Avacta Group Plc (AVCT) Earnings Call Transcript & Summary

Good morning, and welcome to the Avacta Group Plc interim results investor presentation. [Operator Instructions] The company may not be in a position to answer every question received on 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'd like to note the following poll. And I'd now like to hand you over to Alastair Smith, CEO. Good morning, sir.

Good morning. Thanks very much. Good morning, everyone, and thank you for sparing the time to listen to the interim results presentation. Perhaps straight on the deck, it's quite a lengthy deck. So I'm aware that most of you will be very familiar with the company. So just very brief introductory slides. The group comprises 2 divisions, Therapeutics and Diagnostics with combined objective of improving patients' lives, leveraging the 2 platforms, the 2 proprietary platforms, Affimer and pre|CISION that we own. I won't read through all of the investment highlights, but let me just sort of focus on the key points and certainly throughout the reporting period and post period as well, the outstanding progress with AVA6000 in the clinic is clearly attracting a huge amount of attention. We'll talk through that and I'll -- everyone is up to date, but I'll go through the most recent announcements again in this deck. Following behind that, our second pre|CISION project, which is 3996. We'll talk a little bit about that still on target to get into humans. So the second pre|CISION drug into human later next year. On the Diagnostics side, I'll give you a quick update on the progress building a significant pan-European Diagnostics business. We'll talk through the vision and the mission for that division. Focus right now is on growing the acquired businesses. So the 2 businesses we'll talk about briefly, the focus now is not on additional M&A to add to that at this point in time, but really focused on benefiting from the synergies across the division. I think it's worth saying and Tony will speak through the financials in a moment, but it's worth saying that with that balanced business model and a really clear understanding of where capital allocation has to be made within the group at the moment for greatest growth in shareholder value. We are well funded and we have plenty of optionality around nondilutive commercial sources of funding as well as, of course, dilutive funding. But we're well funded through to late next year to achieve the milestones that we're all focused on. I'll hand over to Tony to talk through the numbers, please.

Thanks, Alastair. Good morning, everybody. Just to run through the financials for the half year. In the income statement, we reported revenue of just shy of GBP 12 million, which was the biggest revenue number of actives reported in the 6-month period. And as you can see from the slide, significantly ahead of the position in 2022. The revenue in the first half of the year obviously has the benefits of launch diagnostics for a full period. And we've -- the acquisition of Coris, which came on board at the start of June. Scrolling down the P&L, the most important number, I guess, on the face of the P&L is the adjusted EBITDA by and which is essentially our cash usage from a P&L point of view. So we were just shy of GBP 8 million cash EBITDA loss in the period compared to GBP 15 million at December '22. The items below that on the P&L are all essentially noncash items with the exception of the tax, which is R&D tax credits, which we will receive back over the course of the coming years. We retained loss obviously GBP 11.5 million. And if we just move on to the next slide, we can see how we've broken that down by the divisions and the important point here is the Diagnostics division, which we are aiming to be a profitable EBITDA business in the near term. And you can see the loss in 6 months was just over GBP 400,000 compared to GBP 2.5 million the previous 6-month period. So that is progressing well and we will obviously have the full benefits of 6 months of Coris and launch in the second half of the year. So we're hoping to see that become positive in the not-too-distant future. The biggest spend, obviously, is the research costs in Therapeutics there, you can see the GBP 5.3 million as we continue to progress the clinical trials. Moving on to the cash flow. We started a deal with GBP 42 million. The GBP 8 million outflow ties back to the adjusted EBITDA that we mentioned earlier. The investing activities of GBP 7 million relates to the acquisition of Coris whereas obviously in the period December '22, we had the acquisition of launch at the disposal of the Animal Health business and some CapEx costs there. So the cash at the end of June was GBP 26 million. At the end of August, it's about GBP 24.5 million, and we've received a tax refund of GBP 2.3 million to do with 2022 tax. So that cash runway gives us good runway through right into the back end of 2024. From a balance sheet perspective, obviously, the key assets are the goodwill and the leases around buildings and facilities, given the increase in the Coris acquisition, the cash position now of GBP 26 million and then the convertible bond, there's been a subsequent amortization and conversions since the end of June. So the amount outstanding on the bond is now down to GBP 43 million, which we anticipate will all be settled in equity. I'll pass back to Alastair. Thank you.

Great. Thanks, Tony. Okay. So let's go through the business update, obviously, looking back at the reporting period, but also post period and so focusing on therapeutics predominantly. And just to run through a few introductory slides for those of you who aren't familiar with the company. So the -- I mentioned that we have 2 proprietary platforms. We're focusing initially on the pre|CISION platform, but I will talk through -- give a little bit more detail on the Affimer platform later on in the deck. So the challenge that we are addressing with the pre|CISION platform. It is one of the fact the chemotherapy when it's delivered to a patient IV, the whole patient's body gets exposed to that therapy and these are quite potent toxins. So the whole body receives a systemic exposure to these toxins. And that limits the tolerability for patients, where I think we're all aware from personal experience of people who've had chemotherapy treatment, and it can be very unpleasant. So that limits the tolerability. And through that limit, the way in which the drugs are dosed or the dosing regimen and that has an effect on efficacy, of course. So it's that safety aspect and tolerability for patients, that's the real issue with chemotherapies. Many of them are very effective drugs, but they're not tolerated by patients. So the solution to that -- a solution to that is to target the active chemotherapy into the tumor tissue. And the way we are doing that with the pre|CISION platform is to selectively activate the chemotherapy in the tumor. As you'll see on the subsequent slides, when a drug is modified with precision, it is inert as it goes around the body and then activated in the tumor. So we get a significant reduction in the systemic exposure and that improves the safety and tolerability and thereby the efficacy. So pre|CISION is made to work effectively by an enzyme called FAP. And so it's worth just talking through very briefly some T-cells around FAP and the pre|CISION platform. So pre|CISION, as you'll see in moments a bit of chemistry, ultimately. It's a bit of chemistry, which is recognized by this enzyme and it is removed from the chemotherapy by this enzyme. So that's the mechanism by which pre|CISION drugs are activated. And you'll see in the middle panel on the slide, that shows you the amount of FAP in a range of different tumors, you can see going from the bottom upwards, sarcoma, salivary gland cut, if you didn't know, is cancer of unknown primary, esophageal and so on. So these cancers have very high levels of FAP. And FAP is not present in most healthy tissues. So this is an enzyme, which is very much specific in particular to tumor tissues. So when the pre|CISION modification is made to the chemotherapy and it then can't enter the cells as it's going around the body, that renders it inert and relatively harmless and you'll see that when we talk through the clinical safety data that we're observing for the first of these drugs, AVA6000. When it gets into the tumor, as I said, the modifications removed and it's only removed by FAP. So really to emphasize that third bullet on the left. That's where the IP and the real -- the value lies in the IP, the fact that pre|CISION is absolutely specific to FAP. There is no other human enzyme that will release the drug, and therefore, you get a very tumor-specific release. That's the key to the real value of the technology. So just a little bit -- just to delve into that a little bit more because I want to make a specific point. It's very easy to get focused on AVA6000 and forget the fact that this is a platform, okay? So the fact that AVA6000 is generating such good clinical data, which we'll talk through, it serves to validate the mechanism of pre|CISION in human. Therefore, the platform, the mechanism of the platform is being validated by 6000. So we're not just developing an individual asset. We have a platform very briefly to talk through the nature of that platform, give you a little bit more detail. I may have done in the past. So there's 4 components to a pre|CISION drug. The -- it's easiest to think about on the right-hand side to begin with the active agent, the drug in 6000 cases doxorubicin. In the case of 3996, which is the example I've used here on the slide, it's a proteasome inhibitor. So that's the drug. That's the cytotoxin. There are then 3 other components. You can insert a space after the drug before you get to the FAP substrate. We don't do that for 6000 or 3996, but it can be done and it affects the rate at which the drug is released. So that's an important control lever if you like, in the structure of pre|CISION drug. The FAP substrate, I guess what we ultimately call pre|CISION is the bit that is selective for FAP. And you can see that in red, below. As I said, it's a small chemical. It's actually a pet side that's very specific to FAP. And then there is an additional tail, if you like, on the molecule that again can be used to modulate the way in which the drug is released and the way in which the drug is cleared and so on. So there are 4 components to the structure of a pre|CISION drug. And to try and illustrate that in a simple way, I've indicated the drug as a pill. So that's the drug on the right. And then the pre|CISION substrate is the bit that keeps that locked up as it's in circulation and FAP is the key that releases it. And of course, FAP is predominantly in the tumor. So just to use that way of looking at things with AVA6000 -- how do we get it on somebody else's computer there we go. The doxorubicin, then on the left is connected to pre|CISION and that's AVA6000, okay? Locked up and inert as it's administered to the patient IV that goes around in the circulation until it goes through the tumor tissue in the circulation where it encounters FAP, which again, just to add a little bit more detail as people understand the technology more and more that FAP is predominantly on what are called cancer-associated fibroblast. So this is really -- you may have heard the word stroma. This is really the bulk of the tumor. The dense stroma that surrounds and makes up most of the tumor mass. And that is what is very rich in FAP. And when, of course, the 6000 encounters, the FAP, which is the key unlocks the drug and releases doxorubicin. So hopefully, that mechanism is a very clear; but b, it's very clear that it is a platform technology. So the value here is not just in a single asset. It's in a whole range. A whole range of established chemotherapies and other more potent toxins have never been used as chemotherapies because they're too potent. And we can now begin to think about using those as systemic treatment. Well, we're moving along. There we go. Thank you. Okay. So AVA6000 is, as you all know, in a Phase IA safety study. We -- the primary outcomes of a safety study are obviously safety and tolerability. We will touch on and talk about the efficacy signals that we're now seeing, which has been a -- I mean that's a huge landmark step for us to be seeing efficacy in this group of patients as well as getting the remarkable safety data that we've been getting is a huge step forward, and we'll talk about that briefly in a moment. But the Phase IA dose escalation study is a safety study, the primary objectives to understand the safety and the tolerability and to identify if there is one, a maximum tolerated dose or define the dose to move on to the Phase II study. So as the name suggests, it's a dose escalation through increasing levels of treatment with AVA6000. To cut a long story short, we are now into the seventh cohort, which is dosing patients at 385 mg per meter squared, which to give you a benchmark there is equivalent to at 3.5x the normal dose of doxorubicin that the patient would receive. So significantly high levels of equivalent levels of doxorubicin being given to patient. And so then just talk through -- many of you will have seen this slide before, but clearly, I've updated it for the most recent completion of Cohorts 5 and 6. And I've underlined the changes that I've made here. So we've now had 35 patients through the study with a broad range of solid tumors actually many with soft tissue sarcoma, but many with a range of other cancers as well. We are currently dosing patients in the seventh cohort, as I said. And a couple of weeks ago, we announced that Cohort 7 would be the final cohort. We'll discuss the reasons for that on the next slide. So thinking about the safety data, we continue to see what I've described as remarkable safe to date and all the clinicians involved in the study would use the same word. It's better than we really imagine it could be. We are seeing an almost complete absence of the serious toxicities, the Grade 3 and above toxicities that we see all the time and we'd expect to see with doxorubicin. There is -- there are some the most serious ones, neutropenia, thrombocytopenia, anemia that affect the dosing of doxorubicin and limited to 3 weekly dosing. We'll talk about that on the next slide. We're seeing an almost complete absence of that, whereas neutropenia is a 50% incidence with doxorubicin I believe. So despite delivering multiples of the normal dose of doxorubicin. We're also seeing none of the typical drug-related cardiotoxicity that affects the long-term, a number of cycles a patient can receive because of cumulative damage to the heart. So in a nutshell, the safety and tolerability for the patient is very good indeed. We have done a number of biopsies from patients where we gain consent. That's up to 9 patients now. We've reported previously and I don't have a detailed table in this slide because it's quite a long presentation. So -- but we've reported previously that we're seeing very high levels of doxorubicin in the tumor tissue and that continues with the new biopsies that we've taken out as Cohort 5 so that trend is continuing with the new biopsies that we've got. And then the new news, I guess, that we announced a couple of weeks ago and really, really important progress for us is that we have seen very clear signs of clinical activity for the drug, which you would expect, of course, but if you're releasing docs in the tumor, then some of these tumors will respond, you would hope, even though these are late-stage patients. But we now have those clinical signs of activity, in particular, one patient that's shown a very significant reduction in tumor volume. That's the patient with soft tissue sarcoma, but other patients which have stable disease or who have stable disease that may be sarcoma patients or indeed patients with other cancers. So all in all, Phase IA dose escalation is going extremely well and we're now into the final cohort, which will complete before year-end. So then thinking forward about the clinical development strategy. Some of this is not new. Focus on soft tissue sarcoma for the reasons I think you're all aware of. But what is new is that now that we have got these very clear signs of efficacy. We don't believe it's necessary to go through quite an extensive and expensive Phase IB expansion to convince ourselves of the efficacy signal before we go into the Phase II. So what we plan to do now is to run alongside the last cohort in the Phase IA, 3 weekly dosing, a fortnightly dosing group. Now that is a reason for that, obviously. I mean, it's well known in the development of cytotoxics that more frequent dosing often gives better outcomes for patients. So rather than keep putting more drug into patients with a 3 weekly dosing regimen, which is only the regimen because of doxorubicin's historical toxicities. It is very likely to get better outcomes for patients if we can move to fortnightly dosing. And we should be able to with the safety profile that we've got. So we've designed a relatively short to weekly dosing study that will take us through to the middle of next year when we'll be able to define the dosing regimen for the Phase II and initiate that study, which would have previously begun in 2025, but is now brought forward, we hope, into 2024. So that Phase II study will be in soft tissue sarcoma. We'll release more information on which subtypes and more detail on the Phase II study when we can, but it will be a study in soft tissue sarcoma, and it will be designed to be a registrational study in the U.S. So I say we'll give more detail on that as we can, when we can. But right now, we should be at least looking forward to a registrational study that begins in 2024, and we should finish -- we would expect because these things are variable by the end of '26 or into early '27. Okay. So let me move on. On the back of that very, very positive clinical progress for AVA6000 and those thoughts about the potential of a platform, the potential to take existing chemotherapies or new potent chemotherapies and improve the safety and efficacy the thoughts about what comes next in the pipeline, there's huge opportunities. So 3996 is the second in the pipeline. We've talked a little about this before. The warhead you see on the right, circled in blue, which we rather naturally name AVA2727D. That's a proteasome inhibitor. And the proteasome inhibitor affects the way in which cells clear up degraded protein. So it's effectively, if you want to call it the garbage disposal of cells. If you block that up then that leads to cell death. So proteasome inhibitors are approved, are on the market, but their toxicities, their systemic toxicities have really limited their used to liquid tumors to multiple myeloma effectively. So our approach, of course, is not to think about going head-to-head in multiple myeloma. Now we have an opportunity to take proteasome inhibitors into solid tumor indications because we should not suffer from the same systemic toxicities, but we should be able to release that proteasome inhibitor in the solid tumor. So a really interesting, exciting opportunity. I'm not going to talk more about the rest of the pipeline now. But of course, we have other pre|CISION molecules in the pipeline. I hope we can get to a point where we can talk about that relatively soon but 3996 is the next one. This is a little bit then on some data, but I think those of you are -- would like to see the data. I'll enjoy seeing this. 3996 is looking very good in preclinical. We're aiming to file an IND next year and we're still on track for that. And this is mice data that shows the efficacy of 3996 in a melanoma or skin cancer model, but also shows the improvement in safety compared to Velcade, which is the leading proteasome inhibitor on the market. So the -- very quickly that these graphs that you see here are the increase in the tumor size in a mice. So it's a human tumor that's implanted in a mice and the tumor grows very quickly if you do nothing, which is the black line. If you treat the animals with Velcade or bortezomib as it's known, or with 3996, you get quite a significant reduction in that tumor growth. So there's clearly an effect -- an efficacious effect on reducing tumor growth. But if you look at the animal's body weight, when they're treated with bortezomib, the animals lose significant body weight. And that's a surrogate for the systemic toxicities whereas, of course, with 3996 because it's released in the tumor. The animals are not suffering in the same way. In fact, the animals on bortezomib had to be given a 5-day break and then put back on to the treatment. So this is a mice model, of course. It's not human data, but it's very, very encouraging. And when you compare this final practices, again, tumor volume and the green line is the standard of care for melanoma. So you can see that 3996 is performing as well as the standard of care Trametinib in this melanoma PDX model. So in summary, the takeaway for 3996 is really promising preclinical data. We're now into the IND-enabling studies around tox and so forth, which should bring us to an IND filing next year and a second pre|CISION drug in the clinic before the end of next year. Just moving then on to the Affimer platform. This has, I guess, played second fiddle to the pre|CISION platform for a little while, purely because of focusing resources on pre|CISION for understandable reasons. The Affimer platform for those of you who are not familiar, is a biologic platform. So it's a -- in simple terms, it's a replacement for antibodies. So it's a simple, small protein that you can use to generate binders to drug targets in the same way that you can use antibodies to do it, but there are a number of technical commercial benefits. I mean it's a small protein. It's very stable. Small and stable usually means that you get good pharmacokinetics, good tissue penetration into solid tumors. It's a very flexible molecule in the center, you'll see on the next slide that we can build other structures by combining 1 or 2 or 3 or 4 [indiscernible] to create multi-specifics that really allow you to start thinking about some interesting drug modalities. So that flexibility and that stability and then the feeds through into the fact that we can make these things. A lot of technologies like this suffer from manufacturing issues once you get into the more exotic structures, but the Affimer platform behaves really well even in those multi-specific structures. We can still manufacture these things. That's what high expression levels means. You can manufacture these things quite straightforwardly. From a commercial perspective, this platform is proprietary to the actor of course. So there is -- it's completely unencumbered in terms of IP because the antibody space is relatively complex from an IP perspective. So the other interesting angle around the Affimer platform is it's not an antibody, clearly. And it's not related to an antibody in anywhere. So there is freedom to operate where there is heavily-based antibody-based IP. So the -- I mean the key things really are, how can you differentiate the therapies that you develop and there's a number of elements to the Affimer benefits. One is we have shown numerous times over the past few years that we can get behind us 2 targets that are traditionally difficult for antibodies. So 1 example is something called GPCRs, which are a very interesting and important drug class but very difficult to generate antibodies to bind against and we can generate Affimer bind this important drug class. So one of the differentiators for Affimer is that we do seem to be able to generate binders to or are quite tricky drug classes for antibodies. The second is that we can make Affimer that are very, very specific to the target, so exquisitely selected for the target that we're aiming for, which is clearly important in drug development as well as diagnostics, of course. And then that final point around flexibility in being able to build multi-specific formats. That's not straightforward with many of these types of technologies or with antibodies, whereas it has proven serendipitously, if I'm honest, to be very straightforward with the Affimer platform. So that's the platform. We have 3 programs, internal programs and 2 partnered programs that I'll talk through briefly as I say, the Affimer programs have to some extent, played second fiddle for obvious reasons to the pre|CISION. That's why we put our capital over the last couple of years to get the clinical proof of concept with the pre|CISION platform done. But let me talk you through the programs that we've been keeping going and now properly resourcing. And in fact, we'll be presenting some data on the first of those in a couple of weeks. So the -- I guess, the lead Affimer program is a bispecific PD-L1 antagonist with a cytokine called IL15. So clearly, there are good biological and clinical reasons for wanting to combine PD-L1 with a cytokine and IL15. There are others you could choose. IL15 is our lead and preferred option. So that -- the data, the preclinical data that we have, which is looking quite interesting. That data will be presented very shortly in a couple of weeks, and we'll then get that post in our website, and I'll produce a teaching video to try and talk you through that preclinical data. So it's looking very interesting. The second multispecific program that we are moving forward is a PD-L1 LAG-3 bispecific. So those are both immune checkpoint targets, as I'm sure many of you are aware. So those us, as you see in the picture at the bottom, those use Affimers to bind the drug targets. And the central part is actually a part of an antibody to provide size to give the right amount of time in the bloodstream before the drug is cleared. In contrast, the PD-L1 and IL15 drug uses our own half-life extension technology, the Affimer. So in fact, it's tri-specific binding PD-L1, IL15 and a human serum album. So all of those programs are now in later stage research and we'll be publishing the data say, later this year and through into early next year. The third program, which is a really interesting -- many of you all have talked to many of you about the TMAC program in the past. That remains -- we've now actually built out our chemistry team a little further to be able to keep pushing that forward. That is a combination of the 2 technologies. So the Affimer and the pre|CISION chemistry to create a novel drug conjugate, where the payload, the toxin, whatever that is, is released in the tumor microenvironment. But just to put things into context that there are a lot of unknowns in a TMAC molecule. There's a new toxin in there. There's pre|CISION, which because now is much more validated in the clinic, but there's the Affimer, which has not yet been into human. We'll talk about that with the partners in a moment. So there's a greater degree of risk in terms of developing a TMAC molecules. Those are the reasons why we have focused resource from an Affimer perspective on the better understood bispecific programs on the left-hand side of the screen. But that does not mean that TMAC is not still in our sights. It's just a lower priority for us. So going on to those partner programs, the -- and I'll again, I think you know what these are, but I'll briefly introduce them for those who don't, we have a partnership with Daewoong Pharmaceutical. And that's actually a joint venture. So we are a co-owner in a joint venture in South Korea called AffyXell, which is actually a cell therapy company. So Daewoong's IP that's in AffyXell is around stem cell therapies. And what we have shown is that we can put the genetic code of an Affimer into a stem cell to get a stem cell to make its own immunotherapy. So when the stem cell is in the situ, it will generate its own immunotherapy to support its function, really novel, a real next-generation step in terms of stem cell therapy. Clearly, early stage, but we've been making really good progress with the first of those, which uses an anti-CD40 ligand Affimer in GvHD. So that program, if you just look over on the right, that is still slated for an IND filing next year. So we believe, and we certainly hope that AffyXell will get an Affimer into human later next year if we can work with them to support that IND filing in 2024. The second program, we've got a target that we've generated Affimer again, those have now gone into AffyXell the way our relationship from an equity perspective works with AffyXell is we don't put cash in at their funding round. So they raised capital with regional BC, some ventures, others. And of course, we get diluted at that point because we don't put cash into that lately. But when we put the Affimer to a target in and we transfer the IP, so the patent ownership into AffyXell, then we regain an equity share. And we've just gone through one of those processes. We are going through a formal process in South Korea as to exactly the increase -- what the increase in our ownership will be, but it's going to rise from about 19% to 25%. So AffyXell making really good progress with the first and the second program, and they have the ability to choose other targets as well. Now LG Chem is more straightforward from a technology perspective. It is a partnership, a research partnership with LG Chem for multiple targets, the first of which is a PD-L1 inhibitor. So this is a straight for immune checkpoint inhibitor. I guess, novel in the sense that it's at, but also novel that the half-life extension is provided by our own Affimer XT, which binds to serum albumin in the blood and thereby extends the amount of time the drug spends in the bloodstream before it's cleared. So we believe that LG Chem are taking that program forward. The work is an entirely internally within LG Chem. We don't have any involvement in that. So we would expect and hope to see an IND filing from them sometime next year. They also have rights to other targets, which, of course, we're working with them on what those other targets might be. So I think the takeaway from the partner program, certainly with AffyXell is we've got sight of an IND filing, and that would be the first time that we've had the Affimer platform in human. Okay. Then just to summarize, I won't read through the pipeline. Just to summarize that is now the pipeline as it stands at our pre|CISION and Affimer wholly-owned and partnered programs. Okay. So just fine, it's on the Diagnostics division to prior to you with an update. I know we've got plenty of questions, and I want to get around to those. So the vision that we have for Diagnostics is to build a significant European IVD business. I'll explain what I mean by full spectrum in a moment, focused on professional health care and also broadening access to diagnostics. And the mission really is to make sure we deliver high-quality diagnostics to a broad range of people for both treatments for both diagnostics in that sense, but also to monitor health and fitness for individuals. Okay. So full spectrum, you can look at that in 2 ways. I mean, we are focused on the professional health care markets, so not consumer testing buying tests online and testing yourself at home, focused on professional use. And there's 2 settings for that, really, the centralized hospital, laboratory testing and the decentralized testing, which is more GP clinics and pharmacies and other settings. Now there's a big push in the U.K. for community diagnostic centers. So there's more efforts in the Uganda and of course, in Europe and the U.S. going into decentralized testing to take that pressure off centralized path labs. And then the modalities of testing run from pathology laboratory, which is big equipment and very high throughput in hospitals through rapid point-of-care testing, which primarily means lateral flow tests. And those are used in hospitals as well as in the more decentralized setting. And then there is an opportunity to get individuals to sample but not do the test themselves to then send the sample away to the test to be done in a professional setting and for the results to be communicated with some clinical support. So that's our universe, if you like, of the way we see a full spectrum IVD business. If you think about the value chain and this goes to our M&A strategy, and we'll see how launching Coris fits into the strategy on the next slide. This talks to our strategy. We see the value in the diagnostics value chain at the start and at the end, frankly. So the sales channels, the customer relationships, the market intelligence that tells you, which test to develop, that's very high value. And the IP, the new novel product development, the competitive product development, that is also of high value. Manufacturing is a little bit more commoditized. As you know, Coris has a manufacturing capability. So it tends to come with. But if you need more volume than you outsource, it's a very commoditized market in terms of manufacturing IVDs. So then just thinking how the acquisitions we've made fit that strategy and thinking about that full spectrum IVD market, Launch is the largest distributor of -- the largest independent distributor now part of across. But the largest distributor of IVDs in the U.K. has a growing business in France and some business in Belgium and Ireland and will talk about expanding that in a moment. It's a very well-respected, well-established profitable business, selling into centralized professional health care. So mainly hospitals in the U.K. and Europe. So the NHS obviously, is a huge customer for Launch, but private hospitals in the U.K. as well and in France and other places in Europe. Coris -- so the strategy, just to step back is simple, right? If we can build those routes to market and own those routes to market and then expand our own product portfolio through development and acquisition and put those down our sales channels, then we get decent margin sales. The margins on IVD sold through third-party distributors are pretty tight. So what's attractive about this is owning the routes to market as well as owning the products or some of the products. And Coris is a lateral flow test, a rapid test developer. They have a range of tests primarily focused on infectious diseases. The -- an area of the portfolio that I think is -- we all think is particularly interesting is in antimicrobial resistance. So that's perhaps you know as antibiotic resistance. So those are a range of tests that allow you to determine, which resistance pathway. So if you have an infection that is resistant to antibiotics, what is it, which antibiotics should you choose. And that's a growing market. And again, one that we can grow with Coris going forward. So that's how those 2 acquisitions fits in, and I'll talk about the synergy with the battery in a moment. Of course, that's related to the Affimer platform and Coris products primarily. So it's critical that we grow these businesses. We've talked through these slides before, so I won't dwell on them than we can get on to the questions. But the key area in which we think we can grow Launch significantly in the coming sort of 3 years or so is by expanding their business into Germany, and we're actively pursuing that. I hope I'll be able to give you an update on that soon. So Germany is the biggest IVD market in Europe. Launch have a fantastic reputation in the U.K., France and they're well known in Europe. So expanding that business model into Germany makes absolutely sense. And that, as I say, I hope I'll be able to give you an update in the not-too-distant future. And then with Coris, clearly expanding that product portfolio using the Affimer platform to improve or create new tests for the Coris portfolio, that's a really important synergy that we're working very hard on realizing but also actually with Coris growing and improving their distribution that we're obviously using Launch within the markets where Launch operates, but also just improving the quality and the management of the distribution network globally to grow Coris sales through that route. Okay. And the final slide, just to make a point that I just made, which is that the Affimer platform, we've talked a lot about the therapeutic opportunities, but it also is an ideal reagent platform for generating immunodiagnostics, which is the lateral flow test, of course, is. So it gives us a real opportunity to create competitive advantage with better performance ultimately and also new targets that are difficult for antibodies to -- difficult antibodies to reach. So that is work that's ongoing now. As I said right at the start, I think the real focus now is on realizing those synergies. So we've paused any further acquisitions, and we're working on those mechanisms for growth -- organic growth in those businesses, expansion of Launch into Germany and getting Affimer reagents into Coris products. Okay. So I won't read through the whole summary. But I think the key points are really the outstanding performance of AVA6000 in the clinic and to -- and I'm saying these things multiple times, but that really has validated the mechanism of pre|CISION in human. Pre|CISION works, so we now need to think about what the pipeline really looks like beyond 6000 and 3996. And I hope in due course, we'll be able to talk to you about the other opportunities. And we certainly at the AGM, we talked about the commercial opportunities now that we have. The clinical data that we have, we're getting increased commercial attention, of course, because everyone's been waiting to see whether we get those clinical signs of efficacy. And that allows us to think about partnering not our assets necessarily because we want to take those forwards, but allows us to think about partnering the platform potentially with toxins owned by other companies. And so we'll talk through that in detail at the AGM earlier this year. And just a final note on the capital allocation, as I said, no further M&A activity. We have great optionality that I've spoken about in terms of commercial opportunities with pre|CISION for nondilutive funding. That's a very high priority for us as well as potential for the dialog funding. But as Tony mentioned, our current cash runway is to the back end of '24 to be able to deliver on 6000 and 3996 as we all would hope to. So I'll pause there, and perhaps we can start to take some questions.

Alastair and Tony, thank you very much for your presentation. [Operator Instructions] We have received a number of questions from investors today, and I want to start with the Q&A session with this question here, which reads as follows. What funding options for further phase of the pre|CISION platform, both AVA6000 and other prodrugs that are back to considering. Will these be in the best interest of shareholders and create minimal dilution?

It's obviously a good question. I think I've probably dealt with that last sentence at the end of the presentation. But we are fortunate to have plenty of optionality regarding the way we fund the business non-dilutively as well as dilutively the clinical progress that we've made is giving us an uptick in commercial interest as I mentioned recently. So that gives us one option for non-dilutive funding, which is the real focus of the question, of course. And we've also hinted at the potential to spin out the Diagnostics business at some point. And again, that's another way to produce nondilutive funding for the group. So we have plenty of optionality and that's always at the front of our -- as a Board of Directors, always at the front of our mind. So don't worry about that.

Next question, will the short fortnightly dosing study that is to run in parallel with C7 and Phase IA also be a dose escalation study. Will you pick a single dose level based on the Phase IA date up to C6 or C7?

Yes, yes. So it will be a dose escalation study, but it will be quite a short one because without going into lots of detail from the 3 weekly study, we know where we can start as it were. So we don't have to go back to the beginning. So we'll be starting in the middle of the dose range, and we would expect 2, 3 dose escalations, maybe 4 it the most. But we know where we can start in the middle, and the idea is to run that very quickly and have it finished by the middle of next year.

Turning to the next question. Will Phase II treat early-stage STS patients or only very late-stage patients?

Yes. So Phase II is an efficacy study. So it's designed to be a registrational study and then -- so it will be first-line treatment for soft tissue sarcoma patients. So very different from a Phase I study where many of those patients are in late-stage disease. And of course, many of them, not soft tissue sarcoma. So yes, so the answer to the question is, it will be first line treatment. So early stages the question to put it a first-line treatment of soft tissue sarcoma and it will be particular subtypes of soft tissue sarcoma as well, and we'll give more information about that when we can.

Why did investigators elect a 385 mg final dose if no MTD is likely to be found and not 400 mg? What factors led to this decision?

Okay. Well, that's very straightforward. The -- during the study, the FDA put a limit of a 25% increase in the dosing between the cohorts. So it's a simple calculation of 25% increase over the previous cohorts. So it was an FDA requirement that later in the study, we stuck to a 25% increase.

Can you explain how effective AVA6000 is attacking the stroma in more detail?

Yes. So we touched on this a little bit in the presentation, but the stroma as I mentioned, is noncancerous cells, non-immune cells and it's the tissue that's associated with the tumor. So it's the bulk of the tumor really. And generally, the stroma is a very dense mesh of fibroblast, I think I mentioned during the presentation, that it's actually that structure, that dense structure that prevents some therapeutics or larger therapeutics like antibodies from penetrating. So that -- the question about attacking the stroma is a really important one because breaking down the stroma allows other therapies to penetrate the tumor more effectively. And that's another thing we didn't talk about during the presentation, but it is important to think about opportunities for use of doxorubicin or AVA6000 to work in combination with immunotherapies. And to answer the question, the majority of the stroma is made up of cancer-associated fibroblasts or CAFs. Those are the bulk of the tissue and there the cells, which have FAP on them, you remember. So those are the ones that are directly targeted by AVA6000. So we know that doxorubicin has an effect on the stroma to break it down. We've got data where we have -- so in vitro data, where we've -- what's called co-culture. So we've grown CAF cells with tumor cells, and we can show that the sensitivity of the tumor cells to AVA6000 is greatly enhanced and we have the presence of CAF. So all the data that we have and the knowledge about doxorubicin points towards the fact that AVA6000 is likely to have as doxorubicin does an effect on breaking down the stroma, which means it can be used in combination with immunotherapies as well.

I know you might have just touched on this. I know you had mentioned CAF, but could you also explain how effective AVA6000 is it attacking that as well?

Yes. So -- I mean it's quite a specialist question, isn't it? But for most people, mets are metastases associated fibroblast. So these are the -- so CAFs are the fibroblasts in the tumor, the primary tumor, and mets are similar. The equivalent, if you like, in the metastases. And we know that mets also have a high level of FAP, which is really interesting because from a treatment perspective, you don't need to know. With a pre|CISION drug, you don't need to know where the metastases are because they're rich in FAP. So the drug will find them through the circulation and it will release the chemotherapy in the metastases. So our biopsy samples from the clinical trial are almost all, they may all be but certainly almost all from metastases, from metastatic sites. So we know that we can detect significant levels of doxorubicin at those sites. So that suggests that 6000 is going to be as effective on the better static site, the mass as it is on the cash.

Next question here, what is happening with [indiscernible].

Okay. So maybe worth explaining to some people on the call what [indiscernible] is as well. So the eye in FAP refers to a small molecule that binds to FAP and stops it working is an inhibitor, hence the latter eye. So the first bit of that thing [indiscernible] is basically a small molecule that binds to FAP and PET imaging, where everyone's heard of PET imaging. So that inhibitor, a small molecule carrier a radionucleotide with it. So it allows us to do PET imaging in the normal way that you're aware of. So [indiscernible] gives us a way of doing whole body imaging and seeing where the FAP is within the body, if that makes sense because a radionucleotide binds through the small molecule to FAP. So for us, it's a really useful research tool. So one that we can use during drug development. It's potentially a companion diagnostic, although I would just sort of make a comment that it's a very expensive imaging system. So it's not widely available, and I think that might be challenging in terms of companion diagnostic. But just to answer the question, what's happening with it, we are getting close to getting [indiscernible] working in Memorial Sloan Kettering Cancer Center. So that's the center running the AVA6000 study in New York. So that should happen in the next few months. So that will be very important for research, as I've said, but also for the Phase II study next year. So the real challenge -- I mean, we've been talking about [indiscernible] for a while. I think the question is basically saying, why haven't we got it working yet? So to answer that, the challenge lies in manufacturing because the radioactive label has to be manufactured right next to the site where it's going to be used because it's got a short half-life. So basically, it's not very easy to implement in a hospital and you need specialist facilities, and that's not worked in the U.K. in the way that we'd hoped. But I say we plan to have that in place in slow capturing in the next few months.

I think we've fully got time for maybe 2 more questions. So let's go through this one here. What about to consider adding additional indications in P2?

Not initially. So the Phase II study that I've outlined, and I realize I've given very little detail, but the Phase II study, outlined is going to be focused on 1 or 2 subtypes of soft tissue sarcoma. And that is a regulatory strategy that's designed to get registrational approval. So that can be done in the U.S. It's more difficult to take that approach in Europe. So it is a strategy to make sure that we get to the end of Phase II and get approval for AVA6000 in those selected indications. But clearly, that can then be expanded into other sarcoma subtypes and other indications that we've spoken about in the past. We had a meeting before this where we talked about breast cancer, and that's an obvious one, so we will. And those opportunities may be partnered because studies in breast cancer, as I'm sure you're aware of very large studies and may be something that we would partner rather than do ourselves.

And maybe the final question. Going forward, will the FDA be the lead regulator?

Well, I mean, we obviously keep all our options open. I think everyone is aware that there's delays in the U.K. with the MHRA. So I think it's very likely that the FDA is going to be the lead regulator for a period. Let's hope those delays shorten in the U.K., but we keep all our options open.

Perfect. Alistair, Tony, thank you very much that would just hit the [indiscernible]. I think you addressed those questions you can from investors. And of course, the company will review all the questions later today and more public side responses on the Investor Meet Company platform. But just before we direct to investors prior to that feedback, which is particularly important to the company, Alastair, could I just ask you for a few closing comments.

Yes, sure. Thank you for your time. It's a real pleasure to be talking about such an exciting period in the Therapeutic division's development and the group as a whole. It's been a super 12 months and the last few months as we've seen those efficacy signals is genuinely transformational for the company in many, many ways. So it's a very exciting time to be in the company, hopefully an exciting time to be an investor. We have so much to do. But yes, it's an exciting picture moving forward. So thank you for your time and looking forward to next opportunity to speak here.

Perfect. Alastair, Tony, thank you once again for updating Investors Day. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback in order management team can better understand your views and expectations. That's going to take a few moments to complete, which I'm sure will be greatly valued by the company. On behalf of the management team of the Avacta Group Plc, we'd like to thank you for attending today's presentation, and good afternoon to you.