when I have an open window to be able to buy those shares. How the roadshow how is I assume, how has the roadshow going or or gone? Any new investors coming on board? We had, my next one day today, we met a number of, brokers and analysts and potential investors, and we continued that for the rest of the week. I think the message is is much stronger now that we are in a profitable situation and able to show a positive trajectory.

1:03:27 I'm not saying we are where we should be, but I think we're showing a good trend. And I think this is what is attracting potential new institutions as as future investors. How much is a weighted pipeline now? We're not currently disclosing that, but I will say it's higher than what we disclosed previously. Is Moe buying shares? I think I've answered that question. Why did this take so long to issue the final results? Really good question. And this is something we'll fix for next year.

1:04:13 So So we'll give our interim results in September of this year for the first half. But going forward, we were looking to publish our annual report in April and then do first half in July and interims in September. So you're absolutely right for your comment. And as a professional organization, we should be able to report our annual finances in early April, and that will be the aim going forward. Very impressed with the range and depth of your answers to Michelle. Thank you. Okay. I think we have taken enough of your time. I appreciate your time here. I know I'm new to this, and most of you don't know me. I did meet some of you at the at a at a recent conference, but I'm here to drive the company forward and continue to increase on the revenue. I appreciate that the the EBITDA itself isn't as much as it should be. But look, year on year, the the the turnaround is is £9,000,000, which I think is significant.

1:05:22 But as we move forward, I'm sure we'll do bigger and better things. So thank you for your time. Thank you all. Mo, Leo, thank you indeed for updating investors today. I think you have covered off a number of those questions you can from investors, of course. The company review all questions submitted then. We publish those responses in the investor meet company platform. Can I please ask investors not to close this session? We automatically redirect you to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and that's greatly valued by the company. On behalf of the management team, Open Orphan PLC, we'd like to thank you very much for attending today's presentation. That concludes today's session. Thank you, and good evening to you all. Thank you. Bye.