hVIVO plc (HVO) Earnings Call Transcript & Summary

Welcome to the Open Orphan investor call. [Operator Instructions] Just to remind you, this conference call is being recorded. Today, I am pleased to present Leo Toole, CFO; and Cathal Friel, CEO. Please begin your meeting.

Georgia, thank you very much for introducing us. Apologies for the slight delay. We're 3 minutes late because I got over here well over than the new normal. Participants of 130, 140 people wanted to get an update. So look, we will make it reasonably quick, and I'm not going to delay a beat 11:00 in the morning. I'll speak for only 10 minutes, zoning on our government contract that really zoning in on this COVID challenge study that we announced we were going to do in the 7th of March and to update where we are. And then my colleague, Leo, will go into a bit more digital in the finances for 5 to 10 minutes. With the presentation done in about 15, 20 minutes, and we'll open for any questions you like for a [ further period along ]. So without further ado, let me discuss where we are. First of all, I'd like to -- I think there's lot of rumors we're going to do a fundraise. I can absolutely discuss that we are not doing a fundraise anytime. We're now cash generative, and we're going to end the year with a very substantial cash balance, probably in the region of GBP 20 million, GBP 25 million. We've always guided the market, we were going to turn both these companies around. We've merged them. We see them being profitable this year. And we're proud to say we're now generating cash and we're profitable in Q4. So first, number one, no fundraise. We would imagine the next fundraise will be us handing money back to our shareholders. So I won't discuss that rumor. Next thing, quickly on the share price. I think people should relax. This is a classic. We're public markets. We're old hands. This is the third public company I've run. And this a classic case that share price has gone up by the rumor. And so the fact a lot of people bought on the rumor of we were doing something in the COVID challenge study. And I think people should relax because they're in a bit of a panic, why is the share price goes down. It's a classic by the rumor. And people have been cashing out on the fact that we've announced the deal. And naturally, we're going to talk you through the deal. Some people online people think it's a GBP 10 million deal. Some people think it's a GBP 17.5 million deal. Well, they're all wrong. The reality is there's a GBP 10 million deal we've already started to working on with Her Majesty's Government. That's a characterization study that employs, first of all, getting a challenge virus study. That's about GBP 3 million piece of work, followed by the actual study itself is about GBP 7 million. In total, Her Majesty's Government signed a GBP 10 million contract with us. And of that, as always, we get 25%, 30% upfront as a booking deposit, slot reservation. So we get GBP 2.5 million for that. Separately, Her Majesty's Government will -- and we have announced, we're working on running COVID clinical trials or studies to test vaccines. And we announced that on the 7th of March this year. We see that we're doing it this year, and we had an overwhelming demand from vaccine companies all around the world. Being a good British company, and we agreed when the British government vaccine task force approached us, they wanted to be the first party to it. And they are not alone have engaged us to run the characterization study, which you must have before you can run the studies. But they also -- they have now given us nonrefundable booking deposits on their first 3 COVID-19 trials. So that's where the other GBP 7.5 million came from. So they have committed and we have committed. They've got the first 3 guaranteed slots in our program, which will happen next year. So on completion of this contract this week, we get GBP 2.5 million for the upfront on the GBP 10 million contract. And we get a subsequent GBP 7.5 million deposit that's [ 3x ]. So on signing, we now have a GBP 10 million cash payment. That's why we always say challenge studies, it's a cash-generative business because we get money upfront on milestone payments. Separately, hopefully, Her Majesty's Government wants all those 3. But the beauty about it is, we were overwhelming ultimate vaccines that was looking to get slots in those COVID-19 challenge studies. So despite those deposits being nonrefundable, they are transferable. And Her Majesty's Government can -- if they don't want to take up those slots, can transfer it. And we have queue of the major vaccine companies around the world looking to those slots. And watch this space in the coming weeks and months, we will, and in time, sign up slot 4, 5, 6 and 7, and that's kind of where we max out. Each of those slots, we guided the market clearly all summer, there are GBP 8 million to GBP 10 million to run a COVID challenge study. So in total, British government contract is potentially a GBP 40 million contract. That's GBP 10 million for the study underway, and then GBP 10 million from each of those challenge studies [ of which they pay for prices ]. So I want to make that clear. It's potentially of all this a GBP 40 million deal, vastly better than people are expecting it on the market, the GBP 17.5 million. So hopefully, that cleared up the confusion of the GBP 10 million and the GBP [ 7.5 ] million. Next thing I'd like to deal with, we are delighted and we announced this in recent weeks that for the first time in the history of hVIVO, our 24-bed quarantine is now booked up for over a year in advance and imminently about to get booked 18 months with conventional challenge studies, that's RSV, influenza and all those normal run of the mill. There's a huge appetite around the world to now do challenge studies in the conventional manner and also huge appetite for the COVID ones. Giving them new room in QMB, and imagine this government is very kindly and available, the only other quarantine facility in the United Kingdom, that's the 19-bed one in Royal Free Hospital in North London. We will have to staff it, we will have to man it, we will have to run it. The Royal Free have been fabulous partners. They have made their quarantine facility available to us, and we have people in the ground work on that. And almost overnight, our 24-bed, we've always said, we'd max out at GBP 40 million, GBP 45 million, GBP 50 million annualized revenue. Now with the initial work going on in that 19, where we could hypothetically, happy to say, we've increased our annual run rate potentially, if we do all Her Majesty studies up in the Royal Free, to GBP 80 million to GBP 90 million annualized run rate. So that's a very significant development. I think I've covered the points that we are generating cash and we're profitable in Q4. So we want to discuss that rumors. So why will we do a fundraise? We are not doing any fundraise. I know lots of other fast-growing companies do it. That's not our business. And we're the only company in the end. We have [ one of the largest management stakes ]. We value these shares very, very wisely and very prudently, and we don't see any reason to do any fundraise. We want to get focused on next year. This year is the year of 2 halves. We only got control of this company in February or March. That's hVIVO. We turned it around. And the second half is now get the deal put in place. And revenues next year and profitability will be a huge improvement, radically different from this year. And I think that's where the long-term shareholders, such as myself and management team, look at next year being absolutely transformational. The last thing I'd like to say is that when we took over hVIVO around this year, Open Orphan sees itself as very much a data company, a technology company. We're not a high-risk R&D company. That's all in the history of hVIVO. We're focused on cost plus profitable service, but we're very focused on data, data management and technology. We did say earlier this year, when we took over hVIVO, hVIVO was an interesting division. They're the world's largest database of infectious disease progression. What does that mean? The 30 years of doing challenge studies, and they can see everything that happens to body when they inspect the body with a virus. Funny enough, in today's environment, the big tech company, the big ramp-up, all are very interested in that data. They want to know what happens to your body so that they can predict it. So we've guided market that we've had substantial interest from major technology companies in recent weeks and months that's kind of taken us surprised to see this level. So I think going forward, in addition to talking about now being very much the world leader in the testing of vaccine to use in human challenge study models for testing vaccine and don't forget antivirals. We've had a long history of testing antivirals in hVIVO, but we're now going to be very much a data management company, a data production company. But keep in mind, the one thing we will not be doing, we will not be taking on high-risk R&D projects. This is the time now to build a seriously world-leading company. Our share prices progressed really well in recent weeks and this month. And we believe any guidance to the market I've always said is that we're not a 5 [ by now ], we're not a 6 [ by now ]. We would like to increase our share price, if all goes well, by 50% plus every 6 months. And that's a nice target would like to set for ourselves in the days, the weeks and months ahead. So without any further ado, I think I've hit my 9 minutes talking. I'd like hand over to Leo for 5 minutes, who will briefly outlined maybe a little bit more granularity on our finances, which are in fantastic shape. If we were guiding the market, we'd like to end the year with substantially excess of GBP 20 million cash in the bank. And in other words, we potentially could have more cash in the bank at the end of this year than our market cap was 12 months earlier. So that's a nice note to end by the finances this year. Leo, can I hand over to you to give us maybe 5 minutes of where we are finances-wise?

Certainly. And thank you very much, Cathal, and good morning to everyone. Let me just give a little bit more color on some of the elements of the announcement on Tuesday, and then just reiterate some of the key elements of our financial projections going forward. As Cathal touched on, the headline value of the agreement that we reached with Her Majesty's Government is GBP 10 million, reflecting investment to manufacture a virus and then to characterize that virus. And we think about 1/3 of that GBP 10 million will be recognized in 2020 and the balance will be recognized in the first half of 2021. The overall value of the consideration could flex up maybe about another 20%, depending on the number of volunteers that are required to do the characterization. So there's a little bit of flex on that number as the scientific process proceeds. As Cathal alluded to, we have reserved 3 slots in our program to support HMG to complete 3 vaccine studies. The precise timing, size, protocol of these studies has to be determined over the coming period, but we do anticipate that, that work can start as of -- once the characterization study is complete at the end of H1. And we see a program where those will be rolled out across H2 2021 and into 2022. And again, the precise timing and shape of those will evolve over time. But they will be of the order of GBP 8 million to GBP 10 million in terms of aggregate value based on an estimated protocol today. So that means that the overall aggregate value of this agreement, should it come to fruition, is going to be of the order of GBP 35 million to GBP 40 million in aggregate. And the precise timing of recognition will be determined in the near future. I want to take a moment just to explain what this means now for our overall financial outlook. As we guided a few weeks ago when we announced our interim results, 2020 really was a year of 2 halves. Clearly, we were loss-making in the first half of 2020, but turning the corner in the second half of the year. And as Cathal alluded to, we are on track to be profitable in Q4 2020. That's a little bit later than we had initially guided a number of months ago because we have made incremental investments into our COVID-19 program in Q3, but these are coming to fruition now in terms of the agreement that we've signed just now. So as we look ahead and as we alluded to 3 weeks ago, we really do feel we are now very well placed to deliver very strong revenue and very importantly full year profitability in 2021 based on a number of key drivers. Firstly, as Cathal alluded to, we see a very strong pipeline of already contracted agreements and very, very advanced agreements to fill our clinic -- our existing clinics for challenge studies for flu and RSV. So that is progressing very, very well. We see strong growth on our early clinical development services based in the Netherlands. We've seen strong growth this year, and we see that continuing. And we have refocused our clinical research business based in France towards a steady revenue stream of biometry-related services, and that means we really do focus clinical operations. We see that business stabilizing next year, and we see that team actually generating synergy first by supporting us on our challenge work. And next, we have, as we've alluded to before, finished our work to do the major restructuring of our business, and we see those savings flowing through in the end of 2020 and full year effect of those restructuring savings into 2021. And finally, we see the impact, the strong cash and profitable contribution of the COVID-19 challenge work that we've just signed up with Her Majesty's Government impacting our results next year. And that is before we even look at how we broaden that pipeline to new customers or touch on other more strategic opportunities, as Cathal touched on. So in summary, again, we're very satisfied with our progress this year since the merger. We have -- we're well on track now to complete the turnaround in our business, and we have a very positive outlook for 2021. Cathal?

Leo, look, thank you very much. That kind of gives us a good summary and conscious 11:00 in a busy morning for everyone. We've done that in 15 minutes. So Georgia, maybe I can hand over to you now, and we'd be -- Leo and I'd be delighted to send and answer any questions that any of our -- spectacular large audience we have on online at the moment who want to ask. But again, of course, we're conscious that we don't want to tie up this morning up. So let's try and do 15, 20 minutes, half an hour questions, if necessary, if that's okay. Georgia can now I hand over to you to send the questions, please? Leo, can you hear me?

I can hear you, Cathal.

Can you hear, Georgia?

[Operator Instructions] And we have our first question registered from the line of [ Oliver from Trading Part ]. [ Oliver ], perhaps you're on mute. Perhaps we'll go to the line of [ Jonathan Darby ], private investor. [Operator Instructions] Jonathan, you're muted. Okay. Let's try the line of [ Mereth Newrington ]. Hello, [ Mereth ], are you muted? Let's try the line of Emma Ulker from Proactive Investors.

I don't know if you can hear me.

Yes, we can hear you.

Great. Quick question. Could you give us any more color on the approximate cost of developing the characterization study and the potential timing for that?

Yes. Look -- Cathal here. Look, we probably won't go into exact costing that's commercially sensible. What we can say, we announced the transaction this morning or earlier this week, the overall transaction is about GBP 10 million. And we've kind of guided thereabouts, this GBP 3 million-ish with some flex on developing the challenge virus. And that's somewhere in the region of GBP 7 million-ish on developing this characterization study. It's -- this is GBP 10 million contract. And other than that, I think we've got as much guidance at this point in time, we can share what the market, if that answers your question.

The next question is from the line of Gareth O'Sullivan.

Very good presentation, very interesting. Just a question on your challenge studies. Do you have a reliable stream of quality volunteers to support all these future studies? And I suppose, in terms of risk, what management kind of policies do you have in place in the event of adverse claims against Open Orphan if volunteers become very ill?

Gareth, Cathal here, I'll take that. Look, very good question. First thing, when we announced this deal earlier tissue on the 7th of March, it was the most publicized deal in the world. We had 256 media companies recorded it, 46 TV stations broadcasted it and we've got a volunteer recruitment site called www.flucamp.com in U.K. That's where we recruited our volunteers. That site completely crashed, fell over. Our lines were jammed. We had 107,000 volunteers signed up in March within the first week. 50,000 were qualifying in the system in U.K. resident with volunteers from Tanzania, Melbourne, Qatar, everywhere. But the volunteers must be the U.K. residents. At that point in time, all of those volunteers just left their details. We have now opened a new site and it's www.UKCovidChallenge.com. And we've been very careful in any volunteer signed up. It is very, very clear this is a COVID challenge. This is not a flu challenge. So we have been very clear for anybody wanting to volunteer must come in through that. They can't be confused. They can't be thinking they're coming for flu. But the interest was like blown our lights out of volunteers around the world who wanted to help. I think to cover the thing on insurance, we've been doing challenge studies for 30 years. We've never had a single insurance claim. We are well covered for insurance. Insurance are very well aware of what we're doing. So we don't see the insurance being issue. And the last thing I'd say is on risk, to get our Board, our key stakeholders and some of our senior management onboard with this program, I volunteered to be COVID volunteer number one. And because I'm not stupid, my belief was I'd be much happy being infected with a mild version of COVID in a clinic under 24/7 monitoring of doctors and to get a rescue in a minute I show infectivity. However, I'm 55. It's the last year I can do a challenge study [indiscernible]. And I'm outside the category [indiscernible] of protocols to this. But just to reassure you, my wife and kids wouldn't have allowed me to volunteer if I were to have convinced them. It's not without risk. We don't know that. But from what I can see, I'd say, I'm not allowed to formally be in the program, unfortunately. But I still would love to be one of the COVID volunteers knowing the risks. I would see this is something -- it's not an issue in my books. Hopefully, that answers your question, Gareth.

And our next question is from the line of [ Andrew Young ].

Can you hear me?

Yes, we can hear you.

Just 3 questions, please, if I may. First off, you mentioned earlier on the call, the 5, 6, 7 slots potentially opening up as well. Is that related to the facility in London that you'll be using for the government contract? And on that theme, is there a chance that once you complete these studies that you can use that site for other challenge studies if you maxed out capacity in your existing 24-bed location? And would you -- could you ramp that? Or would you just use it as another basis? And then thirdly, in terms of the -- you might -- you've kind of alluded to this, but -- in the contract side, but what's the margin differential between the COVID challenge study versus your existing ones?

[ Andrew ], Cathal here. I'll take those quick 3 questions. We'll keep them short and sharp. But first of all, as I answered Gareth, we have almost a huge appetite on volunteers. So the biggest problem, academia. We're not the only people. Academia around the world always try challenge studies and do them, very small scale, 5 or 10 volunteers. They've never managed to commercialize them. There's 2 commercial challenge [indiscernible], ourself and SGS in Switzerland. SGS are almost bound out of the challenge study business because most of their team, for some reason, left and joined us this summer. So the reason we do it really well, we can get the volunteers. For the average challenge study, RSV, we used to recruit, sign up and draw blood from 150 to 200 volunteers before we get one good one. So the academias aren't there. So that answers your first question is we have slots, yes. Her Majesty's Government has -- we've kindly agreed to give them exclusive slot 1, 2 and 3. We then have -- we will probably take slot 4, 5, 6 and 7. We've always guided the market that a COVID challenge study will always be between GBP 8 million and GBP 10 million. That's encouraged the extra risk, the cost of having on our unit because we won't be doing it in QMB and a host of other things. Our standard challenge study started out this year at GBP 3.2 million when we took over in February. It's now up to GBP 4.3 million and rising, and we'll probably max it at GBP 5 million. So that will show you, we are very much in a profitable business that we can charge GBP 5 million for the same study we made money on in February. So hopefully, you'll understand, there is slots. But to answer your question, will we do in Royal Free. We are maxed out in traditional slots now. And 2 years in advance is a nice way to be booked out in this scenario [ for consisting ]. The Royal Free is initially strictly for the government contract only. However, in a recent conference call that I mentioned, we are looking at other facilities. There's a number of quarantine facilities in North America. There's one currently being finished in Melbourne, Australia. And all of them have approached us in recent months to say, could we be your JV partners. So what I would say is watch this space. We're looking at multicenter activity. We want to be a one-stop center around the world for vaccine companies can come not just do challenge studies for us, but a host of other vaccines. We believe we've entered a decade of vaccine development. There was virtually no new vaccines development for the last 30 years, whereas there was billions spent on oncology cancer treatment. I think you're going to see tens of billions spent on vaccines. And we're going to continue to be the world leader in the testing of vaccines, but also antivirals. So I'd say that hopefully, that answer your question, [ Andrew ], the [ freedom ]. We are maxed out. Royal Free is exclusively for the government contract. But we do have other options, and we've been discussing our options at potentially multi-sites around the world. We bring them the skills, the expertise, the challenge viruses, the challenge agents, the protocol, the standard operating procedures, that these other facilities have all they have in building and they have no way to run them.

So is that those 4, 5, 6, 7 slots doing well for you as well, are they?

No. [ Andrew ], the government is exclusively Royal Free for the moment. And don't be confused on that one.

Okay. And then the margin differential between the 2 -- maybe...

My apologies, look -- yes. [ Andrew ], we might just conscious that, look, we've got 176 people. So maybe, [ Andrew ], we could [indiscernible]. I'm just trying to -- I was just trying to share it around a little bit given that we've [ done math on the number of people online ].

And our next question is from the line of Paul Smiddy from Sky & Bullets.

Congratulations on the fantastic progress. My question is really about what you're going to be doing with this great cash generation. I presume that you're not optimistic about finding an acquisition target as wonderful as hVIVO. But are we looking to commence dividends in the latter half of next year? Or will it be all invested in other projects?

Paul, Cathal here. That's a good question. I think I've said numerous times that, look, first of all, taking over hVIVO this time last year, our share price collapsed. [ Moving on ], we were going do it. [ Then we went down to 3P ], particularly because I'd mentioned I was stepping down as CEO and up to Executive Chairman. I had to reassure the market well, hey, stepping up to Executive Chairman means I haven't gone away. And now we've decided to be a very hands-on dual role, Executive Chairman and CEO. So look, it has been and will always be the [indiscernible] I'm 55. I've spent my life doing deals, hVIVO will be the luckiest and most exciting and most fun deal I'll ever do for the rest of my life and I've ever done. To answer your second part. I say rightly, look, both of these companies bled cash, both of companies didn't provide a return, I mean, Venn Life Sciences and hVIVO. Our campaign was always fix these companies, put them together, make them profitable. And as I said at the start of this call, there's rumors going around, we're going to raise money. Absolutely not. Fundraisings are done. So the next transaction should be handing cash in some shape or form back to the shareholders. We can't really say much more now at this point in time, but just rest assured, the management team are unusual. We've got a very large stake in this business, and we don't intend diluting our shareholding in any shape or form. All to say is that the next one should be some form of rewarding our long-suffering shareholders.

And our next question is from the line of [ Chris Crawford ], private investor. [ Chris ], can you hear me. Are you on mute? Let's go to the line of [ Aftab Ahmed from Channel Hub ].

I'm just wondering if you can hear me.

[ Aftab ], we can hear you loud and clear.

A couple of questions. You mentioned the wearables, and there's been some conversation around the wearables. What sort of time lines are you looking to conclude something? And is there any guidance on the number? Because at the moment, we're completely unaware. And the other one is the noncore assets. There was a -- you mentioned at the beginning of the year that you're looking to monetize those where are we and what's your target with the likes of Imutex?

Okay. [ Aftab ], look, as regards to wearables, we said at the beginning of the year, we're very focused on data and we're very focused on technology. We're not focused on getting involved in loss-making projects R&D. That's for those noncore, Imutex and PrEP Pharma, did nothing but burn cash. So as regards to wearables, all that good stuff, we will be monetizing it. We are -- and we didn't go out and seek them in recent weeks and months, particularly over the summer, we've had a lot of the large tech companies, and you know who they are, having a discussion. It's not just from a wearables perspective, it's disease progression data, and that's where we are. So look, all we can say is let's see where that goes over the coming weeks and months. And then the noncore assets, the major one is Imutex, and that's work in progress. It's been on our investor presentation, Slide 22, for recent months that we're running the dual strategy one. Can we just settle for cash and hand that cash back to shareholders? Dual strategy would be, could we reverse it into another vehicle? And if that happens, that would be the shareholders will get dividends [indiscernible], and that will be handed back to shareholders. So bear with us. That's work in progress. We don't intend on hanging around. We're working at that for 2 or 3 months. Give us another 2 or 3 months, and we should have something to talk about as we said on the call. Hopefully, that answers your question, [ Aftab ].

And our next question is from the line of [ David Tanshin ], private investor.

Can you hear me?

[ David ], loud and clear.

We can hear you. Go ahead.

Quick question. I just want to confirm, you mentioned that the annualized revenue now from the 2 hospital facilities that you have is about GBP 80 million, GBP 90 million, what previously annualized at around GBP 40 million to GBP 45 million. And you also mentioned you have booked up at least one of the facilities for -- at least for the next 12 months. So is it correct to conclude that there is a core revenue base for next year of at least GBP 80 million in theory, which compares to a current forecast for this year of around GBP 30 million? So a substantial doubling just from -- for the whole business, but maybe just in this one part of the business.

[ David ], thank you for that question. Let me make it really clear. Our QMB, existing facility is 24 beds [indiscernible] number. It always maxes out at GBP 45 million or GBP 50 million no matter how we do it. So that's a max revenue. Her Majesty's Government has kindly provided exclusively initially for the government contract, a 19-bed facility. So all the same in theory, that almost doubled that capacity of GBP 40 million, GBP 45 million. However, the more exciting point is we are now a worldwide company. We've had -- there is a number of challenge units around the world, quarantine units. They have been built, American government, Australian government, in particular, and mostly 1 or 2 European. The problem of building a quarantine, it's like building an office block. Unless you've got the heating, the light and the office workers, it's an empty shell. To run a quarantine unit, no longer do you need staff [indiscernible]. We've been doing it lifelong. So you need challenge viruses. On our website, we've got 9 of those. You need challenge studies, we've got 9 of those. You need very statistical protocols, how to run them, and you need very sophisticated standard operating procedures. So our revenue enhancement now is we're saying we are multisite, not just QMB, not just Royal Free. Vaccine companies want to run challenge studies around the world and not [indiscernible] -- so we have move and broadened beyond just challenge studies. Vaccine companies want to inoculations, we do that. The vaccine company wants to do data, we do that. So I think we'll begin to look at Open Orphan hVIVO now as a one-stop shop for this decade going forward, where there's going to be tens of billions spent on new vaccines. Bear in mind, the reason we're in the pandemic, there hasn't been a single penny by governments or big pharma of any meaningful state in vaccine developments for 30 years, whereas tens of billions went into oncology. So we're going into this golden era of vaccine developments, which will ensure there's no more pandemic going forward. Hopefully, that answers your question, [ David ].

And our next question is from the line of [ Darren Nathan ] from [indiscernible].

I just wanted to ask, as your units approach capacity, and I appreciate what you said about third-party centers, but what's the cost of either doing a refurb or building another center -- site from scratch? I'm just wondering if that's something you would ever consider.

[ Darren ], good question. Look, one thing we don't want are companies being Woodford and company that put 113 million into hVIVO quite some years ago and develop the one in East London. Challenge studies traditionally have been a very lumpy business. The last thing we want to do now is build a white elephant and have a noose around our neck. We wanted to make maximum use of existing facilities around the world. It's very easy for us all to get excited. [ We have it ] and go and spend tens of millions in a big center. And then what happens, we can't fill up. We've got the wonderful QMB center. That is a state of the art. It's a world center, 24 beds. There is, as I say, the Royal Free, it's a 19-bed world-class center. We are providing staffing and skills necessary, but that's just going to say that is exclusively for HMG initially. When they finish their 3 slots, let's see what happens after that. But we've got to get the 3, 4 studies up to 6. But we have had and we know of 2 quarantine centers in North America, state of the art, and one in [ Queen Island ] Australia. And the problem with them is they're empty shell. Their beds, the negative air pressure. They have no challenge viruses, no challenge studies, no protocols, no standard operations. And that takes decades to replace. So our revenue enhancement will be, let's say, [ Darren ], as I said to [ David ] earlier, will be a multicenter business, maximizing them. We're almost using -- almost like a Hilton Hotel, the largest hotel franchise in the world, doesn't own a single hotel, doesn't even have a lease in a single hotel, but they get paid every time a visitor stays in a Hilton Hotel, and we would like something similar. Hopefully that answers your question, [ Darren ].

And our next question is from the line of [ Rory McGee ], private investor.

My question has been answered.

[ Rory ], thank you very much.

And our next question is from the line of Mr. [ Fer Keshwala ].

When can we expect [indiscernible]. Can you hear me?

We can hear you. You're line is not fantastic, but we can hear you.

Great. Just wanted to ask. So when this contract has started, has it already begun -- have you started getting people into the trials? And how long will that take?

Mr. [ Keshwala ], good question. Look, part of the reason we've -- both I and Leo did, we guided the market, we would have been profitable in H2, i.e., Q3. We took a significant risk, and that fortunately, has been paid off in that our staff had been working since the 7th of March on developing our challenge virus. That normally takes years. We're doing it in months. Part of the reason we can do it in months is Andrew Catchpole. He's been working with us for 14 years, developed a coronavirus challenge study model 3 years ago. And guess what? The world didn't want it. Big pharma, said, "Thanks guys, why are you worried about the coronavirus?" So Andrew and his team have a lot of what's done in the coronavirus challenge virus and challenge study from 3 years ago. So we announced at the 7th of March, we were going to do it at this time. Now in the middle of pandemic, we were 3 years ahead of the competition. We've done a lot of work over the summer. And I think our friends in HMG and the vaccine task force are quite amazed that we've had a lot of staff working at risk. We haven't got a penny as yet from HMG even though the fact we've had about 50 staff working full time for Her Majesty's Government in the last 3 or 4 months. But we're glad to say when a contract is signed that investment is totally secured. Likewise, we've had staff working in engagement with at least 6 of the largest pharma companies in the world. And today, I'm actually in Germany, where one of our larger customers, who is unfortunately still at, they'll get slot 4 or 5. So all I'm saying to you is that, look, work is already well underway. And that's how we do the business. We took a calculated risk this summer. But the beauty about it is we now have a HMG contract signed, and we got refunded for that expenditure we did all summer. But more importantly, we have a deluge of big pharma looking for those first 3 slots and looking for slot 4, 5, 6 and 7. So it's a nice place to be. And we've just got to be careful. And I said this to [ Darren ], we're not going to build a white elephant. We're not going to build another dedicated unit. That's up to somebody else to do. We want to use and maximize the skills. We're the world leader in testing vaccines, antivirals. We're the world's largest collection of challenge viruses, the world's largest collection of challenge studies, the world's largest collection of protocols. So we're the place that can become the key to a multicenter vaccine testing process based out of -- and I think people shouldn't forget, part of the reason we're all very lucky, Her Majesty's Government started this journey in 1947, when [ the mob ] soldiers came back from more World War II. Governments around the world, particularly Her Majesty's, realized in World War I and World War II, the greatest enemy wasn't the other side. The greater enemy was the little bug called influenza that killed more soldiers than any armed conflicts. So in 1947, the government started Salisbury common cold units. And they started the first challenge study, a proper one there, infecting voluntarily [ the mob ] soldiers. And the team who worked there, some of them were our first employees in Retroscreen in 1989. So today's genesis is a journey started in 1947. So we see it very, very cozy, cultural and the risk come back to challenge studies in 1947. So I think we want to build on that. It was great that I'm an Irish guy with an Irish accent, but I'm private holder of a British passport and an Irish passport. I was born in Londonderry in Northern Ireland. I think we all should be proud. We're in the pandemic that leaders all around the world trying to [indiscernible]. But hey, the British government started this in 1947. And they should be proud being a world leader in the testing of vaccines. Other countries shrink away, but fair dues to our British government. They started it in '47. And this week, they're the first government in the world who said, yes, we will try this. There's risks to it, but you can't make an omelette without breaking an egg. So I think we're in taking small control the risks. And that's might be why, I think, British government very wisely are doing this very carefully, one step at a time. Let's get the characterization study up and working and see where we go from there. And [ Keshwala ], hopefully, that answers your question.

And our next question is from the line of [ Declan Service ] from The Next Big Thing Limited.

Can you hear me?

Loud and clear, [ Declan ].

Okay. No. It's -- just well done to the last. My question has been asked and answered, so I won't delay any more.

And our next question is from the line of [ Momen Abdul ], private investor.

Well done for the teams so far. [indiscernible]. So a couple of questions. Firstly, regarding the Imutex sale, is there a possibility to put the universal flu vaccine and the mosquito vaccine through the challenge study process to prove -- further prove the efficacy before selling, maybe might add more value? And secondly, are there currently any challenge studies ongoing right now, not COVID related, anything else? Is there -- yes, is the studies ongoing right now or work being done in the [indiscernible]?

Well, no, [ Abdul ]. Listen, Thank you very much. I'll start with the second question first. Yes, we've guided the market. For the first, we took over hVIVO in January. We did a fight of our life. Guess what? The clinic was empty. There was no work. There was no orders. That's a bit of a shock, and I realized, well, over [ half million signed up to ] this company, and we realized -- we did do some due diligence. But we were kind of lead to believe there would be at least an order or 2, but the clinic was actually empty. Strangely enough, the [indiscernible]. The furloughing scheme was pretty good because a lot of our staff were furloughing for 2 months. We quickly -- and there's no rocket science. I've spent more time as a corporate finance deal maker. We very quickly -- I got into a plane when I was in Madrid and lately signed the first customer in February, it's bloody hell. And we did a very good deal to get them there. So look, at the moment, our clinic is jampacked, and we are pushing and shoving and arguing slots. And jampacked would primarily RSV and influenza challenge studies and will be jampacked for the next couple of years. So that answered your second question. The first question -- by the way, we keep saying all the COVID-19 study. Initially, the government ones we don't think they're Royal Free, but we are in discussions with multi-units around the world for facilities to do the other ones. Your first question, let me take it now. The reason it's got so far so quick, it already has done 3 challenge studies for the flu, universal flu, and already done 3 for PrEP Pharma, which is another asset, and has already done 2 for the University of [indiscernible]. So that's where we've got those assets are going forward so far. So the challenge studies are done. All we need to do with the Imutex stake now is to get at a big pharma to buy it for a deal or to roll it in the stack. So we always say that, believe that whether as we started our process in a couple of months ago. It's on Page 22 of our investor presentation. They are noncore. We will not spend any money in those assets because that's high-risk R&D. Other resources are on contracts that we did over the summer where we invested in the challenge study on the basis that Her Majesty's Government is going to sign up. And they didn't sign up, we were in a lucky position to have 6 other competing vaccine companies who would have signed the same deal as Her Majesty's Government. And to be honest with you, we would be saying around -- no, I've said this several times, we probably could have got a marginally better deal by going for some of the vaccine companies. But the deal on table is good, and we're happy with it. And we're great -- we feel wonderful to be a part of the -- Her Majesty's efforts to try and bring forward vaccines faster. So hopefully, that answers your question.

Cathal, we have no further questions registered. If I could hand back to you for closing comments.

Okay. Georgia, thank you very much. Look, folks, I very much appreciate the huge interest. Hopefully, that will continue. It's business as usual. And look, as always, we'll try and do presentation time to time. I'd say, look, let us continue, as we started, to keep driving it, keep closing the deals, keep delivering results and let's see what happens here. So thank you very much for everything.

This now concludes today's call. Thank you all very much for joining. You may now disconnect your lines.