Hvivo (LSE:HVO) — Interim Results Presentation

0:01 Good afternoon, ladies and gentlemen. Welcome to the HVIVO Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time. Just use the Q and A tab on the right hand side of your screen. Simply type in your question at any time and press send. Given the significant attendance on today's call, the company will not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so. Before we begin, we'd like to submit to the following poll. If could you give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand over to CEO, Mo Khan. Good afternoon. Thank you, Mark. Welcome, everyone, to the first half of twenty three presentation from HVIVO. I'm very pleased to offer you some update, both financial and operational on the company.

0:50 Effectively, we will be reaffirming the trading update we provided in July of this year, but I also have some exciting news to share with you, which we have shared in our earnings already, but to be able to provide you with, some more color. Before we go forward, here's the, the obligatory, disclaimer, as I'm sure you've all seen before. For those of you who don't know me, I'm Yamin Mohan. I'm the CEO of HVIVO. I joined, HVIVO as CEO in February of last year. Previous to that, I've had, over thirty years of experience in the CRO business. With me is our CFO, Steven. Steven, would you mind introducing yourself quickly? Hi. I'm Steven Pinkton. I'm the CFO. I've been with the business for seven years now.

1:39 I was made CFO in October last year. I've been yep. So I think that's pretty much me. I worked for Thomson Reuters previously in a various number of financial roles and have a long financial history.

1:55 Over to you. Thank you, Steven. So before we, talk, about the numbers and give you the updates, I just wanna quickly give an overview of who we are and what we do. So HVIVO is the world leading challenge trial CRO. We are effectively the only challenge trial dedicated CRO across the world. We conduct human challenge trials across multiple challenge models, both with big pharma as well as, more smaller biotech. I truly believe, in our mission, to deliver today's health care by empowering tomorrow's innovation. I think I mentioned this, during our last presentation, but just to kinda reaffirm that I truly believe that human challenge trials are the future for assessing the efficacy or the effectiveness of a vaccine against virus a or antiviral against the virus because it gives you a a really important a fixed signal against those viruses in in a very short time frame.

3:02 Not only does it give you a a really good fixed signal, but also provides real data with regards to what endpoint to use and derisk your phase three program. And as I go through this presentation, hopefully, it'll become apparent that more and more clients are looking to conduct human challenge trials to propagate their drug development forward. And it's something that, we have actively been doing, and we've seen some tangible results both with regards to the, marketing authorization achievements by big, pharma such as Pfizer and also the acquisitions of biotech companies such as REVIVORAL, based purely on human challenge trial data. Before I hand over to, Steven to give you more details on the financials for the first half of this year, I thought I'd give you a brief overall summary of where we're at. So we reported £27,300,000 in revenue for the first half of twenty twenty three. This now excludes other income.

4:06 This And is a 52% year on year increase, so a pretty good performance for the company. In addition, we reported a 19.1 EBITDA margin, and that equates to around £5,200,000, and that's more than double the performance in 2022. And we continue to have a a very healthy cash balance at just over £31,000,000. As I mentioned, we are the world leader in human challenge trials with over 70, challenge trials under our belt and 4,000 healthy volunteers gone through the process of being inoculated with the virus during our studies. Our flu cam platform continues to perform admirably well, and we have, processed, over 70,000, volunteer leads in the first six months of this year.

4:58 Some of the operational highlights for the first half, well, we have recently announced the, the plan move to a new facility in Kennedy Wharf, and I will give you, more details on that new facility in the coming slides. We're also in the midst of developing new challenge models both in flu B and in hMPV. And we're also pleased to announce that we signed our first contract with the repurposing of healthy volunteers for Phase one trials. We've also upgraded our guidance to 55,000,000. So the original guidance was at 53,000,000. This has been upgraded to 55. And this is the results of both the negative impact of the delays caused by the MHRA as well as the positive impact of the operational excellence that we've achieved this year and the additional funding we have received with regards to the establishment of a new clinical trial facility at Canary Wharf.

5:56 We've upgraded our EBITDA guidance from mid to high teens to circa 19%. Again, this is, I believe, something we are confident we will achieve and potentially a a very good result for the company. And finally, the order book is is strong, remains strong. We reported it at £78,000,000 at the end of June. This is a weighted figure. But overall, the first half has been as aligned with our expectations, and we expect the second half to be even better to give you a a full year revenue of £55,000,000 at a very healthy EBITDA. So I'm very pleased with the performance so far, and I'm very optimistic for the future.

6:42 Now I'm gonna hand over to Steven to provide further breakdown on some of the financials. Good evening. Thanks, Moe. I'm gonna try and keep this quite short because the numbers haven't really changed from our trading update, but to add a little bit more color to some of the headline numbers and headline metrics. So this is revenue. I think immediately, it is a strong performance. We're very pleased with the results. It is you know, the key sort of reasons driving that performance are, one, we had a strong order book in the beginning of the year. We had 76,000,000 at the end of December, and we're delivering on that. And I think the other thing is what to highlight is that we have five studies in the unit in quarantine.

7:27 And, obviously, we're also earning revenue on the setup of some more studies. It's that are gonna be delivered and set up and start in h two. But one of the parts of this is that we had five studies across four variants, and that's challenge agents. And so that allows us to recruit more easily and therefore fill the unit. So we are much it's much easier for us to get the volunteers in and deliver on our studies. The other thing to highlight is that some of our studies at the moment was the the study sizes are quite large, so and that's given us continuity of work. And and and and that's been also very useful to deliver on.

8:13 The a couple of other points is we've sort of we've had a couple of we've had four sort of manufacturing studies on the go where we had full service. We've contracted full service contracts with our clients and four of them. And so we had two of them hanging over from last year and still delivering, and we've started two this year. So that's also adding to the growth in this business. And finally, it's worth really highlighting is that Venn Life Sciences is delivering a 20% growth and expected and is doing really well. So so just going to go to the next slide. EBITDA. I think it's very nice to see that the revenue growth that we have delivered is flowing through to EBITDA, delivering EUR 5,200,000 versus last year's EUR 2,300,000.

9:09 And that is also reflected in the margin going from 12.7% to 19%. There are three main reasons for this EBITDA growth. One is because we have the biggest studies and we've had a a very strong order book, you have a greater continuity of work so you can plan and obtain your operational efficiencies. We are also getting operational efficiencies because we have a higher volume of work, and so we are better utilizing our staff our staff and our facility resources. And the third I reason for the the continued growth is what I've called sort of recruitment leverage. Because we're recruiting across four multiple four different variants, we are earning revenue for each of the activities and recruitment. So what I'm trying to say is when you get a a volunteer and you have 85% chance of getting that volunteer onto a study, now we have that times four. So we have a greater chance of getting that person onto the study. But because we are charging our clients that value, we're getting the leverage.

10:21 And so it's really about operating recruitment operating leverage. And that comes with the fact that we're having multiple variants in play during during this half year. Cash. We are a cash generative business. You you can see we have grown from 16,000,000 this time last year to 31,300,000 at the end of June. And compared to December, we were at 28,400,000, so it's a further 3,000,000. And this is after having delivered a 3,000,000 paid for a 3,000,000 special dividend in June. So very strong growth in cash, and we are a very cash generative business. And it comes for a couple of reasons.

11:07 One is that, you know, all our contracts we well, our our order book con continues to grow, so that's adding so we get we earn more revenue, more cash from our booking fees, which are nonrefundable. And, also, the you know, we're much more profitable, so that's definitely helping the cash because we're not spending it as much, and so it's falling through to the bottom line and to our cash book. The other aspect is that our contracts are all cash positive. So we always make sure that we have we receive cash for the activity that's about to be delivered, and it's always slightly in advance of what about are delivered until we get to the next milestone. And then we bill again, and then we get cash up front to deliver to the next milestone. So the cash is all contracts are structured to be cash flow positive.

12:03 I think it's worth also mentioning that we spent very little on capital, less less than £400,000, and actually awesome. So we have a very modest capital spend. And attached to that, we actually had put a lot of our cash on deposit, and and we've earned 500,000 on on interest. So overall, a very strong cash position, and we can expect this to continue to grow. Our order book has grown. It's grown from at the end of December, it was 76,000,000. It's grown to 78,000,000, and this is after delivering GBP 27,300,000. And I think that's a very good result. I think the other point to highlight is that the mix on the right hand side is a graph. There's a mix of and what portion of it is biotech and what portion is big pharma. Big pharma is 41%, and biotech is 59%.

12:58 And I think it's worth noting that biotech tends to book into our unit much much much later much sooner than they plan to run the study. So they're always ahead of the game in terms of because they wanna get the study booked, and so they they'll they'll tend to contract much earlier in advance of when the study is gonna run. Big pharma, on the other hand, decide that they wanna run the study, and they, you know, and they wanna run it now. So in in an aspect, you could have to look at that and see that there's some some more opportunity to win some more work because big pharma take a much shorter time to contract. And I think the first last point to make on this slide is that with our order book of GBP 78,000,000, we have a very good visibility of into 2024 and the first half year is fully contracted for H1 twenty twenty four, and we're booking into and we still have and we have some pretty good visibility into Q3, Q4 twenty twenty four and still some room to book more studies into that as well.

14:01 And I think that's it for me. I'm going to hand over back to Moe, who will give you some more operational ideas. Thank you, Steven. So we'll now focus on, some of the operational highlights from the first half of twenty twenty three. We had five, clinical trials in quarantine. These are basically volunteers who have been inoculated with a virus and then being isolated into a quarantine room for seven to fourteen days depending on which virus we are currently working on. The flu camp, this is the recruitment platform that we are, using to recruit for our healthy volunteers as well. They were able to generate over 70,000 new volunteer leads, which is a tremendous performance, especially when you take that into context with a lower spend on advertising.

14:50 The voluntary experience, we know it has improved. We we are getting much better ratings on Trustpilot. And one of the key drivers for that is that we now have a a fully fetched kitchen, that caters for the healthy volunteers who are staying in our quarantine facilities. We also have four, active, challenge models, currently, ongoing. This is really key because, our strategy is always to do multiple challenge models, at the same time because this does mean that we can leverage the suitability of the volunteers not only across one study, but multiple trials. So although the leads at the top remain the same, because we improve the conversion rates, we can actually increase the number of patients going into quarantine and becoming inoculated.

15:37 We also had a doubling of the number of volunteers that were inoculated from twenty two to twenty three. And I'm pleased to say that we have four different challenge models currently in development. This is from in the manufacturing process all the way to being characterized. And this is a a record number for our clients. I don't think this will continue for, too long because there are only a finite number of viruses that are suitable for human challenge trial, but this is something that we we've seen an increase increase in. And, also, all of these have been funded by, our clients, which is also great to see. Our then life sciences company opened a new office in, Leiden to effectively try and get more business from the Leiden, biotech park. And, as I mentioned, we signed the lease for a new facility in.

16:27 We've also signed the first contract with regards to the repurposing of, volunteers. So this is where volunteers who are ineligible to take part in our human challenge trials, maybe because they are not suitable for the challenge trial, that we can repurpose them into a a phase one, trial, to a third party. So we have signed the MSA, and we're now looking to generate some revenue, which hopefully will start later this year or maybe in 2024. We've also had a a successful MRG inspection. This is important because in a growth phase, you could have a situation where you lose quality control, but I'm pleased to say that we've been able to maintain the level of quality as we continue to grow both in the number of trials we are conducting, the number of staff we have on board, and of number of challenge models we currently have active.

17:24 And, also, we've managed to mitigate the delays caused by the MHRA constraints. So as I mentioned before, the MHRA had resource constraint, which have delayed fairly significantly the timeline of approvals for new clinical trials in The UK across the whole industry. And I'm pleased to say that we have worked with several stakeholders, and we mitigated the impact of those delays. And I'm so pleased to say that we've even been able to upgrade our revenue and EBITDA for 2023 despite these delays. We've also signed our first client in the APAC region earlier this year. Majority of our clients still come from The US and Europe, but I'm pleased to see that, we hired a new salesperson last year to target the APAC region, and we have already seen success. And I'm hoping to, build on that in 2024.

18:18 And, of course, we have been very careful with regards to cybersecurity, which remains an ever present threat, in in in any industry, to be honest. And although, there's no guarantees, no foolproof system, we are making sure that we are as protected as we can be with regards to our cybersecurity. Both the, number of challenge trials that we are conducting and size of those challenge trial, is increasing. So you can see on the on the left chart, the number of, clinical trials we are conducting has, increased by 44% CAGR over the last four years. And this is an important driver for the additional revenue. On top of that, each one of those trials on average, has more healthy volunteers per trial. And the reason for this is because the clients are now finding new ways to use the human clinical challenge trial data to find out new parameters about their drug. So, for example, whereas before, you would have your traditional placebo versus an active arm, Now we're seeing multiple doses being run against the placebo. So not only are our clients trying to determine whether their drug is effective, but they're also trying to determine which dose is the drug most effective at.

19:38 And, of course, this increases the sample size or the number of healthy volunteers we need in a clinical trial, and this is something we expect to continue to grow. At some point, it will flatten out as the the expense of the human challenge trial becomes too much for large trials. But to date, the results we have been able to obtain have been significant. So the return on value our clients have been able to obtain has been significant. As a as an example, the the recent approval for Pfizer for the RSV vaccine, that you may have seen, come through in May of this year, part of the reason why that was so fast is because the client has used the human challenge trial to get Fast Track designation with the FDA.

20:24 Now this could save up to two years in the regulated time frame, and the market size for this, product is estimated to be around $3,000,000,000. So you can see for a relatively small amount of money, there's a potential of up to $56,000,000,000 of additional revenue because the client was able to get to market faster. So our human challenge trials, you know, can change the destiny of a product in a very short time frame. And I I see the exposure of these events, these consequences and benefits of the human challenge trial data being utilized for more and more different ways by our clients and hopefully attracting new clients at the same time. We're also being able to sign full service contract, as Steven had mentioned. This this type of contract includes the manufacturing phase where we take a soft sample from an infected individual. We isolate it. We grow it.

21:22 We sequence it to make sure it has the right genetic sequence. And then we're able to purify it, optimize the growth process, take it to a good manufacturing or a GMP facility, and grow it to a commercial level. All this is done under GMP accreditation, it's ready for human clinical use. Use. Once we have that, we then characterize the virus. In other words, we try and determine the right dose of the drug of the virus, sorry, that gives us a a stable infection in a majority of the healthy voluntary population. Once we find the right dose, then we can go on and run the human challenge trial. And I'm pleased to say that several of the new challenge models that we have developed or are currently developing are all have all been funded by our clients looking to test their drug against a specific strain of a virus.

22:22 One of the things I wanted to share with all of you today was to, give you an outline of what a human challenge trial actually looks like from a operational point of view. So this is an example of a challenge trial, where the product recently got fast track designation. So you can see we were awarded the trial in November 2020. A few months later, we, finalized the protocol, which was then submitted to both the regulatory body, the MHRA, as well as the ethics committee approval. Following the approval from both of those entities, we were able to enroll our first patient into quarantine, and then we produced the priority TFLs. This basically is top line data, and you can use this data to basically either partner with other oil. It's pitched to potential partners or to propagate and plan for the next phase of the clinical trial.

23:12 And all this was done in, in a year. So when I talk about that you can get good a fixed signal from a human challenge trial data in around a year or, in some case, under a year, this is factually accurate, and you can see this has happened. From operational point of view, the bottom chart gives you an indication of the vastness of the the number of volunteers involved in delivering this trial. So you can see we had over 21,000 leads that were registered on our website, and they have to go through the steps listed there. So they are invited to the suitable on the prescreening questionnaire. Then, of course, not everyone attends that first screening visit. Then we take bloods. We test the blood to make sure they don't have antibodies against the virus. If they're suitable, they invite to a second screening visit. And then for those who attend and who are suitable, still get invited to quarantine. So you can see to get 60 people into quarantine, we had 21,000 leads. Now so this does require a large machinery to work in a perfect motion, and we have taken steps to improve this. So as an example, we have effectively brought in the call center in house. So we manage that internally rather than using a third party. We've, changed the CRM that manages these healthy volunteers, and we've added new team members as well as a new head for the the volunteer team to give it an excellent oomph and get the numbers on board. And I'm pleased to say that we're now being able to

24:43 deliver the healthy volunteers at a lower cost than twelve months ago. The result of this study was shown that the drug was effective in reducing the viral load, compared to, placebo, and the client used this data to support and get additional funding. And and also, importantly, to define which endpoints they were going to use in the phase three. So not only are you derisking the phase three program because you know the drug work, but you can also select the right endpoint to give the drug the best chance to show a fixity in a phase three setting. In addition to that, the client got a fast track designation, which means that the review process will be shorter, and this drug is currently in late stage. So, hopefully, excuse me, hopefully, this gives you an indication what is involved in, delivering this trial. And I did miss out one item here, the number of labs that was processed. So you can see why we're required to expand our laboratory facilities when you're working on multiple trials concurrently against different challenge models.

25:54 Now this is a slide I'm proud of in that it shows the different, challenge models we currently have now in our portfolio. Even just eighteen months ago, we have a very limited portfolio of challenge models we could offer to our clients. Not only have we expanded on the number of models we are offering, we have been able to do this through funding from our our partners and our customers. The two we are currently working on that are towards the late stage of the development is flu b and h one n one. H one n one is actually currently active. Flu b should be active early next year. And we have recently signed a full service contract for our HMPB, so that should also be delivered late next year. And the reason why we do this is because it gives us access to new clients.

26:41 So a client working in HMPV, for example, is now a potential customer for us. And we'll continue to look at new viruses, new models that we know have a market size that we can build on. So these include, norovirus, Zika, and pneumococcal amongst others. And for us, this is important to diversify our risk. So we don't wanna be relying on one or two challenging models to deliver the majority of revenue. So I talked about the additional nonchallenge revenue streams we're looking at, but it's also important to diversify the different challenge models because it will always remain a challenge trial CRO at our core. So a few more details on the the two new models. The the flu b model is important because it's very difficult to run these trials in the field. So if you took a a typical sample of a 100 patients infected with influenza in the field, less than ten typically of those would have been infected with the flu b subvariant.

27:43 And to run to run a a field based trial at a phase three setting, you need hundreds of thousands of vaccinated people to get a substantial number of flu b infected people to show a fixie for your drug. So there therefore, the human challenge trial is the ideal methodology to actually show a fixie in a virus or against a virus that has a low incidence out there in the field. Secondly, the HMPV. So HMPV have been called the the most important virus you have never heard of. And the reason for this is because in The US, especially, they've seen an increase in the incidence of hMPV, especially in the young infant population. It's rated to RSV, and it is a growing market. And, of course, we've signed one full service contract already.

28:34 And there are currently no vaccines or antivirals currently approved against HMPB. So not only these kind of models give us access to new clients, but also gives us the ability to run combo trials. So if a client is currently researching a vaccine that may have the that makes your efficacy against RSV and also, HMPV, we're able to run-in one trial head to head comparison of placebo, RSV, and HMPV. Thereby, the client is able to determine whether the their drug works against RSV or HMPV or both. We believe this is gonna be a growing market for for us as we move forward and you have vaccine against single viruses. The next step, one, is to get more mucosal vaccine. In other words, vaccine that you take either orally or inhale.

29:25 And secondly, to take more combo vaccine where vaccine works against multiple viruses. So Steven talked about our order book. The order book is signed contracts that where the client has paid an upfront nonrefundable fee of around 10 to 15%. In addition to that, further leading factor is the pipeline. Now these are the sales opportunity our current BD team are currently working on. Now these are not signed pieces of work, but these are the projects we are currently discussing with our clients with the hope to sign them in sometime in the future.

30:12 And the reason why I wanted to share these pie charts with you is to show you the diversity of the pipeline down the road. So firstly, you can see the split between The US and Europe and now with the APAC region coming up, so fairly diverse. You can also see that we have 68% of the pipeline resting with biotech companies with around quarter with big pharma. And most importantly, the pipeline has a a complete diversity across the different challenge models that we have. So as I mentioned earlier, we wanna get away from being relying on one or two models. And you can see this from the pipeline that we have multiple viruses now that our clients are interested in. So our sales team and our scientific team that are currently discussing the ongoing opportunity with our clients are across HMPV, influenza, HIV, malaria, COVID, and so on. So this is important for us and derisks our future.

31:07 See, the other non, challenge trial revenue streams we're looking at, so we would talk about the the lab facility. So our current lab space really is at its limit because we are running so many challenge trials concurrently. And, also, we're running challenge trials in different models. Each model, of course, requires its own lab assets, and so we have finite number of assets we can do with regards to the bench space we have. So we had really kind of urgent need to expand the lab space, and the new facility at Canadian Wolf will give us that. We, of course, have a a cap accredited lab right now. And my aim is to ensure that we have a growth in revenue and in sales in 2024 when you have more space available to be able to conduct more nonchallenge related laboratory work.

31:55 We also want to build on our phase two, phase three field based studies. So these are nonchallenge stories where we provide volunteers or patients to other CROs or the biopharma industry. So we are basically working as a clinical site for for other CROs. Now please note that I don't expect these revenue stream to have a a significant impact to the top line, but we do think they will contribute well to the bottom line because we will use our current resources and our current facilities to be able to deliver this. The third one with regards to the repurposing of our I have already mentioned, And we've also had some success in increasing some of our consulting services at HVIVO. I'm not talking about the growth in better life sciences, but the HVIVO, for example, the quality the quality assurance services has seen a jump in revenues. Again, in the overall speed scheme of things, it's not significant, but it still drives margin at the bottom line.

32:57 A word about van life science. So I'm pleased to say that, you know, we have focused on van life sciences this year, and we've seen 20% year on year year growth in revenue from van life science and also pretty good EBITDA margins too. They've increased their headcount by 18%. And the great thing about MetLife Science is that they're able to get over 75% of repeat business. And this is something we wanna make the most of as we go forward and something we were looking to see that we can grow either organically or in inorganically. Because for me, I think having such a high repeat business and increasing that revenue by several multiples will be good for the future of HVIVO. We have also made investment in recruiting a new expertise in AT and P, which is advanced therapy with additional products such as working in gene therapy or cell therapy and also the drug device consulting services.

33:52 Our Paris office is also doing tremendously well because it's supporting us on all our human challenge trials. So we have stopped using third parties for our biometric services. This is conducting data management and biostat services for our human challenge trials. The back end side. We're running all that in house. So I'm very pleased to say that we are now running the whole concept of the human challenge trial all in house. And, of course, the the cross selling opportunities are right there for any clients who is able to also run human challenge trials. So as you know, it's always been difficult to determine the market size of the human challenge trial. We know we get the world leader. We know we have over 90% of the market share. That continues to be the case. We've seen a growth in, early phase clinical trials with regards to the number of companies working in vaccines or antivirus.

34:49 So you can see this continues to grow. Of course, there is a COVID bias in this, but there's no doubt that even without the COVID bias that the number of companies working in infectious diseases, it continues to go up. There's always a need for new and improved vaccines. I I talked about combo vaccines. I talked about mucosal vaccines, the oral and the inhaled vaccines. And more and more clients are becoming aware of the benefits of human challenge trials as we see companies like Pfizer, Reviral get benefits and and the other companies that have got benefits through fast track designation. And the bottom bottom left side, you can see a pie chart that shows you the number of viruses out there that have no antivirals, versus the one that do have improved antivirus.

35:37 So we believe there is a a big market still out there for us to, penetrate. And finally, I wanted to give you an indication of the historical nature of the human challenge trials. The human challenge trials are not a new concept. So you can see they've been growing since the early eighties. One key aspect to this is the fact that most of these trials in fact, majority of these trials have been conducted in the academic side, so purely for scientific research. What we have done is take that academic know how and that methodology and converted that into a commercial setting with the sole aim to take the development of drug forward. So that's a big difference for us, and we've been able to upsize the delivery of this. In other words, recruit more healthy volunteers faster to be able to be in line with the commercial requirements of our clients.

36:34 So now a few words on, which I'm sure you've been waiting patiently to to hear about. So I've always talked about the fact that we would need to look for a new facility either in The UK or potentially in The US toward the end of next year because our current facilities have a market cap of around £60,000,000, and we wanted to increase the capacity to be able to increase that cap, raise that cap. So why are we doing this now? Well, there's several factors. Firstly, we have been given significant funding from our by our clients to be able to fit out a new facility and pay for the for the move. And this basically helps the clients to expedite their human challenge trials, and it helps us in establishing a new facility.

37:20 We know there's a lack of space currently, especially when it comes to labs. In fact, we were looking at additional capacity anyway with regards to adding more lab space. So now we will not have to do that. We also have the fortune of being able to identify a very good facility at a very good price. So I'll give you a few more details on that on the next slide. And finally, we're able to get a really good situation with regards to the break of the leases being aligned to the move. So we look to complete the move towards the end of q two next year. And we don't expect to incur any legacy facility costs with regards to lease costs and so on after q three of next year.

38:07 So we have already figured the brakes in the closes of both Whitechapel Hotel and also at the QMB. And so, really, it's too good of an opportunity to miss. And overall, across the ten year lease that we have signed, we don't expect to incur any additional costs compared to the current facilities. The move will have nominal impact to us as a company. The the cost per bed will obviously reduce because, as I mentioned, the overall cost is the same, but we, of course, will have 50 beds rather than the 43 beds. And because all the beds will be on a single floor, whereas currently, they're on four floors across two buildings, we should be able to improve our margins. And this, of course, raises our revenue cap.

38:55 So from the 60,000,000 we currently have to around £90,000,000 if we fully utilize the new facility. So this is a setup of future growth because we also have the ability, with with some spend, obviously, to increase the capacity from 50 beds to 70 beds if the demand continues to grow. On the operational side, of course, having all those facilities consolidated in one place, it improves the operational strategy and the execution of that It should improve our our margins. We will be able to run multiple trials because each room is effectively a quarantine zone by itself. We'll increase the lab capacity, so we'll be able to run a lot more samples with regards to the the laboratory assays, and we will be able to improve our bed capacity utilization as well as our staff utilization.

39:51 And for the employees, of course, you know, we bring it together, the employees, into one building should improve the company culture and the morale and so on. And, also, it will improve our ESG score. Overall, I think this move will benefit us across both from the company point of view, the increase in revenue delivery, and the improvements in the margins. So a few more details on the actual the building and and the lease details. So we have 50 beds, as I mentioned, on the 25th Floor with the lab and the corporate offices on the 24th Floor. We will be retaining these screening facilities. Excuse me. At our Plumbers Row and the Manchester facility, we'll have a larger lab. We also have a outpatient facility and the building, and, of course, it will also incorporate the corporate offices.

40:47 Mentioned ten year lease with a five year break. The the rent is low per square foot, of course, because we are going into a facility with a a 30% more usable space. So from I'm sure you guys are pretty good at doing your sums considering you're on this call. So we're getting 30% additional usable space for the same, cost we're currently incurring. So from our point of view, this is something that, you know, we wanted to do, next year. But, you know, given the opportunity, we have managed to expedite this. And I'm very pleased to say that the order book continues to support the this growth. So we we didn't just go in because the opportunity was right, but the the order book weighted volume of 78,000,000 is is shows us longevity well into the end of the first half of next year and into quarter three right now.

41:45 So we talked about the upgrade guidance, as I mentioned, so from £53,000,000 to £55,000,000. We also upgraded the EBITDA margin to circa 19%. We have visibility well into quarter three of next year. And I'm pleased to say that we will be also issuing a nominal dividend next year. Now the details of that will be published in our annual report in April of next year, but this is something we will intend to do on an annual basis. So you'll be pleased to hear this is the final slide, effective to summarize the investment case. Hopefully, will detail why HVIVO is such a a great opportunity for for the new shareholders and and also the the old shareholders to expect great things from us.

42:36 The performance, we have delivered on all our promises. In fact, this year, we intend to beat our promises. We have an amazing robust cash position, and we expect you to continue to grow that. In fact, once the new facilities are onboard, we we would look to improve on our margins. My long term goal is to have an EBITDA margin of 20% plus, and and and that's something I'm committed to. We will have growing revenue streams both from challenge and non nonchallenged trials. We're increasing the potential cap of the the revenue to £90,000,000. So our facility should be good for for a number of years that we are currently going into. But, also, as I mentioned, we have the ability or the option to add 20 more beds as well. We've seen some good traction in the new services I have mentioned earlier. We have feasibility going into 2024.

43:27 Of course, we are fully contracted for the remainder of 2023, and we're not waiting on any MTO decision to fulfill our 55,000,000 target for this year. And, of course, the the nominal annual dividend is there to give us access to potential new institution and new fund managers, and we will have an active corporate strategy with regards to m and a activities in 2024. I'm sure some of the questions you may be thinking about is, what are you going to do with that cash pile? The cash pile will be used effectively to add a new acquisition. So this could be, for example, a phase one unit because we currently have sufficient number of volunteers that we can actually fulfill the requirements of a phase one unit when it comes to putting in new healthy volunteers.

44:17 We could be looking at adding a patient recruitment company, thereby giving us a a widened portfolio, not only recruiting healthy volunteers, but patients for third parties. And finally, we could be looking at adding new companies to support the well, life sciences, early clinical development, clinical trial services. So this could be nonclinical, clinical PK, and other CMC services. I'm pleased to say that is the end of the presentation. Hopefully, it was informative, and I'll hand over back to Mark before you go. That's great. Moe, Steven, thank you once again for updating investors this afternoon. Ladies and gentlemen, please do continue to submit your questions using the q and a tab just situated on the right hand corner of the screen, but just while we give Moe and Stephen a few moments. I'd like to remind you that the recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your Investor Week company dashboard. Well, that's it for your few moments. Moe, you're back in the hot seat. As you can see, you've had a number of questions from investors this afternoon. So thank you once again, for your engagement.

45:18 Moe, if I could ask you to open up that tab for me, and if I could ask you to read out the questions and then give a response, or hand it over to Steven, and I'll pick up from you at the end. Thank you, Mark. Okay. Apologies for my voice. As you can imagine, on results day, I've been doing a lot of talking. So towards the end of the day, it's losing my voice a little bit, but we'll we'll finish this. No doubt. So I'll go through some of the pre submitted question. When are we going to list on the Nasdaq? We keep getting this every IMC. So I'll I'll answer it the same way. We have no medium terms plans to list on Nasdaq. This this happened in the long term, but at the moment, we have no immediate plans to list on Nasdaq. I think we got enough on our plate to be able to deliver what we need to do on the current listings.

46:06 I noticed pullback posting on x that they have found a new drug targets for flu and RSV using the HVO database. While HVO will HVO be licensed in the database for use with other companies to increase income from that unique and valuable resource? If so, will the agreements have the usual, royalties closed for any discoveries made? So yes. So as part of the dividend species agreement with, Poolbag, they have bought the rights for the this data, and that is due to expire soon. So we are currently negotiating with Poolbag on the extension of that. And, of course, the right time, we will announce that when that happens. Is it not time we left AIM and this is on the main market? So this is something we we have talked about. When the time is right, we will do that.

47:00 But right now, I think AIM is good for us. We're good for AIM. We're getting, the right number the amount of attention from our institution. So I think I've mentioned this in my previous broadcast that we were looking to increase our institution, on the shareholder register. So we've had some success, and I'm sure that the current numbers will only promote that. And we have some really good meetings lined up with some institutions this week and also next week to to boost those numbers. Oh, this is a long question, so congrats on the great work so far. Thank you. Recently, agreed to be bought £700,000,000. Congratulations to. Given that HVO has started to provide some field trial services, mostly warranted and a couple of decent contracts that want when won, is there a growth strategy in place of Venn's side of the business in particular? So, yes, both organically. You can see there's been a a 20% growth in the revenue. We've added a new salesperson.

47:59 We've added new a lead generator. And in 2024, we were looking at some m and a activities to supplement what VEM currently has. How do you see the non HCT part of the business growing in the next three years? So, hopefully, I've I've answered that and addressed that question during the presentation. Do HVIVO, HCC customers get to be introduced to non h c c I mean, that's one of the first things I looked at. I looked at the number of clients and list of customers we had for VIN versus for HVIVO, and there was cross selling. So the two sales teams are interacting with each other on a regular basis. And in fact, I've asked both sets of team to be able to cross sell. So when the right opportunity occurs, the van life science is also promoting HCT services, and the HCT then HVO people are also promoting the the vent services. Of course, in in some cases, well, in almost every human challenge trial we run, there is service being provided by both. So then life sciences are writing the protocol.

49:02 HVIVO is running the the clinical trial with regards to recruitment treatment, and then it's doing the biometric, the data management, biostat, and as well as the the clinical study report writing. Also, can you please clarify the situation with the beds? So, hopefully, this is clarified. We have 50 quarantine beds. We do have additional beds, but they're for outpatient. So I don't really count them in because for me, the 50 quarantine bed is a key metric that you should focus on because they're the one that regenerate the the hefty significant revenue for us as a company. What were the previously communicated 62 beds for? So I think that included both the quarantine beds as well as the outpatient bed. And like I mentioned, if I add the outpatient bed, we are a lot more. But I think the key metric for us as a company and for you guys that's important is the 50 quarantine beds.

49:56 It is great that in the new each bed could be used for different challenge trials, but, obviously, running 50 trials on 50 bed isn't really that's correct. Given that part of the reason for relocation is that one some of the customers want accelerated studies, do you think that current facilities may have not have been ideal for growth? So, yes. Absolutely. So I give you an example. So the White Chapel, it's a hotel that we converted to one one challenge trial. Okay? Because the customer demanded expedited delivery. But we we ran multiple trials. It has three floors. We can only run one challenge model at a time in that facility. So that, of course, reduces the potential utilization of that. So as an example, if we ran one trial with one patient in that facility, the other 18 beds would have to remain empty. Also, we have to staff each floor with with nursing resources, which we don't have to in the new facility because they're all on the same floor. So, hopefully, that gives you answer that question. So going forward, in the last investor meet, you mentioned plans for a healthy cash in hand.

51:06 Yes. And it it remains the case. And you said you had plan, which needed to be discussed at the board meeting. They have been discussed. Is this linked to the announced dividend? No. It's not. Do you have additional plans for the cash? Yes. I do. With regards to the m and a activity, I have already outlined earlier on. What reason do you have for holding onto the cash pile for another year? Hopefully, we've discussed that. Instead of giving it back to the shareholders, I can get 6% interest on my savings. Well, congratulations. That's pretty good interest rate, I think. We're also getting pretty good interest rate that Steven has managed to get, with regards to our savings. But, hopefully, we're delivering on much better margins. And and, of course, we will use this funding to this money to fund m and a activity, as I mentioned.

51:54 What are the time frame for the next dividend? So that will be in the dividend policy we'll publish next year. Any plans of further expansion within or outside of UK? So apart from Clay Wolf, not in the medium term. We did have a a look at The US for next year. But considering we've been able to obtain more beds in The UK, we we we may delay that depending on the the continued increase in demand we've seen. But at some point, we would probably need to have a presence in The US, but it's not as an urgent matter as it was prior to us signing this lease with Canadian Wharf. When you say that you like to run multiple challenge models at the same time, could you explain how that helps? Absolutely.

52:42 That's a great question. So so if Steven was a patient that we were screening for, let's say, the h three n two variant, and he had antibodies against that. So in other words, when we inoculated him, he wouldn't be become infected. He would be ineligible to take part in the clinical trial. So what we're doing now is because we are running multiple challenge trials at the same time with different models, we can test Steven's blood not only with the h three and two variant, but also with h one and one or flu b or RSV. So thereby increasing the probability of Steven actually going through the next step and going into a clinger trial. And that's important to to basically leverage those efficiencies. It also means that we have a higher probability in filling our, quarantine beds because you have multiple people qualifying for multiple trials.

53:36 Is there any potential risk of HVIVO getting sued by a volunteer or customer firm because of an unexpected outcome? How do you cope with this? So there's definitely different definitely different layers of, risk mitigation here. So one, for every clinical trial, the sponsor, the pharma company, for example, has to give us insurance for their product. So if something was to happen with regards to the, a side effect of the drug, then we are covered by the insurance by from the client. And that that's something that had to be submitted to the MR carrier, by the way. It's a regulatory requirement. Secondly, we also have our own insurance in place to cover for such eventualities. Does that increase speed to market arguments such as Pfizer, for example, allows allow you to adjust your pricing model such as?

54:26 In some cases, it may do. I I read this morning that the one of the pub chains was introducing dynamic pricing to the pines where to increase the pricing when it's high demand. So that that's something we are looking at, but I don't want to, you know, grade lower any of our clients. So we need to make sure that we deliver on our promises to our clients and not to over promise on the delivery because human challenge trial remain an important way to propagate the the drugs for the client to the next stage. And it's important we meet our timeline so they're able to go to the next step in timely manner. I'll leave this one for Steven.

55:12 What is a nominal dividend versus a normal dividend, and why have you chosen this approach? Well, nominal dividend is a is very small notional dividend. In other words, it's been notional. In other words, if you think we gave a dividend out of 3,000,000 this year, we would we'd be looking at something like 1,000,000 in total. And it's really to attract the a I h IHT funds and attract a sort of a a sector of investors that would be interested in in in in investing in our in our company and improve the share price and the stability of the share price as well. A normal dividend would be something that that is particularly would be much higher, probably a bit like our special dividend and be related specifically to your profit performance.

56:04 Thank you very much. Where does HVO see itself after one year in terms of expansion revenue and profit? So we look to increase the revenue we generate year on year. We haven't shared the shared the guidance for 2024 yet. We will do that in due time. We will hopefully be moving have moved into a new facility by then, and we would look to have added potentially one acquisition in the different targets we have spoken about. We will share both the revenue guidance and also the EBITDA margin in due time. Will the new lab space need accrediting, or does the existing accreditation carry over? Excellent question. Someone's gonna lie for details. So so we will, be continued to be accredited in the new facility with the current certification that we have.

56:54 Based on current pipeline projection, when do you expect the need to expand to the 70 bed capacity in the new facility? It's a difficult question to answer, but potentially not definitely not in 2024. Potentially, maybe in '25 or '26, I I would estimate. Can you give more details on who paid for Canadian Wolf? Unfortunately not. I will be breaking customer confidentiality. I'm sure you don't want me to do that. And how confident are you that you will gain future HC business with, these supportive clients? I'm very confident. I mean, one of them has already signed, more work with us, and the other one has signed up the space, to run, the trial, although not the trial itself because they're they've got some regulatory hurdles to, overcome internally.

57:44 Is there going to be a temporary increase in capacity with the move? No. With both location open at the same time. So there may be a short period of that, but we we don't expect to increase the capacity significantly across the next year. That's it, I think That's it. You have Moe, as as usual, you're on time as well with two minutes to spare. So thank you very much indeed to everybody for your questions. And, obviously, we can provide any further questions for your review post today's meeting. Moe, I know investor feedback is particularly important to you and to the company. I'll shortly redirect those on the call to give you their thoughts and expectations. But perhaps before doing so, Moe, if I may, just ask you for a few closing comments. At least, thank you, Mark. So I'm hoping that as shareholders, you are happy with the results that we have reported for the first half and pleased with the full year guidance we have provided.

58:42 It's important for us that we we speak and communicate with our shareholders. So as as promised last time, we will be increasing the frequency of communications we have, with our retail side, especially. You are important to us as as key shareholders, for the company. We have big plans for the company. We've seen, what ergomet has achieved, and we know there's no reason why we can't use ergomet as an example for us to continue to build, what we have, increase the human child trial services we're offering as well as the early clinical development consulting services with the high repeatability that brings in house. The team is doing an excellent job. We have changed a number of things this year, you know, new sales strategies I mentioned earlier, new operational strategies, bringing, you know, the call center in house, delivering more trials concurrently, bringing an excellent middle management team on board who are now fully integrated.

59:43 And I'll I only see good things. So stick with us. I'm happy you're on board. And if you have any any other questions, I'm sure you know, which channels to use. Happy to continue to build on the communication we have, and thank you for your loyalty. Moe, Steven, thank you once again for updating investors, today. Companies ask investors not to close this session as we now automatically redirect you for the opportunity to provide your feedback in order the company can better understand your views and expectations. This may take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of management team of HVIVO PLC, we'd like to thank you for attending today's presentation, and good evening to Thank you.