Hvivo (LSE:HVO) — Full Year Results

0:01 Good afternoon, and welcome to the HVIVO PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors are in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated on the right hand of your screen. Just click q and a, scroll to the bottom, type your question and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Mo Khan, CEO. Good afternoon, sir. Thank you. So good evening, everyone. It's wonderful to speak to you again. I know it's been a while, but we've had a hell of a year in 2022 and we're busy growing the business in 2023. So right here to present the fully audited results for year ending 12/31/2022.

0:51 Hopefully, there's not too many surprises because we did give a comprehensive trading update at the end of January, but what surprise there are are on the upside with regards to the financial fundamentals. So onto the second slide, as the kind of normal disclaimer for these types of presentations. And briefly, for those of you who have not seen me before or have not met me before, so I'm Yamin Mohan. I'm the CEO of the company. I've got over twenty five years experience in clinical research. I joined as a non executive director in

1:22 October 2021 and took on the CEO role in in February of last year. And so I'm very happy to be talking to you. I also have my colleague, Steven with me. I'm Steven Pinkerton. I have been with the business for about seven years. Coming up to seven years, I've been CFO since October. And, prior to that, I was with Thomson Reuters. I have a very good understanding of the business and the commercial operations of this business. Thank you, Steven. So today's update really is a kind of a brief walk through the financials, which we've already more or less announced three months ago, but also give you kind of more color and flavor on how we achieved the numbers we achieved and give you some insight into the future looking outlook and how we intend to deliver on our 2023 targets. So firstly, an overview of 2022 coming up, but we do wanna share with you guys our our new mission, which is delivering today's health care by empowering tomorrow's innovation. This really goes to the to the seed of the human challenge concept, which we believe is a is a fairly new innovation that we've really optimized in helping our customers deliver their drugs and bring to market fast. And we've seen this already take place, and we expect the very first RSV vaccine to go on to market partly because we ran a human challenge trial with that drug. So effectively,

2:52 we are helping customers to bring drugs to the market faster to the human challenge concept. As we go forward, of course, we're building now a much more, mature company. We have a mission and a vision statement. We also have values and established an ESG statement for the company. But going back to 2022, which I've phrased as a transformational year for the company because I believe it is. We've grown the headcount by more than 50%. We've delivered a revenue greater than our guidance to going to £50,700,000 as a a 30% year on year increase. EBITDA margin of almost 18%, and Steven will go through in more details how that is made up of. And then a very healthy cash balance at the end of last year of £28,400,000, and we're very pleased to announce that we will be making a dividend payment this year, and and Steven will elaborate on that in his section.

3:57 With regards to our performance last year, we had seven active human challenge trials. We inoculated more than 400 healthy volunteers, and we gathered around 120,000 online human volunteer leads. So all of these numbers are, by the way, record breaking numbers. And and twenty twenty three, we expect to beat each one of these numbers. We now have over 11 different challenge agents, which are basically the viruses we use to inoculate our individuals with. We completed around 70 human challenge trials and inoculate around 4,000 healthy volunteers, which continue to be the dominant force in the challenge human challenge trial market with over 90% of the share. And we are really well positioned for growth. And the key metric for me really and for you to take home is that we have 76,000,000 worth of contracted order book. And this is a weighted order book because we realize that there is inherently, you know, postponement and cancellations within our industry when it comes to clinical research. So we we mitigate for that risk and use the probability factor to determine the likelihood of each project actually taking place and going to completion. And with that in mind, that £76,000,000 gives us full visibility into 2023, and in fact, almost all of the first half of twenty twenty four.

5:22 On top of that, we are guiding towards a 55,000,000 revenue and a mid to high teens margin. So the key message really is that we are definitely growing our revenue year on year, but at the same time improving on our EBITDA margins, which is key. So I'll now hand over to Steven to go through the financial numbers from last year.

5:48 Thank you, Moe. It's very nice to present these fine set of results for 2022, and let me take you through some of the figures. Revenue did of 50,700,000,000 does include other income and grew 30% year on year. And the fundamental growth of this business was down to the challenge services business. Our VEN business did grow sort of 5% if you just exclude if you think about on a stand alone basis, but it also contributed significantly to the challenge models and services as well. And if you take that into include, it's closer to 10%. So solid performance from Venn. The main reason for the growth of the challenge models is that we obviously started off with we had a good order book, and then it's then it's come down to delivery. In the second half of the year, we had six clinical trials in quarantine.

6:45 So we were managing six different studies and and fielding volunteers through through our our unit. And the benefit of that is because we're crossing over a number of variants, it gets much easier to recruit the volunteer. And for an example is that we did 413 volunteers this this year in 2022. Last year was 300. Of the 413 volunteers that we delivered in 2022,295. So almost the same number of volunteers that we delivered in 2021 was delivered in h two, and that has all got to do with the fact that we had six studies on the go going through quarantine unit.

7:30 The other driver for the increase in challenge revenue is that we signed four sort of end to end full service studies where we do we're manufacturing the agent, we characterize it, and we do a challenge study. And two of those so our manufacturing revenue grew fairly significantly. It grew almost a 100% from year on year. We've delivered two new agents, and we two were started and will complete in 2023, setting up a a good performance for 2023 as well. The other thing just to touch on this fact is that this is a growth across all our sort of our sectors.

8:15 Obviously, the government sector reduced year on year from and this was more than made up by a pharma. Biotech have remained the same sort of share. They they account for 46% of the revenue in 2022, and they grew to 30% equally as well. So a a solid performance in revenue. If we move on to EBITDA, we we delivered 17.9% as the final figure. At the twenty fifth of January January, we were suggesting it would be close to 17%. Obviously, we hadn't the orders of figures since then, so we're a little conservative. It is worth highlighting that we will have, you know, cancellation or postponement fees coming through, and that certainly impacted our margin in 2022 to about to suggest that the underlying margin for this business was close achieved that was closer to 16%.

9:11 This reflects quite well on 2021 where we had a margin of 7.4%. And some of the key drivers for that, again, is having six challenge trials. You're recruiting for six different studies at the same time. This allows you to get the volunteers on get the volunteers in and more efficiently recruit volunteers, but also more efficiently get volunteers into the unit, and therefore, you improve your utilization on your your facilities and your clinical staff. So that is a core driver for the improvement in margin. We're also in 2021, just briefly, we did have three sites where we were doing the roll free for the COVID study. And so there was a very minor impact having a third site in 2021, but obviously, it support not having it in 2022 also alluded to a small improvement in the margin.

10:10 If you go to the next slide. So we are a cash generative business, and that is really boils down to the way we contract with our clients. You can see that we've generated our our cash increase from 15,700,000 all the way up to 28,400,000. And and this is because it comes down to the way we contract with our clients. So the order book grew from 46 to 76,000,000, And every time we contract with a new client and they book a slot in our quarantine unit sometime in the future, they pay us an upfront fee in cash. And and it's worth noting that that those fund those deposits or those booking fees are not refundable. So if they postpone or cancel, we keep that value. And this ensures the commitment of the client to doing the study with us. And, also, because we're designing the study with them, we don't want them to go off and and give it away to somebody else. The other reason for the growth in the revenue is we have quite a strong milestone program. So we had a high delivery in h two with a long you know, 295 volunteers delivered, and that hit the number of milestones, and therefore, we get the cash coming through for hitting those milestones.

11:25 It's worth noting that all our deals have milestones that ensure that we get revenue upfront before we do that final next step. So in in essence, we're does each study, if you look at it on a stand alone, is generally in a cash positive position except for the very tail end of the study where we might be a £100,000 off or had to accrue for and wait for the final invoice. The taxman gives us about 1,500,000 almost every year, which is nice because we're an r and d business while we support r and d. We don't do r and d, but we support programs that are classified as an r and d, and so for we get a kickback from that. Financing activities is really our leasehold our lease payments.

12:14 We've also made a small payment of debt settling our last debentures in the q one, and so we don't have any debt on our books at the end of the year whatsoever. It was all partly offset by the fact that we had good ethics exchange profits where we hedged our a deal that was based in US dollars. Moving on, investing activities of 1,400,000 is very modest. It's really made up to the fact that we spent two weeks. We set up Plumbers Row, increased our screening facilities there, and also enabling us to do some outpatient work if should you know, when we win those studies and get those coming through.

13:01 We also increased set up an office in Manchester. And so that's that's to also expand our our reach, our recruitment reach in in The UK and make sure we're getting our volunteers in. The rest of it was very minor changes to the QMB capacity just to improve labs, the workflow through labs, and around the nurses' station and on on in a in the quarantine unit. We've replaced a bit of labs, but it is I think the one thing that we should highlight is that that 1,400,000 doesn't include any challenge agent development or replacement. Because as so far this year, we as I've hinted in when we talked about revenues, we we've managed to get our clients to pay for new challenge agents.

13:53 So that's why our investing activities are very modest. And two, if we had to acquire a new agent, it's not that expensive. We would expect next year, we probably have a a new agent to replace mainly because we're running out. And so the spend the investing spend might go up to about 3,000,000 at the most. So it's not a big exposure there at all. So, anyway, at the end of the year, we land up with 28,400,000, which is a robust amount of cash. And given that, we have agreed to reward our shareholders a dividend of 0.5 0.45 p per share, which equates to about 3,000,000 being paid out.

14:40 This represents about 50% of our adjusted earnings per share of 0.990 p 0.90 p. Yeah? Don't get confused. One of the analysts woke up in the night and thought we had printed 45 p, which obviously doesn't work. Just to highlight a couple of things here, obviously, important dates would be the ex dividend date being the May 4, and we expect the payment of the dividend to be on the June 9. Yeah. Just to reiterate our guidance for 2023, our revenue guidance is 55,000,000. We're expecting EBITDA to be in mid to high teens.

15:26 And I'm not going to go allude to much because actually Moe's presentation covers quite a lot about what we're looking to do and how we're looking to grow and why the market is changing and moving. So I'm going to hand over back to Moe. Thank you. Thank you, Steve. So I'll go into further detail about last year. So one of the things I want to talk to you about is what are the factors that are influencing the increase in human challenge trials. So I kind of break this down into four sections. So academic research in human challenge trial is is increasing, and I've listed here a few of the new challenge agents are currently being utilized in human challenge trials in academic circles. And we, of course, use the academic experience and their models, really develop them and commercialize them so we can sell them to our commercial customers to expedite drug development.

16:22 Secondly, the acceptance of the data from human challenge trials with our regulators, we see that is also increasing. And we've seen the FDA, for example, grant four of our clients fast track status, which means that they get priority regulated review of their data and effectively means they get to market faster. And we also look to see that the RSV vaccine for Pfizer come to market early, mainly due to the human challenge trial that we ran for Pfizer. At a commercial level, so one of our tech customers, for example, REVIVORAL sold itself to Pfizer for $500,000,000 purely due to the the results of the data from the from the human challenge trial. And secondly, Sadara, a recent client, also showed a fixie for the drug early in the human challenge trial, and now that asset is being taken forward by Janssen or Johnson and Johnson. And finally, I've already kind of mentioned the the Pfizer news. So all of these factors, I think, are key in ensuring that we are we are showing that our customers, both biotechs and pharma, are getting good value on on doing human challenge trial in expediting product development and getting to market faster.

17:46 And finally, we've also had positive feedback from nonprofit organizations. So the Wellcome Trust, for example, is helping to promote human challenge trials as a concept in drug development. HVIVO PLC is a UK organization that has European membership, which looks to standardize human challenge models both from manufacturing characterization and a challenge trial conduct. One Day Sooner is another voluntary organization that helps to promote the human challenge trial concept to healthy volunteers and also to commercial entities as well as the regulators. And the WHO last year published guidelines on conducting challenge trials. So the key message really is that this is almost the inception of a human challenge trials in commercial drug development. We we are just starting to see an increase in this.

18:41 You have to appreciate the pharma industry is fairly conservative. So these changes are always slower than you'd anticipate. What you've seen from the the numbers year on year, we've seen a significant increase in the number of trials we are running. I think that is really good news for us as we move forward in from 2023 into '24. The market itself, one of the key drivers for its growth are firstly, the infectious disease market is increasing. There are more vaccines and antiviral treatments being researched by biotechs as well as pharma industry. We've also seen the number of challenge trials per asset increasing. And, of course, the actual size of a human challenge trial is also increasing.

19:26 And I will give you a little bit more detail on that in in in the following slide. We've also expect to see more mosquito borne diseases in human challenge trial models. This could be driven by the climate change and an increase in prevalence of these types of diseases in North America as well as Europe. A third arm really is the development of precision medicine. This is where a client comes to us and they're asking us to run a human challenge trial in a specific variant rather than just say influenza. They want to do a study in h three n two, for example, or flu b. And this means that we have to manufacture the challenge agent. We have to then characterize the challenge agent in other words, find the right dose and then do the actual challenge trial. And we've seen more of this, and I think this is something that will continue to increase as we get maturity in a challenge model.

20:21 New treatment methodologies. So for example, we expect to see in the future combo drugs where you have one vaccine, for example, it's active against more than one virus. We also expect to see mucosal treatments for, for example, Omicron where either an oral or inhaled product is used rather since that systemic injection. And we will, of course, continue to build on our human challenge portfolio. And on this slide, we're showing you the various challenge models we have. I I appreciate we haven't really discussed this too much before, and I I want to be more open and more transparent. But, you need to appreciate that we have our goals and we have our strategy. And I will make sure that we achieve all of our financial goals, but the strategy may change. So for example, if a a client was to come in tomorrow and want to run a a Zika trial, we would then, of of course, prioritize the development of a Zika challenge agent. But at the moment, the ones in green are the current challenge models we have active. The ones in orange are the ones that we're looking to develop this year or next year as per market needs.

21:31 But the key kind of message for this slide at least is that we are diversifying the portfolio of the challenge agents we are using. And within influenza, for example, we have multiple different challenge agents. And as I mentioned, we now have customers asking us to conduct a study with a specific variant of influenza rather than just influenza. We had three significant awards last year of what we call the unique end to end human challenge service. This is something we, at HVO can offer no one no other company in the in the world exists that can offer the full manufacturing of a challenge agent, the characterization, and then conduct the the challenge study. And this is something led by the precision medical medicine concept that we expect to see increase and more of in the coming years. And it's something that we are we are proud of, especially because this requires very comprehensive and specific scientific expertise and experience, which we alone can provide to our clients.

22:40 We, of course, still use FluCamp as a platform to recruit healthy volunteers and then perform tremendously well over 2022 and continue to do so in 2023 in delivering the volunteers to run our human challenge trials. As you may have you may remember from last year, eighty percent of clinical trials that are delayed are delayed due to poor patient enrollment. And we've invested significantly in increasing the resources within the the Flukem platform department, as well as updating the system to improve the engagement with the healthy volunteers. On the left hand side, you can see the ever increasing number of new online leads we have with regards to new volunteers, volunteering for challenge trials. On the right hand side, we can see that the number of volunteers we screened per quarter has gone up.

23:33 One of the great advantages of doing multiple challenge trials with multiple agents is that we will look to improve the conversion rates from screening with all the way to quarantine. And we have a database of healthy volunteers now over quarter of million volunteers, which is I think industry leading. So a growing trend is that we are actually conducting more human challenge trials. So this is a result of aggressive selling and marketing from our point of view, but also the the market is definitely expanding. We have a loyal base of big pharmaceutical customers, but we are adding new smaller biotech companies to our customer customer base too. The fact that we're now offering a greater diversity of challenge agents mean we can have access indications we have never have had challenge trials for before. And we also now are running concurrent trials at the same time. Effectively, this should improve the utilization of our capacity and be able to do more trials in a given year. On top of that, the average size of the human clinical challenge trial is going up. So you can see on the chart on the right hand side, the number of volunteers per challenge trial is definitely increasing.

24:52 And this is mainly driven by our sponsors wanting to get more out of the clinical data from human challenge trials. So it could be to achieve different endpoints. It could be, for example, to look at different doses or even optimize platform selection or just help them design and optimize a phase three study. But effectively, there are more challenge trials coming to us, and each challenge trial is bigger. And as you may imagine, the key driver for revenue or the the the contract size of each trial is the number of healthy volunteers. So the greater the number of volunteers, the larger the contract size. This is an interesting chart because, firstly, it shows you the longevity of the order book that we have. So this consists of the contracted order book where the client has paid the nonrefundable upfront payment. So you can see that going into at least to the end of the first half of next year, we have a good steady level of number of patient, number of volunteers to be inoculated in a order book. So this gives us long term planning and and consistency and stability within our working practices and for our resources.

26:06 And secondly, each color on the chart in the bar represents a different challenge agent. And this is important because it means that we can screen one individual multiple times. So if there's failed screening, for example, to take part in a influenza trial, we can screen them for an RSV trial. Effectively, this drives an improved conversion rate, and we, of course, expect this to drive improving EBITDA margin. So one of the key reason, as I mentioned earlier, of us increasing revenue is doing more trials at any given year and more healthy volunteers. And the key driver for improvements in EBITDA is the bill ability to make use of a static number of healthy volunteers and put more into quarantine from what we have.

26:59 I wanna talk to you now about a couple of case studies that we have recently completed. So Sidara Therapeutics is one such case study. We ran an influenza challenge trial for Sidara. And during the interim analysis, they were able to show a significant difference between the placebo and the active group and that the drug was effective. This drug is now being taken forward by Janssen to be developed into to phase three and hopefully to get to market. Secondly, we also ran a a couple of years back now, to be honest, we ran a a human challenge trial for Pfizer on their RSV vaccine. This vaccine showed hundred percent efficacy in the more severe patients, and I'm pleased to say that Pfizer have now completed the phase three, and it has shown good efficacy.

27:50 The reason why this slide is important, it one of the reported weaknesses, apparent weaknesses at least, in challenge trials is that question remains is, does the challenge trial model mimic what happens in the field? So in other words, we in the challenge trial are inoculating our healthy volunteers artificially while does the progression the disease progression in those volunteers mimic what happens in the field when you get the disease naturally. And this is a chart proving that it does. We presented this data at a major World Vaccine Congress a couple of weeks ago in Washington DC. So on the left hand side, you can see the response rates with the vaccine in a human challenge trial.

28:35 And on the right hand side, you can see the similar results in a field study that was run by Pfizer in thirty two thousand patient. And you can see they correlate very, very closely. The fact that the response rate and the trend is very similar shows us evidence that, yes, indeed, the human challenge study does mimic what happened in the field. This is one of the first cases we have been able to show this because previously, our clients have used the human challenge study data to refine and redesign their phase three program. So you couldn't able you you weren't able to correlate between the phase three study that was conducted and the human challenge trial that we conducted because the designs were dissimilar. But in this case, the designs were very similar. And the only difference you may have noticed, for those of you looking closely, the response rates in the challenge study are slightly higher compared to the field study. We believe this is because the human challenge trials are done in a healthy young population. So their response rate, you expect to be much better, whereas the the phase three study is done in a target population, mostly in the elderly population. So you would expect to see a decrease in the response rate. But the fact that the severity of disease and the rate of response rate correlates really well, this means that the human challenge model is a very good way to get an efficacy or effectiveness signal for our clients so they can indeed

30:05 derisk their phase three program rather than just going in blindly and taking a risk on a 100,000,000 trial without knowing whether the drug is effective or not. So with regards to our order book, I think you've seen this before on the left hand side. As you can see, we still have a very healthy order book. So £76,000,000 in contracted order book. Again, this is mitigated for risk. So we this is a weighted order book. So we we appreciate and we are aware that there will be cancellations, there will be postponements, and we have to cater for that and plan for that. On the right hand side is the sales pipeline. So these are the number of studies we're currently opportunities that we're currently working on. So this is unsigned work, sales leads that our sales teams are currently dealing with. I wanted to give you an indication of the distribution of these across different factors. So by region. So as you expect, majority of the leads we have come from The US and also from from Europe, but we're also seeing a good number of leads come from the APAC region. And this year, of course, we have already announced an APAC award. So it's really good to open a new market, and we will continue to build on that. On the right hand side there, it shows you the breakdown between biotech and pharma. So you can see the pipeline is really kind of mostly biotech and then big pharma.

31:30 The chart at the bottom shows you the diversity between the different models in the pipeline. I'm proud of this chart, because we're now able to see that we are not just a one or a two indication company, that we now have interest from our clients across a variety of different challenges. And that was one of my goals to be able to diversify our talent portfolio and able to sell that to our clients. So we can see we have interest in HRV, in COVID, in malaria, in asthma from our customers. In the other section, for example, we're also including dengue fever as well as HMPV. In addition to our human challenge trial offering, we do have a a really good non challenge offering. Now just one thing to note, our core service will always be human challenge trials. But we also want to make sure we're optimizing operations across the board. So we have come up with a new concept of bench to bed bed model.

32:33 This basically relates to preclinical and the clinic early clinical consulting services conducted by Venn Life Sciences and then the human challenge trials done by HVO. So you can see at HVIVO, we have the nonchallenge services in in the laboratory as a clinical site, QA consulting, as well as voluntary repurposing. So we have signed our first clinical site contract. We also got the accreditation for our laboratories, so we are selling that and winning some lab awards. But remember that the lab awards will will not be anywhere near the size of the human challenge trial models. We're also pleased that we're looking to finalize their contract with another CRO where we can repurpose our healthy volunteers who are not eligible to go into a challenge trial going into one of our CROs trials.

33:25 Well, life sciences, of course, has a a long history in providing regulatory CMC, nonclinical, and clinical biometric services. And we at HVO Group now are utilizing all three main hubs, London, Breda in The Netherlands, and Paris to conduct all our human challenge trials. So we don't use any third parties in conducting these trials, and all three offices are fully integrated in delivering the human challenge trials we run. In addition, last year, Venn Life Sciences added new consulting expertise in the areas of drug device combinations and advanced therapeutic medicinal products. This is gene therapy and cell therapy. So I expect both the challenge trial work and the non challenge trial work to continue to grow in '23 and and beyond.

34:20 Aside from Ben life sciences. So this year, I have a focus on growing Ben life sciences because I believe that there is a really good potential for growth. We have some amazing expert at Ben life sciences across different departments, and we've we've seen some significant awards already. So the 3,200,000 award at the end of last year is a huge contribution to the overall revenue as as for this year and for next year. The The company has been going for over twenty five years, and I think for us now, the fact that it's fully integrated in delivering human challenge trial is great. And for me, us opening up a new office for when life sciences enlightened by science bug means that we are closer to almost two fifty new customers, and that expansion helps us to get exposure to new business units that we've not had exposure to before.

35:17 So overall, the market continues to grow. I always say that it's very difficult to actually define the size of the human challenge trial market. But even the last twelve months, a number of occasions we have spoken to our clients, we have never really considered doing a human challenge trial as part of their clinical development plan, but we have or our scientists have convinced the the customers to do a human challenge trial because they've now seen the benefits a human challenge trial can bring to their development plans. But it is estimated that the human challenge trial market in five years will reach 700,000,000. The number of vaccines currently being studied continues to grow. You saw a huge kind of blip in 2021 due mainly due to COVID vaccine. But you can see if you take that outlier out, there's been a steady growth in number of vaccines being studied.

36:08 One of the key components of doing more human challenge trial is that because this, generally speaking, a depressed market when it comes to funding, well, if you wanna know whether your vaccine or antiviral works, you you can conduct a human challenge trial. Would will cost you, what, 20% of a phase two study, and within ten months, you'll know whether your vaccine or antiviral work. So personally speaking, I don't see that the depressed financial markets or the the biotech funding environment we're currently seeing should impact us on severely. Of course, the big pharma are are free to continue to develop their drugs. But on the biotech side too, I don't expect to see a downturn in the number of human challenge trials we are conducting or the number of trials we should be awarded this year.

37:00 Two of the areas we look to focus on is HNPV and dengue. And again, as I mentioned, if a client comes in with a different virus and we prioritize that, we will definitely do that. But HMPV and dengue are both really good candidates for future challenge models. And I've given you some of the data of why we believe that is. So HMPV is related to RSV, and there are currently no vaccines or specific antivirals medications available in the market. And you can see that the incident is significantly high with over sixteen thousand deaths worldwide in children under five. Dengue. With dengue, it's quite scary to to kind of see that over fifty percent of the world population is at risk of dengue infection.

37:46 And I mentioned that the mosquito borne diseases prevalence continues to change with with climate changes, and it will probably we will probably will see a high incidence rate in Europe and in North America. And over three hundred and ninety infection per year resulting in thirty six deaths. So there's definitely a gap in the market, and it's the medicine, vaccines, or antivirals are really needed for this indication. There are no antiviral treatments to date and one vaccine that has been approved recently. So these two indications, we we expect more researching. We expect more funding from biotechs and big pharma, and we look to develop these models in conjunction with our customers. Update on noncore assets. So I think we've been talking about this for since at least I've been here, and we've been working hard to make this happen.

38:41 But for a number of reasons in in in the current market climate, we've been unable to, what, prep BioPharm have decided to commence solvent liquidation in 2023. The process has already started. It should complete in the next couple of months. We did have an impairment on this, I think, in 2018, if I'm not wrong. On Immutex, which we hold a 49% holding in, a joint venture with pep T cell, we will have run a full impairment this year after making an assessment of the investment, and I think this is a good decision. With regards to disease in motion, we are postponing all activities in in the spin out. We still use the disease in motion data to optimize and and design our human challenge trials. So the data is still there. We are still utilizing it.

39:37 In the future, we we may still use it and spin it out. But for time being, we, as a company, we realized that the the key core business for us is human challenge trial models, And we're seeing a significant growth in that area, and there's no reason why we should be distracted by anything else. So we will be focusing on developing the human challenge challenge trial model. But, of course, the Imitax valuation could still be there at a later date, and disease in motion is still in our back pocket. But we'll still continue to utilize that in designing human challenge protocols. We have developed a full ESG policy in the company. So you'll see this in our upcoming annual report. We would use 2023 as the base year to be able to measure and monitor different environmental and social parameters.

40:30 And this is something you will see more of in the coming years, and we were looking to get ISO 14,001 accreditation next year. And I believe this is important for us as a company as we continue to grow. We've added more than 50% headcount to the company. We are growing as a business. I think it's important to make sure we look after our ESG and our our carbon footprint. So you're pleased to hear this is the the final slide, the investment case for the company. Well, I think that the strong financial fundamentals really speak for themselves. We've we've we've we've grown to record revenues, EBITDA, and sales. We have very strong cash position, and we're proving our our operational efficiencies and our margins.

41:17 The market is definitely expanding. We're seeing more human challenge trials per asset. The size of those trials is is increasing, and we're now actually seeing tangible benefits for our customers. The hurdle to entry for our competitors remains high with regards to having the the facilities, the the resources, the challenge models, the the one day database, and the experience of the the challenge trial models in in in actual clinical trials. So we we believe that we will remain the dominant force in human challenge trial model. But we're not gonna sit back and relax. We will continue to aggressively pursue new opportunities and grow the human challenge market. We, of course, have world leading unique capabilities. We are the only human challenge trial dedicated CRO in the world.

42:05 We have a team that has unique experience and expertise in developing the challenge models and conducting human challenge trials. We, of course, we believe are the sole provider for the big pharma when it comes to human challenge trials. The outlook looking forward, while we're projecting guidance to get £55,000,000 in revenue, for me personally, this is a a baseline, not a target. I I would like for us to to beat that, and we are projecting higher mid to high teens EBITDA margins. We have full visibility in 2023 revenue going into at least the end of June for 2024. And we will be we have already, to be honest, in certain cases, open new markets.

42:51 We will be opening new hate human challenge trial indications and opening up new services. And our pipeline our sales pipeline, these are new leads remain the strongest. So I remember talking to you guys almost, what, a year ago, just under a year ago. My goal was really to make sure that, hey, Vivo. We have a a long term sustainable growth model, and I believe we have that now. Thank you for your attention. Fantastic. Most even, thank you very much indeed for your presentation. Ladies and gentlemen, do please continue to submit your questions using the q and a tab situated on the right hand corner of your screen. I just want the team to take a few moments to review those questions submitted today. I'd like to remind you that recording of the presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard.

43:39 Guys, as you can see, we've received a number of questions both pre submitted throughout today's live event. Thank you to all the investors for submitting their questions. Just a reminder, due to the number of attendees on today's meeting, the team will not be able to answer every single question it receives during the session. However, we're going to review all those questions and publish responses where appropriate to do so on the investor company platform. Mike, if I may just hand back to you just to read out the question where appropriate and give you a response or direct it to Steven, that'd be fantastic. Thank you. And I'll pick up from you at the end. No, thank you for that. So yes, we we do have lot of questions. Some were pre submitted earlier. So I do I have seen there's a large number of questions on on spin out. Hopefully, I've I've answered a number of those. But if you want any further elaboration, you can continue to submit them, and we will get back to as many questions as we can. But the key goal really is that for me, personally, the focus is HVIVO in delivering the the revenue and the EBITDA margins.

44:40 We've announced the the current update, and you've seen our broker, at least one of them has increased our target price. So they've seen the value in the human challenge trial model and the fact that we are performing more trials and generating more revenue as well as at the same time improving margin, which is a difficult thing to do to increase the revenue and improve the EBITDA margin. And that's, I think, significant. And that's what we will continue to build on, and that's that's what I would like to grow as a business. So going to your questions, with the UK government recently allocating £4,700,000 of funding to the University of Liverpool Hospital for a facility to to undertake human challenge trial, do you view this enterprise as an opportunity for partnerships and complementary services or as a competitor when bidding for government contracts?

45:33 Well, to be honest, we don't really bid for government contracts. I appreciate we had that historically with regards to COVID, but currently in a pipeline or in our order book, we have zero government work. And the fact that other academic sites are establishing human challenge units is really good for us because it shows us that the the prominence of the human challenge concept is increasing, and academia is using them for more and r and d purposes. And, of course, that would mean that when it comes to commercializing those models, we will we will be there to take advantage of that. Can you give a timeline for when COVID challenge studies will be available for HVIVO to sign contracts? Well, I'm hoping that we will have COVID challenge trials in 2024.

46:22 That's the goal. We are currently finishing up the manufacturing proportion of the COVID challenge trial, and we are aggressively marketing and selling the COVID challenge model. So as soon as we have some clients ready and we need to push forward, we will do so. Going for some some of the other question, is there any institutional interest? Steven, do you wanna take that one? Sure. We have been working hard to get institutional interest, and, actually, it has started improving in our shareholding. It's not where we want it to be, but we are working on getting institutional interest. Moe and I have been visiting a number of institutions and showcasing our business model and our performance, and we expect them to come on. It just takes a long time for an institution to come on board. They have to go through quite a few processes before they they they they they take in.

47:21 But I think there is quite a significant interest from our institutions that we are showcasing to. Thank you, Steven. I love this question. Why are you forecasting only 5,000,000 extra in revenue for '23 and almost a flat EBITDA? I I love a challenge. So the £55,000,000, as I said, that that's the baseline for me. So I I would want to beat that. The flat EBITDA so one of things you have to remember that the 22 EBITDA included cancellation of postponement. So that did increase the EBITDA. But mid to high teens is a very good EBITDA target for any contract result research organization. So that is something that we will strive to to hit. Do you expect to undertake COVID Omnicron challenge? I think I've covered that.

48:07 With 413 volunteers used in 2022, how many active volunteers does HVIVO have today, and how many are required to deliver full year '23 and '24 plans? So we have around quarter of a million healthy volunteers on our database. So we've increased the the contact center staff to 20 FTEs so we can manage and engage with these guys much better. We've increased our marketing spend with regards to TikTok and Instagram and other platform we use to market for healthy volunteers. We haven't publicly shared the the target for this year, but, absolutely, it will be higher than last year. Quarter one to date, we we are in plan. So I know we haven't published any numbers for this year, but we are going as planned for quarter one with regards to the number of healthy volunteers that are being inoculated within our clinical trial units.

49:02 Do you expect to expand the number of challenge study beds this year to meet demand? If the demand needs it, absolutely. Currently, our projections show that we have sufficient beds to be able to hit our target numbers. But for example, if you have a huge increase in new sales and new opportunities in vast projects and we had to add capacity, we will do this. We will do this. I think I have mentioned this previously. It takes six months from a study award and to get all the approvals to get ready to go into quarantine. It takes us five months to get a a new building and convert it into a a quarantine facility. So for me, capacity constraint does not really exist. We just need to increase our sales performance to be able to build new capacity.

49:51 Are you planning to have a dividend every year? No. We're not planning to have a dividend every year, but we will assess this in due time if and when we need to. We would like to utilize the cash pile we have for bigger things and to pursue M and A activity and to grow the company. Can you discuss the effect of inflation on the business? I think this is one for you, Steven. Have any particular cost items increased, e. G, salaries? Have you been able to raise prices to customers and still win business? So I'll start off with the customer side of things, first of all. Actually, where we have a study that crosses over a couple of years or eighteen months, you know, crosses over from 2023, 2024 sort of example, we always define our budget as based on a certain price level. So in our contract, we will submit a budget, and we'll say this is based on 2023 prices.

50:51 And if it goes into 2024, we include the right to increase our prices for inflation relatively. So from a price perspective and from a client relationship perspective, you know, we build in an inflationary increase. So that sort of things. And the other thing is we have increased our our prices significantly to deal with our increase in our cost base. Our cost base hasn't increased that much. It's it's pretty you know, we are exposed to you know, the utility costs have obviously gone up. Well, they've gone up from £60,000 to a £120,000, for example. But but overall, there are some some reasonable increases, but we are because we track we have a lot of KPIs where we track the costs of doing things.

51:40 And therefore, we are able to up update our business models quite quickly, on our contract models quite quickly, and that allows us to flex our prices. So we don't start at the beginning of the year and say, oh, this is the price for a flu study or a RSV study. It will move constantly as we get new information coming in, and we adjust our pricing accordingly all the time. So I'm comfortable that we are more than covering any inflationary increases in our cost base as as they come across. Thank you, Steven. How much will you keep in booking fees from the contract council referred to dates in IRS? 100%. I mean, this is part of a a contractual obligation with our customers. We we dedicate them rooms in the quarantine facility in a certain time frame, and that gets canceled. We need to be compensated for loss of revenue with regards to those rooms being unoccupied.

52:32 So this is the way this business works, and I think it's part and parcel, and our customers recognize that. Very impressive results. Given the increase from 39,000,000 to 51,000,000 in 2022, 55,000,000 targets for '23 seems modest. I think I've kind of answered that. What is the limiter on more accelerated growth? The limiter really is is sales. We've we've added a new salesperson in in or two new salespeople in the Europe, one for HVIVO, one for vet life sciences, and we are pursuing aggressively more business. And that that is the only kind of rate limiting step in in future growth. As I mentioned, we now have a really good recruitment machine, and we also have the capacity the ability to increase capacity in a timely manner. So I don't believe those two are the the restrictions.

53:26 What is the plan with field trials? Is it going to be more than helping with recruitment? So field trials basically mean we act as a clinical site to contribute healthy volunteers to a global trial run by a third party. So that's the goal. And this will now be a a huge significant addition to our revenue. But what it'll do is it'll improve our margins in the sense that we were using the same facilities, the same resources to drive additional revenue. So the the individuals, the volunteers, we cannot who are not eligible to take part in a a challenge trial could be eligible to take part in in a field trial because the restriction and the eligibility criteria is much, much looser in in the field trials. In the past presentation, you have given an update for the current period, e g order book value. Can you give an update on q one twenty twenty three? It's too early in the year to be able to do that.

54:26 I think the next update we will give will be the the the half year of of this year. But suffice to say that, you know, I hope you you are getting to know me now and, you know, I've I've made certain promises before and delivered on all of those targets, and my goal is to continue to do that. Whatever. Hi, Moe. You and your team are doing a good job. Thank you. A shame. This is not reflected in the share price. Just to comment on that before I move forward. So the the share price, there's a lot of extrinsic extrinsic factors that affect the share price. My goal really is to make sure that we deliver on our guidance or beat our guidance numbers. And I believe that in the long term, if we continue to do that, the share price will take care take care of itself.

55:15 When do you estimate HVO will reach a revenue of £80,000,000? I have my own estimates. Unfortunately, I cannot share that with you right now, but we have a a strategic plan to be able to increase our revenues by significant amount as we go forward. But currently, the guidance is for this year, and that is £55,000,000. What else? Is a 10% revenue growth aggressive enough? Should you be targeting something higher? I'm I'm driving for greater growth. And but at the moment, I I I want to make sure that we don't overpromise. I think that that's key. So as, you know, I've said before, underpromise or deliver. I think that's a a strategy that has set sat well with me in the past, and I'll I'll continue to continue to use that strategy.

56:09 Let's see. Given our staff numbers were up, maybe, Steven, you can comment on this one. Staff numbers were up 50% last year. Given the strong growth prospect of the business, do you need to continue to be hiding at this pace, or is there a scope for operating leverage stroke productivity gains? So, yes, our staff numbers have increased last year, but and that was mainly for because from the beginning of the year, we had scaled down at the start of 2022, and and then we have increased our our headcount towards second half of the year to deliver a very strong second half of year. So, therefore, we've had, you know, quite a growth in the year on our headcount. What's actually interesting if you look at year on year, if you looked at the average headcount for 2022 and 2021, they are comparable.

57:02 And but last in 2021, we had a third site. So, actually, what's quite interesting is that we are running two sites at the same number of headcount, but we're delivering a hell of lot more revenue and more volunteers with lower staff than we did in 2021. So we have increased our headcount significantly in in in 2022, not expecting it to grow significantly in 2023. It's pretty much stabilized for delivering this this year's growth rate for 2023. We have invested in quite a bit of man management middle management. And, also, we have done a little bit of restructuring in the team and most moved things around a little bit to make it a little bit more efficient.

57:51 So it's it's it it full balances out for 2023. Thank you. You have not harnessed any contract wins since early February. Does that mean nothing has been won in that period? So I have intentionally given instructions to the IR team not to RNS every contract we signed. We've we're working with a a broker to basically determine what is a significant event and and announce those. I also believe that we we need to kinda retain a certain level of competitive intelligence in house to be able to continue to grow and deliver our our targets. So don't take this in any negative way. We will continue to arrest any significant events as per AIM regulations, but the events that happened so far, we have announced, and I'm sure you will see more announcements in the coming months.

58:50 Okay. What is the expectation of the revenue from field trials? I think I can answer this. It's it will not be significant. It's more about improving margins rather than adding significantly to the revenue line. Who are your main competitors in the HVO sectors? I mean, human challenge trial sectors. And do you see scope for consolidation? So we we have couple of key competitors, but to be honest, we we have 95% plus of the of the market. So I I don't think that, you know, I'm sitting here in in fear of competition. I think competition, to be honest, is is good and healthy to increase market awareness and and keep us on our toes, but we we managed to do that by ourselves. So our scientific team, for example, collaborates with leading academic side, sometimes teaching them on how a human challenge trial to be done.

59:42 Scientists also go around the world at publishing and and and speaking at world leading conferences on vaccines and antivirals. So, yeah, we are known from a scientific point of view, a key innovator in human challenge trials. But on top of that, of course, we we are able to generate good revenue, EBITDA margin to have a really very sound growing business. I think that's all we have time for. I think it's 06:00, so I think I'll I'll call it a day there. Fantastic. Thank you indeed for addressing all those questions that you can from investors. Of course, the company review all the questions that have been submitted and with published responses where appropriate to do so on the investor me company platform. Moe, just before we redirect investors to provide you with their feedback, which I is particularly important to you, just the last few closing comments for me, please.

1:00:29 Yeah. So thank you for your time. I hope you've enjoyed this presentation. I think the numbers speak for themselves. We've delivered on what we promised. In fact, we deliver, I think, more than what we promised. On the spin out, I I I wouldn't be too worried. I know we have impaired the Imutex value, but that doesn't mean it's worthless. We we still continue to work on that when the time is right, and and and the disease in motion is still in the back pocket back pocket. And we'll and we we are continuously continue to utilize that data in house. As we look forward, I think we're in a very healthy position. So even from twelve months ago, I think the company is has been transformed. The the commit commitment and the ethos and the teamwork I see in our company is completely different to what it was even twelve months ago. The order book is tremendous.

1:01:21 The operating model is so efficient. And to be able to do multiple trials at the same time is something new, and and the team have taken down board really well. The pipeline is is looking tremendous. The the order book, the signed order book is looking great. So I think I'm very optimistic for the future. And my goal really is is threefold. One is to look after employees, make sure they're fully engaged and rewarded for what they do do. Secondly, our customers to make sure that we have a quality deliverable for our customers within the time frame they're giving us. And finally, our our our loyal investors such as yours to make sure that, you know, we're building value and rewarding you for your loyalty and investment in our company. So thank you again for your time and your investment in the company.

1:02:07 Most even, thank you indeed for updating investors today. Could I please ask investors not to close the session? You should be automatically redirected to provide your feedback in order that the team can better understand your views and expectations. This will only take a few moments to complete and 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 session. That concludes today's presentation. Thank you. Thank you very much.