Ixico (LSE:IXI) — Half-year results for the six months ended 31 March 2021

0:02 Good afternoon, ladies and gentlemen, and welcome to the IXICO Half Year Results for the period ending 03/31/2021 Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Please just simply type in your question and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor Meet company dashboard, and we will notify you when they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit to the following poll. And if you could give that your kind attention, we'd be most grateful. And I'd now like to hand over to Giulio Cerrone, CEO Grant Nash, CFO and Robin Watts, CSO from IXICO. Good afternoon to you all.

0:55 Good afternoon, and thank you, everyone. We're going to initially take ourselves off camera, so hopefully, you get good quality audio. And we'll rejoin once we get back to the Q and A session. So we'll switch off and we'll you'll see us in full technical glory once we've gone through the presentation.

1:18 So thank you. And again, welcome to our interim earnings presentation for the first six months of the 2021 fiscal year. I'm joined today by by Grant, our CFO, and, Robin, our CSO. And we're delighted to have the opportunity to speak directly with you today on recent developments, in addition to giving you an update on the business. I'll be providing update on our strategy and, strong commitment to innovation. And, Grant will be giving you an update on the financial performance in recent period, and Robin will be, providing more color and detail around our innovation road map and some exciting developments that we have planned for the the rest of this year and going into the future periods. So if we go to slide two, we have our regular slide and disclaimer slide. And then if you go to slide three, this is really outlining IXICO in our position as a specialist company in CNS clinical trials.

2:21 The information on the left hand side articulates that this is an attractive market that management estimates around about a 120 to a £150,000,000, which IXICO has less than 10% market share. So plenty of runway for us, in terms of growth. It's a it's a market that we see has long term growth prospects, with one of the key drivers being an aging population, but also recognition that for the pharmaceutical industry, this is the second largest area of investment for clinical development after oncology. And so we, you know, we see a long term growth opportunity for the company by being and remaining focused as a specialist in CNS. In particular, I just want to highlight Alzheimer's.

3:09 Actually, recent years, our growth has been fueled by very strong performance in Huntington's, is actually a rare disease. But there are a number of factors now coming together, which mean that Alzheimer's is a is an area that we see as having a lot of opportunity for us. Obviously, it's it's one of the largest neurological diseases. It's the sixth leading cause of death in North America. Worldwide, there's, probably about fifty million people suffering with Alzheimer's. That's expected to treble, by, 2050. So the the burden on the, the the global health care systems is going to be immense. Now the the good news is there's a very active pipeline of, development in this area.

3:55 There's over a 120 clinical trials running currently around the world. We actually have less than 5% of that. And so, again, opportunity for us to, to expand our footprint significantly. But the other thing I want to highlight as well is that, whilst there have been significant failures in this area in the last three or four years, there's actually a very significant event coming up on the June 7, which is the FDA of determining whether to approve Biogen's aducanumab drug, which is a drug based on the amyloid targets. And this is very pivotal in that there's there's not been a a drug approved for Alzheimer's for over fifteen years. And if this does happen, of course, there are a number of other companies with drugs that they'll be looking to to bring to market.

4:43 And then, of course, if if it doesn't get approved, it also stimulates a reinvigorated requirement to come to market with the drug and that will drive new trials in this area for other drug targets in Alzheimer's. So, either way, an IXICO perspective, you know, we feel that there are going to be lots of opportunities for new trials requiring the sort of services that IXICO provides. The slide on the right hand side of this slide in particular just highlights the the other areas that we're looking at, which are Parkinson's and MS. And just making a point that imaging as a modality has been increasingly used in clinical trials in these areas.

5:30 And so what we'll be doing in the coming years is making sure that we, further strengthen our portfolio so that we can capture a bigger portion of this, growing market. And as I said, Robin will will talk in detail around the, the innovations that have we drive in that, which will be very much driven by our capabilities in AI, which has been, developed over the past decade, and in operating in this area. So if we go to the next slide, this slide I I I use often because it's fundamental to the the success that we've delivered in the past four years, but also is a road map for the future momentum of the business. So the the the first four sections of this are, of course, organic elements to to growth.

6:17 Clearly, we we have been focusing on delivering scale and operational excellence. We've, you know, we've grown considerably in the last four years. I just reflected recently that in 2016, our revenues were 3,100,000 for the full fiscal year, and we've just reported 4,900,000 for the first six months of this year. So so clearly, we have delivered and operated, and, we've obviously, during that period, delivered more trials and bigger trials, than previously. That obviously needs to continue, and and our investments going forwards will be, to ensure that we can continue to scale the business when those opportunities arise. In addition, our fundamental strategy is to accelerate penetration of the clinical trials market by targeting the early phase trials and really making sure that we're ready for those later clinical phases.

7:08 This has been a bedrock of IXICO's success. It really plays to our strengths as an innovative company, with very deep relationships with both the pharmaceutical clients, but also the key opinion leaders in these different therapeutic areas. And, again, Robin will talk a little bit, to how we do that. And then the the fourth point about innovation, whilst I've always described the strategy as a commercially led strategy, it's very important to understand it's underpinned by a strong commitment to r and d and innovation, and in particular in the areas of AI automation and data analytics. And, again, you'll see that come through in in Grant's slides in terms of where we're making investments, and also in Robin's slides in terms of how we turn innovation into commercial services that we can charge, a premium price for, which in turn gives us premium margins, which again will come through in the numbers that Graham will speak to.

8:10 And and the fifth point, the enhancing the organic growth through selective m and a. The point I'd like to make here is that in in the past four years, all of our growth has been organic. So it's a 100% driven by our execution of this plan.

8:24 Going forward in the next phase of the company's growth, and as we look to diversify into other technology modalities while still remaining in CNS, It's it's quite likely that partnerships and m and a will play actually a a role in our in our roadmap. So just really highlighting that now that we've grown the company at the stage that we have, and you'll see from the numbers, we have a very strong balance sheet. We feel now that the next four or five years, is one where we can we can add incremental growth and scale, by also looking at partnerships and and m and a. So if we go to slide next slide, slide five. So this one I just used to highlight the sort of companies that are investing in neuro.

9:11 And, of course, these are all well known large corporate companies. And, of course, they're all addressing this area because there is such a a large unmet medical need. Now what I whilst we we we can't identify which companies IXICO works with, you know, I I can say that we've worked with nine of the 14 companies here. And, obviously, we, in in in the coming years, would look to want to do more business with the companies that we currently work with and but also acquire new companies that we've not worked with before. The other thing that this perhaps slide doesn't doesn't illustrate is that biotech companies are very active in this area. And and quite often, what you'll see is that biotech companies will will be involved in the early phases of development, and, they'll all have their exit strategies with the idea of, selling their assets, to big pharma, who then have the resources to do the very large phase three studies across many, many countries.

10:17 The other thing that this slide shows, I think is important to understand, is that actually the volume of clinical trials is actually, of course, the earlier phase studies. And, obviously, by by default, you know, the idea is that so many drugs don't get to late phase three studies. But that's the nature of the industry. Obviously, developing drugs, is difficult, it's expensive, and it takes time. And and our job is to make sure that clients can progress their drugs through the development process. And that sometimes means that they'll finish, before they get to the next phase because they didn't they weren't efficacious or they weren't safe for patients to take. So so our job is to to be there with the the right solutions to help our clients run clinical trials more efficiently, smaller trials that they can get to decisive points of decision sooner in in the whole clinical development process.

11:14 And then this is why, you know, as a as a strategy, we're very focused on winning lots of new trials, but in particular in early phase. And and, Grant will talk to that when he describes our recent successes and how that has built up our order book in the recent period. So my next slide, I hand over to Grant. In this slide, I just want to give a flavor of, a, why scientific collaboration is so important and fundamental to IXICO's innovation roadmap, but also how it it piggybacks on the back of some macro trends that we see as real growth drivers to the the the market that we address. And so on the left hand side, you know, these are familiar ones, the agent population, the investment in rare diseases by the pharmaceutical industry, and also the idea that, of course, the pharmaceutical industry is constantly looking for new therapeutic areas and approaches to tackle a particular disease.

12:13 On the right hand side, these are some of the things that are becoming more prevalent and actually, as a result of the COVID pandemic, more important and have really received a supercharge, if you like, in terms of the interest of the pharmaceutical industry. So there's one key terminology that's that's on everybody's lips at the moment is decentralized clinical trials. And what this basically means is technology that allows pharmaceutical companies to do more of what they need to do in clinical trials outside of a clinical setting. That's obviously a lot more convenient for a patient, but it also means that these measures and monitors are able to be taken in a real world environment.

12:59 And so, a lot of technology is being looked at in terms of how we can accelerate that process. In addition, also, a lot of companies previously had to have specialist people travel to the clinical site to administer the tests. And that's another reason why there's a lot of interest in digital technologies. The the other point is early intervention. It's becoming more and more prevalent that there's an acknowledgement that the sooner you find the right patients to put into your trial, the better. And so technology, again, allows you to do that more efficiently is again very valued. And again, Robin will be able to talk to how we've actually been playing a role in that. And we see significant opportunity for us to help our clients pick the right patients going forward. And then finally, the patient reported outcomes ties into the idea that people want to be able to have more control over what's being reported and how they're feeling.

14:02 And again, technologies such as wearables that allow us to do that are becoming more, more widely adopted in clinical trials. And again, Robin will will highlight why we're interested in that and some of the activities that we have so that we can be, a player in that new emerging market. So, I mean, that those are the overarching things. The the the key thing that is is a value proposition that we do is we provide the clients with new and better ways to measure biomarkers. And we're very much wanting to use AI. The AI expertise actually that we've developed over the past decade. So it's important for you to all understand that we've been developing and deploying AI driven solutions for over a decade. It's not something that is new to IXICO.

14:49 And, again, Robin will will talk to, our excited developments there in terms of the next generation platform that, that we've developed and is proprietary to, to IXICO. And, also, Grant will be talking to the investment we've been making in our data management, platform. This is a a major investment for the company, and, it supports our, ambition to further scale the business over the next three or four years.

15:15 So with that overview, let me hand over to Grant, and he'll be able to provide you with, detail on the, financial period we've just run through and also an insight into our order book and our pipeline, as we go forward. Grant? Thank you, Julio, and good afternoon, everyone. So just, turning to the financials. Slide seven, as you can see in front of you now, shows our financial performance for the six months to the March 31 and compares it to the same period in the previous five years. So starting on the left, what this graph shows is our revenue performance and reflects a fifth consecutive first half year of revenue growth. We're, of course, pleased to be able to report 8% growth achieved in the last six months, but do highlight that the growth rate has been impacted by COVID nineteen, where we have seen and continue to see new clinical trials having their start dates delayed.

16:11 Our growth over the period, therefore, is is really instead come primarily from contracts signed prior to the pandemic, and that reflects the lag between contract signing and the associated revenue delivery, which has been exacerbated by the delays in new trial start up from COVID nineteen. Also, though, to an extent, this is also reflective of the multiyear nature of clinical trials and the relative complexity, particularly in CNS, getting these trials set up, recruited, and initiated. The middle graph shows our sustained strong gross margins that we've been reporting over the last few years. Once again, we've we've increased that to just under 68%. And as we've presented previously, these have been augmented by the success we've had in phase three trials, which contain a relatively high proportion of high value, high margin data analytics services as compared to the more traditional but essential CRO type services of project and imaging site management that we also provide.

17:12 So as we look forward, and I'll speak to this in more detail shortly, where we see a greater component of our order book and therefore our revenues in the earlier phases of trials, we do expect to see these margins come under a little bit of pressure. Finally, on the right, we show the rapid progression of the company across the last five years from substantial EBITDA losses to substantial profits. We've achieved a 31% growth in EBITDA compared to the same period last year, and that delivers an overall EBITDA margin of 18%, reflecting the relative fixed cost nature of the business and has been achieved despite the focused reinvestment of profits to position the company for continued growth across the medium and longer terms. So just turning then to to slide eight.

18:01 What this shows is some of the areas that we have been investing in. So particularly in r and d, which Robin will speak to in more detail. But as you can see from the graph on the left, our investments in research have increased significantly over the last couple of years. That is driven not only by investment in raw research, which we've been gradually increasing the amount that we've been investing in that, but also into development activities, which we're obliged to capitalize under international financial reporting standards. And what that means is that we've invested within r and d as a whole just under 1,200,000 in the first half of our financial year, which is equivalent to 23% of our revenues.

18:48 The r and d investment combines proof of concept research into brain and digital wearable analytical tools, which Robin will talk more about, with the capitalized production ready development of algorithms, which we have now we have now either adopted or expecting to adopt on client trials. In addition to this, we're investing our new data capture and analysis platform, which is based on the Microsoft Azure cloud infrastructure, as Julia mentioned, and is a key strut of the partnership with Microsoft that we communicated to the market earlier in the year. Moving to the middle graph, you can see that we have reduced our expenditure a little bit in sales and marketing. That, however, is primarily linked to COVID nineteen where we have seen no travel or conferences taking place in in physical presence in the last six months.

19:35 Now considering that, we're particularly pleased with the greater than 10,000,000 of contracts that we've signed year to date, which is a book to bill ratio of approximately twice and reflects that we despite the fact we've had less ability to travel, we've still been able to to meet client expectations and sign new contracts. And then finally on the right, we have our g and a spend at 1,600,000, which we continue to carefully control and where we expect this to level off across the second half of the year to align with the full prior year expenditure levels. If we move now to to slide nine, what we're showing here is an overview of our other financial KPIs focused on return on our FTE investment, our financial position, and contracted orders.

20:20 On the left, we show our revenue per FTE and our average headcount compared to the last five full financial years. As you can see, we've continued to invest in people with the growth in headcount reflecting both a reaction to our growth, to the growth of the business over the last few years, but also a recognition that the market opportunity exists for IXICO to grow much further if we make the right investments. This is what we've been doing, so a number of those who've been employed now are engaged in activities designed to promote our scalability and service offering for the future, either in r and d or in our platform development. That inevitably hits our revenue per FTE a bit, which is reduced from a peak of a 120,000 in across 1920 to just over a 100 thousand in the first six months of the year. But we do anticipate to see that become more than reversed and and improve again, perhaps not across the rest of this year and next year, but as we move into 2023 and beyond and the real benefit from the investments we're making now come through.

21:19 Moving to the middle graph, the thing we have to think about in terms of underpinning our ability to invest is not only the the fact we're generating profits as well as our conviction, that we're well positioned to continue to grow in the market we we address, but also that we have the strength in our balance sheet to do so. And by every being able to report that we had 7,000,000 of cash again on the balance sheet at the end of March, despite investing just under 1,000,000 in capital assets, including our data capture analysis platform. We the fact that we continue to be debt free. And in the past six months, our total net asset position has increased by 1,300,000 or 15%. We can show that we're in a very strong position from a financial position point of view to continue with our investments.

22:03 Finally, on the right, we continue to to have a strong contracted order book with a position of 19,000,000 of contracted orders as at the end of March. This is despite the fact that we we have had the impact as disclosed to the markets in March of the failure of our largest client's phase three and open label extension HD trials that resulted in a significant descope of the work we expect to provide to them. What this means is that whilst our order book is slightly down on the financial year '20 closed position of 21,700,000, it remains double the revenues reported for the full year 2020. And because of the that the impact that we've had and the negative news around the largest our largest clients' HD trials, we felt that we'd use a couple of slides just to provide a little bit more detail on our order book.

22:51 So if we go to slide 10, what this shows is the development of our contracted order book over the twelve months to the March 31. So a year ago, our order book was at 15,300,000. We then announced in April 2020 the signing of the HD open label extension contract with our largest client, which added 9,100,000 of revenues to order book and was as if when was it and it's within that blue box of 11.6 new contracts that we won 11,600,000 of new contracts we won in the second

23:27 half of twenty twenty. We then delivered 4,900,000 of revenues in the second half of twenty twenty, which, along with a couple of minor descopes, meant and a bit of FX, meant that our order book hit a year end high of 21,700,000.

23:46 In the last six months, we've signed another impressive total of contracts totaling 9,400,000, which is that blue box. Different, however, to this to the contracts we signed in the second half of twenty twenty, that hasn't been dominated by a single large contract. Rather, it reflects nine different client wins across five neurological indications. In other words, we've diversified our client base and portfolio of projects whilst augmenting our order book. We then recognized a further 4,900,000 of revenues. Then in March, as we announced, we received news that our largest client's HD phase three trial, which we won back in 2018, an open label extension, which was the trial we won in April 2020 as shown, had failed, and therefore dosing of the patients was being stopped.

24:34 Although this didn't mean all of our services to these trials stopped, as there remains significant value to the client in the safety and analysis services we're providing irrespective of the trial failure, it did result in a 7,100,000 d scope of the trial, meaning our closing order book at the March 31 closed at 19,000,000 as compared to 26,100,000, which would have been where it would have closed if we hadn't had that trial failure. So in other words, we would have had an all time record order book at the end of the half if it hadn't been for the the trial failure. Now, clearly, whilst this is a negative event for us and obviously a devastating blow for the HD community, we are really extremely pleased to be able to weather the impact of such significant trial failure within our portfolio. It does, however, of course, impact the profile of our order book and means due to the ramp up time of new trials as well as the ongoing drag to these start up times created by COVID nineteen,

25:29 we expect to have a leveling off of growth across the remainder of this year and possibly even a small contraction in financial year '22 before the benefit of the recent trials we've signed year to date starts to fully impact on our revenues. This is a simple reflection of the fact that we've taken a £700,000 hit to our expectations for this year, and near 3,000,000 hit to our expectations for next year on the basis of those phase three and open label extension trial failures. Those are clearly significant gaps to fill. And whilst we feel we're extremely well positioned to continue the growth that we've been the underlying growth in terms of new trial wins, there is a short term period where we expect that gap to to be to become apparent because of the time it takes for new wins to come through.

26:16 And to really emphasize, how that order book is now made up, just if we turn to slide 11, I'm gonna give, again, further detail on our on our order book to to help understanding.

26:28 So what this slide shows is there are the two pie charts on the left the far left hand side relate to the makeup of our order book as it was at September 2020, both in terms of the relative split between phase three trials and other phase the phase one, phase two trials, and also the split of the large the five largest projects we're working on and and other projects. Then the two pie charts in the middle show the same information that as was the position at the end of March twenty one, so after we had include included the descope of those HD phase three trials. And then on the right, we show our pipeline of opportunities by by trial phase, which is the the pipeline that our business development team are currently pursuing to secure more contract wins.

27:21 So what this shows is that following the phase three and open label extension trial descope, our order book has become more balanced between phase three and the earlier phases, and the size of any individual project is also more balanced than was the case in September 2020. Now to be clear, if an opportunity to win a large scale scale phase three arises, we're clearly not gonna seek to turn that away. But the real benefit we've had from being having that phase three those phase three trials over the last couple of years is that it's really grown our credibility credibility in the market by being able to show that we're able to win and operate such large trials on behalf of a global top global pharmaceutical company.

28:06 And that has really been very well recognized across the industry and has supported an acceleration of the wins in the earlier phases and across a wider range of clients that we've been seeing in the last few months.

28:17 So in other words, whilst we do expect a slowdown in growth over the next eighteen months, at the same time, we go into the period with a more balanced, more diverse order book with a value not significantly lower than it was at the end of September twenty. Added to that, we have a diverse pipeline of opportunities, which we feel confident of winning. And whilst it will will take time for the revenues related to those to be delivered, it means we go into the period with an order book, which has a lower relative risk profile than was the case just eight months ago. So all this means is that despite a short term bump, we do feel as confident as ever in our medium and long term growth prospects. As Julia mentioned, the market opportunity hasn't changed if anything has grown. And through the investment plans that we're well positioned to continue with, plus some careful management of our costs, which we will always was always part of the way we look to manage the business over the next eighteen months, we'll be in a very good position to grow even further as we as we pass through that period.

29:15 I'll now hand over to to Robin who can put some more color on the r and d areas that we've been investing in.

29:22 Thank you, Grant. Good afternoon, everyone. So what what I'll do, I'll I'll try and dive a bit deeper into the way we innovate and the way we work scientifically. Julia has outlined that concept in principle where it's really around developing new and better biomarkers to address emerging needs if if that's aging population or going into

29:46 new therapeutic areas. And the way we do this is is really focused on the understanding the science, understanding the biomarkers, and then combining that with our deep understanding of AI and data analytics, which is why I'll start with this brief overview on AI just to recap.

30:07 And, obviously, artificial intelligence as a concept has been around for decades. More recently, it's been often used interchangeably with the concept of deep learning, which is really something that has developed over the past decade where we're now able to resolve neural networks with increasing compute power and can actually feed them with with an increasing number of available datasets. And that has revolutionized data analytics across industries, and it's obviously something IXICO

30:45 has been has been focused on over the past ten years, really extending from our work in more general machine learning. So if you go to slide 13, we see on the top part, we see really a zoom in into that transitional period between traditional machine learning and deep learning concepts for the past fifteen to twenty years roughly.

31:08 And what we're looking at here is illustrated in a in a quite widely used benchmark in the in the AI in the AI community looking at image classification, just standard classification of images. And what we see is how, deep learning has really facilitated, to develop algorithms that, outperform human performance in that particular task. So we see, right at at roughly 90% level, we see, is is very good human performance. And between 2014, 2015, AI has, started to outperform that accuracy with some of the widely used, neural networks in that space.

31:56 See some of the big names like Google on there. And that that really is a quite strong message, I think, that shows how

32:03 the past ten years in particular have been transformational in terms of what is possible with with data analytics. What we see in the in the in the the bottom now of this graph is IXICO's timeline. Obviously, founded in 2004 by, the leading London universities, focused on imaging science and also data analytics. And with our founding IP already, we had a strong standing in in a more traditional machine learning focused on alignment of various images initially with the, I f two k toolkit. We then, quickly started to develop an in license semi automated algorithms for for brain imaging.

32:48 And from 2009, 2010, have started to pioneer fully automated image analysis technology with the the leap platform, which still forms the the backbone of a lot of the analysis we do and provide into clinical trials. Over the past ten years, however, we've started to transition and focus our research efforts onto deep learning as as it the community. We've initiated data access programs by about five, six years ago now. We're strategically focusing on securing access rights to the data we collect. We've started various deep learning programs, set up infrastructure, and so on. And then started to release into production first algorithms focused on on deep learning, interestingly, on on digital endpoints for sleep first.

33:45 And then, I I will go to the imaging platform soon. But, one one milestone that, is is worth highlighting is, that we now see year on year increase in the number of, clinical trial datasets we we actually have rights to use for R and D, for and that that has increased to more than 40% as of last year, giving us a significant, value in terms of, AI development. And, what what I'll then focus on on the next couple of slides is really that, new AI platform we've developed on the back of that data and, leveraging new technology for image segmentation, illustrate how it works and how we've, deployed it on first, use cases. So if you go to slide 14, we see, an application to Huntington's disease and of that platform. So what when I say platform, what I mean is a set of pre developed AI models associated code infrastructure, pre processing workflows, and and really pre trained datasets.

34:58 So the technical term here is is transfer learning. So as we are focusing on a more specific problem, we are using these pre trained models and they can very quickly adapt it to a specific problem in a in a given domain. And, that gives us two advantages both in terms of the, the prototyping and the development cycles, but then also, increased accuracy, when we go into production. And, so here, we're looking at segmentation of the putamen, which is one of the key biomarkers in Huntington's disease. It's a highly challenging region to segment just because of contract contrast properties in the brain on an MRI and because of its shape and and and structure.

35:44 So what we've done here is we've we've we've used datasets across four different clinical datasets, More than a thousand training cases highly contextualized through manual segmentations of that train structure, and then we we trained the AI platform for that specific problem. And so we can deploy it on unseen data. And as we can see in in the prototyping section, that has a significant benefit during our model development. So we sleep the more traditional machine learning platform, we're still using we we can do that kind of customization, but it takes days, for the learning cycle. Whereas with, AI platform, especially deployed on a GPU hardware, this goes down to up to minutes, significantly increasing the process.

36:37 And then once we're in production, as we see on the bottom right box, we we see an increase in QC pass rates, certainly from the, standard lead platform, but also over the optimized, p lead algorithm, that we see in the middle here, to more than 90%. And then the increase in run time in production, reducing it to minutes or even less than that, which is a a nice benefit in an, from an operation point of view of clinical trials, but offers opportunities for more real time applications like the ones we see in, in clinical, practice. So if you go to slide 15, please, we'll see, in a bit more detail how we how we work on those kind of concept and how we collaborate with our different partners. So what we see in the left panel is a recent publication we did together with Imperial College London and the computer science department there on on the technical validation of this platform.

37:40 So, again, looking at the putamen here as an example, we see actually an outline on on a slice of an MRI scan, of that, brain structure delineated by an expert in red. So the red outline is the gold standard crown truth label, of of the putamen. And then we see overlayed in in four in in those four rows in green, the the automated segmentation by different algorithms. Starting in the bottom, we look at free server, which is the most widely used image analysis tool for for brain imaging used by, some of our, competitors using used quite widely in both academic research as well as, clinical trials. And we do see that, there is some disagreement between the, expert label and then the, automated segmentation, making, kind of like deteriorating the quality of the segmentation and, and and then causing dancing problems in in in the, clinical trial.

38:50 Similarly, for the unoptimized lead algorithm, we we see a missegmentation. But if you go to the optimized, PLEAP algorithms using, the optimized, leap, platform, we see a good agreement and that increases further with the AI platform. So on top of the the pure computational advantages, we see a significant increase in accuracy. And the case illustrated here is actually the, the median case out of a larger dataset, of test cases. And if we most slightly do the right, on the top graph here, we see a metric called the dice metric, which is, basically volume of percentage agreement between the, expert rater and the, automated algorithm.

39:38 We see that the two optimized IXICO algorithms are in the mid eighties. It's around 85% on average in that population, and then the free server reference tool is around high sixties. And for reference to expert readers would probably get somewhere in the mid eighties as well. So as we've seen for that example of image classification, we're at a stage now where we are competitive with regards to human performance. What we've done then in this use case is a more detailed clinical evaluation with one of the leading labs in in HD research at UCL where the the clinical expert would be rating the automated segmentation. Again, comparing our AI platform to FreeSurfer as a quality pass or quality assessment in four different categories. So green is a usable segmentation, and then the red shades would show segmentations that can't be used in analysis and would result in the QC fail in the clinical trial.

40:53 And, we're looking at three different brain regions, all highly relevant in Huntington's research, putamen, caudate, and thalamus. And as you can see with the, free software algorithm, we're getting up to fifty percent, failure rates. And that's that's where it gets highly relevant to our client and to the application in clinical trials because, obviously, the more data pass rate or the higher the data pass rate is and the more data we can actually use, better the chances, we identify treatment effect. We're more sensitive to more subtle treatment effects or in turn, yeah, have the possibility to reduce sample sizes in the trial and then choose costs accordingly. And then we have the the the side effects like increase smaller run time or shorter run time and so on.

41:42 This is this the pipeline, as I said, we are releasing, for full production later this year, and we have started to pilot it, for the past year already. We have worked with, one of our top pharma clients, on on validating and developing this platform as part of, their proprietary work for one of the upcoming trials. And there is a publication, in press that will come out shortly on on this piece of work. And then furthermore, we are working, to translate this technology into other therapeutic indications. So basically, apply the platform, for the segmentation of, structures relevant in other brain disorders. We have presented at the recent conferences in Alzheimer's where we have deployed the same concept to segmentation of 80 relevant brain switch brain regions, again, showing increased performance over our state of the art technology.

42:43 If I we then move on to slide 16, I'll I'll try to change, shift gears slightly and spend just a couple of minutes on, digital biomarkers, which, as Julia said in the beginning, is an area we are actively engaging in for a couple of years now. We do see a lot of, synergies between the development, of biomarkers and imaging and variables. Applications are, parallel in terms of, patient selection, safety, and efficacy assessment, but they also are significant similarities in terms of the, scientific work involved, the regulatory stages to go through in order to validate those biomarkers. Then finally, deployment from an operational point of view, which is why we we feel well positioned, to engage in that field.

43:39 We have, the work we focused on over the past, years was in, sleep and activity. We, follow a device agnostic approach where we can work with standard technology devices, most typically research grade devices, but we've worked with consumer devices as well. The idea is to, add value by developing specific analysis algorithms, and validating them in our specific, therapeutic indications. We've done this for sleep in Parkinson's, for example, And we've also run commercial trials, in in other indications, psychiatric indications, for example, looking at, activity. An area I'd like to, briefly look at today is is is this gate and walking more specifically.

44:29 So as you see on on on this slide, there are a couple of biomarkers in in orange we're actively working on. One is walking as it's a highly relevant measurement in movement disorders like Parkinson's, Huntington's, PSP, and so on. So if we move to my last slide on slide 17, we just see some examples of proof of concept. We we we are working on at the moment on developing AI technology for gate assessment. I should say that's a couple of stage stages before, what we're doing in imaging in terms of, maturities or it's really developing early evidence on, what is feasible. So most, technology in, gate assessment currently is focused on in clinic assessments. We're quite sophisticated sensor setups, collect a lot of data, and then enable well controlled analysis in order to really make this applicable for real world data collection and remote clinical trials and, more generally, at home, data measurements, you you need to move to something more or less invasive.

45:47 So our focus again is on, Vistaram devices, simple three axis accelerators similar to what, we have successfully deployed in in other domains. And what we've developed here on, on on on various datasets is, an algorithm to segment the diff or detect the different stages, of a of a step of walking. So, basically, heel impact and then, leg swing and, standing. And once, these different characteristics are identified, we can look at, interpreting this from a clinical point of view. That's working, quite well with the neural network based algorithm. We're getting 90% accuracy in delineating those steps. So if you validate that over a long period, it gives a very robust and strong signal of of gate and then enables to look at various endpoints.

46:45 Like, obviously, a number of steps, which is a metric widely used and also available in fitness trackers and so on. But then the more subtle and more sophisticated measurements that enable early detection of, abnormalities or or difficulties in gate, like, strike length, symmetry, cadence, these are all clinically relevant measurements that are assessed at current in clinic assessments as part of Parkinson's workup, for example, and where, at home measurement over long periods will be, highly valuable. And we have started a project recently with Crystal University. We're really validating these aspects in the clinical setting, and that's really where we believe we can add value as we have a deep understanding of the therapeutic indication, and at the same time, we we are developing the algorithms.

47:45 So this is in a Parkinson's population where there's a specifically configured house in Bristol called the Sphere House that has a is is ambient sensors installed silhouette videos, cameras, and and at the same time, clinical workup. There's a gate map in there, for example, to measure gold standard walking characteristics. And Parkinson's patients with the care are staying in the house for for several days to two weeks and are being assessed through the sensor technology. And what we provide into the study is our Wistron or our nominated Wistron device together with the developed data analytics, and we can then compare against the clinical assessment, UPDRS, for example, the detailed gate assessment, and and and other measurements that I've been taking to really understand how far those, digital biomarkers, can go towards, assessing, what is currently, taken in a in a more clinical assessment.

48:57 So that's that's an exciting study. And, once we we we interpret those results as they come in, it really enables us to design, the next phase of this program to see how, the technology can be developed and eventually rolled out into into clinical trials into to patients. And with that slide, I'd like to close and hand it back to Giulio. Thank you very much, Robin. So just as a summary slide, the last slide, which is entitled focused on on growth. Just wanna highlight that that's really underpinned everything that we do at IXICO. And, obviously, the the points we're making here, there's sort of four pillars really that, hopefully, you've got a sense of why we we see the market that we're in as one that's attractive with long term growth prospects underpinned by some very strong and consistent macro trends that will will continue to be there for likely decades rather than just individual years.

50:02 Also, during this particularly challenging twelve months, which has obviously brought challenges as well as opportunities, we've we've demonstrated that our business model has been very resilient throughout the pandemic, and and it's allowed us to deliver another very strong set of financials, not just in terms of top line growth, but also sustained high margins, tech margins, and very pleased to be able to report a 30% increase in our EBITDA to a level of 18 for the the last period. And and looking forwards, you know, we've Grant's done a very nice job of articulating where our order book is, how we got there. And also, we've talked to the fact that we've been able to really have a very strong first six months in terms of bookings to billings with a ratio of 1.9, which is a very, very strong performance.

50:57 And we've got a an attractive opportunity pipeline that will will be continuing to look to convert in the coming months and years as well. So in terms of financially, we're we're, you know, well placed. We've got a strong balance sheet, and we're continuing to be debt free, and so well positioned to continue to invest in those programs that you've heard about with the intention of scaling the business, but always very focused on innovation and how we can ensure that we can provide our clients with the best possible tools to develop the best possible clinical trials so that they get the return on their investments in this area. So that we can get new drugs out to the population as, you know, as we see that these diseases have such a large devastating effect on the families that that it affects.

51:53 And then finally, the fact that in addition to the organic investments we're making, obviously, now we we have a market cap that is significantly higher than it was three or four years ago. And, we recognize that we want to, in scaling the business, stay very much focused on CNS. We think that's where we can create the most value as the go to technology partner for the pharmaceutical industry. And So as we look to diversify, into new modalities and technologies, we feel that, the next four or five years, we'll be, we'll be, very much looking at potential partnerships and and even m and a opportunities that allow us to further accelerate our ability to diversify, and create a bigger, technology platform that gets adopted by the pharmaceutical industry.

52:45 So thank you very much for your attention. With that, I think we can come back on to video and maybe deal with the Q and A. That's brilliant. Giulio, Grant, Robin, thank you very much indeed for updating investors today. 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. But just want the company to take a few moments to review those investor questions submitted already. I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, will be accessible via your Investor Day company dashboard. I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you will be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. Giulio, obviously, have the ability to pre submit questions. And perhaps I could hand over to you to read through those.

53:36 And then the live Q and A, if I could ask you to read out those questions, that would be most useful. Thank you once again. Okay. Thank you. Well, the first one we'll start with is what are your main risks going forward? And and maybe I'll direct that one to to Grant. Yep. Sure. So the main risks that the the company faces are we we outline some detail in our annual report. But the three key risks, I think, that that are worth highlighting now are, firstly, the risk of loss of a key commercial relationship or the early termination of a client's clinical trial. We've obviously felt the impact of this in the last six months as outlined in our market statements in March and April and obviously during this presentation. We operate in the clinical trials business within CNS, an area which has a very high failure rate in in terms of achieving new drug approvals.

54:28 As a result, there is always a risk, particularly with material client contracts, that a safety or efficacy failure of the drug may result in in an impact on our revenues. So our focus is really to continue to diversify our portfolio of clients and projects such that as we grow, no single client or project materially changes our prospects even across the short term. So that I say that's the key risk. Second risk would be that we operate in a highly regulated environment, and we must ensure we comply with data privacy and protection regulations. Any failure for us to do so results in substantial damage to the trust and relationships we've built up with our clients. So as a result, we continue to take very strong precautions over personal data, particularly client related data via pseudo pseudonymizing of data and receipts and having multiple layers of IT and other controls ensuring data protection requirements are integrated within our processing activities and practices.

55:20 And then thirdly, as wide has been widely publicized in recent weeks, the risk of cyber attack across all industries remains high, but the health sector particularly has been a focus of that. We've invested significantly in our IT infrastructure and security over the last couple of years, and and, of course, we'll continue to do so. Julia? Great. Thank you, Grant. So I'll I'll take the next question is, what are, your greatest opportunities going forward? So I'll I'll take that one. So as I highlighted, we've obviously got the the large neurological disease market, which we have less than 10% market share. So we feel there's, you know, a large opportunity is to keep on doing what we're doing bigger and better.

56:07 In particular, I highlighted Alzheimer's. That's that's the largest area that we see. And so developing the the new tools that that Robin mentioned and applying those into Alzheimer's, we think will give us a lot of growth opportunity. And then just touching on the point that the the risk elements that Grant talked to, clearly, we're able to deploy our technologies across a wider range of neurological diseases, that will diversify and derisk. And so, again, we've got a track record of being able to do that. And so those opportunities are out there, and we're very focused on capturing those opportunities and also at the same time diversifying the the risks that, are obviously out there in terms of developing new drugs.

56:58 So so really, those and you're lots of lots of runway for growth for what we do today. Longer term, as I said, we are looking at other new modalities such as the wearables technology that Robin referred to. That that is very exciting, but it's a longer play. We don't expect revenues in the near term, but we definitely feel that over the next four or five years, those are gonna be very significant markets, and we want to make sure that we're getting a a slice of that pie over the next four or five years. With that, maybe the next question I'll go to Robin, which is are there any new product services in your pipeline? Yeah. Thanks to you. Well, I I I think I've I've shown a couple of examples just now.

57:49 So clearly, in terms of analytics, there's a significant release coming up with the, the new AI platform that I've illustrated, And that that will immediately enable us to offer some specific biomarkers in some specific indications, but it will also form a foundation for more rapid innovation and more rapid prototyping and development. The other area, of course, is digital measurements. Julia just mentioned this, and I've also shown some examples. It's an area we're continuously working in. And the the the the focus there is is earlier at the moment, and a lot of it is around developing the evidence for specific measurements.

58:35 But we are also expecting new product releases, this gate measurement from restaurant devices that have shown us something we're expecting to go into production in the next twelve to eighteen months, for example. So these are the the the big trends, I would say, and these are the big areas in innovation we're focusing on. But then apart from those bigger topics, we are continuously developing new analysis solutions as new imaging options get available, maybe, I should say. So in in terms of MRI, we we have a continuous development of imaging sequences to enable us to essentially look at different things. And in PET imaging, we have new traces that enable us to measure new things as well.

59:27 And there's there are quite some releases we're planning to shorten there. So we have a new product release coming up in MRS. So spectroscopy of the brain with analysis solution for ASL, which is arterial spin labeling, which enables to look at perfusion in the brain. And we have some other techniques in in the fusion weighted imaging that that we've been able to measure take proxy of information, for example. So these are incremental solutions we're releasing as new imaging techniques mature. So and we certainly see that to continue over the over the coming periods.

1:00:16 Thank you, Robin. So we've got actually a very good and long list of questions that come in live. So I'm gonna jump to those. So the the the first one actually, director Grant, it's it's a question from from Simon c. Do you see g and a at 1,600,000 being stable, and how much cost, if any, do you have to add to grow revenues? Yep. Thanks, Julia. Thanks, Simon. So yes, in terms of our G and A spend, what you'll have seen over the last few years is that we've been bringing G and A spend down as a percentage of revenues year on year. The expectation that I've outlined earlier is that we would have a G and A spend for this year that would be in line with the G and A spend last year despite the fact that we've been growing.

1:01:14 And so I think our g and a, you you should look at as being sort of semi fixed in terms of it's the right level for the organization. It might go up a little bit, but but it essentially will it should continue to come down as a percentage of revenues. In terms of how much cost, if any, do we have to add to grow revenues, the answer is that we've done a lot of the investment that we needed to do to to deliver that over the last eighteen months. So we're actually now well positioned with our cost base to deliver increasing revenues from where we are today. A lot of the investments we're making are actually about the scalability that allows us to address a bigger market and making sure we have the cost base to deliver that. So I think we are well placed at the moment without having to to add material costs to deliver increases in revenue.

1:02:04 Great. Thank thank you. So next question from Lionel H, which I'll take. Does a lot of the contracts to your biggest client free up resources to focus on more profitable and diversified opportunities? So so the answer to that is, of course, it does free up resources, which we will in our diverse applying to other areas. However, not to more profitable things because the fact of the matter is that, a lot of the work that, we are doing there were the, very profitable data analytics that Grant referred to. So, and and that's why Grant made reference to the fact that, in terms of margins, you know, we we will anticipate some pressure on those margins.

1:02:51 So we will be redirecting those resources, and they will be able to allow us to pursue some of these diverse opportunities. But, of course, it'll take time for those to get to a point where they'll provide us with the margins that we were receiving from these very large contracts. Next one, I will let's have a look. Vivek s, and I will have an attempt at this one. Again, I'm a new shareholder. Please forgive the question. How will the development CRISPR gene editing m l r a mRNA approaches to pharmaceutical impact IXICO? Is this a threat or opportunity? So let me answer that. It'll be a pause it impacts IXICO positively in in the following ways. So I mentioned earlier about pharmaceutical industry's interest in new and diversified targets and new therapeutic approaches.

1:03:46 And and one of those is gene therapy. So, for example, in in Huntington's, which is a a hereditary disease, gene therapy is seen as a as a great way of not just treating the symptoms, but actually providing a potential cure because it it addresses the particular gene that is driving the the disease. And and so as a pharmaceutical looks to new gene therapies, it uses imaging as a way to monitor whether the gene therapy is having its desired effect. So in short, it's another tool in the toolkit for the pharmaceutical industry to identify new targets, which will drive and require more imaging and more analysis of images, which will, of course, drive demand for sort of services that IXICO provides.

1:04:40 Next question. Could you give me and this is from. Could you give me more detail on the Microsoft partnership and your thought on their recent AI acquisition? Grant, do you wanna have a go at that? Yep. So I think good question. So so the the real, attraction, I think, between ourselves and Microsoft was in terms of, obviously, we are redeveloping our data capture analysis platform using Microsoft Azure technology. Now that is absolutely in the sweet spot for for Microsoft in terms of their own strategy where they're investing heavily in the health care sector. What by bringing together the health sector in with with imaging and the AI capabilities that we have, this is something that they're very enthusiastic about and very interested in.

1:05:36 So they are providing us support through what they term black belt expertise where they're bringing in some of their their best Microsoft expertise to support us in the development and design of our platform. And that's very helpful for for us in terms of simply the the design and and the effectiveness design, also making sure it's as flexible as possible so that as we build the business, not only can we build that platform so it suits the requirements that we can see and know about today, but also allows us to adapt through microservices infrastructure technology to other data types as the business develops. And this really ties into some of the work that we're doing around wearables where wearable technology can also be and data can also be integrated into our platform as we as we move forward.

1:06:27 So, obviously, Microsoft as a whole, I'm I'm not specifically clear on on the particular AI acquisition you're you're talking to. Obviously, they've done a number of acquisitions, but they they this is an area that they're very interested in, and we we see the benefits of working with them. We've actually got a couple of other workshops with them in terms of a wide array of capabilities that we feel are gonna be very valuable to us. So so I it's probably the the the radiology business they recently announced they'd acquired. And and what I'd say there is, you know, a lot of over the next four or five years, we we do see that there's going to be the there's gonna be a crossover from that clinical trials into clinical practice. And, clearly, the the the market size is significantly larger in the, the clinical practice market.

1:07:18 And so I'm sure, Microsoft like Google and others are all looking at the the clinical practice market and the size of that market and wanting to deploy digital technologies to to relieve the burden on the on on the health care system. So from from our point of view, you know, we we we are doing things that are of of interest to Microsoft. We don't wanna get ahead of ourselves. So at the moment, it's early days, but, they're obviously a great partner for us to to work with, and they're obviously very, very keen to get more involved in health care. So, Grant, another question. Just a few questions on on m and a's as you would expect. I mentioned it. So just really in terms of how we're going to fund potential m and a, we'd I'll I'll I'll merge a couple of questions to make it easy. But how we fund m and a and also would be looking to smaller m and a or larger m and a, you know, that we could fund from within the, the balance sheet, you know, sort of thoughts on on those two aspects?

1:08:27 Yeah. So, I mean, it's it's a well, it's a it's a it's a slightly theoretical one to to to answer whilst, you know, until we have a a a clear clear target in place. But in terms of m and a, where the the balance sheet that we have built up, we have built up largely with a a a, if you like, addressing the organic market that we've identified. So we are clear that for our organic growth plans, we have the balance sheet to support that going forward. If and when we identify a suitable m and a opportunity, then looking at how to finance that will depend on the up the specifics of the opportunity that that it is. But that would be the time when it would be likely we would look to raise capital in the market to support that m and a. In terms of debt finance, you know, never say never, but at this point, it's not something that I think would be our first choice. It is something that we would definitely look at, but it's more likely to come from a capital raise, again, depending on on on scale.

1:09:31 So I think that's probably the best I can answer at the point this point. Yeah. Cool. I'll I'll ask another one just on m and a, then I'll hand one over to to Robin. So from Sam, you mentioned you're looking at partnership and or m and a over the next few years. Can you clarify if this will be only within CNS, or are you looking to diversify outside of CNS? So the other stance I would give there is that we are looking within CNS, as I said, because we all the all the the reasons that we've we've highlighted, one of the key things that we bring is client access as well as our technology and our our deep heritage in the space, and there's a lot of value to that, both for our clients and also potential partners. So so that's why why we you know, it's highly likely to be within CNS.

1:10:22 Again, on the basis of never say never, however, if there is a very nice business, that is in imaging but outside of CNS, but we see a lot of synergistic opportunities in terms of client access or geographic reach, then, obviously, we'll we'll pass our slide rule over it, and we'll take a look at it. And if it's a good business that we think we can that can be accretive to us and that we can scale, then, I think we'd look at it, seriously. So that's that's my, honest, honest answer to to that question. And then one for Robin. Robin, a little bit commercial, but I think, it also touches to, you know, why we think our products are good. So if you have less than 10% market share, how are your clients fulfilling their analytical requirements?

1:11:14 In particular, how many use competitors, who are the biggest ones, and how much is performed in house? Yeah. Thanks. So so maybe the one thing to to keep in mind before going into detail is that in some of the rare indications in particular, the market share is certainly higher than 10%. I think we put numbers out. But if we use some of the the rare indications, think they illustrate quite well how we're approaching it, which is that we're going with specific analytical technologies in the early stage, and that's where we differentiate most, at the moment. And then if the the, the trials are successful, we we expect those those clients to transition with us into the later stages and to take some of this analytics forward. So that's an opportunity for us to get into late stage trials.

1:12:12 In terms of the overall market share, that obviously is is heavily impacted by these latest stage trials, which often are run by competitors, we we we should say. And where often the focus is on is on the the delivery and the more operational CRO services as opposed to the specific analytical services we provide. We do see an opportunity though to get more into those late stage trials by positioning our services in in earlier stages and then move through the stages with the pharmaceutical clients. Excellent. Thank you very much. And then, I've got a a question again from.

1:12:59 How will you prevent culture change in the business from m and a? So, again, it's a a generic point, but an important one, obviously. So I actually take that question with there's an inference there that we have a a good culture in IXICO, so I appreciate that. That's the the intention because we've obviously worked very hard in recent years to create a professional organization with a very clear stated purpose of helping medicines come to market sooner across neurological disease where there's a very high unmet medical need. That's important to us as as a as a company, as individuals. We've laid out very clear values that we demonstrate in our organization to to demonstrate every day and and it's clearly demonstrated through the pandemic period.

1:13:51 And, also, we're we're very focused on our clients, and, you know, we continuously look to to do what we do better for our clients. So these are all the cultural aspects that are important to us. You know, we've got many people in the organization, including myself, that have acquired businesses and recognize the importance of culture. So we'll be working very hard to make sure any acquisitions fit our culture, and our culture will be one that will be very client centric and focused on delivering sustained long term growth for our shareholders. I'm just going to cut across just because I think you've addressed all the questions that have come in from investors during the live meeting.

1:14:36 So thank you to those investors that submitted those questions and, of course, to the management team for being so generous with your time as we've minutes through the close of the meeting. Judo, perhaps I could just briefly hand back to you just a few closing comments. And then I know investor feedback is important, and I will redirect them to provide their thoughts and expectations. Sure. Well, thank you. Well, again, I mean, first and foremost, from our side, I want to thank everybody for making time in your busy schedules to to join this presentation. I hope you've gotten what you wanted from it and that you have a good insight into IXICO and go away with a good feeling about what we've achieved over the past four years. And again, we look forward and appreciate your sustained support in the coming years. So thank you.

1:15:24 Giulio, Grant, Robin, thank you once again for updating investors today. Please, could I ask investors not to close this session as we'll now automatically redirect you for the opportunity 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 and is greatly valued by the company. On behalf of the management team of IXICO PLC, we'd like to thank you very much for attending today's presentation. That now concludes today's session, and good afternoon to you all. Thanks once again.