Physiomics (LSE:PYC) — Business Update

0:03 Good afternoon, ladies and gentlemen. Welcome to the PHYSIOMICS business update presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time using the Q and A tab. Just situated on the right hand corner of your screen, 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, company can review your questions submitted today and will publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. And if you give that your kind attention, I'm sure the company will be most grateful. And I'd now like to hand over to CEO, Jim Mellon. Good afternoon. Thank you very much, and welcome to a company update for PHYSIOMICS on Friday, November 17, which I'll be doing together with my colleague, doctor Pete Sargent. So what we'll cover today is, just a brief introduction.

0:54 Pete's gonna speak mainly to the slides on our core business. I'll provide a brief update on the precision medicine initiative, especially in light of the recent grant award that was announced, just very recently. Say a few words about the biostatistics initiative that we've also flagged recently, and then we will go to a summary and the questions both the questions that were submitted before, but also any that that that you guys might want to ask over the course of the meeting. And, obviously, we'll not be able to answer absolutely everyone, but I'll do my best to get through as many as possible as usual. So, you know, first of all, just a a few words of welcome to to Pete.

1:42 You know, obviously, for for a little while now, I've been acting as CEO and chairman, and it is great to have Pete on board. He's an extremely experienced consultant, and we'll be able to take some of the weight off my shoulders in terms of the, day to day, operational aspects of running the business, comes with a wealth of very relevant experience and is already proving his worth within the company. Also, just to note, as announced fairly recently that we've we've moved office from the Oxford Science Park to Bee House. There is nothing sort of sinister in this. We simply needed a more flexible working environment, as many other companies. You know, we're not not everybody is in the office every day, and we wanted a space that we could flex up or down depending on the number of people, and and that will actually, you know, lead to a

2:34 a a fairly material cost saving for us over the course of of each year that we stay here. So, it's been a good move so far, and, you know, we will be holding our AGM here next week as, as we've also announced. So I'm gonna hand over now to, doctor Pete Sargent, and I will be back in three or four slides time. Thank you, Jim. So, as Jim said, so my name is Peter Sargent, and I joined just over two, and a half months ago as the new COO. So just a bit about my my background before I start, giving an update. So I have a PhD in biochemistry and biophysics. Since then, I've worked in a number of different, roles across both industry and government organizations, leading r and d and, commercial teams.

3:32 Just to give you a flavor for the the last two roles I I worked, I I I took part in. So the I was head of business development for the National Institute for Health Research while supporting a wide variety of life science organizations from around the world, access research capabilities and and and facilities and infrastructure here in The UK as well as funding. And then prior to joining, PHYSIOMICS, I was working for seniors health consulting as a strategic, strategy consultant, management consultant, primarily focused on supporting biopharma, starts emerging to top tier biopharma with r and d strategy and, large scale transformation projects.

4:19 So it's a a pleasure being here today and, having this opportunity to, to take part in this, company update and, present to you all online. So, to start, just as a reminder around, who we are as PHYSIOMICS, so we are primarily a consultancy business focused around supporting companies developing oncology therapeutics with mathematical modeling. The I'll go into a bit more detail on what that service that core service ultimately looks like. But over the the years when developing the business and growing the business, we grew the the business on a foundation of three main capabilities and expertise.

5:08 The first one, as shown in this slide, is around quantitative pharmacology. So this is around looking at how drugs behave and interact within biological systems, so kind of mainly humans or animal models. Data sciences and biostats. So this is the ability to be able to curate and analyze large and complex datasets datasets and derive insights from those datasets, and then our understanding in cancer biology. So now having worked on as a business on over a 100 client projects and modeled over a 125 models for clients, we're looking at how we can grow and add value to the business leveraging these capabilities.

5:55 So as you can see here, we've been exploring new services around biostatistics and also precision medicine. So over the next few slides, I will give an update, as Jim mentioned, around the core mathematical modeling service. And then I'll pass back to to Jim regarding an update on precision medicine and and bar stats.

6:18 So to focus in on the core mathematical modeling service. So as a reminder, this is a service we use to support clients gather additional insight from their r and d data or data derived from the the public domain. That really enables them to kind of better design their r and d programs and meet the kind of increasing regulatory requirements. So we do this by leveraging a a wide range of tools and models, including kind of industry standard tools, bespoke models which we design and develop for our clients, and also our proprietary tools such as the virtual tumor models, really to analyze this data and derive these insights.

7:05 As I mentioned in the previous slide, our primary focus has been to date around oncology. However, a lot of these techniques and tools can be applied to a wide range of, therapeutic areas and drug modalities, and, this is something which we'd be we're we're keen to explore further going forward. And just as an example there, out of a a recent conference we attended, we have been speaking initial had an initial conversations with clients in both the neurological space and also kind of immunological space. So we are exploring opportunities in in a a a different kind of subset of of clients.

7:49 So talking about our breadth of service with our clients. So we can support companies across the r and d continuum from as far upstream as as discovery right through to kind of translation into the into the clinic. I won't go through each of these points in any detail. I think the slide is probably self explanatory to that extent. But I just wanted to highlight, I guess, three main areas in which we support our clients with. The first area is around supporting clients, gather deeper insights, and generating predictions around their behavior of the drug, which they can then take to investors to support an investment discussions, which is obviously particularly important for those companies looking to raise funds or or out license their their drugs.

8:45 The second area is really around supporting our clients in regulatory activities, such as kind of I and d, CTA submissions and applications, and generating the required data to ensure that those those applications and submissions are are successful. And the third area is to support our clients around to help them gain deeper insights to support r and d decisions. So how can they make smarter decisions and accelerate their r and d programs?

9:20 So where are we with our core business and kind of the success we've had so far? So over the last year, we've had a concerted effort in our business development and marketing activities. We have attended some key international and local events whilst kind of leveraging a range of different marketing strategies to really help kind of gather momentum in that pipeline. As an example of some of the events, last week, myself and our head of business development attended Bayer Europe in Munich where we had the opportunity to meet over 25 potential clients, some existing clients, and it's gonna continue and and and building our relationships with them. But they but the event yielded some some new opportunities as well, some new some new leads.

10:15 And then prior to that, I think back in September, a few of my other colleagues attended the EORTC ACI EO EORTC event in Boston, which, again, was successful and and enabled us to present some of the work we did with the previous client, so post the presentation, and also meet some new clients. So these this kind of emphasis on business development and marketing and and getting out there, meeting customers face to face is is certainly yielding, you know, positive momentum in our pipeline. And we've just put some numbers here to give you an example of of where we are as of this week. So looking at our pipeline from a high level perspective, we are currently actively pursuing 36 leads.

11:09 What I mean by leads is very early discussions we've had with clients where there's a a positive outcome and the client is keen to engage in in further conversation. There was 19 active opportunities within our pipeline. So this is, I guess, the next stage down whereby there's a specific kind of project or or kind of opportunity identified with the client, and we are continuing discussions with that. Based on those 19 opportunities, out of those 19 opportunities, five are at the proposal stage. So that is where either a proposal is being drafted up or is with the client and under review.

11:57 I must emphasize, obviously, this is just a snapshot of our pipeline. So, you know, as I'm sure you're you're all aware, there is a natural attrition rate. Unfortunately, not all of those 19 opportunities will land as a contracted project. But hopefully, you know, we will be able to kind of progress, you know, a few of those and deliver those into the business as contracts in the near term. When you're looking at the mix of those opportunities, the types of clients, repeat versus new, I think there's a healthy mix there, about 50 approximately fifty fifty repeat new. I think the repeat shows to me that, you know, the clients we are currently engaging with and and have delivered projects for are are happy, and and they see the value of our work to the extent that they want to reengage with us. So I think that that is that is a good story.

12:55 I think the then but then having a a flow of new opportunities in the business is obviously good for growing our pipeline and and our revenue whilst trying to derisk the the pipeline at the same time. So not relying too heavily on one or two companies bringing in new clients into the into the business. So at the moment, the value of our pipeline as stated here, so this is a a nonrisk adjusted pipeline, is approximately the 1,000,000, mark. But, again, you know, I must reemphasize that, you know, these opportunities, there are natural attrition. So, some of these will drop away, but, with the continued business development efforts, we'll then be able to refill the pipe at the at the top end to ensure that there is a continued kind of flow of opportunities.

13:50 So how that pipeline is translating into projects. So to date, at this point in time, there are nine active con or nine contracted projects currently being worked on, and they include the three which we announced back in August, so Bicycle, Newmab, and Merck. Out of these nine projects, seven are currently active and two awaiting data and on hold. I must say at this point that it is quite normal for projects to have these kind of natural pauses. Because quite often when we run a project, we will create models based on available data at that time, and then we need to have a pause whilst our clients then generates the next lot of data to be fed into the model.

14:43 If you look at those nine projects, they are made up of five companies. Three of them I mentioned before, and their logos are in slide here. So I think it's, you know, it's a nice mix of, you know, large pharma and some kind of emerging kind of mid tier mid tier biopharma.

15:03 And then two, our research institutes, so one being CI UK. So, you know, hopefully, you can see there's a a nice mix of clients there. So the last slide I wanted to touch on before passing back to Jim is really kind of thinking about the future of core business. I think, you know, looking at, I guess, market trends and and the kind of the pressures on on the market, I think, you know, we can all see that the the the volume and complexity of r and d data being generated in drug development programs is is ever increasing. And at the same time, there is kind of increasing pressures from regulatory bodies for companies to utilize that extra data, the the the the breadth of the data using tools such as mathematical modeling.

15:57 And the FDA's kind of initiative around project optima just just highlights that. So our focus going forward is to continue to grow and diversify our our client base, you know, making sure that we don't rely too heavily on on one or two clients and keep on bringing in new clients to kind of grow the business. We will focus on broadening our kind of focus to other therapeutic areas and drug modalities. An example of that I mentioned around early on in my slides in the neurological space. We're also speaking to a company with advanced therapies at the moment, advanced therapy at the moment. So again, looking at how we can support different drug modalities.

16:50 We will continue increasing efforts in our BD and marketing. I think one of the challenges we have as a a business is around messaging. We have a quite a complicated offering and been able to communicate that offering effectively to a wider audience can be challenging off often. So we're gonna be working on that. We're looking at how we can reach into both the the markets we've currently been working in, so things like Europe and and the East Coast, but look at kind of new markets, leveraging some of the organizations across The UK to help us enter into those markets. And we'll obviously keep a momentum around kind of events, presentations, and publications. So just to kind of finish off, I think there's a couple of other areas. There's one area which we are keen to explore in more detail going forward is is how we can leverage partnerships with other service providers to reach out to new clients.

17:50 And, also, underpinning all that kind of almost outward facing, client facing activity is how we continue to strengthen our operations, so ensuring that we deliver excellence and build new capabilities, which will put us in good stead for the future. So based on that, I will pass back to Jim. Thank you very much. Thank you very much indeed, Pete. So just picking up where Pete left off. Just talk a little bit about an update on the precision medicine initiative. As you all know, that the story is to date is that we've developed a tool supported by some Innovate UK and NIHR funding, completed an initial observational clinical study down in Portsmouth called PARTNER, which reported out at the well, last Christmas, which basically confirmed the ability of the tool to model the timing and extent of neutropenia following chemotherapy and specifically docetaxel in prostate cancer.

19:01 We did identify that in order to make the tool work optimally, it requires some additional, very simple, but additional blood tests over and beyond what would normally be included in standard of of care, and that that was potentially, you know, a challenge for the commercialization of the of the tool. So we started looking for solutions to that problem. And again, as announced earlier this year, we entered into a partnership with Beyond Blood Diagnostics, which is a small company like ourselves, which is developing a a device based technology to be able to do the sort of blood tests that are normally done in a hospital, in a primary care setting, and possibly even in a patient's own home.

19:50 So that, you know, that partnership has now progressed to a grant, and I'll come on to talk about that just momentarily. The other, you know, piece of feedback that we got from the work we've done in personalized medicine to date is that, although it's great to be able to predict neutropenia, what would be even more interesting and potentially more commercially valuable would be to be able to predict utility of a particular expensive biological drug called G CSF, which is used to counteract that neutropenia and is currently used in a somewhat empirical fashion, so a little bit blindly by clinicians. If they're worried about perhaps an elderly frail patient, who they don't wanna get neutropenic and become ill, they might, almost prophylactically prescribe them this, this biological drug.

20:45 But we know that, you know, it's probably being overused, and any guidance that could be provided to clinicians as to, you know, when would be the right circumstances to use it and when not could potentially be valuable in terms of optimizing its use and, you know, potentially saving money and health care resources for for for payers. So the upshot of all of that was that we got together with Beyond Blood and with a new clinical partner, Blackpool Hospitals Foundation NHS Trust, I believe they're called, to give them their full title. And we made a grant a application to a call that was jointly organized by Innovate UK and and and OSF.

21:35 And we, you know, we were very pleased to recently announce that we were awarded that grant to conduct a further trial called predict on up in Blackpool, and that will focus more specifically on trying to optimize the tool to incorporate, consideration of G CSF with the objective of of, you know, coming up with a tool that can actually help to make some recommendations, that will optimize the use of of the product. So it will help to advise clinicians when it will be right or not right for an individual patient. It's a substantial project. So, you know, the total project cost between all of the partners is over £500,000.

22:21 So, you know, that makes it by far the biggest such project that we've been involved with. We, as part of the project, will receive a £137,000, which is 70% of our total costs. Our total cost being more in the region of about 170 odd thousand pounds. But just to note, because there were a couple of questions on this, that that that isn't a a cash cost to us. That's that's really the cost of our staff who will be working on the project. If you wanna look at it I mean, the way I look at it is it's effectively a subsidy to the employment of people, most of whom we're already employing anyway. And another way to look at it is that if we wanted to do this and we didn't have the grant, then we would have to fully fund it ourselves. So either way, I think it's it's really good news.

23:08 We're really excited about this project, we're already starting to work with with both Beyond Blood and with Blackpool to scope out that clinical trial, which we hope will will start next year. Another question that I had, and I know I'm kinda preempting the q and a, was, well, does that mean we won't hear anything until October 2025? You know, we will obviously be able to provide you with interim updates on things such as, you know, when the protocol gets approved, when we start to recruit patients, and so on and so forth just as we did with the partner study. Obviously, the most interesting stuff does come at the end. But in the meantime, we continue, to have a a relationship with with Beyond Blood and also sorry, with in The US.

23:58 So we have, you know, ongoing discussions with them and also are exploring other potential uses of the tool in its current form. But we do think that that this project is particularly exciting because it precisely addresses the two main potential, you know, impediments to making this work. One of which was, you know, well, my patients have to come back to hospital, and I don't necessarily want to do that, or they don't necessarily want to do that. Well, potentially, with a tool such as the one that Beyond Blood is developing, they won't need to go back to hospital. They can go to their GP clinic. They can have someone come around in a in a in a mobile unit and and and do the test. And, ultimately, the hope is, excuse me, that they can even do that test at home.

24:45 And then the second, you know, factor that that we're we're we're aiming to focus on here is is the use of G CSF. So I think this grant project nicely addresses both of those. So that's all I was gonna say on that for the time being. I will check the q and a at the end and and just see if there are any other specific questions. But as I said, very excited to be embarking on this further project. Then just to say a little bit about biostatistics, some people call this biometrics, by the way. So if you see the word biometrics, then you can you can read it as biostatistics and vice versa. You know, it it does comprise a number of different activities within a typical sort of r and d process.

25:34 So there are elements of biostatistics involved in in the design of studies, in the analysis of the data that comes out of studies, in the management of that data, and then the reporting of the results to regulatory authorities. We already do a small amount of what you might call biostatistics work in the you know, with some of our clients, we do support the statistical design of their phase one studies in parallel with the modeling projects that we do. And it was that for that reason that we felt, you know, hey. We already have some overlap here with with the field of biostatistics. So why not push that envelope a little bit and and see if we can get maybe some more projects in that area, perhaps projects that that combine modeling and and by and trial design.

26:23 But, also, perhaps, you know, maybe we can get some projects that that focus exclusively on trial design, also on analysis and reporting. So I think in all of these areas, we do have strong existing capabilities that can be leveraged in order to work more specifically on projects of this nature. In order to, you know, get us going on that, we made an external recruitment, which was also announced recently. You know, it it's clearly gonna take a little bit of time to set up and and get our feet under the table in this new area. Although, you know, we do have the advantage that we can go to a number of existing clients who we know already use these sorts of services and start to talk to them about about that. So we're we're not starting completely from a standing start.

27:11 You know, I think in this first year of of of the services operation, it will be a modest net investment, although we do expect to see some revenues. And when they come in, we will announce them. And then we hope that from its second full year of operation onwards that it would be a net contributor towards, you know, in in terms of cash and profitability. So that's our objective, and we will revisit that. As I said, it's early days at the moment, but we'll revisit that as soon as we're able to give you an update on on progress.

27:48 So, you know, just to summarize, you know, we remain confident that we have, you know, very solid foundations in the core modeling business. I won't repeat everything that I said in my April update, but, you know, clearly, we had a a difficult year last financial year as a result of a reduction in the volume of work that came from our our largest client, Merck, and also, unfortunately, from the, you know, delaying or cancellation of of two large projects just as was announced, I think, in April this year. However, you know, the business development marketing teams have done a fantastic job to help us diversify our client base such that we've moved from being, you know, I think we said about 85% Merck in 2019 financial year to being, you know, less than 40% in the financial year, which has just gone. So, you know, we have really worked hard to build up our, you know, non Merck client base. That's mainly small and medium sized biotech businesses.

28:48 And that client base continues to grow, and and that's evidenced in in the pipeline, which Pete talked a little bit about earlier and which we also talked a little bit about in in our full year results announcement. So I think we've already covered the, you know, the increased business development, marketing efforts there. We continue to get very positive feedback. So we do have a lot of repeat business, and and I think that's a testament to the fact that the team does a good job and that the, you know, the insights that we generate are are highly valued by the the clients that we work with. They're also very willing to do, you know, thought leadership activities such as, you know, joint poster presentations like the one at URTC in Boston that that Pete mentioned, but also joint publications. And we're currently working on two publications, full, you know, peer review publications with with clients. Obviously, you know, they haven't yet been submitted, so we we we we can't guarantee that they'll get published at this point. But, you know, we we you know, we're we're substantially quite a long way through developing those two.

29:55 And there's another one that might come out of the last partner study as well. So, you know, we're very pleased that we're doing more in terms of getting thought leadership out there. Also, on the social media front, you will have noticed that we've, you know, we've started to to push out a regular newsletter to to clients. And that's also, you know, generated a lot of heightened awareness of our abilities and and think that will help us in our marketing drive as well. Precision medicine, you know, we're very excited about. I won't repeat everything that I've said, but, you know, that there is a a substantial contribution towards the cost of that project in terms of cash, 137,000 over a couple of years. I think about 40 of that will probably be in the current financial year, just for your information.

30:44 But that's, you know, that that that's that's very substantial. The other thing I forgot to mention about that, of course, is that, in the last NIHR funded grant for partner, I think of the 130,000 odd value of the project, you know, more than half of that went to Portsmouth to pay for the trial. In this case, you'll notice that the the the NHS trust, which is which is actually doing the trial, is a partner in the grant. And so there's a £100,000 going directly to Blackpool to pay for that study. So the entirety of the of the £137,000 subsidy to PHYSIOMICS is coming to PHYSIOMICS and not then going back out of the door to to a third party. So in in fact, it's, you know, the value that we're getting out of that grant is really the £137,000 to PHYSIOMICS plus the the $100 to to Blackpool in in terms of, you know, it pays for the study that's gonna generate the data that we need. So it it's it's even, I think, slightly better picture than than perhaps I originally painted.

31:55 And then finally, you know, the the new services line in terms of biostats and then potentially other related areas in future, we also see as a as a material growth driver going forwards. So I think with that said, I will move across to the questions. I'll start with the questions that came in prior to and in the lead up to this meeting, and then I'll take a look at the chat room and see if there are other questions that may not already have been addressed. And if there are, and if we can answer them, then we'll we'll go to those as well. So please bear with me. So we obviously had some questions about the last raise, and I I apologize that we felt that that was what was in the best interest of the company in the summer.

32:48 As I've mentioned already, you know, we had a difficult year for a combination of reasons partly because of of Merck significantly reducing its, you know, its outsourcing to to all players in the outsourcing business. Right? So it wasn't a PHYSIOMICS specific phenomenon. It was simply a decision that was made and very publicly announced by that large company at the beginning of this calendar year. And then secondly, there were two large projects, which, you know, we thought we've got, you know, 99% of the way to the finish post, but which then, you know, were pushed out. And, unfortunately, you know, they haven't come back yet, but, know, the team's done a great job in replacing those in the pipeline, and, you know, you know, the the pipeline still looks very strong even without those two projects. Those two projects may yet come back, by the way, but they're not canceled. They're just delayed at this point.

33:42 So, you know, as when they come back, then we'll add them back into the pipeline. So, yeah, I mean, all I can really say about the raise is that, you know, the board felt it was the the right thing to do. You know, obviously, we apologize that there was a negative financial impact on existing shareholders. You know, we all also a number of the senior executive team, existing shareholders, and we were also impacted, so it wasn't a decision that we took lightly. There are I'll just acknowledge this, but, you know, without being able to answer it, you know, there were a number of questions as there always are about, you know, why specific executives or board members or combinations of of of the above, you know, don't buy shares or shouldn't or don't buy more shares than they have been buying.

34:30 You know? Well, for a start, I can't comment. And if we were intending to buy shares, then clearly, wouldn't be able to tell you for for for market reasons. But I can only repeat what I've said before, which is that, you know, the board doesn't have a a, you know, a policy on whether directors should, you know, buy shares. It's up to individual directors. You know, we're not biotech millionaires at this point in time. You know, we we we work hard for modest salaries in order to support the business. We make share purchases where we feel that we we are able to, and we will, you know, continue to to do that, I'm sure, going forwards. But, you know, we can't make any specific commitments, and I'm I'm sure you would understand that. So there's a question about our contact with DoseMe.

35:19 And I think I addressed this a little bit in in the slide that I spoke to on personalized medicine. I think, you know, DoseMe has been a really critically important relationship for us for, you know, for two reasons because it really enabled us to kind of market test the offering that you know, as it as it stood, you know, up to this point in time. And it gave us a couple of critical pieces of feedback, which we are addressing. The first piece of feedback and I'm only really gonna repeat what I said earlier. The first piece of feedback is that having patients come back in for multiple additional blood tests, you know, is likely to be problematic for some institutions and patients.

36:04 So, you know, that's what led us to cast around to look for, you know, opportunities such as that with Beyond Blood whereby, you know, we can partner with an entity which has a tool, which could, you know, remove the need for those patients to come back into hospital. And and that would, you know, make it far, far easier to get those tests and would really facilitate the, you know, the utilization of of the tool as it stands. And then the second really helpful feedback that we got from that relationship up to this point in time was, you know, to maybe consider focusing on GCSF. So we've, you know, we've really absorbed that both of those pieces of feedback, and we are you know, they're both of them integrated into the most recent grant project, and we're also thinking about other ways in which we can address that.

36:53 We are still in in touch with with DoseMe, and, you know, we're exploring, you know, other things that we can do with them in the meantime As and when we, you know, we we we reach any, you know, material conclusions with those discussions, then we will, you know, we will we will let you guys know.

37:14 So next question. So there was a question on the grant funding and the nature of the subsidy, which I think I've addressed. So, you know, as many of you will be aware, Innovate UK grant funds provide 70% funding to SMEs. It's actually less to bigger companies. I think it's 50% to bigger companies. On the other hand, an HR funding, which was the source of the I four I, you know, partner funding that that paid for the partner study, is a 100% funded. So there's a range there. The innovators at 70%. So if the project's costing a $100, for example, then you get 70. However, as I pointed out earlier, for PHYSIOMICS, you know, those costs are primarily staff costs.

38:02 So to some extent, there are already some costs, and, you know, we consider this a nice deal. So it's a it's a heavy subsidy of of people who are already working for the company for the most part in order that they can work on a project that we think would be quite value adding. So I think that's that that's all there is to say about that. The house, there was a question about the move. Was it because of cost hybrid working or the awful roadwork in Oxford? So it wasn't it wasn't specifically the roads around Oxford, although people do complain about them.

38:37 As I said earlier, it's primarily around hybrid working. So there is far more flexible working space in in our new location. And, you know, obviously, because not everyone in the company comes into the office every day, we didn't wanna be paying for office space that we weren't using the whole time. So, you know, I think from memory, it's gonna save us 30 to £35,000 a year, something in that order of magnitude in terms of office, you know, office space that we were paying for but not utilizing before. And, clearly, that's a material amount of money, and and we we, you know, we wanted to try and capture that. We we believe you know, we've only been in here a month or so, but so we will obviously run a slide rule over this after twelve months, see what the actual cost savings were, but I think that's what was projected.

39:24 There was an interesting question about the Horizon program. So as many of you probably know, the Horizon program was was basically a a a series of grant funded programs that you could apply for that were administered by a European central European entity, but where, you know, participants from The UK could apply for grants. During the Brexit process, we were excluded from from from that program, but fairly recently, you know, it's we've renegotiated our way back in. We look. We we do horizon scanning on potential grant projects all the time. You know, we have a it's a standing item at our board that we review potential upcoming grant calls.

40:11 That's obviously what led to the recently announced grant. But now that Horizon is is back in play for UK participants, we'll obviously, you know, include that as well. I would just say that the, you know, the Horizon program grants tend to be extremely competitive, and, obviously, they're open to every single European country. So, you know, 400,000,000 people will have however many is now. Whereas Innovate and NIHR are, you know, restricted to to, you know, lead applicants from The UK. So and we've had a a very strong track record of success with those UK based grants, but we will certainly, you know, consider Horizon program grants in future as well. There were some questions about AI. You know, as I think I've noted before, I think AI is is kind of a little bit overused.

41:02 I do see a lot of companies using AI in a very fast and loose way, you know, in order to try and get people excited about what they do. And when you dig into some of these companies, it's kinda hard to see really what they're doing and and and how AI is adding value. But, of course, you know, AI is the future. It's on the news almost every day at the moment. And as I think I've also mentioned before, you know, there are some AI type techniques. I mean, AI isn't a thing. Right? So it's a it's a bundle of techniques and capabilities. Machine learning is one of those, and we do use that in our data analysis already. In particular, I think with the personalized dosing initiative, we've used, machine learning and even a little bit of neural networks in order to analyze both data from the public domain, but also data that's coming out of our our studies in order to reach the the insights that we have in that area. So we'll continue to use that. And and where we can flag that to the outside world, then then we will do.

42:10 But I don't wanna get to the place where we're kind of saying AI AI just because it's a buzzword. I don't think that that's that's the right way to go, but, you know, we do use AI capabilities in order to analyze, you know, some of the datasets and in order to generate some of the models that we do generate. There is a question about the grant again in relation to do we have enough people to work on it? Are we prioritizing it, or or are we gonna are we running alongside other projects? So, yeah, I mean, the the short answer to this is is yes. We have enough people because we have a number of external consultants who we can flex up and down.

42:55 So we will lean to some extent on them. And then, you know, we always have some spare capacity internally as well. And so this is a great way to soak up that spare capacity. So, you know, obviously, from one month to the next, you might have a busy month. You might have a month where people have, you know, some some spare time. And where we've got grant work that's gonna have to be delivered over an extended period of time, we can basically then, you know, soak up some of that spare capacity with the the grant funded work. So this is why I say, you know, it it doesn't if you use if if if you run the if you if you deliver the grant in that way, then it's actually helping to subsidize the spare capacity rather than an activity which costs us more than if we didn't do it at all even even though that subsidy is only 70% of the time that people spend.

43:50 If they would otherwise be doing activities that, you know, don't necessarily bring in you know, may add value such as doing publications, but don't necessarily bring in cash. If instead they do grant work, then two thirds of their time is reimbursed. So, you know, that's the way I look at it. And, you know, I I think it's a it's a real positive for us over the next year or two. It may be, you know, if things get busy, you know, in aggregate across both our commercial projects and our grant projects that we need to bring someone else in. You know, we have hired several new team members on the technical side over the course of the last twelve to eighteen months, and we keep that under constant review. So, you know, in answer to the other part of this question, you know, the the grant project will very definitely run-in parallel with with other things that we're doing.

44:38 We will look in aggregate at the workload across both the grant project and all other projects we're doing, whether that be precision medicine, you know, bio stats, or core business. And as and when we see crunches coming up, if we think they're gonna be sustained and represent, you know, a a genuine long term growth of the company, then we hire new people in order to make sure that we can service that business. There was a question about so someone found a a publication that was based on a neutropenia model that looked a little bit like the one that we've been developing in our precision dosing project. I'll see if I can I can I can share that with you guys somehow? But, I mean, at the end of the day, you know, looking at at neutropenia is not a completely new activity.

45:32 I think the angle that we have on it is novel. And the other thing is we've made it actionable for for clinicians. So, you know, there's quite a bit of academic literature around this. But as far as I'm aware, you know, there are very, very few companies that who who are actually generating tools that is not designed for, and in fact, in our case, have already been implemented on on on the DaceMe platform that could potentially be used, you know, in the very near term by clinicians once they're approved for use. So, you know, we're really coming at this from the perspective of wanting to develop tools which are you know, can be used in practice rather than are just sort of academic exercises. There's a question about the pipeline and conversion rates. So we can't really talk about conversion rates because, you know, I think the level of detail in which we've described our pipeline is feels appropriate to me at this point in time.

46:32 You know, as Pete highlighted earlier, you know, there's a million pounds worth of potential projects that could start in this financial year in the pipeline at the moment. You know, that's a fact. Clearly, you know, not all of those are gonna turn into projects at the end of the day. So, you know, at the end of the day, our our our revenues are gonna be everything that's committed up to this and contracted up to this point in time, plus whatever we can convert out of that that million. I would say that we're trading in line with expectations. Obviously, if we weren't, I you know, we we would have put out notice. So, you know, at the moment, you know, we're we're aiming to hit the numbers that are out there for us. If we have a very high conversion of that pipeline and things are looking, you know, really hot later in the year, then then, of course, we will, you know, we'll let people know if the expectation is that we're gonna beat projections by, you know, by more than 10%, for example.

47:25 But at the moment, I, you know, I don't think I can say more about specifically about conversion rates, which which vary a lot from project to project in in all honesty in any case. But I'm glad that, you know, by contrast with, you know, a few years ago when we didn't have enough projects in our pipeline to be able to do this sort of analysis, at least now we do have a substantial pipeline which we can quantify both in terms of number of opportunities and and and total value, and and we'll try and keep you updated on that periodically. Okay. Let me try and accelerate a little bit just in the interest of time and focus on questions that we haven't all that haven't already been addressed.

48:12 So there's question on Merck. I mean, obviously, Merck's important. Someone said, you know, they thought the Merck MSA had gone. That's that's not really true. We still have a master services agreement in place with Merck. It never specified how much business they would do each year. It was more an umbrella agreement that on which you could hang individual projects. So it's always been the case that we've negotiated on a year by year basis with Merck as to as to what business they're gonna do. As you know and as was announced a couple of years ago, they switched from an upfront, you know, forward looking commitment at the beginning of every year more to drip feeding us projects over the course of the year. And then at the beginning of this year, you know, there was the further event that that they, you know, significantly reduced their outsourcing.

49:00 So, you know, I think we said in our April announcement that Merck was gonna represent less than 40% of of the last financial year's revenues, and that's about right. So, I mean, you can do the math, but it was a little bit less than 40% of last year's revenues. I can't say what it would be this year, but, obviously, you know, we still have a relationship with them. We have several Merck projects ongoing at this point in time. They remain you know, we remain in very close contact with them. And as you can imagine, we're doing everything we can to try and get as much business out of them as possible. I think I've talked about BioStats. So there was a question on on well, actually, there there was a question about about whether the BioStats employee that we have have have brought in will work by himself or other team members.

49:52 So there are other our other team members with Biostats experience, so we can draw on them to some extent. Doctor Pucci can also run projects by himself potentially, and we can also contract with people externally if if we need to. So we have a, you know, we have a pool of results that we can draw on. Obviously, you know, once we have a steady stream of business, then we would plan to expand that team with more full time, you know, in house employees. Pete, there's a question for you. Pete, there was a question that said, where does doctor Sergeant see the priorities right now? You know? And and, you know, how does he think he's gonna be help able to help support those. So Yeah. And I can answer that. Yeah. Apologies for the coughing as well. I was trying to avoid avoid that.

50:41 No. So I I see the business my the prior my priorities as well as getting up to speed. You know? Again, I've only been here for just over two months, but I think my priorities are around ensuring that we continue with the momentum, the good positive momentum with our pipeline for our core business model. And that was why I I went out to Munich to buy Europe last week with our head of business development, really provided her more support in in how we approach our business development and marketing efforts and, like, kind of the messaging we we have for our clients. The second lead to that so the second lead to that is also supporting Venkata and and the rest of the team in setting up the bar stats service.

51:28 I think, you know, those those two are the the key areas for me going forward. But I I guess I think there's one other question that was around how I felt things were going so far and what was my first impressions of the company. I I you know, I've been very happy joining PHYSIOMICS. I think it's a great team, You know, speaking to some of our more technical folk, I've certainly got a lot to learn from them. They are very smart and knowledgeable individuals. And I think, you know, looking at the market and where kind of regulators are pushing drug development companies towards and kind of the pressures drug development companies are under, I think there is a a lot of opportunity for PHYSIOMICS going forward.

52:16 So, you know, in in summary, I guess, you know, we've got a great team. We've got a a good opportunity in the market. You know, I I think it's it's an exciting time. Thanks very much, Pete. I'm just looking at the time. I'll try and get through the remaining questions just quickly. There was a question about project Optimus. The question was, you know, has anything come from it? How is it helping us, basically? And I think, you know, it's an initiative, not a sort of specific requirement. It's an initiative by the FDA to try and encourage people to do modeling, basically. So it's it's really perfect for us to help us in our marketing to companies. And and I've mentioned it personally in every conversation that I've had with a potential new client, you know, this year.

53:07 You know, almost everyone ends up wanting to do a trial in The US at some point, and I you know, it's it's just the the the the the the truth to say that the FDA expects models, and and that's what Procure Optimus is all about. So, you know, it's it's not a a sort of specific tick box requirement, but it's an expectation on the part of the FDA that that modeling is done. And that's quite a powerful marketing message when when you're talking to new clients. And and I and I know my colleagues as well certainly use it, you know, very frequently. Last question that we haven't already covered from the from the questions that came in prior to the meeting. There was a question about the collaboration with the University of Sheffield. Has it concluded? It hasn't yet, actually. So they're they're still in the process of generating the data that we need to, you know, to to do our bit.

53:59 It was only a small project, but I can say that there is another potential project, you know, in in in in in development there as well. So we, you know, we would expect to conclude that in the next few months, but, we're also helping hoping to do a more substantial project, in fact, with them, not guaranteed yet. So I don't wanna I do wanna manage expectations, but, you know, obviously, as soon as that becomes you know, as and when that becomes a a, you know, a a signed opportunity, then we will let you know as well. Okay. So I think, you know, there was some repetition of questions, so I won't go back to the ones that are the same as the ones we've had already. Let me just have a look at the ones that have come in over the course of the meeting.

54:49 So there's a question, like, about pipeline numbers again. So, you know, I I we we can't speak to the value of of specific opportunities. I think on, you know, I think we have said in the past that an you know, on average, our our projects come in, you know, worth sort of $50.60 grand. I think that's in the public domain. But any given project could be anything between, you know, 20 and, you know, a 150 or or even more in a in a in a small number of cases. So there is a huge variation. And and, you know, I I don't wanna be specific about the value of of the five at proposal stage, but, you know, those averages, you know, generally pertain, you know, when you look across a large enough number of of projects.

55:37 Time to convert, that's an interesting question. So there's also a part of that question asking, you know, how long does it take to convert inquiries? And and it it can be quick. So for repeat business, it can be weeks. So for existing clients, they can come to us and say, look. There's an extra work. You know, just send us the proposal. We'll sign it, and we'll start next week. So that can be really, really quick. If it's a brand new client that you've never worked with before, especially if they're a big pharma company, that can be a year or a year and a half. I remember, you know, we did a project with Astellas a while back. You guys probably remember. That was a year and a half in the making. But on average, I would say, you know, maybe more like three to six months. But, obviously, if you're already at proposal stage, then you're quite a long way along that process.

56:25 Level of recurring revenues and how is that developing? So I don't think I did this analysis in the you know, just before this meeting, but, I mean, I think Pete highlighted that, you know, the mix in the pipeline is about fifty fifty. You know, I'm I'm gonna kill myself for doing this, but I would I would guess that it's probably somewhat similar in terms of our actual contracted revenues. You know, probably something like you know, maybe a little bit heavier on the recurring. No. About $50.50 probably. But, you know, don't I I will undertake to try and get a slightly firmer figure and and and confirm that with you. Okay. And and and that was the the last question. Okay. So listen. I think unless there's anything else which is gonna come in right now, we will just say thank you.

57:18 That's great. Thank you, Jim. Peter, thank you so much for taking all those questions. And if any further questions do come in, we'll provide those to you post today's meeting. Thank you once again for your time to both of you. Could I please ask investors not to close this session as we will now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This may take a few moments to complete. I'm sure we'll be greatly valued by the company. On behalf of the management team at PHYSIOMICS PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.