Hvivo (LSE:HVO) — Interim results - Investor presentation

0:01 Good afternoon, ladies and gentlemen, welcome to the Open Orphan PLC Interim Results Investor Presentation. Situated on the right hand corner of your screen. Just simply type in your question at any time and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we would like to submit the following poll, and I'm sure the company would be most grateful for your participation. And I'd now like to hand over to CEO, Mo Calm. Good afternoon. Hi. Thanks, Mark. Good evening, everyone, wherever you may be. I'm very pleased to be able to announce the first half twenty twenty two results to you all. As you all know, I joined in February of this year, so I had a quite a hectic six months. And we have made good progress in the first half of the year, and we have a very good insight over the next eighteen to twenty four months.

1:04 So without further ado, we'll we'll get straight into the presentation. Here's the your standard disclaimer statement. I'm Yamin Mohan. I joined as a a nonexecutive director to open up on October last year and took up the role of CEO as of February. Prior to that, I have over twenty five years of experience of working in the CRO and

1:29 the biotech industry, and I have a a PhD in biochemistry. And I'll ask Leo to quickly introduce himself too. Leo? Well, good evening, everybody, and we're very grateful to present to you today. I'm Leo Toole. I've been CFO with Open Orphan for three years now. I've twenty five years experience, in finance, in FMCG, and most recently in various life science roles in private and public settings across multiple finance functions. Thank you. Thank you, Leo. So first, order of business. I'm pleased to announce that we will be changing our name from open to HVO.

2:19 In fact, we have to start that process, and we expect to complete the process by the February 26. On that date, around that date, at least, we will change our market ticker from ORPH to HVO. So the question maybe why are we doing this? In fact, we've been thinking about doing this for a while now. OpenOpen was a company used to bring together then life sciences and HVO, and we think we're at a stage where HVIVO will be the the the main company. All our customers and our employees know us as HVIVO or as then life sciences. OpenOpen really is a a financial vehicle used to interact with the the shareholders and the markets.

3:04 And I believe that the shareholders and the markets may be missing something, but not fully being aware of what HVIVO is up to. So we're also through this mechanism of change, we're reducing the number of brands we need to keep up. And as I mentioned, all our sponsors know us as HVIVO. All our scientific publications that we've had recently, including Nature and New England Journal of Medicine have all been under the HVIVO portfolio. So I think it's a a good time to make this change. It's a positive change. The initial feedback from all the different parties we've received has been very positive. In fact, I think the the the first question everyone asked is why didn't you do this sooner? So I'm glad we're we're making this change. Yeah.

3:52 We are streamlining and making everything a lot simpler. So after this change, the the brand that we will be working under will be VEN Life Sciences, part of HVIVO HVIVO and FluidCam, which, of course, is the recruitment platform that is a part of the HVIVO challenge offering we we we provide. For those of you who don't know who HVIVO, formerly known as OpenOpen is, Well, we are the world leader in providing challenge studies for infectious infectious diseases and respiratory diseases. We have conducted over 66 challenge trials to date. We have inoculated over 3,500 volunteers and have a portfolio of more than 10 challenge models.

4:48 Now we are the world leader in this, in fact, by many, many factors, our next competitor has less than two challenge agents, and they've done and our and our estimates less than 10% of the challenge studies that we have done. So we are truly the world leader, and our goal is to consolidate our position. And during this presentation, I'm gonna talk about some of the additional services we will be offering to our customers, but remain in no doubt that we are remain as a core challenge study CRO. In fact, in that sense, we are the only challenge study CRO. The other two CROs that do conduct challenge studies are really phase one CROs that happen to do challenge studies. But for us, this is our main core business, and it is growing at a tremendous rate, which you will see on the next slide.

5:47 To give you a very brief summary of our first half numbers, Leo later on will give you more color on this. We announced GBP 19,000,000 of revenue in the first half of twenty twenty two, backed that by an ever increasing EBITDA margin getting us to £2,300,000 of EBITDA. And the cash position still remains very strong of just under 16,000,000 at the end of June of this year. With regards to future growth, while we are still committing to our guidance for 2022 full year revenues of £50,000,000. And one of the key questions we have been asked is how do you increase that shift from one h to two h? Well, we have already started this. For July and August, we have already generated revenue of £9,000,000, and we will continue to increase that revenue month on month to get to our £50,000,000 target.

6:50 I'm also very pleased to inform you that we are keeping to our guidance of between 13 to 15% of EBITDA margins. Previously, I have said that we will be delivering a double digit percentage point, so we're kind of increasing that a little bit. On top of that, I'm pleased to say that 80% of our projected revenue for next year is already contracted. Our backlog at the beginning of this month stood at £18,000,000. That's a record backlog. This gives us foresight and transparency over the next eighteen months. And the fact that we can now say that 80% of our '23 revenue is already contracted is a significant milestone for the company.

7:37 To address this additional work and the increase in number of volunteers we need, we have increased our capacity to screen healthy volunteers to 1,000 per week. We have ongoing partnerships with four of the top 10 biopharma with regards to challenge trials. We're expanding on our challenge models to to what we already have, adding new influenza models, Omicron challenge model, hopefully, will be active next year, and the malaria model, which is currently active right now. We're also adding new revenue streams in addition to the challenge studies, including site services and laboratory services. And, of course, we've added a a new screening facility in Manchester to increase the pool of patients from which we can recruit for.

8:27 But the key highlight for me really is the the order book or the or or the backlog that we have generated. This chart shows the increase in the order book year on year. December 20 was a little blip because of the the the COVID nineteen trial we ran. But you can see at the end of June, we had a £70,000,000 backlog, which has now increased to £18,000,000. And if you add on top of that, the fact that we are now generating revenue of, you know, £9,000,000 for the last two months, we we we are in a very good place. With regards to the increase in backlog, what that's come from new work that we have signed over the last six to nine months, both with biotechs and with big pharma, medium sized projects and large projects. In fact, you know, we signed our largest ever contract of just over which is under £15,000,000 for a full end to end human challenge study program. This included manufacturing the challenge agent, conducting the dosing study, and then the actual challenge study.

9:36 We have also listed some of the additional challenge studies we have won. Post period, I'm very pleased to inform you that we've signed another 6,000,000 influenza challenge trial and our second end to end manufacturing capitalization and a challenge study program. This this is something new for us. And the fact that we have two of these under our belt says huge amount up to the team we have internally that has been able to gain these contracts and now actually are executing them internally. So I talked about expanding the portfolio of challenge models. Now we know we are the world leader in manufacturing, of new challenge agents. The two end to end programs that we were awarded, we are the only commercial organization in the world that can do this under one roof.

10:32 We we don't have any competitor in this region. We we can manufacture, conduct a dosing study, and the challenge study all ourselves, and this is something that's really important to us as we go forward and trying to build build on this. We're also have already started manufacturing the Omicron challenge model. We hope to have that active next year. On top of that, of course, we did recently launch our asthma challenge model, and we have an active asthma challenge trial ongoing with a big pharma. And we also now have an active malaria model, which we are currently marketing to our clients. And just to reiterate, this is an example of how we can grow by expanding on our challenge model. As we move forward, we will always be looking out for new opportunities, new indications where we can build more challenge models, and therefore diversify and expand on the different offerings we have just based on the different challenge models.

11:41 One of the key challenges in clinical trial is recruitment. 80% of the trials that get delayed get delayed because of poor patient or volunteer recruitment. We have invested quite heavily over the last five, ten years in building the Flukem brand. Flukem brand is very well known within the industry. It uses technology to get leads and process them through the different steps and get volunteers into quarantine. And this is something that we have now upgraded. So for example, now our healthy volunteers can go in and do self booking online. We've expanded the number of weeks to which they can add their own appointments. We have a new CRM that manages these healthy volunteers through their progress from the lead generation all the way to quarantine.

12:35 We have a more detailed online screening for a patient. So for example, when we are recruiting asthma patients into our trials, we have a a more detailed questionnaire so that if patients are not suitable, they are rejected at that state rather than coming into in house. Okay? We've also expanded the number of marketing channels we are using, and we have added the usage of influencers in different social media platform to recruit more patients. And as I mentioned earlier, we're now able to conduct full screening in our Manchester facility. So our healthy volunteers don't have to come to London twice before they get into quarantine. They can get the visit one and the and the second visit both locally in Manchester. And if they pass both visit, they can then travel to London knowing that they are now eligible to go into the quarantine. The number of leads that we gen we need to feed these studies, of course, remains high. And this is something that we are rising to as a challenge because this is something we know that if we can't recruit, we won't be able to recognize revenue. And we have shown historically a 100% delivery rate in ensuring we meet our recruitment challenges. Now this is fairly unique in the industry, and I think the the Flukem team and our recruitment team are working very, very hard with regards to innovation and putting out the Flukem message out there for everyone.

14:07 So apart from the the core challenge study, so as we're offering, what else are we doing? Well, one of the things we are doing right now is we're increasing our laboratory services, and we're offering them to third parties. During my last conversation with you guys, we talked about us getting accreditation. I'm pleased to announce that we have got the CAP, the College of American Pathologists accreditation, and that's currently in place. This allows us to market our laboratory services to other global CROs and the biopharma industry, and that is actively happening right now. We also launched our clinical site. With regards to the resources and the facilities we have in place, we're now able to conduct field based phase two and phase three studies run by other CROs or other biopharma companies.

15:01 Now during a challenge study screening process, around eighty percent of the healthy volunteers that we screen are not eligible to go into a challenge study. So what we're doing right now is using that pot that are eighty percent of the patients that we can't use for challenge study to divert them into field based phase two or phase three studies. So with minimal addition in resources and no addition in facilities, we've now been able to tap into a new revenue stream. In addition to this, we are looking into potentially referring some of our healthy volunteers who are ineligible for the challenge trials to other third party phase one units. And this is something also on under consideration. But what really pleases me that we're now able to offer additional services to our current client as well as new clients. And the fact that we have already signed a good sized contract for us, clinical site services, is a very good sign for us that we are doing the right thing and able to diversify and cross sell to our current clients.

16:12 Vendor veins are a very key driver for business. Now we talked about offering laboratory services. Most of the clients for vet life sciences are in early clinical development. They're in phase one or even earlier. And what we want to do is to able to offer a laboratory services from HVIVO to the Van Life Science Science customers, which would be wonderful. In addition, this year, twice, we have had the the great news that two of the Van Life Sciences customers have moved on to HVIVO's challenge model programs, and this is the first in the history of the company. We have also integrated Venn and HVIVO to be able to offer a full service to our customers. So for, like, any given human challenge trial, our VEN colleagues write the protocol.

17:02 Our HVIVO colleagues would then recruit the healthy volunteers and treat the patient in the quarantine, and then back to, Venn colleagues to perform the data management and the stats analysis and the medical writing. So both teams are now working together, thereby reducing what we need to outsource to third parties. I think this is a great sign of the integration of the two groups, and in us able to off offer our clients a one stop shop, and therefore, a single transition from writing a protocol all the way to finally getting the the final report to our clients. So what are the dynamics with regards to the market size? I'm sure most of you know that viruses and and antivirals and vaccines are in the news almost daily.

17:54 The amount of funding in this area has increased significantly. Pre COVID antiviral and vaccine therapeutic sales was second only to oncology. The number of vaccines and antivirals in phase one and phase two is more than ever before. That's our core market, of course. So any vaccine or antiviral that's in phase one or phase two is a potential target for a challenge trial. Clients are seeing different benefits from doing challenge trials, and I'll go through some of those in a bit. In addition, we we we expect the challenge study market size to increase to around 700,000,000 plus in about five, six years. And this is great news for us considering who we are the world leader in performing challenge trials.

18:42 In addition to that, we've seen some of our clients achieve huge benefits from doing a challenge trial. For example, Bavarian Nordic obtained a breakthrough status, which means they can save up to two years with regards to regulated timelines. We have another client, Big Pharma, that achieved similar status through conducting a a challenge study. This in effect means that both of these company will now be able to sell their drug if

19:10 it's successful and gets marketing authorization for a longer period of time. Now typically, a drug of this magnitude would get a revenue of around $1,000,000,000 a year. So you can imagine doing a challenge study and saving potentially two years will have a significant impact. So the return on investment for our client is huge. For a a small fee to do a challenge trial and a and a ten month period, they can make huge savings. But the why the reason why clients are doing challenge studies do differ. And here's a overview of some of the reasons why challenge studies are becoming more of a norm and why clients are conducting challenge studies more and more. So one of the key things here is the derisk the phase three program.

20:02 A phase three study typically costs $100,000,000. Okay? With doing a challenge study, which costs a lot less than that and within a ten ten month period, they're able to work out whether the drug is effective or not. So effectively, they know what kind of signal they will get before they make the full commitment to a three year, four year long phase three study costing a significant amount of money. They're also able to optimize the phase three design in a in a way that they know exactly what endpoint to use to determine whether the drug works or not, what time points to use, what sample size, you know, how many volunteers or patients they should recruit to their study.

20:47 All of these factors go into the client's decision in why they should do a challenge study and the benefits of that. We have internally changed the way we sell our our services because HVIVO is the number one provider of challenge studies. We know that we need to sell the concept of challenge studies and why challenge studies are an important step for our clients to get to their goals much faster and much cheaper. And if we do that, we know we have a good chance of actually executing the challenge that is. I think this is one of the reasons why we're seeing an increase in interest. Not only have we have now a huge backlog, but our sales pipeline still remains very strong and we are getting more queries every week with regards to future challenge studies.

21:42 Majority of our clients can be split into two, big pharma and biotechs. I'm very pleased to say that four of the top 10 global big pharma are our repeat clients. They have been clients in the past, They're current clients, and we look forward to working with them in the future. Here, we show some numbers with regards to the number of trials we have run with a different big pharma that we've had. The great thing about working with big pharma, of course, is that it is stable work. They have a lot of foresight, a lot of thought into they execute a a challenge program. So they know what the return on investment will be. And the fact that big pharma is aware and is conducting challenge studies on an ongoing basis, they know they have a they have a lot of confidence in this model. Now this gives us confidence in turn that we know that the future for challenge studies is is very strong, and we are very optimistic in that we can continue to expand the portfolio or offerings we make in addition to the challenge programs we're running, but also increasing the number of challenge models we are currently offering.

22:49 On top of that, 40 of our current order book is with big pharma. Again, this shows that we have a very strong and stable foundation to build on.

23:02 With regards to biotechs, of course, biotechs have different reason to get up challenge studies. One reason maybe, for example, they want to get to phase two as early as possible because that means they can get the Nasdaq listing. Another another reason is to maybe increase the evaluation. A biotech's asset is worth x if it's past phase one program, which shows that it's safe. But that multiple increases significantly if they're able to show that the drug is effective. And they can do this under a year, under ten months by doing a challenge trial. So this is huge for them. And the number of companies that we have worked with in the past that have been acquired by big pharma partly on the back of challenge study data is increasing. So we do see that these challenge studies are really good for the big pharma, for them running their programs, for the program, for even deselecting the program that they wanna go forward, but also for the biotechs who want to get to a fix seed results sooner and faster and then be able to propagate that asset either through out licensing or being acquired by big pharma. So both of the customers remain strong.

24:14 60% of our order book currently sits with with the biotech. But, of course, our van life sciences also work with biotech quite significantly. Our vet life sciences have a wonderful model where they have a roll on year on year projects. So most of their clients, I think over 80% of them are repeat clients, and they continue to work across both biotechs and also with the big pharma. I think here, I will, hand over the baton to Leo to go through some of the financial performance and outlook. Thank you, Moe. So just to summarize some of the key takeaways here from the numbers.

25:01 Firstly, we think these are very solid numbers showing ongoing progress, but really still on the journey to improve our financial performance. Secondly, we know that we're trading well for the for the first two months of h two. And that leads us on thirdly to say that we remain on track to meet our financial goals for the fiscal year. And just to remind you, our goals are to grow revenue, grow absolute EBITDA, and grow EBITDA as a percentage of revenue. So looking at the numbers, again, just to reiterate, just under 19,000,000 in revenue in the first half of the year. That's in line with the run rate that we had for all of last year. It is down on h 01/2021, but that that reflects two two things. The the general lumpiness of the business, which I'll touch on in a moment, plus there was some COVID activity in h one that wasn't repeated.

26:16 But importantly, as I had touched on, we have, revenue of £9,000,000 for July and August this year, which means we're really on track to deliver the slightly heavier weighting of revenue in the second half of the year. And as a result of that, we remain on track to deliver our guidance of £50,000,000 for the year, which will be almost a 30% step up on revenue in 2021. Importantly, HVIVO remains the strong engine of growth, but within that, we are diversifying where the revenue comes from. Moe touched on already how we're expanding the different, challenge models that we're doing within influenza, within RSV.

27:12 We're also looking at new, revenue streams that allow us to utilize our assets and utilize our team. We touched on it already, but the Venn division is is now a smaller part of the business. And there are questions why we don't report more Venn contracts. And the reality is that these are smaller contracts now as part of our overall mix of contracts, and therefore, they're not material in terms of disclosure to the market. But Venn is still doing lots of repeat business, lots of recurring business. It's steady. It's stable and growing at approximately 5% per annum. And importantly, the Venn team is contributing by allowing cross selling of, challenge studies, for HVIVO, as well as providing important work for the London team, to get to to get those studies done.

28:17 Moving on to give a little bit more color on, EBITDA and cash. EBITDA has as as we show in this graph, EBITDA has grown from a loss making position in 2020 to a continued profitable position in 2022. This is despite a modest reduction, in revenue year on year, which I touched on a moment ago. So that's demonstrating real progress to get to stable financial position. Now we made this point back in June. We're not we're not yet happy that we're at the right position in terms of our EBITDA margins.

29:02 It's important that they are positive, but they're they have historically been in the low single digits. We committed that we are working to get into double digits or into teens in terms of EBITDA margin, and we are very confident now we're gonna make significant progress in that regard. And we're going to continue the work to deliver improved margin, EBITDA margins. And what we've done to deliver that is really focused on productivity gains in our operations and our overheads. And we've we've we've worked to improve utilization across our service lines. We've improved, productivity through our ROTAS, through our training programs.

29:47 We've introduced new CRM systems for recruitment and screening, and that allows us to get an improved yield on our, recruitment spend. In in our base period last year, there was also some COVID related expenses that are not recurring, and we've also gotten better at managing the take on of bank staff or variable bank staff. So all of that has led us to, drive an improved margin, for the business, and we're gonna continue that work as business as usual as as as we drive the business forward. Looking at cash, again, we are in a strong position, and we've grown cash for the last number of, last, number of halves.

30:40 In fact, our cash at the end of August was up at 20,000,000 just to give you that trading update. That reflects the the nature of our business model whereby our clients, pay us significant, 15 to 20% of contract value upfront in cash. And that puts us in a really strong

31:01 financial position to conduct our studies and gives us real strength on our balance sheet. And the last point here, our goal as as I as we touched on is really to drive, sustainable profitability and cash generative business. We are we're we know that this is a journey, but we're now, I think, providing real evidence of progress because we're continuing to deliver strong absolute revenue growth and growth in our in absolute EBITDA, but as well as seeing progress on our EBITDA margin. And we're gonna continue that progress. And to address some of the questions, we think, it's our judgment that by building that sustainable track record of delivery

31:55 that we will drive real value in the share price over time. And we think that that will we will be rewarded by continuing to work on the fundamentals of the business. Moving on, just to give you a flavor of you know, recap where we've come from and to give you a flavor of the market consensus on where the business will will go in the future. Just to recap, only a few years ago, we did 22,000,000 in revenue, and, we're happy to guide that we will maintain our guidance of £50,000,000 for for this year. So that is still very, very good progress in terms of top line revenue.

32:45 And the strong order backlog that we the the strong backlog that we have and recall, £80,000,000 at the end of August means that we have really strong visibility over our revenues into 2023. Over 80% of that is contracted, and the balance of that backlog will actually be delivered in 2024. So that gives us a really strong position to drive forward where we focus on delivery, focus on improving EBITDA margins over the coming period. I'll now pass back to Moe. Thank you for that, Leo. So just to, really give you a recap and a summary. So the market dynamics, remain strong.

33:33 The number of studies being conducted in infectious diseases and respiratory is increasing a lot of focus on being prepared for the next pandemic, which which kind of sits with us really well as as you can imagine. And we have a lot more work with the big pharma, which is great for long term sustainable growth. Secondly, the infrastructure that we have is scalable. So we are able to add more capacity in a very short time frame. So just to give you an example, we we have previously added a new facility within a four or five month period. And we know a a study typically needs between six to seven months to get started. So if required, we have that option, and we'll we will be able to build out a new facility. So we don't think capacity in that sense is a constraint for

34:21 us. We've already expanded the screening capacity both here in London and also by adding a new facility in Manchester. We are the trusted partner for our big pharma customers, and we've seen that across a number of years and across a number of study and across a number of indications. And order book growth is fantastic. The fact that we currently have £80,000,000 worth of work signed up that's going be recognized between now and the next eighteen months is a significant milestone for the company. I was brought on in this company to get a model of sustainable revenue growth and improvements in margin. We are already beginning to see the improvements in margin slowly, but improving nonetheless.

35:08 The next step is to grow the revenues. You can only grow the revenues by building a backlog. And I think that backlog now is significant. And now we need to work hard in converting the backlog into a strong sustainable revenue. We expect to see a significant year on year revenue growth from 'twenty one to 'twenty two, an improvement in EBITDA, including the margins. And we expect, again, to grow revenues going into 'twenty three and improve our EBITDA margins. So I think open often, hopefully, going forward, known as HVIVO, is in a a very good place for the future. I know there's a lot of frustration of the share price, but the key fundamentals of the company and where it is placed today and for future growth, I think we we are a very good story, and we're in a unique position to make most of this growth in challenge studies.

36:03 That's great, Mo and Leo. Thank you very much for your presentation. I may, if I may take the liberty on the news that you probably haven't heard, Leo and Mo, that sadly, the Queen has just passed. So if I may just hold this meeting just for a minute just while we pause just to reflect, and then we'll go into the q and

36:23 a if I may. Thank you. Thank you very much indeed, and thank you for everybody on the call for that as well. Leo and Mo, obviously, had the ability to submit questions throughout today's presentation, and thank you to all of those investors that have taken time to do so. I wondered if I may just hand back to you now, given the significant attendance that we've had on today's call. Obviously, there's been a of questions of a similar nature. And what we've tried to do is try to provide those to you in a way that hopefully we can cover as many topics. So apologies to any investors if we don't get to your specific question, but to say that we are trying to cover all those themes that you wish to address. If I may just hand back to you, Mo, if I can ask you to read out any questions and give a response, and I'll pick up from you at the end. Thank you.

37:32 Yes. I'll do my best considering the news that just informed us. My condolences to, the royal family and everyone associated with, with with the family. Very sad day for the for the country. I'll do my best and and go through this. So we have some pre submitted questions, and I've also seen a long list of questions that have come in. And as Mark said, we'll try and get through these questions, as as many as we can. So the first question, that was pre submitted, is how is the business going to grow turnover and increase, profits? Well, I think we are beginning to see that, right? So with only four months or less than four months to go to the end of the year, we are giving guidance of GBP 50,000,000 revenue. That's almost 30% increase in revenue year on year.

38:22 Our EBITDA margins, last year was wasn't that great, but it was the first year we actually seen a positive EBITDA margin. So that will also increase. So I feel that the the backlog we currently have will give us the opportunity to have a a sustainable long term growth both in revenue as well as an improvement in our EBITDA margins. And on top of that, of course, I do want us to make sure that we make the most of the healthy volunteers we bring in providing the clinical site services and then also increasing the utilization of our laboratory services to third parties. That's key for us, I think. When will you monetize the malaria challenge model?

39:08 Well, we are actively, pursuing, customers, on that model, and we will continue to do that. This model was active this year. Remember, it's a a new area that we have moved into. All our previous studies have been in antiviruses. This is a parasite, so you're aware. So this is a new area. It does take some time a little bit longer to convert an active model into into revenue. But as you can see from our influenza and RSV experience, sometimes you do get a lot of these contracts in a very short time frame. And, you know, hopefully, that will happen in the coming months and maybe next year. With regard to the the markets, why doesn't the company have any significant institutional investors seeing as there were more institute institutional investors two years ago when the business was considerably small.

40:03 So this is one of my goals to increase the institutional investors in the company. And we can do this by showing sustainable growth both in revenue and EBITDA, and that's key. And I said as I said before, to do that, we need to grow the backlog. And we are we have done that to a certain extent, but, of course, that is not a finished article. We'll continue to build on that. I met some of the institutional investors back in June. We were meeting them this week and next week, and we're hopefully in convincing them that, you know, this is a company that can show good growth and EBITDA. But as as I said, this does take time, but I am very focused in increasing our our share of institutional investors in the company.

40:53 And by the way, we did appoint a new nomad in Liberum who are also helping us getting us access to new institutional investors. I noted registration of HVIVO in US. What is the intention to list open offer on Nasdaq? HVIVO has been listed in The US for for a while now. And as I mentioned earlier, Nasdaq always remains as an option for us. There's no short short term commitment, but it is a a potential option for us. The company has signed £87,000,000 of contracts in the last twelve months. I'm I'm not sure that figure is quite correct, but I'll I'll go with it. Are these contracts going to generate any profit? And if so, why is the share price at a two year low?

41:39 So on your first point, absolutely. These projects will generate profits. There's no point in gaining and winning these projects if they're not gonna generate generate profits. We have different pricing model. We have more efficiencies within our operational models. So, absolutely, we need to improve on our margins to be able to deliver the EBITDA that we talked about earlier. With regards to the share price, now, absolutely, I agree with you. The share price is in the wrong place. It should not be where it is right now. There's some things that we just cannot control. So the current global market condition, the cost of living, inflation, the war in Ukraine, the supply chain issues, all are all contributing factors.

42:26 For me and the company, our goal is to ensure good delivery on the key fundamentals of the company. I believe that if we continue to grow our revenues, our EBITDA margins, grow our cash, I think the market will come and show the true value of the company. On top of that, as I mentioned, we are following institutions in in in in building a a greater share from from their side. And as I said, that can only happen once we start delivering a sustainable growth in our key financial fundamentals. We have a pre submitted question, and I'm sure there will be a lot more on the on on the list coming in. Why have the spinouts not happened?

43:12 What is causing delay? I have spoken to Cajal. And as I mentioned in a previous call, my job really is to grow open, HVIVO, and then life sciences, the the core businesses that we we have active here. Rahul. He is taking an active role in the spinouts. And I have spoken to him earlier about this, and he had said he's currently actively working on this. And as soon as the market changes and it's more recipient to spinouts and IPOs, he will be executing this. The timing of this is unfortunately and we are unable to determine that right now, but rest assured that Cajal is currently working on on the spinouts. And when we have the right opportunity at the right time, we will be delivering on this.

44:04 If SIG group are not prepared to move Immunotecs forward, why can't OpenOpen use its cash pile to buy a controlling stake in Immunotecs? I think that was one of the mixed messages previously from OpenOpen. We don't want to be a biotech. We are a a service provider. We are a CRO. We need to know fundamentally what we do, what we offer to our customers, and that's what we will do. So the goal of HVIVO going forward will be continuing to act as a CRO. Now why has Mo not bought any shares? So when the relevant close period will finish, I will be buying shares. I have committed to this before on this call, so it's just a matter of timing. I do have to pay my bills first, so we know what's happening to those.

44:50 On top of that, I I do think some of you may be a little bit disappointed with the amount I buy. My net worth is not the same as Cajal's, but I will commit to buying these shares in the near future. And as I said before and I will do that. But please don't be too disappointed with regards to the pound amount you may see on the register. A question for you, Leo. Have you got enough cash to see you through the next full year without a further placing? Well, no. I think I'm happy to say that I think as as we touched on, we're we're very well financed with a strong balance sheet. We haven't done a placing now in over in over two years. And right now, in terms of our normal operations, we don't see a need to. Now we always take a view in terms of strategic opportunities as they present themselves for the business in terms of m and a and other otherwise.

45:49 But those are the only reasons why I think we would really go and do a placing right now for a real strategic, activity. And, obviously, we keep those kind of things, under review, at all times. But I can say again, just to reiterate the message, by focusing on being sustainably profitable, by generating cash with a very strong order book. We're in great shape, and we don't need cash. Just in case for to avoid any doubt, we have no bad debts at the moment. We have very, very good collections of our receivables. So our overall cash cycle is really supporting our growth that we've just described. Thank you, Leo. So I'll get to the question that have come in during our presentation today. Hi, Moe. How confident are you of signing more COVID challenge study contracts?

46:44 We are pretty confident. We built we are building the omnichannel model. I think I saw a question, what variant is that? That's BA five, which is the most recent variant, and we we hope to add to the current client we have in backside, as we move forward. And this is something we feel there's a good demand for. But, of course, these things, take time, and we we will be able to build on this. What else do we have? Moe and Leo, why do you think the stock didn't rally today? Do you wanna get that, Leo? Again, Moe touched on it touched on it earlier. It's it's it's often very hard to to understand the movements in the market given given lots of other external factors, impacting, the market.

47:44 We're satisfied that by, again, reiterating that by focusing on profitability of the business, generating cash over time, the share price will will value us properly or appropriately. And we are focused on continuing to deliver, good news to to to to the markets. Yeah. Just to kind of add to, Leo's point, I think we are underappreciated. We are undervalued. Talking to some of the institutions today, some of the brokers today, they agree with that. So I I just think it's a it's a matter of time. And I said I know we've said this before, but the key thing for us as a management team and a group is to deliver on the key fundamental fundamental, and that's what we are doing. We are delivering what we said we we are gonna deliver. So £55,000,000 sorry. £50,000,000 of revenue this year and between 13 to 15% EBITDA margin this year. That's what we are committing to going forward for this year, and that's a significant growth year on year.

48:51 2023 revenues are guided by the in house broker at 54. Is that the current capacity of the company? So we are guiding at £55,000,000 No, this is not just the current capacity. We have the potential to increase the revenue beyond that before we fulfill all of our capacity. Would you be developing further strains of COVID model? Or is there sufficient interest in the Omicron? We are we have sufficient interest in Omicron. Right now, we don't have plans to develop any further COVID model, but we don't know what's what what the future holds for for COVID, for the virus, and and potential future variants. So never say never, but right now, we're focusing on building the Omicron BAFI model.

49:47 What else? Somebody asked, why are you working from home on the results day? Aren't you taking us seriously? This is not my my home. I am sitting in our Whitechapel offices, in London. Could you please explain the, the big difference in the exceptional items? Leo, maybe this is this is for you. What needs to be done to turn this figure around? So I think what that impact is year on year is last year, there was a an accounting adjustment to reflect the revaluation of an asset that was then eventually spun out into Pool Bank. So that was a technical accounting adjustment. So, typically, in terms of guiding operational performance, that's why we typically focus on revenue, EBITDA, and EBITDA as a percentage of revenue. And those are the best indicators in terms of our day to day or our operational performance. And as we said, our goal is that each of those measures grow year on year.

50:53 Thank you. What impact, if any, does today's news about a successful Oxford vaccine for malaria have on the urgency value of HVIVO's work in the same area? So the news that we have received is very positive with regards to a treatment for malaria. They've showed the early results have shown an eighty percent, affixity rate, which is wonderful because malaria is a is a is a huge problem, especially in the in the poor regions of the world. But I think maybe we're jumping the gun a little bit too early. The the the full field trial results, will not come out, maybe until towards the end of this year or or next year. I think only then will we realize the the full effectiveness of of this product. But, of course, the goal of the scientific community is eradicate all, you know, antiparasitic or antivirals and so on. So for us is to continue to expand on the different models we have. We need to diversify our risk. So like I said, we have more than 10 challenge models. At any given point in the future, in the short or long term, some of these may get eradicated.

52:00 We need to make sure that we are continuing expanding of the challenge models that we have and continue to to grow our revenue. Moe, you just said market is not valuing HVO business model properly. Why not buy back shares then? It's on the on the agenda. I'm not committing to doing this, and I'm not saying we never do this. So this is something that we keep under consideration as we, go forward. Why do four of the top 10 biopharma use HVIVO services? What do the other six, top 10 companies do or seem to progress their development pipeline instead of challenge model. So it depends on the the priorities of the different companies. Some companies may not have a a large portfolio of antivirals and vaccines.

52:48 Other may use different technology. In other words, a field based phase two trial. But we are exploring and actively talking to some of the other big pharma to add them to our portfolio of services. So four is a is a very good start considering it's a 100% repeat business with these customers. But, of course, we we are not not satisfied. We're not content, and we are looking to expand on working with more big pharma, but also not forgetting that the biotech also need to do challenge studies to progress their drugs faster. One for you, think, Leo. How are you going to boost, pretax profits, which are currently tiny given current revenues? Yes. I mean, really, the the the message is continue to drive revenue and and EBITDA and then flowing if we do that as we've just described, then, net profit will also rise, consistent with those measures.

53:53 And as I said, just in terms of KPIs that we track, so consistent measurement, for the for the market, we focus on those measures. But by driving those up, we will also drive net or pretax profits up. Okay. I'm going to start going through this a little bit faster. I think there's about 50 odd questions and we have five minutes. So I'm going to try and focus on some of the topics maybe we have not covered. The profit seems very small in h one in relation to h two. Is that because of fixed costs? Yes. To a certain extent, that's correct. So as we build size, we will improve our margin, and we will be able to deliver a greater EBITDA in the second half of the year.

54:41 Can you explain how you have 80,000,000 order book but only 80% of full year 2023 revenue? It all depends on the timing of the study. So the different clients are in different, stages with regards to developing their drugs. So for example, we have one client in the, backlog, and this study starts in first quarter of twenty four. So it all depends on when the the client is ready to go ahead with the trial, and that's when it gets placed in that quarter, for example, or in that month. And then we build the backlog and project the revenue from that. When was the last time when life sciences delivered a contract? Or they they deliver a contract very often. The only reason why you may not hear of them because they're relatively small in size.

55:26 So we don't need to generate an r and s, on a on a on a contract that is not, having a significant impact on the market. So so so rest assured, they are winning contracts. In fact, they're growing year on year, but the size of the each individual contract, considering there are consulting services, is not as large as a a human challenge trial, for example. Is the company leveraging the unique position it has considering the margins on these large contracts are very low and inflation is running in double digits? So absolutely, we we do take into account the inflation, and we ensure we we achieve the right margin that we need to deliver our EBITDA targets. Approximately how much the business is flu?

56:16 Flu is the dominant indication we are working on, no doubt. But like I said before, we we are diversifying this. Even within flu, we have active ongoing trials in different variants of flu. So even though they're all in flu, there's different variants of flu that we we are, currently working on. Can you explain the reason behind why Venn hasn't been rebranded to HVO? Absolutely. So we we don't want to lose the customer base. All of VEN customers know VEN as VEN. For us to go in and force the change to HVO, I don't think is a great thing to do. In addition, our our VEN colleagues have gone through a number of transitions already.

57:02 We believe REN has a a very good brand name right now in the market, and we need to make the most of that. Leo, why can't OpenOffen grow revenue uniformly? The numbers are too lumpy, and the market hates that. Great comment. I mean, historically, because we didn't have a consistency in terms of our our order book, then then then revenues were lumpy. Going forward and it's you know, when you have 80,000,000 in in contract signed, you're actually much better placed to have consistent delivery of that revenue. Utilization levels in our our occupancy levels in a quarantine unit have been low in h one this year.

57:54 They're going to improve significantly in H 2 this year, and we and we expect that that level of occupancy will be maintained across all of 2023. So we expect that lumpiness will re won't be there, to the same extent next year. Thank you. Is there any seasonality to cash flow? No, there isn't. It's purely based on when we are awarded new projects and when we when we sign them. What EBITDA margin do you think you can hit long term? I believe my target would be in the high teens. I think that that is something we should be able to achieve. Do you foresee any margin pressure from the increased cost of energy?

58:39 Insignificant on that because, the total energy cost of the company is fairly low compared to the cost we have with the electric facilities and the staff and the resources and so on. What are the biggest risks for the foreseeable future? I think, I'll give you the answer maybe in a different way. The biggest challenge, is recruitment of healthy volunteers. And that's one of the reason why FlukeAP is such a high profile initiative for us. So we need to make sure that we continue to recruit our healthy volunteers as we continue to build How vulnerable is the business of cyber attacks? I don't think we're vulnerable. We we I that doesn't mean it's a 100% foolproof. We've seen what's happened to other organizations.

59:26 In fact, we we just renewed our insurance policy on this. But, yeah, we we we have good cybersecurity. We have a fully fed IT team that take cares of our cybersecurity. What are the greatest risks? Maybe you can cover this earlier. What are the greatest risks to your cost base as a result of inflation? Well, we are you you touched on energy, and and, fortunately, it's not such a big part of our cost base. Wage inflation is a concern, but we we work to try and really drive productivity.

1:00:11 We'd like to drive high utilization. We we do proactively look at, pricing mechanisms within our contracts so that we can try and pass, you know, if we have to pass those cost increases, onto our clients. Our focus, though, is really by by driving revenue and profit performance that we will try and stay ahead of these inflationary pressures and and and and manage that as best we can. Okay. Mark, I think it's 07:00. I I could go for another hour. I I know. I know. And for every question that you seem to answer, there seems to be another two or three coming your way.

1:00:56 So, look, what we'll do is we'll we'll we'll make all these questions available. And if there are any topics, subjects that you feel you wanna add a response, you can just provide that, and we'll make those available to the investors on today's call. With that in mind, Moe and Leo, I'm mindful that investor feedback is important, and I'll shortly redirect investors provide you with their thoughts and expectations. But I wonder before doing so, if I may, just ask you for a few closing comments, and then I'll redirect investors for their feedback. Okay. Do you do you wanna go first? Sorry, Bill. No. I'll go. Sorry. So I think the the key message for us is that we realized that the share price is not where it should be. The key financial fundamentals are strong.

1:01:46 The growth that we have projected for OpenOpen as a group remains on track. The backlog should give you confidence in that. I believe that really it's just a matter of time, before the the share price reflects the the true value of the company. So I know I've said this before, but if we weren't delivering on our key fundamentals, then I think, you know, there's kind of real frustration, and I would agree with that. But the fact that we are able to deliver this, I think another question I just saw, are you confident of delivering your 22 numbers? I am confident, of delivering our 22 numbers. I think if we do that and then we get institutional board, we hope to see a turnaround on our share price. But thank you for all of your interest and being loyal and committed to us for all overall this time and tonight, and we look forward to speak to you again. That's great, Leo, Moe. Thank you very much indeed for updating investors this evening. Could I please ask investors not to close this session as we now automatically redirect you for the opportunity to provide your feedback in order that the management team can better understand your views and expectations?

1:02:52 It take may a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Open Orphan PLC, we'd like to thank you for attending today's presentation. Good evening to you all.