Verici DX (LSE:VRCI) — Interim Results

0:01 Good afternoon, and welcome to the VERICI DX PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Sarah Brankton, CEO. Good afternoon.

0:33 Good afternoon. Thank you everybody for attending. This is, obviously to present our interim results at the half year, and also to give a update on the, on the progress of the company. And I just wanna start off by reminding everybody, where everything, fits into the wider vision, of the company and what we're doing here. We obviously have three individual tests, a pretransplant test, FLARAVA, an early stage damage test, TUTIVA, and a later stage damage test focused on fibrosis called Protagon. And what we said we would do is we would launch these as individual tests, but the real power for us is being able to offer these as an end to end platform, knowing that not only is it covering the time continuum, of kidney transplants, but that each test is likely to inform the other.

1:40 This around, that end to end testing, and the platform idea is what we call the clinicians platform. We are looking to sort of partner with clinicians, answer their major questions based on, RNA signatures. And then behind that, is the data that we collect. Just a reminder that, we do collaborations in research to to promote innovation in the field. And our data really, in conjunction with the ICA programming from Illumina, offers a secure place to do these collaborations and to properly curate the, the the data that we've got. So that's the ultimate vision.

2:27 We're in kidney transplants now. You can see that we have a long term vision of other organs and then into other disease groups because RNA signatures are really at the forefront of diagnostic care now. And what we've been able to do, is translate that now, not once, but now twice, with Klarava's results coming into the, cross from from an academic, from an r and d environment into, into the clinic. To TIVA, we announced earlier in the year around May, June of this year, and Carava, has been just, announced, yesterday.

3:13 And what this does is this really starts to support the fact that although we're looking at these individual tests, we're now really proving the platform of RNA signatures and their applicability into the clinic. So let me just run you through, some of the milestones.

3:32 Thank you. Obviously, what we've done put up here is is really the commercial pathway. I think there's a big emphasis now in this transitional year from us just being an R and D company into one of commerciality on what that pathway looks like and what the progress is. And this is what this table seeks to do. So obviously with Tufiva, the clinical trial results, you know, was completed and, know, presented at AST conference, and we're now in the second half of this year in what we call commercial soft launch. What we mean by that is being able to work with some very early adopters in understanding how to integrate it into a hospital system. So, it's like what I call the easy button, making sure that all the logistics work, the turnaround times, all the things that can trip you up in a mature launch, we've got covered. We understand.

4:28 And also to give, more material to our KOLs as they go out and talk to the wider community on that. And so that's, that's well underway. Karava clinical trial, you know, we issued that yesterday. Did note that, the good news, bad news story for Carava being so novel, is that it has no competitors, in the marketplace. That's the good news, you know. But obviously, in a novel test environment, more and more data is needed to support that, and that's what we're looking at. We're expanding the enrollment to support the commercial adoption, the utility studies, the reimbursement, pathway, so on and so forth, publications, and presentations.

5:19 So I think that that was very encouraging and testament to its success. Looking at reimbursements, if you remember the code, price, the coverage. We got PNL codes for each of those tests at the beginning of the year, so each has unique code. And we're going through the this year is all about going through the process of pricing. There's two choices. We may be recommended for crosswalk, or gap fill. Crosswalk would be issued at the end of this year. Gap fill would be into next year, but that would give us a pricing, recognized by Medicare. And then you go into the coverage determinations.

6:05 Trutiva, obviously didn't need that extra work, because there are already other tests in this area, even though they're not the same technology. But it gave a local coverage determination in the Palmetto region, which is what we needed. We need to apply for that. We'll do that once we've got the publication out on the validation data, and then look for an answer coming back from the Palmetto region, next, early next year. Obviously, the Carava coverage determination, will take longer. We always said that this point, this year is the year where the two tests take different pathways. This is what we're seeing now. And we'll move from, you know, from validation into utility work, into publications, and we'll be making an application for the local coverage determination with all of those data points and and that that looking to to have that within the Medicare system and then obviously be looking for both products into the private situation.

7:14 New York State on the regulatory side, that submission we, need to, complete a clear audit, which apparently we're in line for, and so that's pending. Once we have the results of that, that we can include in the file, we'll make that submission. And then obviously in terms of public, you know, publicizing, the results and the nuances of the tests, one of the big ones, big parts to to our marketing on the conferences. Sorry. My words are stumbling today. But we had a positive reception, for the Tutiva data at ATC. We're very pleased to be

7:57 given a speaking slot, a quite competitive situation at AASN in the kidney week. So that's coming up in November, and that's a big splash to the wider kidney community. And then we'll be building upon that with our soft launch and subsequent publications. We announced that we had engaged our commercial team. They're now up operational and out in the field, And obviously, they're active on this soft soft launch for Tutiva. And then for the wider longer term revenue story outside of The US, obviously, we are leveraging our clinical validation sites in Europe and in Australia for that wider adoption further down the line. So as you can see, when we're looking at the commercial pathway, there's been a substantial amount of progress and during the first half of this year.

8:57 And obviously, we're looking forward to more information and more milestones achieved by the end of this year and into next. Thank you.

9:08 Just to cover the other, aspects when we're looking in the period, which includes right up to today, one of the key studies that needed to be done over and above the validation, the clinical validation studies for the analytical validations, those were completed in February. They will be submitted for publication, before the end of this year, and they obviously go into both our regulatory and our reimbursement, pathways, and then important key milestones for commercialization. We also announced a collaboration with Illumina. Again, if I can refer everybody back to our long term vision, one of the aspects to the company that we were keen to promote is not only are we a biomarker company, but we are a data company. And that collaboration with Illumina is a very important step forward in curating that data in such a way that it it expedites the operational launch of research collaborations, you know, within that environment to to speed up the the pace of innovation in other areas. And so we're looking forward to launching that a little bit more formally by the end of the year, moving that forward into collaborations into next year.

10:33 Obviously, in the period, we we write we did a fundraise of 10,000,000 in in March and completed that. And then, obviously, we'll talk about the financials and the interim results and the cash runway in subsequent slides. We've already noted we've got a commercial team. We've already noted that essentially we're now two shots on goal. I think the expression is improving the individual

11:04 tests will be moved into the clinical environment and proving the worth of that of that platform. David, over to you. Thank you, Sarah. Good afternoon, everybody. So starting with the cash flow statement, in terms of operating activities, cash burn there broadly in line with expectations. In terms of investing, and so we spent 560 odd thousand on the clear lab. The total cost of that is gonna be around 800. I'd assume that we would have a little bit more spend up to the end of June, so a little timing aspect there. And then a 160 odd thousand on patents and licenses. The 2.6 reflects the net inflow from the fundraise.

11:50 There's another 90,000 of cost, which are included within its operating activities. So taking our cash to the end of June at 15.7. And current cash is 13.5. Now at the time of the March fundraise, we were expecting cash runway to August 2023. We're now expecting cash runway to early twenty twenty four. And the big movement there is really in terms of head count and the way that we are planning on building out the team. As Sarah mentioned earlier, we have the the the generals as I call them in terms of the the commercial team. We've got three individuals. They're out in the field, and they're out in the field talking to the hospitals, talking to clinicians, and really to get a better understanding in terms of what we need. And more particularly, how hospitals can order the test in as easier way as possible.

12:44 And then from that, we will take that and build out the the business development team on the back of that knowledge. So that that together with other actions will help us take cash runway out to early twenty twenty four. In terms of the income statement, adjusted EBITDA of 4.9. Largest of absence expenditure continue to be wages and and r and d. In terms of headcount at the end of June, we had 13 people in the business. We currently have 14. We're looking to hire another three by the end of this year and another, seven by the, by the end of twenty twenty three.

13:24 And then in terms of the balance sheet, as I mentioned earlier, we spent $6,560 odd thousand on the ClearLab to date. Our intangible asset base of that is 1,500,000 that we paid RENalytics at the start for the original license and then further costs which have been incurred to date. Receivables is mainly prepayments. And then in that trade and other payables, Biggest item there is accruals, and the biggest item of that is our site accruals. This is where individual sites have incurred costs on our behalf in respect to the trials, but have yet to bill us. The the lead time on that can be some months, And so those are included within accruals. Thank you, David. Back to you, Sifa.

14:13 So just, you know, obviously, the key points on this is that we did make very strong progress to date. I think this transition from being just an r and d company to commercial one is is proving to be very successful. You know, obviously, with the soft launch, by the end of the year, you know, we did say that they wouldn't represent, high amounts of revenues this year, because it's a soft launch launch this actually to be able to sort of really integrate, the tests in proper way through our commercial readiness, program to those, key early adopter sites. But I'm very pleased to be able to say that we, got the right team in place to be able to to implement that.

15:02 Couple of other things that we're doing, you know, we've talked about the health economics model that's now drawing to a close. That's ready for, another sub publication that's going to be, submitted by the year end. And then obviously as we're moving forward out of, just, the the validation into the commercial arena, We would expect to see more studies supporting that in terms of utility and real world evidence studies, not only done by us but by other, members of this clinical community, to support our, body of evidence and publications. We've always said that the, the true test is when you get independent publications, that's that's very supportive in terms of the larger scale adoption, and we're on on track for that.

15:53 The pricing determination, you know, is is well underway. We'll know by the end of the year if that's cross bought. But even if it's gap filled, it's sort of in line with our adoption, for revenue next year. And so that would be, you know, known in the first half of the year. And then what we would say is is obviously we were looking for this year to be a springboard in terms of that transition, and then we're looking forward to next year, and I'm planning on how to do the the the hard launch, the mature launch, and for 2023 and 2024 revenues. Okay. That concludes just the update, and I I see we have a number of of questions.

16:44 Did you want me to go straight into that? Yeah. Sarah and David, just just like to thank thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated in the top right hand corner of your screen. But just while the company take a few moments to review those questions today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. As you mentioned, we've received a number of questions, and thank you to the investors for submitting those. Sarah, could I just ask you to read out those questions and give responses to what is appropriate to do so, and then I'll pick up from you at the end. Great. Yes. So so the first question we have is, has there been any interest in products from any companies already addressing the kidney transplant market? Yes. There's a lot of interest in these products from the scientific community, and that does come obviously include competitors that are already operating in this space.

17:43 And I see the next question is about companies not yet operating in the area of transplant rejection. So I think that, you know, what's really important here is is the is the adoption from the scientific community. When we're talking about other companies, they, of course, are monitoring our progress. We talk all the time. It's quite a close community. I and and, you know, we meet at conferences. We are constantly reviewing their work. They're constantly reviewing our work. So there's definitely interest in that. In terms of outside of the tradition, you know, we are being showcased by Illumina as first of their clinical offerings or content offerings on their ICA products.

18:30 And we know that we, you know, we also got a case study from the Amazon AWS as they're hosting that plan in terms of promoting the clinical adoption of these tools and techniques into into the marketplace. So how that is manifesting into outside of kidney transplant rejection is unclear to me. It's not necessarily on our immediate horizon, but we we are going to those conferences and obviously we do have quite a lot of publicity on that side. What are the expected costs of the planned improvements to the CLEAR approved lab?

19:18 800,000. And and what's the stage of the lab improvements at? It's pretty much complete. Do we have a date for moving in? It's within the next month we're moving in. It's part of our commercial readiness, you know, and part of the soft launch was to to be ready at that time and to be able to process the commercial tests within that environment to to check that that that we would be ready for the wider adoption. So that's all on track.

19:59 Is the pricing decision required for you to start your soft launch later this year? How long do you envisage the soft launch lasting? So the soft launch, no. We do not need Medicare's pricing determination. That is actually really if you the way I like to explain it is it's like a list price, for Medicare. So the pricing determination is that that will be recognized across the whole of the nation. But we can, in the meantime, put a price up there. Obviously, you wanna be, close to what where you think you're going to end up. But, yes, you put a price out there that you're charging, and part of our soft launch is to sort of test that through the process even though we haven't got a pricing determination nor the the official check-in the box on the coverage determination.

20:55 So, you know, clearly, those are things that we'll be testing out through the soft launch. I like to think of the soft launch as being for the rest of this year. It really is the case, as I said, on two fronts. One is commercial readiness, which as you can hear, we're we're on track internally. It's good to understand it externally, work out all those little nits. I always like to say find the easy button and that will speed up adoption. But it's also for us to explore our marketing messages, what resonates, what doesn't, and also for the KOLs that are the early adopters to be able to gather their own data, see what it's like in their own hands, and be able to talk into the wider community next year. So, early January, you know, I think it's January 2. You have to say it's our hard launch rather than January 1.

21:47 But, you know, essentially, that's when we're, going to be going out outside of these very early adopters into the wider, community to make what I would call the hard sales, the cold, selling. Obviously, there's still, networks that we can leverage, but that's really where I'm seeing that next is next year. Any events happening in the broader kidney area which might have an effect on you good or bad? There's always the legislation activities that are going on in the background. You know, it's one of the rare areas of bipartisan support, so that's good news for us that there continues to be support in terms of widening access and improving some of the coverage for healthcare in the kidney area and that that continues to march forward. So I would say that that's a very good background.

22:51 Clearly, there are, they still haven't solved a lot of the issues in terms of the progress of kidney disease, you know, the underlying causes such as diabetes. That's still on the increase as it was the effect from COVID. Obviously, we you've probably read that the the kidney is one of the major organs that got affected by COVID, particularly long COVID. And with, you know, I we've yet to see that really play through. There are other innovation ideas. There's some interesting things on artificial organs, but they'll be years away from from really hitting the market. So I think those are the kind of general general sort of trends in kidney that we see right now.

23:50 K. What sort of revenue would you need to enable you to stand on your own on your own foot feet? Yeah. I think then that's about cash flow breakeven. And, essentially, we would be predicting that not out of this round. We've never promised that and and certainly that that wouldn't be expected. It was all about the, getting to a situation of of the early revenues. The next phase is where you could expect that to happen, and that's more likely to be in the in the sort of year of 2024. Am I seeing any other questions?

24:39 Seeing it. Nope. Nothing there. I'll just give it a couple of minutes. Oh, that's because it's a very long question. Hang on a moment. Okay. Can you tell us about your plans to make TruTiva and Clarava available to clinics in a real world setting, and are there many locations that are keen to work with you in the role of early adopters in the current year? Yes. I can. So quite excitingly, we we targeted between two and four centers to to work with us in this soft launch, and we wanted centers that had multiple clinicians as well.

25:34 So, I'm pleased to say that we're already engaged in two centers, and we're being actively considered by another two, and there may be more than that, but we'll see. We we don't necessarily want to to overwrite it in terms of when you're doing the sort of early adopting learning. So I would be looking to to make that sort of something that that we do well in because that's obviously what you want communicated out to the wider, community. So, expect it to be about two to four centers. The real world, setting is very interesting and, you know, again, healthcare is always about could you give us more data? Could you give us more data? And I think that there's sort of, need to have, data sort of drive some of these real world activities, and we've seen this through other companies.

26:32 KDX, for example, did a lot of that in there in the early days and continue to do studies. But, of course, you know, one of the things that we are trying to move on to very quickly is instead of us funding the studies, that it's done in what we call a real world evidence. So, for example, if you want to understand the impact of our tests in the interaction of a drug modulation, that's not necessarily something we would fund, but it's something that we would expect clinicians in their own hands, in their own ways to be doing. And so you do have this sort of period of transition where, for what we call the utility studies will be done, but there'll still be revenue generating, so they're part of your sales, even though it's because people are looking to see how it operates within your own hands or whether they're interested in a subsection of data such as the interaction with with a certain drug or etcetera. So, that's what we mean by, real world. And yes, we will definitely be seeing that in both tests, alongside just, you know, straightforward, clinical settings.

27:42 With regards to strategic partners, is there scope to work with the bigger players such as the big pharma companies and to use the results in drug trial in demand? Absolutely. Again, you know, when we talk about that research asset and the need to have it in an environment that is as flexible and as helpful as ICA, that is exactly what we're doing and we are looking to do collaborations. One of the things I said earlier is that we're hoping to launch that, you know, by the end of the year, early into next, and we're looking for collaborations next year to come into that space and to to prove that asset out. So, yes, that is a one a definite area for us.

28:30 Is there scope for such potential partners to help fund the rollout and accelerate the adoption? Absolutely. I think that is part of the rollout is is where, know, companies are looking to collaborate and extend the use of your tests into areas where that aren't necessarily just the the first intended use. So, yes, I do think so. And lastly, regarding your comment about being well funded, how much runway do you perceive you have in your camp? I think when we went out back in March, we had a runway out to the end of August.

29:16 Clearly, given the current circumstances, you know, we've been reviewing our budgets and prioritizing. We're now extended the runway out to, you know, the end of twenty three, the start of twenty four, and we'll have to see if there are any more things that we can leverage into doing that. And that's with fairly conservative views on revenue just so that we don't get caught short on that. So, yeah, we're we are, very mindful in how we are preserving our cash and how we're spending it. Obviously, there's a need to grow, and we do need to do some hires and to put some resources in. But at the same time, we're doing it very mindfully, and not trying to get too ahead of our skis, as the expression is, so that we can extend that runway as far as possible.

30:11 Are you depressed at the price? Sorry? I'm just looking at the I think I can read it. Are you depressed at the share price? Alright. Anyway, I'm not there yet. I calculate net monthly burn as about $75,800. Oh, I think I've answered Yes. I've answered that. Yes. It does include some revenues, but we've been very reasonable on those so that we don't get caught short. And are you depressed at the share price? Isn't everyone? You know, unfortunately, we're all faced with the same market conditions that stocks that clearly have accrued value in a very tangible sense are not are not having that reflected in their their share price.

31:07 Here we are underneath an IPO price and yet we've got two validated tests. So but at the end of the day, when the markets turn like this, the only thing you can do in the company is put your head down and keep executing and making sure that our progress is continued and very tangible and and wait for that to be, you know, reflected in market conditions. Sarah, David, thank you very much for that. I think you've addressed all those questions from investors, and of course, the company will review all questions submitted today and will publish those responses on the investor me company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important to you both, Sarah, could I just ask you for a few closing comments? My closing comments are and I'm sorry that I was so stuttery earlier on.

32:04 Sometimes it happens, doesn't it? I'd like to say in my closing comments that I I have a huge amount of excitement about the progress that we've made. I mean, if you look at this, you know, we took, some some, information and some technology, and we've been able to translate two products all the way through to the clinic. I think that this is a great achievement. I'm very proud of what we've been able to do, and I'm really looking forward to what we'll be able to do with this commercial launch. It's a very exciting time and it's great to see the transition going, from, from just the r and d into into the clinical reality. Sarah, David, thanks once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

33:01 This will only take a few minutes to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of the REACH DX PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all. Thank you very much. Thank you very much.