Diaceutics PLC (DXRX) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Diaceutics PLC Half Year Results Investor Presentation.[Operator Instructions] Before we begin, we'd like to submit the following poll. I'd now like to hand over to Nick Roberts, CFO; and Peter Keeling, CEO. Good afternoon.

Good afternoon. Thanks very much indeed, Paul. And indeed welcome as Paul said, to the webinar. And so as myself and Nick presenting. Nick, just as a reminder, joined the company some 6 months or so ago, and he's certainly been working diligently to introduce a couple of new KPIs, which we will feature in the deck today. And I'm going to walk you through a brief introduction through changes in the market space, what we've been doing for the last sort of 6 months. And Nick will then hand over -- I'll hand over to Nick and he'll take you through the kind of the key financials at the headline stage, and then we'll come back and look, take a little look forward as to where the business is going. We move on to the first slide. So just as a reminder, Diaceutics works in a particular corner of the precision medicine market. We are focused on helping the pharmaceutical industry commercialize the diagnostics upon which their drugs are dependent. And just to put that into perspective, the number of drugs that are being launched alongside the diagnostic continues to increase every year. If we look a little back over the last 5 years, the FDA have approved, some 30% of all of their approvals have been for drugs, whether it's a diagnostic dependency, where you have to solve the diagnostic problem. Now that's good news for patients. These drugs are clinically more effective. However, there's an issue underpinning that. And that is that because the diagnostic and ecosystem underpinning many of those drugs is not yet fit for purpose. Up to 50% of those patients will not get access to the drug because of bad testing. Test isn't available. The turnaround time for the test isn't adequate. And in combination, that 50% represent several billion dollars of lost revenue per therapy for the pharmaceutical industry. We spent some time this year really validating that number alongside a number of our customers as well as our peers in the industry, and we will be publishing shortly in the Journal of Clinical Oncology, just to prove that, that 50%, that number do seem to be the kind of the issue of the moment. Now the pharmaceutical industry has been aware of this for quite a number of years and has been investing to eliminate or eradicate those diagnostic hurdles. And historically, if you look back, at the beginning, 10 years ago, they might have spent $3 million to $5 million to investing and trying to eliminate those hurdles. Today, that number is somewhere between $5 million and $10 million, and we'll see over time that, that wallet increasing. And you'll see in the stack further down, I think Nick will cover it. The evidence that we have to show that pharma will actually invest that amount per therapy and is already coasting through our own metrics and our own spend program. So we will come back to that. And in overall context, what we have is a situation where the pharmacy business is seeking a solution to the diagnostic problems holding back access to these drugs. So what can we do? Moving on to the next slide. So in essence, what we've created in Diaceutics is a very dedicated business model focused on this issue for the pharmaceutical industry. In its combination when we deliver health tech data and services to really solve for that. And when we look at our pharmaceutical customer base, we have over almost 80 therapy brands under some form of management. 41 of those we engaged in the first half of this year. We will continue to engage with all of those brands over time. Some of them -- sometimes they go into a few months where they will pause, waiting for the next phase of their commercialization stage. So really pleased to see that level of engagement, ongoing engagement that we've been building up over many years. We do continue to add our clients. In fact, in the first half of the year, we added 7 new clients, 5 of those were pharmaceutical companies, 2 of those who are interestingly diagnostic companies starting to see that new customer base and coming on to our books. And what we in essence do, and I'll bring this out in more detail further down the deck, and is we are servicing that need via a platform, and the platform has 3 value drivers. And the first is we have our lab network. And that lab network, which we're building that really helps to solve the problems of testing on the ground right at the front line to make sure those patients are being tested the right way in a timely action. The second thing we have on our platform is we have created a series of bespoke products, data and technology-enabled products, which are really allowing our pharmaceutical companies to engage easily and simply with this really complex problem. And in its combination, fix the issues in a timely way to solve them. And I have a slide further down in the deck where I'll walk through an example of how our customers are using those products. And lastly, here, we have a data set, which is really underpinning everything we do. We believe today that we have the largest single testing database of any company operating in the space. And we use that data to guide not just the investment decisions for our pharmaceutical customers, but indeed our own behavior inside the company. If I look very, very quickly at the metrics on the right-hand side, and I said Nick will open these up in a little bit more detail. And really pleased to see the kind of ongoing platformization of our business. Now to put this into context, we assumed when we launched the platform in October 2020 that we would have 20% adoption in year 1, 60% adoption in year 2 and 80% adoption in year 3. So we are actually sitting in the latter end of year 2 of the platform on the right. And we're looking at potential drops and hitting at 76%, probably 80% of the time we get to the end of the year. So really pleased to feel that we're a year ahead of our adoption targets there. In terms of our revenue build, the platform, again, has really enabled a switch in the change in our business in 2 ways. One is in terms of the revenue growth that we've delivered in the first half of the year. We're seeing some 25% growth and 18% on a constant currency basis. So the growth that we established in 2021 in the first year of the platform, really continuing to build momentum through the first half of this year. And the second thing we're doing is, for the first time is, we're moving towards that subscription models of subscribing and the licensing to the platform. And what that provides us with is to be able to build a forward book of business for the first time in Diaceutics' life. And again, Nick will give some detail and some flavor for the revenues shaping up not just for this year, but 2023 and 2024. And if I move on to what's been happening in the last 6 months. I touched on the kind of the sun dial here of the slide. I've touched on the key aspects on the bottom right of the slide. And you will note that we have launched our signal product at the latter end of last year, which is driving a really healthy switch towards that subscription revenue. Some 15 -- 13 subscriptions signed in the first half of this year, representing some 30% of our total contract value going forward. And indeed, we really see the quality of the revenues changing for the business as the platform gets into its stride. So what's driving that growth? If you look in the left-hand side around the 7:00 on the sundial, there's a real differentiation and expansion going on in our customer base in a number of different ways. We continue to bring on net new clients. As I mentioned, 7 net new clients have joined our, kind of our customer roster in the first half of this year. But we're also increasingly seeing the move outside oncology. Oncology has been the kind of the bedrock of how our precision medicine has evolved. And now we're seeing introduction of the same type of biomarker and drug dependency in diseases like cardiovascular and infectious diseases -- autoimmune diseases. In fact, only today, you may have noticed no -- news of new Alzheimer's drugs being approved by the FDA. These Alzheimer's drugs and increasingly will need a diagnostic component to make sure that they're getting to the right patients in time. So from a market perspective, we really see our own order book at transforming in front of our eyes, and we anticipate that, that trend will continue. Of course, 2021 wasn't just about us and launching and having yet one other platform. We also invested very heavily in a transformation of our sales and marketing team, most particularly a 12-person key account team supported by a further 10 people in terms of sales operations and solution selling. And that, that team have really started to make a difference to the business in terms of penetrating sideways within our top 5 customers where we are having on multiple therapies under management as well as bringing new customers and on elsewhere. Through this year, we will continue to kind of nuance and perfect that key account management team. We certainly feel they're just beginning to get into their stride. And a big event on the kind of precision medicine calendar is a meeting called ASCO. It's held in Chicago, every year, at least it was until the last 2 years when obviously COVID interrupted it. And this year, I'm pleased to see that ASCO was back in full force. It's a very, very significant science meeting. All our pharma customers go to it. And indeed, many of the key doctors in the space. We took a 22-person team to ASCO this year, first time we've ever done on. With significant success, be able to reach more clients, more customers and indeed really understand our needs as we're going into the second half of this year and forward. So I really feel that we're building that sales and marketing capability to work with the significant opportunity that's in the industry. Of course, we're underpinned by the platform and on the top right, you'll see here, yet again, we've continued to evolve and improve the platform. We've added new patient records up to now around 600 million patient records. This, as I said, we believe is the largest single testing database. And it's not just data in the U.S., It's data in all the key markets that pharma is focused on, that top 10, 12 countries. And we're being able to look at this both at a patient level and the disease level, at a lab level. It's multi-dynamic and with that really serving the needs of our pharma customers. A second thing that we've done is to continue to expand our lab network. So our lab network is our, if you like, our reach down into the front line of testing. And by working with these labs, we're able to affect a change on behalf of our pharma clients to really improve clinical testing quickly. And without this lab network, the level of change that would take place in the market would, in terms of top line testing could take 3, 4, 5 years. By bringing this lab network onboard to our platform, we can create a shuffle-ready team working with us, working with our pharma clients to really get out in front of the clinical issues. The other thing -- component of our platform, which we're really pleased is it's -- we continue to enhance the features and the capability of that platform all the time, listening to our lab network, listening to our pharma customers and saying, what is it that you need now that you really embed this in. And for some of our customers, what we're doing is basically bringing the data all the way through into their own CRM systems without any hands touching that data at all through the platform. For others who are introducing levels of content and education that really support those labs moving on. So as we should with a platform business like this, really listening and involving the market space that we're in. And more to come here, but really pleased with the level of market reception that we received with the platform to-date. I'm going to hand over to Nick to cover a few of the top line numbers, and then I'll come back and talk about some of the other things that we're working on going forward. Nick?

Thank you, Peter. So I'd like to start off by talking about just some of the high-level financial KPIs and to highlight that we've introduced 3 new KPIs for this reporting period. The first 1 is regarding the lifetime brand spend. And I've got a slide on that next, which I'll talk about in a little bit more detail. But really, that talks to validating the total addressable market and that form of wallet that we're looking to pursue, brand, that $10 million to $15 million that we'd like to realize. We've also introduced on this slide here, 2 new metrics. The total contract value, $20.4 million in the period. That is the value of contracts signed during H1 of 2022. And as you can see, that's more than double what it was this time last year. And we've also introduced the order book. And again, I'll talk about total contract value and the order book in a little bit more detail in a moment. But overall, really pleasing set of results for us. We've seen revenue grow by 25% to GBP 7.5 million. We've seen the platform adoption, which Peter touched on earlier. Now 76% of our revenue is generated through the platform. We are a high-margin growth business and those margins remain robust. We are seeing continued EBITDA profitability and importantly, increased operating cash flows as well. And finally, on this slide, we finished the year in a really strong, sorry, finished the period in a really strong position, net cash position of GBP 20.4 million. We don't have any debt, and we have an order book of GBP 10.2 million. I mentioned we'd go into a bit more detail on the sales performance. So the total contract value of $20.4 million, that really reflects the investment that we've made in our sales and marketing team, the enlarged product suite we have and are our ability to now sell in multiyear recurring contracts. So that increase in total contract value has dropped into 2 areas. One, it's been realized immediately as revenue, which is why we've seen that, that strong revenue growth. And across the 2 platform business divisions, which are the Data and the TES, that 52% up on the prior -- on the comparative period. TCV that's not realized immediately then drops into order book, which gives us a lot more forward visibility. So 6x what it was at December 2021 at GBP 10.2 million now. It's the first time we've had a meaningful order book, and that gives us visibility into H2 2022. So the pink block at the bottom right of the graph, that is the H2 revenue rollout. That's GBP 3.8 million, but we also have visibility into 2023 of GBP 4.1 million and 2024 and beyond of GBP 2.3 million. As we've increased our revenue, we've seen our gross profit increase from GBP 4.4 million to GBP 5.1 million. We looked at 2 different types of margins so that we can be more readily compared with other platform business. So look at it both including amortization and excluding amortization. We've seen the margin ever so slightly reduced in the half from 74% to 68%. That is a temporary timing difference between H1 and H2. There was some early stage nondigital service deliverables right at the end of H1, but for the full year we see that washing out at a 70% plus margin as we've seen in prior periods. I think it's really important to highlight that we continue to invest in the growth of the business. Our profitability, our operating cash flow and our net cash position enable us to continue this and will enable us to scale both the platform, the business and achieve more of that addressable market that Peter talked about earlier. Our EBITDA profitability, which is level on the comparative period last year at GBP 0.3 million and our operating cash flow, which has increased from GBP 1.3 million to GBP 3.3 million in the period. That P&L strength allows us to continue to invest in our people, so recruiting more people to scale the business, investing in those people. And we've seen an increase in sales and marketing, but in also our data analysis and customer support functions. Our strong net cash position, which has gone up also slightly from December '21 from GBP 19.7 million to GBP 20.4 million. That puts us in a really strong position. It allows us to continue to invest in the platform functionality, which we've seen here on the graph on the left, is reducing in intensity over time. So as the platform matures, we're seeing less and less need to invest in that platform. However, we are still looking to invest in the functionality of the platform. And Peter mentioned earlier, we developed the platform such that data can be ingested, turned around and delivered straight to our customer CRM systems, enabling them better insights in a more timely manner. We continue to invest in data. Data is key to our business and our high-quality market-leading insights that data gives really will be driving revenue growth now and in the future periods. It's important to highlight that our investment in data, although is relatively similar in period to period, is now being supplemented by the increasing lab network. So we've seen, we now have 777 labs on our network. The exhaust data that comes out of that lab network is being captured by our data repository and enriches. That data allows us to sell on to our customers. Finally, I'd just like to step back for a moment and put the financial performance of this period into a bit more context with the journey of the business so far. Just to remind you, we IPO-ed in April '19 with the goal to raise funds and develop and launch the platform, which we did in October of 2020, on time. 2021 saw our first year of performance with the platform products in place. And this first half of 2022 has been really promising and just to pull out some of those positive metrics for the half so far. So we've seen revenues from the platform grow at 76%, a significant shift to multiyear subscription contracts. That's reflected in the order book. 37% of our revenues are now generated through subscriptions, and we see that trend continuing. We are achieving revenue growth rates of about double what the precision medicine market wider growth rates are. We are a high-margin and scalable platform. We have successfully launched the tech-enabled service product suite at the end of 2021 and actually won our largest company contract to-date so far, $3 million in 2022, and we're starting to see that revenue flow through now, and as that TES division grows. And as I mentioned earlier, we continue to invest in growth of the business, but we're seeing that intensity reduce over time.

Thanks, Nick. And what I want to do is just again to reflect on some of the kind of key drivers, if you like, underpinning the business. And to do that, let's take a stand back and say this, well, what's really happening in the marketplace. So and a lot of pharmaceutical customers have really clarified that they have a set of needs that span a 7- or 8-year time frame, and it spans from before they launch these drugs, through the launch period and then deep beyond into the life cycle management of that. And they ask a number of key questions. For example, prelaunches, how many labs am I going to need in order to make sure these patients are tested the right way. During the launch period, they'll ask questions like -- and how can I accelerate the adoption into those labs so that patients aren't missing right on treatment. And then the, when it comes to the life cycle management, when the lab network is established, and when they believe that they're sort of at a steady run rate, so they say how many patients am I losing because of bad testing? What's going on? And why am I not hitting my forecast or how can I optimize my forecast? So these questions have really defined how we've responded in building our business. Another metric on this particular side, I'd like to pull out, is really the number of therapies that really are pulsing across this market. And there are some moved lately from right to left. There are some 200 therapies already approved. There's 25 new therapies plus every year, not coming to market that need these diagnostic that have a diagnostic dependency. And behind that, there is a tsunami of therapies moving through clinical trial and not just in cancer, but indeed in many of the other diseases that I've already mentioned. I do want to also talk a little bit about, there's an urgency here within pharma that we see in the last year to 18 months. Part of that urgency is driven by the fact that there are some really important new therapies coming to market in the space. And you'll see on the right-hand side, just a few examples being pulled out of that recent meeting in ASCO, that I mentioned. But secondly is that -- and we've reported on this before, COVID has really built up a kind of a waiting room of patients who didn't get tested then, mainly because of COVID. And in cancer, that creates a delay in diagnosis that's creating more [indiscernible] patients. So what we see here going on in the market is more therapies and more urgency and indeed, more understanding, I think, of the needs of our pharmaceutical clients. So as we think of how we've addressed that, I come back to the lengths of our platform. And so the platform has really been built over -- with years of understanding of the needs of this industry. And that platform, which is a global network, reminding you that those labs are critical to do the change management of the front line of testing. If you want to get labs, if you want to change something quickly, then you need to recruit and collaborate with those labs. And we're building that, that lab network. And it's around 770 labs. Our intention is to continue to build that to 2,000 to 2,500 labs. Why that number? Because that's the number that we believe represents 60% to 70% of oncology testing. Now, as we move outside oncology, we will come back and look how that lab network can be optimized. So the lab network is a huge asset building underneath our business. And our data, and I mentioned 600 million patient records, really important. And we're slice and dicing this data increasingly in ways partly in response to our customers' needs, partly in what we understand will help drive their levels of investment in the industry. And we've been introducing new data products in the last 6 to 9 months. I'll speak to that in a second. And of course, our network collaboration. So our collaborations is the vehicle, the innovation, if you like, where we bring all of this together, where we bring pharma and laboratory is really working in harmony to fix testing. Change management in health care, as many of you will know, is probably one of the toughest things to achieve. And I think what we've cracked with our platform is the enigma code of how to do that. And we're really engaging on some of the most meaningful projects at the minute to provide that real level of change at the front line of testing. If I consider the needs that we talked about on the slide before the last one, those questions that pharma has now. So what in essence we've done is, we've broken those questions down into these bite-sized chunks and reflecting the phases of our engagement with our client. Some of them at an early stage, some of them are at launch and prelaunch stage and indeed some of them in the life cycle management. And by breaking it down into these bite-sized chunks represented by the gray box, the gray boxes here and saying these are the areas where we have observed pharmas willing to spend, to invest in order to improve the overall diagnostic ecosystem. And against each of those needs, we've set either a data product, are represented in blue or a technology-enabled service product, represented in pink or a professional service, represented in black. But the big message to take away from this slide is our ambition here is not to manage bits of this, but to manage the whole thing. And by managing the whole thing, we will ladder up to that $10 million to $15 million that we believe is available from every one of these therapies that we're engaging with. I want to describe 1 customer journey. So just go back to the last slide, if you could. I just want to describe 1 customer there, represented by the little sort of pink, green and orange buttons on the left-hand side. And what this customer experience has been, it's a customer launching a drug in breast cancer. And we started working with them back in 2019 with a piece of data to help them understand what was the scale of the opportunity to fix the diagnostic lab network. And then subsequently, we have been upselling and enhancing alongside them what they're doing, training laboratories, moving on to standardize that next wave of laboratories to make sure that we're building that lab network, not just with numbers of labs, but with the highest quality of testing, which is really important to our pharma customers. And indeed, what we believe will continue here will be provide additional data of what's going on in the marketplace. So we anticipate living with this particular therapy example for many years to come. And you can see what our more salespeople, our key account management people are looking down this list and saying, we've helped you in these following areas, now there are some of these other things that we know that are important to you. So it allows us to build our land and expand strategy with each of our customers. If I touch just on the data. It powers everything that we do. And you've heard me say already, I think twice, we believe it's highly differentiated strategically in the market. And by living with these data sets for over the last 10 years and augmenting them, we've really begun to understand how to flex and cut and slice these data to create some of the most high-value products in the industry today. An example of that is our signal product, which we launched in October last year. And so what signal is doing, is identifying in the previous week, by ZIP code how many patients were tested positive for a particular biomarker. By bringing that data and ingesting it, doing all the standardization and integration that is required at these large data sets and by feeding it into our customer CRM system so that it's sitting on the iPhones of our customer apps -- our customers and -- our customers' DXRX app in front of them. It really is guiding just-in-time education of physicians. Yesterday, a pharma rep may have walked into a physician and saying, "Perhaps Doc, you may be seeing patients in the next 3 to 4 months that are positive for this biomarker." Today, what we're able to do and saying, "Doctor, you're able to -- you're likely to be seeing patients right at this minute that are biomarker positive. Let me remind you what the opportunity is to treat them the right way." So this signal product is really changing just-in-time education. I'm delighted to say that and since we launched the Spark, we've identified some 18,000 patients. These are cancer patients and where we believe the opportunity is to get them on to the right drug. A really significant breakthrough, I think, in the industry. So our data is an extremely sophisticated engine driving everything that we're doing. And there's more here, with more innovation, there's more product to be delivered out of the data as we go forward. And if I kind of really almost conclude for the minute, I know we'll get into Q&As, and arrive at sort of a picture of what's next, where are we going. I think I've mentioned already the little [indiscernible] on the left-hand side, the precision medicine market that we operate in is changing in extremely dynamic ways. More drugs come into the market and more therapy brands, brand teams considering what's the right level of investment to make sure that more of these patients are getting through the diagnostic access issues and onto their drug. And indeed, what we're beginning to see diseases outside oncology. Not just in some of the large diseases like the inner autoimmune and cardiovascular and infectious diseases. But indeed and some of the rarest of diseases in -- on the planet where the patient need is quite often a life and death need and whether you might be looking for 1,000 or 1,500 patients every year. And what we're able to do with our data is to find those patients and again making sure that our pharma clients are really addressing that clinical need in a meaningful way. So from a market dynamic, we really see the marketplace beginning to -- it's beginning to lean into the precision medicine from us that has been building in the background. For us, that has represented an opportunity to step into that market at exactly the right time. I think we built, with DXRX, I think we built the right product. It's fit for purpose. Of course, we're not finished. We'll continue to perfect, add many data sets, listen to what our customer needs in terms of the platform engagement. And our ambition there is that we become the preferred partner in the long term to our pharma clients who are saying it's -- what's the right option for me, who is the right partner to help me really understand why I am going to eliminate these time lost hurdles. Key to that is building those important customer relationships, those customer -- trusted customer relationships that we've been building up over many years, making sure that we're delivering against the needs and we're making sure that we're bringing the highest value platform capability to the table. Scale is really important in the platform business. And I've mentioned in the previous slides, that once we are dealing with several hundred therapies in this space today, what's coming behind that is a doubling or tripling of that space. Again, I think we've anticipated that tipping point in the market and the platform that we've built and that we will continue to evolve and will be fit for purpose. A couple of things to just look out for, I think, in this space. Obviously, more subscription, as we shift the business towards that level of subscription revenue. And at certainly more proof statements, if you like, that the platform is making a difference in some of those publications and will be coming out either in the second half of this year or quarter 1 of next year. So really starting to get in more stride as a company that's making a difference in this space. I think that brings us to the Q&A.

Yes. Peter, Nick, thank you very much indeed for such a comprehensive presentation.[Operator Instructions] Just while the team takes a few moments to review those questions already submitted today, I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q&A can be accessed via your investor dashboard. Peter, Nick as you can see, we've had a number of questions through during today's meeting. If I may, just ask you just to read out the question where appropriate to do so and give your response that would be wonderful. Thank you. And I'll pick up from you at the end.

Thank you very much.

There's 1 here on ownership of data. I'll take that one.

Yes.

And do we own our data? Yes, we do. And we're ingesting the data that is coming in. It's anonymized data that's coming into our database or data identifiers, as it's called in the industry. And those data sets and coming into our platform, what's really important, I think, in this space is to consider that we really aren't selling bits of data, we're selling insights. And for us, the real intellectual property is -- it's important, obviously, to bring in those core data sets. But what's really important is that you turn that into the so whats. The insights that are going to change behavior in the market. This is a real differentiator for us. We know there are companies who do or aspire to sell testing data. And few of them have the level of expertise and the comprehensive living with this space to turn that data into the key insights that create the high value opportunities for us to sell that data. We are -- our data products are some of the most valued insights, I think, in the industry today, and we're constantly being referred back after that. So our ownership, our stewardship or shepherding of that data, the level of compliance that we put around and the investment that we've made in making sure that we have the highest value and the highest integrity around how we're handling that data, it's something that I'm particularly proud of. And I think will really drive the business for many years to come.

The second part of that question, the multiyear subscription contracts, how do they work? And of the GBP 10 million (sic) [GBP 10.2 million] order book, how much is deliverable this year? So I think really the best example of how a subscription contract works for us is in relation to the signal product, which Peter talked about earlier. That is a at least an annual, but it can be to 2 to 3, up to 5 or indeed longer year contract with a pharma customer, whereby they get regular updates on data through alerts, and that's the information that can feed directly into their CRM system. So they subscribe to this data feed over a period and we invoice that on a monthly basis. In return, they get data on a weekly, monthly or quarterly basis. And of the GBP 10 million (sic) [GBP 10.2 million] order book, GBP 3.8 million is deliverable in the second half of this year. Again, it's giving us some really great visibility into this half. And again, build the order back -- order book for future periods as well.

There's a question here on how far and do we think we are from seeing some meaningful network effects? And -- so network effects, I think, for our platform are coming in 2 ways. And the first is, obviously, on our lab equipment and what we're looking for is labs inviting other labs to join the network. We're already seeing that. And through our program for lab talks, where we're really allowing labs to teach other labs. We really see that labs and sales are creating that internal referral, you should ask this lab to join. And indeed, we're reaching out with -- that level of endorsement is happening. So that lab network effect is already being triggered there. I think the second part of that is the sort of the kind of the internal referral within -- inside some of our outright customers. So as we work with 1 therapy team what we're hoping is that the service and the work that we're doing gets sufficient traction that they're then referring us on to another therapy brand. I'm pleased to see that in our top 5 customers, we're working with 4-plus therapy teams, each of which really is an individual customer within that. And I think that -- again that, that referral is ongoing. From a sort of a macro point of view of that sort of the platform really gaining that momentum in the marketplace. It's hard to say exactly when that tipping point is. And we feel that 1,000 labs on the network, 600 million patients in the platform and the customer base that we have, that we're pretty close to setting out a kind of the preferred product for the industry. So it's a good question. I'm not going to create a prediction around it, but I think we're already beginning to see the seas of network effect already beginning to build the business.

We've got another question here. So how has the headcount moved since last year? And are there additional hires planned for the coming year? So since -- I'll take the reference point of December '21. So from December '21 to June '22, we increased our headcount by a net 9. Within that, there were 20 new starters. As you'd expect usual, but unfortunate churn of employees, but also new heads joining. Are there additional hires planned for this coming year? Yes, absolutely. We believe it's right that we continue to recruit people to be able to scale our business and meet our ambitious growth trajectory and expectations. And of course, we'll make sure we balance that with continued profitability. But it is important that we continue, as I mentioned in my slides earlier, important to continue to invest for our future growth.

There's a question here on the $10 million to $15 million per therapy mentioned, is that the -- is that per annum or is that for the entire life of the therapy? And actually, we have a slide on this, which I'll ask Nick to switch to in a second, while that's coming up. So 2 things here. The reason why I think it's really important that we focus for a second on the $10 million to $15 million per therapy, I think it creates a real growth statement of an opportunity that is in the marketplace. Now on the left-hand side of this particular slide, you see what we call the lifetime spend extracted from the brands, the brands aren't mentioned, by name. But you can see here that of a brand at the top what we've been living with for 7 years, even before the platform arrived on our doorstep 1 year and a bit ago. And we've been living with that brand for a sufficient amount of time to extract up to just under $8 million from that therapy brand. Others where we had more of the platform experience, we've seen an acceleration of that spend. Again, $6 million, $5 million, $4 million, you can see the direction of travel there and that spend over the lifetime of that brand. On the right-hand side, the graph really speaks to what's been happening this year or the first half of this year. And again, you can see some really meaningful movement across those brands as a result of the platform. But I think there's a sort of another maybe question I'd like to pose on top of that. And that is, is that where this ends? And way back about 5, 6 years ago, we published an analysis that shows for every dollar that a pharmaceutical company spends fixing diagnostic, there's between $30 and $60 investment back. So what does that mean? It means that what we ultimately believe will happen here is that as the pharmaceutical industry sees real patient -- additional patients coming into their drug, that might otherwise have been lost because of that 50% of loss of patient leakage, and there will be a propensity or willingness to spend. And we've done some modeling around this to say somewhere between $35 million to $50 million per therapy. It's about the right level of spend for a $1 billion brand. Now I think it's important that we keep our feet on the ground. We're building a business. We're building that credibility. But I do feel that as the industry understands, the significant return on investment for every one of those dollars that we spend on diagnostics, I think we will see that number move upwards.

Next question, how much cutback are you expecting from pharma due to headwinds and the possibility of a protracted recession? Peter, did you want to...

Yes. I mean, it's -- this is a tough one. What I can say is that I think what the pharmaceutical industry experienced for example, during COVID was an abrupt number of patients that didn't present because of the pandemic. And outside of that event -- and really, the pattern and the pace at which patients were presenting both in cancer and other diseases, we did not see changing as a result of any recessionary fears. Obviously, there may be payment concerns around that. But I can tell you that I think the pharmaceutical industry almost as a whole is anticipating a very, very significant growth period for the next number of years, largely driven by the number of new therapies they're bringing to market. The success that they're having with the FDA, these precision medicine drugs get through the FDA faster and with a higher probability of success. So what we're drawing, I think, the pharmaceutical business for the next few years is kind of locked in already, and I don't think we'll be subject to those recessionary fears. From our point of view, I think what we're making sure that we do, is to diversify our customer base. So that as 1 customer might have on off year or their pipeline isn't quite where it needs to be, that we have 2 or 3 others filling that and the like. I think we've been successful and not so far. So from our point of business, from our point of view, what we're leaning in or what we're preparing for, I think, is not a slowdown or a recession, but rather an acceleration and the speeding up of the marketplace.

Thanks, Peter. And I think we've got 1 more question, which is what was capitalized in the half? And how does that change over the next 2 years? So what was capitalized in the half, GBP 2.3 million. Now that was GBP 0.9 million of data and GBP 1.4 million of platform development costs. But that intensity of capitalization is reducing. So in the comparative half, it was GBP 2.7 million. So that's dropped to GBP 2.3 million. If I remind you, it was GBP 5.1 million for 2021. And where we see that landing this year is around about the GBP 4.5 million. Over the next couple of years, I believe that it'll continue to decrease. And I think we'll find a steady state in and around possibly the GBP 4 million of spend. But we'll have to appraise that as time goes on. If there's an opportunity to purchase potentially more data to help with growth and enhance that area of business, then that may be something that we look at. But certainly, that's my expectation, as of today.

There is 1 last question there, which is how well do you think you market yourself to the wider media, not simply in U.K. and the trade class, are you celebrating your successes? And I think this is one of those questions, which is, I suppose there's never enough. What I can tell you is what we're doing and why we're doing it. And in essence, what we've been doing with the, both the platform and our communication, if you like, is to make sure that our pharma customers have both the confidence and the proof that we can really support them. And I think that's been evident in the business development build in the background and that will continue. So we have a very strong understanding and I think a presence with our key pharma clients. That was priority one. Obviously, the second one, as we move and really reflecting the fact that we are a PLC, I think there's an obligation on us to really communicate to that wider audience. And I think what we're aiming to do is really tell the story of Diaceutics. I'm particularly proud of the fact that even since the beginning of this year, we've identified some 18,000 patients through our work and that might otherwise not have got the right treatment. That's a profound impact, a profound clinical impact on patients' lives and then be it on their families. And it's a particularly important point for my team inside Diaceutics. We're particularly proud of that and that allows us to really understand how we at Diaceutics are connected to our mission. So yes, I do believe that we will continue to tell that story, tell it louder and tell it more effectively, obviously helped by the fact that we can now have proof statements behind us, that we just didn't promise to do this, but that we're actually doing it. So thank you for the question. And more to see here. But I think that we're at a very good point where we have a really strong story to tell.

Peter, Nick, thank you very much indeed. You've covered off every single question we've had. Great. So thank you, indeed. If there's any further questions that do come through the team, we'll have the ability to review those. Peter, I was going to ask you for a few closing comments, but yes, I think you've just delivered them. So thank you again for that unless there's anything further to say. But what we would like to do is get your feedback. So could I please ask investors not to close the session because you will be automatically redirected to provide your feedback in order the team can better understand your views and expectations. Should then take a few moments to complete, but it's greatly valued by the company. On behalf of the management team of Diaceutics PLC, I would like to thank you for your attendance today. Thank you, and good afternoon to you all.