Ixico (LSE:IXI) — Full Year Results

0:01 Good afternoon ladies and gentlemen and welcome to the IXICO PLC Full Year Results Investor Presentation. Throughout this recorded presentation investors will be in listen only mode. Questions are encouraged and can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Just please simply type in your questions at any time and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and where appropriate, we publish those responses on the Investor Me company platform.

0:29 Before we begin, we'd like to submit the following poll and I'm sure the company be most grateful for your participation. Before handing over to Giulio Cerrone, CEO, I'd just like to say that we'll be taking the cameras down to make the slides bigger for you during today's presentation and then return them for the Q and A. So if I may, Julio, hand over to you, sir. Thank you. Thank you very much. So thank you everybody for attending today's call on our full 2022 results. I said, I'm just gonna go off camera and talk through slides as we go through. So if we jump to slide three, heading up as a company driven by our purpose, we have a very clear purpose. And in this update, I'll begin by highlighting how we're making excellent progress. Sorry, this is a slide too many.

1:18 Slide three, you jumped one slide there. Forgot that one. That's right. Just that we're making excellent progress towards our strategic objectives in building a best in class and resilient technology platform in neuroscience. Grant will then follow on and provide details of our financial results. And then I'll finish off by describing our new precision in neuroscience strategy, which is aimed at ensuring we establish a strong foundation for medium to long term growth for the next five year period. In particular, during the new presentation, we'll be highlighting resurgence in Alzheimer's disease, which many of you I'm sure will have seen lots of media coverage and why we have good reason to believe that there's a growing use of brain health imaging biomarkers by pharmaceutical companies, which will result in increased demand for IXICO's advanced AI driven computational analysis of imaging biomarkers.

2:13 In being driven by our purpose, just to explain what that means, it's basically very clear that we want to broaden our range of neurodegenerative diseases, and that that's going to be very evident in terms of the rapidly aging population, which are having a devastating social impact and costing global healthcare system trillions of dollars. So our focus is very much on addressing an attractive pharma services market, which continues to grow as pharma and biotech companies look to outsource and collaborate with companies like IXICO. Whilst this is an area of significant investment, it's also important to recognize that there will be bumps along the clinical development road, but that the long term size is the prize for the pharmaceutical industry and companies such as IXICO that support their efforts in clinical trials is significant.

3:04 In particular, in the case of neurodegenerative diseases where the requirement and beneficial impacts to society of a new drug approval is particularly urgent and large. So in this slide, what we're articulating here is that we continuously focused on developing our neuroimaging biomarker platform for a broad range of neurological diseases. And it also highlights what's different about IXICO and put very simply three key points. We're a pure play in neuroscience and that's recognized by the industry as experts in neuroscience. We have a track record of innovation, which again is recognized by the industry for being able to deliver tailored AI driven analytical services to each client's trial requirements. And thirdly, more recently, we're recognized now for being able to deliver operational, support for clinical trials across all phases of development, including large phase three studies.

4:01 And this is obviously a reflection of the investments that we've made in recent years, to support trials, of any size, in any global location.

4:11 And of course, the key thing here was, our demonstration that we're able to deliver the world's largest Huntington's disease trials, in recent years. We've established a very valuable position as a trusted partner to many of the world's leading pharmaceutical companies. And that track record is really, fundamental to our continuing to build a strong position as an approved vendor of choice for these companies to support our delivery of projects in the coming years. Going to the next slide. So in addition to our operational capability and our expertise in house, we also over the last decade have been building a very extensive scientific network with academic collaborators and opinion leaders in the different therapeutic areas. And this is very, very important to our differentiated proposition in that we are very much involved with these organizations to gain access to highly contextualized data, which allows us to develop highly sophisticated advanced analytical tools.

5:16 First of all, for use in this consortium, but with the aim of those tools being adopted by the pharmaceutical industry. And clearly this is very important and allows IXICO to be seen as very much at the forefront of not just neuroimaging, but also the different therapeutic areas and be an integral part of the ecosystem that, determines, the gold standards, in terms of the different therapeutic areas, how those diseases develop over time, and therefore what might be the appropriate biomarkers to assess the progression of the disease, which is obviously very important as companies look to develop their own clinical trial protocols to determine whether new drugs have efficacy in being able to slow down the progression of a particular disease.

6:10 So the most recent example of this has been the Huntington's disease consortia which we highlighted few months ago and what we're basically setting out to do with our next five year strategy is to replicate the great successes we've had in Huntington and deploy those into the much larger therapeutic areas of Alzheimer's, MS and Parkinson's but with a particular focus initially on Alzheimer's, especially given the very positive news from recent readouts of the pharmaceutical companies that were presenting at CTAD last week. So more about that in a moment. So next slide. So this slide basically summarizes, some of the key achievements over the last, five year period, which has been very successful and obviously we're going to be building that over the next five years. But in addition to reporting a 16% revenue CAGR since 2021 and four years of consecutive profitability, we're very proud to stand behind the fact that our business model has demonstrated tremendous resilience, not just through COVID, but also a number of early trial cessation that obviously are part of the landscape, but however, at the same time, we've also demonstrated consistent and continuous ability to acquire new customers and deliver projects across a broader range of neurological diseases with high levels of quality. And Grant will

7:41 talk more to this in terms of our current shape of our order book and the composition and the success we've had in acquiring new customers over the last twelve months. In parallel, the other thing I want to highlight here is that we've utilized the profits generated in recent years to invest in expanding both our analytics franchise, but also our operational capabilities so that we are a credible vendor to more pharmaceutical companies around the world. So with a strong balance sheet continues to be debt free and cash position of just under £6,000,000 at 5,800,000 at the end of September. We're well positioned to continue to invest and support the long term growth ambitions of the business. So with that, I'll hand over to Grant now who will present our FY twenty two financial results.

8:33 Thank you, Giulio. Yes, so just on slide nine and across the next few slides, what I will do is provide a summary of IXICO's financial performance over the last twelve months as compared to recent years, as well as the strength of the company's financial position and an insight into the visibility we have looking forward. As Julia has just outlined, as a company supporting the search for solutions to large unmet medical need posed by neurological diseases, we have a very clear and very defined purpose. Enacting this purpose, we are essentially executing on a clearly defined strategy, which is to capture an increased share of the neurological clinical trials market by offering the best end to end services to our clients, including the most accurate measures of biomarkers that relate to neurological disease.

9:28 Ultimately, what that translates as is that to achieve our goals, we need to win more projects with more clients across a broad range of neurological indications. And it's with this aim that we're balancing the short term realities of decline in revenue growth, the reasons for which I will go into in more detail and which we've disclosed on several occasions previously, with a focus on the market opportunity that will support a return to growth for IXICO and achievement of increased scale in the business. Consequently, as a company, we are viewing the current period as a transitionary period. As you can see in the revenue graph on the left, having shown rapid growth across the period to the end of twenty twenty when we reported £9,500,000 of revenues, we've been successful in holding our revenues relatively stable across 2021 and 2022, despite the fact that during that period we've lost approximately £14,000,000 of contracted revenues from our order book since the start of 2021,

10:29 as a result of the early cessation of large phase three HD trials and a large early stage natural history study. Now again, just to emphasise, when I say we lost those revenues, it wasn't because of something we did wrong. That's just the nature of the business that we're in and that in CNS in particular, which is a very difficult area to achieve market approval of a drug, most trials fail. And therefore, when servicing this area, this market, it's important for us to have a diversified order book to manage that. So we've been achieving on our strategic goals by seeking to penetrate a greater diversity of early phase clinical trials, which deepen our order book in terms of client numbers and projects, thereby reducing specific project and client risk.

11:21 This is a significant positive across the medium and longer terms, but in the short term these trials are lower in value individually than the larger trials that have ceased. Because they're earlier phase, they also tend to have a lower proportion of analysis work, which for us is higher margin, and a higher proportion of project management type work, which is priced at typical CRO rates and is therefore lower margin. So the consequence of this is that whilst we have seen a small decline in revenues across the period between 2020 to 2022, and expect this to continue into 2023 as we seek to continue to win and start up new client trials to fill the gap created in our order book by the large client trial cessation.

12:08 The change in revenue mix is reflected in our gross margin, which while still strong at over 60% for 2022, as you can see in the graph in the middle of this slide, has reduced from the high that we saw in 2020. Again, we anticipate our margin will come under further pressure in 2023, in line with existing market expectations, reflecting both the change in revenue mix and the impact of slightly lower revenues. But with this said, we are particularly pleased at the ability of the company in managing to maintain our EBITDA profitability over the last three years, which can be seen by looking at the graph on the right. In reporting £1,500,000 of EBITDA in 2022, we're reflecting the level of revenues achieved as well as that maintaining of strong gross margins.

12:56 And this performance also reflects the investment in our next generation trial tracker platform, which has resulted in the capitalisation of costs onto our balance sheet to reflect the long term returns we expect from these investments. We've also benefited in the period from a couple of one time impacts. We've benefited from foreign exchange movements and also the anticipated lapse in a number of share option awards that have been accounted for, as well as the careful management of costs. So looking forward, with the clear unmet need across CNS increasing a focus of governments globally, our conviction is to continue to invest to ensure we're as best placed as possible to service this demand and return the company to growth. In doing so, we do anticipate that we'll return to losses in 2023 as we're impacted by lower revenues, increased costs and the drop out of the P and L of some of the one time beneficial impacts we've seen in 2022, whilst at the same time continuing to deliver on our investment plans.

14:01 And if we turn to slide 10, this shows the change in our year end being the September 30 order book position across the last five years. As you can see, the end of twenty twenty two, our order book consisted of £16,000,000 of signed client contracts. The revenues related to which we expect to recognise over the coming few years. This provides us with reasonable revenue visibility despite the significance, as I said, approximately £14,000,000 of recent large client trial sessions that order book has had to absorb. And this is a really important point that I want to make sure we convey clearly, that across the last two years our order book has had £14,000,000 of revenues removed from it because of these large trial solicitations.

14:49 Yet across that period, our order book we've managed to maintain that £16,000,000 which lower than we would have liked it to be, effectively returning us to position where we were at the end of twenty nineteen, actually contains significant grounds for optimism. As you can see from the graph on the right, during the year we signed £12,600,000 of new contracts. That included 11 new projects across six clients, three of which were new to IXICO. If you set aside the fact that £6,800,000 of the order book was lost through client trial scopes, what that means is that we achieved a book to bill ratio of approximately 1.5, which really underlines the potential for IXICO to continue to scale across the medium and longer term. And to emphasise that, if we just turn to slide 11, I want to give a little bit further visibility into the makeup of our order book.

15:43 Again, these graphs show the order book position as at the end of each financial year across the last five years. The graph on the left shows our order book split by trial phase and highlights that we have increased the diversification of our order book across trial phases, particularly over the last two years. This has changed the focus of our order book from phase three, which made up 80% of our order book in 2020, to a much greater proportion across earlier phase trials, approximately 75% on phase one and phase two

16:14 in 2022. And really what that reflects is a significant portion of those late phase three trials that ceased in 2021 and early twenty twenty two have been replaced, albeit by smaller but early phase trials in the interim period.

16:36 That has two distinct benefits to IXICO's future prospects. In 2020, the phase three portion of our order book was dominated by phase three HD trials, which provided very strong revenues and margins but placed significant reliance on one client and one compound. Over the last two years, we've won many more trials in early phases that have partially rebuilt our order book, but also significantly reduced the reliance on any one client or any one project.

17:05 We've achieved this both by winning new clients, but also by being recognized as a lead provider in image analysis services across a greater number of CNS therapeutic indications. And therefore, we've won new projects, not only with new clients, not only in therapeutic indications that we were already well recognised in, but also in new therapeutic indications with both existing and new clients. And the second benefit is that by having a broader number of clients,

17:36 which is what is shown by the graph on the right, which shows the order book split by client, where we have approximately doubled the number of clients and doubled the number of individual projects that we're supporting compared to two years ago, and therefore brought down the proportion of our order book relating to a single client from just under 80% in 2020 to just over a quarter, just over 25% in 2022. We're now in a position where we have many more shots on goal,

18:04 And what I mean by that is that by having a greater number of trials in early phases, whilst not all will be successful and some will fail early, which is the nature, as I said, of the business that we operate in, There is a greater likelihood of some of these projects moving from phase one to phase two and from phase two to phase three. And by being involved in these trials early, it is likely that IXICO will then continue to provide services to those projects and those clients as their trials progress through phases. So a key continued strategic imperative for us is to continue to win new early phase trials, which provide a scale basis for revenues within our order book, and then accompany those successful subset of trials through to phase two and to phase three, which will augment IXICO's revenues and profitability whilst increasingly providing it with a scale to manage the inevitable client trial failures that will happen along the way.

19:03 So the key message that we're giving here is that whilst we've experienced challenges with those large phase three trials ceasing early, The importance of having built up and rebuilt that order book with a large number of earlier phase trials is that we give ourselves much more chance to get into phase three. For a company of our size, phase three trials can be transformational. So with only one or two large Phase 3s, whilst being augmented by a strong and continuing pipeline of early phases, we actually put ourselves in a position for the longer term to ensure sustainable growth and profitability. On slide 12, just before I hand back to Giulio, I wanted to give a bit more visibility on the context within which we're able to make decisions to continue to invest for the medium and long term, even though we're experiencing challenging times, both in terms of the specifics of having these large trials ceasing early for us, but also in the current macroeconomic environment where we, like other companies, are experiencing rising prices and challenging market conditions.

20:22 By having a strong balance sheet, we remain fully in control of our own prospects, but also are able to continue to invest for that future opportunity whilst others are having to be much more cautious in their approach. So as you can see on the graph on the left on this slide, we completed the year with a cash balance of £5,800,000 That included just under £1,000,000 of operating cash flows and that's before we include R and D tax credit inflows on top of that, offset by £2,300,000 of technology investments designed to support IXICO's growth strategy over the coming years. As you can see from the middle graph, whilst our investment programme peaked in 2021, we have continued to pursue it across 2022, with the primary focus being ensuring that the three pillars of our technology offering are market leading.

21:13 And just to emphasise what I mean by that, when I talk about three pillars, the first of those is we need to make sure and we are making sure that we have a resilient secure IT infrastructure that complies with the rightly high expectations our large pharmaceutical clients have of any vendor operating in the clinical trial space. So having state of the art infrastructure doesn't win you a trial but it loses you a trial if you don't have it. And so it's a significant barrier to entry. And we've invested just over a million pounds in that base IT infrastructure over the last three years to make sure that we're able to deliver on the expectations of our client base.

21:51 The second pillar is that we have been investing, and we talked about this before, in our next generation trial tracker platform. That's the platform we use to capture brain images from imaging centres across the globe.

22:04 This development is now well progressed and we expect to launch it later in 2023. And the third pillar is the biomarker analysis pipelines, I. The pipelines that we use to measure biomarkers in the brain from the brain images that we collect from the clinical trials and has included our next generation AI platform, Xecue dot ai. That was launched this year and provides increased sensitivity and accuracy for client trials, thereby supporting reduced costs in CNS trial design. And it's worth highlighting, as Julia mentioned earlier, that this has given direct and rapid ROI through a consortium agreement that we signed during the year with CHGI, one of world's largest Huntington's disease charity, alongside with two biopharmaceutical companies, where we are re analysing data that had already been analysed by others, but using our state of the art analytical capabilities to provide the best MRI data set available in the market.

23:13 So from a balance sheet point of view, the strong combination of our cash balance and the capitalised investments, the capitalised future looking investments that we have, plus the fact that we continue to be debt free, mean that we've further augmented our net asset position to £12,500,000 over the last twelve months, an almost 10% increase on the prior year. So just before I hand back to Giulio and really returning to where I started, which is whilst we have been and we're continuing to manage a challenging period for the company following the large client trial sessions at a time of increasing cost pressures, the market we serve and the capabilities that we have developed give us confidence that we look to the medium and long term in our ability to grasp new opportunities.

24:06 We're confident that as we continue to diversify and build our order book and deliver on our purpose at a greater scale than has been the case to date. So, Julia, I'll pass back to you.

24:21 Thank you, Grant. So slide 13, in Terlipozone can be talked about being driven by our purpose and that's by advancing precision neurology. So if we go then on to slide 14, I'll just, highlight the precision neuroscience strategy that we're laying out for our journey over the next five years. So the first three pillars, as I've laid out here, are about building traction and further penetrating our core neuroimaging market with a particular focus on maintaining what we believe is a leadership position in rare diseases such as Huntington's disease, but also recognizing that plan to significantly ramp up our intensity on larger therapeutic areas such as Alzheimer's, Parkinson's and MS in which we'd like to achieve significant market share gains over this next five year period of the strategy.

25:17 The last two pillars are all about commercial partnering to create additional stretch growth momentum in our core market or to enable our technology to be deployed in new large attractive markets. And this would be through a number of different possibilities. But I'll talk a little bit more about that as I go through the slides here. But the key takeaway here is that we are more convinced than ever that there is sufficient runway for growth in neuroscience without having to diversify into new and different

25:50 therapeutic areas such as oncology to build a business of scale and value to all our stakeholders. There's also an intent stated to develop these commercial partnerships, which is additional to the past five years where all of our growth has been very much grown out of our own organic capabilities. And so acknowledging that to accelerate our trajectory to scale a business and to reach more clients in our designated target markets is that we plan to devote significant efforts in developing these commercial partnerships. So we've gone to the next slide. And here I just want to talk a little bit about the, historical meeting that took place last week in San Francisco, where space of Alzheimer's in particular had really got a very big boost of confidence and really good news. You'll remember that just over a year ago, I talked about the significance of Biogen's aducanumab drug approval, which was the first drug approved in the space for nearly two decades.

27:01 And but at the same time as well, it's a very controversial approval. And there was an approval based on the ability of the drug to reduce the level of amyloid in subjects. But it actually didn't, there was some conflicting data around whether that came with clinical benefit. But again, going back to the urgent unmet medical need, the FDA approved the drug and has been on the market for over a year now. However, with the news from IXI on their nakanemab drug, they reported out last week that they demonstrated that amyloid removal does actually come with clinical benefit and that's clearly a major achievement. With that, key points to bear in mind is that first of all, PET imaging and the use of blood based biomarkers have been used in determining that amyloid reduction.

27:59 So those are clearly the methodologies and have been validated as being able to support potential drug approvals. There's also the FDA decision approved to fast track this in January with an anticipated approval in July. So that would mean that we would have two drugs in the space of eighteen months that have been approved, whereas previously there hadn't been drugs for over eighteen years. And then the other key thing is that all of these drugs come with a warning label that there are potential side effects, notably ARIA. And so for this reason, there's likely to be a requirement for post marketing surveillance trials.

28:44 And the way that ARIA is monitored is through MRI. The key message in terms of what does that all mean, for IXICO and companies like IXICO, it basically means that, it looks like we are going to have an approval for, an Alzheimer's drug in 2023 that used amyloid as a key biomarker. And that's throughout that process, reinforcing importance of imaging both MRI and PET imaging, during the clinical trial itself, but also talking to the significance of a requirement for, MRI monitoring, once the drug is out in the market.

29:30 More MRI in PET before, during and after clinical trials is the message. So, in addition to AISI, there are other companies that also, gave important updates. The most notable one is Eli Lilly and they talked about their donanemolab drug and they're expecting a readout for that drug in 2023 and again reemphasized all similar points in relation to the importance of imaging and the importance of monitoring area. There was also news from Roche where they actually indicated that, their drug, had actually not succeeded in meeting its milestones, and so Gantenerumab called out as not progressing further.

30:16 And this is an example of where this is a trial that we weren't involved in the phase three study of, but actually now creates an opportunity for IXICO in that the key question now for a company like Roche is, okay, if their lead candidate now is not progressing to approval, what do they plan to do? Do they, you know, do they pull out of Alzheimer's or do they double up their efforts? And obviously I'm not privy to their strategy but clearly with IXI making progress, Biogen making progress, Lilly making progress, I think that could actually well be an opportunity for us to again get involved early with potential new assets that companies like Roche will be looking to in the next two to three years. So lots of activity and the upshot of all of this is will be that the whole Alzheimer's space will have a real resurgence.

31:09 And for that reason, it's going to be the number one area that we'll be pointing our efforts to in order to really look to scale the business in the coming years. If we go to the next slide, this again is just the reason I just want to put this slide up was just to highlight that it's not just the big guys and it's not just late phase studies, but actually there's a very large cohort of companies out there, ranging from big pharma to new innovative biotechs, all with a range of different investigative drugs ranging across a number of different targets, gene therapies, disease modification and also symptomatic drugs. So a number of these companies, as well I'd say on this slide are actually, existing current clients of IXICO's or clients that IXICO's worked with before. And of course, some clients here that IXICO hasn't worked with and we've taken the opportunity whilst we're at CTAD to connect with all of the above. And we're looking forward to developing those opportunities as part of our pipeline of opportunities.

32:16 I guess the three key takeaways I took away from my meetings with the pharma executives that I met last week are the following. The first one is that Alzheimer's drug development is experiencing a significant resurgence and confidence of future FDA approvals. Two, that MRI, PET molecular imaging and blood based biomarkers are essential and growing in utility in Alzheimer's disease drug development programs. And three, the increased diversification drug targets for Alzheimer's disease therapeutics will drive further demand for neuroimaging, in particular for amyloid and tau monoclonal antibody and anti neuroinflammation drugs. So with that, I just want to move on to what we're doing in terms of making sure that we have the right portfolio and services to be able to meet those requirements.

33:10 So in slide 17, this really reinforces the message that IXICO is very well known as a leading provider of MRI services for volumetric measurements of imaging biomarkers used in clinical trials. And what you'll see without going into all the different scientific, aspects of this slide, if you just look at the very top of each box, we've just got a tick basically saying that, you know, we have everything that we feel we need to have to address not just the Huntington's disease area, but also these other therapeutic areas. So we have the toolkit and, we're actively, as you can imagine, engaging with many companies, many of the ones I showed you on the previous slide, to be their vendor of choice for MRI.

33:58 And of course, also acknowledging that we're obviously often competing with large billion dollar corporations, usually North American. So it's very important for us to have a differentiated offering, which goes back to my talking to the deep scientific network that we have and the capabilities that we have as a pure play neuroscience expert in demonstrating that we really understand the space and we can provide real value add services to our pharmaceutical clients. So MRI, we've got a very good track record, very strong position and we have all the tools to go after that requirement. Then the next slide is talking about PET molecular imaging. And just to highlight that PET molecular imaging is used for what are called radiology reads and quantitative analysis.

34:51 Now, radiology reads are basically where, you're able to have a network of, radiologists that are able to read the image and interpret the image, often looking for, safety aspects. I mentioned, some of them earlier, but also historically a lot of, visual reads to do to try to attempt to do volumetric analysis. And clearly our expertise is automating volumetric reads and utilizing AI tools to make that more efficient and also to be able to get more granular detail from PET images. And so what this slide is highlighting is that in the last eighteen months, we've been very busy in building our portfolio of PET.

35:37 And the reason for that is that we frankly have been asked by clients to do so. And so you'll see that in the last twenty four months, we've built a portfolio, which is pretty comprehensive. We've still got some areas where we want we are actively investing to build a capability. Alpha synuclein, for example, is a very hot area that we see opportunity and we want to develop our portfolio for. And just to give, maybe some insight in terms of the progress that we're making here is that, in 2019, around about 19% of the studies that we were supporting included a PET requirement. And in 2022, this has increased to 29%, so just under a third.

36:29 So the key message here is that we've got really good momentum. And the other point to make is that PET, we're seeing increasing use of PET in Alzheimer's and clearly, as we've identified Alzheimer's an area we want to focus, we're basically saying that we want to build on our strong MRI platform and be able to offer both and be one of, a few companies that we think have credible offerings in both areas. And secondly, that we're keen to develop this so that we can also go into Parkinson's disease and PET is often the imaging modality of choice in Parkinson's clinical trials. So by developing the portfolio for Alzheimer's, we're also building a capability to address the PET requirements in Parkinson's.

37:21 So the other thing to point out is in the five pillared strategy I talked earlier, where we talked about commercial partnerships. In the area of PET in particular, this is an area where in addition to our own in house development capabilities, we see an opportunity to develop partnerships with other companies to accelerate our own scientific capabilities and global footprint so that we can address more opportunities with more clients around the globe. So this is an important development for us, which I said we've already got good momentum, anticipate being a key driver for our growth in the next three to five years. So as a final slide, just a quick summary of hopefully the messages that you've heard, as we've talked through the slides.

38:15 First and foremost, that clearly we're addressing an attractive market with long term macro growth drivers. And we've we've really built a really strong position that is very well, received by our existing and also prospective clients. I would classify us as an emerging leader. We've got great capabilities in our analytical capabilities, but also combine that with end to end project management services, which really puts us in a very strong position to be able to be an end to end service provider, but with a very specialized premium analytical capability for pharmaceutical companies.

39:02 And we've also demonstrated the ability to deliver across the whole phases of development from early phase to late phase. And Grant talked a little bit to the barriers of entry that exist in the marketplace. You know, this is a very difficult market to get into. Clients are very conservative, rightly so. It takes time to build their trust. You have to go through a lot of hoops around building massive service agreements and being approved vendors. You know, we've achieved all of those things. Of course, there's more to do, but we've got a very strong platform to build on. And then finally, our Precision in Neuroscience growth strategy demonstrates our commitment to continue to innovate, continue to look to penetrate and scale to support that growth ambition, but also to acknowledge that in the next five year period that there are opportunities that we should fully investigate to partner and where the opportunities provide themselves to further accelerate three early, the first three pillars with M and A to accelerate that organic growth.

40:20 So with that I'll close and thank you all for your listening and hand over back to Mark. That's great. Julia, thank you very much indeed. And Grant for updating investors this afternoon. Guys, if you want to bring up your cameras, just click on that camera icon at the top of the screen. 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, just by the company take a few minutes to review those questions submitted already. I'd just like to remind you that a 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. Julio Grant, as you see, you've had a number of questions from investors throughout today's call. So thank you firstly to everybody for your engagement this afternoon. If I may, Julio, if I hand back to you, I could ask you just to read out the questions where it's appropriate to do so. And then I'll pick up from you at the end.

41:09 Well, that can be easy because, do I have a question? I do, sorry, was on the wrong tab. Okay. Matthew asks, how do the different phases of trials, different revenue terms generally, when you say they could be transformational? Maybe Grant, do you want to answer that one? So can you just repeat that question? How do the different phases of trials differ in revenue terms generally when you say they could be transformational? Yeah, so you should see. In terms of the revenues per trial phase, it obviously varies and there are a number of factors that are involved. But for a phase one trial, that's usually in the region of 500,000 to £1,000,000 worth of revenue.

41:57 If it's a phase two trial, it's usually somewhere between 1,000,000 or 750,000 up to as much as 2,500,000. And a phase three can be really anything from a couple of million up to 10,000,000 or more in terms of value. So in terms of the, if you like, transformational element to that, you obviously can find yourself that you need to you find something running potentially up to 20 phase ones might be equivalent in revenue terms to one very large phase three. But the operational effort to deliver those 20 different Phase Is will be relatively higher than the Phase III, which is the sort of the balance that we have to strike as an organisation that actually you need to be in the phase ones in order to get to the phase threes. It's very rare to just win straight to a phase three, but actually you need a lot of phase ones to get to phase twos to get to phase three. So from a transformational point of view you only need a couple of phase threes to really transform the business.

43:02 As we saw, we had a very large phase three back in 2020 that ultimately failed for no reason of ours, but it transformational in the business across that period. We were able to build up our business development function to an extent across that period, which means we've won better and more trials since then. So, you know, key is having the sufficient balance of enough phase ones, phase two coming through to manage trials, the fact that there will be trials that fail whilst getting that sustained growth and profitability by those phase three trials coming through. Guess thanks Grant. I mean, what I'd add to that is, you know, phase three trial might generate 3,000,000 of revenues in a year. It might take you 10 phase ones or maybe more to generate a similar revenue number. So that's the kind of transformational impact that it has on the P and L in the short term.

44:08 But as Grant's point said, doesn't mean to say that the 10 or 15 early phase are not valuable because they all are shots on goal for potential future phase threes. Okay, much so Shagar asked the question how much capital investment will be made in 2023? Grant, I'll push that to you as well. That's fine. Last capital investment we'd expect to be lower than we've invested in 2022, which again was lower than 2021. We'd still expect it to be over £1,000,000. So you know we are investing for the medium and long term, so that's still very much part of our plans and so it will be north of £1,000,000, I'd say less than we have in the last couple of years.

45:07 Great, okay. So a few questions here. Shagar asked as well, I'll try and spread it around a bit that do you expect any M and A? So obviously, we can't comment on specifics until specific. But, you know, I think being realistic, I mean, we have to be realistic, right? So over a year and a half ago, our market cap was £50,000,000 Today, it's a lot less than that. So that makes it a little bit more challenging to do M and A. But, you know, I would say that, you know, also other companies valuations have also seen similar impact in just in terms of the macros of the public markets. But I guess the best and most honest answer I can give to that is that if they are out there to be done and they accelerate the first three pillars, then we will will do them because they're the right thing to do. But that's the key thing for us is really, you know, we have a very robust, strong organic plan and that's where our focus is.

46:16 But if we see an opportunity to accelerate those plans, then we should do so. But we wouldn't do M and A for the sake of M and A and doing something totally different. And it's very important. As I said, we're, we're a pure play neuroscience business. And that's our intention to stay there because we see lots of runway for growth. So that's the other strategic thing. Because we think we've already built a business that is very valuable and very well recognized as a neuroscience specialist. And so all the things that we do should be about further enhancing the value of that asset in that position in that high growth market. So another question from Sam, which I can take. So what confidence do you have that you will not need to raise additional equity to fund operations in '23 and '24?

47:15 So again, I'll answer that as honestly as I can, as open as I can. So basically, as Grant pointed out, we've got a very strong cash position. We're debt free. So we're, you know, we don't need to raise capital to do the things we want to do. What I would say though, is, you know, if the opportunities are there and they're compelling to accelerate the opportunities, then I think that's always an option. That's obviously one of the reasons for being a public company. But as I said, straight answer there, simple answer is, and again, we're very we we've put ourselves in this position because of the traction of the business throughout the whole of COVID and everything else that we've all experienced.

48:06 During that period, the company has continued to build and invest and add people and build in technology, all the things you'd expect us and want us to do if we have the conviction that there is a market opportunity there that we can address. And so obviously we do think so and we do have the capital to support that. So, you know, that's my answer to that question. Let's have a look. The business is expecting decline in '23 revenue. How bad do you think 02/23 will be?

48:52 Well, think that's easy. It's in our guidance. Otherwise, we wouldn't give the guidance. I don't think I need to say anything more than that. Is it helpful just to clarify that? Terms of what guidance in the market, just in case people haven't seen it, say the guidance in the market is revenues of £7,000,000 and EBITDA loss of £1,000,000 So we've announced that previously, that's in the market, so it's publicly available information. Okay, Steve K asks, how much of your future revenue can you see and how and what drives potential cancellation in trials?

49:38 So I'll answer the second bit. Maybe Grant, you can answer the first bit. So what drives potential cancellation in trials? Again, just to take a step back, we all know, so developing drugs is difficult, can take over a decade. And also the success rate of a drug going from beginning to end is single digit. So the industry that we all know is a very successful industry, very profitable industry. We all need it to succeed because we all want to live longer and healthier lives. You know, developing drugs is very difficult and the sort of things that means that, drugs don't make it all the way to the end.

50:24 The first and foremost most important thing is patient safety and you can imagine if it's just, you know, ourselves or our family on a clinical trial. First and foremost, we want to know that being on the trial doesn't do them any harm. So a key reason why a drug trial would be terminated early would be for a safety reason. The second one would be for it not meeting its endpoint, which would be probably around does the drug do a good thing? Is it slowing down the disease progression? Is it curing the disease? So if it doesn't meet its milestone to support submission into the FDA, that would be another reason. Again, the whole clinical trial, thing is about managing risk to reward and if we take the situation in Alzheimer's disease, you know, drugs have been the Biogen drug has been approved and put onto the market.

51:29 There is a known high percentage of potential side effects with the ARIA side effect, but yet it's still been approved and that's because of the very significant unmet medical need. Depending on the therapeutic area, obviously the FDA makes the call on the risk reward profile of the drug, but those are the reasons. First and foremost, safety. Secondly, efficacy of the drug, and of course at the end, if they do submit the drug to the FDA, the FDA needs to be convinced that it's the risk reward benefit to the population of having that drug on the market, warrants its approval. So maybe Grant then in terms of how much of your future revenue can you see?

52:19 Yeah, so I think the best way to answer that question is really refer back to the order book slides that I talked through. So we had an order book at the end of September, the end of our financial year 2022 of £16,000,000 What that means is that we have signed contracts with clients to deliver services to their clinical trials that we have not yet done and therefore we have not yet recognised associated for revenue of a total contract value of £16,000,000 across numbers of clients and numbers of projects. So, what that means is that we have visibility as at the end of September of 16,000,000 of future revenues, which is spread over several years. We then build up our expectations on the fact that we will obviously recognise revenue off that each month.

53:10 Those projects will develop, and so we have the opportunity to sign new change orders and effectively upsell additional analysis. So that has a potential to push that revenue up further. There's also the risk associated that some of those trials may fail early. So the revenue that we visibility that we have essentially is tied to the contracts that we've signed and then the expectations we set in terms of things like guidance are driven by our own risk assessment on that, plus the fact that we know that we're bidding on other trials currently, and we hope to win some of those, and they will augment revenue visibility going forward. Thank you Grant.

53:56 Again, Shagar has asked a question. Could you justify the high director salary pay? So I'm not sure if that's aimed at you Grant or me, but I'll take it as me. So I guess again, the short answer is yes. And again, on the basis of what we've achieved with this business over the past four or five years, I think something for us to be very proud of. And it's been reflected in making sure that we get the best talent in the company, not just at the director levels, but across the company. I would say as well that we're as we currently look to strengthen the company and in particular, as we look to be able to address new markets such as North America, you know, the fact of the matter is that if we want to compete for talent, you know, we're going to have to pay the, you know, the expectations and requirements of the best talent that we can bring into the business.

54:54 So, you know, I would say that we've gotten very good value of the organization that we have. At the business. It's gotten us to where we are now and I'm very confident that we can continue to attract the best possible people to be able to achieve the ambitions that we set out. James C asked a question, does your sales process have to change as you target a deeper pool of smaller trials rather than the concentrated large trials? So James, just to be clear here, because it maybe is how we articulated. So our sales process isn't changing and that we've always looked to bid on the whole range of types of therapeutic trials.

55:44 What we maybe we're overdoing it a little bit. We're trying to articulate that, you know, we obviously had we were successful in demonstrating that we weren't just a small clinical trials company. We could also win and deliver large trials. And that's important from a credibility perspective, because there are lots of trials to be won. We've obviously, you know, that trial was terminated early and there are other trials that get terminated as well. All that we're highlighting is that, to operate in this clinical trial space, you need to be able to do both. Need to be able to win lots of new trials to provide you long term shots on goal, but also when you are chosen, for a phase three trial, you need to be phase three trial ready. You can't say great, we'll be ready in two years time. You know, pharmaceutical companies need to know that you're there and you've got the resources to do it. So our sales process, what does need to do is to scale and so we need to be in every meeting that we can be, we need to be at the table whenever we can be. We are saying at the moment that we're probably at half of the opportunities that exist in the market. Some of that is because we've not had the products. Other times we just don't have the commercial reach and access.

57:08 So obviously we're working hard to be seen as a credible vendor so that we do get the request for proposals from clients and then when we do get them, we win them. At the moment, our win rate is around about 30%, 35%, which is very credible. Grant talked to our bookings to billings ratio about 1.5, which again is very credible in the industry. I mean, in the last eighteen months, it's been over two. So in terms of industry metrics, you know, we're doing well, but there's a lot more to go after. And so it's really more about how we ensure that we build our pipeline faster and convert it faster as we build out our product capabilities.

57:55 So no change in our process, just building out our reach and our visibility to clients so that we get the opportunity to bid and show them how good we are basically. So the board are handsomely remunerated yet have bought very few shares and hold a tiny fraction of the company. This is a statement from Francis. Should shareholders be concerned about this divergence of interest? So again, bit of a difficult one to answer succinctly other than to say, clearly, I don't believe that the board has a divergence of interest from other shareholders.

58:43 We have shares specifically, I can only talk to myself. I mean, I've obviously over time acquired shares, acquired them at ATP plus, plus obviously myself and Grant and other parts of the management team have long term incentive programmes which are geared around making sure that our interests are aligned with the shareholders. I think and I would question, I mean, don't think we're overpaying our board of directors based on comparators that I've seen. And so, you know, I think again, that's as honest answer I think as I can give to the question. So Michael D, great update. Thank you, Michael. Appreciate that. How is the search going for the new board members?

59:36 Maybe Grant, I'll give you an opportunity to talk to that one. Yeah. So obviously, as you've seen in RNS this morning, following nine great years on the board of IXICO, our chair, following good governance practice, was stepped down during 2023 and one our existing IXIES exec director will step up. And we are, as a result, looking to appoint a new non executive director. That process has really just started. The board only made the resolution recently, which is why it was announced today. So we're just starting that recruitment process now and we will hope to be able to update the market with some good news in that respect early in 2023.

1:00:29 Okay, we've got two final questions, both from Sam. So first one, Grant, the likely loss in FY23, is it plausible that IXICO could return profitability in FY24? Obviously not being able to give forward looking projections but just how would you answer that question? So I think the answer is yes, it's definitely plausible and I think the sort of extra colour that I'd add to that is that as a company we could have been profitable we could have put guidance out of profitability this year. The reason we didn't do that, and we thought long and hard about that, was because actually the big prize for IXICO as a company, and we believe for our shareholders as hopefully long term investors in the company, is the fact that we are serving think the Grant is frozen on us. Can you not hear me? Yeah, I can hear you now. Yeah.

1:01:33 We're serving a market that is growing and is growing rapidly that is going to need an increased amount of objective analysis of brain biomarkers to distinguish between incremental improvements in addressing these hard to address neurological diseases. And we are really very well positioned to provide that service. But in order to do so successfully, need, as Giulio said, need to be credible not only in terms of early stage trials, being able to run one, two, three, four phase 3s. And so making sure that we invest to put ourselves in a position to do that over the medium to long term may mean whilst we weather some challenges in terms of trial failures in the short term, that it's actually the right decision to return to losses for a period of time to make sure we're well positioned for the longer term.

1:02:30 And that's the decision that we've taken. That's what we're doing. We're doing it carefully. We're not throwing caution to the wind. We do have a careful cost management process. So what I'd say is that we anticipate and plan to continue to rebuild our order book following the loss of these recent clinical trials, and that in doing so that will increase, we hope, our revenues. And because we have operational leverage, because we have a well invested company, we have invested in infrastructure, we don't have an infrastructure deficit, we would expect that the profitability would follow that. So hopefully that provides a clear answer on that. That's great. Think we've lost Julia, so I just wonder whether I'd Yeah, pick up on there's just one final question there, if you'd so kind Grant, that'd be great. Yeah, again question from Sam.

1:03:23 You're now ruling out moving into oncology, explaining this by the expanded opportunities in neurology, but is there anything you've learned about oncology to rule out moving into oncology? So I think the answer I'd give to that is that there are many companies operating in oncology and if we went into oncology without essentially acquiring something already there, then we would have to ask ourselves the question why we thought we were a better place to be successful in that space than those companies that are already there. That's very different in neurology. We've been working in neurology for well over a decade. We've built up a very strong reputation. We have a workforce, and employee base that are very strong in neurological expertise.

1:04:10 And so being in neurology makes a lot of sense. In terms of acquisition, know, never say never if there was the right opportunity, but it would have to be one that really progressed our overall strategy for clinical trials. Right now it would seem more likely, particularly with our valuation where it is, that we would find a technology type acquisition that would be in neurology rather than oncology. So it's not that we don't believe that there's value in oncology, it's just that we believe where we are, we're far better placed and far more likely to be successful by focusing on the neurology space than that diversification. That's great. Thank you very much indeed Grant and Julia, we've taken the two final questions for Sam. So thank you once again to everybody this afternoon for your engagement and apologies for the loss of connection momentarily during today's meeting.

1:05:03 Julia, I know investor feedback is important and thank you very much indeed for taking all the questions today, but I'll shortly redirect those on the call to give you their feedback. And I wonder if I may just ask you for a few closing comments to wrap up with, after which I'll redirect investors for their feedback. Yes, thank you very much. So again, I'll just begin by thanking everybody for taking an hour of their day to listen to the update today and generally hope that people found it informative and transparent and learn a little bit more about us and hope you go away from today with some of the enthusiasm and confidence that this is an attractive space and that there's lots of opportunities and that we as a management team are very focused on bringing that to the company and to the benefit of our stakeholders, including our shareholders.

1:05:55 That's great. Giulio, Grant, thank you once again for updating investors this afternoon. Ladies and gentlemen, please could I ask you not to close this session as we're now automatically redirect you for the opportunity for you to provide your feedback in order that the management team 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 IXICO PLC, we'd like to thank you for attending today's presentation. I wish you all a very pleasant afternoon.