Verici DX (LSE:VRCI) — Final Results

0:03 Good afternoon, ladies and gentlemen, and welcome to the VERICI DX Final Results Investor Presentation. Throughout this presentation, investors will be in a listen only mode. Questions are encouraged and could be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Just simply type in your question in the box below and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. These will be

0:33 available via your Investor Meet company dashboard, and we will send you an e mail to notify you when they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. If you could give that your attention, we would be most grateful. And I'd now like to hand over to Sarah Barrington, CEO and David Anderson, CFO from VERICI DX. Good afternoon to you both.

0:58 Thank you. Nice to meet everybody. We'll just do a quick introduction whilst you're doing the poll. My name is Sarah Barrington. I'm the CEO of VERICI DX. And I spent the last twenty years in The States, although I'm London born, translating health care products really from, you know, the academic bench all the way through the process to commercial reality.

1:22 Do you want to give a quick intro, please? Yeah. Good. Thanks, Sarah. Good afternoon, everybody. My name is David Anderson, CFO for the company. I spent most of my life as an auditor many for many years with BDO, and then I've been on the commercial side of life for last twelve years and been with the company since it started its IPO journey. Sarah? Thank you. So as we go through the slides today, obviously, this is our disclaimer. We'll test you on it later. But what we thought we would do is give quick recap on the company for those that met us through the IPO process, which was really only in q four of last year. But for those that are new to the company will be a service and introductions.

2:09 So, you know, forgive us for for being a little repetitive. The company was spun out of Weanalytics last year. They had originally licensed the technology called it Fractual DX. We renamed it VERICI, but essentially recognized that they were very focused on their key deliverables and their critical path. And this technology was being kind of sat on the shelf and not really given the attention it deserves. So they spun it out and we floated it in Q4 of last year as its own separate company. The underlying technology is based on a very simple premise and that is that the immune system is the most important aspect in terms of transplant care, very beneficial to the body. Normally, recognizing transplants as an alien organ can be very destructive.

3:08 And so any kind of information in that process is is of value. The diagnostic portfolio is based on immunophenotyping. It's looking for gene signatures in those pathways and related cell pathways so that the clinician can have very valuable real time information. Why kidney transplants to start off with? Well, kidney disease has been the poor relative realistically in terms of focus in health care. Oncology has tended to dominate in the last decade or so. But we're seeing increased focus on kidney disease and this is why. The WHO estimates there's about five to ten million people that die annually from kidney disease. And when you compare that to lung cancer, which is the leading cause by some way of cancer death, sitting at one point eight million, you can see that this is, you know, a a bigger problem by some, you know, order of magnitude.

4:12 You know, it is also an increasing. The comorbidities of obesity, diabetes, so on and so forth are not helping the progression of kidney disease. This is a rapidly progressing area. We're at the tail end of the process, which is in the transplant care. And just to note, we'll go into this in a little bit more detail. But there are about three hundred people three hundred thousand people worldwide sitting on an official transplant list for a kidney graft. And that's that outstrip supply by by an order of three. We are gonna talk today very much focused on our two leading products. One is pre transplant Clorava. One is early stage damage to Teva, but we'll touch upon the developments in the other areas and how the long term future as a platform play for this company is established.

5:07 Our technology is, you know, out of Mount Sinai. Doctor Barbara Murphy's lab worked on this in the last decade, published on the extensive multicenter trial called the GoCARM study. There were three publications that came out of that, a number of patents. And we have we're currently the exclusive worldwide licensee from Mount I nine. This is not only a of great importance to the patient's well-being and their outcomes. We'll show you some basic sort of health economics numbers to also demonstrate that this is of importance to the entire worldwide health systems in terms of both process outcomes and, of course, of cost. Just a quick introduction to the people of the company. This is our board of directors.

5:59 So I've introduced myself and mentioned that over 20 the last twenty years, I've launched a number of companies, three of which have been with James McCullough. He's the CEO of Renalytics and hence the association there. Doctor Barbara Murphy is the original inventor. And Eric represents Mount Sinai's interest. They are a major shareholder of the company. EKF, you know, was originally the source of biomarkers for renal lytics. That's connection with Julian. And so Ian and others spent the last forty years working in the NHS, last seen as the interim CEO of NHS, and so it's a wealth of experience and information for us. So a very good solid board. The science advisory board is is is impressive.

6:46 It's kind of real testament to the faith of a lot of clinicians in Barbara's work. And this is kind of a little bit of the who's who in transplant care. Catherine Wood at the bottom is out of the University of Oxford here in in The UK. She's seen as one of the leading voices in pure research. But you'll see a combination of both research and transplant centers represented here and very active clinicians. This is an active board. This is not a name only board. They're very they meet regularly with the company, but they're also very active in the whole area. We've got five past presidents of the major, you know, societies in this area, the current president of AST. And in terms of the commercial aspects, they represent about 2,000 transplants annually.

7:37 Just a quick, you know, review of where we've been in the last sort of quarter or so. We launched or we're admitted to the AIM November 3, so q four of last year. Having raised 14,500,000, that was 2,500,000 over the target. We were substantially oversubscribed, And the current interest from this folks has been, I think, reflected in our post share you know, IPO share price, sort of sitting at the sort of three or four times, you know, the IPO launch price. I think it sort of reflects ongoing interest in the company in what is a foundational year, but it also in the in the story altogether.

8:29 The net proceeds are being used to support everything pathway in to that commercial launch of those two products. So clinical validation studies, start of utility, health economics, so on and so forth. Everything that we need to put in those foundation blocks for commercial launch next year. In the period with our focus on the clinical trials, we did engage both our CRO and someone internally to manage that organization. The CRO, obviously, is an organization that does the day to day managing of your clinical trial sites. Angela is a senior and experienced person to manage the CRO and all those centers, and she's certainly been showing her enthusiasm for this area. And this in the post post period, we brought on three very credible sites. So very pleased about that.

9:28 Just a quick highlight. It's a very small period for results, So David will talk to those later on. But the results of a loss and our still high cash balance reflect a small period. Just in terms of the events post periods during the last quarter, we did expand our license agreement with Mount Sinai. We had already rights over some patents for fibrosis, but they were using different technology approaches. And in our move to have a platform approach to this whole area, we wanted to license something that was on the same technology approach. We did that on on good terms. And now we have three products in the clinic. That's Clarava, pretransplant, Tutiva, early stage, what will be called Protaga, which is the fibrosis later stage test. And all of those are on the same technology approach and therefore, the relationships between those will really support the platform development.

10:32 In the spirit of supporting our commercial milestones, we accelerated our clear approval process by searching. We have found a suitable lab in a good jurisdiction for our reimbursement efforts. We're signing the lease. We're going to bring forward that clear approval from next year into this year to support those commercial launch milestones. To that end, we made a key hire in that area, and he is busy project managing throughout the year. Today, we also announced something that's very supportive for our clinical trial being, you know, concluded by the end of this year. As you know, the biggest risk to any clinical trial really is sample acquisition or accrual.

11:21 And this agreement where we take a study that's the principal investigator is from Mount Sinai, but the study is actually multicenter, 15 sites. It's funded by the n I h n I h who gave us permission to do this. But we will sequence all of their samples and in return have access to samples that we will be able to use in our clinical trial. That's about 60 samples. We estimate that's about a third of our need And clearly, it's going to support our ability to have the right numbers by the end of the year. So we're very excited to announce that today. Just a little bit of background to the transplant kind of key stats.

12:07 As I mentioned before, 300,000 are waiting on the list and that's likely to increase. Only about a third of those will get a transplant every year. That's about twenty four thousand in The US, twenty five in The EU. And obviously, there's a problem in supply. So what you do see is legislative activities in the background. In 2019, there was an executive order in The US supporting this. The goal is to double the supply of transplants. And, you know, that probably sort of indicates how inefficient the organ network system is here. But, you know, obviously, it took a little bit of a backseat to COVID. But we are happy to report that when we're working with the societies and their advocacy groups, they have secured confirmation. There's still bipartisan support for this.

13:00 There's still a focus on this, and we're likely to see more activity towards the end of the year, second half of the year. So that is important. Why is this important? The EU did a number of directors, 2,012 to say 14, and had a 17% increase in supply. So these activities initiatives do have a very real impact on supply and we're confident that we'll see an increase in figures in The US as well as the EU.

13:31 That is obviously on organ supply. I will like to interact iterate that that really where about the recipient. This does encourage organ supply more from living donors where you do get a higher success rate, so that's good news. Living donors obviously are keen to know that the the organ is likely to be successful. So anything that you can do to contribute that will increase the supply there and the emphasis there. There is a problem in transplant care, and that is under a a great deal of threat. So there's a wide range here from from credible publications. So it sort of depends where you are in the world. But between thirty seven or fifty percent, so almost half of the grafts will experience quite a serious rejection event. So they're under threat.

14:17 There are things that the clinicians can do and they do save grafts, but still there's a failure right there. And you'll see the difference between those coming from living donors and those coming from cadavers. But still the the failure rate is too high. It is something that everyone is keen to reduce. Not only for patient outcome, but the back of the napkin health economics, obviously, we'll be publishing on much more detailed view on that, you know, early next year. But the back of the napkin is quite obvious. So we calculated there's about a $10,000,000,000 failure cost. And when you add in the cost of dialysis, so those patients have to go back on to dialysis, back on the transplant waiting list, so on and so forth, you can easily double those costs. So not only a patient interest, but also for a health care system perspective as well.

15:11 This answer is really the so what question. Diagnostic information is all well and good, but sometimes it goes nowhere. It hasn't got an impact. So you always need to know exactly what that information will do and how it will impact health care. And here, it directly affects clinician behavior. At the moment, they have what we call the therapeutic dilemma. The main tool of treatment for or or management care management for transplants is through the issuance of huge immunosuppressant drug therapies. These are very, very large drugs. They suspend the entire immune system. And so it leads to what we call or what Barbara calls a one size fits all protocol. Very high dosage at the beginning, tapered off quite quickly.

15:58 If it doesn't work, then you increase the dosage. It's a little bit of care management through damage, not exactly ideal. And clinicians will report that they feel like they're flying blind. They don't have the right information. Before at the moment, you know, before the transplant, all they've got to do is look at clinical factors. They're too broad to be really very helpful, largely ignored, And there are no competitive products in that area. So the pre transplant, they're definitely flying blind. Post transplant, in terms of the early damage, the gold standard, the serum creatinine test is a tarnished bronze. It misses about thirty percent of all cases. That's very well documented and recorded. And there are competitive tests in this area, but largely speaking, they're using cell free DNA.

16:46 I call that the measuring the debris in the in the blood post damage. The problem is is that it's very nonspecific. So there's damage happening, but you don't know whether it's in the graft, whether it's permanent damage, whether you need to action it, or whether it's a passing infection. I think the most stark, you know, example of that is the b k virus where you actually have to reduce the dosing as the clinician of the drug therapy, but the test will indicate that you have to increase it. So the clinicians got this dilemma. They haven't got very good information and they know if they under treat, the immune system could cause permanent damage. If they over treat, they're putting their patient at risk and yet they say they are flying blind. So hence the focus on our two leading products.

17:34 Clorava is pre transplant. It's a prognostic. It's going to give a kind of risk score. Very simply, it looks at the recipient's immune system and gives us sort of prediction about whether it's likely to give an aggressive response or a fairly benign response. That is very valuable information. If you've got a benign response, this current protocol will suit you very well. If you have an aggressive response, the clinician needs to know that. They want to keep the dosing levels. They are confident about doing that, taking those risks because they know that they have to give a higher dose and taper off more slowly. Very valuable information. Tutiva is the gene signature that is not only looking at the immune system, but also the cell pathways for early stage damage.

18:23 And the reason that that's important is because it's giving the clinician very actionable data about the damage that's happening in the graft in a real time, and then earlier later. You know that in diagnostics earlier is better. You can do something about it. And it's giving the clinician the information that they know to do something about damage that's actually happening and improve patient outcomes. We've chosen to stay with sequencing rather than other approaches. It's very robust. It's very reproducible, and it provides us a competitive advantage in that way. The addressable market, there's no published source on this. So each company makes their own estimates. We all roughly come into the same area if it's a very large market still.

19:11 We've based our addressable market on our tests and our price points, and I will cover that in a bit more detail. But essentially, we come up with a figure that is about 700,000,000 per annum, so every year, just from these two tests alone. And then we know there's going to be a growth factor underneath that. There's a growth factor from kidney disease. There'll be a growth factor from supply increase. And there is, unfortunately, a growth factor associated with COVID. It's very difficult to estimate all of that right now to any credible ability. But, you know, we can see this market doubling and tripling over the next decade or so.

19:54 Okay. So just talking about the test performance, these are based on published literature and articles and from the GoCARS study. We will be validating these through our trials this year. So with Clorava, as I said, there really is no competitors, no other products in this marketplace, but you see that the performance is high. And this is something that's very important to the clinicians that it's not only a well balanced test, but something that gives some clear actionable data. With the PPV, that's what really gives the clinician certainty to do something rather than NPV, which is ruling out saying no, you don't have to act. The high PVV of 70% is very encouraging to clinicians, especially when they're flying blind. You can see with the clinical characteristics that PPV is less than, you know, tossing a coin.

20:45 So very well received in the marketplace there. Trutiva has, as I said, competitors largely in cell free DNA. Mostly the claims you'll see are on the NPV of rule out. That was very helpful in my days in prostate cancer where you're looking to say to the clinician, I'm going to give you confidence to put your patient on a wait and see because it's benign, the risk of biopsy, so on and so forth. You know, you're looking for reasons to tell the the clinician to take no action. Kidney transplant care is not like that. You're looking to say, you've got to do something. Earlier is better, so on and so forth. And so there is this emphasis, and we do have very well balanced tests, but the PPV is very encouraging at seventy nine percent.

21:33 And I can tell you that as I said before, cell free DNA is nonspecific. It's high NPV grade that's in the nineties. But the PPV, the actionable data, the thing the clinician actually want to rely upon is very low, anywhere from late forties up to early sixties. It varies obviously with with additional studies. So we've given you a range there.

21:57 As I said, that means that our clinical utility is high, something that has been complained about. And then our pricing is also designed to answer the clinician need of a monitoring product. Currently at the moment, you know, there's a lot of criticism and downwards pressure on Medicare reimbursement, which is just under $3,000 per test. That sort of lends itself to a one and done. And the problem is with the rule out test is it says you don't need to do the biopsy. But if it's not coming back with a very clear answer for that, you must have done the biopsy. It's about the same price and you'd have more information. So that's a big criticism. With us coming in with a price point, we're going to aim to at least half that price. We can still make a good profit at that. But the most important thing for us is we encourage volume uptake. Clinicians want to do this multiple times.

22:44 You know, the conservative estimates of running two t vera is a month is three times rather than one. And I've heard every month, so that would be like a twelve month twelve test cycle. So you can see the importance of reducing your price to increase your volume here. And it's something that I see that we are you know, we're really meeting both Medicare and the clinicians' need on that. And I think it will give us clear competitive advantage. Just a little side note for anybody that follows our competitors. As you know, they're most of them are are busy in quite awful awful conflicts and and lawsuits over the same technology, you know, approach, we're pleased to report that with our different approach, we're free and clear of that. And that's not something we anticipate getting embroiled in.

23:33 So, you know, obviously, this round and the company's focus at the moment is all to get to to early revenues of of commercial proof of concept. Just to give you an idea of why we're confident in having early revenues, Obviously, we represent, you know, from our advisory board, you know, just under 2,000 transplants per year, and we're bringing on, you know, additional sites into our clinical trials. There's a high degree of enthusiasm for converting into that. And so, you know, we do expect to be able to convert some of these sites straight into the commercial and early revenues. But then what? That's always the big question. And that's, you know, about how you do your commercial expansion.

24:19 So first of all, a big reassurance point that there are, you know, care is concentrated into transplant centers. And you will see that, you know, the split between The US and The EU is fairly consistent. But what it means is that I do not need to employ a 500 person sales force to get this, you know, really adopted. We're looking for key business development people, a small much smaller manageable Salesforce. This is much more of a, what I would call, a business to business plan. You go into the c suite, you go in with your clinical performance, the utility studies, and data, but you also go in with your health economics. So you're talking to both clinicians and to the administrators on both sides. It's platform play. It's a business of business play.

25:09 Those transplant centers account for about forty nine thousand transplants annually. So you can see that just even with a reasonable sales force of, you know, 20 to 30 people, you can cover a lot of ground there. Don't just trust me. We pulled out CareDx, which is our nearest competitor in The US and said, okay. What what did they report in their last annual report in in '19? They'd covered in very short periods of time and only in the it had taken them only a sort of a two, three year period to once they got sort of regulatory clearance and into reimbursement to cover a 150 of those sites. And although their revenue is both over heart and kidney, you know, they're sitting in in quite early years at a 100,000,000 in revenue.

25:57 I think this really goes to the fact the market was very ready for a move out of tissue biopsies into, you know, the liquid biopsy, that's the canned phrase, but into blood based testing. And I see that we will be able to come in with better pricing, better performance, and also, you know, answering the clinician need of monitoring and providing an end to end solution with all of our products as a platform play as something that will be highly disruptive to them. I've talked about sort of how we develop from single tests portfolio into a platform and looking at relationship, how they inform each other, so on and so forth. And that, you know, providing a partnership with the clinician and the patient end to end. But I also want to indicate something else that's very important by our sequencing.

26:45 And that is we in sequence the entire transcript channel. It's about 25,000 genes. And obviously, this creates over a two year period from our clinical trials. Obviously, that's extended for the fibrosis outcomes,

26:58 you know, rather than our first two leading products. But still, we're collecting data on an ongoing basis and that will provide an enormous data bank of information. This is not only good for us in terms of accelerating some of our future clinical trial work as we already have the data accrued, But we'll accelerate partnerships and also lend itself very well to discovery, both in diagnostics and in drug discovery. And you see the pharma companies moving away from, you know, whether they have broad immuno sorry, diagnostic therapies, which are very sort of general and then looking to personalize that. They're being slimied a little bit in some of the further studies by not having a more particular personalized view in that in that way. And we know that they've got interest in developing in that area.

27:52 Okay. So not only do we have a clear path through the clinic, you have to understand your background commercial activities, and that's in the regulatory and the reimbursement. So we have a strategy of the fastest route possible. So in the regulatory area, although we could go through to the FDA and we may choose to do that as a parallel path, our critical path is actually launching as a lab developed test. That's a service based. It lends itself to a

28:23 clear approval that's administered by CMS and is much, much faster and more robust. It's about can you provide a good service offering to the clinician. So as you saw earlier, we've started that process this year. We will submit our data this year and look to get the post commercial launch, you know, certification, you know, after we launch when we're ready to do so. So that would be in early next year. That just, you know, completely speeds up that process, supports, and makes it more robust. I'm very pleased to announce we're doing that. With reimbursement, which is obviously the sister event, you know, pathway, it's still complex. I'd love to say that this has been sorted with the, you know, the PAMA, the MTET, all the advances that are being made in The US for reimbursement through Medicare, but it's still an art form. You still need to get a code, a price, and a coverage determination that still takes a number

29:24 of years. And each area is slightly different and nuances away. You can get either stuck for a year or two or where you get pass through quite quickly. We obviously have a little bit of help from some of our advisers, some of which work with Reenalytics. Our close association with that company enables us to, you know, follow the same game path, look for the most efficient strategy, and the advisers are helping us to establish that. When we decided to look for reimbursement, the the the the sort of organization called Mold DX is the most transparent and straightforward. Of all of them, it's subdivided up. The Palmetto Region was the most advantageous for us in transplant care. And so we opened up our ClearLab in Tennessee, which falls within the Palmetto Region.

30:15 And that should give us a the fastest route through the Medicare system. And then, you know, there are a couple of other nuances such as use of case studies, vignettes as they call them, that have been used successfully in transplant care to get ahead of some of the coverage determinations or laid down the foundations ahead of your full blown clinical utility study. And so it is these nuances, these strategies that enable us to have quite an accelerated pathway through that. For anybody that saw me present at IPO, this will be a familiar slide, but I have updated it a little bit. So you see where we have had the clear approval next year. We're putting it forward into this year where we're looking for applying the reimbursement code next year, we're pulling forward into this year. We're still predicting that the trial will still take us to the end of the year to collect all the samples and do the analysis.

31:12 If I can beat that by a month or two, I'll be delighted. But, you know, I think we need to be very realistic about that. That would be then analyzed and published in the following year. We would be doing our reimbursement. We're laying down the foundations for that right now with the health economics, you know, modeling and so on and so forth, which we'll publish early next year. But also starting to organize the sites for the utility studies and do these case studies early on. That will support effectively the pricing decision and then the coverage determinations in the in the well, the pricing is July of next year and and the the determinations are in the following year. So everything that we're designed to do is to make that more robust.

31:58 I promised revenues within the first two years, and we're still holding to that timeline. It will be the early adopters. It will be a low level, but it's the commercial proof of concept. And then as I said, you know, we we were very clear that we would fund to that, and then we will be back for the next phase of the company, which is commercial expansion. Just a a little outlook for this year. What can you expect from the company? Well, this is what I call our foundational year. It's we're putting in all the building blocks for that commercial launch next year. So you'll see as we go through anything we can control, we're trying to push the timelines up to make anything that we don't control more robust and certain in terms of our milestones. We are on track to hit all of those milestones either early or on time. And we're also strengthening those activities by, you know, all the foundation work working with the societies may looking for key partnerships, looking for health economic information, working out our publications, looking at any, you know, additional studies that we might do. All of this goes to building up a brand presence and the credibility that's gonna be incredibly vital for that commercial launch next year.

33:15 David, give me a break. Talk to me about financials. Give you a break. Thank you, Sarah. Good afternoon, everybody. So on the financial side, our overall admin expense just cost us 1,600,000, then two exceptional items in the year. One, share based payment is not exceptional in terms of it being an expense, but exceptional as to the amount. And the amount was because just over 72% of the options had vested by the year end. So the full charge on those is taken in that period. The rest of the options, the charges then spread over the the the next just under three years. So that's exceptional by amount, but not by nature.

34:03 And then the IPO costs so the IPO costs were just under a million pounds sterling. Most of that goes to reserves, but an element needs to be charged through the income statement. So that's the element in dollars charged to the income statement. We then had an interest charge really arising from international financial reporting standards because of the con our convertible loan note that existed. And because it had a conversion term, you have to allocate an element of interest to it. So I'll I'll put that in the in the category of of accounting matters. So giving us an overall loss of just over 4,700,000, an adjusted EBITDA loss when I also exclude a forex loss of 1,200,000.

34:48 If we add back that forex loss, then it's about an adjusted EBITDA of 1,400,000 adjusted for that share based payment and those IPO costs.

35:01 Going through to the balance sheet. So in terms of our intangible assets, intangible assets, that's the license and related assets from the license that we acquired earlier in the year from Mount Sinai. There's there's no other development cost which are included in that. It's pure asset cost, if you will. Cash balance at the end of the year was $17,700,000, which at a year end exchange rate gets us about 30,000,000 sterling. So we spent overall about a million and a half for the period. And the rest of the balance sheet made up prepayments about accounts payable accruals, etcetera, the sort of normal normal items you'd expect. In terms then of cash flow, so on cash use in operations and investing just over a million dollars, which included the 275,000 spent on IPO costs. So an an operating cash outflow, if you will, of about $750,000, which equates to about 550,000 sterling.

36:08 And then we get the benefit of the

36:13 the appreciation and the value of sterling against dollar at year end, and it takes our cash up to 17,700,000 at the end of the year. Thanks, Sarah. Thank you. So I'm just going to summarize before we take the questions. I think that, you know, in in the last twenty years, I've learned a few things about having what what you need for a successful diagnostic company. You know, it's not just about the science. Clearly, you need a good technology, very robust and highly differentiated. And I think we've demonstrated that in terms of it's quite a different approach and one that is, you know, garnering a good response from the clinical community. It has to be useful.

37:01 And this clearly is. It by it will in improve patient outcomes. It will assist the clinician in their treatment pathways. And also, it will have positive impacts on the health economics and quality of life measures, all of which I think are very useful in terms of supporting the clinical utility case. Key partnerships, obviously, I've shown you that from our advisory board, we already have some key voices and influencers in the marketplace. But the announcements of our first three sites that we opened up in The US gives confidence that, again, this is garnering a high degree of very credible interest and desire to be part of this progression.

37:50 I was thrilled by the level of private investigator private principal investigator sort of interest and the level to which they operate. So this is a tight community, and we're seeing a high degree of interest in seeing the outcomes to this validation study. It's not just about science. It really you have to know how you're going through the regulatory pathway. Pleased to say that we don't have to do FDA. We may choose to go through FDA for other reasons, but our critical path is not dependent on them. And that's particularly important as the agencies, you know, reporting overwhelmed from the COVID applications. And then in reimbursement, I've talked about The US side. The EU side is also just as complex, still an art form, but it uses a lot of the same data.

38:43 So as we're building up our case for Medicare, I'm also building up my case, for example, from the NICE guidelines. Those are being used by the European countries as well as a good practice area. And as we expand our clinical trial sites into the EU, the point of that is to capture the key opinion leaders in that area, which they are looked to by the each each country's policy making and a test adoption. So that's how we get through those processes in terms of commercial launch and being reimbursed for it. And then you need a clear competitive advantage. I think we have demonstrated that in the technology.

39:30 We're demonstrating that in understanding the clinician's need for a kind of platform, a partnership, and being very clear about pricing at a level that is meeting the needs of the patient and improving patient outcome by supporting the clinician. And we're seeing that being very well received. So hopefully that sort of gives you the introduction. I'm happy to now move on to questions. That's brilliant. Sarah, David, thank you very much indeed for such a comprehensive update. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. We just want the company to take a few moments to review those questions submitted today. I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, will be available via your Investor Meet company dashboard.

40:20 I'd also like to remind you that your feedback is important to the company. Immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. Sarah, David, obviously, investors have the ability to pre submit questions. I think you have touched a lot during the presentation, but perhaps if there's any areas where you can expand. The first question is, can you discuss the clear lab approval process? How it works? How long it takes? And what are the risks? Absolutely. So generally speaking, there's two parts to an approval. So first of all, you have to have a clear lab. And that is what we're doing this year. We're setting it up. We have to have the right processes.

41:06 We have to have the right medical director with the right license in that jurisdiction, and we apply for approval of the lab itself. Once they've reviewed that, they understand that effectively you know what you're doing in terms of running a lab, then you get the approval on the lab. Thereafterwards, you're looking for approval for the for the tests themselves that you're going to offer. So the idea is that, essentially, you're offering a service. What happens is the samples will come into the lab, the lab processes them, and you give out an answer. So no materials go out apart from the result and the interpretation of those results for the clinician. So it's a service based offering. To that end, the clear regulations are much more focused on the processing of the test.

41:54 They are focused on things like reproducibility, the robustness of the results, and so on and so forth. And we will be submitting that data in q four of this year and showing how we run each element of the test and how robust and reproducible that is. Thereafterwards, you have a period of time to commercialize. And, obviously, us accelerating this process enables us to commercially launch the minute we're ready to after the fact, you know, our clinical validation. We can launch this year. I don't know that anybody would buy without that kind of clinical validation study. But it does mean that we're ready to launch at all level at all timelines after that validation study.

42:40 And then you submit once you are in the commercial activities, I e people are buying your tests, you are then, you know, issuing responses. They come in and do an audit to check that everything is still as it was when they gave those first approvals, and then they give you a certificate post commercial thing. So that's the end to end process. There are risks involved in terms of timing and resources. And interestingly, I don't see very many risks associated with the the system that covers the about 45 states. And that's, the one, you know, in the in Tennessee is is covered by that. The bigger risk is actually, there are five states that follow, New York state, who are a little bit more rigorous, and they will require coming out to do an in person audit themselves.

43:35 They favor in state audit over out of state. And with COVID, they have been putting a time delay on it. So you'll see that in my timelines, I still gave myself a full year to get the clearance on that. We'd like to beat it, but it can take up to a year just to schedule that order. That's the main risk that you have with New York State and the five states that follow them. Beyond that, it's relatively straightforward. Hopefully, that answered that question sufficiently, but do let us know if there's something else you want to know about that. That's great. Thank you very much indeed. I know towards the end of the presentation, you you referenced key partnerships. But the question that we had that came in is, can you discuss any partnerships that you have? So if there's any room to expand, that'd be great.

44:22 So academic partnerships, you know, I think we've been very open about in terms of bringing on our trial sites. I have some announcements in The US to to that are forthcoming as well, very credible sites. Obviously, the academic kind of network is very well established and those partnerships I'm I'm very happy about. The commercial partnerships, we have not formalized anything. We will be in a number of discussions over this next year. And I hope to announce in 2021 some key partnerships there. And then in terms of key influences, we do have dedicated resource for the societies. We've identified there are about 20 or 25 players in this field internationally.

45:11 You know, the the key players are about five or six of those. We're already in touch with them and we will look to do partnership events with them. You know, we will support their efforts in terms of advocacy, but they're also the key avenue for education. So as you know, clinicians doing their CME need to understand the up and coming products And so we'll work with them through those education and patient advocacy as well and awareness. You know, that's one of the building blocks for me on our brand awareness and credibility for commercial launch. And those partnerships are, you know, whilst may not be terribly formal as in we I don't know that we're going to be writing many contracts with them.

45:57 You know, we're already addressing that, and I'd like to see some announcements before the end of the year, Particularly in the fields of not only conferences as awareness and stuff like that, all very, important. But we're looking about supporting some of the upcoming research areas. Obviously, as we're looking to have a platform, ultimately, the partnership with the clinicians, we are always looking for opportunities to liaise, particularly through the societies who are very active in sort of networking between research efforts and putting people together. That's great. The final pre submitted question, if I may, is does VERICI have any fee agreements with Mount Sinai? So from the fee agreement, what we have is a royalty agreement.

46:47 It has this it's very standard. It has some milestone payments, you know, on various stages of development and an 8% royalty upon commercial launch. That's great. Thank you very much indeed. Well, that takes care of those questions that were presubmitted. Perhaps I could ask you to open up the Q and A tab that's on the right hand side of your screen also. If I could ask you to read out the question and give a response where it is, of course, appropriate to do so. And then I will pick up at the end before redirecting investors' Thanks. Yeah. Okay. So the first question from Peter PLC. Having read the results today, one of the risks which the directors believe could materially affect the company's ability to achieve its aims is the reliance or retention of a small number of individuals.

47:37 Has the company thought about taking out key man, key woman, thank you for that, insurance? So, yes, is the very simple answer to that. You know, it's the conundrum between cost control and also being able to move fast. I'm not looking to build a huge company at the moment. And the next question will address that. But effectively, you know, to be able to move as a very tight motivated company, you do then have a very small team. And we will be assessing that within our insurance brokers. Now we're in the post fundraise period. So, hopefully, that answered that sufficiently. The next question is sort of building on that which from Simon c. Can you elaborate on the size of the company, number of employees, office locations, and do you require further investments in this regard?

48:33 So let me address the further investment area. Everything that I comment on now is already budgeted. We were very clear about our needs for the next year to get to commercial launch. It is a small team. We are adding to it as we go through, but it's all budgeted. So no further investment is required. And the acceleration of the ClearLab is is more a timing issue rather than, you know, a funds issue. We were gonna do that lot next year early next year. We're going to do it this year instead. So our use of proceeds, we're on track with that. So the size of the company is quite small. And I I'm blanking on the number of employees, but, basically, it's six. Mhmm? It's seven at the moment. Seven at the moment. Yeah. See, that's how fast we move.

49:27 We are recruiting an extra three people over the next few months, and so that will take us up to 10. We don't particularly have office locations. I suppose this is a COVID progression, but we are a virtual company. So as you can see, I'm at home, and you can probably hear from the background noise as well. We don't see the need for a central office, but we do have central labs. We can't one, the development lab is in New York. That's out of the J and J incubator space there, and we've had that for some time. And then we're opening up, which will end up being our headquarters, is the ClearLab in Tennessee. It's just outside of Nashville, but I'm not looking to expand beyond that.

50:16 So I think that answers everything there. The big expansion after the 10 employees, we may have one or two join us before as we get to commercial proof of concept. But I'm not looking to rapidly expand in that area. We do use advisers and, you know, to great effect. And then really the next tranche of funding will be about commercial expansion, and then I would be looking to probably double the size of the company at that time. Okay. Another question from Simon c. What do I see as the biggest risks to my commercial expansion plans, And will this be managed in house or outsourced? Great question.

51:01 I think, you know, realistically, we haven't proven this business to business case. When I look at CareDx, they have a a larger sales force than I would expect to have. But then if you look at their offerings, they have a wide range of quite disparate products with disparate audiences. We are trying to you know, as we commercially launch, we're trying to keep on a very critical path even if we bring in other research opportunities. I'm gonna be dead set on this commercial path for these two products, and we're gonna be very focused on how we expand that offering. This is gonna be a platform play. We're gonna be talking to the same people, the same c suite, the same clinicians about the entire platform.

51:47 And so that's how we're managing the risk of kind of growth, but, you know, that you didn't plan for because you're talking to multiple audiences. And so that's that's really when I think about commercial expansion, I always think about things getting out of control to get those revenue numbers. We are designing ourselves and and our launch to to really target a very tight approach in that area. Okay. Hopefully, that answered that question. Tim h, appreciating your two year pathway to revenues, do you expect to raise any further capital prior to this? Your current burn rate suggests not quite right. If we're business as normal, you know oh, you've added to the question.

52:36 Oh, no. It's another one. I'm sorry. Sorry. You know, we were very clear with our budgeting that the two year horizon that we could get to, we would do first horizons and that we wouldn't be really looking to need any additional funds. Having said that, there are always opportunities that present themselves and those may take additional funding. We would assess those. And also there's market opportunities. There are times when you would it's favorable to the company to raise more money in terms of a timing issue, and that would also be a consideration. But in terms of business is normal, then I think our current burn rate does support the fact that we would be keeping to our plans. Okay. Your next question. And can you give us any helpful guidance in assessing what revenue opportunity is ahead and how this may look for The US versus rest of world?

53:31 Any comparables that may help. So that's why I threw up the case of CareDx. You know, the other companies are hard to really extract the relevant information. CareDx is just in heart and kidney, and I I think their revenue figures of 104,000,000 in 2019 was probably fair. It may have a slight edge towards heart transplants, but the pricing was quite similar. I think their adoption is fairly similar. So you can sort of use that as a case study. The interesting thing, Tim, was that the CareDx expansion has been quite rapid. And so that's where I'm looking for The US to be quite efficient in terms of that revenue growth, and that's why we're going for that market first.

54:20 Now Europe is our is a very close second for me. You know, we raised in the AIM market. I am a Brit. I would definitely like to get into the NHS, so UK is an obvious target. And you'll see us trying to bring on clinical trials on centers of significance for that UK. And you'll see us putting in the foundations on qualities and stuff like that. All stuff that is required by the NHS. The NHS is notoriously slab in terms of new innovation adoption. And so we're not sort of, you know, hanging our hat on those revenue projections. Instead, I see Europe being a little bit more advanced. The general rule of thumb is the fur you know, the closer to the Mediterranean, the easier that innovation is adopted.

55:07 Have no idea why. Maybe it's just good lunches. But, you know, essentially, we will be looking at the obvious candidate. So we are talking to clinical trial sites in France, Italy, and Spain, as well as The UK. And I think that I would like to expand that to to Germany and Belgium. That's really how we would cover Europe in the first instance. And then rest of world, you know, Asia is always an interesting market. I saw Korea as a good launch pad into into Asia just because they are very focused on transplant care more than the other Asian countries. And Australia is also part of our advisory board, Phil, likely to be in our clinical trial and likely to be an early adopter. So I see that too.

56:02 So hopefully, that answers that question. That's brilliant. Sarah, David, you've been very generous with your time and perfect timing as we come up to the hour And think that's that's that's good question. I small company in what is probably our most boring year, our foundational year, you know, putting all the great box in, but not particularly exciting. So the, you know, high level of participation and support from the stock is very much appreciated. And in return, we would like to continue hitting our milestones and being very focused on that shareholder return.

56:49 Sarah, David, thank you once again for your time today. Could I please ask investors not to close the session as you'll now be automatically redirected for the opportunity to provide feedback? If you access this meeting from our website, then the feedback page will automatically appear. However, if you access this via the link sent to you by email, you'll simply be asked to log back in and submit your feedback, and I think the that would be greatly received by the company. On behalf of the management team of VERICI DX, I'd like to thank you very much indeed for attending today's presentation. That now concludes today's session. Good evening or good afternoon, should I say, to you all. Thank you.