Diaceutics PLC (DXRX) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Diaceutics plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. And I'd now like to hand over to Peter Keeling, CEO. Good afternoon, sir.

Good afternoon, indeed, and good morning and good evening for those joining at different time zones. Nick and I are delighted to have the opportunity to present our 2022 results and discuss some significant progress that we've been making in the business over the last year and indeed talk a little bit about the outlook going forward. I think one way to just book end 2022 for us. There was a lot of moving parts. But I think for 2022, overall, we made particularly strong financial progress. Nick will go into some detail on exactly what that looks like. And we were delighted to end the year ahead of initial market expectations. And for those of you who have followed us know that a big part of our, both innovation and our corporate engineering, is to really shift to a subscription business model. We have some progress on that, update on that and show you exactly what our direction of travel is there. Pleased to see that also took a major shift in 2022. Underpinning all of that, of course, is our platform, DXRX. We have a few slides again to illustrate what's actually happening on the platform, how are we materially changing and helping our customers in the pharmaceutical sector as well as supporting laboratories to better testing in the frontline of precision medicine. And lastly, I hope what we can cover today is our rationale and direction for actually accelerating the investment in that innovation and driving forward and capitalizing on our first-mover advantage. Just one slide before I hand over to Nick, really to just give you a kind of a snapshot of how we think of our progress and aesthetics of the leadership team. And a couple of metrics here that are really relevant to us. The first on the left is speaks to our intent to drive higher up within our pharmaceutical customer base. And I mean by higher up on that is to working with multiple therapy teams over multiple years in multiple countries. We call those enterprise engagements. And it's always been a goal of ours. It requires a significant level of evidence of trust in working with the pharmaceutical industry over years before you get awarded this level of status. Pleased to see that in 2022, we secured 2 of those multi-brand engagements that took over 1 year to put together. But now that they're in place, they are running over multiple years. Again, Nick will talk to these. So delighted to see that really arriving on our own landscape. Our platform, the DXRX, although it's barely really 24 months old and we shifted 76% of our revenue via the platform. And what in essence that means is that we're really leveraging the platform for the scalability that we require as well as improving the quality of revenues, which we will touch on here. So that platformization, our underpinning our business with the platform is well underway as part of our architecture. We work with pharmaceutical brand teams. And for those of you who are following precision medicine know that there are some 25 to 30 new therapy brands moving into the clinical market after FDA approval on an annualized basis. And I'm delighted to say that we are continuing to work with brands over a long period of time as well as adding new brands to our customer list. 56 brands across 43 customers is a significant breadth of coverage for us as a company. Again, underpinned by the scalability that the platform can provide. And within those brand teams, we are continuing to drive to that $10 million to $15 million of life cycle or lifetime revenues that we believe is available to us given the product makeup that we have. And then one of the ways that we've articulated this to show that on an annualized basis, we have 26 brands now with revenues over $1 million. Again, a big shift for us as a business. I touched on the platform functionality. We'll actually illustrate a few examples of what that looks like. And -- but really, one way to think about is all the time we have a continuous improvement process undergoing, continuing to improve the utility, access to the data and indeed the global reach of that platform. And of course, all of that is underpinned by the fact that we've been able to identify and recruit additional employees to join the team. With that, let me hand over to Nick. And I'll come back in a few minutes and talk a little bit about kind of platform utility.

Thank you, Peter. And apologies, I understand that I've flipped slide across too early there. So welcome, everyone. I just wanted to briefly talk to the key financials and then touch on some of the enterprise-level engagements, Peter mentioned, and then go into a bit more detail on our strategy acceleration and add a bit more detail on the financials. Let me just start on this slide, say, I think 2022 has been a really exceptional year for us in terms of financial growth and our trading performance. We saw revenue up to GBP 19.5 million, up 40%. That's 26% on a constant currency growth and a really strong underlying growth rate, certainly above where the wider precision medicine market is currently growing. That was driven by the enterprise level engagements that Peter mentioned, but also a higher spend per brands, which we highlighted in our RNS. But that has increased from 250,000 per brand to 350,000 per brand in 2022. I think more impressive than the revenue growth has been our significant shift to subscription and our increase in order book in the year. That was all achieved while -- I said the revenue growth was achieved while we were doing a significant lift in shift to subscription, which has increased from 3% in 2021 to 35% in 2022. And it is a core area along with future visibility through the order book that we want to really push home and develop as part of the accelerated investment in our strategy. On the order book, that increased to GBP 16.9 million at the end of 2022, up from -- up 9 fold, more than 9 fold from GBP 1.7 million at the end of 2021. Our EBITDA was up 56% to GBP 3.6 million as an 18% EBITDA margin and achieved, I think, in spite of the macroeconomic headwinds and again, our shift to subscription, which was a heavy lift in the year. Finally, we finished the year with a really strong balance sheet. Cash of GBP 19.8 million and no debt. Peter talked briefly to the enterprise level engagements. We announced this as part of our trading update in January of this year. Just to step back and say that the way that we have and are launching the platform with our customers is that they don't subscribe to the platform as a whole in an all-you-can-eat type consumption way. What we've done is we divided up our products into modules. And we have laid up in these different modules to meet our pharma customers' specific requirements with their brand teams, with their drugs that are being launched into the market. These enterprise-level engagements are a really good example of where we've worked. In this case with 2 top 10 global pharma companies and have laid up multiple products, all of which in these 2 cases have been our insight solutions, which is our data offerings. We've laid those up across multiple brands teams within pharma. And what we mean by that, a brand team is launching a drug, so you could have 5 or 6 drugs being launched within a large pharma customer at any point in time. And we -- with these 2 particular customers working with multiple brands within that customer. So in 1 example, that's 5-drug launches and another 1, that's 3. That's the cumulative value of over $7 million across those 2 contracts over 2 years. Those modules, those products that we've laid in are a mix of 12- and 24-month contracts. And as I said earlier, they are wholly at this stage just across our data insight products. So there is opportunity there. So obviously, go into more of those brand teams within that pharma customer, but also start to develop a relationship and sell in additional modules, additional products in the form of engagement solutions and our thought leadership with our advisory solution products. We also announced in January of this year our strategy acceleration. And I'd just like to take a few minutes now to explain what that is, what we intend to do and what we have been doing at the beginning of 2023. As stated here we have listened to our customers. That's exactly what we did do. We used a third-party agency to survey our customers as well as conducting our own surveys and analysis of data to better understand what is it they require, how do we satisfy their requirements, what can we do better. And that's helped us develop this strategy, which is broken into 4 segments, which I'd like to just talk on briefly here. And I'll explore a bit more in the deck in the finance section as to what that would mean in our future numbers and with the current guidances in the market. So we have in the top left here, enrich. We intend to enrich our data and platform products. This is a capital expenditure. We want to significantly invest or increase the scale of investment in our data on an annual basis. Currently, that's about GBP 2.2 million a year, and we're targeting to double that. Through our lab network and through our current customer for our current data supply chain, we've identified suppliers labs who can help us expand our geographical reach within certain areas. So we have very good coverage, for example, in North America. We've got good coverage in Europe and APAC, but we want to really expand in those areas and not just expanding geographically, but it's also expanding on the disease coverage within those geographies. And we also want to increase the utilization of our data. What I mean by that is our current data is testing data, but we've highlighted opportunities initially in North America, where we can, what was called, tokenize that data. So all of our data is deidentified, but using tokens provided by a third party, it can be linked to other data sources. So a pharma doesn't know who our patient is, but can understand the full journey maybe from a diagnosis to a test to finally a prescription of a drug. And that will help them understand where the opportunity for them to sell that drug is and what sort of return on any sort of investments to commercialize they're getting. That's really important area. The other 3 areas are predominantly investment in our business, and that will materialize in the form of additional administration cost within the business. We're going to invest in our platform scale and capability. So we're going to recruit predominantly in Belfast and Northern Ireland, where our headquarters is. Data, analytics and development teams to help us really take our platform and enable it to the next element of -- to next stage in our scale capability. So it's really well developed and automated now, but we have high ambitions. So we want to continue to invest to ensure that, that platform has really good usability and utility for our customers. At the bottom left, we want to accelerate the growth and engagement of the lab network and our platform community. Our lab network, and Peter will talk to this in a bit more detail later, is really important to us and really important to our unique offering. We have 851 labs within our network, and they have been an important source of data for our insights solutions in the past. We launched our engagement solutions in 2020 -- in late 2021 and early 2022. And we want to be able to leverage this lab network back to pharma to give them a solution to help overcome some of the commercialization issues they're having. Peter will talk to this in a bit more detail. But things like where we see suboptimal training within labs, we can help identify which labs do need training and pharma can help sponsor this to bring it on and bring them up to the level where they think they should be and therefore, enable more customers to get on drug. Finally, we're looking to transform our customer experience and service. That's to pivot our business internally to be wholly account focused rather than product focused, and we think that's going to service our customer needs a lot better and to be able to meet their requirements and demands on a more timely basis. So we're going to invest in our sales and marketing team, our customers, services and support teams. And really importantly, have a 1 account team to 1 or 1 account team to 3 pharma customers to really help them feel special as a customer to us, which they are, and to help them get the most from our commercialization offerings. Hopefully, the strategy acceleration objectives are obvious. But let me just talk to those and indeed the -- what we expect the cost to be over the next couple of years. So we're looking to invest in the strategy predominantly in the next 2 years, so that's '23 and 2024. We're expecting to see a net cash outflow of GBP 7 million across those 2 years, broadly GBP 4 million in 2023 and GBP 3 million in 2024. But we want to maintain a robust minimum cash holding, impose our own, if you will, guardrails that we wouldn't go below a minimum cash holding at any point in time of GBP 12 million in our accounts. So just to remind you, we have no debt as well. Over the period of this investment, we will remain EBITDA profitable, which I think is really important, although we will see the EBITDA margin scale back a bit from where it's currently at. We're expecting around about a 10% EBITDA margin over the next couple of years, which we see that accelerated investment in our cost base. But of course, what that gives us and is really obvious hopefully on this slide, is it gives us an increased medium-term rate of top line revenue growth. It really pushes through that shift to higher quality, higher visibility revenues, I mean, subscription revenues and I mean multiyear contracts and order book. And it's going to help us scale the business and really meet our customer demand and expand our EBITDA margin in the medium to longer term. All of that we see feeding through to an increased shareholder value. Why are we doing the strategy acceleration now? And I think that's an important question to answer. We've seen post COVID this continued shift broadly across all industries, but really so in pharma, this shift to digital channels. That does happen in clinical trials, and we're seeing it within the commercialization space we're in. We're also seeing growing customer demand for our data insight solutions and all of our end-to-end solutions. So more so now our engagement solutions, which increased from GBP 0.9 million to GBP 2.2 million in 2020. We have a -- where we feel a unique offering in our platform, our data and our lab network. We want to capitalize on this first-mover advantage and really leverage our competitive edge. We feel we've got a good advance on where we do see competition. That's not across all of the solutions we offer, but it is in certain buckets. We feel we're leading the way and are really a thought leader in the precision medicine space, and that's helping our customers get the most from their commercialization, from their drug return on investment. And finally, and hopefully, that was evident in the finance numbers. We've seen a strong financial momentum in 2022. We have a strong balance sheet. We have those cash reserves, and we'd like to deploy those to really, as I say on the earliest, a slight increased shareholder value. I'll just go into a section now to -- sorry, go into a bit more detail on the finances of the business. I'm going to start off with revenue and just touch on a few key points there. I mentioned the increase in revenues, up 40%, 26% on a constant currency basis to GBP 19.5 million. I've included, I think, importantly, the 2020 revenues as well. Just to remind everyone, we launched our platform in October of 2020. 2021 was really that first year of launch, post launch, and we saw good traction. And now I think we're really being able to see in the 2022 numbers evidence that, that traction we're getting with our customers and how we're really making a difference then. This graph also highlighting on the left the 35% of revenue shifting to subscription, something which you want to push forward on. We highlighted in the RNS that we'd like to see subscription revenues move to up and around 70% in 2025 and 80% 2 years after that. We think that's an ambitious but wholly achievable target. And certainly, that is why we're investing in the strategy acceleration now. We've seen on the right-hand graph a significant improvement in our visibility, in our revenue visibility with the order book increasing to GBP 16.9 million. Important to point out the orange block in the bottom right, the GBP 10.9 million of order book at the beginning of 2023, end of 2022, which is revenue, which will roll out Solarisbank's revenue contracted revenue for 2023. That is giving us some 40% to 45% visibility of our guided 2 numbers in 2023. Just to talk to the left-hand side on the broader P&L and our progress in the year and what that would look like, what we're expecting that to look like with the strategy acceleration. I've talked to revenue. The gross profit margin was 86% in 2022. I think that window of 85% to high 80% margin is where we expect to be as a platform business on an ongoing basis. Of course, subject to the mix of our products are being sold in. But I certainly think that is a realistic margin and something that we'll look to maintain going forward. I mentioned our EBITDA margin, up 56 -- sorry, our EBITDA, up 56% to GBP 3.6 million, a margin of 18%. All that achieved in spite of we've seen like all businesses, increase in our cost base, increase in our wage cost as well, which is a significant part of our business. And we've had the big shift to subscriptions. So really pleased to see consistent EBITDA margins '21 to '22. As I highlighted earlier, we expect the EBITDA margin over the next 2 years to reduce as we invest in our cost base. But that's a release, obviously, a higher rate of top line growth and a better medium- to longer-term EBITDA margin. What does that look like to us? We feel as a technology business, as platform-enabled, we could be achieving EBITDA margins in the medium to longer term, which are more in line with those of textile businesses. Really pleasing to see cash flow generative from operations, up GBP 3.7 million. Overall, free cash flow of GBP 0.1 million, I think, a significant milestone for us. I did highlight that we would be seeing a free cash outflow through the investment about GBP 7 million over 2 years. We finished the year with GBP 19.8 million of cash, really strong balance sheet. And we have that cash as of today, now diversified across 3 financial -- Tier 1 financial institutions to ensure that we are diversifying against any banking concentration risk. Finally, I'd just like to touch on our investing for growth and scale slide and sort of carry on our discussion from earlier on the accelerated investment in our strategy. And then I'll hand over to Peter. This graph just highlighting where we are investing in our business. Just to remind everyone where that is. Predominantly, that is data that we acquire, which is the orange box at the bottom. And then the blue and the turquoise color, that is what we are -- that is the funds that we're using to develop the platform. Some of it capitalized and some of it expensed through the P&L. We saw the platform development costs in 2022 of GBP 2.6 million, of which GBP 2.4 million is capitalized. We think in future years, an increasing proportion of those platform development costs we're going to choose to expense to the P&L. We recognize that, that is probably cleaner for investors, easier for investors to understand. And I think that's -- we're at the right stage of our platform maturity to start doing that. The orange blocks at the bottom of this graph is our data acquired costs, which are capitalized. Just to remind everyone, we amortized data over 4 years. It has a life of potentially longer than that as well because it's really important for pharma to understand historic trends and rates in the commercialization landscape. We're looking to target doubling that data acquisition in future years, and that forms part of the GBP 7 million net cash outflow I mentioned earlier. Finally, I know Peter mentioned this earlier. I'd just like to touch on our headcount that we increased 151 people as at the end of December 2022. That's up from 129, 22 heads, of which a majority circa 18. So we increased headcount across our sales, marketing, customer service, delivery and technology teams. Probably no surprise that the areas we invested in, in 2022 in our headcount are similar areas to where we think we need to invest in as part of our data -- sorry, as part of our strategy acceleration going forward. I'd like to hand over now to Peter. Thank you.

Yes, indeed. Thank you, Nick, for taking us through that, and thank you for being patient while we just really covered the results of 2022. I'd like to switch gear a little bit and perhaps put again what we're doing in that extent to the context of our customer and the problem that we're solving for. And what we've identified within the pharmaceutical business model is a significant shift towards precision therapies. And those precision therapies require diagnostic testing to be pretty seamless in order to identify the substance of patients for whom these drugs work. That interdependence, as we describe it, has really created an opportunity for someone to step in and build a commercialization solution for the pharmaceutical industry. And that commercialization solution, in essence, is seeking to make sure that patients are being tested in the right place at the right time so that they can go on to a drug. And we published a study in the Journal of Clinical Oncology in November last year. We understand it's one of the most read pieces in the Journal of Clinical Oncology in the last 12 months. In essence, what the study showed was up to 60-plus percent of patients are not getting access to the drug. So the drugs are available, but patients aren't getting access to them because of testing hurdles. So how are we solving that? Well, in essence, what we've built in our platform are a kind of a 2-sided solution. On one side are a series of data insights or insight solutions that are represented here on the slide. And those insight solutions provide everything from an understanding of how many labs are currently being able to do the test, how many labs could in the future be able to do -- to run the test, how do physicians test and their different behaviors, and is that -- how is that relevant in terms of changing their behavior, and all the way down to a product which we call Physician Signal. And that signal is in essence identifying patients who were positive in the previous week on days so that our pharmaceutical customer can engage with the physician and meaningfully direct treatment to those patients who are testing positive on these particular biomarkers. So the data side of our business is very much designed to help our customers understand the gap, understand where to put the investment and most particularly, understand how and where patients can be brought forward in a much, much faster way to get access to that treatment and close those practice gaps, so that 60-odd percent of patients who are missing that. The other part of our business is an engagement with labs. So why labs? Well, when you think of laboratories across the globe, they are literally at the frontline of testing. They are the ones that are supporting the physicians, doing all of the prescribing of those drugs. They are the ones that have the relationship with the physicians. And what we've done over the years is to build a relationship with leading laboratories in all of the key countries to support them as they adopt new tests or as they understand how to adopt new testing guidelines. And in supporting them, we've created a series of engagement solutions, which are pharmaceutical customers pay or support, and those solutions work. I'll illustrate in a second, including engaging with those labs and helping them adopt that new test. And we're supporting those labs with constantly updating them with new information that's relevant to their business and ultimately also support training them where there are new biomarkers and new techniques coming up. So all of those solutions are really embedded or being embedded within our platform so that we're providing a commercialization end-to-end approach for a pharmaceutical therapy team that is launching at test. We continue to have an advisory service as part of our business. We believe that will ultimately constitute 10% to 15% of our revenues over time. But the majority of our scale, the majority of our reach across the globe through the lab network is coming through the platform. If I just talk a little bit about platform activity for a second. That's come, I think, really key KPIs here. And our signal product. Our signal product is one where we're identifying patients by ZIP code in the last few days who have tested positive for the relevant biomarker for the drug on which our customers are targeting those patients. And we have engaged over 30 different therapy teams embedding what we call a signal. In other words, they are availing of the ability to find patients within days that are relevant for their drug. Delighted to see that signal product really lead the way for us as a vanguard data product. And within the platform, we have 8 solutions that were identified on the previous slide. 5 of those are now absolutely up and running. We've done the various pilot work. We've done the beta testing, and they are live in terms of generating revenue and contributing to the numbers that Nick talked upon it. The other 3, which we are bringing online in 2023, will move through that beta testing through those initial customer interactions and become live as part of our business in 2023. So you still will have each functioning solutions available on the platform. And that, in turn, will drive higher levels of subscription. A key part of our business model is to be what we described embedded or integrated into our customer systems. And whilst it is great to have our customers avail of the dashboard, the utility of the platform as it presents to them on a daily basis, it's equally important that we can transfer all of that data that we might be providing all the way through to the iPhones or the iPads of the pharmaceutical reps so that they have just-in-time information. And again, our data team and our engineering team have worked really hard with our customer departments, IT departments, to integrate that data. So it's really good to see that embeddedness increasing on. And you can see there the amount of our business that is following, revenue-wise is following that platform activity. I touched on Signal. This is a very sophisticated product. And this could really bringing data out all at the minute, just available in the U.S., out of U.S. laboratories. Analyzing it, labeling it, transforming it and submitting it back so that anonymized patient data becomes available in almost real time to our pharmaceutical customers. And we're delighted to see the traction with this product. We continue to think that it will lead and lead throughout 2023. And indeed, we will continue to look for ways to augment and improve the ability of this product to support our pharmaceutical customers. We talked a little bit about labs. So the laboratory community is really important to us. And we've identified around 2,500 laboratories as our sort of midterm target. And those 2,500 labs, we believe, are conducting somewhere between 50% to 60% of cancer testing today in the top 10 to 15 therapy markets. So you can see here a quarter-upon-quarter, we have continued to add labs. And not just add them, but engage with those labs to really support how they're actually changing testing in the frontline. That's really important to us that we can see and evident that we're not just helping a lab understand what a new biomarker is, but we're actually helping that lab get trained up, get staff all ready so that it can actually test patients faster, quicker and more accurately. And by the end of quarter 4 2022, we're up around 850 labs and continue to increase both the level of engagement with those laboratories as well as add new labs onto the mix. And what -- how are we engaging with those labs? Here's an example of 2 products, which are really sort of moving us beyond the initial intention of that lab network, which was to provide us with data. And here, what we're doing is really broadcasting into that lab network. Broadcasting, I use that word really to indicate our shift towards that marketing channel that we believe the lab network can be and imagine that those labs are sitting right next to the prescriber base. At the same time, as pharma is approaching that prescriber base through its rep and other omnichannel approaches. And what we're supporting our labs doing is be better informed, be better equipped and be better enabled in terms of providing physicians with the right treatment solution and enhancing that. And lab alerts, as illustrated here, and kind of lab talks are 2 of the ways in which we have trialed and proven that they actually work. Laboratories really like it. It really supports them on the ground becoming more clinically useful to the community that they're servicing. Just a quick sort of outlook slide and then we can open up for questions. I think what we've tried to cover on this call is we touched on the importance, I think, of accelerating investment in our strategy. The real rationale for this is because the first-mover advantage that we have that being in the right place at the right time is really happening for us as a business. We are being absorbed alongside our client base into their commercial business, into their commercial rollout of precision medicine. And it is appropriate, having listened to them what their needs are, that we will follow and invest alongside them, if you like, in improving the utility. And what we think will arrive as part of that are these multiyear enterprise engagements, moving more broadly within our clients as well as adding new brands and new customers at the other end of our business. And we ultimately want to be the preferred partner for our pharmaceutical customers as they're rolling out these diagnostics strategies in parallel with their drugs. That's our goal, and that goal will be fulfilled when we're kind of glued in or plugged in at an enterprise level. This is not all about oncology. Of course, we've all learned precision medicine on the back of what's happening on oncology. But if you look at the pipelines and the research, you will see that both orphan diseases and large diseases, like cardiovascular and autoimmune diseases, are equally converting over to this precision medicine model. We have the data to support that. We believe that we have the lab network to support that shift, and that's indeed a part of our growth strategy as we go into subsequent years. And there, as I said, ultimately, this is about positioning ourselves to be highly useful to our pharmaceutical customers. In many ways, Diaceutics didn't start with a script or a business plan and said let's build to this. And the reason being is that we were working alongside our pharmaceutical customers, informing and creating the innovations that were relevant to them. I think where we end up at this moment in time is we actually have the right product with DXRX. We continue to improve it. We continue to add the utility of that for pharmaceutical customers. And ultimately, we are positioning ourselves to be that preferred partner. Our pharmaceutical customers are of -- they are demanding customer base. But we genuinely think that what we've created here is the preferred product of Diaceutics. With that, we pause for some questions, hopefully address some of the information gaps that we've left you with, and then we can come back and add some closing remarks.

[Operator Instructions] I'd also like to remind you that a recording of this presentation, along with the copy of the slides and the published Q&A, can be accessed via your investor dashboard. We have received a number of questions throughout today's presentation, and I want to start off the Q&A session with this question here, which reads as follows. Can you explain in simple terms what you do and how it adds value to pharma companies and their brands?

Yes. Again, I go back to the concept that the pharmaceutical business model is transforming towards precision medicine. And 30% of FDA approvals on an annualized basis are not drugs were attached, and the drug has to be really commercialized instead. And what we have done is really focus on solving for that diagnostic commercialization opportunity. We know that our pharma customers are adept at launching new drugs. What they're less comfortable with is the somewhat complex ecosystem that underpins diagnostic testing, and it is indeed extremely complex. Multiple parts, multiple technologies, multiple stakeholders. And what we've attempted to do is to build through DXRX a simple one-stop platform where our pharmaceutical customers can solve for this issue. They can get the data and the insights that they need to understand what the issue is and where to invest. You'll see those products represented on the slide. And then we're building this lab network that we believe is sitting alongside 15 prescribers that they will require to drive adoption of these new drugs. And the mix of that lab network, and we're engaging with our lab network in creative and innovative ways to support them so that they move from being less comfortable with the new biomarker to being proficient and indeed a key part of their support for the prescriber base. So what are we ultimately doing with the platform, in essence, is providing that commercialization solution for the tests, alongside our customers who are commercializing the drug.

Perfect. The next question here, reads as follows. Can you speak to the competitive environment for your main competitors and why can pharma companies not do this directly?

Well, let me deal that a little bit sort of in reverse order. Why do pharmaceutical customers not do this themselves? In essence, I would say that our primary competition is indeed pharmaceutical customers occasionally trying to take this on. And the reason why a pharma, for those of you who know that model, the reason why a pharma company will intervene in an area like this is when it doesn't have a good alternative. And it's real preference is to find a good outsourced partner. So what we see in working with our pharmaceutical customers is our need to prove that we can really move the needle on their business, we can prove with evidence that we have the right level of data. And as that happens, we are winning more and more of their hearts and minds and bringing them over to our customer set. Some 50 therapy brands at the end of 2022 are working with us on a kind of an ongoing basis to support the rollout of the drug. So I think the pharmaceutical model is really to try and shift towards a good outsourced partner, and I think we're sticking our hand up for that. In terms of the competitors, we have all sorts of flavors of competition who what I would describe as nibble at the fringes of our business, but none that really have built for a very particular diagnostic commercialization purpose. Some of those competitors include large CROs, include large consulting businesses, who have relationships with the same therapy brand teams, but who increasingly are disadvantaged versus Diaceutics because we've collected the data, we've built the lab network, and we've really designed a purpose-built set of solutions that are for our customers. We are never complacent about competition in Diaceutics. But at the same time, our RIs are very much on board, very much focused on continuing to focus on this very singular issue, which we believe is part of the transformation of the pharmaceutical business model. So competition is there, but it doesn't threaten us in terms of acquiring market share on an active basis.

Perfect. Can you speak to the nature of the relationship with pharma companies and labs?

Yes. Nick, do you want to grab that one? .

Yes, absolutely. Thank you, Peter. So we've developed over the 18 years or so of Diaceutics' life to this point in time. We developed very deep relationships with pharma customers. Pharma is a very particular buyer. I think Peter said that earlier. They're a very disciplined buyer, and they will only engage with really robust businesses that offers them a secure solution. And it's broad relationships that we've been able to build up these enterprise-level engagements. And just to highlight, we worked with 21 of the top 30 global pharma companies. Within Europe and the U.S., we work with all of the top 20 pharma companies. So that's within the North America and Europe regions. That's really our strength. It's come over many years. And as Peter said, it's about building a differentiated, but really important product that pharma recognizes as important, recognizes as unique and can get the maximum value and return on investment from. Our relationship with our labs is really important. Not just -- it's not just a transactional type relationship, where we buy data or reducing training. We work with labs. We have a special lab, lab liaison team who work and nurture those relationships. So that is lab people talking to lab people in scientific terms with quality in mind and not just saying can we turn up, can we buy your data? Of course, we want to do that because we want the lab data to be able to help pharma understand the hurdles and commercialize their needs. But it's not just about giving labs money. It's about actually understanding their requirements and being able to help them on their journey of development as well. One of the benefits of our lab network and our engagement solutions is that we nurture that relationship. So once the lab comes on to our network, onto our platform, we start enabling -- we start engaging with them on a regular basis. That is either paid for and sponsored by pharmas. So that could be training programs, that could be alerts about new drugs, alerts about quality and compliance. Or we will actually develop that content ourselves with our lab liaison team to make sure that is really a value-for-value 2-way relationship.

Perfect. And this question here follows on quite nicely from that response. I see from the results substantial expenditure and plans to accelerate expenditure on data assets. What are these data assets? And how do they support the offering? And why are labs willing to sell this data if it's such a valuable asset?

Yes. So I think I touched on this a little bit earlier. But let me just explain. So our data asset is really important to us. It sits within our platform as a data analytics and a delivery tool. And it is there and available -- sorry, for pharma to be able to utilize. Apologies, the question just got away from me. What was the second part of that?

Sorry. The second part was why are labs willing to sell this data if it's such a valuable asset?

Yes. So it's a really interesting question. I think, think of data created by labs is not wholly conceived and in a nice ordered fashion, it can be very messy, and it can also be quite desperate state. So a lab or a group of labs, and are very big lab complexes in the U.S., have good geographical coverage. But what we've worked on over time is building that relationship, building that lab network so that we get what we think is the optimal level of patient coverage from those labs in that disease area. So let's take North America, for example. We work with hundreds of labs within that space to be able to get the right coverage predominantly in oncology, but in rare diseases in non-oncology as well, to understand what is happening with patients, what is happening in testing. If the lab were to go in and try and sell data themselves to pharma, and they can do that and pharma does buy that, then they might only get a certain amount of geographical coverage or a certain amount of disease coverage depending on where that lab has strength. So pharma might get a 5% coverage here, a couple of percent here, maybe a 10% there. So they may got to build up 10 or 20 different relationships with different lab groups. Again, and they all might have different data sources, which are very messy and difficult to integrate. We essentially give pharma that ready, which we state, we've got the right coverage. This is our current coverage. We've got actually geography covered. By the way, it's all standardized. It's all mapped. There's AI algorithms over the top to help them not just -- we're not just selling raw data, it's data insights. And then we can deliver that either through our platform in an analytics tool or directly into pharma, data analytics tools and their CRM systems. So we do see labs doing that, but it can be difficult for pharma to ingest that. And we offer a lot more comprehensive solution.

Perfect. So next question here asks. Can you talk a bit about how critical your offering is to pharma kind of become discretionary?

Yes, let me grab that. I think there are only a few times in kind of pharmaceutical kind of business here where the business shifts and tilts in a meaningful way. I think we're in the middle of one of those moments, and that entirely is being enabled by, if you go as far back as the human genome project or the shift towards precision medicine. And if you listen to the CEO presentations of -- from GSK, from AstraZeneca here in the U.K. and indeed from Merck and BMS and Pfizer in the United States, you will understand that the pipelines of the pharmaceutical industry are shifting away from the one-size-fits-all drugs, where we treat everybody on a trial and error basis, towards identifying and targeting particular patient subgroups. And up to 70% -- 60%, 70% of those forward-looking pipelines are full of drugs, which are going to require some level of patient testing in order to drive the revenues and the forecast of those drugs. So the first thing I would say is that the science is building an interdependency between testing and treatment in a way that it hasn't done for decades up until this point. So where we come in, in essence, is saying we have identified and spotted. That requires a new level of service, a new type of support, a new type of platform ability to help decomplexify what in essence is a diagnostic ecosystem, which is running at about 1/2 to 1/4 of this feed in terms of change than the treatment pathways. And in order to make these fall into synchronization, you need to create levels of intervention. Those interventions, through trial and error and working with our pharmaceutical customers, we believe we built into the platform. Those interventions include data information to really change that testing paradigm and secondly, engagement with the lab network to accelerate change. And to put that into some context, we know that observing change within the diagnostic and precision medicine market can often take years, 4, 5, 6, 7 years. What we've been able to do with our lab network is to see that level of change move within under 10 months. So we are saving 3, 4 years of lab time for our pharmaceutical customers. So how critical are we? How do we fit into the critical path? I think increasingly, what we're seeing is that our data and our lab engagement solutions are very much part of the go-to-market model for a pharmaceutical industry that is in the midst of shifting towards precision medicine. I've touched on oncology. We know that 70%, 80% of drugs being launched in oncology are test dependent. But they look at what's happening in cardiovascular medicine, in autoimmune disease, even in areas like diabetes. There is a renewed investment in diagnostics and treatment working hand-in-hand. I believe that where we sit in Diaceutics with our first-mover advantage is building a product and a solution and a platform that's sold for that issue.

Perfect. Just turning to the next question. How come all the news surrounding Diaceutics is exceptionally good, and if that share price is falling, albeit minimal, the company has plenty of cash and no debt?

Yes. No, I think it's a very good question. And as you rightly said, we have -- we are very well funded. We have GBP 19.8 million of cash at the end of the year and we have no debt. I think it's difficult to say why perhaps the share price isn't, let's say, in line perhaps with our expectations. But I mean, certainly, we are taking upon ourselves to tell the story in a lot clearer way and a lot more sustained way and raise the profile of Diaceutics and to continue to deliver on what we promise. So we go out, we set guidance to the market with our analysts, and we look to meet and exceed those expectations wherever possible. We think the investment in our strategy is the right thing and to accelerate that is the right thing given our position, given our strong balance sheet. And of course, we're looking to invest in where our 3 core areas are or core differentiators, being our DXRX platform, our data sets, which are unique and highly evolved and taken years to -- years put together. And of course, our lab network, which we work really hard to engage, develop and grow. We will continue to focus on those, continue to enhance those, maintain our competitive edge. And it is our hope that within time, if we make the right steps and continue to talk about Diaceutics and how well we're doing, we'll see the share price -- hope to see share price recognize that.

Perfect. The next question here is around DXRX and asks, is DXRX signal available outside the U.S.? And if so, in which countries?

Yes. Let me grab that one. I think I've mentioned already, but I'll reiterate. What we attempted to do with Diaceutics and the DXRX platform is to build a solution for the top 10 to 15 countries in which our pharmaceutical customers are rolling out these precision medicine drugs. We recognized earlier on that we could build a solution just for the U.S., but that we were missing an opportunity to really repeat and evolve our business along that geographic basis. As a result of that, all of the solutions that we have built on the platform, all of the 8 that we envisage will make up the predominant of the subscription revenues are being built with a view that they will be global and available in all of our key markets. With regards to Signal at the minute, it is currently only available in the U.S., and I think it's a question to ask we are indeed looking at rolling that like into key European markets. There are different data requirements in all of these geographies, different levels of access to data. And we're working through that at the minute to really make sure that we can introduce signal on some at least early part of signal into a couple of those European markets. So that's something to look out for towards the latter end of this year. And I don't want to call just yet exactly which markets will be first. But the intent is clear. We want to provide all the solutions in all of the key markets that we believe our pharmaceutical customers are going into. That is what we believe will be the partner of choice requirement for pharmaceutical industry.

Perfect. The next question here asks, what is the reasoning behind the minimum GBP 12 million cash balance rather than reinvesting part of this?

Yes. And so I think it's a great question. We obviously did -- took a long time to make sure that we're getting the right level of strategy investment and acceleration. And certainly, we expect to see that GBP 7 million cash outflow over the 2-year period, meaning that we can maintain that minimum GBP 12 million holding. But we're a platform-led business. So we think that level is right. We're a platform-led business, and we're going to remain agile. So that means that if our customers demand more of us and we need to increase that investment, we will and we have that extra resource to do so. Likewise, if for any reason we want to slow that down, again, we'll remain agile and we'll turn on and off as we need to. I think it's really important that we maintain a good level of cash balance. We remain debt-free in these difficult times with rising interest rates. It's important for pharma to see that we are a stable business. Being listed is really important to them, and having a significant cash balance shows that we have the balance sheet strength to stay around to continue to do business with them and partner for them for a longer period of time. Finally, it's really important that we keep some of that cash resource back in case we spot any M&A opportunities in the future. We are looking for potential opportunities perhaps in data or in the tech businesses to help augment our platform, enhance its capabilities on data sets. And we look for potential opportunities maybe with lab engagement or building out a lab community solution. So again, having some of that GBP 12 million back, having that in reserve will mean that we can deploy some of that if we need to and quickly without debt to take advantage of any opportunities that are out there.

Perfect. And just 1 final question here. What would Diaceutics look like in 3 to 5 years' time?

Yes, a good question. I think the seeds of our direction are well planted at this stage. And even within the slide deck, our intent to be the preferred partner for a pharmaceutical industry that has shifted its model towards precision medicine. We understand that requires a level of scale because we're talking here about the majority of drugs requiring some sort of diagnostic enablement. But I think what we've done with the platform is be thoughtful about building DXRX with that level of scale in mind. We've collected the data that is required with that level of scale in mind, and we're building the lab network with that level of scale in mind. So what do I think the next couple of years look like for us? In some ways, it's more of the same. It's increasing the utility of everything that we built. But ultimately, it's building that preferred partner framework for a pharmaceutical industry that has shifted onwards. And for those, for the pharmaceutical industry, there's a track record of reward for tech for pharma businesses that have really supported them in their business over time. Our goal is to be one of those preferred partners in the next 2 to 3 years. I think the size, scale and the financial success that will come with that will follow by just basically sticking to the netting and just really being dedicated to these goals.

Peter, I think I actually managed to address all those questions from investors. And of course, the company will review all the questions submitted today and will publish that response on the investor company platform. But just before we direct any investors fight with their feedback, which is particularly important to you both. Peter, can I just ask you for a few closing comments?

Yes. I think I want to grab the moment of the fact that we had President Biden in Ireland. You may have spotted that in your news flows in the last week. And -- but what is little known about President Biden is that at the early part of his presidency, he announced a Cancer Moonshot. And that Cancer Moonshot was in essence seeking to have a 50% reduction in the incidence of cancer by 2030. And there were 3 things that he specifically called out were an important part of that Cancer Moonshot. The first one was obviously new treatment. And our pharmaceutical customers are really attempting to bring forward innovative targeted solutions for patients. But there are 2 other components to that, that very much fit with the business model of Diaceutics. The first was data. And specifically, he called out releasing the data that will drive investment and drive an understanding of the clinical patient flows. And secondly is diagnostics and better testing. And we're delighted, I think, to find ourselves in a place what I describe as the right company in the right place at the right time, where we have both the political support, we have the customer support and I think increasingly, we have the clinical support to really to drive change here. And we know that over the last 2022, we are making a difference to individual patients in terms of helping them being supported with better testing. And that better testing ultimately will improve their treatment outcomes for myself and my team, that is a particular driver, a particular motivator and really drives the purpose of the business. So it's a privilege to be in this space. It's a privilege to watch the success of the business follow. And most importantly, I think it's an important part of our future landscape is that we continue to make a clinical difference to patients' lives.

Peter, Nick, thanks once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to ride your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Diaceutics plc, I would like to thank you for attending today's presentation, and good afternoon to you all.