Hvivo (LSE:HVO) — Full Year Results

0:00 Good evening, and welcome to the HVIVO PLC investor presentation. Throughout this recorded meeting, investors will be in listen only mode. Questions are encouraged, can be submitted at any time via the Q and A tab situated in the right hand corner of your screen. Just click Q and A. Scroll to the bottom, type your question and press send. Due to the number of attendees today, the company may not be in a position to answer every question received during the meeting itself. However, can 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 evening, Thank you. Well, thank you everyone for your precious time given to us on this Tuesday evening, is it? In early April, where we announced our full year 2023 update. I'm very pleased to have you on board.

0:47 Straight going straight into it, this is the the normal disclaimer. I am Yamin Mohan. I'm the CEO of HVIVO. I've been CEO for just over two years, and I've got a long history in working at a contract research organization or CROs. I'm joined here by our CFO, Steven.

1:07 And I'm Steven, CFO from October 2022. I've been with the business for over seven years, and yeah, that's it really. Thank you, Stephen. So welcome and we get straight into the presentation. For those of you who may not know who HVIVO is, well we are the world leaders in conducting human challenge trials in infectious diseases and respiratory diseases. We have a huge a large human challenge trial unit here in London. We also have several offices across the country, including a screening site in Manchester. We are due to open the world's largest human challenge trial unit later on this year in Canadian Wharf, and I will talk about that later in the presentation.

1:54 We also have a a second subsidiary called Venn Life Sciences who help in conducting our human challenge trial, who also provide standalone early clinical trial clinical development clinical services, which fits in well with what HVIVO does. As a company, as I mentioned, we are the world leaders in human challenge trials. Human challenge trial is a is a niche way to develop antivirals and vaccine is in fact, expedites in the way we can develop drugs and and take them forward to phase three. Our mission, as stated here, is delivering today's health care by empowering tomorrow's innovation. And we believe that human challenge trials and the concept of human challenge trials will be the future and the norm in the future of how we expedite and get vaccines and antiviral to patients much faster.

2:46 I'll give you a brief summary of our year of 2023 with some key numbers. So we did hit our £56,000,000 target in revenue. This is what we guided towards early on last year. We also hit £13,000,000 in EBITDA, which is around a 23.3% EBITDA margin. And when you look at the 13,000,000 EBITDA, it's actually a 44% year on year increase. And that's actually slightly ahead of guidance. So a really good result and a great effort by everyone at HVIVO in not only delivering the the increase in revenue, but also delivering that at a really high margin. On top of that, we have £37,000,000 in cash as of thirty first of December last year. This shows that not only is our business model a profitable business model, but also a hugely cash generative business model. We have a weighted order order book of around £80,000,000 as of, again, end of last year. And this basically means that we have over 90% of our revenue target for this year already contracted. And we are guiding towards a £62,000,000 revenue target for this year and hopefully at a sustainable EBITDA margin.

4:03 I'm going to now hand over to Stephen to provide a little more details on some of the key financial parameters for 2023.

4:13 Thank you, Moe, and good evening, everyone. It's not much changed since our presentation in January, but I'll go through some of the highlights again. As Moe just mentioned, our revenue was $56,000,000 at sixteen percent up in last year. Contributing to that was Venn Consulting, our business in Netherlands that is an early clinical consultancy business. It grew over 30% in the year. So it was a great result and a great strong performance from them. One of the things that underpinning our revenue performance both in '22, '23, and in '20 as we go into 2024 is these multiple bespoke full service contracts contracts that we have won. This is where we are manufacturing the challenge agent, characterizing that challenge agent, and then doing a challenge study then. So in 2022, we had signed three, and we'll, you know, work it and two of those carried over into 2023.

5:11 In 2023, we have signed three and some of those have completed and are now carrying forward into 2024. So that that sort of strength of pipeline of work is I'm seeing as well through in this business. We also also got to recognize a bit of revenue relating to the sort of facilities accelerated, and Moe will touch on that a little bit further on. But this has to do with Canary Wharf and the build out of that facility. We're able to recognize some of that revenue went through our P and L where the cost of it actually sits on our balance sheet. But this would both this and the fact that we have large studies and train helped us sort of reduce any impact from the MHRA delays. And we did have a few studies and a few amendments to our studies that were impeded by delays from MHRA in 2023.

6:08 Going on to EBITDA, this is slightly better than we had in trading update. To be honest, trading update we gave an indication of 22% and this was just sort of a conservative estimate where we thought we would land. And so we're very pleased with the 23% and the 13,000,000. And depending this EBITDA is a couple of things. First to highlight is that during the year, we had nine studies in quarantine unit. Now we have more studies that we're working on, but actually in the unit were nine studies, different studies where we had volunteers for nine different studies in the unit. And this compares to seven in 2022. As well as that and is that we had 31% increase in our volunteers in the unit in the year. So that is driving a much greater usage, utilization of our staff and our facilities. And therefore that is really sort of supporting the EBITDA margin.

7:10 Further on top of that we have a very good well, we had a number of studies that were had five we were screening for five different variants and something I call our recruitment leverage opportunity. Here, we, get to charge all our clients for, a recruitment of a volunteer. But when we screen them, we get five chances of putting that volunteer onto a study. And that that cost saving, is tremendous and is really supporting the EBITDA margin. So that's because we're running multiple studies concurrently at the same time across five different variants. And moving on to cash, cash is same as we've obviously provided an update of 37,000,000. We are just to reiterate, are debt free.

7:57 We paid out this is after paying out a 3,100,000 dividend in 2023. And it's developed because we're very we've been profitable in the year and our order book continues to grow and we get upfront fees from our clients which are non refundable. So this is why our cash continues to grow. And actually it becomes the position how cash is generated is a bit clearer on the next slide. This is our sort of cash flow statement sort of bucketed into sort of categories. And on the left hand side column is our opening cash position of 28,400,000 and then our closing cash position on the right hand side of CHF 37,000,000.

8:43 And the graph buckets in between are highlighting how we move from the beginning of the year in our cash to the end of the year. So you could see CHF 13,100,000 cash generated from operating activities. That's before working capital. I mean that's a 46% up on 2022. So I mean if you look at that, that's $13,100,000 Our EBITDA was $13,000,000 practically 100% flow through, very strong performance. And other thing I want to really highlight is that the $4,100,000 is a positive cash is a positive working capital movement. Because we extract from our clients a booking fee upfront and also that our milestone payment plan on relating to our work is in advance of the work that we deliver.

9:36 Generally and provided our business continues to grow, we will have positive working capital. So as our business grows, we don't have to fund our working capital. It will fund itself. And so there, as we project going forward, we project and expect a positive working capital balance every year. Then we have the what we've spent, how we spent some of the cash during the year is capital spend. We spent 5,200,000 million of that was spent on Canary Wharf facilities, which I remind you has been 90% funded by our clients. So which as I said, so the facility fee that I've just mentioned that we recognized partly in 2023 that was a very modest amount and the majority of it will be recognized in 2024.

10:25 But it's 4,800,000 is what we've completed on have spent so far on Canary Wharf fit out, and that remains leaves a balance of 400,000, which is really a sort of a nominal amount just to replace existing equipment, clinical lab equipment, no more than that. The dividend, which we just touched on and the net figure of 500,000 is the lease payments for year on year flat and that was offset, mostly offset by our interest on our deposits because we're obviously sitting with a lot of cash. At the end of the year, I think something like 32,000,000 of it was was held in deposits, earning around about 5%. And the other offset, partly offset was we issued some options, and this is the cash impact of so the exercise of options during the year.

11:18 So that gets you to your $37,000,000 And just to highlight again why this is a cash generative business as we continue to grow. This is a typical study of what's a typical graph of a study, a particular study that we completed during 2023 is a very good example of all the other studies as well. So the green line is highlighting the revenue recognition. Revenue recognition is the total cost incurred to date versus the total cost expected on the study. So it's a percentage of completion, cost completion model and how we recognize revenue. So as we incur cost, we recognize revenue as a percentage of the total cost of the budget.

12:07 But it is very trans it is very at a very granular level. So it's not at a very high level that we recognize revenue. It is down to task and phase of each of those projects. So it's there's about 60 different lines on which we recognize revenue. So it's quite accurate. But the point the darker line shows you the cash that we received whilst delivering the study and you can see the cash is always ahead pretty much of revenue recognition right until the very tail end. You can see in the very first stage we take that upfront fund upfront fee of 15% to 20% of the contract value plus some service charges, setup fees where we design and design the protocol. We design we finalize the protocol with the client.

12:53 We submit it to MHRA. And at the same time, we then do is refresh our budget. As soon as the budget is refreshed and finalized, client enter into an agreement with a CTA agreement and clinical trial agreement. Here, they will pay us a contract fee on a signature. A screening fee will be the next milestone. The next milestone is first inoculation, twenty fifth inoculation or thirtieth inoculation, and and so on until you get to data lock and CSR report, which is the very final stages. It's not only at the very final stages of the study that we go into an accrued revenue position. And you could see that cash continues through. Right at the very end, you can see there's a little jump up in the dark green. And that was because in this study, we had a small change order right at the tail end of the study. And that was agreed and transacted and therefore the revenue the cash jumped up ahead of revenue at the very last stage of the study. So hopefully that gives you a picture of why we are cash generative business and gives you sort of confirms the cash receipts that we receive upfront and that we're always in a cash generative cash positive position on all our studies.

14:11 Then the last slide is just to highlight. We at the trading update, we announced that we would be paying a dividend and we are confirming that this business is committed to paying an annual dividend. And this is to reward our existing customers and also to attract investors that require a bit of a yield to invest. And we've always had to try we want to try and diversify our share register because different investors have different horizons, different motives for holding shares and different timelines. And that stabilizes the share price and that's what we've been aiming to do. And this is why we're implementing this dividend as well as part of the reason. Now arriving at that dividend policy, we also wanted to take into account that we whilst we are cash generative, we've got quite a bit of cash on the balance sheet, we also want to use that cash to grow this business. We do want to hold on to it for mergers and acquisition activity.

15:13 So we arrived at this by taking a dividend cover about 6 times of adjusted basic earnings per share, right. And we rounded it down. So it's actually the figure is around 6.3. And we expect that as that adjusted basic earnings per share grows, so will the dividend. But we do want to take into account that we do want to have a strong cash balance for M and A activities going forward. Think that's all I wanted to say on the dividend. Yeah, I think I'm going to hand over back to Mohit. Thank you, Stephen. So hopefully that gives you a summary of our 2023 performance when it comes to the financial metrics. As you can see, over the last two years, we've seen a sustainable growth in in revenue, EBITDA, EBITDA margin, and order book. So all the key parameters when it comes to the past performance of the company and also forward looking indicators, we're seeing a positive trend across all that.

16:18 And we hope to continue to do that as we move forward. So this year, we're guiding towards £62,000,000. As I mentioned, 90% of that is already contracted. So so for us, I think we, you know, are are in a very good place, but we're just starting the growth cycle. And, hopefully, as you listen to the rest of the presentation, we'll begin to realize why we are bullish for the future and how we're going to continue to expand and grow the business as we move forward. So before we do that, I think one of the key things I wanna address is the utility of the human challenge trial concept. So why are companies running more and more human challenge trials? So the very various reason why this is happening. So when you look at the commercial market, so these are the biotechs and the pharmaceutical companies. The reason why they're running it is, of course, biotech companies, for example, they want to get a signal of a fix your effectiveness of the drug in a very fast manner.

17:10 And it means that they can either raise more money and run the phase three themselves, or more likely, they have a reason to be acquired by a big pharma. So a reviral is a case in point that got acquired by Pfizer for $500,000,000 on the back of a human challenge trial. Also, the big pharma, for example, the Pfizer in this case, were able to get fast track designation for their RSV vaccine, which is now on the market from last year. In fact, today, they they received additional data to expand the label for for this particular vaccine. So again, both biotechs and pharma are able to get really good data. One of the other key trend has been that our clients are not just looking to compare their drug against the placebo arm, they're now using the human challenge trial model to get additional data. So one of the things we've seen is clients are not only looking at placebo versus active, but they're looking at different doses and which dose will work the best in a clinical trial setting. So this means, for example, we're running a trial with three arms.

18:16 So this means a placebo at dose one and dose two. Now that straightaway increases the size of the human challenge trial by 50%. And of course, the biggest indicator for the contract value of a given clinical trial is a number of volunteers we recruit. So the more volunteers we need for each trial, the bigger that contract size. And as I mentioned, our clients are using human challenge trials for different purposes to get more insights into endpoints, sample sizes, also into doses when they move into the phase three as well as derisking a potential phase three. From a regulatory point of view, we've seen very positive feedback from the FDA for at least five of our different clients. We've been able to get either fast track designation and or breakthrough designation based on human challenge trial data, which I think is is really key for us as we make progress in making human challenge trials the mainstream and the main kind of clinical development pathway for developing vaccines and antivirus.

19:22 The other key thing we've also seen is organizations such as the WHO issue guidance on how to conduct a human challenge trial as well as Wellcome Trust issuing guidelines on how to manufacture challenge agent. SEPI, a nonprofit organization geared towards pandemic preparedness, had also issued a grant of over $55,000,000 to help and assist academic sites into creating more human challenge agents for a challenge trials as well as standardizing the methodology of how challenge trials are conducted. All this goes towards in harmonizing how human challenge trials are conducted. And, of course, as you know, with over 75 trials conducted and over 4,501 trials through our clinical trials, We are the world leader. In fact, we believe we have over 90% of the market of the commercial market at least, and this market continues to go on a daily basis.

20:26 As a operational summary for 2023, some of the key indicators here are given is that we ran nine different human challenge trials through our quarantine process across across six different challenge models. Now the reason this is important is the more challenge models we can run-in parallel, the more efficiencies we can realize in our patient recruitment or healthy volunteer recruitment, as well as increasing utilization both from our staff and also from the facility. And that really leads well into increasing our EBITDA margins, which are evident in our numbers from last year. We've also expanded our capabilities in labs. So you can see we we had assays of over a 112 samples conducted last year. And with regards to Flukem, which is a brand name for recruiting healthy volunteers into our clinical trials, We had over a 145,000 leads registered.

21:24 With regards to some of the key operating highlights, I'm not gonna go through each one. It's there for everyone to see. But one thing I do want to outline really is that we did sign two master service agreements, one with a big pharma and one with a mid sized pharma. Now this does not mean that these clients are not committed to conducting x number of human challenge trials, but it does show that their commitment that they are considering more than one human human challenge trial with us. And this is why they are basically creating and agreeing a legal framework so when they do come to the right time and the stage to be able to run a human challenge trial, then the legal framework is already taken care of. And all you're doing is negotiating the project budget and the timelines, and you can move straight into conducting a clinical trial. So for me, this is a very positive sign and a good indicator for the future, and it also establishes us potentially as the sole provider of human challenge trials to these customers and also us gaining more repeat business from our current clients.

22:32 We're also the only company that can provide end to end human challenge service. So this basically is divided into three subsection. So the first part, of course, is the manufacturing part. This is where we take a a swab sample from an individual who has flu or RSV infection, and we use that to effectively grow a bank of virus, which we can use to basically challenge our healthy volunteers. The second stage of this process is called the the characterization study or effectively a a dose determining study where we determine the right dose of the virus to give the symptom that we need to measure to be able to see a difference between a placebo and an active group. Once we have completed the characterization study, we then go out and conduct the full human challenge trial. And as Steven mentioned, over the last couple of years, we've seen an increase in this full service conduct.

23:32 And one point to remember is that once we finish the human challenge trial part of this component of this process, we are then free to use that challenge agent for other customers and other studies. And this is one of the key drivers for our expansion of portfolio. So we are continually adding new challenge agents. I think we added three or four last year. We are building some new ones this year. But we are basically waiting for demand from the market before before we are going out and investing in new challenge agent. We are always renewing the challenges we have. But when we add new challenge agent as we did with h one n one, for example, or flu b, these are very often funded by our clients who will provide the funding for manufacturer characterization and the challenge trial.

24:24 So FluCap is a very important part of our provision of services because FluCap is the the key brand we use to recruit healthy volunteers. Without the recruitment of these volunteers, we would not really have a a good business model. Patient and volunteer recruitment is a single biggest reason why studies get postponed or or canceled or even delayed. And for us, the fact that we have got such a strong team and and a great system to measure the engagement of volunteer means that we we are the leader in The UK with regards to how many people visit our website, how many people register on the website, how many people we screen, and how many people go through, I think, the trial process. You have to remember that conducting human challenge trial is very strenuous exercise.

25:12 It's the the criteria for people qualifying into this challenge trial is very strict. In fact, we worked out that it's easier to get into the University of Oxford than getting into one of our clinical trial because of the strict criteria. And we've given you some breakdown of the the various parameters we measure. So you can see the age group is is fairly young people. We we estimate the average age of the person going into quarantine is around 31 years of age. And you can see from the people who log in to our website, the the the gender breakdown is more or less fifty fifty. We also have made some changes with regards to the the volunteer experience. So one the things, for example, we did was we we bought a kitchen in house. We're giving freshly prepared food to our volunteers. And as a result, we've seen significant improvements in the schools we're getting from the volunteers who have been through a quarantine process.

26:08 The graph here shows you the number of leads we are generating. So these are people who are registering on the website showing interest in in our challenge trial. Now one as you can see, we have consistent level of people who are interested in our clinical trial, which is a great thing. But one of the other key factors we've also shown this year is that we've been able to reduce the cost to get these leads on board. And that's really good for us because it means that we can fulfill the quarantine at a lower cost and partly this is partly due to the improvements in our in our internal processes, but also in running concurrent trials using different challenge models. So effectively, we're able to screen an individual multiple times so that increasing the chances of getting into one of our clinical trials rather than just screening them for a single trial at a time.

27:02 So as Steven mentioned, Ben Life Sciences showed a 30% increase in revenue year on year, which is a a great effort by that team. We also increased the headcount. The great thing about the Ben Life Science model, of course, is that they have a high level of repeat business. Up to 75% of the customers come back more business. And

27:22 one of the other things that people sometimes forget is that Ben Life Science has an integral part in the conduct of human challenge trials. So the protocol writing, which is effectively a manual of how we run a challenge trial for a forgiven drug, is written by the Veteran Life Sciences team. HVIVO in London then recruit the patients. We screen the patients here. We then put them into quarantine. When life sciences is responsible for collecting the data, for analyzing the data, and producing the final clinical study report, which goes to our customer. So both subsidiaries are working hand in hand in a very complementary manner to make sure we deliver a full service to our customers. We've also opened up a very small office in the item last year. And the main reason behind this is to take advantage of the huge number of startup biotechs in that region.

28:12 And for well life sciences, who are very, very good at providing standalone early clinical development services to utilize that biotech part and gain more exposure and gain customers. And we've already seen some success in that. One of the key factors we I may have mentioned last time was we had recruited some experts in AT and P with one therapy medicinal products. So such as cell and gene therapy consulting expertise. I'm pleased to say that now we have signed contracts in that field. So what are we doing as we move forward? So one of the key forward looking indicators, of course, is the order book. At the end of twenty twenty three, our order book stood at our weighted order book stood at £18,000,000.

28:58 What we do is we take each award that we have, each contract we sign, and we sign a probability factor as to what is the probability that we will recognize the full value of that contract. And by that, we calculate, we aggregate aggregate the sum, and we communicate that value to you guys. And the reason why we do this is because clinical research is notoriously volatile. Not so much for us, and I'll explain why, but generally speaking in CROs, projects very often get delayed or postponed or even canceled. We make sure that we only communicate the numbers that we are comfortable with with regards to the project being going to the finish. But one of the key differences between us as a CRO versus the standard CRO model is that we have a a 15 to 20% upfront payment that is nonrefundable.

29:49 So if the client was to cancel the project, then they will lose that upfront payment. And the key reason behind this is because when a client signs a contract with us, they are dedicated and allocated a space in the Quantity Room. And, of course, if they, for whatever reason, cancel the project, then they would basically mean that we will lose that space that we couldn't potentially allocate it to and the client, and that's what the cancellation fee is for. In addition to that, there is a postponement fee. So depending on how much notice we get and how long the postponement is, there's a postponement fee allocated to any delays from the client side. The order book, as you can see, as I mentioned earlier, goes well into 2025. 90% of this year is already contracted. But you can see already, we've seen a good number of quarters in in '25 seeing order book recognition.

30:41 And this is the longest visibility we've seen in the history of the company. So very pleased that our sales team has done an excellent job in making sure that the order book is continued to be fulfilled even though we are recognizing more and more revenue. One of the other thing I wanted to talk about really is to give you a little little bit more breakdown, more color on the order book. One the things I wanted to do is make sure that we have diversification in our order book. So we're not really relying on one project or one client for majority of work. So on the left hand side, you can see the breakdown of the order order book by customer, and you can see client a and client b are are big pharma clients, which is great to see because we know they're much more stable and they get their their study to finish.

31:29 And and third in place here is Venn Consulting, and they got multiple clients in that. And then we have client d, which is a a a mid sized pharma. And then, of course, we've got other pharma and biotech clients. In the middle, you see the same breakdown by project. So you can see we've got multiple projects with same client. So the risk we have with regards to cancellations and postponement is a lot less than it was maybe couple of years ago, even maybe eighteen months ago. We've added new clients. And on the right side, you can see we've added new challenge agent. So the diversification of the order book by challenge agent is the best it's ever been. This is not to say that a client will cancel or all our clients will cancel all of the project with a certain challenge agent. But for us, we need to make sure that we diversify any risk that if there's a downturn in the demand for one particular challenge agent, we have working other challenge agents that we can recognize.

32:23 But the rumors that we we heard previously, for example, that, oh, this could potentially be the end of the RSV market have been proven to be untrue. We still see a large demand for RSV work, which is which is great to see. The other item I I wanted to cover was is how this order book is burned across the the coming twelve months. So you can see each month how many volunteers we are contracted to deliver to all our clients.

32:57 So you can see it's a very healthy pipeline. But the key thing I want you to focus on is the fact that each bar chart here is a different color. This means that we are recruiting against multiple challenge agents each month. And this is really good because this is this means our conversion rate from the website leads into a healthy one day making into quarantine improves. Because we can screen the same individual for influenza, h one and one, for h three and two, for example, and RSV at the same time. So if an individual comes in for screening and they fail to go into H1N1 trial because, for example, they may already have immunity against that virus, that variant, we can screen the same blood second time and the third time and hopefully get them into a a clinical trial.

33:50 But that's not to say it's still it's a very, very big job to get all of these healthy volunteers. I think we screened 17,000 people that came through our doors. We took their bloods last year to fulfill this proportional work. And this is kind of a a big task, and it's one of the the key reason, I believe, is also a hurdle for new competitors coming into the market. So one of the big milestones for us this year in the company is going to be our move to Canary Wharf. What we've done is we basically split this new facility built out into two phases. So phase one is to build out the 50 bed quarantine floor. I'm pleased to say this is now complete.

34:39 The commissioning audit is happening next week. If that is successful, we plan to have our first quarantine in Canary Wharf come towards the end of April. This again is ahead of timeline to have the full 50 beds available for quarantine. And one of the key reasons for this is because we have one of our clients who wanted to accelerate their trial, and we've been able to accommodate them into the new facility. This can this facility will be at the end c l three, a category level three pathogen compatible. It means that we could potentially run challenge trials in coronavirus, for example, as well as other category three pathogen, which I think is key for us. We have new opt updated rooms. As you can imagine, this is a a fit for purpose building for human challenge trials. It is the world's largest challenge trial facility. So I think we all should be proud of the fact that The UK is the world's leader in conducting human challenge trials and boasts the larger facility in the world.

35:42 As we go forward, each bedroom here is a single quarantine unit. It means that it gives us much greater ability to run concurrent trials compared to the restrictions we have at the moment. It also brings our multiple builders under one roof. So long term, we're hoping we know that this will give us a potential to realize up to $90.95 pounds in revenue and also improve our margin by bringing everyone together on top of the automation initiatives that we have planned, which I will talk about in a second. The second phase involves the the Lower Floor Floor, which includes the laboratory and also the offices. That's that is planned to be ready by the end of June with the c l three lab to be planned by the end of July. This is also going on track.

36:34 Now this lab will be much bigger than what we currently have. Our current lab space really is just about enough for us to cater for the human challenge trials we run. Our goal is that we will market h labs, which is our laboratory brand going forward so that we can conduct standalone nonchallenged trial lab assays. And this is one of the growth areas we expect to see as we move forward. We also will have an outpatient section within the Clarendonville facility. This is the reason behind this is we want to be able to run phase two and then phase three outpatient clinical site studies. And this is one of the additional revenue streams we have planned for our growth to hit the £100,000,000 revenue target in 2028. I mentioned with regards to the automation, so we have three fairly large initiatives currently in in in in different places different phases of implementation.

37:32 The Laboratory Information Management System or LIMS for short, phase one and phase two is complete. So we already have certain automation within central lab, but we also will complete all of this implementation by the end of this year. Our volunteer management system is already fully implemented. Of course, there will always be ongoing continuous improvement, but we are using a system that will help us manage our volunteer, improve how we engage with the volunteers, as well as get more leads in and convert a higher fraction into quarantine. Finally, the third initiative we will look we are planning this year, at least complete the phase one, will be the e consent or e source. This basically mean that we will have all our medical health records of our individual in electric electronic format.

38:20 This, of course, will be more efficient, and it will improve quality as well as speed. So all in all, these initiatives are all under under the way in some way and format, and we we hope to realize full potential and the efficiencies of this come 2025. As a whole, the the CRO market continues to grow. So you can see here by 2030, it is estimated the government CRO market will sit at $124,000,000,000. And you can see in the chart the the number of trials that either planned or being conducted in the different pathogen that you could potentially put in a challenge trial model for continues to be consistent. If not, the trend, of course, is is growth. So this suits us well because this is the stage, and these are the viruses who could potentially use a challenge trial model against.

39:15 With regards to potential competitors, well, I talked about CEPI, for example, increasing investment in the the development of human challenge trial models. We have a a a small company established in Australia called Doherty Clinical Trials. They are looking to develop human challenge trial models. The Dutch government has issued a grant of 9,500,000 to a couple of local nonprofit organizations to develop a chill challenge trial unit to prepare for the next pandemic. And I'm very pleased that all this is happening now because this basically raises the profile of human challenge trials. So I expect us to see an increase in market awareness. So we expect to get more requests coming in. And being the company that has done the most human challenge trials has the patient recruitment database and the widest human challenge model portfolio, I believe we we we are in a really good place to take take use and make use of this increase in in the market.

40:21 The growth drivers towards going 2028. So rest assured, we are a human challenge trial CRO, and we remain a human challenge trial CRO. This is our major niche. It's like the the big set of action we have in the market, and the revenue continues to go up. So we will continue to do develop and market the challenge models we have. We are looking to expand and add more challenge agents into our portfolio. In addition, we would add more revenue to the revenue stream that talked about so that the h labs, the the clinical trial site services, as well as voluntary repurposing. So all of this, of course, will increase our revenue. We expect this to get us to our £90,000,000 in revenue come 2028, and then we also have plan for m and a activity to add £10,000,000 in revenue in 2028.

41:13 Now the m and a process is is active now. We are looking for targets. But one of the key message I wanna give to you is that if we don't do any m and a activity this year, it's not a failure. Okay? Remember, we are in a niche service. We are the world leader. It's not like there are other five, ten, 20 channel units that we can go and acquire. The key thing is to find the right target at the right price and the right fit. And for that, we may have to wait a little longer. But our goal is to bolster what we have and have bolt on m and a assets, m and a targets to what we already provide. So just to reiterate our guidance for 2024, we expect to hit £62,000,000 to try and sustain our EBITDA margin. We expect to see one h waiting in this this year. This is driven by two factors.

42:07 One, we did have a small cancellation with regards to our HMPB calculation study. We finished the manufacturing and recognized that revenue. We we did not complete the calculation study and but we did get the cancellation fee for that. We've also being asked by our client, as I mentioned earlier, to accelerate one of the studies. We're pushing that more into h one. And with the combination of of both of those factors, we expect to see a higher h one weighting compared to h two. But in the meantime, of course, there may be additional projects coming in that we may still be able to run later on this year. But we just want to kinda give up full transparency and give out the metrics for today. We expect to see h one weighting to rather than h two weighting, which I think is also is not a passing the fact that you can deliver and get your target of 62,000,000 in time.

42:57 We mentioned 90% of the revenue already contracted, and we have visibility going into 2025 and an order book of 80,000,000. So in summary, I hope the the numbers we have provided you today show that we have a robust model. It's definitely profitable. It's obviously sustainable, and the margin continue to grow. And we will continue to build on that. I always have this ethos of under promise that we'll deliver, and we'll continue with it within the same manner. The Canadian wall facility is a live facility that will help us get to the the next level, and that will be a 50 bed. As I mentioned, the largest facility of its kind in the world, and we will be adding new challenges. £62,000,000 of revenue already guided for, and we also have an annual dividend policy announced. And just remember, the main reason for this isn't to have large amounts of dividend payout. This is a nominal or modest dividend that we are paying out to attract new institutional investors.

43:58 Thank you very much for your attention. Fantastic. Most even, thank you very much indeed for the presentation. Ladies and gentlemen, do please continue to submit your questions just using the Q and A tab situated in the right hand corner of the 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. Most even as you can see you've had a number of questions that have come through, no surprise as always. So thank you to all the investors that have submitted those. If I could just hand over to you just to start at the top and read out those questions where appropriate to do so, and I'll pick up at the end. Thank you. So yes, we have a lot of questions. Thank you for your interest, and thank you for for staying with us into this evening. So I'll I'll I'll shoot through through these questions and answer as many as I can between myself and Steven. The first one is, is there any program to monetize the the non core assets? So as I mentioned before, the non core assets are really an upside for us. Our current focus is in developing and increasing the the human challenge trial market.

45:04 So not only the portfolio of talent agents we have, but also adding new challenges. And that's our our key goal. We are in conversations with regards to the noncore asset. But when that happens and that does come to fruition, then, of course, that will be an upside for everyone. Is there any latitude for expanding our human challenge trial offerings into noninfectious diseases? For example, drugs for autoimmune diseases like psoriasis, where continuous monitoring of inflammatory markers will be desirable combined with control volunteer diet and activity? This is a question for somebody who who knows this subject really well. So we we we have to be careful because we do want to diversify. Absolutely. But our core business really is providing human challenge trials for respiratory and infectious diseases.

45:52 And our team had the experience and the expertise in that. So that's our our core goal, and that's what we want to do. We haven't really covered all the challenge models that we can do. So for example, Zika or dengue or whooping cough. There's so many out there that we haven't really worked on. I mean, COVID is another example. So I think that's our core business. That's what we are marketing aggressively at the moment. But these are something potentially to add in the long term. Of course, there are other things like allergen testing or, for example, asthma allergy testing. So there's lots of different aspects of human challenge trial that are conducted globally, but we really haven't focused on the autoimmune for the moment. I think this one is for you, Steven.

46:41 What is the right tax rate to model? Why do you recognize r and d tax credit as other operating income and not as a contra account in the tax line? Okay. So the answer to the first question is most of our profits are in The UK, so we'll be subject to corporate tax UK corporate tax rates. So that's the rate to pretty much use in in in your modeling. Why do we recognize r and d tax credits? That's more of a historical thing. That's the way I've done. I have seen it done both ways. I've seen a number of reports where it is other income and other places where people have it within the tax line. I quite like it separated because it highlights two different things. You know, you're paying normal tax. It goes on the tax line. An r and d tax is something additional that you get from the government. And it is, you know, it is a cash receipt.

47:33 So whereas the other one is a cash payment. So I quite like them separated, but, know, there are two ways of seeing it around and it's historical. And at this stage I'm kind of think of leaving it that way. Thank you very much. Can you give us an insight any insight into why there is a H1 waiting this year and how the order backlog has evolved? I hope I've answered that question during the presentation. So as I mentioned, the HVIV characterization study as well as acceleration of another large project coming in earlier. The order backlog, again, hopefully, you've seen the chart. We've given you quarter by quarter breakdown of when we expect the the backlog to be recognized into revenue. With the cancellation of the HMPV characterization, are there other candidate companies looking at developing a vaccine that could then take this further?

48:28 So, yes, I mean so I'm not sure if I answered this correctly. So we have a HMPV virus manufactured that's ready to go into a calculation study. So we we have that, and that's we hold the IP on that. So we are currently looking for companies and partners who are looking to develop a vaccine or or antiviral against HNPV. And once we have that, of course, we will then work with them to characterize this HNPV virus, find the right dose, and then conduct a challenge trial. So this is basically is a new challenge agent or a new challenge model that we will look to develop at adding on to the portfolio of the challenge agents we already have. I hope I've answered that question appropriately.

49:17 How do you guard against the risk that someone may fall seriously ill within your facility and lead to negative headline risk to the company? What safeguards can you put in place? It's it's really good question. So clinical research, of course, there is a certain level of risk. So we have liability insurance coverage across a number of factors. So for example, for errors in admission, for any side effects of the challenge agents, or even the the investigational drug that we are testing. Our screening process is very strict. As I mentioned, we we we screen out over 99% of the people who register on our website. So it's very strict. On top of that, we don't do any first in human clinical trials.

50:05 All the trials we run, that drug has already been in humans in a in a phase one setting before it gets to the phase two human challenge trial setting. On top of that, we've had over 4,500 healthy volunteers go through our quarantine facility and have it inoculated with different challenge agents with no severe safety issues. Finally, just to reiterate maybe, every challenge agent we have manufactured maybe by manufacture is is a wrong word, to be honest. But effectively, the the the seed, the virus comes from a person who has got that infection naturally. So we're basically growing that virus that somebody has caught naturally. So it's not something that we use or mutate in any way. I think that's key. So so you can imagine for RSV or influenza, this is out there in the field. We take it from a a laboratory or a hospital, and we we grow that. We purify it.

51:04 We sequence it to make sure that it's the right strain of the virus we're looking for. We characterize it. So some of the low dose, and we increase the dose to make sure we get the right level of symptoms before we use it in a in a challenge trial. So hopefully, gives you some reassurance as to the all the steps we we undertake before we actually use it in a challenge trial. How many of the top 10 pharmaceutical giants are using HASES to say? So around four that we know of. I don't believe there is a big pharma that is running a human challenge trial with a with a third provider, at least in respiratory and ID space that we are in. So we we we have full access to the market.

51:49 In fact, almost every big pharma client we have has come back to us from multiple challenge trials. So we've had repeat business from all of our big pharma clients. Any news on new models such as c difficile, norovirus, strep pneumonia, dengue, chikungunya, zika? Excellent question. So you've really done a a good job here in identifying the the potential challenge model we can look forward to. So as as an example, for example, norovirus challenge trials have been run-in The US. Step two dengue has also been done in The US. Even Zika challenge trial has been done in UK UK academic side. So US academic side. And that's one of the important points, though. We we rarely invent new challenge models.

52:35 These challenge module models originate in a academic site where academics are conducting this trial on a small scale to study the scientific progression of viral infection. And we basically take that model, and we basically big size it, and we commercialize it, and to help develop our clients' products. But one of the key things we have changed not so long ago is that we're really looking for our customers to come and partner with us in the development of new challenge model. So you can see from from flu b for h one and one, even for HVIV, we had a client who was interested in that challenge model before we invested into develop that further. And we continue to seek customers, and we give them the opportunity to discuss the different models that are available, including these ones. And as soon as we have a client interested, we would, of course, help develop these challenge.

53:35 Will we ever see a commercial COVID human challenge trial? Any companies considering this now? So as you know, we have run a COVID challenge trial that was sponsored by the UK government. But since then, of course, no further COVID work. None of our our revenue this year at the moment is estimated to come from COVID trials. In order book, there's zero COVID related work. So we really are a non COVID stuff. But I do think as we move forward, there will be more interest in in COVID challenge trials, especially as we as we move into the next generation of vaccines, which, for example, oral vaccines or also multivalent or or combo vaccine, which work against more than one virus. And and these are something some areas of potential growth for us as a as a company focusing on conducting human challenge trials.

54:32 One for you, Steven, I think this one stripping out the Venn Consulting acquisition and the Canadian Wolf cost reimbursed for customers. What would organic revenue growth have been? Right. So VIN consulting accounts for about 12%, 13 of revenue. And so and it grew over 30%. We're not giving away what the Canary Wolf reimbursement from our customers has been. But the underlying margin organic growth is pretty close to the 16% that we've disclosed overall for the business. It probably is 1% or 2% lower than that. Thank you. Okay. Oh, it's this last question got five minutes. So I'm gonna answer this in a in a fast way. So hopefully, you guys can keep up. From here on, should we look at HVIVO as a growth company or a stable dividend paying firm, a growth company? Although we we will be paying a nominal or a modest dividend.

55:32 Do you have statistics to show how concentrated or diversified is your revenue by client or geography? Hopefully, you've seen that from our our breakdown of the order book that I showed on one of the slides. Generally speaking, how many healthy volunteers take part in one of your challenge trials? And how long does a challenge section of the trials last? So so the size vary depending on the the the the reasons why the client wants to do a challenge trial. So at the minimum, I would say it's around sixty, eighty, but it can go up to 200 healthy volunteers. The the actual quarantine parts so each so depending on the virus, the the volunteers in the in the quarantine between ten to fifteen days. But the overall the the kind of beginning of the quarantine phase and the end typically takes about two to three months depending on the size of the project. But, of course, for bigger studies, it could take longer than that.

56:28 You have screened 17,000 people last year for trial participation. Correct? How many of those 17,000 turned out to be less than one, let's say? Or maybe a little bit more than that. Less than ten percent, definitely. Our volunteers, more than once. I want to use more than once. So typically not. The only way we can use more than one volunteers is they can come back after six months and take part in a challenge trial with a different virus, not the same virus. Can you give a bit more detail on the financing of the new clinical facility? Not more than what we have already shared because we have to basically abide by the our clients' confidentiality. We we can't give out those numbers.

57:14 Is there an advertising budget? Of course, there is for voluntary recruitment. You say you have 50 bed capacity. Do you have plans if you go and exceed the yes. So Canary Wharf has the capacity to add 20 more beds, so we can go up to 20 beds sorry, up to 70 beds in total in Canary Wolf. To what extent do you view yourself as a possible acquisition target? That's a a question that with an unknown answer, to be honest. You potentially have to ask a a PE company or other global CROs for that. And our goal basically is to continue to grow the company, continue to hit our our targets. Why can they evolve? Surely less prosperous area would attract a greater number of volunteers.

58:01 So why can they evolve? Economically, it's the primary reason, to be honest. I'm not sure there's anything else add to that. A great place to be, but economically, it made sense after we we assess different locations. And for the location of the volunteers, so we have actually have a UK wide reach. So volunteers come from all over the country, and we will continue to have a screening facility in Manchester. We will continue to have a screening facility here in East London. And the only people who go into Clarendon Wolf will be the one that qualify the screening process and go there. So it's it's not an issue from that point of view. In view of the Exxon cash position, would you consider the payment of a special dividend later this year? Not at the moment. Thank you and welcome to everyone at HVIVO. Thank you for that. How was the dividend amount determined as it seems rather small given the company's cash pile? You want take that, Stephen?

58:56 Sure. I think I alluded to in the presentation, we looked at having been conservative to keep a robust amount of cash on the balance sheet. We looked at six times cover of adjusted basic EPS. And as that grows, so will the dividend. And we really are looking to retain cash on the balance sheet for mergers and acquisition activity. Thank you. With the new facility coming online earlier than planned, will you be looking to run studies at both facilities? Absolutely. And this is one of the reason why we think h one will have a slightly higher weighting than the h two. So abs good question. Hopefully, that makes sense. Why does the company attend so many conferences? Is this the only way of generating leads? It's one of the ways of generate generating leads. Of course, it is. I was at the World Acting Congress last week, and we had a presentation that we gave out on human challenge trials. I mean, the key goal for us really is to raise awareness.

59:53 That's the key thing. We know there's a a bigger market that we're currently aware of. So the the bigger the platform for us to talk about human challenge trials, the more. You'd be surprised that even now at our booth, when we're standing there, we have companies coming in asking us about what a human challenge trial is. So that work will continue to happen. And as as I mentioned, people like CEPI, WHO, Welcome Trust, and other small academic sites are helping us in getting the message out there. Thank you for all your questions. I think we've we've gone one past the hour, so I'd like to close the question section now. Fantastic. Well, Steven, thank you indeed for covering up so many questions, and thank you for everyone for submitting those. Before redirecting investors to provide you with their feedback, which is particularly important, Michael, I'll start just for a few closing comments before we wrap up.

1:00:40 Thank you for that. Well, again, thank you for your time today. Hopefully, this is a good positive update for you. No kind of surprises. The only kind of surprise I guess would be that we have increased now a higher EBITDA margin than we had previously communicated and the fact that we've been able to get Canadian Wolf up and running earlier than planned. We stand by our guidance of £62,000,000 for this year and a 100,000,000 goal come 2028. So hopefully, you've seen over the last couple of years that we've basically delivered on the numbers that we communicate. Sometimes you may feel these numbers are conservative, but we we communicate them as we see them, and we we hopefully will continue to beat the numbers. So thank you for your interest and for your holdings. For those of you who are holders and for those of you who are not, what are you waiting for, really?

1:01:29 But, again, thank you for your time. We are pleased to be talking to you. And, you know, hopefully, we will be talking to you next time from the world's largest quarantine unit in the world. Thank you. That's fantastic. Most even, thanks indeed for updating investors today. Now please ask investors not to close the session. You'll be automatically redirected to provide your feedback. Lord, the team can better understand your views and expectations. This will only take a few moments to complete and that is greatly valued by the company. On behalf of the management team of HVIVO PLC, we'd like to thank you for attending today's presentation, and good evening to you all.