Hvivo (LSE:HVO) — Investor Presentation

0:02 Good afternoon, and welcome to the HVIVO Investor Presentation. The The company may not be in a position to answer every question received during the meeting given the significant attendance this evening. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. As usual, before we begin, we'd like to submit the following poll. If you would give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand over to CEO, Mo Khan. Good evening. Good evening. Thank you very much for the kind intro. Good evening, and welcome to everyone on the call today. Current shareholders, new shareholders, welcome to our first of the year 2023 IMCs.

0:55 This is really a summary of the year trading update for full year 2022. And I'm sure you will all appreciate the results we are about to publish are unaudited, and we will expect to publish the full year annual report come April of this year. So jumping right into the presentation, the normal disclaimer. I'm a Yamin Mokhan. I'm the CEO of HVIVO. I joined as a as a nonexec in October 2021 and have been at the helm as the CEO of the company for just around twelve months. Allow hand over to Steven to give a brief intro of himself. Hi. I'm Steven Pinkerton. I have been recently promoted to I'm the CFO role for HVIVO.

1:44 I've been with HVIVO for seven years, and prior to that, I was with Thomson Reuters. I'm a chartered accountant trained up with Deloitte. And, yeah, I'm enjoying the new role. Thanks, Steven. So with no further ado, going straight into the company. Most of you already know what HVIVO is and what it does, but very brief summary before we get into the financial numbers. We are a CRO providing human challenge services, which means that we basically inoculate healthy volunteers with a viral infection, and then we determine whether a potential vaccine or antiviral is fit for purpose and works or not. The key advantage of what we do is that we're able to get a good efficacy indicator.

2:33 In other words, whether the drug works or not in this setting very fast and fairly inexpensively compared to the alternative, which is conducting a a phase two trial in the field. We are the world global leader in what we do. We have 95% plus of the market share. We have over 11 active challenge models. We have run over 70 human challenge trials to date and have almost 4,000 healthy volunteers gone through our flu cam bar inoculation process in the history of the company. So we are unique. We are very much the leader, and I'm very pleased to say that this year has been a transformational year for the company. For those of you who have followed the company for a while, you will see some of the numbers we have published this year are record beating. In fact, across almost every financial fundamental we put out this year is a record number for the company. We delivered a 30% year on year increase in the total revenue. So we and we beat our market guidance to get £50,600,000 in revenue. We achieved, again, a record breaking 17% EBITDA margin.

3:47 Our projection was between 13 to 15%. And when we add the a million pound of cancellation of and postponement fees, it gives us the 17%. We also have a a huge cash base right now, £28,000,000 at the end of last year, and I will cover on what we are going to do with that later on in the presentation. On operational level, we delivered more challenge studies than ever before. We've inoculated more healthy volunteers than ever before, and our flu camp recruitment platform has also processed record number of healthy leads going through the different steps in getting healthy volunteers into inoculations. We have also built the foundation for future proof future proofing our growth. We have built new models that are already currently active. So at least two models we have worked on over the last year or so are currently recruiting into human challenge trials. We've added new revenue streams in that we are now actively participating in clinical site services, and we are also consolidating on actually selling additional stand alone lab services.

5:03 We have moved on to new premises here in Plumbers Row in March last year. We've added a new clinical facility in Manchester to screen new healthy volunteers, and we've upgraded both our Whitechapel hotel facility as well as our QMB quarantine facility. One of the key numbers really to look out for from our figures we published, well, yesterday or today even is the backlog. This is the weighted backlog that we have. This basically means that we have around £76,000,000 worth of contracted work that we have not done yet. So this is the work we expect to do for rest of this year and going into 2024. Again, this is the the greatest visibility we've had to date. We have an expected revenue projection for this year of £55,000,000 and 95% of that in fact, now more than 95% of that is already contracted.

6:03 We now also have work booked in for the first half of twenty twenty four. So I'm not taking this transformational year lightly. It is something that will boost our revenues and EBITDAs as we move forward. Historically, I understand we have been maybe somewhat lumpy business that is gone. There's also been somewhat maybe a lack of confidence that we have a long term sustainable growth model. Well, I can now say with great confidence that we indeed have a a long term sustainable business model that will increase in revenue and in EBITDA year on year. I will now hand out to Stephen to go through the financials in a little bit more detail.

6:52 Good evening, everyone. I'm just going to try and give you a little bit of flavor of the drivers behind some of our key metrics here. So revenue of 50,600,000 is in line with our market guidance, and it is a healthy 30% year on year increase on 2021. Now key drivers from that, obviously, is initially having a good order book, but more than that is that we're running more studies than we ever had before in our quarantine unit. Previously, we would have one or two studies on the go in the unit. Today, we have five studies on the go in the unit. And this allows us to really drive and improve our utilization of our resources and our quarantine unit at the time. So that is a really key driver why we've been able to drive and improve this revenue.

7:41 You've had a very strong h two performance. The second factor is that during the year, we signed four sort of what we call full service human challenge contracts. These are contracts that have a manufacturing element to them, characterization, and challenge agent, a challenge study at the end of it. So we have signed four of these, and they are at various stages of progression. They are eighteen month long contracts, and we have consequently out of this, our manufacturing revenue has increased by well, it's 10% of this revenue for 2022. So that's a a key driver to the performance of this year.

8:27 The studies are getting much larger. In 2020, there were about 66 volunteers per study. They're now closer to a 108 volunteers per study. So all that means that you have you have more studies on the go at the same time, so you have more chances of delivering revenue, and you're not stuck with one study and trying to deliver on that one study. So that is the main reason for that's what's driving our revenue growth. Onto the next slide, EBITDA margin. As most sort of touched on, this year, although we're saying our margin will be at least 17% from no less no lower than 17%, the underlying performance of this business is between 14 to 15%.

9:15 And the core drivers in in the improvement in the margins are the fact that we again, it is running more studies at the same time across different variants. So if you think about you have a volunteer, you recruit a volunteer, you have more five chances currently of getting that volunteer onto a study. Previously, in, like, 2021, or and then prior to that, you may have had two chances at best on getting that volunteer onto a study. So that creates a huge amount of efficiency as the cost per volunteer or recruitment cost of volunteer is quite a high cost to a business. And we are able to spread that cost across five studies, and that is certainly a strong reason for the improvement on the EBITDA margin.

10:01 The other aspect to it is the clinical operations. If you have 12 volunteers in a a unit, you don't need the same amount of staff. Well, you you you might say you need six staff to run 12 volunteers in units. But if you have more volunteers in the unit, the linear increase there's not a linear relationship in quarantine operations, so you might need eight volunteers at least eight clinical staff to run a unit of, say, 20 or 24 volunteers, a cohort of twenty, twenty four volunteers. So you we're getting those operational efficiencies, and we're seeing those through happening in h two last year, and and that's driving the improvement. And the last bit is that, you know, as we did have a a sort of a postponement and a cancellation in the year, And because we've overlapped our studies, we some of that has filtered straight through down to the bottom line, and that is driving the improvement to 17%.

11:04 Moving on to cash. We do we've ended the year at a very strong cash position of 28,400,000. It's obviously driven by the fact that we've grown our order book and also because we have driven our mouth we've we've had a strong delivery in the business in h '2. So we've been hitting our delivery milestones and being able to charge our clients for those hitting those milestones. It should be noted that we are always in on any contract, we're always in a cash positive position generally up up until the very end of the contract doing going to a what we would call a accrued revenue where we're waiting for the client to pay for us. And that's a very small value. It's no more than a £100,000 at the very end of the contract. So what I'm trying to say is that we receive most of our cash from a client in advance of delivering, and that has driven the growth to 28,400,000.

12:08 So on to the next slide. Looking at the order book, $7,076,000,000. It is, you know, 65% growth on 2021. It's a huge improvement. A large portion of that is, again, you have mentioned, we've now we've signed four contracts that have, you know, are full service. So, you know, you got manufacturing characterization and a challenge study still to be delivered, and some of those are further advanced than others, and that's what's driving that 76,000,000. The other point is big pharma has really come into play this year. They've always been with us in the past, but they really are investing a lot more on challenge trials at present. And that is also a huge driver for the growth in this in our order book. What should also be fairly noted is that if you think about, you know, our order book at the beginning of the year was 46,000,000.

13:11 We've delivered 50,000,000, and yet at the end of the year, we still have seventy seventy six million order book at the end of the year. And then and and as Moe's noted, it is a weighted value. So we we we look at that value and make sure, you know, that's what we feel will definitely deliver or is definitely in the book, in our order book. I think it's just a touch to note is that when we talk about our order book, this is an order book that is signed and paid for. So not the full value, but what we get, we get a strong commitment from our clients because when they sign a contract with us, we ask for a deposit fee. And that drives the client commitment because that contract fee is anything between 1520% value of the contract.

13:59 And that you know? So, therefore, we we really don't expect any postponement or cancellation fees generally because the client is going to have a penalty of a postponement penalty or cancellation penalty if they don't go ahead with the trial. So that that 76,000,000 is a very robust order book. It's not a if you look at phase one clients and CROs, they tend to have to hand the back the money back, whereas we won't be handing the money back. That that backs up that 76,000,000. And I think after that, I'd like to hand over to Moe, who could go through some of the operational highlights with that. So thank you very much, Steven. Although most of you may have missed it, but Steven is super excited on the inside at least that but by these numbers that we achieved this year. So for those of you who may be new to the HVIVO story, couple of slides on the background. So we exist as two subsidiaries, HVIVO, the human talent CRO with its main headquarters here in East London in Whitechapel. We have two quarantine facilities and one admin office with the with the screening facility downstairs, and then we have a second screening facility in Manchester.

15:15 We also have a a bio bank, and we also have our our financial guy sitting in the Dublin office. In addition, our Venn Life Sciences subsidiary has two locations. One is in Breda in The Netherlands, and they do early clinical development services. So they provide nonclinical or PK, CMC type services, very technical, very expertise services in the early clinical development cycle of a drug development. Secondly, the Paris colleagues, what they do is they provide data management and biostatistic services. So effectively, what they do is they crunch all the data that comes out of clinical trials and provide the client with a final analysis on whether their drug has worked or not. The great thing right now is that both the and the life sciences are working, in a much more integrated way on delivering human challenge trials to our customers. So our VEN, VEN colleagues write the protocol, design the protocol, HVIVO, recruits the volunteers, treats the volunteers, and then our Paris colleagues, they they collect the data, analyze the data, and then the better guys produce the final clinical study report that goes to our customers. On top of that, of course, the Paris guys and also the the better guys are actively selling standalone consultant services for their local markets.

16:43 So this is the overall picture of the company and some of the highlights for for this year. I mean, I've been there for twelve months. I feel like this is a a complete different company to to the one I joined. We've achieved so much in such a short time. The executive team has been revamped and has delivered extraordinary results this year. In fact, the whole company across all the subsidiaries have done a tremendous job and come together really tightly and really well to effectively turn around last year and be able to produce, you know, market guidance beating results that we have, seen today. I joined as CEO of the company, last February. Steven mentioned, he's stepped up to the CFO role. But the great thing with regards to Steven is he he knew the business inside out having spent a number of years in in in the accounts department working across different function. Has joined us as a business director, and I will talk about one of our priorities is to try and get into the Asia Pac market and how we're doing there. And then finally, we've also had a new non exec join, Martin Goldstone.

17:56 I won't go through the complete list of the achievements we've had over the last twelve months, but you can see a lot has been done. We have revamped Flukem. We published our COVID study we conducted a couple of years ago. We signed our first ever Omnicron challenge study program. We've got accreditation for our lab services, which mean now we can sell our immunology and virology lab services to third parties, which is, again, something I want to build on and improve on as we move forward. With regards to numbers, we attended many conferences, have published a number of scientific publications. Media coverage has been second to none, and, course, we did do one Capital Markets Day.

18:41 This year, we will be doing a lot more interactions with our retail base to to update people on what we're actually doing day in, day out here in the company. Operationally, as a summary for for us as a company in '22, one of the great thing that we have achieved is to diversify and derisk our client base. In other words, you don't want to rely on one single client to be responsible for the majority of your revenue you are generating. And you can see in q four twenty twenty two, we have seven different customers generating a minimum of £1,000,000 per quarter in revenue. And that's a great place to be at. We also have repeat business from the four other top 10 big pharma, which continues to be good news. We are the only challenge CRO that these guys have worked with today.

19:30 We also have new and repeat business from our biotech customers. Majority of the customer still comes from Europe and The US. And one of the key changes we made last year was to remodel and revamp our operations group to be able to deliver multiple trials concurrently. And that's really key both in increasing our revenue and improving our operational efficiencies. On the right hand side, you can see the number of healthy volunteer leads we need to process to cater for and address the increasing demand in the human challenge work. And you can see that we are actually being able to deliver more revenue from fewer healthy leads. And that's a great thing in a sense that it will make the whole process more efficient.

20:21 And the reason why we're able to do this is that we are running more than one challenge variant at the same time. So on the left hand side of this chart, it gives you the breakdown by customer with regards to how many volunteers are required per quarter. Again, you'll see there's a good diversification across the board, across all the months. And one of the key things to note here is that not only do we have visibility over the next eighteen months, the level of work is fairly consistent. So this myth that we are a lumpy business, I think, hopefully, once and for all, we can get rid of that. So we have a now a consistent long term growth model, business model that we we can actually continue to expand.

21:07 On the right hand side, it's the same chart but broken down by broken down by different variants. Excuse me. And the reason why I want to highlight this is that we now can screen one particular individual for more than one study. We need to make sure we're delivering on our clients' projects, And we can do this by maximizing the number of volunteers who come through are going through into the quadrant. We don't run more than one study per variant. We run different studies with different variants at the same time. This maximizes the throughput of healthy volunteers through that pipeline, which is, of course, great for our screening team because they'll be able to produce more healthy volunteers for the quarantine per one of the the screen.

22:03 It also means we have a consistent workload across the board as we move forward from '23 to '24. And we are now already talking to customers, booking them into not only for the rest of 2023 to fill our or hit our targets for this year, but also to build on the amount of facilities already booked up for 2024. We're also not standing still. We're not here sitting celebrating our achievements. We need to move forward and continually expand on what we do. So and we're doing this on both facets, challenge and non challenge. So we're expanding on our challenge portfolio of agents we have, so we're able to offer more models than ever before. Right now, we have 11 active models, which is a a great achievement, but we will continue to build and look at opportunities opportunities to add new models. Secondly, we also want to expand on our nonchallenge work. I have spoken about this before, but we are continuing to consolidate on the nonchallenge clinical study site work for phase two and phase three studies. We also achieved our cap accreditation for a laboratory here for virology and immunology.

23:15 And now this gives us the opportunity to effectively go out and win standalone business. At the moment, the lab effectively caters for all of the challenge studies we we do, but I would like us to go out and target other CROs, other pharmaceutical and biotech companies, and conduct their laboratory assays, especially when it comes to immunology and virology assays. One of our key focus this year would be to open up the APAC region. As I mentioned before, majority of our work does come from Europe and The US, and we really have not tapped into the Asia Pac market. This year, more clinical trials will be done in China than in The US. So it is really a somewhat inflection point, I think. And what we want to do is to get into the market.

24:09 Asia Pac effectively means China, you Japan, and also South Korea. So those are the three regions we will be targeting. We've hired a new BD person with a focus on the Asia Pac region. We've also hired a lead generation person to be able to go out and generate more leads. We have already had success in our first APAC client to sign for a challenge trial for over a decade. That happened earlier this year, and I'm pretty sure we will have more soon. My personal target is that I would like to get around 20% of new signatures coming from the APAC region. One of the key differences we'll see this year is that for the first time in the history of HVIVO, we will have a a product going to the market on the back or partly on the back of a human challenge trial. We ran a human challenge trial for an RSV asset for Pfizer, and that asset will hopefully get to market this year.

25:10 I'm not saying that this drug would not have got to the market without us doing a human challenge trial, but I know that we have definitely sped up the process of the drug development for this asset would now be available to patients much faster. I know historically, we've spoken about the potential benefits that a challenge model, a challenge data, a challenge trial can do to a a new product. Well, now it will no longer be theoretical. It will be a reality. We will be able to say that our customers have seen this particular benefit. In fact, this should be first of three RSV vaccines that should be going to market in next twelve to eighteen months, and all three of those have been through our human challenge process.

25:57 So for big pharma, I think this is a huge incentive to continue to use human challenge trials as part of their clinical development process. When it comes to smaller biotech, of course, it's a different type of incentives. Smaller biotechs don't really want to or have the resources to conduct large scale phase three humans last three field based clinical trials. So what they want to do is to be able to prove effectiveness of the drug at an earlier stage and then sell their product to a big pharma. And this is exactly what Reviral did. We conducted their human challenge trial for their asset. And on the back of that, as you can see from this press release from Pfizer, which effectively cites the human challenge trial that we conducted.

26:46 On the back of that, Reviral was sold for £500,000,000 to Pfizer. So you can see the benefits of human challenge trials are now being fully realized by both the big pharma as well as the smaller biotechs. And I think we have been drumming this speech for a while now, but the fact that we are seeing this come to reality will, of course, help us in selling our solutions to our customers, but also educate more potential clients in fully appreciating why a human challenge trial beneficial in expediting their drug development plans. Because of the wonderful year we've had in 2022 and the extra cash we have in house, we will be rewarding our shareholders. So there will be a a capital allocation event. The nature of this is not fully determined or the amount. I know this is the question I'm gonna get on the on the web chat here, but we will wait for full year results in April, and then we will make a final decision as to the nature of this and also the amount of money we will be willing to allocate back. So really, here, it is good news, the fact that we are a cash generative business and also the fact that we are in this position to be able to talk about returning value to shareholder, I think is a is a very positive outcome for the company. It will be a a one year event. Looking forward, as we move into 2024,

28:16 we'll have bigger and better plans for the company. For next year, our guidance is that we will hit, £55,000,000 in revenue. Personally speaking, I would be disappointed if we hit 55. I expect us to beat the 55. This to me is a baseline target that we need to focus on and do more for. But this is what we are promising at the moment. My mantra is to effectively under promise and over deliver. I wanna make sure that as a company, we are cautious and conservative, but also we challenge ourselves to deliver more than ever. And we wanna build on the great numbers we delivered in 2022 and do even better in 2023. This is my final slide just to kind of summarize the presentation.

29:09 I hope you feel that the financial fundamentals that we have presented today are second to none. I don't expect many people expected these number these numbers to be better than they are. Is the work done? Absolutely not. This is the beginning. This is the start of what we want to be able to do. We came when when I joined the company, we had to build the backlog. We did that. We had to revamp our operational model to deliver multiple studies at the same times. That is done to a certain level, but, of course, there's room for improvement. And then we have to improve the margins, and I believe we are doing that. So we are on the right trajectory to deliver much more. The market is increasing, so we have the opportunity and the timing to make most of this. We are educating our customer base. We have changed our sales strategy to from selling HVIVO as a service provider to providing solutions to our customers.

30:04 Every client, every sponsor has a challenge or a problem they want a solution to. We believe that in certain cases, challenge trials provide that solution, and that's what we are offering to our customers. The competition really, there's not much to speak of. The hurdle to entry remains very high. You have the high initial upfront cost in building a a facility, hiring the clinicians, the physician building the the voluntary database, building a portfolio of challenge agents, which takes a year per agent, around £5,000,000 per agent. And then up on top of that, having the experience with the challenge model. We have run 70 different human challenge trials to date with a portfolio of agents we have. You cannot buy that experience. No company will risk testing their product on a model that has not been tested and tested and tested again. And we have that experience, and we are unique in that.

31:00 The company as a as a as a as a global service provider, we are and will remain at a core the human challenge CRO. That's important for us. This is a service that's unique to us, and we are the kind of the only solution provider when it comes to human challenge studies. We have great depth and breadth of expertise. We have an excellent scientific expertise. We have a very good clinical team. We deliver on our recruitment. We are very high on data integrity and quality, and our goal is always to try and hit our timelines that our customers are looking for. The outlook going forward, well, as soon as you announce your revenue and EBITDA figures, they've become history. They're not going to improve your numbers going forward. The only key forward looking parameter for you guys to focus on is backlog.

31:50 And remember, that's weighted backlog of £76,000,000. That should give you clear indication and confidence that we are on the right track, and we are very confident in hitting our 2023 targets. 95% of our 2023 revenue targets already contracted. We are now tapping into new markets. We're also diversifying our offerings to our customers. The key thing to remember, we are now growing sustainable business model. It's key. That's gonna deliver increasing revenues and improved and better EBITDA margins. Thank you for your time. That's great. Moe, Stephen, thank you very much indeed for updating investors this evening. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. I just want the company to take a few moments to review those questions submitted already. I'd like to remind you that recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your Investor Meet company dashboard. We'll notify you by email, simply log in to access that recording.

32:58 Moe, Stephen, as you know, you've got a significant attendance on this evening's call. You received significant amount of questions before we even started. And throughout today's presentation, you've had even more. So with the time remaining, if I may just hand back to you, I'll allow you to to respond to any questions where it's appropriate to do so. If I could ask you to read out the questions, that'd be also very appreciated. Thank you. No. Thank you for that. I don't want to be rude or anything, but I will answer this in a short, sharp way. It's just for to save time and cover as many questions as possible. So here we go. Has there been any institutional interest? Yes. There has been, institutional interest. In fact, some institutions have have already decided to buy into the company on the open market, so that is good news. One of the key challenge for us was to be able to deliver our market guidance targets, and we have done that. And that, of course, will stimulate further interest.

33:51 Update on opportunities in the Far East following recent contract win. We have somebody dedicated to focus on Europe and the Far East. We have one award already. I expect more this year. Like I said, target of around 20% of the total sales for this year. Surplus cash, what is the plan? I think I've described this already. Given the company's healthy cash position, our acquisitions are on the agenda, not in the short term, but, of course, we will keep our eyes open. We are opportunistic. If the right acquisition comes to mind, we'll we will, of course, look at that. But the key goal for us right now is to grow the company organically and build on the revenue and the EBITDA we have delivered over 2022. Does HVIVO have a direct competitor in its chosen market? I would say not really. There are two phase one CROs that happen to do human challenge trials, but we are the only dedicated human challenge CRO.

34:45 If contracts continue to come in for challenge studies, how will HVIVO respond to this extra capacity demand? We have shown in the past that we're able to build and open a new facility within a four month period. A new study that we are awarded today takes around five months to start. In other words, you have to write the protocol, you have to get approval from the independent ethics committee, You have to get approved from the MHRA before you can start recruiting healthy volunteers. So we believe that the demand continues to surge. We will be able to open a new facility in time. And as you may imagine, we are always looking for new facilities, and we have a pre identified list of places that we will be able to convert if required. Does HVIVO foresee a time when it may have to refuse new business? Not under my tenure. We will never refuse business only if we're not able to deliver it. But like I said, capacity new capacity will be found and will be established to make sure that we can deliver. The other key factor also just to bear in mind is that we need to make sure we can enroll the healthy volunteers required to deliver our studies.

35:54 What will the catalyst be which will turbocharge the share price? I cannot control the share price, but I can definitely control our revenue and EBITDA delivery and other key financial fundamentals. And I think I mentioned this previously on this call, and I said, if we take care of our business, we grow the revenue and the bottom line and build the backlog, the share price will take care of itself. And since I last spoke to you, I think it has significantly increased. We've had many questions in relation to the status spinouts. Absolutely. So this is something on the agenda. I'm sure all of you know that the current market is pretty depressed. There are not many spinouts or IPOs happening right now. But as soon as that changes, we will use that opportunity to determine which spin out to do first. But that's something that remains on the agenda. But in the meantime, of course, we focus on increasing revenues and EBITDAs for the human challenge part.

36:54 More detail on converting opportunities into revenue. So I think I've given you kind of a brief outline on how we've done that. Running multiple studies concurrently is is key for us. You got target has to be making sure that we utilize as much as a as a of our facility as possible. In other words, try and keep every bed occupied whenever we can. HVO's data is being utilized well by pullback, what value is attributed to pullback use of this data. But pullback paid for its license to this data through the distribution in in the Specyshare. So they have an acquired license at that stage last year, so they're they have all the freedom to go ahead and and use the data as as they will.

37:44 In the 06/30/2022, RNS detailed the development of new human challenge model, manufacturing of the agent, and so on. The questions are, can you advise where we are in the process? Well, we are in the middle of manufacturing the Omnicron challenge model, and we hope to move that into clinic later on this year. Does he HVO have sold ownership of the challenge? We do. So backside have the first right to conduct their challenge study, but after that, we are free to use as we will. Why do different brokers have different share price target price? Well, this really depends on what they expect the company to deliver and also on their own models and how they value the company.

38:32 So maybe this is more of a question for the brokers than than myself, but this is something I would continue work with our brokers. We'll we'll provide provide them with the updates. In fact, I I met them all this morning already to tell them how we achieved what we achieved already and what we intend to achieve in the coming twelve months. So now going to the the question today. So I think, Steven, first one's for you. Can you speak the reported cash balance at the end of last year between advanced contract payments and available cash for the company? K. So the client cash balance that were of the 28,400,000, 12,000,000 of it is related to directly to advanced cash receipts, and that would be a combination of early milestones and also deposit fees.

39:25 And the balance of our working capital is about 12,700,000, 13,000,000. That gives you a sense of what's available in the company. Thank you very much. Okay. Do you expect much COVID revenue this year? And next, please. Much. No. I wouldn't say much. Less than 10% of the total order book that we currently are reporting on, is COVID. I think this may be an impression that we may have given or people may have. We are not a COVID stock. Okay? Majority of our work is non COVID related. Infectious diseases, yes. Respiratory, yes. We're doing human challenge trials in RSV and different variants of influenza.

40:12 We've expanded on the number of variants we have for influenza, and we are working across a number of those. And as I mentioned earlier, we will continue to expand into other challenge agents. COVID will form a part of this, but not a significant part of this. Great results, guys. Thank you. With 90% of 2023 revenues contracted already, do you have capacity and facilities to sign more contracts in 2023 and exceed the 10% year on year revenue growth? Yes and yes. Absolutely. That's our target. We will never stop. This is something that we need to make the most of. We have an opportunity here and we need to make sure we realize it to the full potential. We need to make sure though, we continue to keep eye on the quality of the data we are producing and the timeline of the delivery to customer satisfaction.

41:01 What is the limit to the number of challenge studies that a company can undertake in any year? It's a difficult question to answer because it's not the number of challenge study that is kind of restricted. It's the number of healthy volunteers that go through the book and the number of bad days. In other words, how many times they stay per quarantine? Those are the key factors we we always keep an eye on and monitor continuously. What feedback are you getting from clients who have completed human challenge studies? Well, I think I've given you some of that already with regards to Pfizer and reviral. Feedback is is very good overall, and people are now beginning to see the true value of conducting human genome trials. Do they find it provides them significant value? I will speak to refer you to Pfizer and to ReViral and their happy shareholders dividing £500,000,000 between themselves.

41:55 Given that the cash pile is offset by a deferred income creditor, this is one for you, Steven, then surely the money is really clients' funds, so it shouldn't be distributed to HVO shareholders. Not no. Not really the case. The case is that these are our cash. I mean, the clients are paying us upfront to book a slot in our unit and a time frame to deliver the study. So those p those are items. And if they postpone or cancel, then we take a back fee, and that becomes a fee to them. So it's it is our our money. We never we we don't ever refund. It's it's not there's no cases of a refund back to the client. So it's it's our money.

42:42 You seem to have found a great niche. Surely, competitors will copy what you're doing and it wrote margins. I I would be surprised if we don't see competition in the next twelve to twenty four months. Absolutely. But remember, the hurdle to entry is very high, both in time, in cost, scientific expertise, volunteer database, and most importantly, the use of the same agent multiple times to make sure it's a robust model. Any plans to open an HVO branch in Far East to cater for that market? Not really. Human challenge trials are not really required in that region. We would expect those customers to come here and have the human challenge trial done in a in a in a in a Caucasian patient population.

43:35 Long term market focus is APAC. Absolutely. One of the focuses, how do you plan to drive this? We are already driving this. Right? So we've already seen some success, and we'll continue to build on that. Do you plan to open an office in Asia, or is it a UK based BD individual? It's a European based BD individual. I don't feel at this stage we need to open an office in that region directly. Do you get any financial benefits if RSV human challenge study gets approved? No, we don't. We are a purely a service provider. Whether the drug fails or doesn't fail, we do not get any advantages or disadvantages. We are there to provide the final challenge study data to our customers. You have mentioned you are targeting APAC countries, but it seems that Indian market is not under that umbrella.

44:24 It is, but there are not many large scale internationally focused Indian pharmaceutical companies. There are more so with regards to China. That's why we are looking at China, South Korea, and Japan first. But, of course, you know, if an Indian pharma company wants to do human challenge route, we will be eager to work with them. How are we incentivizing key staff in order to retain them? It's a really good question. So we've changed the way we we contract with our individuals. We have a bonus scheme fully in place. We're adding new perks to our employee contracts so people are able to make use of that. So in historically, because of the lumpy nature of the business, we have had to scale up and scale down our employee base. We're no longer doing that.

45:15 We're creating a a very talented core set of permanent employees that we'll we will keep across the board. Like I said, from July of last year to, effective June 2024, that's twenty four months of consistently booking the quarantine facilities for conducting human challenge trial. That kind of security consistently we haven't seen in the company. The order book to revenue ratio has increased over the past few years, and it's currently 1.5. It is. Is it reasonable to expect this to increase further in 2023, or is it better to assume it will level up? Well, I would love it to increase even more, but also increase with regards to time spent. So, basically, go out further into 2024 so that signing contracts now that we will be doing not only maybe in 2023, but also in first and second half of twenty twenty four.

46:13 This one's for you, Steven. How do you manage foreign exchange risk? All our contracts are in GBP, and all our costs are in GBP. And if they are the other occasion, there is a contract in USD so far. We have taken up foreign exchange contracts to hedge those US dollar receipts. Thank you. At what business contract level will you have capacity constraint, and what is your plan for dealing with that? So like I mentioned, we don't have capacity con constraint. We can add more capacity as and when required. If your question is, what is the revenue cap with regards to the current capacity we have? I would say it's around 65 to £70,000,000 annually.

47:03 Your ambitions are focused on clinical trial business. How much scope do you see to diversify the business by expanding the VEN Science Group? Excellent question. So you're absolutely right. We are focused on the clinical trial business only because the the potential growth is much greater. Right? So if you look at year on year growth in human challenge trials, both by the number of human challenge trials, but also the size of those trials is increasing significantly. But this year, we are investing in our Ben Life Sciences subsidiary as well. We want to grow that business. We're adding new services such as AT and T, advanced therapy, additional product services. We hired a new salesperson starting in March of this year. So you're absolutely not taking our eye off the ball. We are building our better life science services too because they are critical in providing early clinical development services and potentially feeding customers into that human challenge challenge that he worked to.

48:03 Chris Chew is involved, believe, in a dengue study in Vietnam. Is this an APAC target country? Not really. When I talk about targeting APAC, it's targeting APAC based pharmaceutical and biotech companies to do human challenge studies here. I think we're three minutes over time, so, this will be, the last question. What is it that you're doing exactly to increase APAC client base? So we've hired an APAC specialist consultant who has a relationship across different biotech and pharma companies. I myself, for example, have liaised with the British Commission in APAC. We've hired a lead generator who's going through the different databases that we subscribe to and looking at leads and how those companies are moving from preclinical into clinical or phase one to phase two. We hired a very experienced sales executive to work on closing the opportunities that we have. So those are the some of the the key things we're doing to build on our APAC region. That's great. Mo, Stephen, thank you very much indeed for taking your time to answer all of those questions. Most appreciated.

49:16 Thank you very much indeed. And thank you to also to all the investors for submitting your questions during today and ahead of today's meeting. Mo, Stephen, I know investor feedback will be important to you both, and I'll shortly redirect those on the call to give you their thoughts and expectations. But before doing so, I wonder if I may just ask you, Mo, for a few closing comments to wrap up with, and then I'll send investors to give you their feedback. No. Thank you. Well, first of all, I want to thank all the loyal shareholders who have been on a bumpy ride. And I think 12/12 or maybe about eight, nine months ago, I promise that, you know, if you stick to us, you will see fruits and and and to your labor. And, hopefully, at least some of you, you've seen that improvement. My goal here is not to deliver one year on and one year off. It's to build a long term sustainable growth model. And I hope you've seen historical indicators that we've delivered on what we promised, but also the the backlog and other future looking indicators will show that we're not a one trick pony that we will continue to grow and build on on the key fundamentals.

50:20 And my ultimate goal really here is that in in twelve months time, I'm sitting in the same seat talking to you guys announcing another record year. Thank you. That's great. Moe, Steven, thank you once again for updating investors this evening. Can I please ask investors on the call not to close this session as we're now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of HVIVO PLC, we'd like to thank you for attending today's presentation. Good evening to you all.