Hvivo (LSE:HVO) — Final Results 2020

0:03 Good evening, ladies and gentlemen, and welcome to the Open Orphan Final Results Investor Presentation. Corner of your screen. Please just simply type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor Meet company dashboard. I'd also like to remind you that this presentation is being recorded.

0:34 Before we begin, we would like to submit the following poll. And if you'd be so kind to give your that your attention, we'd be most grateful. And I'd now like to hand over to Cathal Thrill, Chairman and Leo Tull, CFO from OpenOrtham. Good evening to you both. Mark, thank you very much, and good evening to everybody who has dialed in to join our event tonight. So basically, the last event, what we'll try and do is bring every is with software update where we are, bring in a few more slides of the deck, and then get my colleague Leo, our CFO, to really address the finances on our results today. And then most importantly, the reason why I like this forum, there's been a lot of pre submitted questions, and let me work through them. Give you an idea how the pre submitted questions is a we've grouped them. There's a good group around. People are curious about the pill bag pharma.

1:26 The next one is about spin outs in general. We've another group of questions around disease and motion, and then finally, the twenty twenty results announced today. So that's how we'll do it. And then, naturally, I see lots more questions coming directly, so let's address those as well. And we'll try and wrap it all up forty five minutes an hour if that's okay. So moving take people through briefly where we are, the last of it. So in summary, we're halfway. We're not I don't know. There was some debate today where we're really profitable. We can absolutely always say we are absolutely profitable, operationally profitable q four last year. This bear in mind, this was a combination of two companies, Van Life Science on the stock market for eight years and HVIVO on the stock market for nine years. Never made a profit either of them. So we combined them and then within five, six months, operationally profitable. And the core clear, crystal clear thing, we're now highly profitable this year, not operationally profitable, EBITDA profitable in the first half and substantially very substantial EBITDA profitable in the full year.

2:33 So there's no question, EBITDA, pretax, no matter how you look at it, it's all profits this year. We're in a fabulous place with a world leader in the test of the vaccines. In the next ten years, and this is where, look, I I know we'll address the share price has been bouncing around today, and we'll deal with that in a moment. However, it's almost like we've been here before. About a year ago, when the share price bounced around 10 or 20%, and for those good patients and hung in, they get rewarded. And on that note, I was hoping to buy a substantial amount of shares today. Unfortunately, there's a little bit more information that leaves me an insider. So within the coming days, as soon as that last bit of information that stops me from makes me an insider, you will see an answer where I'm gonna buy a substantial amount of shares. So that's been well flagged. It's not in Sutter, but, unfortunately, there's one last bit of information. And it's not to do I know you're all guessing to do what it's very good news, actually, but it's not to do with our our pool by spinner. There's another piece of news.

3:30 Unfortunately, directors cannot buy shares when there's any substantial news flow outstanding. So let's get that last bit of positive news flow, by way, in the coming days, late this week or early next week, and then I'm putting my money where my mouth is. Anyway, why am I very happy with my money where my mouth is? The next ten years will be the decade of vaccines and infectious diseases. There was virtually very little spelt in vaccines and infectious diseases. And guess what? The average year was about a 10,000,000,000 industry. The bulk of infectious diseases was the annual flu vaccine. By 2025, that annual market is now growing. 2025 is literally four years, will be 250,000,000,000 a year in products in the infectious diseases.

4:17 That's 250,000,000,000. It's been the single biggest market ever in pharmaceuticals, and that's simply vaccines, antivirals, COVID, influenza, RSV, asthma, all those infectious diseases are suddenly so we're right front and center, a bloody great place to be. With an extensive pipeline of challenge studies and look, watch this space for the 10,000,000 deals. They are as the next one, they are in motion. And for people who hang in there, they will be rewarded. With the disease motion platform, it's not patented, and that will be spun off. I'm a lot allowed to say it will be an IPO, but I think make up your own mind what we're gonna do with it. The shares in that will be handed back to the shareholders. We now have the formula. It'll be done as a strategy demerger prior HMRC approval, and that means you will get those shares in your hands with no income tax on those dividend species.

5:15 I'll explain that more in a minute. That's the way we're doing pool bag. You will get the shares in these vehicles and the reason you don't pay income tax on them because we're giving you shares in a new company of assets you already own. Naturally, if you double or triple or quadruple the share price of pool bag or disease in motion when we when we IPO them, you will pay capital gains when you exit. That means the holding cost will be zero. In summary, we're monetizing all our non core assets and they'll be done by the autumn. That's hard stop. Over the summer, some more and all done. I'm not in the humor of hanging around with non core assets. And the reason I don't want to hang on with non core assets, open orphan as a world leader in tested vaccines is in probably one of the best places to be at the moment. It just couldn't be a nicer market, but these assets are better sitting in stand alone companies. You shouldn't mix pharma services with pharma products. Why? Because we've got Pfizer signed the big contract, get this developer product. They don't want us running around the corner in another arm of the business building a competitive product. I'm being honest with you, the the first pool bag asset, it's immune suppressor modulator, and that would compete with a couple of our customers. Big Pfizer and company don't mind if it's sitting in a sister company with commonality and shareholders, but as long as it's a separate company. So that's why assets biotech assets one, services the other. And that allows us then look what EKF did. EKF created over £1,000,000,000

6:46 starting between renal analytics and the other ones. I'm gonna give you the names of them again. They've gone over. Vergichi and Trellis. That's well over. It's 1,200,000,000 starting. I'm absolutely convinced in the months and within the coming year, we can create at least a billion dollars in shareholder value between open orphan and our four non core assets. And if all goes well, if Leo reassures you that cash balance is going to rise by the year end and it was dipped a little bit because we put some money into some of our non core assets to make them in strong position. So people are worrying why did the cash balance drop with us because we invested some of it. And as that starts now, that investment is done, as that starts ticking up. Well, I'm the single largest shareholder, and I I'm not selling. I'm increasing my stake, so a nice cash dividend with a lovely Christmas present.

7:36 Moving on, and look, not gonna dwell unless you've been watching this significantly. The pieces missing is the next couple of 10,000,000, studies, and what's that space is all I can say. So we've had to look with a busy twelve, eighteen months. I know some of them would prefer we're much busier, but, hey, we're a small team and I think we're going places and for those who hang in over the next couple of weeks, not months, I think you will be roarly rewarded. And I wouldn't be an increase in my stake if I didn't think the rewards were coming. I'm not gonna bore you this, but in case there's any new folks on here tonight. Basically, we a London office with a world leader who run clinical trial studies. We have a Paris office, data management biostats, and we have the Dutch office. I spent most of this week between the Paris office and the Dutch office, got back into London this morning, and all of the office are functioning so well together. And look at our customers.

8:27 We're basically dealing with every one of the infection, basically, vaccine, antivirals, Janssen, Merck, Pfizer, you name it, they're our customers. So that's not a bad place to be, in a market that is absolutely on the upwards infectious diseases. We don't wanna be seen as all a COVID story. I know people, the COVID stories come and the COVID stories go, but it's a bit like the gift that keeps on giving, basically. And it's terrible things. It's not a gift, but it is for a business where we're testing vaccines. Many of us, hopefully, every here tonight has now been successive access, so we can move around. We can do things, but you have new variations. And our firm belief is for the next couple of years, people will told take your annual flu jab, and when taking your flu jab, take your COVID jab, and that's just the way it's gonna be. It's very clear. Three point five billion people in the world have now had either one or two shots of the vaccine.

9:26 And the piece the media don't talk about, virtually nobody in that 3,500,000,000 have gone to hospital. Virtually nobody has died, and virtually nobody in that group has got serious illness. You may still get COVID, but it's only gonna be a sore back, a running nose, or sore head. So it's kinda moving into the flu phase if you have been vaccinated. So and again, we're working hard on the next generation of vaccines, and then say a spray can do a whole community. An injection only can do one person. So bear in mind, we're well into the next generation of the vaccines as we speak. Really importantly, volunteer recruitment was screened over 550 volunteers, and we don't like spending big money. The previous management team has spent a 120,000,000 of which we then wasted a lot of it, but we left as nice facilities. We're minding our pennies.

10:18 We've expanded the screening center into what was formerly a cost coffee shop. Manchester, again, an old gym, and we converted the Whitechapel hotel, it's now the Whitechapel clinic with 26 beds. So we've taken that in combination with the Royal Free Hospital which the government has given us access to, that gives us close in 70 beds, that's by far the market leader by a million miles. Disease in motion, I know everybody's really excited with this. We've decided that's absolutely and I see some questions I'll answer them in detail, but that's a standalone company. We have the data with the largest database in the world of infectious disease progression. All our challenge studies ongoing with wearables on them and we're collecting that data sets, an absolute standalone company.

11:09 People are saying, why not keep it in the company? But again, we're a contractor, we're servicing big pharma, we're delivering them pharma services, disease in motion, we can go to every pharma company and all the big tech wearable companies and do subscription services. So again, a bit like have the biotech in the same company's pharma services, we believe data is the future. So data should be spun off into separate standalone company and the model is the same. It'll be a strategy demerger, we will be giving you shares in that company as a dividend species in a tax neutral perspective, in other words, you will have no income tax. The only tax you'll pay on them will be when you sell them and hopefully, there'll be a good multiple triple or quadrupling of them. They'll be naturally, now we've got the model, a nine months lock up and let me tell you that. The shares with health and trust, the minute nine months is up, the shares automatically through Crest goes into everybody's account and they're freely tradable.

12:09 The potential spin outs are in progress. So basically, this morning, look, I was only so much you could say about, but I know our the Pillbag Pharma CEO has been saying the road show starts next week, so he got away with it, so I can say it as well. So yeah. Look. The Pillbag spinoff starts next week. It's a separate company. I'm chairman of both. I'll be splitting my time seventy thirty. 70% open orphan. 30%, I will be non exec in pullback because we have a very much a very good hands on CEO, Jeremy Skellington. He sold his last company in month thirty three for £380. That was 10 x in less than three thirty three months. So we've gotta try and beat that, Leo. And believe it or not, almost 1,000,000,000 almost 1,000,000,000 in milestone payments. So that was basically for an investment of 30 odd million.

13:00 So no pressure to Jeremy. I'll be barking down. I said, Jeremy, get us to 1,000,000,000 pretty fast. And being honest with you, that that's the beauty about a standalone biotech. We're gonna try and get it on the Nasdaq as fast as we can, I e, somewhere next year? And there's a beauty with spin outs. Put it on to Nasdaq, put it on to AIM in the coming weeks and it's almost like ready for takeoff. It's a unbelievably hot space. It's providing pharma products to big pharma. We know these pharma companies really well through open orphan. We deal with them every day of the week and our sister company can make products for them. So what do we say here? It's initially, it's a vaccine discovery platform. It's also got an immune suppressor for severe influenza, and guess what? It stops cytokine storm, so naturally, there's going to be some patent extensions into long COVID. So that product immune modulator will do influenza, long COVID, and a modular thing. So that could be an absolute blockbuster.

13:59 Bear in mind, Jeremy, our CEO of Pool Bags last company, he sold this company for 380 and it hadn't even started phase two. So it's, again, an infectious disease product, so it's it's a really exciting place to be. With a biomarker plot platform for predicting severe disease and we've licensed some of the data in no. That's not an exclusive license. It's only some of the data we don't need. It's tax neutral dividend species, and distribution day was the June 16, that was yesterday, and is effective from the eighteenth.

14:33 In summary, what are our non core? It's a phase two ready immune suppressor modulator. That's the first thing we've talked. It's called pool bag pharma. And, basically, the as of ex dividend date was sixteenth, distribution date the eighteenth, road show starts next week, and IPO will complete in about three weeks time. Very clearly, I said we'll hold the shares and trust for nine months, and then they automatically go into everybody's account who currently has an open orphan share on the sixteenth. They automatically get their different species. It goes into account and they're freely trade that and go to your automatically your ICE account or wherever it came from. So it's done through the Crest fungible system. So it's very simple. You won't be having paperwork flying around.

15:20 We're looking at data business, reviewing the possible spin off, that sort of disease in motion. You can take it as well. That is well underway, and that will be a standalone company. We're not supposed to say it'll be a standalone IPO, but you know what's gonna happen there. Prep Pharma, again, we're cracking the whip and watch that space. And our friends at Immutex, of course, you know, I'm getting a little bit frustrated. They're taking longer. We can do multiple companies, but we're getting there. And then somebody says if the Immutex folks who fifty one percent can't do a deal in the middle of an influenza and COVID pandemic with mosquito vaccines, then there's something wrong. So that process is well underway as well, I'd By autumn time, all four non core assets will be in your hands via dividend species and we've done the exact model now. We don't want to hand you shares in another public company and the first thing you say you've gotta pay income tax that encourages sellers shares. We're do it in the basis that you won't be selling the shares and you can hang in there a bit like open orphan. Those who hang in, they should be quite a good multiple uplift in that company.

16:28 So I think in this basis, I think we're talking to the results. I'll get Leo to go through them, and I might comment on them, for or after Leo finishes up. So, Leo, over to you. Thank you, Carl, and it's good to present everyone, this evening. Thank you for joining us. Wanna take a moment just to set the scene for our results, if I may. This

16:51 year really was an important year of transition. You must remember the very, very high combined losses that HVIVO and VEN had in 2019, and really we had a turn an important turnaround to do in 2020. The initiatives we followed really were were pretty obvious what we needed to do. We needed to strengthen business development by really focusing on delivering value and an improved offering to our clients. We had to restructure underperforming businesses, in particular, shutting down the clinical operations business of Venn, which was no longer viable. We did seek out synergies across the group.

17:37 In particular, we were able to use the Venn team to actually do work for the London team that had previously been outsourced and we had to pay for. We stripped away unnecessary layers of management across the group that was really saving money, really building up next generation leadership to to drive the business forward. And lastly, as you would expect in a integration, we had to trim all the support functions, be it finance, HR, IT, quality, etcetera, etcetera. The focus this focus on turning around the business led us really to drive a significant improvement in our contract wins in 2019 in 2020 versus 2019.

18:27 And and we'll show that data in a moment, but it really does, if you like, set the scene for the major improvements in revenue that we are seeing already so far this year, and we expect to continue for the end of this year. So our big picture big picture will we'll show the graph in a moment. We have turned around the business that we are operationally profitable in q four, and now we're in a position where we can target to be operationally profitable for the full year in 2021. And we'll talk about the numbers in a moment. Importantly, cash, we have a really strong cash balance now, which was relatively weak at the start of 2020, where we had about a million pounds.

19:17 Now we have we had £19,000,000 on hand at the end of the year. One of the questions we have and Karl alluded to is where the cash balance is right now. Well, there's a there's a large element of the normal ebb and flow of managing working capital in a in a business. At the end of of the year, we had quite a bit of prepayment prepayments received from our client from our clients, and those prepayments are were in part being released into the business through the first half of the year. So that explains why some of the cash will have dropped. On top, as Cathal alluded to, we're spending money preparing for the dividend in specie. We're also investing in new challenge models and investing in our data platform.

20:12 So we we actually expect that with the normal flow of contract wins, our cash balances will be strongly ahead of the 2019 or the end twenty nineteen position by the end of the year. So I just wanna make sure that point is clear. Talking about the numbers then, I just wanna call out one one just address some of the questions that are that are that are floating through through the q and a. The way we present the numbers in the accounts is is slightly misleading because you're not actually comparing Apple with Apple with Apples. 2019 numbers, the official statutory numbers reflected Venn and OpenOrphan on a standalone basis for 2019.

21:00 2020 is reflecting Venn, OpenOrphan, and HVIVO. So in terms of the statue reporting, you're not comparing apples with apples. And that's why in the chairman statement, we were very careful. I would really draw your attention to those numbers. In the chairman statement, we take care to show you the pro form a data which is fully, fully comparable. And so the the numbers that I'm presenting in this slide are the full pro form a data, full on a full year basis and are fully comparable. And indeed, we do see a drop, a modest drop in revenue year on year, and that really was a function of managing our way through the COVID as well getting used to COVID in q two of last year as well as divesting and winding up the clinical operations business in your in around Europe.

22:01 However, if you look at the underlying cost position, you'll see that our costs have actually gone down by £3,500,000 on a fully comparable basis. And that's just compared to what we show in the accounts, which are not comparable showing, say, salaries jumping significantly from one year to another. That shows the effect of the merger and and, you know, happy to I hope that clarifies that point. So I've touched on some of the points in here in the p and l in terms of what we've done to close offices, eliminate unnecessary layers of management. So really, that sets the scene for a lot of full year effect of those of those activities hitting our numbers in 2021.

22:50 I'm gonna show a few graphics here just to help you you you you see the change in performance, again, on a fully comparable basis. So if we look at our quarterly performance in 2020, and there is a question I saw asking about h one versus h two. So clearly in h one, we made EBITDA losses of just over 5,000,000, and that's the pro form a data that we reported on the half year. But notice the strong recovery that we made

23:23 in the second half of the year where our revenue rate started picking up significantly. And it's that step up in revenue in q four that has allowed us to be operationally profitable in q four. And it is our target, and in fact, the momentum that we have is that that quarter four, that broad trend line is continuing through the year to to to the end,

23:50 excuse me, of 2021. This slide is very important to what I what I consider to be really important leading indicators for the business. So if you look at our win rates, contract win rates, and these are in large measure of what we have announced and plus some other change requests that have gone through in in the normal course of our business. Notice how wins our ChallengeLab business have jumped from 4,000,000 to 27,000,000 from 2019 to 2020. I point out that already this year, we're at 15,400,000, and we actually are confident that we're gonna have another material win very, very soon that we could actually be very close to our 2020 total very, very soon.

24:44 So that that is really, really strong performance on the sales side in terms of winning contracts, which feeds your revenue in follow following periods. And if you factor in that there's about, you know, a four to six month lead time from winning a contract to getting quarantine trials underway. That is really feeling the feeding the funnel for the for the second half of this year. I've touched on cash a moment ago, but clearly, you know, we're in a much stronger position now given the fundraising that we've done, given the strong prepayments that we've received from our clients that we're you know, we can weather any storm. We can manage the normal ebb and flow of working capital that will happen on a on on a business like ours.

25:37 And just just a quick word, and I'll I'll I'll I'll let Kyle talk a bit more about the the demerger. But overall, our we're very confident now about our outlook for the year or for 2021 and beyond. A strong pipeline of challenge models in flu, RSV, and COVID that where we have a strong pipeline that we are closing. We also have invested to deliver new models in malaria, strep, pneumococcus, and asthma, And we see contracts forming. We're gonna sign contracts for these indications this this year, which will deliver revenue next year. We are targeting we're we're we're now increasingly confident of full year profitability in 2021 and and very strong revenues in 2021.

26:35 The market consensus is is pointing to revenue between 45 and 50,000,000. The market is also pointing to EBITDA numbers of the order of $7.07 to eight to 9,000,000 in in EBITDA. We think those assessments are are are pretty are pretty good. We're actually targeting that we can exceed those numbers. And in fact, as we look ahead into 2022, we there we don't see any reason why we can't be at least targeting double digit growth for 2022. And the real question is just how far into double digits we go. We certainly think 20 to 30% growth again in 2022 is the kind of minimum target levels that that we should be expecting.

27:28 So overall, we've a lot done. We have still a lot of work to do to deliver, but we're very confident in the direction that we've taken and the delivery so far of the numbers in the last in the last year. Taho, over to you. Leo, thanks for that. So, look, I think in summary, we'll go to the lot of questions coming in online here at the moment. And so, look, likewise, Leo can see the question. But if there's anything on the finances, it's not clear. I think we're making clear as brokers have set targets up around 50. And my view is we're gonna substantially increase them, exceed them this year. It's always good to earn the optimistic side. Say Leo was a finance person. I think some people are weighing, are we really profitable? Absolutely very profitable, It leaves me that very clear.

28:19 So my view and summary of the financial results there before I get into them, they're out there. It's clear. We are making good money. We're setting ourselves high targets. And, look, my belief is this business will keep doubling up each year going forward, and we're by far the market leader. There's nobody close to us at the moment and the stage where the big players are not particularly the big heroes have to work closely with us to do we do the challenge piece. So without further ado, I'm gonna move over to the questions, and we can see them coming in. We'll try and get through them. I think probably the first question is, really, it hasn't actually come in as a share price. Are we disappointed? Of course, we're disappointed. It's dropping off. I think what's been happening today, people expected to monster profits of last year's and monster profits this year. Bear in mind, we're we're only in control of this business eighteen months, but we're getting there. And I would say that, look, very clearly, I am committed to increase my shareholding. You'll see that days away. I I I should have been in today's r and s, but unfortunately, I'd like to there's still a piece of information that will put a smile on our face and hopefully that piece of information comes true. I'll be free to buy. So just all you can say is watch that space.

29:33 We had one of the few times a director can buy is around the publication of the results at a time like this, and we have to be cleansed. If there's any insider outstanding, I've got a hold back. So trust me, that is a piece of news. It'll be all well worth waiting on. Let's see what happens in the coming days. So then breaking it up. But, again, I think that we've been here before. People will sell, but people will buy. And I'm not buying more shares as the single biggest shareholder I've ever thought to her if it wasn't a bloody good opportunity. So that's all I'd say on that. So let's break down the questions now. FuelBike Pharma, we've broken them down to groups. Question, can you provide more details on the dividend species concerning share values and open orphans expectations for new shares? Yes. They're very, simple.

30:20 The dividend species will be awarded form that's in the publication this morning. But really, kind of long story short, it'll work out in the region of about well, this is certainly what I can say for the roadshow, but it'll be a substantial number of shares pro rata that could equate to between 1020% of the current, market cap. It will be given to you in shares as announced that is held in trust for nine months. And to give you an idea, we believe in that nine months, there's something wrong if we haven't doubled or tripled, the valuation of those. So that could be, in theory, you could be getting back a third of the company in those alone. My belief, ultimately, I think it'll be selling after nine months.

31:08 There'll be so much news flow. We'll be approaching as I can see, I think anybody who's who who's in for the longer haul. They'll be rewarded because I think the very fact that EKF, one off renal analytics, and there's quite a lot of similarities, and they got it to a billion, close 880,000,000 starting in less than a year. So that's the target we're setting on pull back. So let's see how big we can make pull back. Second question, do you know the capital gains implications certain pieces for investors in Ireland from a CORMIC code? CORMIC, we've got UK, HMRC prior approval. We have, some of the Irish account and say it is a strategy demerger. So people are getting shares in a company over assets they currently own. So they should be as tax neutral as tax neutral can get. You will have capital gains to pay on them when naturally they will be sold eventually, so there will be a a capital gains. But normally, people worry about dividends is that you have an income tax liability. But the structure we have, there is no tax at this point in time.

32:12 Question three, when the shares are officially released after nine months lock in, will the certificates be sent directly to ourselves or will be sent to our brokers who hold their shares? Or if they go directly to our brokers, will it go to wherever our shares and ISA? Yeah. The the way we've done it is they will be held in trust and then as of yesterday, anybody who held shares in the company, it'll go directly wherever that account to held shares yesterday. So it goes directly into your ISA, it goes directly into your broker, it's all done electronically. And the ones the paper copy shares, that can be done as well, but it's done through the Crest system. It's almost like awarding the dividend. It's held and it'll go straight to wherever that share is currently held. Four, you've been clear in the past that directors and board members can buy the mark shares in the open market if they want them.

33:00 We don't give options. Well, yeah, basically, I'm not a big particular fan of options in this particular company because I think there was too many old VIN options outstanding. There was too many old HVIVO options outstanding on back years. Most of those have washed through and gone. And, basically, I've made it clear. I am buying shares. I've got permission from the Nomad, commission the board. I won't I won't one piece of news away from exercise there, I'd say. Give me a few days if that news is out there. I will be putting my money where my mouth is. It'll be a reasonably substantial investment. Spinouts in general. Please questions. Please list the potential spinouts in order of approximate timing of IPO disposal, value really realized. So the ones we control are the IPOs. So we control, pull back, that's underway. I said, roadshow starts next week, and IPO will be completed within three weeks.

33:51 The next one we absolutely control is the disease in motion or data business. You can take it as red. That's already work in progress. IPOs do take a number of months, but we will be handing dividend species shares out yet again on that one. And again, somewhere in the region of 10 to 20. The market cap is what we'd like to guide the market with. And then the other two, prep pharma. I know people are frustrated nearly there, but do bear in mind when you're dealing when you're trying to sell assets like that to big pharma, it does take time. We we can push an IPO in three to four, five months, but it does take a little longer to get deals done. But I've made it very clear, they will be all gone by the autumn, all those four non cores, and everything returned to the shareholders, myself, yourself included, via dividend species and by strategy demerger that you won't have an income tax liability.

34:48 Next set of questions, spin rights and journals. Well, I've done that. The number of yes. This is causing a bit confusion. The question is the number of open or open new company registrations, name changes, media hashtags, platform west is confusing. Could the company put up a family on a tree chart or show similar current or possible future? Yes. So just take him and talk him afterwards. I'm gonna it a live mic. Mark or Lily, is it? Cool. Thanks. Yeah. Somebody's asking, yep, doing spinouts until we got the right structure. Being honest with you, it was a bit of experimentation on which structure would work. This critical one is I didn't wanna get a whole lot of shares in another IPO in Pillbag and then immediately have to write a check for income tax later this year.

35:37 So it took a while, hence, the reason there was a bunch of those companies named. So it's gonna be very simple. First spinner is pull the bag. Forget about all those other subsidiaries out there. That's the company. And the next one, definitely, disease and motion has to be coming down the track. We absolutely control that. We don't completely control the other two, but you can take it around. As I say, we'll get those jobs done over the summer as well. Next question. Could the company follow-up with an idiot's guides to non core assets? I think I covered that. It was a good thing. So, look, we will have it, and I think it'll be clear we'll be putting out once the road show is done and dusted in the next two weeks. We're gonna say, right. The reason we can't put an exact value on it, and this is by remiss, you start a company, you start a road show, you you hope to get a pre money price of x, depends on demand. We've got actually, the the book half covered before we even start the roadshow given the level of interest. So if you look at a share price today and some of the bullet points, you think there was a people running for the door. Well, the funny part is the brokers are saying they've never had more interest in a spin off like this before.

36:41 So but the final pricing won't be done, as you all know, till a day or two before the IPO. So we're about two, three weeks away from that. So you really have to say then in two or three weeks, let's say, right. There is what the first spin off is worth. What percentage of open orphan have we handed you back? And that's not gonna be little single digits. It's gonna be a a chunky return of cash to you. I would advise you to hold on to them, but you'll be free to sell them after nine months. Next group of questions. And bear mind, this is a pre submitted question. There's a lot of questions going online. I'll try and run through quite a few and as many as we can as well. Okay? Well, actually, following one of them here, I've just seen come in. Alex k, When is the cutoff date when I can buy off shares before I'm not qualified for the first IPO shares? Unfortunately, Alex k, the cutoff date was yesterday. Anyway, the the recorded date was yesterday. So as of today, if you buy shares in open orphan, you don't get full bank shares, but you still will get if they'll you still get access to non core. So and that's well, think fundamentally, we are ex dividend. Anytime a share trades ex dividend, it will always tick back and people will be guessing what is the value of the share because now today, people actually do have a separate share. So if if hypothetically, we were giving you a 10% handbag, our share price should come back 10%.

38:04 Hypothetically, if the dividend species for pool bag is 20%, our share price naturally should go back 20%. So do understand handing dividend species back does fundamentally allow the share price to come down. But bear in mind, we do have three more coming down the track. And, hopefully, Leo does his work and keeps that cash pile building. We'd all like a little Christmas present in a little cash different this side of Christmas. Okay. Moving on. Disease and motion questions. Can you confirm that disease and motion will be a, spun out of its own company? Absolutely. That will happen. And, allow the time frames to treat four months for these things to happen. So that is the one we can absolutely we control at a 100% that will happen. Is it on track before the end of twenty one? A lot sooner than that. End of twenty one is July June, July, August, September, October, November, December. That's seven months. Takes us three to four months to complete these things. Bear in mind, we control the this motion.

39:00 Anything we control, we can move faster. And the next question, the off share holders will have an opportunity to benefit from this spin out with free shares in similar manner. Absolutely. Every time we spin off a non core asset and and bear with us with the structuring and testing with these different had IP codes registered or pharma IP codes. There's a range of them till we got the structure right. We now have a team, the same lawyers, the same accountants, the same two sets of brokers will manage or spin out as we can do it twice as quick going forward. So z's in motion will be spun off, not stable IPO, but you think you know where my heart is, and you will, as shareholders, get shares in that vehicle. Now and by the way, I know some there's a number of questions that are here, but I've saw them come up.

39:51 Flagged that some of the founders there is some founders equity. The structure is initially because it can't be a subsidiary owned by Open Orphan because then you would have tax liability. We put a company together where myself and Ian and some of the directors had to own a 100%. The minute the asset has gone in, we've dropped down to less than 10%. And the minute the cash comes down, I end up with a couple of percent, and Ian ends up a couple of percent. We're locked up for two years. So I think most people agree if Ian's gonna work twenty four seven full time, as Ian O'Connell, I'm gonna give quite a bit of my time to drive it if we end up with a couple of percent at IPO in that vehicle. I don't think that's any not too bad. And bear in mind, I'm also putting up to 500,000 of my own cash into pool bag at full market price and yet again been locked up for two years. So I always believe if we put our money upfront, lock ourselves in, that allows investors plenty time to come in and try and make some profits.

40:49 Quick one. I think Leo, it's over to you. There is a number of questions here. Trying we've tried to reduce the time to fund the 2020 final results. So, Leo, Mike, could you please? Yeah. No. And I think I tried to cover those in in my remarks in relation to questions about the comparables in in the accounts. The salary costs have gone from 5 to 15,000,000, but that really is the base of preparation in 2020 showing HVIVO included in the numbers while 2019 was just open often and then. Looking at the other questions now. There is questions about h one versus h two. I think I addressed that in the slides where I showed that we made on a comparable basis 5,000,000 hands loss on EBITDA basis in the first half of the year, but you'll notice that we turned that around to make about a 2,000,000 loss in second half of the year. So that that shows the turnaround on profitability there.

42:01 Leo, very importantly, you're talking about last year. There's no Last year. Sorry. Last year. There's no loss this year. No loss of this year. Correct. Thank you, Carl. I think there was a question about, cash balances, which I which I touched on, and that really is it's it's working capital movements because we have large prepay cash prepayments in the the twenty twenty balances plus investments that we've made to manage the management of the dividend in the species and the capital reduction and investments in our challenge models and in the data model that that we're working on. I think I've covered the the headcount.

42:48 Again, there's questions about headcount, the comparable numbers. Again, there's an element of measuring averages at the start of the period versus the end of the period, and it's also the comparability point. What is really clear, I just so for the record is that versus the opening position versus the opening head count at the start of the year, before we, acquired HVIVO, we actually cut almost 50 heads between and most of those were restructuring and integration and some natural attrition. But out of that baseline, there were certainly 50 heads that we we we actively worked on to as part of our restructuring that that I alluded to. And we should and because those restructurings phased over the course of 2020, you don't get all the benefit of those savings in 2020.

43:43 So you're seeing quite a bit of the full year effect of those headcount savings flowing into our numbers now in 2021. Those are the key questions that I was aware of. I think there were a few others about timing of events, I think. I'll jump in. Leo, I'll jump in some of the rest. And maybe what I'll do because the people have taken the time to submit questions, so let's try and run through those standing ones pretty quickly. E and M, eight months on, is the characterization study completed, and when is the first CHIM contract expected? E and M, very precedent. Absolutely. Look, sometimes when you're dealing with the only one in the world, you deal with the UK government, yes, that the initial characterizer is almost complete.

44:34 And bear in mind, uncompletion is when you see the start of the 10,000,000 contracts. And all I can say is you just have to bear with us. These things do take a little longer, but for those who wait, all they can say is what's this space? That's I can't say anymore, but the study the characterization is virtually completed. We're literally there, and they'll be published around that. And at that point, we can sign off on our 10,000,000 contracts. So that's absolutely next one, hard b. Following your analyst meeting this morning, do you get the impression they are on your side and will report favorably? Look. The the issue with the analyst, we don't wanna beat them up. They have their job to do. They're always beaten up in the past of overhyping companies and getting it wrong, want to error. All I'm saying is that the analysts at the moment are forecasting close to 50,000,000 sterling and $78,000,000 pretax profits. Our plan for this year is substantially exceed those. Leo might say, as a CFO, that I'm the optimist.

45:31 Leo is less optimistic, but he's like, I I these two companies didn't have something Leo in the past, so it needs a steady hand. But look, we don't substantially exceed those analyst forecasts. I won't be happy. That's all I can say there. And the next one, what is the basis of your spin out valuation? I think it covered that. Spin out has to be 10 or 20% of the market cap, and we should double or triple that reasonably quickly. Tincara m, what is the time for OFF to not make vaccines? Not really sure what that's. Let me come back to that. Tommy, do you not make we look. We don't make vaccines. We test them. So any making of vaccines will need to be done in, you know, pool bag, of which we're now as of today, I've today a very substantial investment as of today. I feel that's we've got two companies on our hands. Okay?

46:34 Next one, running through these questions. Can you give him more, okay. Can you give us more granularity trajectory on the revenues and how you're counting your receivables? Look. I think, that's gonna as for Leo, I think, is clearly when we sign a contract. We don't do multi year contracts. The contracts are from signature, Leo said earlier, and we deliver we get money upfront right away, 20% on signing, and it's delivered within three, six, nine months. We don't have these big CRO contracts that last multi years and people get confused. So take care of that. That's revenue recognition. It's in the year we sign. Occasionally, the little pop of, like Ordinance. Where are we? Let's try it.

47:22 Sorry. I'm trying to read these. I'm trying to some of them here. Sorry. Sorry. I'm reading this. A lot of them coming. There's lot of repeating. It's John g. If the new shares are in an ISO, surely there's no capital gains tax. Absolutely. Yep. You're right. But I'm only focused on the super banks of Sydney, your ISO. Absolutely. It'd be totally tax neutral. No income tax, no capital gains. So that's reassuring in your ISIS. David w, are there any developments on the test of antiviral? Well, let's watch. Very soon developments. Any update with Chinese pharma? Absolutely. Again, like all these things, who has seen a fast deal with a Chinese company?

48:09 And we gotta be careful if if you do it too fast. We wanna be careful if it's done right. All I can say, the Chinese companies and Chinese companies got has got a jump in North America and in Africa and South America with their vaccines, the the casino vac. And they do need help from people like this. Yeah. They will try themselves, but we're very satisfied with the way things are going in regards to China. Again, look, I think people get very the good part of our business, as far as I'm concerned, we are going for the the big price of 1,000,000,000 and we're gonna grow it and keep growing it. So I think some of these things do take a little bit longer. Disease in motion, is it patent? It cannot be. It's from Thomas b or mean trademark. Absolutely. Disease in motion is a trademark, and with some of you'll see trademark come through some form of our biomarkers as well.

49:00 Next one, Tim H. Kyle, you're saying all four will create share dilution even if they're non core. If so, what do you expect the share price to be after all four has been completed? Well, be perfectly honest, let's do it this way, and this is the reassurance of shareholders. We're pretty comfortable, well north of 50,000,000 revenue this year. All our competitors trade on six times that without an encore, and they're running the mill. Run the mill CROs, lots of people doing phase one, lots of people doing phase two, lots of it in phase three. We're unique. We're the only people doing it. There's a high moat around it. So we believe our valuation is substantially in excess of that. So take all the non core out, and we're still undervalued. That's my opinion. It's a personal opinion, but I think anybody who talks to us believes that's where we should be. So as a non core spin off, yes, there will be some price because now we're holding shares in another company separate. We are ex dividend.

49:57 Think that's some of the shareholders that they didn't realize Shares do trade pro rata on the ex dividend because bear in mind, you know, any of you held open open shares yesterday, today you hold open open shares, but you also hold shares in Pewlbank Pharma that are held in trust fee. So that's a fact of life now. But look, I don't believe, I think we keep growing the primary business. It's an exciting one, so I don't believe there should be too much share price till people get used to this first one. And if people see some of the bigger contracts coming true, I think bear with us between now and the next couple of weeks, we'll all be in a very, very different place. That's all I can say. Alex K, when do you expect to pay the first cash dividend from a going concern? Well, the beauty of it, Alex, part of the toing and froing, we got shareholder and high court permission to get distributed reserves. Up until three weeks ago, we couldn't pay any form of dividend.

50:52 The cash is growing. We're in a business that doesn't need cash. We have allocated some cash to our noncore assets. You can't just do an IPO and leave the cover to empty. People are saying, what's going on here? You've got 20,000,000 in your bank. So that is part of the cash has been allocated, and you'll see it come roaring back. Leo made it very clear. There's absolutely no question, we're cash generous. So that's Alex Cape. And let me see. Or and will we see any other insider corporate shares in the next few days from others and senior management more? Look. I can't speak for them. I put my money where my mouth is to stand up for I am the largest shareholder, so I think it's my duty to follow from the phone to and to buy shares, basically. Basically.

51:39 Mark with an ACS. I'm very glad to see these assets spun out. Assets don't help patients sitting in the shelf. Absolutely, Mark. And the only thing if we do do it again, it's very hard. We keep the team small. I'm sitting here in the office in London. It's a Leo works in Dublin. And we don't wanna build a big because the business doesn't need a big overhead, but it does take time. I was in Antwerp on Tuesday, Amsterdam yesterday, back or the day before backfire, Paris until London today. We do have an operation. It does take a bit of hand holding to keep all the balls there. We could be lazy and, go find a proper CEO. I don't really like that either because I think with a fabulous COO, with a fabulous CFO, you're lucky, Leo's doing the job, and the management team. So it does take a little bit more time to get everything done, and bear in mind we're also doing an IPO called Poolbag.

52:31 But we do have a professional full time CEO called Jeremy Jeremy Skellington, and we do have one of the open orphan team who cofounded open orphan, Ian O'Connell, moving out and moving across as a full time CFO in Coolbag, and I will be the chairman of both. Executive chairman here, hand on, and over there, none exact because it has a a full team. Chris g, how can the share price drops on x dividend when we don't know the value in dividend spaces? Well, the only problem is we can probably guess the value, and I think some of the more astute people are guessing fundamentally if people pay a 10% dividend, the share price usually drops pro rata. We don't know how much we're gonna get it, but I'd imagine it's gonna be the the the pre money valuation will only be decided on completion of the roadshow, there's a lot of appetite for these assets.

53:27 Steven c. I think we're into our last couple. Oh, there's a few more. Steven c. And we're gonna probably stop around seven because I don't wanna tag it in too much, Steve. We'll run through the last few questions. Will we receive cutoff dates prior for all? So absolutely. Look. Each time, we're not allowed to publicly say in advance the cutoff date is x. It just happens. We pick a line, the lawyers, the brokers, advisers, and it gets published the next morning. Because if we publish in advance, that would be putting very public information. But look, we might look at it and try and we've gone through this first one, but it might takes a while. We do have the company sec, Salim Hassan from EQ from, EKF Diagnostics. He's a company sec. And all of those, spin outs that would have came out of EKF. So bear in mind, Salim was involved in Renalytics. It's the 860,000,000 spin off. He was involved as a company sec in for Durchi, a 150,000,000 spin off.

54:25 And Trellis is the CFO there. So he's our our now, Poolbag Pharma company sec. So we've had a lot of learnings with Salim, and he's a valuable member. So next last couple of questions. Somebody's saying the CROs are valued at six times revenue, six x you said revenue. Absolutely. Zero. Most seros in the world are four to five. Comparable to us is Ergomed. They're on eight times revenues at the moment. So basically, I think being the world leader is a very very difficult space to get in. The only reason we got into this is John Oxford started this company in '89, a bunch of investors put a 120,000,000 into five years ago and built the challenge unit and there is a kind of high watermark again. So our valuation, we should be valued more than the typical CRO at about five to six times revenue.

55:21 Think a real value, when we even spin them all off, is substantially ahead of where we currently are. Mike p, I currently own a 100% of the o o. Currently currently I currently own a 100% of the open offering products as a portion of shares they own in o o. What would my dilution of product or if she wants this product to spin off? I think we've guided that. If it's 10%, it causes 10% dilution, but we are going on the basis that they're noncore, that weren't adding value as they sat there in the first place. Let me see. We're down to alright. We're down to our last three questions. Paul o, has any disease in motion contracts been signed yet? We actually have a quite a demand, but if we're gonna spin that off into standalone company, what we're trying to do is get the spin off done and then sign the contracts. It gets very messy if the contracts are signed in open orphan and then try and go back to customer. Can we can we separate? So that is holding it, but it will be very much standalone.

56:23 Let me see. The last question I can see here is Steven w. I already own quite a few open orphan shares yesterday. So what I get pulled back shares and trust? If I invest more in open orphan tomorrow, will I get shares to three? Steven, a wonderful question. Yesterday, you opened over owned orphan shares. You automatically got pulled back shares today. However, anybody who buys new if you're on the share, anybody who buys new open orphan day will not get pulled back shares. They had to be in the share register at the close of business last night. However, if you buy open orphan shares, you absolutely get a stake in dividend species in the disease and motion spin off, in the mutex, and in the prep pharma. So bear in mind, that's how we're doing it.

57:12 I think that wraps that up. So hopefully, that's clear that yesterday, whoever's a shareholder, whoever bought shares, get them in both companies. Going forward now, you Steven, as you do have now pool bag pharma shares held in trust for you. And if you still stay in the share register, you will get shares in the ImmuTech spin off. You will get shares in the prep form, and you will absolutely get shares as well in a disease in motion. The part I can't say, not supposed to say they will all be IPO ed because that's not absolutely assertive by the time you we control disease in motion, and we're making damn sure we control the other two assets as well. So I think look. Without further ado, we simply try and do it within the hour. And I think at this stage, I might hand it back over to you, Mark. Great.

58:01 Thank you, Car Hill, and thank you for being so generous with the Q and A. Obviously, I know investor feedback is important, particularly after your presentation and the results today. So perhaps before I redirect investors, I could just ask for a few closing comments just to wrap up tonight's session. Sorry, Mark. Is that a few closing comments from yourself? From you. Yeah. Just to wrap up, top and top, and then we'll we'll send off, people for their dinner. No. I think it we'll all head off happy to dinner. I'll bring some of the staff member here. They're delighted in London. We can go out and have team dinners there together. So yeah. Look. In summary, yes, we're disappointed the share price would be wrong dropping. We we kind of expect it to come back somewhat. Leo will probably be more to the fore in some of these presentations going forward because I know I talk big picture. I'll deliver the jails, make sure we're world leader. I'll make sure I'll run it like an iron fist. But as long as people submit questions to me, given that Leo was making it clear, the cash pile is building up. People got frightened. Hang on. We ended the year 20, and where did the cash go? That was simply we put some of the cash into the spin outs, we put some of the cash into parts of the business, but it is cash generative. This company will never be fundraising ever again. I said earlier this year, we're in handbag mode. We started out today. We're handing back shares in pool bag. There is three other non core assets and if I have my way, I'll be getting a cash dividend before Christmas, but ultimately that help me harass and leave out to that. So in summary, I think if people bear with us over the next days, not weeks, I think we will be,

59:32 in a slightly different place share price than where we are today. And it's not downwards. I would be very optimistic that we'll see, And, like, naturally, people expect a lot more, but look, all this that we've been here before and my belief it's upwards and onwards from here. So in summary, thanks everybody for listening, and hopefully, we might do more of these once a month. I think these forums are really good. People can preset my questions and get straight answers from it and hold us accountable on a monthly basis. I think, Mark, we like your platform. Let's do it at least once a month. That's very kind, Carhill. Thank you very much, and thank you to Leo as well for this evening's presentation. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations.

1:00:17 It will only take a few moments to complete, and I'm sure both Car Hill, Leo and the management team will be highly valued by them. On behalf of the management team of Open Orphan, I'd like to thank you for attending this evening's presentation. That now concludes today's session, and good evening to you all. Thanks once again.