Skinbiotherapeutics (LSE:SBTX) — Interim Financial Results

0:02 Good morning, ladies and gentlemen, and welcome to the SKINBIOTHERAPEUTICS PLC interim financial results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab that's situated on the right hand corner of your screen. Please simply type in your questions at any time and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I would like to submit the following poll. And if you'd give that your kind attention, I'm

0:33 sure the company would be most grateful. And I'd now like to hand you over to CEO Stuart Ashman and CFO Doug Quinn. Good morning to you both. Good morning. Firstly, thank you all for taking the time to to to to listen to us this morning. I'm gonna take the next sort of thirty minutes or so just going through a deck of slides. There's only about 25 of them. I'm gonna obviously, the the main point of focus here is the interims and and the reporting of the sales and and financials up to December close of December last year, and then we'll talk about prospects and and and progress going forward. So there will be some repetition amongst the the slides. Please forgive me for that. For those of you who don't know the company, I have to give somewhat of a background who we are and what we do, and then I'll get into the the meat of the presentation.

1:25 So there's our standard disclaimer. So I'm gonna be talking about the microbiome. So as a brief explanation, the microbiome is a term used to describe the community of microorganisms that live in on and around the body. The human microbiome has extensive functions such as the development of immunity, defense against pathogens, hosting nutrition, including the production of short chain fatty acids that are important in hosting energy metabolism, synthesis of vitamins, fat storage, well as having a direct influence on human behavior. All of this makes it an essential organ of the body without which we wouldn't function correctly. So who are we and what do we do? Our focus is on skin health, specifically how skin looks, how it feels, and and most importantly, it repairs itself from injury and various diseases.

2:14 In the past, there's been a lot of work done on the gut microbiome and the impact of probiotics therein, and and many consumers have become very aware of gut health and its impact on overall well-being through the likes of Activa probiotic yogurts, yakult, kombucha, kimchi, etcetera, things that we see more commonly these days. But very little has been known about SKINBIOME. So in 2009, professor Kath O'Neill, who was a world renowned scientist from the University of Manchester, where she leads the translational dermatology department. And I'm also proud to say she's our chief scientific officer. She looked to replicate the benefits of probiotic used in the gut, and transferring that onto the surface of the skin. This involved the identification of appropriate bacterial strains to extract. In our case, initially, this was lactobacillus grammosis, which is excellent defensive action within the gut environment.

3:03 Professor Kath and team decided that a bacterial lysate would allow greater stability, shelf life, and ease of use. So effectively, what that means in layman's terms is we take bacteria from the human gut, we smash it to pieces quite literally, suspend it, and then we reapply it back to the surface of the skin in a more stable condition and look for reactions therein. Very flippantly, fast forwarding over nine years of exhaustive research by one of the most respective scientists in the field, her research formed the basis to deliver probiotics to the skin, from both the outside topically with a lysate and also, from the inside with a bacterial cocktail, designed to to to promote skin health, and I'll detail that in just a moment. Subsequently, the company spun out of the University of Manchester enlisted in 2017.

3:50 We've translated our science into a five pillar commercial strategy that covers everything from cosmetics through the pharmaceuticals. We've signed two commercial, agreements, the first with Krolla PLC in 2019 in November and in Winklove probiotics, in January 2020. We're in discussions with several multinationals across all of the sectors. And finally, after more than twelve years of research, we've we've been busily filing patents, which resulted results in a very robust IP portfolio.

4:22 So the the the five pillar strategy that we talked about, this is our visualization, our one slide snapshot, if you like, of of who we are and what we do. Very quickly to walk you through them, on the left, SKINBIOTIX is our core technology. That's the lysate that we talked about, designed to promote skin health, harnessing the beneficial properties of probiotic bacteria in cosmetic specific applications. Secondly, AXIS Biotics that uses probiotic blends or cocktails of bacteria, and to address the emerging area of science is focused on the gut skin axis and its roles in various diseases. Third, MEBIOTIX. This targets the use of our proprietary SKINBIOTIX technology, but for application within the medical device sector using topical treatments of skin disease as well as accelerated wound closure and advanced wound care.

5:11 Fourth is clean biotics, which focuses on the use of our technology to address certain categories of health care acquired infection and the potential to reintroduce good bacteria into both professional and domestic environments. And finally, pharmabiotics. This is an extension to our medical device and our access biotics pillars through the pathway of medicinal prescription registrations. So why do I talk about these five and why do I talk about them in that order? Quite frankly, if you were to draw a time and cost axis, this is about what is the lowest hanging fruit, what's the swiftest route to market. So the first pillar we talked about as deals very specifically, SKINBIOTHERAPEUTICS deals very specifically with the cosmetic market. This is the fastest route to market. All we have to prove there is a safety study, which was completed quite some time ago. This is where we signed a deal with Croda PLC, and I'll detail the the progress on that a little later on. The next step up the staircase, if you like, or the second pillar is Axis Biotics.

6:10 This is claims that are limited to food supplements. There are no mode of action claims here, it's not a medical device or a pharmaceutical. This is where we talk about the gut skin axis, where we like to say healing the skin from within. This requires a short term consumer study, which we completed last year, and I will talk about that in quite some detail in just a moment. And the third pillar is the medical device market, considerably more regulated here, so a little bit longer to get to market. This sector requires clinical trials for the applications or, a clinical trial partner for the applications, and and we do make mode of action claims therein. Fourth, clean biotics. This is health care required infections and surface protection. Again, very complex area. We're reintroducing bacteria or good bacteria into a medical or a domestic environment, so requires quite quite the the the registration, quite the regulatory clearance.

7:01 And then finally, highly regulated, the most regulated and the most expensive of all, pharmaceutical market, prescription medicine. These are the longest trials, etcetera, etcetera. So as we climb the staircase, we derisk in every step. We're two steps up the staircase and well, I think what we're doing here is showing the versatility of the science and showing that we're not a one trick pony. In terms of SKINBIOTIX, this is, as I said, the the the lowest hanging fruit. Our safety study revealed that not only can we provide highly efficient barriers in cosmetics, we also saw significant evidence of the restoration of elasticity at cellular level in skin treated with our product. The lab slides to the right, the two pink slides show the short dark purple candelabra like structures on slide a.

7:49 These are fibrillant microfibrils which deteriorate in aging, particularly with sun exposure associated aging, which is the biggest driver of all aging exposure to the sun. In the presence of SKINBIOX on the right side b, the microfibrills are strengthened and and and restored. You can see how the strong long fibers increase the fibrillin and the deeper ridges indicate increased elasticity and extremely strong antiaging effects. So in November 2019, we signed a deal with Croda PLC. Why did we decide to partner with them? Well, they're a FTSE 100 company. We got a market cap of about 1,300,000,000. They're they have an expert, cosmetic ingredients division in Paris called Souderma. They have a portfolio of 12,000 plus customers that include pretty much every household cosmetic name, Ponds, Garnier, Chanel, Estee Lauder, etcetera, etcetera.

8:40 The the deal we struck with them is very specific to the provision of our science to to to provide an active skincare ingredient purely for cosmetics. Think moisturizers, makeup, etcetera, etcetera, anti aging creams. They are building a dedicated sort of four to 5,000,000 pound production facility in Witness in Cheshire to build our to basically produce our lysate. They are currently in in the process of scaling that up to 20,000 liters, and that will basically provide the the raw material for the worldwide market. They're currently they've currently exposed this to their their VIP customers. What they mean by that are the top 12 cosmetics company in the world because of the the volume that they purchase. They represent roughly 80% of the turnover of an ingredient of this nature.

9:28 They already have an ingredient called Matrixyl, and these 12 customers dominate the sales of that product. So they've been giving a sneak peek, if you like, of this product so that they can decide whether they wish to include it into an existing formulation or a product that they have or with whether they wish to develop a brand new product or a new brand. And they've been given a sort of sort of eight to ten, twelve months run at this so that they can they can see this before everybody else does. The project is bang on schedule, and we're due to see a release to the wider world towards the end of this year and and and initial revenue starting to filter through then. This is a passive revenue play for us. Once this this product is launched, it will yield us double digit royalties. And and as I say, very passive revenue, which allows us to get on to focusing on the remainder of the pillars.

10:16 So very specifically now on to Axis Biotics. This is where where we talk about the concept of gut skin access. This is a newly emerging and an extremely important avenue of medical and scientific investigation. It's sort of healing the skin from within. And the best way to describe that is if you eat something that disagrees with you, you tend to develop a rash, become blotchy. This is a that's a great example of the gut skin access or the the superhighway that exists between the stomach and the surface of the skin in play. Gut problems and indigestion, actually affect the way your body retains nutrients found in your diet, which leads to poor absorption of vitamins, minerals, and antioxidants needed to keep your skin looking healthy, and an imbalance of the homeostasis of your gut microbiome could potentially worsen existing skin conditions like psoriasis, acne, etcetera, etcetera. So we look to restore that vital balance by the addition of missing bacteria and very specifically through blends of live probiotics targeted to very specific diseases. And we do this through food supplements. That's because it's the fastest route to the market. No mode of action claims made here at all. We signed an agreement with Windcloth Probiotics in The Netherlands in in 2020 and expected that a formulation for and and validation of a blend for psoriasis would take upwards of eighteen months. They cracked this in four months and as such, we're ready to go into the study phase.

11:37 So I think it's important to note that we're we're considerably ahead of schedule in in the formulation of this product. We started specifically with psoriasis because it it is a very niche condition. The the the sufferers tend to be very well educated. They communicate with each other widely, and they they they tend to know very much what they want. And psoriasis patients tend to buy from psoriasis patients. They listen to each other. So we started a study in in 2021. We completed it in 2021, and we subsequently launched a product, AxisBiotics PS. So it is a proprietary blend of probiotics. All of those ingredients are GRAS registered, so it's very natural. It is designed to slow down the overproduction of new skin cells in the gut, leads to the plaquing that we call psoriasis.

12:28 It it has a huge impact on patients' quality of lives. We started with a 265 subject consumer study. We actually had over a thousand people, apply to join the study. We we settled on 265. We commenced it in February of of last year, ran it for fifty six days. That's very specifically two cycles of human skin. Human skin tends to repair itself wholly within twenty eight days. So that was two twenty eight day cycles, which is more than sufficient for us to see whether the product worked. The product, because of of of the pandemic, because of COVID nineteen, we pushed this through a mobile phone application, which was custom built from the ground up. We were going to to run a study in in in a clinical environment taking blood and stool samples. The pandemic put paid to that. So rather than sit still and rest on our laurels and wait for that to pass, we decided to push this forward aggressively.

13:19 The data, because it was on a mobile phone, was live. We could see at any specific stage of of of the study of how things were going. We had zero adverse reset reactions at all. And and as a direct result of that, we launched the product, you know, at the back end of October, early November, last year in quarter four, on World Psoriasis Day. So what were the results of the study?

13:44 Well, I think you can see for yourself. We've those of you know the company well know how successful it was. Most of the people on the study had psoriasis. They self identified as psoriatic. Some of them had rosacea, some had acne, some had all three. This was an extremely successful study indeed. Circus seventy percent across the four categories saw a noticeable improvement in in their skin condition. That's an important number to remember, seventy percent. So for roughly thirty percent, the product shows little to no change, and that is down to things like genetics, diet, hydration, body mass, lifestyle, whether people actually remember to take the product or not. So there's a lot of factors that go into play there, but the seventy percent, circa seventy percent is an important number to remember as we move on.

14:30 So what was the path to commercialization? We, we prepared post study and prelaunch, for a launch that would ensure the scale up of manufacturing and distribution channels, and we needed them to be robust. And the reason for that is that if people take this product for two to three months and stop taking it, the symptoms return very swiftly, just as swiftly as they went away. So you need that that that probiotic foundation within the gut constantly. That's why this is a subscription model. You can't just take it and forget to take it, you know, two or three days after that. The the symptoms will simply return. So this was registered as a food

15:05 supplement in The UK and The US, so we had to have regular clearance to do that. We did that in an extremely short space of time. We decided to choose targeted regions, UK and US rather than the rest of Europe, and that's because we require, regulatory clearance by member states because of Brexit country by country in Europe. We require language specific packaging, language specific websites, language specific specific interaction with the web shop and Shopify. So we decided to launch in in in the English speaking markets first. So in terms of the the scale of the manufacturing, that was quite a significant feat as well. Getting the packaging right was a significant feat also. You know, I'll talk about that in just a moment. But that was the path towards commercialization.

15:52 The product was split into into into three phases. So first of all, the packaging had to be small enough to mail. We decided that because of the pandemic, we didn't know how long that would go on. We needed to basically make this go through a letterbox. 28 sachets per per box rather than 33, which is what we did in the trial, ensures that there are 13 sales in a year rather than 12. As I said, we launched it in in The UK and The US, and we had significant cross border issues in the first two to three months. We used FedEx as our partner of choice. It it it that that in itself brought a lot of problems. We're shipping, let's be honest about this, 28 sachets of white powder across an international border. So the customs officials in The United States did raise an eyebrow. We did have significant customs and border control issues, not just in The United States, but also in The United Kingdom. We're shipping from a central warehouse in The Netherlands into The UK post Brexit. So we did have significant delays. We have problems with the condition of the packaging arriving. We have to make that more robust and more resilient.

16:56 So as I say, we we cleared this as a food supplement rather than a medical device to avoid a full blown clinical trial, but that still involved us having to to basically secure a food operator business license, which is is is no small feat. When we talk about the launch plan in on a macro perspective, this is basically a three phase plan. It's a systematic rollout of the product that preserves cash and tests the supply chain to secure the retention levels. It's key that we keep remembering retention levels here. Retention levels are key to what will be a robust forecast, and it's key to basically growing this business. It's pointless having someone try the product and then not buy it again in month two or month three. We need to understand why people want to to buy this product on a on a constant basis and on a perpetual basis.

17:44 So we decided to run with the the National Psoriasis Foundations in The US and in The UK, also with an influencer program that came in in in phase two social media platform. And, basically, that was quite simply because we don't have a huge marketing budget. I'll talk about this in a little more detail in a while, but this this business was was basically formed, floated, and funded as a b to b, a business to business entity. It was never intended to be a business to consumer or a direct to consumer model. We weren't funded that way. We weren't structured that way. So we've had to pretty much reinvent ourselves from the ground up. We've had to bring in customer services support, which is not something you need in a business to business entity. We've had to bring in digital marketing creators. That's again something you don't need in a b to b entity. We've had to bring in commercial managers, etcetera, etcetera. So, and we've also had to get to understand influencer programs and digital media platforms.

18:42 So, you know, it's been a very steep learning curve indeed. And, with all marketing programs, you have to blow the balloon up a little, you know, and then and then it leaks a little. In our case, that leak is 30% drop off and about 70% retention, 69% retention, and you keep blowing it up and you keep doing that and continually going on and on and on. Fortunately for us, the retention means we keep 70% of the customers that try our product. Phase three sees us rolling out into the rest of the world, and the reason for that is, you know, we we've got attract distributors. Distributors like to see success in home markets. We'll continue to boost and and maintain those sales, make sure that we're communicating with our subscribers and building a community, building a tribe of people out there that actually use this product. We'll continue with our search engine optimization and continue to do region specific testimonials.

19:33 So phase two of the launch plan, as we said, very targeted approach here. The influencer program is designed to reach one point nine million people with each wave. Frankly, people with psoriasis listen, to people with psoriasis, and indeed they buy from people with psoriasis. They have to be influencers that they relate to. This is not the Kim Kardashians of the world. Kim Kardashian is the most famous person in the world that has psoriasis, but her five or 6,000,000 followers don't all have psoriasis. The people that we target as influencers all have psoriasis. All of their followers tend to follow them because that's all they talk about, their life and their struggles with a psoriatic state. So they talk about the introduction of probiotics. They talk about exposure to sun, hydration, exercise. They're the people that we need because all of the people that click and follow are actually potential customers.

20:26 Those 1,900,000 people that are reached are boosted across all social media platforms, Instagram, Snapchat, TikTok, Facebook, etcetera, etcetera, that results in 3,000,000 ad impressions, so 3,800,000 clicks. That sees an increase in traffic and increase traffic to the shop of 335%, and that re the retention is in line with the study. As I said, it's sort of high sixties, 70% at at the top end, and that's in line with exactly the same, you know, metrics that you saw in the study. The search engine optimization is critical. We need people who who who live in a fast paced world. People live on their mobile phones these days. They live on laptops. They live on computers. That's the way people get their news now. We need to make sure that when they type in probiotics, they type in psoriasis, that we hit top of the list. And that takes some work and it takes some money to do that.

21:18 All in all, that results in an integrated marketing plan, which basically covers all channels. And and and that is the the level of our success now as we move out of the soft launch into the main marketing phase. You know, we start to see that really having an impact on our sales and and and and on our our retention levels.

21:37 So what does that actually look like? We start with 200,000 targeted followers reached across Instagram and and and basically we boost them and that number turns into 1,900,000 across all the platforms. The response has been absolutely phenomenal. 986% rise in referrals from Instagram, two seventy six from Facebook, and as I said, three three thirty five rise in sales. So I mean, that that's an incredible set of statistics. Some of the, some of the influences that we have are consultant dermatologists, doctor Emma Wedgeworth. I would encourage you all to sort of Google her and have a look at her Instagram posts. Sienna Ray, a lady from The United States, so we now have influences and customers on the other side of the pond. We read spots. No surprise that that's a Scottish lady, you know, who who who talks specifically about her struggle with psoriasis, but a very successful campaign to date.

22:29 When we talk about, phase three, we talk about the tools that we can use to support and prop up the learning curve that we have. So it's not enough to just drive people to the shop. A lot of people will go into the store and take a test take a subscription, put it into a basket, and not check out. And there's a million reasons why that that that they don't do that. The doorbell rings, a dog barks, a baby cries, someone sends them a a funny meme of Will Smith punching someone at the at the Oscars. So, yeah, they get people get distracted. So it's our job to then, you know, put in place a piece of software that allows us to track those abandoned carts, go back, reach out to them, and and ask them if they have any questions that need to be answered. If they don't, basically, complete that subscription or complete that checkout within a a set period of time. We offer the a slight reduction in cost, a one off discount, to see if we can get them to subscribe.

23:20 We backed that up with trust pilots reviews. That's critical to anyone having a belief and a trust in, you know, in the security of our site and the efficacy of our product, not just testimonials, but, you know, independently rated by Trustpilot. In order to do that, you have to have consumers. You have to have subscribers, and that grows with every day. That's why we we we reinforced our commercial team with a customer services manager, why we're looking for a digital media creator because those Trustpilot reviews are critical. And then we have to look at the conversion rates for every person that visits the store, you know, how many can we convert to a sale, and then how many can we retain thereafter. And it's the retention level that is the key number here. That number will drive the basis of a solid forecast. We were pretty much thumb in the air when we put a forecast out earlier when we worked with our with our analysts at 1,200,000.

24:10 I would say that that's very much a timing issue. You know, we've had a soft launch. We must ensure that that supply chain is robust. We had significant shipping issues getting cross border with Brexit and The United States. We've had to iron those creases out. None of those problems are insurmountable, but, you know, we've we've needed to iron those creases out. We now know the things like IFUs and testimonials absolutely have to be region specific. We've seen a lower pickup in The United States than we anticipated. And, you know, why is that? We've still worked with the National Psoriasis Foundation. We now realize that our our our testimonials were all very much UK centric, and that was by design. That was by by by necessity. Also, we were in the middle of a pandemic. We couldn't get to The US. We didn't have US customers.

24:56 We were trialing this in The UK with UK only residents that were on that study. So all we had was UK testimonials. We're now working on US regional specific testimonials, and we now know that we need to do that in every region we go into. Having one or two testimonials that are French would be better than having, you know, 10 testimonials that are English for launch in in in France specifically. In terms of distributors in phase three, they're very attractive to bring distributors in, People that are have have intricate, local knowledge in in places like China, Latin America, The Middle East, etcetera, is is is much easier than bringing trying to bring a direct to consumer product in. It's better to have a distributor on the ground with expert knowledge. In order to get those distributors and have them place significant stocking orders, they're looking for success in home markets. We're seeing that with the conversion rates. We're seeing that with the retention rates, and we are talking to a number of large distributors at the moment about their pathway forward.

25:54 So the big question on everybody's lips right now, is access by it's a hit or a miss? So let me just talk about the difference between b to b and b to c. I can give you no end of data on on the difference between the two. They are night and day. First of all, marketing spend. We are, I think anyone that knows us as a shareholder, a very cautious company. We don't dash out the gates and throw, you know, the kitchen sink at at at a at a half baked marketing plan. We take our steps cautiously and carefully. We are acutely aware that we are dealing with investors' money here, so we we spend it very cautiously and very carefully. This has always been a case of when and not if. This product fundamentally works. We've got no end of testimonials, no end of rave reviews, no end of photographs that we can prove that. You know, 70% of people that take this product come back and take it again. We know that it works. So as I said, and I'll say it again, this is a case of when and not if. This is going to require a little bit more time than we gave ourselves.

26:56 A standing start from, you know, from basically what is five months away, three months of a soft launch, and two months since the main marketing campaign started. We started the influencer program in February Is is, you know, where we are right now, we've got people using the product on both sides of The Atlantic, which I'm enormously proud. We reacted to a global pandemic and the need for a study. We have reacted again to the results from that study, and we're reacting again to the stats that we've got now. Again, the key key number here is retention. This is a category blurring product. It is not a medical device. It is not a pharmaceutical. It is a food supplement. Some people see it as homeopathic. Some people see it as a nutraceutical. It is it is blazing a trail. Again, there is somebody very wisely asked a question in advance on this forum. Have we gone for the National Psoriasis Foundation's rosette of, you know, accreditation, one of their their sort of recommended product?

27:52 Yes. We've talked to them extensively about that. We are aware of the criteria, some of which is clinical evidence and an awful lot of which is based on, you know, testimonials from customers. So in order to get a US testimonial, we're going to need a lot more US customers. We are absolutely on on that pathway and in regular contact with the NPF. Again, they don't have a supplement. They don't have any form of bacterial probiotic treatments within their their recommended products. We are the first because we are category blurring, because we are blazing a trail. So in in in my terms and in in in the terms of the board, this is a category hit. It's just a matter of time. In terms of what's next, well, you you you all know that this is not a a one trick pony. When you talk about category blurring, you know, it's it's it's it's very important that you you look at what's coming next. Acne to be treated by a food supplement potentially a chewing gum, that is absolutely category blurry. Dandruff that is treated by a food supplement, a boiled sweet or a sachet powder you're taking a drink, what would Procter and Gamble and Head and Shoulders make of that? These are trailblazing products. Nobody's done this before. There is a learning curve. We are on it. What if there is absolutely no doubt about is that the science works? We've got multiple strains to run at here. We've got multiple target opportunities.

29:15 We need to get the marketing model right. We need to get the the the consumer model correct. We need to reinvent ourselves, and we're doing that, and we have done quite successfully thus far. So the opportunities to heal from the inside out are very significant and continue to present themselves. Just a quick word on on b to b versus b to c. I'm not gonna bang this drum, you know, for for for ten minutes or more. This is very much a yin and yang. You know, I've talked about reinventing ourselves. I've talked about a balance. You know, we are absolutely a b to b business in SKINBIOTIX, in METIBIOTIX, in CLEANBIOTIX, and in pharma. In no way, shape, or form would we ever attempt to go direct to consumer in those four pillars. In this pillar, an opportunity presented itself. And the question is, do you surrender margin, you know, and have no marketing spend, or do you take all the margin and have significant marketing spend or a moderated margin marketing spend? And that's what we're doing right now.

30:16 We are being very careful with our cash. Nobody wants to to see us run out of cash, and nobody wants to see us go out and do an enormous fundraise to fuel a marketing machine. We are trying to do this moderately slowly and and carefully and cautiously as we've conducted this business since day one. But this is about a balance. So I'm I'm kind of hoping that people can see that the the the balance that we've got here that we we that this is actually calculated risk. So in terms of the, interim results and and and financial key points, we've talked about the commercial launch of AXIS BIOTHERAPEUTICS. I've said it again. I've I've I've said it once. I'll say it again. It's a timing issue. It's very much a case of when and not if. We need a little longer runway. Can I tell you when we'll hit that 1,200,000?

31:01 No. I can't. Not not at this moment in time, but what I can tell you is that as each day passes, our sales grow, our our retention level grows. Our retention level remains. We keep retaining clients, and they come back month after month. So as far as we're concerned, AXIS Biotics, it's just a matter of time when and not if. Croda, had been engaging with a v VIP clients regarding SKINBIOTIX. That project's absolutely running to plan. The VIP clients have been in. They have now got samples of the product that were drawn from the 600 liter scale up. That's what happened to that that end product. It's gone to the the the VIPs. They've gone away to test this in their own formulations and to see whether it stands on its own legs as as as a brand new product or as a new brand within their portfolio. It's still on track to be released to the to the wider world at the end of this year, so we should see revenue.

31:52 And remember, it's passive revenue by the end of this year. Formulations under development for an acne food supplement. We've always said that that was next on the rack. That is with WingClove now undergoing stability study. We've identified the strains of bacteria. Now it's a case of getting the formulation spot on. I would love to say I know what time that is. Last time I put a timeline on Windglove, I said it was eighteen months and they did it in four. I'm not for one minute suggesting that that will happen again, but it would not surprise me. They're certainly working very diligently on this. Our research programs continue with the University of Manchester, the first of which will complete in July, and that is the Andrew McBain study. So we've got that look forward to that oral cavity protection. Then we've got professor Kath's inflammation program.

32:38 We've also you'll have seen the appointments of the chief financial officer subject to due diligence and our new nonexecutive director. So Manpreet Singh, Randhauer, and and Danielle Becker, respectively, in those two positions who bring with them a wealth of experience both in growth and and also in digital media and and and customer interaction and customer behavior trends. Our cash at the end of December was on plan 3,200,000. And and our outlook, you know, it is pointless dodging this. Our revenue for the full year will be below expectations, materially below expectations. Some people are going to ask, and I haven't looked at the questions that are coming in now, but I would imagine some of the questions are, why did you put an RNS out six weeks ago saying that you would you you you'd still believe that you could hit the 1,200,000 by the end of June, and you're now seeing you're materially below expectations.

33:31 And that's purely and simply because it is taking us time to basically process through and scale up the the influencer program and the digital marketing integrated program as well. Does that mean it's a fail? No. Again, it's a matter of time. We're just moving the slide rule here. To what point in time, I do not know. But as soon as I do, you'll be the very first to know. Doug, would you mind talking about the finances for a moment, please? Thanks, Joe. So, obviously, we're just reporting up to the end of December here, that's a six month trading period. The revenue was for the two months of November and December, just over 20,000, during which time we shipped a thousand boxes of the product, you know, predominance to the to The UK.

34:16 A strong and sustainable gross profit margin at 60%, and we certainly see that continuing. Selling and distribution, obviously, relatively speaking on the low volume is quite high. There's elements of fixed cost on the on the storage costs. And then we've we've taken the decision again in the early stages of a kind of cautious cautious approach that we're shipping product directly to end users and particularly in The US. And again, because you're shipping from Europe into The UK, the postage costs are quite expensive. As we see volumes grow and have greater sustainability on the volumes, then we will look at potentially bulk shipping in those two geographies and in other markets as well. R and D in line with plan, predominance again with the work that we're doing with the University of Manchester and operating expenditure increasing in line with, you know, increasing cost base of the business, some marketing spend, prelaunch of of AXIS Biotix, and therefore, overall for the period, a loss of 1,100,000 for for the six month period.

35:23 And looking at the balance sheet, obviously, a key change in the lead up to launching AXIS was building some inventory. So as many of you know, we manufacture the products through WingClove in The Netherlands. They take it to the point of the sachets inside the box, and then they are shipped to a third party distribution center also in The Netherlands. We made the decision prelaunch. We did consider building and storing our own warehouse, but decided in the end that we were better with a third party far level greater capability and experience in this. And I think that's proved out with the with the work that we've done through in the launch. So we were holding just under 400 or just over 400 grands worth of inventory at the end of December. And, obviously, a key element for the business is our cash position.

36:11 So as you would expect, you know, an increased burn over the six month period of 1,400,000, partly reflective of the inventories and partly reflective of the, you know, the increased cost and having brought, you know, AXIS Biotix as a product from concept to launch in the in in the space of twelve months. But, you know, end of December, we still had over £3,000,000 worth of of cash on the balance sheet. Thanks, Doug. So back to the the the slide that we put up early on. We've talked about the first two pillars. In terms of many biotics, I I mentioned earlier, and somebody just popped a question on about that. I think I think it's important to understand that the the I mentioned this earlier, but the introduction of of bacteria into an open wound is an enormously complex scientific, medical, and legal question and and issue.

37:04 It's not insurmountable far from it, and we are talking to the biggest players in the world about the application of this science. The microbiome is a very, very hot topic. It continues to be. So someone's putting a question up here saying, you've been talking about this since 2020. You know, what's the progress? Well, the progress was hampered a little bit by by the pandemic, but we certainly didn't stop talking to people. We we have had, you know, very, very senior meetings with with the best possible partners you you could imagine. It is a matter of time, again, before, you know, we we we achieve something in this area, but we need the right partner here. And we don't want to go off half cock. We could have done a deal on this last year. It wasn't the right time. It wasn't the right partner. We weren't ready, and certainly they weren't the right partner.

37:49 So, I would rather wait and get this right. We are, as I say, still in discussions with multiple partners, and and we'll continue to update you on that. That is very much a b to b play. As I said, that's an upfront milestone payments, a success payment, and then royalties, thereafter in in return for exclusivity to the science. The same, is to be said of clean biotech. We've actually seen a pickup in interest there. On top of the two or three people we're talking to, there are a couple of new players that have come to the table as a result, one would imagine, of of the COVID nineteen pandemic that are now very interested because the focus in health care associated infections and bacterial loading and, you know, bacterial resistance is coming to the fore. A number of, months ago, about a year or so ago, I presented a short video where we talked about the World Health Organization's focus on bacterial loading. That was before, know, pandemic kicked in and and truly crippled us all. But this is an area of great focus at the moment.

38:49 We've only got so many resources, so we can only spin so many plates at once, but it is an area that we are discussing at the highest level. Pharma biotics, as I've said, that's a conversation that we've had around the water cooler, around the coffee machine, whatever you wish to call it, and where people are watching very closely what we're doing, what science we have, and I and I would imagine they'll pounce when they're good and ready. So in terms of focus for 2022, the remainder of this year, it goes without saying, I've I've already covered this in the highlights of of of the of the interims. Our our focus is very much on the Axis Bionics launch and and and increasing the growth in sales there, keeping that retention, continue that integrated marketing plan. We'll roll this out in Europe country by country. As I said, we've already strengthened the commercial team significantly. We'll continue to do so.

39:39 I've already talked about SIDERMA and the VIP engagement with SKINBIOTIX. I've already talked about acne, and I've already talked about the the the research programs and also the two new appointments, which which we, you know, we're we're very much looking forward to welcome to the company. In summary, I I would say that this is not the result that you've all expected. It's not the result that we planned for, but this product is an absolute hit. It it it should not be put down because it's taking a little slower to to roll out. We're doing that to pervert preserve cash. People could be saying, Stuart, critically, you've got to throw more money at this. Well, if I was to keep those people happy and appease them by throwing money, I would upset the other half of our shareholders who would say, why are you burning money? There are a bunch of questions which, Doug, if you're ready to, I think we'll go through.

40:27 And and and the first one Stuart, if I if I'm if I may just come in there and just thank you very much, you and Doug, for presenting this morning. Ladies and gentlemen, if you could please continue to submit your questions using the q and a tab that's just situated on the right hand corner of your screen. But just while Stuart and Doug take a few moments to review those questions submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Doug, Stuart, firstly, thank you very much indeed for taking the time to respond to those questions that were presubmitted and that have come from investors today. Ladies and gentlemen, we will publish those responses where it's appropriate to do so on the investment company platform. But, Doug, perhaps before doing so, as you can see, we've received a number of questions throughout today's presentation, and thank you to all investors submitting those questions.

41:14 I could please ask you where it's appropriate to do so to read out the question and give a response, and then I'll pick up from you at the end. Thank you. Okay. Thanks for that. So first question, given rising costs in social media and paid search, why do you think the b to c strategy is right and not too costly for a business of this size? Surely, need to partner with psoriasis partners. That's a good question, and it is one that we've asked internally. It's actually one that we've discussed openly with the market. We initially intended for this very much to be a a a retail play, a Holland and Barron, a health food store play. Given the conversations we had with companies of that nature, the the the margin surrender was was colossal.

42:00 We literally eroded the bulk of the margin by giving it to a a retail partner. Furthermore, the payment terms were were basically about you know, for anywhere between four and six months depending on who you spoke to. And then there was the jostling for shelf space and retail space on a shelf with other products, not even of our category, but with the the next hot thing. So we decided that bringing all the margin to our side would be a a better play. Given the rising cost of social media, we've not spent an awful lot on marketing at all. Now I could be criticized for that. We could be criticized as a company for that, but we're not in the habit of throwing everything at at, you know, at this in marketing. Prior to this product's emergence, we didn't even have a line in the budget for advertising and promotion. Why would we? We're a b to b business.

42:47 This is just basically rolling this product out. It absolutely works. And in fact, there is no doubt. This is a matter of time again. In terms of psoriasis partners, there are none. The National Psoriasis Foundation don't sell product, neither the National Psoriasis Association. If we go to a drug company, it's not what they do. We're a sector blurring product. If you go to a food supplement company, as I've just said, the costs are eye wateringly high. So that's the decision that we made, and and we do stand by it. The next question is, could you please give us guidance on how far away you think we are reaching the target sales? I understand it's uncharted territory, but this answer is critical going forward. That that's not a question that I can answer with any accuracy right now. This is a publicly listed company as you all know.

43:34 We we we can only give you absolute facts. I can't give you, you know, an estimation. We are not in the in in in the in the business of giving forecast. That's what the analysts do. We work with the analysts and ask them to withdraw the forecast purely and simply because I couldn't put an accurate number on it. I couldn't tell you whether this will will hit the one point two two months after the deadline or four months or six months after the deadline. What I can tell you is that sales grow every single day and that it is a matter of time. This is absolutely just a timing issue. And I wish, genuinely, from the bottom of my heart, wish I could give you a solid answer that we just don't know at this moment in time. What I do know is it works and people keep keep buying it. I've got another question here. Stuart, are you guilty of not doing your homework on the true level of influence and membership numbers of the psoriasis society partner when you leased, a 10,000 square meter warehouse and confirmed that 1,200,000 revenue was achievable in the February r and s? So let me address the first one.

44:33 We have not leased a 10,000 square meter warehouse at all. I think you might have read the r and s incorrectly. We have a a an elastic walls warehouse. We have basically got a distribution partner. If we wanna put, 40,000 boxes on the warehouse, we pay for the space for 40,000 boxes. If we wanna put 400,000 boxes on, we pay for just the space we use. That's because we do things cautiously and carefully. We only use we only pay for what we actually use. We would not go out and and basically rent a 10,000 square foot warehouse. Not now. Not not in the immediate future. Elastic walls warehouse makes a lot more sense in terms of cash control. In terms of where we confirmed the 1,200,000 revenue was achievable in 02/20/2022.

45:20 All of the stuff that we we we basically put on RNS is fact checked by our nomad. We we basically pour over ourselves. It was a unanimous decision of the board that it was still achievable at that time. What we're seeing now is that 1,200,000 number is not achievable, and we think we're gonna materially miss it. What does that miss look like? Again, as I said in the previous answer, I can't give you a finite answer on that, and I wish I could. What I'm saying is it's a matter of time. I've got another question here. Early discussions with potential commercial partners have been ongoing since 2020 for MediBiox and Clean. Has there been any progress at all in advancing these discussions towards a commercial partner announcement, or have they been put on hold while attention's been focused on access and skin? Great question. I think I've I've in part answered that, on the last slide when we talked about the stay stay away, and and the various pillars.

46:15 We are absolutely still engaged with the MediBiox partners and the CleanBiox partners. But it is important to understand this is not a food supplement that's a, you you basically take as a as a in a glass of water each day. This is putting bacteria into an open wound and accelerate wound closure. This is introducing bacteria glycated bacteria into an operating room, into an intensive care environment. There are there are significant legal implications and significant medical and scientific implications. So you would all think very, very, weekly of of us as a company and very poorly of me as a CEO if we roll this out and end up with a lawsuit six months later. So we are making sure that we've got all our ducks in a row before we actually go ahead and push this forward. We are everything's going in the right direction there, and I'm I'm very pleased with the progress we've made thus far.

47:04 I think that's about it. We answered some questions previously, which I think are being published. Is that correct? Yes. That is correct. And thank you very much, Stuart, Doug, for addressing all those questions that have come through from investors. And, of course, if there are any further questions, submit it to say, we will give them back to you immediately after the presentation has ended. And ladies and gentlemen, once again, will publish responses where it's appropriate to do so on the investment company platform, and we'll notify by email when these are ready for your review. Stuart, perhaps for redirecting investors to provide you their feedback, which I know is particularly important to the company, could I please ask you for a few closing comments to wrap up with? Thank you. Thank you. As I said earlier, this is not the the set of results that we hoped to to issue when we launched this product. We are cautious. We are careful. We are taking our time with that for which I offer no apology.

47:53 It this is a matter of time. We're moving the slide rule on the dates here. As soon as I have a final answer to that, I will be be informing you by RNS, and we'll be happy to do another one of these forums as and when we have we have focus and detail on that. Sales are growing. The product does work. I would ask you very much to keep the faith in this. We are the same company as we were five months ago. We did a soft launch. We've just gone into our main marketing phase. The numbers will grow. The product does work. And and as do all of the other things behind it, We're not a one trick pony as well as AXIS Biotics. We do have SKINBIOTHERAPEUTICS, MEDI, KLEEN, and and and all of the other areas and all of the projects that are going on within the university. This is a a longer term play. It is it is groundbreaking science. We are blazing a trail. It is sector blurring.

48:39 I'm still remain very, very proud to be the CEO of this company, and I'm I'm extremely proud of the achievements that we've made in making people's lives better. Thank you very much for your time and for your patience and also for, listening to me drive along for the last forty nine minutes. So enjoy the rest of your day. Stuart, thank you. Thank you very much. Stuart, Doug, thank you very much indeed for taking the time to update investors this morning. Could I please ask investors not to close this session? It should now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of SKINBIOTHERAPEUTICS PLC, we'd like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.