BRAIN Biotech AG (BNN.DE) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Capital Markets Day 2024 at BRAIN here in Zwingenberg. I see the slides are moving forward. It's a 5th Capital Markets Day, and I think it's my 4th. So we like to do these things to talk with you to inform you about what's going on in the business and to exchange views and answer your questions, obviously. My name is Adriaan Moelker. I've been with the business almost 5 years today. I have started in Enzymes in 1993, and so a few years of experience in the business. Happy to be at BRAIN and to inform you about what's cooking in the business. For today, I've prepared this agenda for you, and let me quickly run you through the different presenters. So myself, I already mentioned. Second is a presentation on the technology by 2 people: one is Alex Pelzer here today, our Head of R&D in Zwingenberg; and Andy Ellis here today, our Head of Fermentation and Technology in Cardiff. Now first, I'd like to congratulate Alex because he became a father 36 hours ago. Or was it 35, Alex? And when we were preparing for this, just so you know, he said, "My wife is due on the 11th. I'm not sure I'm going to make the 12th", and he said, "But I really want to be there". And I said, really, have you talked to your wife? So now he double checked, and he came straight from the hospital here, so wonderful news, a beautiful daughter Emma. It shows a commitment to all of the people at BRAIN and in general in the group to say, I'm here for the business, and I want to do this. Alex, by the way, has been with the business slightly longer than me, about 10 years. He has got -- he is a PhD in Enzyme Technology, and he's also worked in other enzymes fields. Andy Ellis, here on the front, our spider in the web, I would almost call him in our Cardiff facility, leading the Fermentation and Technology, been with the business about 15 years and also has a PhD, what is it, in Biochemistry, has also worked in bakery and in pharma enzymes and so has a broad experience in the business. Next, we're going to go into some show and tell also on what it practically means with regard to our technology, and Esther Gabor here today, will present that. Esther, you've been the longest with the business, I think, about 20 years, PhD in Enzyme Technology. And actually, the fun fact about Esther is she is the -- one of the co-inventors of our urban mining, the gold recovery. So any questions on gold recovery, go to Esther, but she's done a great job there, which partially also helped the promotion to unit head, obviously. Next on is Daren Bryce. Daren, in the front here, been with the business slightly shorter again, about 7 years, has a degree in chemistry and has worked in pharma, industrial businesses and in food. He leads our sales operations. So a great experience to do exactly that and to also lead the Life Science solutions business that we've recently announced. Finally, Michael Schneiders, Michael, where are you, over there, been with the business just as long as I have, roughly about 5 years, background in banking, and he helped BRAIN with the IPO in 2016. So many people will recognize him from that. Without further ado, I will then go into the heart of the business. First, I'm going to take you through some of the macro trends, then why are we in there, what's our passion in the business, then how do we organize and why do we slightly reshuffle, restructure going forward, then what we're actually doing on the ground, what are the differentiating factors for us. And I'll wrap it up with a competitive space and our key actions going forward. First, the key messages for today. Today, we're announcing the combination of BioScience Zwingenberg with the Biocatalyst products business. Now remember, before we had BioProducts, BioScience and Incubator. Now we're splitting the Bioscience sector and merging the Science in Zwingenberg with the business in Biocatalyst. Key reasons, I'll go into later, but I think this is a milestone event for the business. Second, this results in a reduction of the segments that we're going to report. So in our reporting, you will be seeing exactly this and to make it simpler actually, for all the investors, customers and analysts in the market. Thirdly, key message, you must have noticed, we're so happy with these 2 deals, is the Royalty Pharma -- Royalty monetization deal we struck a few weeks ago, along with the Akribion Therapeutics spinout or the establishment of Akribion Therapeutics, both of which have resulted in an immensely improved liquidity and earnings position. Now I would call this also a milestone event for the business, which makes us much less dependent on capital injections, which makes us cash flow -- the cash flow positive quicker and so on and so forth. Just to illustrate, the Akribion Therapeutics alone reduces our cash spend every year by about EUR 2 million. So that is, for us, is very substantial. Next, the successful commercialization of the Incubator, and we'll go into that later. We'll continue, so the cash flows will continue to come in, and we'll continue to monetize the Incubator. And finally, we're announcing today new 5-year targets with -- which are EUR 100 million for the BRAINBiocatalysts, as we now call it, a division, along with a 15% adjusted EBITDA in 5 years, whilst maintaining a high R&D ratio, which, of course, is the lifeblood of this business. Then a couple of macro trends. We're playing in the field of the big challenges of the world. I mean, you talk about energy and environment, pollution. You talk about farming, livestock farming being one of the most polluting things that we humans actually do. Food security, always a big topic. We play in that field. And I'll go into more detail later. Planetary boundaries, the greenhouse gas emissions, the issues that are being caused for climate change. We, in biotechnology, can play a big role in almost all of them. And that is a key fact of life. When I become a little more specific, and we're largely in food here, of course. When you look at food production actually, and not many people realize, most of the food products that we consume today have in some way, shape or form enzyme technology at the basis of it, either as a process ingredient or as an ingredient in the product itself, like in baking, but many, many products contain enzymes or have been used or are using enzymes in the process. Food waste reduction, improving production times, improving yields, adjustability of plant proteins, all of these things are relevant to us, leading to using less scarce resources, reduction of CO2 emissions and being more efficient in general. So we're working on something really great for society. But not only food, also in industrial production, enzymes can play a big role or biotechnology can play a big role. For instance, on the left here on your chart, and this is really nice. I mean, this is the first gold that has been produced with our process recovered from e-waste or waste in general. And our biological process has been able to do that. So not only in food, also in industrial, we play a role. On the right, you can see biomolecules will be produced by biotechnology as well. And the one you see on the right over there is our BMC molecule that is part of the CRISPR-Cas system that we developed, which aids the things that are mentioned here. For instance, active pharmaceutical ingredients fired by catalysis, natural preservatives or technical additives can be made with the use of our technology. All of that resulting in substitution of high energy chemical reactions with biological processes. Now, having said all of that, where is our passion? And let me first speak about myself. When I joined the biotechnology business in 1993, I did that for a reason actually, is because I felt even at that point, that biotechnology was something good for the world, that we made a meaningful contribution and that we would be able to do something that changed the way, let's say, polluting industry was done. What was a fact 30 years ago is a fact today and even more so because our technology has been able to deliver lots of the things that I was then still dreaming about. So to show our passion, and this passion is to make a difference is shared by many of the people in our business. I mean, you talk to the people here in the house. So you go to Cardiff, you go to Nieuwkuijk, Buttelborn, all the sites we've got, the passion of our people is to do something that is good. So to give you examples, words are nice, but examples of what we're actually doing I mapped it along the sustainable development goals of the United Nations. So we play to many of these goals. And you may understand -- you may know the pictorial representation of all of these. Food security, improved health, minimizing pollutants, promoting sustainable industrialization and new techniques for precise editing, all contribute to these goals. Over here, I'm going to show you what we're doing in our current products business. Then here, we'll pop up what we're doing in the science, see new wave kind of things. First, in food security, you have food enzymes, beverage, baking and dairy enzymes that play a key role for food. But in our Science business, we work on natural preservatives, animal protein replacement, think about the cow I showed you on Page 2 and plant-based proteins. On improved health and well-being, we just launched the Life Science solutions initiative, headed up by Daren Bryce here, to actually cater to the needs of the Pharma/Life Science business. Now we will not become a pharma company, but we will cater to the needs of pharma companies and help the enzymatic cascades that are needed in that space. Also, we're working on things like novel sweeteners, drug API development and enzymatic wound care, enzymatic wound care, of course, being our SolasCure business that we have established. On minimizing the pollutants, we today have starch processing enzymes, enzymes used in the -- for producing fuel ethanol, for instance, or potable alcohol. But also, we have urban mining, already mentioned, is the gold extraction, battery recycling, similar process, Esther will tell you more about that, and utilizing food streams. On promoting industrialization -- sustainable industrialization, again, the dairy proteins, we're playing in that space. Now we have existing sales into this segment where we replace dairy proteins through fermented proteins. But also, we're working on CO2 as a feedstock and enzymatic syntheses, and for instance, biolubricants. And on the new techniques for precise editing, they play as a platform technology to almost all of these SDGs because it's an enabling technology. Remember, we established Akribion Therapeutics, which is the use of our CRISPR-Cas tool for pharma. And we retained at BRAIN the ability and the technology and the rights to use this technology for our own products, in food and industrial, whereever you want to use it, i.e., not pharma, and that is an enabling technology, fast and precise with a novel motive action that we have the rights to. Again, this is a passion that we share, and this is actually why we love doing this business. Then, further to my point on the summary slides. We're now introducing BRAINBiocatalysts. And this is the logo we've chosen to integrate much better the science here in Zwingenberg with a business in Cardiff, Nieuwkuijk, Buttelborn, Tampa, all the sites that we have. We've chosen the slogan science to application for a good reason is, we had lots of good science. We had sales, but to bring the science to the application is our path and is the critical thing we need to do. So BRAINBiocatalysts science to applications is the new division that we've launched. This division will cover, subtitle here, products, but also contract research, i.e., the business we do here out of Zwingenberg mainly, and contract manufacturing, CMO, contract manufacturing being done largely out of our fermentation business in Cardiff. So all 3 elements will fall in this bracket now. The product side of things is the biggest segment there with research and contract manufacturing supporting, synergizing with the Products business. I'll go into more detail later. Remember those words; product, CMO, CRO. Now this is how it's going to look, and Michelle will address this in slightly more detail later. We are moving BRAIN Zwingenberg into this space, and we're moving AnalytiCon Discovery into the Incubator space, resulting in this structure going forward for reporting. Again, Michelle will explain exactly what that means in terms of numbers. BRAINBiocatalysts here, enzyme products, microorganisms and ingredients. And on the right, the BioIncubator, including SolasCure, Akribion Therapeutics, Royalty Pharma monetization, AnalytiCon Discovery and any other BioIncubator projects that we may find and develop with partners. Next, how we position as a solutions provider in the enzyme value chain. So further to our BRAINBiocatalysts positioning. And I wanted to explain again how all the pieces in this value chain fit together. On the bottom left, starting with Discovery, Protein Engineering, Rational selection, this is the foundation essentially of BRAIN Zwingenberg. And the people here in the house have focused a lot on the Discovery part. Also on the Microbial strains. This is the genetic makeup, the DNA, let's say, of BRAIN Zwingenberg, where Discovery, Engineering and Strains was the foundation. Next, in the last few years, we have done a lot of work on Expression technology, Strain development and Bioprocess development. And now why that is relevant is that you can discover the most wonderful protein, but if you cannot produce it, you have a problem. And we thought we had all the technology and all the people and licenses and freedom to operate to further develop that space. Just to explain, a microbial strain is essentially a small factory. So when we want to produce economically, we need a good factory in terms of fermentation, process design and all that. But the real factory as well is the Strain. So the better we engineer the Strain, the more efficient we make it, the more we increase the yields. Actually, we're increasing the capacity of the steel in the ground of our fermenters. This is a very important point that I think you need to understand. So the Strain development, the Expression technology and all that allows us to make proteins at high amounts at low cost. And that's been a key building block that is also supporting the BRAINBiocatalysts' new positioning. Then we have production in Cardiff. These are 2 beautiful fermenters, Andy will explain everything about that. We have formulation and blending, of course. We acquired some businesses there, and we have sales. From my explanation, it should be clear that BRAINBiocatalysts division capitalizes on that whole value chain. BRAINBioIncubator, segment on the right that it shows you, capitalizes more on the left, on the discovery and strain development, but not on the sales per se. So typically, a BioIncubator project would be research and development with a partner bringing it to market. A little bit more in detail about the unique offering that I believe is here is, again, contract research, contract manufacturing and products. And these work synergistically together. Most enzyme businesses have a products business, a business where you develop a product, you produce it and you sell it. We're in the lucky circumstance that we have a science business, the CRO, contract research business, and a CMO working for partners as a contract manufacturer that actually tap the same technology platform. What that does? It makes us much less dependent on the customers we have in the Products business. Actually, we have many more tentacles in the marketplace with customers, collaborators and people that we can creatively offer these different services to. I jokingly sometimes say, if I could design a company and make it robust, I would probably design it like this, because it allows us in the Products business to punch above our weight in terms of innovation and in terms of industry relationships. So it's a good situation to be in. So, therefore, I say in the subtitle, we are the Swiss Army knife, I don't know if you have one, a solutions provider for specialized wide biotech challenges. That's what we are essentially. So not only that, and I included this sheet on market size. I get this question a lot, what's our market size? In Food Enzymes alone, our market is well over EUR 2 billion accessible market. Now we're roughly EUR 50 million. So we're low single digit even if you define the market as such. And this is enzymes alone, we also sell ancillary products, these emulsifiers, fibers. So in enzymes alone, our market upside is really major. And some of the applications I mapped here, I rounded it to the next EUR 100 million for the simple reason that any market number in enzymes you can find on the web. ChatGPT, if you try enzymes market, you can find market sizes from EUR 10 billion to EUR 200 billion. This is based on BRAIN research, it says on the bottom right, where we know our business, where we talk to our customers, that we have experience with these businesses. And I would confidently say are reasonably accurate in our market size estimates. So biggest market there is starch processing, but also Life Sciences. On the right, again, Daren Bryce leading that business is very substantial. In Baking, we have a good market share today. In Brewing, we have a wonderful portfolio, but still a low market share. We need to penetrate. And in Specialties, even though it looks very small there, it is a niche that is relatively high margin. So we focus on that, too. So there's different reasons for all of these segments, all of these applications to focus on, the commonality being it's all food and life sciences for us and as this space is by far big enough to be successful in. Explain a little bit more about our customer base. The customer base we have is highly diversified. We work with a lot of fast-moving consumer goods leaders. Over half of the large FMCGs are active customers of ours. We work with most of the leading flavor companies, which is not a small thing to consider. And science customers for our Research business are often large multinationals. So we have that space covered, pretty well, to be honest. We also work with small and medium-sized enterprises, and a lot of companies are our customers. Typically, these are regional leaders, or in the Science business, they are startups quite often. So we try and grow with the start-ups. What we also have though is a tail of smaller customers that we typically cater to with distributors. So smaller regional accounts would be handled by distributors. And we have 10-plus distributors worldwide, a reasonable amount of sales. But truth be told, the middle sector, the SMEs are the largest segment for our sales. Sales, remember, largely products. Next, and this is one I'm quite pleased with, actually, is our enzyme pipeline. Again, enzyme -- new enzyme development is the lifeblood of our business. And in any business, you want to see a process and you want to see content of are we actually pursuing all of the innovations that we can. This is our funnel of new enzyme products. It goes from ideation, what could we do, to feasibility, let's test it to projects. Now we're really working on it and launch -- is going to be launched. So we have enzyme molecules in each of it. This is not just a new blend. It is not a line extension. It's not a new formulation. This is a novel enzyme. A novel enzyme could be a copy of a competitor's enzyme, but it could also be an improved version of a competitive enzyme or one that we have to date or an entirely new one. You will understand that I, for competitive reasons, will not say what these are. But trust me, this is a key priority of my everyday work at the company. So we have a pipeline, we have a funnel and we have risk-adjusted net present values that we have calculated. With the risk adjustment and with all the things that we consider, that pipeline is worth well over EUR 25 million for the next 10 years, well over EUR 25 million. And look, I didn't even include any value for the ideation part, which hopefully, will come up with more innovation. Long story short, we have been building this for years. We're actively pursuing this and actively trying to launch new products onto the marketplace that are new and different, the lifeblood of the business. Talk about mergers and acquisitions. I didn't mention it yet. One of the key things that I mentioned -- have mentioned to you more often is my goal of doing bolt-on acquisitions. Now we've done bolt-ons before. We started with WeissBioTech, you will remember that, about 12 years ago. Biocatalysts was acquired some 8 years ago. Then, in 2021, we bought BioSun as a bolt-on acquisition to get North America exposure and tackle that market. 3 years ago, we bought Breatec, the baking business for access into the baking market. Remember from the applications, baking is one of the bigger food enzymes market, so we wanted to be in there. And I would totally expect that we find some new bolt-ons going forward. What that could be, could be end of the geographic, could be the product acquisition, could be steel in the ground capacity type thing. We don't know yet, but I -- obviously, I have a list, and I have a wishlist that Michelle will also address. I believe Michelle. Next to that, of course, we have organic growth supporting this business. So it's about organic growth. It is about innovation, the enzyme pipeline I talked about, and it's about bolt-on acquisition to get to an even bigger future. Now switch gears slightly to BioIncubator, you see it on the top right. The BioIncubator, so the right-hand segment I showed you before, has quite substantial cash coming out in the years to come, thanks to some of the deals we've made. So the risk-adjusted net present value of combined projects in here is well over EUR 100 million. Talk about the Royalty Pharma/Pharvaris compound, the royalty monetization. The total deal is up EUR 138 million -- up to EUR 138 million cash in, where obviously, we banked EUR 18 million already, so EUR 120 million still to come. Akribion Therapeutics, as I mentioned, the CRISPR-Cas for oncology, we've successfully founded that company, where they have successfully -- I now have to say they, not us anymore, sorry, up to EUR 92 million cash in plus additional royalties at -- and emphasize this at 0 ongoing cost to us. This was important for us to do that we didn't have any cash burn there anymore, be able to use the technology for our own strains and externalize the expense, if you like, whilst keeping the upside. And that is a model I've been trying to build and I've been building the last 4 years. On SolasCure, we're going to Phase IIa extension with the objective to show the efficacy, dose response curve, more enzyme is a higher response. We need to show that to go into Phase IIb and attract more investors. We found the money -- they have found the money to do that extension, is going on -- is going to start 1st of January, let's say, early next year with half year run time for that study. So that's good news on SolasCure. On BioGold, the valorizing for urban waste, and thank you again, Esther, we still look to announce the partner. They haven't agreed on a press release yet, but they're close to it. If you really research very well, then you could find it, but I'm not going to tell you here today. Brazzein, as always, ongoing project. Still very good idea. We're talking to multiple large partners, and we look to monetize that investment going forward. And then there's a pipeline of new ideas. Even today on LinkedIn -- or yesterday on LinkedIn, I don't know -- we didn't announce it with a press release, but we announced it on LinkedIn, is a collaboration we struck with GOA Ventures, a Dutch company, on the valorization of seaweed. So they buy today our enzymes already for trials and testing to convert seaweed into food ingredients. So that's one other initiative that we're doing, and you should be on the lookout for things like this going forward. So we have a continued pipeline of things, and please check our LinkedIn for that announcement with GOA. Seaweed, of course, being one of the bigger environmentally friendly options for food production. Talk a little bit about the competitive space. How am I doing for time? Yes. In my view, we are quite unique, and an investor or analyst community, like most of the people here today, always look for comparable companies. It's not that easy to find. We have competitive space, the wide capability, wide biotech leaders, Novonesis, IFF. We have targeted enzyme specialists; DSM-Firmenich would be placed in there, Kerry, Amano or my old company, AB Enzymes, would be in there, all focused on the products. In our CRO space, you could think of companies like Ginkgo or ArcticZymes or Codexis. In our CMO space, you could think of Olon in Italy or FERMIC or Bio Base Europe in Belgium. And on the end use, sometimes people confuse us with that, is we more cater to that end use rather than compete. So companies like Better Dairy, Formo, Bonumose are in the alternative proteins, alternative sugars kind of space. We cannot be compared with any of these essentially on a one-to-one basis plus if you really wanted to compare us, then it would be hard as well. Because we publish data externally, as you all know, but mostly these people don't because they're part of larger conglomerates, and the comparisons are really, really difficult. In other words, good luck assessing how we can be compared. But truth be told, most of these companies we buy from, sell to, compete with, produce for, produce with, it is a very connected industry, if you like. So in summary, we are very well positioned for earnings growth. We have a passion for sustainability, for innovation and enabling the bio-based future. We have a strategy to become a global top 10 enzyme company, and we want to harvest and commercialize the Incubator. We have a uniqueness in the combination of products, CMO and CRO, and we are all based on a common technology platform that caters to all 3, which should lead to earnings growth potential, and earnings growth, obviously, being a key driver of share price and market cap. Initiatives that we're focusing on, innovation with and leading in targeted areas, the segment approach that I talked about, partner with leaders in the field, the large FMCGs, the large labor companies, the collaborators out there, the biotech startups. A pipeline of new ideas and new products as a basis for our success, the enzyme pipeline I talked about, monetizing the high-yielding microorganism hosts. Again, the mini factories that we can use internally as well as sell that capability externally, so monetizing that middle part of the value chain I explained to you, develop further our technology toolkit. Alex Pelzer will talk about that. Bioinformatics being a very important field. CRISPR-Cas, monetizing what we've developed, the strains, again, and the scale-up in Cardiff, realizing the hard and soft synergies in the group. So with these bolt-ons, we want to integrate and monetize these synergies and, of course, seek bolt-on acquisitions. That is the extent of the talk.

So I guess we have 5 minutes for questions. And I do need to check, they told me what the question -- I have a question here. Does BRAIN still have a share in Akribion Therapeutics? No. Zero share. It's a totally separate company, and we have no share. We didn't want to have a share because we thought it would be better this way. We have the upside, but we do not have any cost going forward or any work to have -- to be done in Akribion Therapeutics. Another question is, what is the shareholder structure? I think we can -- it can be looked up on the web. I mean, we have about 22 million shares, approximately 48% is in the hands of MP Beteiligungs-GmbH. And then there's a number of other large shareholders, some of whom are here present today. I think that's the extent of that question. Any questions from the audience?

Jan Koch from Deutsche Bank. I have 2 questions on the newly created BRAINBiocatalysts segment. How much do you need to invest to achieve the EUR 100 million of sales? At last year's CMD, you mentioned you would like to buy some new fermenters. Has that changed? And could you also maybe speak a bit about the current capacity in the underlying industry? Do you see any kind of overcapacity?

What do we need to invest? I'd say the investment is not exponential, Jan. It is -- the capacity we've got in Cardiff, the capacity we've got in Nieuwkuijk, the capacity we've got in Buttelborn is in many ways is absolutely sufficient to get towards EUR 100 million. Now, what we do need is some debottlenecking, maybe another small scale fermenter, maybe an ultrafilter, but these are within the -- do we need a new factory? No, we don't. So the capacity -- the CapEx for this is relatively modest compared to what is in the ground today. What is the other question, sorry?

The second question is the overcapacity in the industry. Do you see any kind of overcapacity?

I have seen -- the question is, do we -- is there overcapacity in the industry? We see some capacity, but we've also seen capacity problems with others. So there is capacity available, but it's a bit of a game of smoke and mirrors, nobody will easily tell you that they've -- that they're half empty. With some of our collaborators, we've been able to ferment, external fermenting -- we do, do external fermentations when it's too much for us. We do, do that. We have not had problems with that. Difficult to answer, Jan, difficult because capacity, as you well know from competitive reasons, is one of the most closely guarded secret.

Makes sense. And then secondly, on the enzyme pipeline, you provided a slide. Could you also provide the peak sales of your enzyme pipeline to get a better feeling about your sales guidance?

I could, but I didn't want to do that today. So let's take that offline. I really don't want to share some of those details. Other questions. Nothing from the live feed. Then probably, we move to the second topic.

So a very warm welcome also from us for the Capital Markets Day. I'm really happy that I can be here and that our little Emma came on time. So my name is Alexander Pelzer. I'm the Head of R&D based here in Zwingenberg and together with my colleague, Andy Ellis, VP, Fermentation and Technology, based in Cardiff. We are delighted to give you insights in our unique technology and production platform. Adriaan has already introduced you to our unique customer offering. So we are offering 3 distinct yet interconnected services. And these include contract research, contract manufacturing and products. And in each of these areas, we have absolute experts, specialized in the respective fields. And what's really important for us is that they were closely together to maximize synergies. And all of these services, CRO, CMO and products can rely on a shared technology platform. And we want to give you insights today into this shared technology platform, which is the engine of our businesses. I would like to start to introduce you to our Advanced Research and Development platform, where we offer our tailor-made solutions from discovery to production. We use these technologies for our contract research services, but of course, also we use our R&D power to expand our product portfolio and develop innovative products. In end of '22, beginning of '23, we refined and sharpened our focus areas. And since then, we have been massively investing in them to develop new technologies. So we are focusing on enzymes and proteins, microorganisms and production strains as well as bioprocesses and scale up. And we have different teams specialized in different areas, as you can see here. So the team of enzyme technology works in enzyme discovery and enzyme engineering. The microbial strain development team works, for example, in bioprospecting, which is a technique to, for example, discover new microorganisms in nature. And this is a technology we have been using to develop the bioarchive, the huge strain collection we have. And how powerful microorganisms can be will be later on presented by Esther Gabor on the topic within the food. We do strain engineering to specifically optimize strains for application. And one of our focus areas is production strain development, especially for enzymes, but also for other biomolecules. The bioprocess development team works on fermentation and downstream process development. And this also includes tech transfer and scale-up, especially to our production site in Cardiff. And everything we do is heavily supported by Bioinformatics, which gets more and more relevant, a very broad and flexible instrumental analytics, quality management and intellectual property management. And this is our advanced technology portfolio that is designed to deliver biosolutions. Then the question, of course, is where do we find these biosolutions in nature, of course. So since day 1, it has been and it still is our inspiration, it's the creativity and diversity of nature. So nature had over 3.5 billionth time to solve numerous complex chemical problems, and we want to get access to nature solutions, these biosolutions and apply these solutions to our challenges, industrial challenges of today. This is to look back into evolution. What we see is that the future is digital. So we want to combine nature as a role model with the modern technologies of today. And one technology I would like to introduce you to is our MetXtra technology platform because this platform is exactly doing this. MetXtra is composed of 3 modules: the database, MetXtra Design and MetXtra Discover. The MetXtra Database is digitized biodiversity that is constantly -- continuously evolving. You can see some pictures of habitats that we have samples, digitized and start on our servers here in BRAIN. And this is not only a database of a couple of hundreds of millions of sequences, the unique feature of our database is that it is very diverse. So as you can see here, 99.8% of the protein sequences that we have here in our database are not known in public domain. So if you want to get access to these novel sequences, you need to work with BRAIN. And this is what is for our customers very interesting and also for us, of course. MetXtra Design is a toolbox of AI generated enzymes so these tools can be used to predict synthetic enzymes, and the beauty here is because we have so much novel sequence information no one else has, we can use this data to train these AI tools to come up with even better or other enzyme sequences no one else can provide. The MetXtra Discover module is in the end of the filtering and selection module that helps us to find the right enzymes from database and design. So here you can see this is a Bioinformatics workflow, how this normally looks like. We start with roughly 100,000 sequences, which is a lot, but then we need to filter out the right molecules, and therefore, use this Bioinformatics pipeline. Normally, for a typical project, we end up with 20 to 200 enzyme sequences that we want to work with. But we don't stop here. So we are not only a Bioinformatics company. We then test it in real life. We bring it to the lab, express the genes, produce the enzymes and characterize them in detail for application. So this is in a nutshell our advanced technology for discovering novel natural enzymes or novel synthetic enzymes for application. And we have shown that MetXtra works several times. One of the most impressive case studies, I would say, is the discovery of our own CRISPR-Cas like genome editing tools because this shows that it is really possible to develop truly new enzymes with MetXtra. We did exactly what I illustrated on the last slide. We went out in nature, sampled biodiversity, digitized it, put it into our MetXtra Database and use the Discover approach to identify over 2,000 CRISPR-Cas like molecules. In the end, we focus on roughly 15 of them to develop them into genome editing tools that we can use here in BRAIN. And CRISPR-Cas9, got a Nobel Prize in 2020, is one of the disruptive technologies for medicine, plant and animal breeding and also for industrial biotechnology, but the commercial licenses are so expensive. Therefore, we went through this workflow to finally got our own BMC better BRAIN Metagenomics Cas that we can use for production strain development. And as you can see here, we have developed them to work in our industrial enzyme production strains, but also in our other strains that we use for biomolecule production. In the end, the genome editing tool, BMC, enables precise and fast production strain development. And the biggest benefit for us is it significantly reduces production development times for our production strains. Not always are enzymes derived from nature perfectly fit for application. Therefore, we need sometimes protein engineering to specifically optimize them. And it is good to have both technologies at hand. Here, you can see again this wheel of Bioinformatics method because also for protein engineering we use Bioinformatics. We use something like multiple sequence alignments to analyze conservation and which amino acids in an enzyme, we want to change and to optimize enzyme characteristics. We use structural modeling to look at the structure of enzymes, the surface of enzymes to predict characteristics. We also do something like docking studies, as you can see here, to predict which substrates can be converted into novel products. We use molecular dynamic simulations to analyze how flexible an enzyme is under certain conditions. And also here, we use AI tools to predict which amino acids in an enzyme, we need to tackle to optimize these enzymes. And in the end, the result of the workflow is the same. So the goal is to reduce the endless possibilities to what is beneficial for the enzyme, what is beneficial for the product -- project. And for enzyme engineering, for example, we normally end up with 20 enzyme candidates that we then test in the lab. And here you can see an example for an alpha amylase for starch processing. As you can see here, the enzyme is quite huge. But due to the Bioinformatics we know only to focus on the red ones and the purple ones because these are the positions we need to optimize to make the enzyme better for applications. So to reliably provide our customers with novel enzymes or better enzymes, we need or we have integrated both technologies because enzyme discovery and engineering are equally powerful tools for providing novel enzymes. And, of course, having both available greatly increases the chances of success. And this is possible that we can do discovery and engineering because these rely on the same technologies in the middle. And with this integrated strategy, we fuel enzyme innovation and produce market-leading enzyme solutions. As Adriaan already mentioned, creating or finding the best enzyme is only the first step. It -- even the most exceptional enzymes must be producible at scale; otherwise, it's of little value for us. Therefore, these technologies are great, but you also need powerful industrial production strains and the bioprocesses to come to an enzyme production in the end. Therefore, we look at the whole pipeline, microbial strains, strain development, process development, manufacturing and also product manufacturing. So at BRAINBiocatalysts, the enzyme development is considered in a comprehensive and end-to-end manner. Let's have a quick look at our industrial enzyme production strains. We constructed in the last years, so-called, plug and produce systems. These are based on our industrial production hosts, standardized methods to come to a yes-no answer if an enzyme is producible or not in very short timeframes. In our industrial production also you can see right here, we use bacterial strains, yeast and also fungi for enzyme production. To specifically optimize these strains, we use methods from expression technology, random with the genesis and also genetic engineering. The introduced BMC technology, the genome editing technology, plays a critical role here. So this is the enabler in genetic engineering. Looking at our bioprocess development platform, we normally started very small volumes in the lab and do bioprocess development up to 200-meter scale. We have DSP development and also product purification development, full analytical support. I already mentioned broad and flexible instrumental analytics that we have. And what we have, and this is really key for us, is experience with a wide range of production strains. As you can see here, we are not focusing only on 1 strain or 2 strains, for our industrial production host, we have several strains and a very experienced team who knows how to work with these strains. And what our customers really like is that we have extensive knowledge of industrial regulatory and quality requirements as well because we know early on which media components to use, antibiotics to use and things like this. And also here, like for the enzyme discovered engineering, this is a fully integrated process, as you can see here. So during strain development, we directly also started the bioprocess development because this goes hand in hand. And to also give you a case study on this. Here, you can see only this middle part, so we have already identified nice protein or nice enzymes. And then we go to our microbial plug and produce strains and check what is the initial situation, is an enzyme producible, yes or no. And here, you can see these black bands that we are able to produce low single-digit grams per liter of this protein already. So this is quite a good starting situation. And then, over different rounds of strain engineering and process development, we end up with this very thick band. And this is what industry is looking for. And this now is high double-digit grams per liter. I cannot really tell you the exact number because this is confidential. But as you can see here, this is a pretty good result in time -- in short time frames. With this, I wanted to show you that the integrated platform for production strains and bioprocesses is able to lead to higher enzyme yields. Some summary -- a summary of our highlights. What we offer is a MetXtra technology platform, which is capable of identifying unique and high-performance enzymes for industrial applications. We use an integrated enzyme discovery and engineering approach to drive success in delivering novel enzymes. We provide high-yield industrial production strengths. We have our unique CRISPR-Cas tools here in hand -- at hand for strain development, the BRAIN Metagenomic Cas. And we use an integrated approach for production strain and bioprocess development that drives success in industrial enzyme production. And all of this is also offered to customers. And the -- what makes this offer special is the range of technologies, the modularity and the flexibility. We offer our customers custom -- a tailor-made solution. This means we look at the challenge of the customer first. we can use our technology portfolio and help our customers to find the right combination of modules to tackle that challenge. And the beauty is that customers can select several modules to also go for the end-to-end solution from start to finish, but sometimes a solution can be quick and easy. So, therefore, it is also possible to only select one of these models. And one last comment on this. These technologies, our technologies can be used across various industries. We are focusing on food and specialty enzymes as Adriaan has already introduced you to, but we use these technologies also for pharma, chemical industry, food and feed, just to name a few. And with this, I would like to hand over to Andy Ellis, who's going to show you how this seamlessly connects to our fermentation manufacturing platform. Andy?

Thank you very much, Alex. Given I think you had only 2 hours sleep last night -- 3 hours sleep, oh, wow. So yes, you did exceptionally well there. So yes, as Alex described, I want to give some insights into how the variety of R&D capabilities that have been discussed over the last few slides are fully integrated into the manufacturing capabilities for enzyme production. In terms of our enzyme manufacturing capabilities, we've invested heavily over the last 5 years, both in stainless steel, but also in our expertise, bringing in new talent and developing that talent to support the manufacturing side of the business. So Alex described the bioprocess optimization. Essentially, that happens within laboratory scale with very small fermenters in order to maximize the amount of value that we can get out of a particular production process. Of course, then we have to scale that up. And within Cardiff, we have a number of different pilot scale fermenters, up to 750-liter scale. And in reality, they are used to scale up, but actually in their own right can be used to manufacture. We have some incredibly high-value, lower-volume enzymes that we offer, particularly into the life science space and those smaller fermenters, ideal scale for those particular products. Additionally, we have the 2 fully functional 10-meter-cube fermenters, the nice shiny fermenters, I think, as Adriaan described them that you can see at top center here. And additionally, a network of fermentation partners, we do have a number of enzymes that exceed our capacity. And over the last 12 -- going on for 15 years, actually now, we've developed some really good partnerships to be able to push out our own strains and our own manufacturing processes to those manufacturers when we need that capacity. All of the fermentation capability at every single scale is supported by downstream processing technology. So what is downstream processing technology? Essentially, in the fermenter, you produce a relatively crude enzyme. And that means recovering from the fermentation, but also needs purifying. And different applications are delivering the science towards the applications, different types of applications require different levels of purity of the enzyme. So we have a different array of downstream processing assets and knowledge that allow us to fine-tune the purification, specifically towards the applications, the market and the individual customer need. Over the last 18 months, we've specifically focused on a relatively new technology to the Cardiff side, which is chromatography. So chromatography is a particular type of purification so downstream processing technology allows for very, very high purity specifications to be achieved. You can see an image there of the chromatography setup on the bottom left of the screen. All of these capabilities are compatible with multiple production hosts that have been described by Alex. Behind the scenes, what we also have is a long history of expertise in product stabilization. Our product business is global. So we have to ship product, sometimes very high-value products overseas and that product needs to be stable. Equally, when it's received by the customer, it needs to have the required shelf-life stability. That's not always straightforward to able to offer enzymes in such a stable fashion to meet the transport and shelf-life requirements. We have lots of knowledge in that space. Whether the enzyme is in liquid form or in powdered form, we have insights on how to get the best out of stabilizing them in their finished form. And to that end, again, over the last 18 months, we have fully commissioned and fully exploiting our new freeze drying capabilities that can be seen at the top right of this particular slide. And as I mentioned earlier, all of this fully exploited by the pool of talent that we have across BRAINBiocatalysts. I wanted to make a key feature of this point, designed for manufacture framework. We feel it's an extremely important part of the Biocatalysts' offering. What does it actually mean? Approximately 10 years ago, we hired a senior manager who comes from the automotive industry. He has a background in engineering, kind of design and development. And he embraced through his background and then brought into the BRAINBiocatalysts offering this framework that allows us to ensure we make the right informed decisions from the very start of any enzyme development project right through strain development, through scale up, ultimately towards manufacturing to maximize the probability of success. What does this framework contain? Essentially, it's a set of decision-making criteria that are fully documented in work constructions and SOPs and guidance notes that ensure we capture the key parameters for success. So process economics, understanding the price point that a particular new enzyme is -- which is required for the particular application. From that price point maximizing the margins that we can deliver from the manufacture of that product and working with the tools described by Alex around strain development and process optimization to hit both our internal margin targets and the customer targets. So process economics, the whole design starts with understanding that framework. Similarly, in terms of environmental factors, both for the enzyme itself, the enzyme production process and ultimately the application, we have to consider a number of environmental factors. And again, those play into the design rules. We operate in a heavily regulated environment. We offer enzymes into the life science world and also into the food industry and operate globally, as mentioned, so we have to ensure that they are compliant with the different geographical regulations, but also the particular market regulations that are applicable to each enzyme that we develop. Of course, intellectual property is also key. Adriaan mentioned our approach to kind of novel enzyme development, the funnel, the pipeline of NPD that was described. And mentioned that often, we will look at a competitive enzyme and try to produce an alternate version that was perhaps a special feature, but making sure that we don't step on any patent issue is really, really important. So ensuring FTO at the very start of the enzyme development process and ideally developing some in-house know-how that we can protect is a key consideration. Quality framework, ensuring that, again, we design into the process a framework that it ensures that the process itself operates on the required quality criteria, but also the finished product hits the required quality specification for its intended use and all of that driven by time. Not every business that we come across as competitors, particularly the kind of smaller CRO and CMO business has this kind of approach. In fact, we win some business whereby customers come to supplier A in the CRO and CMO space. And let's say mis-designed or not designed effectively for manufacture a particular enzyme and we end up reverse engineering that. So we get a few projects based on our ability to approach enzyme development in this way relative to some of the competition who don't. Another focal area of the fermentation side of the business, of course, is maximizing margins. This operates at 2 different levels in terms of cash utilization and productivity. In terms of capacity utilization, we now have the 2 fully functional 10 meter cube fermenters, and since the second fermenter was fully commissioned just over 6 months ago, we put a lot of effort into debottlenecking the cold running of the 2 fermenters. So maximizing the overlap of those 2 fermenters to ultimately increase capacity. And we made some major breakthroughs there, particularly over the last 3 months. So a key focus area is maximizing the use of that capacity in Cardiff. But additionally, as mentioned several times, we utilize external capacity when we need to. And through our kind of planning tools, operational planning tools, we have kind of a push and pull strategy, and we take a holistic view on deciding strategically which processes to run externally versus internally, and often pull back processes from our external partner into the Cardiff capacity if that makes sense to do so from a kind of holistic planning and from a margin perspective. So that's the capacity level. In terms of productivity, as mentioned previously through our approach design for manufacture, we try to maximize fermentation margins from the get-go through the design of each individual enzyme manufacturing process, but it doesn't stop there. We're then committed to continuous improvement to continue to drive margin improvement for the fermentation side of the business. And that operates at kind of 3 sublevels, strain development. You heard from Alex, how we can engineer the strain to make them more efficient. So that's a key activity that takes place across the BRAINBiocatalysts team. Continuous fermentation optimization. So irrespective of the strain, tweaking the fermentation parameters to increase space time yields. So maximizing the amount of value that we can obtain per meter cube of fermenter per time is a really important consideration. The downstream processing, so the recovery and purification operations that come after the fermentation, also a key target area for improving margins. So we have cross-functional teams look at CI from engineers, planners, scientists working collectively to continue to drive the efficiency of the fermentation side of the business. And Adriaan and I had a discussion several weeks ago where he wanted a clear update on the goal that he'd set me at the start of '23, '24, which was for a particular process, targeting a significant productivity improvement on that process. And thankfully, the news was good. And I was able to disclose that we'd reduced the overall material costs by that process by 10% and a greater than 25% increase in overall process productivity. So we are getting good movement, mobility on overall EBITDA improvement from the fermentation side. And this will continue to be a key focal area for this financial year and beyond. So just to summarize some of those key points associated with our fermentation capabilities. We have a breadth of different fermentation scales towards food enzyme needs, food specialties and the life science industry. We have extensive downstream processing capability that can be used flexibly and dynamically depending on the end application requirements. This design for manufacture framework, we're really proud of. We think it makes a difference and a key focus on margin, margin, margin for the future, driving EBITDA growth from the fermentation side of the business. So just to kind of sum up how we kind of monetize all of the capabilities that we've described between Alex and I. Alex mentioned in his final slide, the CRO business, so essentially where the R&D part of the platform can be monetized through one-to-one projects with clients, whereby the client is interested in the Zwingenberg team primarily, developing some innovative novel intellectual property that is financed through project revenues and ideally ends up with a license deal. So that's a key model for monetizing those R&D capabilities. We have the CMO business. So the third kind of business model, which over the last 6 years has continued to go from kind of strength to strength in terms of interest and absolutely uses all of the manufacturing capability that we've described. And what does that look like? Well, essentially, a customer will approach us. Typically, they've already found an enzyme that they know kind of works, delivers for their application, but they don't know how to produce it. They need a partner to take that up to the relevant scale to access on a one-to-one exclusive basis, commercial quantities of that enzyme. That's where BRAINBiocatalysts fit in with the CMO business. Very close to Alex and I's kind of heart in terms of the kind of passionate connection with the BRAINBiocatalysts offering is the product side of the business. This is where we've spent, Alex, with our colleague Ludwig, a lot of time over the last 2 years is rejuvenating our product development pipeline for those go-to-market enzymes that Adriaan referenced in his funnel diagram. We've got a real exciting bunch of enzymes in that enzyme development pipeline, and we're kind of looking forward to future kind of realization of those through go-to-market launches. Just wanted to close now on a couple of kind of case studies, give you some kind of real-life examples of how we monetize all of what we've described. In this first one, it utilized both the R&D platform and the manufacturing platform. We engaged with a particular customer through CRO project mode and CMO project mode. Specifically, the customer requested that BRAINBiocatalysts developed a novel enzyme for production of a particular food ingredient that will be used in gastrointestinal health. So the customer, one of the top 10 food and food ingredient businesses. They were particularly interested in ensuring that they had a patent or an IP position that they could lock down ideally in a patented new enzyme technology and application thereof. So that was very much central to our design for manufacture principles when embarking upon this particular project. And we found the enzyme of interest through the MetXtra program. We, I think, screened 15 to 20 enzyme candidates, of which one of them hit all of the technical features that the customer required. We then developed the production strain, it was a bacterial production strain to effectively produce that enzyme for that particular customer for that particular application. We scaled that up with bioprocess optimization towards the fermentation and the DSP. We produced several batches at the 10-meter cube scale of that enzyme with the customer's approval. And we're now -- and we talked about this earlier with the contracts department here in negotiation terms for exclusive rights to that enzyme with that customer and ongoing supply contracts associated with that. It's a really good success story that covers many of the different facets that Alex and I have described. This is slightly different. Here, we identified a gap in the market for a particular enzyme for accessing a particular lipid substrate. So modifying lipid A to produce lipid B, lipid B being very high value and having a certain application in the food industry. So we didn't work with any particular customer. This is in-house financed. So a kind of example of one of the funnel NPD enzymes mentioned by Adriaan. Very specific quality criteria that we needed to take into account from the very start of the project. So as part of the DFM approach, quality stood out as being the main attribute. We developed the enzyme, developed the new strain for production of the enzyme, optimized, scaled up to the 10-meter cube scale internally. But what we also did is scaled up externally because we had in mind this need to be flexible around where we actually produced that enzyme. So we scaled up to 20-meter cube scale and then used the various production batches or trial batches from the different sites to put forward a regulatory submission that was granted, and we launched that product approximately 18 to 20 months ago, and we're now selling that to multiple customers in a number of different countries. And actually, Daren will talk, I think, more about the impact of this particular project in his slides later. So that brings, I think, a conclusion to our part of the presentation. Hopefully, we've given you a good insight into the different capabilities that we have on the R&D side and on the manufacturing side and how those are fully integrated to serve the 3 different business models of CRO, CMO and products. There's real strength in the technology platform. It's broad, it's deep, and we think it's a really high-performing engine that supports the BRAINBiocatalysts business. Thank you for your time. Take any questions. It looks like we've battled everybody. There's no questions online.

Congrats on the happy event. So Nicolas Pauillac from Kepler Cheuvreux. Maybe a question as you did a great job at choosing this very good platform that you developed. How does it work internally when you think about all this possible enzyme? What's the decision process to say, okay, this one looks interesting? And how do you do, let's say, the arbitration between all of the possibilities? Is it more financial upside that you see? Or it's also likelihood of it being really the [indiscernible] sorry.

Yes. Thanks for the question. So as we have seen, we have hundreds of thousands of opportunities where to start. So first step is always using our bioinformatics predictions to narrow it down to the relevant set of candidates. important for us to mention here is that we use also a lot of AI-based tools, but we combine this with our expert's expertise because what we still see this huge AI trend is great for us. We need to follow it. We want to use it, but we always complement it with our expertise that our real humans have to say, okay, I think this enzyme has the property I'm looking for or maybe this enzyme has here. So it's a combination of machines and humans, a lot of experience to select a set of candidates. And then the next question is how many enzymes can actually be screened. So for example, using a bacterial host, you can screen hundreds of enzymes, a fungal host like aspergillus grows very slowly, then you cannot test so many enzymes because the project would take forever, not forever, but pretty long time. And then this is also part of the decision process. In the end, of course, we also have to look at the commercial aspects later on. So how much enzyme secretion or production level needs to be reached that it makes commercially sense in the end. So there are many factors starting from the database, bioinformatics narrow it down, also use our expertise to predict which enzymes might do the job. And then looking at the application, what can be the strains or production strains we can use, looking at commercial parameters, which strains can actually be used and what is required to come to the market in the end. So it's quite a complex process, and each step has opportunities to further narrow it down.

Maybe just a follow-up. So it's more gaining efficiency and capitalizing on experience that you have rather than a major breakthrough, let's say?

It's both, but efficiency, definitely to screen as much enzymes as possible. So our strategy always is to predict as good as possible and screen as much as possible. That's our mantra.

I have 2 questions. The first one is on your CRO business. Could you share your view of the current market dynamics. We continue to hear from larger players that they continue to see significant external headwinds such as your biotech funding and competitive pricing so I'm wondering if you see something similar?

Yes. So it is a more difficult market situation at the moment, I would say, because companies willing to fund contract research is challenging at the moment, but we see that there is a lot of interest in our technologies, which is fine, especially looking at our expertise in expression strains and production strains, enzyme production strains. So this is something where we see a clear market trend. There's a lot of competition in the field of enzyme discovery at the moment, especially because of the AI and data-driven technologies that are out there. But I think this is good because there are many companies also synergistically pushing this field together into the markets. And the good thing is that biodiversity is so diverse and so much enzymes are still there to be discovered that there is a lot of competition but as you have seen in our database, 99.8% of the sequences are novel. So still, even though there are several companies working in this field, there's so much to discover still. So this is -- some are constraints that I see at the moment. A lot of competition in the AI feed, but this is fine because there's enough space for everyone. And very interesting is our technology at the moment around production strain development together with the scale-up opportunities that we can provide.

Yes. Great. If I could just add to that point or support that point. For me, the strain development that is now enabled by the guys in Zwingenberg and Alex's team is so powerful. I mean for the product side of the business, we now have access to an array of strains that we've never had before. And for our products customers, we're finding a lot of interest in this. So customers, particularly in the top segment of the larger food companies who have got interest in lots of different areas. We have been selling enzymes to those kind of companies for decades. And now we're able to talk about the strains, the strains for production of interesting molecules and food proteins. And that's creating quite a wave of interest, right? So the strains for me is definitely kind of unique offering that perhaps some of the other incumbents in the CRO space have not got that same level of strength, in my opinion.

Very clear. And my second question is on your product business. Specifically on the second fermenter, could you share your view on the utilization trajectory going forward?

Yes, of course. It's a good question. We are pretty much at capacity with the first 10 meter cube fermenter. We are not quite at capacity with the second yet. So there's still capacity to fill, and we expect within the next 18 months to 48 months, we will fill that capacity. But of course, that kind of capacity is kind of continuum. As I've kind of alluded to, we are continuously looking at process optimization, strain optimization. And so through relatively kind of low cost investments, i.e., not in CapEx, we're able to expand that capacity, but that's the kind of time line we're looking at for filling.

2 to 3 questions. Do you also use, for example, steel sensitive microorganisms for production? Can steel sensitive organisms for production, for example, non-steel fermenters, do you also use some ceramic fermenters or something like that?

No. I mean, at the smallest scale, glass fermenters for various reasons, particularly around cost, but at the largest scale they're all stainless steel fermenters.

When do you speak a full capacity utilization of fermenters because you have planned shutdowns, for example, these are certainly multipurpose units. So you have to purify them, et cetera. One, when one does speak about full capacity utilization, it's 50%, 60%, including planned shutdowns for purification?

Yes. So I mean to the previous question and answer, we have currently one of our 10-meter cube that's near fully occupied. The second, we've got a lot of interest there, and it is ramping up in terms of the capacity. And in terms of that 18 months to 2-year time line that I indicated for full capacity, that kind of includes our shutdowns. I mean we have maintenance programs that are essentially 2-year -- sorry, twice a year shutdowns. One of them is kind of a 3-day another is a week, and all that is included in those kind of capacity indications that I provided.

Lots of information has been given on downstream processing and strain development. But you also have to demonstrate that the mass protein or enzyme that is produced. This is homogeneous, that there are no heterogeneities. Is test development part of the custom agreement? Or do you leave it to external sources or even to your customer? What about in-house test development?

Yes, that's a really good question. And yes, absolutely, it wasn't mentioned here, but I suppose that's in kind of the black box behind the scenes capability that we have, which is around quality testing, and that points to the enzyme activity, the purity of the enzyme to side activities, also ensuring we hit microbiological specifications, specifications around metal content that's particularly of interest for the food industry. And all of that capability resides in-house. In terms of kind of product purity, typically with customer contracts, we have a certificate of conformity and certificate of analysis that's pre-agreed as part of that contract deal. And all of the specification requirements are mutually agreed within that to ensure ultimately consistency for the end user. Part of the question, I think -- or part of the answer is also around the application consistency and ensuring that the enzyme product that we produce performs consistently within the application irrespective of the [ CFA ] activities. That's real strength as well across the BRAINBiocatalysts area. I mean the markets in which we operate, as you've heard from Adriaan, bakery, dairy, beverage processing, another area, which is essentially fats and oils. We have lots of application expertise within the business, whereby we can prove the efficacy, the efficiency and the consistency and reproducibility of the enzymes that we develop and also operate very closely with customers to make sure that when we say in our application trials, it ticks all the boxes that it does exactly the same for the customer. Application expertise is a key part of BRAINBiocatalysts absolutely.

There is a question from the online platform. Is the CRO business really an attractive business with regards to revenue potential and margin? You can't really scale it. The scalable part for me seems to be the BRAINBiocatalysts product development. How do you prioritize those 2? So on the CRO business, what we can do is make our CRO business more efficient, definitely. This is something that we are working on continuously to convert more projects per time. This is something we can do. And of course, the opportunity to generate long-term businesses with regards to licenses, for example, is also very interesting for us to have long-term revenues and not being dependent on the projects, only on the project. What is really important for us also with regards to the CRO business is that we get insights into actual market trends, new market trends. So we see what the market outside of BRAINBiocatalysts is looking for, which market trends can be seen and so on. So besides the revenues, it is also very important for us to get a feeling for the market there is a need that we can, for example, also fulfill. In general, but this is something, Andy, you can maybe comment on the -- for scalability, the product business is probably better suited.

Yes. I'm just trying to merge your answer to this particular question here. Yes. I mean in terms of the CMO business, I think the question here is, is the CMO business really scalable? And the second part of the same question is the product business seems to be the key part of the business to prioritize because it essentially clearly is scalable. And the essence of the question is how do we prioritize. We work very closely together. We are pretty much on the phone daily. We are accountable for ensuring that strategically, we deploy our resources to maximize long-term revenue. But we don't do that alone. We have here what we call a new business development team, which ignoring the description in essence is around strategic prioritization of resources. And that's composed of Alex, myself and Adriaan and Michael Schneiders and Martin, who's at the back of the room. We meet quarterly, and it's essentially to do exactly that to make sure that we are apportioning the right resources in the right direction to please the customers in terms of CO projects that we've either won or want to win to ensure that we have the right resources to deliver the CMO projects that we're involved in, but equally to retain a ring-fenced amount of resource to drive the products business forward. And for obvious reasons, essentially what Adriaan said, the products business is -- that's our lifeblood and continue and continue to be so in the future. That is a key area for prioritization. So thank you, Markus, online for that question. Hopefully, we've answered that for you.

No more questions at the moment. There is one now.

But this is one maybe more to Adriaan about you differentiate your customers with regards to size in a way and mentioned that you are more focused on the small and medium ones. What about stickiness of the customers in general? I know it from the pharma CDMO business that there are -- along with regulatory requirements, you have usually a very good stickiness to the customer because sometimes the production process is part of the dossier. Is it in your industrial area, is it the same stickiness? Or when you compare your customers with the bigger ones or the even smaller ones, is it the best possible segment?

So I said a couple of things. Is it microphone on? I said a couple of things. First, we work with the biggest companies intensively together, but the most revenue comes from the SME. So that -- just to segment that, which means that we do, do a lot of business with the large companies, but the core business is with the SME type companies, that's one. With regard to stickiness, you're absolutely right on the CDMO business is sticky because of those reasons you mentioned. In general, I would say that the stickiness of our customers is really high. is really, really high. I mean, Daren, you can address it in your talk. But customers typically stick around for years, years, years, years up to 10, 15 years for sure. In and out, we barely see it gets a little up, a little down, which also means when you're in a customer and they do well, we do well. If they do poorly, we do poorly. So there are some of those things around. But in general, we are about long-term partnerships. That is really what the business is. In biotech, that is really important and especially for us is critical. So those long-term partnerships are critical, which is why on the CRO, CMO relationships and then building that into a product offering is a very long-term offering essentially that we're doing. So happy with the stickiness. I'd love to have more of them, and that's what we're building. Daren, you can absolutely further elaborate on that.

Is there any more questions? No?

Okay. Thank you for joining us again. My name is Daren Bryce. I am the Vice President of the Food and Pharmaceuticals business unit. And I'm going to talk to you today about our growth initiatives and margin drivers. So you've heard already today from Alex, who's talked about our technology platform. And obviously, this can go towards the contract research income stream. You've heard from Andy earlier on talking about the contract manufacturing business and our manufacturing capabilities here. So I'm going to talk about the third area of our income stream, which is the products business. So I'm going to take you through the markets we work in, what's driving the margins within those markets. And then I'm going to take you through 3 of our growth initiatives to demonstrate to you why the products business is a major part of our ongoing growth and makes a major part of achieving that EUR 100 million target that Adriaan mentioned at the beginning of the presentation. So we work in high-value markets, high-margin markets within the food and life science industry, as Adriaan has talked about before. And we're looking at these markets, what is it that makes these markets attractive for us? We work in a number of niches. And what we're really doing is delivering functionality, flavor and texture through the products that we supply to our customers. And across all of these markets, what's really common is that they all have a high degree of innovation, whether that's delivering an alternative to an animal product, whether that's reducing the CO2 impact, whether that's driving increased yields. And really, when we look at these markets, they are -- microbiology is key across all of them, whether that's through the enzymes that we supply or whether, as Esther said, it's actually about microbiological fermentation. But when we look at other aspects here, we're looking at the -- I think someone mentioned before, the stickiness of the market. These markets all have a high barrier to entry. Often that can be in the food stuffs through the flavor or texture that we're delivering. Many brands don't want to change that because they're essential to that brand, and our products are delivering those impacts. Or when you look at highly regulated markets like the life science market, the regulation itself provides a barrier to entry. And therefore, once you've won the business, makes it very sticky. When we look at the margins we have within these markets, what's really driving our margins here is our deep application knowledge and the ability to focus that application knowledge on emerging trends. And really, Irene talked about a lot of different trends that we have within these markets. But specifically, I wanted to talk about 2, talk about the sustainability. And when I'm talking about that, I'm talking about, as I mentioned earlier, increasing yields, looking at increasing shelf life, looking at converting novel products such as plant proteins into proteins that we'll consume. But also then healthy living is a key trend as well. And when you think about the use of alternative sweeteners, we think about the low or no alcohol wine, as Esther was talking about earlier on. And when we think about the life science industry, specifically, we can look at platform technologies, such as the CRISPR-Cas technology for gene editing or actually when we look at new technologies we've seen through the recent pandemic, when we look at the use of production of DNA, RNA, which can be produced in vaccines, can be produced in diagnostics such as PCR. These platforms are driving new trends within health care. And all of them are using microbiology as a key technology. So I want to talk through, as I said, about these 3 main initiatives. But first of all, I thought it's good just to reiterate where is our uniqueness in the BRAINBiocatalysts business. Adriaan mentioned before the unique combinations of business models. And it's clear to say this combination of business models is designed to allow our customers to access the shared technology platform. And this is crucial because this allows us to access also those markets with high barrier to entry. A sticky customer, a market with high barrier to entry is great when you have the business, it's hard to access. This combination of business models is our way that we can get to access the customer and the customer can access our technology. But that's not only our only uniqueness. We also develop unique products into high-value niches. These are often the niches that our competitors don't work to access. They supply standard products. So this is where some of our formulation capabilities becomes really useful. We work with our customers to develop products that they can't access from our competitors. And that's been crucial to our growth so far and will be going forward. As I said, as a part of that, the application know-how is also critical, and that also develops customer intimacy. And that customer intimacy is critical because it allows us to develop really high-value innovation partnerships with a number of companies, both multinationals and small and medium companies that allows us to really co-develop technology with our customer base. So as I said before, there are 3 areas I want to talk about within how we're developing our business and expanding our market share. Quite simply, the first is geographical expansion, so taking our existing products into new territories, but within our existing overall market. The second is developing new products within our existing markets, so using that shared technology platform. And finally, taking our existing products or our existing services into new markets, and that allows us to create additional value within what we have already developed. So first of all, looking at geographic expansion. And when we look in that, it's important to understand how we approach the market now. That customer intimacy that I talked about earlier is derived from the fact that in Europe and North America, we have a direct route to market. And what I mean by that is that we employ our own salespeople to approach those markets in the majority of cases in our businesses. Where we work outside of North America and Europe, we often work through distribution partnerships. And we have an established network of distribution across many parts of the world. I've mentioned -- I've put on here some of them in some of the regions. We have distribution in other areas as well that we haven't disclosed. We also use our distribution network where we're working in niche markets. So where our own salespeople, maybe in Europe and North America are not the most appropriate route to market, we will use the appropriate route wherever needed. And really, this direct route to market has allowed us especially to gain that customer intimacy to develop these relationships with a number of the top food companies in the world where we have strategic relationships, most of the flavor companies where we have strategic relationships and a number of the large pharmaceutical companies in the world. So this is a real asset we see, and we'll look to use these things as much as we can. So the 2 main initiatives we have are looking to understand ourselves where our strengths are, cross-fertilize these strengths into areas where we have a weaker market coverage. A good example of that is in the U.S. So we have a historically strong business in the U.S. in the dairy and food specialties business. In 2021, as Adriaan said, we acquired a business in the U.S. called Biosun, which is essentially a distribution business. So we now have, by combining these 2, as we have been in the last year or so, by combining these 2, we consolidate that strength we have in the market in those markets and establish a stronger customer service and logistics function towards those customers. But crucially, we can then use that strength to look at our other business, go through that same route to market and derive those other benefits in other markets. And I'll explain -- give you an example of that in a moment. But we also can look at how to invest further in that through the commercial team. And we have localized a lot of our commercial functions from the U.K. to the U.S. when it's covering the U.S. market to really solidify that strength. So conversely, in the beverage and the baking business, which has essentially come from acquisitions of WeissBioTech and Breatec, we have a very strong distribution network. And so in the dairy and food specialties market, we are now working to push some of those products through that distribution market in markets where that's appropriate, as I say, typically outside of the U.S. and Europe. So this is something where we're identifying the strength, identifying an area where those strengths can be cross-fertilized into another market to deliver a strength. So giving you an example of that is in our baking business. So our baking business has experienced very strong growth in the last couple of years within Europe, Latin America, Middle East and North Africa. It's been 15% year-on-year growth in the last 3 years, and we expect that to continue in those territories. However, with the position we've created in the U.S. with our acquisition and our existing dairy and food specialties business, we now have been working to use that route to market to grow our baking business in the U.S. which is an attractive market for our baking business, and we have been developing that significantly over the last year or so to the extent that we've now started to deliver our first products to the U.S., and we have strong plans on how to grow in that territory. So it's a good example of how this is working. Obviously, that growth allows us to look further at the baking business itself and understand what investment would be needed to support that existing growth. What little bolt-ons do we need in terms of additional capacity, in terms of additional application testing. And we're allowed to now say and what needs to be more local to the customer in this new territory in the U.S. and what can be serviced from Europe. So it's a really nice way of how to approach a new market. So as you might expect from the discussions that we've already had about the technology platform and where I've already talked to you about the routes to market and the markets we serve, product development is a big part of our forward growth. So recently, we've launched a number of new products within the baking area, within plant protein modification, within oils and fats modification. And currently, we have a large number of products with customers under evaluations, which we would expect a good proportion of those to transition into sales. However, customers' product development takes time as well. Customers' qualifications takes time. To really look at the impact that we have of a new product, we need to go back a part. Andy spoke earlier on about a new product we developed in the lipid modification space that was launched in 2022. And on the next slide here, I'll talk to you and show you what the impact a new product can have when we launch into the market that we do already have a route to market in. But obviously, the future growth is also about our development pipeline. Adriaan spoke to you before about the products that we have in development. We have 9 products that are already in the lab, and he talked about we had up to 50 products that we're evaluating. And actually, that list is growing at the moment. The evaluation before going to that obviously needs to be careful. But then the NPV, as Adriaan spoke about, is an important part to ensure that we have success. But those are the products that are developed here in Zwingenberg. And it's really important to understand there's another route to product development that we have, which is utilizing our application knowledge to develop a reformulated product. And this is crucial. I talked before about the markets where we look at operating where our larger competitors don't operate. And this is where we add real value. So we have another 25 products that we have in our development pipeline currently, where we are reformulating, reblending sometimes some of the enzymes with other enzymes to create slightly different activities. And this is a real strength in ours and something we look to continue to grow and continue to invest in. So I talked about an example of the impact a new product has. So the product that Andy was talking about was a product for enzyme-modified Mayonnaise production. So I'm not sure how many are aware of Mayonnaise production. Mayonnaise is essentially a combination of egg yolks, fat and water, and it's an emulsion. So they need something to help them stay together. Typically, in your own kitchen, you'll just whisk and whisk and whisk and create an emulsion. A lot of work. You could just have an electric whisker, I don't have one at home, but whisking the mayo and not in my kitchen, but in our application lab, it looks like the example is the untreated egg yolk at 0 hours. You can see there is an emulsion. There is stability to that material. But after an hour, you lose that. And actually, if you leave it for longer, they'll start to separate out between the water and the fat. So when you add an enzyme, you can see, hopefully, in the picture, you can see it has slightly better stability, slightly better structure there, but crucially after an hour, there is still stability to the emulsion. And that's what we know. We put a piece of enzyme on our -- sorry, on our plate, and it will still retain that structure over time. And this is achieved through an enzyme. We BRAINBiocatalysts have been supplying that enzyme for a number of years, and it's animal-derived. The market has now moved to a non-animal product. So it's an enzyme that is produced with microbial biology. And we developed, as Andy talked about, a new product for that and launched it in 2022. So the blue on the graph on the right-hand side is actually the sales of the existing animal-derived product. The gray is the impact of the new product. So in 2 years, we've doubled our sales in this sector from sales in the new product. We're still only a small market share. Most of these sales are in Europe. And obviously, there is a market outside of it. So we're going to grow further by growing outside of Europe. But crucially, also, we're going to grow by using our application knowledge to apply this enzyme to other markets as well to reformulate it for other applications to really achieve further growth beyond the existing market that we develop the product for. So it's a good example of how we can use existing enzymes to penetrate new markets, which neatly takes me on to my third point, how we penetrate new markets. We can penetrate new markets through the use of existing products. We can also penetrate new markets through the use of our services proposition. Now there was a question online about the CRO model. And I think there's been questions about the CMO model. How do you build this? How scalable are those models? And that their questions where these models of contract research fit in. This is a great example of contract research and to a certain extent, contract manufacturing is a great way for us to enter new markets. It is a business development tool as well. It's a question of do we work passively or do we work proactively in approaching new markets with a specific business model. And I want to talk to you about a really good example of that when we look at what we're looking to do within the life science market. The life sciences market itself, as we analyze it through our own market research, is an attractive market for us. Adriaan showed you how it compares to our other markets. It's a strong market. When you look at life sciences holistically, in general, life sciences is a small volume, high-value market. It's a market where microbiology delivers significant advantages. And so when you look at that market to the strengths and capabilities in brain biocatalysts, it is a very attractive market. Now for many years, we've had a very strong relationship -- a very strong reputation, sorry, in this market with the contract manufacturing proposition out of Cardiff. So actually, we have a strong route to market already. There is an active and thriving enzyme discovery market within the pharmaceutical biocatalysts. Protein engineering is used extensively in that market. So if we combine the capabilities we have here in Zwingenberg with the existing route to market in contract manufacturing we have in Cardiff, then we have a really strong motivation to strategically approach this market. So what makes us unique here? So I think we've described before a general uniqueness for BRAINBiocatalysts is the combination of enzyme discovery, scale-up and commercial production. And that's absolutely true within this market. Another uniqueness we have developed is actually our approach to IP in this market. Now because we are focused on product production, on manufacturing as the end result of this business, that's the successful collaboration if we want to go with customer all the way to manufacturing. Most other companies do not. They look to rely on royalties and licensing revenues. So we're able to really challenge an existing frustration from customers in the market that they have IP restrictions, they do not get freedom to operate. We circumnavigate that. We just avoid that obstruction by saying, we'll just say you're the product. It's fine. You have complete freedom to operate. Which is a real advantage, and it's addressing a key weakness within the pharmaceutical biocatalyst market for most of the existing players. But also, we've talked before about the -- some of the technologies that there's an impact from after COVID. So molecular diagnostics, the use of PCR has been a key technology that's been rapidly accelerated. Messenger RNA, key technology that's been rapidly accelerated and actually is going to be applied a lot more in pharmaceuticals rather than just in vaccines in the future. And all of these use a lot of molecular diagnostics capabilities, a lot of enzymes used within these. The manufacturing capabilities, including the chromatography that Andy mentioned earlier, we have those capabilities in-house. And this is something where we're going to look to focus our product development towards these areas because they're really attractive markets for us, and we're very well suited to further develop that. So what have we done? So we've launched a new brand back in October into this area, BRAINBiocatalysts Life Science Solutions. We've formed an established team to focus exclusively on this market and really focus on the growth that we're looking for. And how are we going to grow? Really, what we're looking to do is leverage the existing capabilities of that contract research and contract manufacturing proposition as a way for the customers to access our shared technology, going to penetrate the existing market. We're going to use that existing credibility that we have in the market to come to the market with a wider offering with the same credibility. We will develop products both within the pharmaceutical market aligned to the service offering. So the service offering has allowed us to enter a new market. And we're also going to develop products in some really key strategic markets aligned to our core competencies. So there's some really interesting ways that we're going to grow here. Our targets, to give you an idea, we'll look to grow the existing service business by 200% within the 5-year period. And we expect to develop EUR 3 million of further product sales within 5 years. Now this is generally a slower growing market because of the way clinical trials work there. Diagnostics, a little bit quicker. But obviously, this is an ambition for this market. Those product sales will grow much more than that in a longer time frame. But obviously, our target today is a 5-year time frame. So finally, we've talked about the markets and the drivers within that market. And really, that comes to where we have the product sales now that in the most recently reported numbers that are EUR 42.5 million. That is a growth trajectory already a 15% year-on-year growth over the previous 4-year period. So there's a strong growth trajectory in that existing product sales business. And really, we've been talking about these 3 initiatives of how are we going to continue that growth trajectory towards that EUR 100 million target. So we've talked about already the products that we have already launched, I've demonstrated to you how we have existing growth and that will be applied to the other products that we've more recently launched. And I've explained to you how we're taking our existing offering within the baking business and applying that to the U.S. market. In the more medium term, we're looking at how we would have geographic growth outside of the baking business within the U.S. in other markets by using our existing strengths within our existing routes to market. And also, the new products that are in our development pipeline now will also add on to our sales over the 5-year period. And finally, in addition to the growth that we'll see from contract research and contract manufacturing with our life science initiative, we will also have growth in the product sales. So that will take us to the EUR 75 million, which then Michael will talk about there, obviously, we add the contract research, contract manufacturing and the license and royalties on top of that to get to the EUR 100 million. Okay. Thank you very much. Any questions? Yes.

Please could you give us an indication regarding the early phase of product delivery for the life science or pharmaceutical, biotech industry, et cetera. Are there some of the enzymes in use, for example, in pharmaceutical ingredients in the preclinical phase or in the early clinical phases. Is there something to expect?

So generally, in the preclinical phases of pharmaceutical discovery. So this is small molecule pharmaceutical. It's chemistry-based pharmaceuticals. Generally, they will use metal-based catalysts. They normally switch to a more economical process around Phase IIa, Phase I, Phase IIa, and that's where the process R&D within the pharma companies comes in. And actually, they'll then look for how can we do this more economically. We've proved the efficacy, now we want to make money. And Biocatalysts as a platform technology has been really successful at that. They've used Biocatalysts for about the last 15 years, and we've certainly seen that being quite effective. In my previous role, I was selling the precious metals. And I can tell you the impact of it, I felt that a lot in my previous role. So yes, that's a really big change in there. But we then start to, from the contract manufacturing, make those products for clinical trials at small scale and then they scale up to the large scale.

What importance plays the diagnostics industry for the enzymes you produce?

So the diagnostics industry, there's really 2 parts of the diagnostics industry. There's clinical diagnostics. We can think of this as lateral flow test, we're all familiar with. And then there's the molecular diagnostics, which is really the PCR, ELISA, a lot of the other molecular biology techniques. And we're focusing on -- we can do the contract manufacturing for the clinical diagnostics, and we do have some customers, and we're looking to grow that. We think the product development effort should be focused on the clinical diagnostics because it talks a lot more to our fundamental strengths. There's a good need for suppliers of existing products. There's a scaling issue that we talk to that really well. But actually, there's next-generation diagnostics as well, and we are well set to look at that.

To increase sales to that level you mentioned and showed us in the chart, how many people must a marketing and sales department have? Internally, and regarding the structure of your sales and distribution partners, [ DKSH ], et cetera, these are very, very huge companies of BRAIN Biotech. And your sales by such kind of companies is probably quite small. What importance play very small distribution partners that address very specific niche plays?

So I think when you look at any distribution channel, I think it's really important, as I said, to know where your strengths are and know where your strengths are not. And I think where -- in this area, where is our strength, understanding the market, we need to and are focusing on understanding the market a lot. We have the right technology platform to really make a difference here. And we have the manufacturing assets to make a difference. We are working at the moment to understand the market and going direct to market. We may, at the right time, consider a different strategy if appropriate because absolutely, if it's not a strength of ours, then there are many other ways to work. There are a lot of other distribution channels. It doesn't really answer your question, but...

But it gives a hint. And what signs must the marketing and sales department have?

So I think when we talked about the markets earlier, certainly for the food market, certainly for the pharmaceutical development, these are actually quite concentrated markets. So the direct sales works really well unless it's outside of your niche or it fits more geographically remote. For some of the other new markets that I'm talking about, say, within the diagnostics space, the honest answer is I don't know yet. And I think we're probably not at the point of disclosing that anyway.

Two questions on your baking business. The first one is you have been quite successful in Europe since you acquired that business. What gives you confidence that you can do the same in the U.S. is it that your product is better, the enzymes are working better? Or are you able to produce cheaper?

So do you want to answer this better Adriaan or -- sorry, I'm just wondering -- I'm unsure quite what we could disclose at this point.

How will we be successful in baking in the U.S. is your question. We have the products. We have the product range. We have the application skills. We have the production capability. We have all these things. We just didn't have a sales team in North America. Now through the acquisition and through collaborating more within the group, we have a team. in the early stages now, we're flying into the states and supporting our -- I was actually at a customer in Long Island, and they were thrilled with the local support that they could get through the Biosun acquisition and the customer intimacy. Are we going to be much cheaper? No, of course, not. But do we have great application skills? Absolutely. And that is what customers look for, application skills because people in the baking industry talk about industrial bakeries. What they look to do is to cut costs. So they want to have the process as simple as possible so that any operator can run it. But to do that, they need to depend on the technology providers like us to design the formulations that allow that to happen. And that is real value-added selling. So we need customer intimacy. We need the product range. We need the application skills. And I fully expect that we need a lab in North America, a baking lab, i.e., with ovens and things that we have in Nijkerk in Netherlands that we're going to need that. So customer intimacy, product range and strategic desire to get there.

You just mentioned that the lab in the U.S. That was actually my second question. Do you still have enough capacity to supply the demand you are expecting going forward?

Absolutely. Yes, it's fine for now. And as and where we need extra warehousing capacity, let's say, we can outsource that. So -- but we don't like to invest before the growth. We'd like to get the growth, find a way and invest to expand the capacity. what I fully expect, again, we have a lab for produce fruit juice, wine, these kinds of applications. A baking lab is something entirely different. You need bakers, you need ovens, you need all new skills. That would be required in the future. But let's first get market penetration. Any other questions online?

No questions online.

No, okay.

Okay. Yes, sure.

Your growth of 10% in the next 10 -- 6 years. Also, I wondered the bakery market, which is the biggest one, is growing by 15% and is expected to continue, as you said. And you're expanding to the U.S. And in total, you're only growing by 10% per year. That doesn't fit together, I think. It's very modest.

Well, over promise under deliver or under -- there's an element there. So we like to make plans that we think we can achieve.

Okay. That should be easy.

Yes.

But more important question is, very interesting, the PCR market and also the mRNA. But these tests and these applications exist and we have to spike proteins and so on. Would you give us a little glimpse on what exactly do you want to achieve there? Or what is -- where can you really contribute in these markets because that is definitely something very, very exciting.

So I think -- yes, to a certain extent, as much as I'm allowed. At the moment, all of these -- obviously, we know the impact that there was with COVID. We know that very, very rapidly this industry upscaled. And a lot of the enzymes were produced in laboratory conditions. There were decks and decks of shake flasks, no actual fermenters. It was somewhat rapid, that is the word I'll use on the way it was delivered. So there's definitely room to improve. Obviously, they have now companies that have established there. But I think the industry is looking for more, absolutely. There are technology extensions that can happen certainly for PCR that technology can -- there's room to improve on those products within the messenger RNA area. This is really the similar enzymes crossing over from diagnostics into pharmaceuticals. And within that area, the vaccine spike was something quite unusual. The long-term projections for that market over the next 10 to 15 years is that through pharmaceuticals that are currently in clinical trials using the same technology, not for vaccines, that will grow back up again. And so it is an area, there are shortages that are predicted in certain chemicals when it's used as a pharmaceutical that are really important. So with -- as I said, with the right customer intimacy and understanding of the market, then the right decisions should be a very profitable way forward.

So you're not that -- yet there, to understand this.

We are getting there, and I can't share any more information. But definitely not there. There's more to do, definitely. Any other questions? Okay. Thank you very much.

I hope I can keep you awake for another 20 minutes or so. My name is Esther Gabor. I'm heading the technical unit of Microbial Strain Development. And Adriaan asked me to shine a spotlight on what we are doing in R&D to make it a bit more tangible, maybe. And I like to talk about sustainability. So the topic fits quite well. And I will give you some insights into the sustainable food production using microbial fermentation. I think as you heard a lot this morning is sustainable food production is at the heart of what we are doing at BRAIN-Biocatalysts. So we develop enzymes, we manufacture enzymes, we sell them to the food market. That's already the first part of the story. But using microorganisms themselves, gives a lot of more opportunity because they can do interesting things as well. And as you learned, I mean, enzymes are metabolized. There are products produced by microorganism. So we have this expertise. We have the scientists that are not only experts in enzymes, but they are also very good microbiologist and we want to take it advantage of the effect and explore even further markets. But coming back to sustainable food production. I think this is a topic this is not only of importance for us as BRAIN Group as a company. But it should be of importance to all of you in this audience because we are living on this planet, and we want to have a good life also in future. But as you all know, we have to deal with climate change and -- oh, safe harbor. But there's one thing you may not know, and this is that more than 30% of the greenhouse gas emissions are caused by food production or actually by agriculture and food production. And this is really, really huge. This is more than any other sector amidst worldwide. So why is that? So around about 50% of those greenhouse gas emissions in that field, they come from agriculture, so for production of fertilizers, bringing the fertilizers to the field. This will result in a lot of emissions of greenhouse gas. It's not only CO2, but even worse of nitrous oxides. And the other 50% of those greenhouse gas emissions are caused by meat production in the end. So probably you are all aware that meat production causes a lot of emission. So 1 kilogram of chicken of poultry, I think this causes the emission of 10 kilograms of CO2, but if you switch to beef, this is even more extensive because 1 kilogram of beef production emits 100-kilogram of CO2. So this is massive, massive, and we have to reduce it, and everybody can make the biggest impact on the personal carbon footprint by changing the diet a little bit towards a more plant-based and nutrition because this is more efficient. And we need to become more efficient. This is really important because as you may know, again, our population in the world is growing. We are with 8 billion today. We will be with almost 10 billion in 25 years. And that means that we need to produce much more nutrients, not only proteins, as is mentioned here, but also vitamins, micronutrients, we will have a lack of that in the future. And so we need to increase production while reducing the greenhouse emissions at the same time. And in such a situation, you may become really desperate because the challenge is really, really huge. And then I think it's always good to remember that here, we are biotechnologists. And this gives a good feeling because we can do something about it. I mean, food is pure biology. So the biotechnology should be the technology that can do something about it that can be part of the solution. And I think you already heard a lot and talk of Alex and Andy about the enzymes, also about the microorganisms, the bioprocesses, so all what we are doing here at BRAIN can contribute to a more sustainable food production. You may remember those pictures Alex have shown a minute ago, so these gel pictures with big black bands of protein that is produced. So we can -- so we are working on projects where we produce with our production strains animal proteins in microorganisms. And this is what we call precision fermentation. So this is the rocket science, let's say, in biotechnology, we are doing here in the group. But what I want to talk about today is something that is probably more close to you, and this is the topic of fermented food. I think you all know fermented foods, probably you consume them every day. If you drink -- if you eat some yogurt or some cheese, you drink a wine or a beer, if you eat some bread, that's all fermented food so where you use microorganisms to convert in the end some plant material into something nice and healthy. And the reason why those traditional fermented food products have evolved over the decades or the hundreds and thousands of years is that fermentation gives some benefits to food. Microbes when they ferment the food products they produce either ethanol, alcohol or acid and that would prevent molds from growing on the food. So if this preserves the food, it extends the shelf life. The second benefit is that microbes, they already start to degrade the product so the digestibility is higher, and while microorganisms grow on the food, they will also produce some healthy metabolites like micronutrients, vitamins, so they make the food healthy. And this is what mankind learned over the centuries. And what we can do today is to employ the very same technology to solve some more -- even more exciting issues because microorganisms cannot only convert the high-quality agricultural products like fruits or vegetable grains, but they can easily transform waste streams of agriculture to nice products in the end. So they are very modest. They also grow on like peels and shelves and tasks and make something nice of it. And we want to employ that. So to give you a very concrete example from our current research, I'm working together with my team and a bunch of winemakers on a project where we want to make the vineyard more circular. So we do not only want to take the grapes out of the vineyard, but we want to also use all the side streams that are produced in the vineyard. And the winemakers we are working together with, they are very much into sustainability because they have specialized on certain wine breeds and they are called fungal resistant wine breeds. In Germany, it's PV, Petit Verdot breed, and they have the advantage that you don't need to spray those wine breeds as often as conventional wine breed. So maybe you don't know, but wine is one of the product with a really bad environmental footprint because you need to go to the vineyard and spray like 10x, sometimes even 15x per year. So that's a lot of pesticides in the vineyard. If you are working with those fungal-resistance wine breeds, 2 to 3x spraying is sufficient. So that's good because this reduces the amount of pesticides you need, and this opens up a window of opportunity because you have time windows during the year where you can take products from the vineyard and make food out of it without intoxifying the people who consume it because the material is not sprayed. And the third nice thing about the wine breed is that the leaves they have a very nice flavor actually. So they have a very characteristic flavor profile, which is much related to the flavor of the grapes, that you can take from the vineyard. And this is where our whole story started because we talked to those winemakers and we thought we should be able to make something nice out of this actual waste stream to make -- we want to make a high-quality product. What could it be? So we thought it's the vineyard. So let's make a beverage. Let's try to make beverage out of those wine leaves, but we don't want to be into competition with the wine, which is the primary product of the winemakers. So let's make it nonalcoholic because this follows, again, a market trend, which is highly appreciated. As you may know, people don't want to drink that much alcohol anymore. So that was the goal that we set ourselves like 2 years ago. So by now, we had 2 wine leaf harvests. The first one was in 2023, that was still a hand picking. You see it here on the picture. People in the vineyard harvesting leaves in early May, just after the blossom of the vineyards when you need to take off the leaves anyhow. But the problem is this won't result in an economical process. So the next year -- so this -- actually, this year to 2024, the winemakers invented a machinery like a mesh box, they can attach it to their catching equipment, so they go with the tractor. With their machines, they go to the vineyards, they drive along the road. The cut the leaves and now with this mesh box, they can also collect the leaves and bring it to the winery. And in the winery, we prepare kind of a tea, like a cold tea, we call it infusion out of the wine leaves. So we immerse the wine leaves in water for like 2 days, and then you get a very nice infusion. It smells nice. You wouldn't like to drink it, but it's a good start already. And so after filtration, you get a clear beverage or not the beverage, but the infusion. We fill it into vessels, into casks. And this is where the job of BRAIN actually starts. So here, our microbiology expertise come into the game. So my team were screening for yeast in our strain collection that can make something nice of this crude infusion, so that can bring about nice aroma compound, a nice flavor, a nice taste. And at the same time not produce any alcohol as would happen in normal -- if you just use the normal wine yeast, they would produce alcohol again. So we did a screening in our labs, just a short representation of that. We did it on a small-scale experiment. And we find out, "Oh, we can produce a nice, something nice out of this wine leaf infusion." And currently, we are in the progress of scaling it together with the winemakers. We are not doing that at BRAIN. We are the biotechnologies. So we have our partners for this. And they are currently bringing this protocol to the fermenters and we are -- we will have a prototype, a first prototype of 1,000 bottles by next year to present it to the customers. So this is just an example to show you what's possible, how you can make something nice out of waste streams by using microbial fermentation. So yes, I think, this is actually, in general, the power of fermentation. You can create products with a good taste, which are healthy and which can be produced sustainably. Just to give you some more examples that you already know from the kitchen I mentioned it before. For instance, in sauerkraut, you know this. This is produced from cabbage by a traditional fermentation process. So you use lactic acid bacteria, they will produce acid that makes the cabbage shelf-stable, that give it a nice taste, makes it healthy. So this is a very traditional product where you use microorganisms in. Another example, which is even nicer because you can employ both enzymes as well as microorganism is sourdough bread. Also in sourdough bread, you use lactic acid bacteria and you can combine them with yeast to give a very special taste that you probably all know to the sour bread. And you can vary the taste by varying the microorganisms you use for the fermentation process. And by combining this fermentation process with the use of specific enzyme, you can also influence some other characteristics of the bread, like the raising behavior, the browning behavior. So this is actually, I think, a very nice example of what's what you can do in the field of fermented food by combining microorganisms with enzymes. In some applications, when it comes to plant-based milk, for instance, you do not even need to have microorganisms. There, you usually have to deal with a kind of a bitter taste that comes with the plant-based milks. You can easily remove that by using specific enzymes and by coincidence, they are at sale at biocatalysts. But when you, for instance, want to prepare a plant-based milk based on peas or beans, you have to deal with this nasty bean's off taste that most people don't like. And actually, if you would incorporate a fermentation step in the production process of the plant-based milk, then you could easily remove that off taste. And this is what we offer to our customers. And as I mentioned before, the nice thing is you have a big playground now. We have agriculture high-quality products that can be converted by fermentation. We have the side stream pomace, shells, peels, spent grains from brewing. There's a whole range of waste stream when you start to think about it. And you can prepare exciting products from it: sweeteners, plant-based dairy, I mentioned before, alternative coffee. A lot of things you can do with it. We have the expertise to support the customers in developing those kind of products, and we have the resources. The expertise, just to comment on this first. I mean we have this at BRAIN R&D since 30 years already. So we have the laboratories. We have the capabilities to do microbial screenings, to do enzyme screenings, identify the right microbe for the right substrate. And then we can also produce prototypes for our customers in a regulated environment because we have all knowhow of this due to our application experts in the group. And then finally, we can also assist the customers in evaluating the prototypes and the products that we have created, either by using their expert panels for taste evaluation or by setting up our own taste panels here within the R&D teams. So we can support new product development of our customers right from the start, from early R&D to prototypes and till the final product. And yes, we have done that in the past several times. And just to show you a few showcases, one of them I have already elaborated on it, is the wine leaf case that you see on the right-hand side. And here, actually, we support our partners in following the market trend of have -- of not creating any waste stream. So we can enable the customers to follow their zero waste strategies. And I have shown you how that may work. Another market trend can be or is for sure, clean label. So consumers now follow the trend they want to consume natural products. They don't want to read long ingredient lists on the back of their food packages. And here, again, we can profit from a nice feature of microbial fermentation. And this is that microbial fermentation changes multi parameters in the food at the same time. So microbial fermentation has an impact on the taste, on the aroma, on the texture, on the mouth feel. So we don't need to add a lot of single ingredients to the food, but we just do the microbial fermentation. And we have showcased this together with a big industrial partner in the development of a natural sweetener based on a fermented stevia tea again. So similar technology to what we have done in the vineyard. And the third product, I think maybe this is the most interesting for you because you can taste it during the lunch break. So we have developed a new product together with a start-up company. And what we have developed there or what the company has developed by our help and by our microorganism -- by using our microorganisms is nonalcoholic sparkling wine. And this is actually what a lot of people are looking for. This company, they are called [ Choosy River. ] They state it's the best nonalcoholic wine in the world. I don't know. I tend to be a bit more modest, but I can promise you it's quite good, and you can taste it later on yourself. So what we have added to this project is the microorganisms again. And I want to say something about these resorts. It's only one slide, but it's a lot of work in it. So my food team, they have been out collecting microorganisms from a lot of artisanally fermented traditional foods. So there are a lot of fermented foods to find in Asia. There are a lot of fermented food also in Europe, in all parts of the world. And we isolated microorganisms from those fermented foods and collected a really -- I think it's a unique collection of microorganism -- of food-grade microorganisms. It's not so much the number. I think, here it states is more than 750 microorganisms, and this is for sure true. But it's not the number that is important here, but it's the diversity of organisms. We have bacteria, we have yeast, we have fungi, edible mushrooms and filamentous fungi and many different species of that. And I think this is rarely found elsewhere. I'm sure other companies have those organisms in their freezer as well, but they don't give access to it to customers, and this is what we do. So if customers are doing a project with us as a CRO, they have the option to access this collection and use this and license strains for their own applications. And yes, as I mentioned before, microbial fermentation fits very well together with enzyme -- with using enzymes in fermented foods. And we have a lot of expertise here. We have a lot of products here already in the market for the more conventional application, but it's an easy thing for our application experts. We have as BRAIN-Biocatalysts to adapt those enzyme products also to new application. So that's a really nice fit using the enzymes and the microbes together, and we can do that all under 1 roof. So I think that can be very powerful in supporting our customers in their new product development. So to sum this up, I hope that I could already convince you a little bit that fermented food offers countless options, possibilities for new product development. And we are very well positioned as a BRAIN-Biocatalysts since we can actually supply all you need to develop those foods. We have the resources, enzymes, we have the microorganisms and we can develop the processes. So when it comes to modifying very specific properties of a product, it's often a good choice to just use an enzyme because enzymatic fermentation is really easy from a process perspective, so this is very well established. And even if we don't have an enzyme in our shelves already, we can -- as you learned from Alex before, we can find new enzymes with our enzyme discovery pipeline, so with MetXtra. When it comes to more complex characteristics that you want to change at the same time, then the microorganism and the microbial fermentation is very attractive. And as I just showed you a minute before, we have this nice collection of food microorganisms in our hand that we can use to develop new fermented products. And last but not least, yes, I think the real beauty of what we have here is that we can harvest all the synergies between our enzyme expertise and our expertise in microbiology to support our customers in all instances. So this is where we are. I hope you have understood a little bit why we talk about the power of fermentation and why I'm quite excited about it. So if there are any questions, I'm happy to take them. No questions. I run out of time.

Maybe 1 question and then we move to the break. We're slightly behind.

Just quickly. For example, when you talk about your example with the wine leaf project, how do you monetize something like this? Just to get a better understanding. Is this a one-off? This is research, you do that and then you get a payment? Or is there some recurrent revenue, which is Mr. Schneiders' most favorite word.

Yes, of course, this is what we are aiming for also in this project. So we have created some IP. And here, it's a plan to license this IP to the winemakers. We're currently discussing the concrete business model together with them, but there will be some reoccurring revenues also from this project as well. And I think this holds true as a general rule also for all the microorganisms we identified in our food collection, we will license them to our customers. So there are these reoccurring revenues, yes.

Yes, I really have to say I enjoyed the morning myself. It's always amazing for somebody who is not a scientist, what biotechnology can all do, the depth and breadth of this company, not only in services, but also in products, I think, is quite amazing. And also, it reminded me how fortunate I am really to be able to work with very talented and intelligent people day by day. It's not a given, I would say. And the interesting thing about BRAIN is that not only the people are very talented and intelligent, many of them are also driven. They're driven really by a purpose to change the world, so really people want to make an impact. They want to make an impact on better food, doing changes to the environment, helping to produce differently, more efficiently, more sustainable. And from time to time, we can even cure rare disease, which I think is pretty cool. And I think that is something which intrigue most stakeholders to BRAIN for a very long time, might it be the employees, the neighbors next door or you as the investors, yes. And what I think what Adriaan and me have tried very hard for the last couple of years, and that's the way we will continue to do is, to add another layer of sustainability to it, if you want so, which is sustained finances, i.e., we want to have a clear path of growth, of profitable growth, a path to profitability. Or on top of that, ultimately to generate enough cash flow to provide a lot of the cool things we can do to the world. And in the next 15 minutes or so, I'm trying to explain a bit how we try to get there. If I talk about executing Vision 100, that really is reaching EUR 100 million of revenues. And that is a sweet spot for us. That brings us on the top 10 companies in the world for enzymes. And that is what exactly where we want to be. We don't want to end there, but we want to get there. That's the intermediate target. The prerequisites to get there, obviously, is growth. So we need about 15% average annual CAGR around about to get there in the next 5 years. We aspire to grow high single digit, low double digit organically and add the remainder by M&A, bolt-on acquisitions. That's the idea here. Not only to grow on revenues, but to grow profitably means having positive operating leverage. So we try to increase the EBITDA margin about 100 basis points year by year by year by year. It will not be every year, some it will be 70, next it will be 120, something like that. But on the path on the CAGR, about 100 basis points per year for the next 5 years to get us to about the 15% target level that is for BRAIN-Biocatalysts only, so the major business we are running. That would not be possible if you wouldn't be active in attractive markets. That means markets with secular growth, but also attractive margin profile and particularly in the niches we are active in, we think we can get attractive margins here. We just started to harvest the bio incubator. We will continue that. Very consequentially, we're trying to get commercialization profits out of the bio incubator to finance that future. That's clearly part of our strategy. And last but not least, we think we have a very, very good value proposition to U.S. shareholders. We are really a provider of biosolutions and bioproducts to the market, which is based on a combined technology platform with very strong USPs. And I think Alex has alluded quite nicely on that, what we all have here. And also the production side, we have some very exciting technology as well, which Andy pointed out. Before we now look further in the future, I think it's worth pausing for a minute to think about the past because obviously, we had also to put in some foundations for that growth. And what we really have tried to do in the last couple of years is take out complexity out of the organization and reduce costs. An absolute prerequisite to get to an efficient organization and to get to efficient corporate structure and harvest the synergies was to buy out the minorities. Because quite frankly, if you merge things at book values, you leave a lot of value upside for the minority shareholders. We don't want to do that. We want to give that value uplift to you. So we had essentially to clean up the minority positions before we could put the business together and harvest the synergies we should finally get out of that combined entity. Secondly, we have significantly simplified the corporate structure and taken out costs, have reduced the number of entities from 18 to 7 now over the last 1.5 years. While that might not be a big number to you, it means maybe EUR 50,000 each for tax advice, the auditors running it, let alone the management times it takes to run all of these entities. So multiply maybe 9x EUR 50,000, almost EUR 0.5 million. By the size of BRAIN, that is a lot achieved. We optimized the tax structure because particularly the Royalty Pharma deal we have done, we need to find a structure which is tax efficient for us because we want to keep as much cash in the company as we can. And if you see that BRAIN Biotech AG has about EUR 85 million of tax loss carried forward on the last reported year, you can imagine we want to use as much as we can of the tax loss carried forward against the future royalty income, which we expect from the transaction. And to put a bit graphically, everything that's the black crosses, we have already closed, where the gray cross is that's something still to be done. And the last thing we have done is we merged now U.S. entities with BioSun and Biocatalysts Inc. in the United States to have 1 combined customer offering there as well. But we don't want to stop there. We still want to reform the organization, and Adriaan already pointed that out. So we're going from a 3-pillar structure plus a holding structure to a 2-pillar structure plus holding. I would almost say we put together what naturally belongs together, i.e., the science-based business on microorganisms and enzymes with a production business of enzymes, i.e., moving BRAIN Zwingenberg of around EUR 6 million revenues to the BioProducts division and moving the AnalytiCon business, which is different in nature to the other businesses which are different in nature, i.e. to the right-hand side to the BioIncubator, which at the reporting year '22-'23, that's the last reporting year reported out, had EUR 6.4 million of revenues. If you look now at the pro forma structure, how that structure would look. Again, business years '22, '23 last reported numbers, and we have taken out Akribion Therapeutics for better comparison because it will not be with us going forward. But BRAIN-Biocatalysts would be quite a nice unit of EUR 48 million revenues, about EUR 5.5 million adjusted EBITDA, so a good starting margin and a target R&D ratio around 4% to 6%. On the BRAIN-BioIncubator, about EUR 6.5 million recurring revenues, but fully coming out of AnalytiCon essentially, plus some very strong potential in the future to realize project revenues from that pipeline once we start booking particularly the Royalty Pharma income here. Also here, we keep investing around 3% to 4% of target ratio of R&D. If you combine the 2 target ratios we're talking about 7% to 10% of group R&D, which we feel very comfortable with for our size of the company to stay innovative, to do the right things for the future without killing the shop. If you look at now in a different way, i.e., by business model, how do we try to drive value in these divisions? And very clearly for us, we will not have divisions who don't contribute to value creation. So on BRAIN Biocatalysts very clearly, we have a unique customer offering. We are an integrated biosolutions and bioproducts provider, which can do everything from discovery over manufacturing to the finished products for our clients. Our go-to business models, and I think we very clearly elaborated on this, are enzyme products. We have a contract research organization and the contract manufacturing organization of 3 ways to go to customers. We have a very strong shared technology platform. So everything we'll do in the future will be based on that technology platform and venture around in different things for it. We're looking at high organic growth, as pointed out before, plus some bolt-on M&A. And of course, we're looking at positive operating leverage by increasing the EBITDA margins year by year. On the incubator, again, looking for disruptive innovations. We have just successfully started to commercialize the platform. We will do so in the future. We are looking at really creating more and more licensing income for the company because we have a great technology base. We should be able to get much more licensing income out of that. Very important for you to understand, we are not a venture capitalist. We are technology-heavy, capital-light. You will be a technology provider, not a capital provider. Hence, everything we do in the incubator, we will be trying to do with partners, either out-licensing or have a partner for the development. It makes them go to market quicker. It makes the way to market more secure and it's risk sharing, cost sharing, which we need because we are not the best people in everything we do. And last but not least, we will keep investing at a reasonable level in the technology, particularly here the licensing platforms. Also the holding, of course, needs to contribute to value. By active portfolio management, we will facilitate essentially the cross-divisional synergies, look at the M&A process and also be ready, of course, for strategic financing. And I would say the Royalty Pharma transaction is such an example of that is strategic financing for the group. Now let me come to our 5 years targets. And of course, with the new structure, we also needed to update these 5-year targets for the structure. We will change, we will guide to the future, i.e., we will guide on the dependable business, which is the BRAIN Biocatalysts business in the midterm and give you a yearly guidance on the BRAIN BioIncubator by whose -- by the nature of a business more volatile. So looking alone at BRAIN Biocatalysts, we are forecasting now in the next 5 years, EUR 100 million of revenues only for the division, an adjusted EBITDA margin of 15% and an R&D ratio for the division of 4% to 6% of group sales. CapEx, and that is regular operational maintenance CapEx plus some expansionary CapEx for the path, around EUR 3 million to EUR 4 million per year. If you have to do another whole or something that's on top, but around that range, we are quite comfortable. On top of that comes the BRAIN BioIncubator, where we will see significant revenue and earnings potential in the next year to come, particularly once we start harvesting the Royalty Pharma deal and, again, with an R&D ratio of 3% to 4%, bringing group R&D to 7% to 10%. I think what should be quite clear is, these are not only updated targets, they are also upgraded targets because essentially, we guide now only to 1 division, and we want to deliver the full growth of that division of the old targets in the 1 division within the next 5 years' time frame. Everything out of the BRAIN BioIncubator would come on top of that. I cannot exactly tell you now in what year it will come, but I can tell you we have a good probability, it will come. So from that point of view, we will guide you closer to the actual years when we're going to harvest these revenues. Now I'll give you a bit more insight how we're trying to grow sales and how we're trying to grow EBITDA with more granularity on it. Essentially, we expect the base business we have today to grow alongside a bit higher than GDP. So grow with GDP, win some market share. The new products business, and I think Adriaan alluded very nicely to the funnel, how we try to get there. Daren gave you some very nice examples of what we launched, what we're trying to do. We expect high growth out of new own launch products. Geographic expansion plays a key, particularly in North America, maybe also the MENA region. We're looking clearly to grow in different segments. So for example, Life Sciences launch has been a very good example of that. The contract manufacturing organization, here we're talking about modest growth and picking one of the questions out of the net before. It is also, of course, to fill the capacity, and we have always a choice to make. Do we manufacture ourselves? Do we manufacture outside? Do we in-source production from other people or not. So we can play with that capacity, exactly what we want to do. Very important for us is to add more licensing business to the company. So what we alluded to in the past is TMS+, we call it now Fee and Royalty Revenue. And you can imagine that, that for a science-based company is very important because other people pay for our technology, we can actually prove we have a great technology position, and we are working very hard on that. And Martin Langer, who actually is in the room right now, I think, did a great job in getting some nice contracts into the door in the last 2 years. It will take some time before you see it in terms of our numbers, but the foundation is clearly there. And last but not least, we do expect M&A to add up all of these points before, because otherwise, we wouldn't go for an acquisition. Let me take a different view on it. So how do we actually drive margin in these divisions? Well, on the base, business is clearly working day in, day out on the mix improvements, really harvesting the procurement synergies. We are getting into light sweet spots right now in terms of size, which is quite good for us. And we are also trying, of course, getting more and more scale benefits in, particularly out of procurement. New products clearly will carry higher margins when bought in mix and blended products and also with more own production, we will utilize the fermenters better. So getting to 100% utilization is actually what we achieve, of course, when try to optimize the fermenters. Geographic expansion is also very interesting from a margins perspective because particularly in North America, the margin in enzymes are much higher than they are in Europe. So even though you incur some shipping costs, some handling costs, let's hope Mr. Trump doesn't kill the business, essentially, there is going to be some money to be made in the United States for us also from a margin perspective. Life Sciences, diagnostic, pharma, much higher margin markets. So as Daren said before, low volume, high price. So also something that will drive our margins. On the CMO business, the contract manufacturing, it's clearly about maximize the fermental utilization we have, so the capacity and smart debottlenecking. So invest in better strains, invest in better downstream processing, try to fill the fermenters quicker, get cleaning quicker, things like that to really sweat the assets to a certain extent and increase capacity without investing in further steel. That's the strategy here. But Fee and Royalty Revenue, pretty clear. All license revenues will fall immediate to the bottom line. So if the share proportion increases of sales, it will drive our margins without any doubt. And last but not least, again, M&A, we won't do if it doesn't add to the points above was not accretive per se. Let me quickly jump to the BRAIN BioIncubator. I mean we have been able to close 2 benchmark transactions this year of a size we have never seen before at BRAIN. The first transaction, Royalty Pharma deucrictibant is a transaction who can bring to BRAIN about EUR 138 million of revenues. 18.41 million of these revenues are already booked on our accounts today. You will see them in the full year numbers quite nicely. We are entitled to another EUR 18.42 million of milestones from the Royalty Pharma transactions and another EUR 9 million milestones directly from Pharvaris. So we're talking EUR 27 million. I cannot exactly tell you when they come, but it will come along the clinical development up to registration of the product. We are now on the start of Phase III. Take your best guess, 2 to 3 years, yes. So in that time frame, we are entitled to EUR 27 million additional cash, which again, by the size of BRAIN, is very high. On top of that, once we enter in the sales phase of the product, we could get up to another EUR 92 million of sales-related royalties. So I think we have tried to do a deal where we get as much cash upfront as we can, do that in a tax-optimized way, but still basically benefit from the product over the very long run time of these pharma products. The second transaction and also something I'm very proud of, we have been able to find an investor base for Akribion Therapeutics that is to license out the BRAIN-engineered [indiscernible] technology for the use in pharmaceutical applications, particularly oncology to a venture capital finance consortium. What that will do in the long term is, it allows us to get up to EUR 92 million of regulatory milestones. And additionally, we could get royalties on net sales. What it will do to us in the short term is also very important. It will reduce our cost base significantly. We can take out about 15, 16 people, plus some additional costs, of course, with outside services. So talking about EUR 1.5 million to EUR 2 million initial cost savings in year 1, which started on the 1st of December. So the team already is working for the new co and not on our payroll anymore. And that has been a fantastic deal from our point of view because it reduces the cost now, it leaves the long-term potential, and it gives a new team, which is also important, much more money to quickly get quicker to the market in a very exciting technology. Also very importantly, we have not given the patents away. The patents stay with BRAIN. We have just licensed out the technology. And there's a big difference in that because we can still use all applications outside the exclusively licensed fields to other application possibilities inside and outside BRAIN. But of course, we don't want to stop here, right? But we still have a future conversation projects. We want to continue with them. And one is BioGold, and I'm quite happy actually to hold the first BioGold nugget in my hand, which has been commercially produced out of our BioXtractor at a partner, which we hopefully can announce soon. And always amazes me that, that thing is worth about EUR 1,800, but okay. Gold has a high price right now. But also Brazzein, so the natural sweetener compound is still in development. SolasCure, and Adriaan gave you a hint that here, the financing has been secured now for an extension study and some new projects we might as well also add to the pipelines going forward. Let me talk a bit about M&A. I mean M&A will be part of our DNA and has been part of our DNA. So I'll give you a bit of an idea that we have been quite busy in a lot of years, my predecessor and myself as well, i.e., we have been buying many companies prior to the IPO and post the IPO. And post the IPO, some very big and meaningful acquisitions, particularly Biocatalysts as a manufacturing platform and adding on to that BioSun as a springboard to the U.S. And Breatec as a line extension into baking. We have also taken some corrective measures, i.e., we said we are not a B2C player, so we don't want to be in cosmetics directly to consumers. So we have sold essentially Monteil and L. A. Schmitt. We have been playing in that space. And as I pointed out at the beginning, it was very important to buyout minorities to actually get in a position to reap the synergies within the group. So what are our criteria for M&A going forward? First of all, our business M&A criteria is clearly focused B2B only, nothing else. We will be looking at the enzyme business and the products business within enzymes primarily, so not buying tech shops essentially. We're looking at specialty niche applications within the enzyme market. It either has to have a strong fit with what you do or it has to be a line extension like Breatec when essentially we went into new segment, baking here. Major focus will be Europe or U.S., but of course, we will be screening around for other interesting things. From a financial criteria, we are clearly focusing on bolt-on. We're looking to have profitability in line with the existing segment or to achieve this within 2 years. We are clearly looking to have real strong economies of scale to either in-source production or have scale economies in terms of procurement. And we look to be at value accretive in 1 to 3 years post synergies on adjusted EBITDA. So I think we have a nice framework we can work with. We have been building a pipeline of things we are looking at it. It takes always more than one to tango, so we can't promise when something will happen. But we have, of course, some things in mind to accelerate the growth within the group. If you ask me should that be a highly valued business model in the equity market, I would clearly say, yes. Because first of all, we have a unique positioning. We are bioproducts, biosolutions provider who sells products, who does research and has a custom manufacturing organization. And on top of that, a quite exciting bioincubator still to commercialize. But why does the equity market normally apply quite high multiples to these kind of models? Because, first of all, you have high regulatory entry hurdles. And that's particularly true for life sciences and the food space, high regulations. So it's a nice sticky space. We have specialized niche kind of products with quite attractive margins and attractive growth markets. We have high customer intimacy. So once we are in the customers' products, it's quite sticky. We have the bakers who can tell the industrial bakers how to bake. Don't forget in the industry, there are no bakers. They are cheaply cheap workers essentially trying to bake the bread automatically. You need skills, and we can provide these skills. So once you're in, it's good, it's a very sticky business. We have strong technology USPs. And one of the biggest arguments for our customers is that, for example, with our own CRISPR-Cas technology, plug-and-play strains that we have and MetXtra, time to market gets quicker. Quicker time to market means actually it's good for margins. And last but not least, our products have strong value added. While they might only make a small price change to the final product, they make a big functional change to the final product. So it's very high value added for our customers. And on top of that, we're usually at a sustainability angle. And if you don't take my word for it, that these things can be highly valued, look at some of our competitors, who I think have been done very well over a very long period of time and also have some quite juicy multiples in the equity markets. That brings me almost to the end. So why should you invest in BRAIN? I think we have 5 very strong reasons for that. First of all, we are clearly on the path right now to profitable growth in specialist enzymes. We want to become a top 10 player in the world, and we can be part of that journey. Secondly, we have a large growing and accessible markets, and we have all the means and the tools to play in these markets. We have a strong demand right now for integrated biosolutions, not only from a sustainability angle, but also from the fact that many parties out there trying to look for outsourcing partners, and we can be one of these partners with a strong technology offering. We have still significant chance to commercialize a bioincubator. We just started with the Royalty Pharma deal to get the money into the door. We just started now to do something with Akribion Therapeutics and have other projects who have, let's say, maturity stage, which lets you expect they could be commercialized not in the too distant future. And last but not least, I think, we have a very strong product offering to make really an impact. I mean our services and products address at least 6 of the SDGs directly, and Adriaan showed you a very nice chart to that, which per se, I think is also quite an attractive value proposition. Yes, that brings me to the end and happy to take any questions.

I have a lot of questions, but I will keep it to 3. My first question is -- or my first 2 questions are on your new midterm targets. Thanks for providing the details on biocatalyst. What about the bioincubator? So I understand that you don't provide detailed guidance here, but do you expect that business or that segment to be margin accretive in 5 years?

Totally, totally. I mean, the big problem is and that's why I'm a bit reluctant to guide that is, it follows along the path of clinical development in some instances, like with SolasCure or particularly also Royalty Pharma deal. And while I know usually it takes 2 to 4 years, I don't know exactly when that comes. So also not within that 5-year time frame, how much we can harvest of that. So I think it would be honest to tell you now a precise guidance on that. The second thing is we have seen in the case of Royalty Pharma that we have chosen a cash optimized structure and tax optimized structure, i.e., we will book no revenues for a long time. We will book no earnings for a long time. We could have chosen differently, it would have just not been good for cash, so we didn't. So depending on how we commercialize things out of the bioincubator, it will make a big impact when we book it and how we book it. So we thought it's much cleaner to guide on what you can measure us against and not guide on something, which is a bit arbitrary when it comes from a timing perspective. I'm pretty sure things will come. So I'm pretty confident on that. And of course, particularly on the largest part of that, i.e., the Royalty Pharma transaction, Pharvaris is listed, so you can look what they do. I mean, it's very transparent in terms of. And every time they say something positive about clinical development, it will actually end up with us at some point of time as well. But if that's going to be year '24 or '26, I don't really know.

And then your previous margin guidance pointed to 15%, plus/minus 500 basis points. So essentially, you upgraded that margin guidance. What gives you confidence to reach that 15% in 5 years?

We have been, let's say, always confident on the 15%. But of course, as the old guidance was on the group, so including the bioincubator, we didn't know how we would exactly commercialize. So if you commercialize in the way we have done it right now, i.e., no impact on margins and sales, something else, we could have also taken the model of licensing, low sales, high-margin or own product, high sales, medium margin. So it's very difficult, and that's why we have taken the 500 basis points up and down. If we now point to the guidance only essentially on BRAIN Biocatalysts, we have a much better way of steering that, i.e., what I tried to show you with the indicated things, we have a lot of moving parts, but these moving parts, we can influence to a larger extent. So we are quite confident that by changing the mix, by having more own production, by going to different geographies, by adding things like life sciences, by adding scale, getting the synergies out, we have a little flywheel, which is running right now, which maybe in 1 year is 50 basis points, in the next maybe 120. So it's not going to be a straight line, but the flywheel goes in the right direction. And we think 15% also looking in what's possible in the market seems to be very possible from our structure.

And then lastly, on your cash position or net debt position, including the Royalty Pharma deal. Could you update us on that figure?

Well, we had a cash position roughly about EUR 10 million, EUR 12 million at the 9-month figures. And we have obviously getting -- got EUR 18.4 million in, so if you add that together, that will come pretty close to the truth. The rest we will tell you in January when we report the numbers. But of course, we will also use some of the money to repay some debt, so that in terms of a net cash position that over time might look a bit different. But I think we are in a strong position right now. And I would also expect the Royalty Pharma program to contribute quite nicely over the next 2 to 3 years. So more to come, essentially alluded to the EUR 27 million, which I'm still expecting. So -- but we are, I think, now getting not -- from a defensive position, let's say, in a healthy position, and we could get into the offensive in the next 2 to 3 years.

Thanks for the great presentation and this very detailed chart. Maybe 1 question on the margins. You mentioned one of the driver is still Life Science. And so from the previous presentation, we understand that's more backloaded. So are we to expect like some, let's say, staircase margin improvement with backloaded high step in there?

Yes, it could be very much. I mean, as Daren said, it's a long-lived program. So it takes a long time to get them and they tend to ramp for a slow time. And then obviously, with the success of a product, you can have an impact. But I think the life sciences, pharma play in 2 things, right? One thing would be own products. The second thing would be in the contract manufacturing organization. So actually growing along with the volumes of the customers, which are not huge volumes, but there could be high value. That's more the idea of growing in these segments. So yes, of course, we have some fluctuations in the customer success and these projects tend to be longer dated, i.e., more back-end loaded, i.e., we gave you an indicative guidance, not a very granular guidance on it because, of course, it's early stages in that development.

Maybe a second question then. So the EUR 25 million remaining, you had still on the previous slide, EUR 75 million, the rest is what milestone and things like that, that will be booked into biocatalyst?

Yes. It's the TMS+ fee revenue business, it's licensing business we will be doing. It could be sales of certain things, and so there's a whole bunch of other things we can do. I think what we try to do is to give you really granularity on, let's say, the plannable things of things. And then there is something nonplannable, of course. There's also an unallocated portion in every planning of 5 years, of course, a long plan time. And that's represented in that part, plus M&A basically as another source of growth.

And one last thing, and I'll stop there. On the M&A, could you give us a sense on what will be let's say, the deal value that you are trying to look for?

Yes. I think if you look at what we have done recently, i.e., the Breatec acquisition, the BioSun acquisition, that's the kind of things we look for, digestible things. Normally, if we buy something, we tend to keep the old owners engaged for some time. So we tend not to buy a 100% at the beginning just to make sure we stick in and they deliver the targets. And if we get rich, they can get rich, but not the other way around, yes. So usually, I would say anything within EUR 3 million to EUR 5 million kind of range is something we would be feeling quite comfortable at.

Two questions. Question number one. Taking into account the change in the company with new products, new enzymes, new markets, what is the potential on the gross profit level, medium term? When I look into companies that do maybe highly specific enzymes for diagnostic applications for, let's say, molecular diagnostics or maybe for gene therapeutic applications, they can get up to more than 90%. So what is your expectation on the medium term or long-term run?

It's a very valid question. Of course, a rising EBITDA margin would also need a rising gross margin. Otherwise, that will not work. Having said that, we have a very diverse portfolio. I mean we have some very, let's say, long-running products with very high margins with a very good knowledge of how we manufacture them. We have some new stuff, which has maybe no margin contribution just ramping up. Baking enzymes have a different contribution margin than fruit juice enzymes than beer enzymes or brewing enzymes and so on and so on. So it's very difficult to say in the overall mix, I would say. But clearly is that we're looking very carefully into the gross margin, which has 2 elements, of course -- 3 elements: mix, pricing, and purchasing. And with rising volumes, you would expect, of course, to get purchasing volumes, better prices also from the buy-ins we have. We expect, of course, higher efficiencies in many things and also in terms of procurement, in particular. And as said, the mix should improve also with the addition of the life sciences enzymes. I will not be giving a guidance really on gross margin. But clearly, the gross margin has to be propelled quicker than the EBITDA margin. Otherwise, that doesn't work. Nothing in the web, I see. Well, if not, then I guess the most exciting part is Adriaan closing up and you can try some real stuff that BRAIN does there. So I'll leave it to Adriaan to say some words.

Yes, I don't know what's left other than to thank you very much for all the great questions. I think we've had some very good questions. And when you're presenting and when you prepare a lot, what you hope for are a lot of questions. So thank you for that. I hope we've been able to show you that we're going into a new phase. I mean -- and this BRAIN Biocatalysts launch is absolutely important to us and for the future of the business, going from a past from university roots and a set of unrelated acquisitions to an integrated bioindustrial business that has a place, particularly in the enzyme world, but also with ancillary products added to it. So we're excited about it. We hope you are excited about it. We will be guiding in the months and years to come on how that exactly works. But all the things that you mentioned on margin improvement, on mix change, on prices, on choosing the right segments, going into things like life science solutions is absolutely critical for us and a very exciting journey to be on. So with that, I would like to thank you. We're going to have some stuff that we can try, the wine, Esther, including that is nonalcohol, I think. So most people need to drive. So thank you very much. See you next time and for sure, see you in the conference calls and at the AGM in March. Thank you so much.