hVIVO plc (HVO) Earnings Call Transcript & Summary

Good afternoon, and welcome to the hVIVO investor presentation. [Operator Instructions] As usual, before we begin, we'd like to submit the following poll. And if you would give that your kind attention. I'm sure the company would be most grateful. And I'd now like to hand over to CEO, Mo Khan.

Thank you very much for the kind intro. Good evening, and welcome to everyone on the call today, current shareholders and new shareholders. Welcome to our first of the year 2023 IMCs. This is really a summary of the year trading update for full year 2022. And I'm sure you would all appreciate the results we are about to publish are unaudited, and we will expect to publish the full year annual report in April of this year. So jumping right into the presentation, the normal disclaimer. I'm Yamin Mo Khan. I'm the CEO of hVIVO. I joined as a nonexecutive -- October of 2021 and have been at a helm as the CEO of the company for just around 12 months. I'll now hand over to Stephen to give a brief intro of himself.

I'm Stephen Pinkerton. I have been recently promoted to the CFO role for hVIVO. I've been with hVIVO for 7 years. And prior to that, I was with Thomson Reuters. I'm a chartered accountant trained out with [ Deloitte ] and I'm enjoying the new role.

Thanks, Stephen. So with no further ado, we're going straight into the company. Most of you already know what hVIVO is and what it does, but very brief summary before we get into the financial numbers. We are a CRO providing human challenge services, which means that we basically inoculate healthy volunteers with a viral infection, and then we determine whether a potential vaccine or antiviral is fit for purpose and works or not. The key advantage of what we do is that we're able to get a good efficacy indicator, in other words, whether the drug works or not in this setting very fast and fairly inexpensively compared to the alternative, which is conducting a Phase II trial in the field. We are the world global leader in what we do. We have 95% plus of the market share. We have all 11 active challenge models. We have run over 70 human challenge trials to date and have almost 4,000 healthy volunteers gone through our FluCamp or inoculation process in the history of the company. So we are unique. We are very much the leader, and I'm very pleased to say that this year has been a transformational year for the company. For those of you who have followed the company for a while, you will see some of the numbers we have published this year a record beating. In fact, across almost every financial fundamental we put out this year is a record number for the company. We delivered a 30% year-on-year increase in the total revenue. So we beat our market guidance to get GBP 50.6 million in revenue. We achieved, again, a record-breaking 17% EBITDA margin. Our projection was between 13% to 15%. And when we add the GBP 1 million of cancellation and postponement fees, it gives us the 17%. We also have a huge cash base right now, GBP 28 million, at the end of last year, and I will cover on what we are going to do with that later on in the presentation. On an operational level, we delivered more challenge studies than ever before. We've inoculated more healthy volunteers than ever before and our FluCamp recruitment platform has also processed a record number of healthy leads going through the different steps in getting healthy volunteers into inoculations. We have also built the foundation for future-proofing our growth. We have built new models that are already currently active. So at least 2 models we have worked on over the last year or so are currently recruiting into human challenge trials. We've added new revenue streams in that we are now actively participating in clinical site services, and we are also consolidating on actually selling additional stand-alone lab services. We have moved on to new premises here in Plumbers Row in March last year. We added a new clinical facility in Manchester to screen new healthy volunteers and we upgraded both our Whitechapel [ Hotel ] Facility as well as our QMB Quarantine Facility. One of the key numbers really to look at for from our figures we published yesterday or today even is the backlog. This is a weighted backlog that we have. This basically means that we have around GBP 76 million worth of contracted work that we have not done yet. So this is the work we expect to do for rest of this year and going into 2024. Again, this is the greatest visibility we've had to date. We have an expected revenue projection for this year of GBP 55 million and 95% of that, in fact, now more than 95% of that is already contracted. We now also have work booked in for the first half of 2024. So I'm not taking this transformational year lightly. It is something that will boost our revenues and EBITDA as we move forward. Historically, I understand we have been maybe somewhat lumpy business that is gone. There's also been somewhat maybe a lack of confidence that we have a long-term sustainable growth model. Well, I can now say with great confidence that we indeed have a long-term sustainable business model that would increase in revenue and in EBITDA year-on-year. I will now hand on to Stephen to go through the financials in a little bit more detail.

Good evening, everyone. I'm just going to try and give you a little bit of flavor of the drivers behind some of our key metrics here. So revenue of GBP 50.6 million is in line with our market guidance and it is a healthy 30% year-on-year increase on 2021. Now the key drivers for that, obviously, is initially having a good order book. But more than that is that we are running more studies than we ever had before in our quarantine unit. Previously, we would have 1 or 2 studies on the go in the unit and today we have 5 studies on the go in the unit. And this allows us to really drive and improve our utilization of our resources and our quarantine unit at the time. So that is a really key driver while we've been able to drive and improve this revenue. We've had a very strong H2 performance. The second factor is that during the year, we signed 4 sort of what we call full-service human challenge contracts. These are contracts that have a manufacturing element to them, characterization and challenge -- agent, a challenge study at the end of it. So we have signed 4 of these, and they are in various stages of progression. They are 18-month long contracts, and we have consequently out of this, our manufacturing revenue has increased by, well, it's 10% of this revenue for 2022. So that's a key driver to the performance of this year. The studies are getting much larger in 2020, there were 66 volunteers per study. There're now closer to 108 volunteers per study. So all that means that you have more studies on the go at the same time. So you have more chances of delivering revenue and you're not stuck with 1 study and trying to deliver on that 1 study. So that is the main reason for and that's what's driving our revenue growth. Onto the next slide, EBITDA margin. Mo touched on, this year, although we're seeing our margin will be at least 17%, no lower than 17%. The underlying performance of this business is between 14% to 15%. And the core drivers in the improvement in the margins are the fact that -- again, it is running more studies at the same time across different variants. So if you think about it, you have a volunteer, you recruit a volunteer and you have more 5 chances currently of getting that volunteer onto a study. Previously, in like 2021 and then prior to that, you may have had 2 chances at best on getting that volunteer to the study. So that could create a huge amount of efficiency as the cost per volunteer or recruitment cost of volunteer is quite a high cost to a business, and we are able to spread that cost across 5 studies, and that is certainly a strong reason for the improvement on the EBITDA margin. The other aspect to it is the clinical operations. If you have 12 volunteers in a unit, you don't need the same amount of staff. Well, you might say you need 6 staff to run 12 volunteers in the unit. But if you have more volunteers in the unit, the linear increase, there is not a linear relationship in quarantine operations. So you might need 8 volunteers -- at least 8 clinical staff to run a unit of, say, 20 or 24 volunteers -- a [ cohort ] of 20, 24 volunteers. So we're getting those operational efficiencies, and we're seeing this through happening in H2 last year. And that's driving the improvement. And the last bit is that we did have sort of a postponement and cancellation in the year and because we've overlapped our studies, we -- some of that has faltered straight through down to the bottom line. And that is driving the improvement to 17%. Moving on to cash. We've ended the year at a very strong cash position of GBP 28.4 million. It's obviously driven by the fact that we've grown our order book. And also because we have driven our [ mouth ] we've had a strong delivery in the business in H2. So we've been hitting our delivery milestones and being able to charge our clients for those -- hitting those milestones. It should be noted that we are always on any contract -- we're always in a cash positive position generally up until the very end of the contract [indiscernible] what we would call an accrued revenue where we're waiting for the client to pay for us. And this is a very small value. It's no more than GBP 100,000 at the very end of the contract. So what I'm trying to say is that we received most of the cash from a client in advance of delivering. And that has driven the growth to GBP 28.4 million. So on to the next slide. Looking at the order book. GBP 76 million. It is 65% growth on 2021. It's a huge improvement. A large portion of that is, again, you mentioned we've signed 4 contracts that have our full service. So you've got manufacturing characterization and a challenge study still be delivered. And some of those are further advanced than others. That's what's driving that GBP 76 million. The other point is Big Pharma has really come into play this year. They've always been with us in the past. But they really are investing a lot more on challenging trials at present. And that is also a huge driver for the growth in this -- in our order book. What should also be fairly noted is that if you think about our order book at the beginning of the year was GBP 46 million. We've delivered GBP 50 million. And yet at the end of the year, we still have GBP 76 million order book at the end of the year. And as Mo's noted, it is a weighted value. So we look at that value and make sure that's what we feel will definitely deliver what was definitely in the book -- in our order book. I think just a touch to note is that when we talk about our order book, this is an order book that is signed and paid for. So not the full value. But what we get, we get a strong commitment from our clients because when they sign a contract with us, we ask for a deposit fee. And that drives the client commitment because contract fees, anything between 15% and 20% value of the contract. And -- so therefore, we really don't expect any postponement or cancellation fees generally because the client is going to have a penalty of a postponement and zero cancellation penalty if they don't go ahead with the trial. So that GBP 76 million is a very robust order book. It's not -- if you look at the Phase I [ clients ] and CROs, they tend to have to hand the money back, whereas we won't be handing the money back. That backs up at GBP 76 million. And I think after that, I'd like to hand over to Mo, who go through some of our operational highlights with that.

Thank you, Mr. Stephen. I know most of you may have missed it, but Stephen is super excited on the inside at least, by these numbers that we achieved this year. So for those of you who may be new to the hVIVO story, a couple of slides on the background. So we exist as 2 subsidiaries, hVIVO , the human challenge CRO with its main headquarters here in East London in Whitechapel. We have 2 quarantine facilities and 1 admin office with the screening facility downstairs. And then we have a second screening facility in Manchester. We also have a Biobank and we also have our financial guys sitting in the Dublin office. In addition, our Venn Life Sciences subsidiary has 2 locations. One is in Breda in the Netherlands, and they do early clinical drug development services. So they provide nonclinical or PK, CMC type services, very technical, very expertise services in the early clinical development cycle of drug development. Secondly, the Paris colleagues, what they do is they provide data management and biostatistics services. So effectively, what they do is they cut all the data that comes out of clinical trials and provide the client with a final analysis on whether the drug has worked or not. The great thing right now is that both the Breda and the Venn Life Sciences are working in a much more integrated way on delivering human challenge trials to our customers. So our Venn Breda colleagues write the protocol, design the vertical, hVIVO, recruits the volunteers, treats the volunteers and then our Paris colleagues, they collect the data, analyze the data and then the Breda guys produce the final clinical study report that goes to our customers. On top of that, of course, the Paris guys and also the Breda guys are actively selling stand-alone consulting services for the local markets. So this is the overall picture of the company and some of the highlights for this year. I mean I've been there for 12 months. I feel like this is a completely different company to the one I joined. We've achieved so much in such a short time. The executive team has been revamped and has delivered extraordinary results this year. In fact, the whole company, of course, all the subsidiaries have done a tremendous job and come together really tightly and really well to effectively turn around last year and be able to produce market guidance beating results that we have seen today. I joined as CEO of the company last February. Stephen mentioned he step up to the CFO role. But the great thing with regards to Stephen is, he knew the business inside out, having spent a number of years in the accounts department working across different functions. Egle Pavyde has joined us as a Business Director, and I will talk about one of our priorities is to try and get into the Asia-Pac market and how we're doing there. And then finally, we've also had a new non-exec joined Martin Gouldstone. I won't go through the complete list of the achievements we've had over the last 12 months that you can see, a lot has been done. We have revamped FluCamp, we published -- a COVID study we conducted a couple of years ago. We signed our first ever Omicron challenge study program. We've got predication for lab services, which means now we can sell our immunology and virology lab services to third parties, which is again something I wanted to build on and improve on as we move forward. With regards to the numbers we attended many conferences, have published a number of scientific publication. Media coverage has been second to none. And of course, we did do one Capital Markets Day. This year, we will be doing a lot more interactions with our retail base to update people on what we're actually doing day in day out here in the company. Operationally, as a summary for us as a company in '22, one of the great things that we have achieved is diversify and derisk our client base. In other words, you don't want to rely on one single client to be responsible for the majority of your revenue you are generating. And you can see in Q4 2022, we have 7 different customers generating a minimum of GBP 1 million per quarter in revenue. And that's a great place to be at. We also have repeat business from the 4 other top 10 Big Pharma, which continues to be good news. We are the only challenge CRO that these guys have work with today. We also have new repeat business from our biotech customers. Majority of the customer base still comes from Europe and the U.S. And one of the key changes we made last year was to remodel and revamp our operations group to be able to deliver multiple trials concurrently. And that's really key, both in increasing our revenue and improving our operational efficiencies. On the right-hand side, you can see the number of healthy volunteer leads. We need to process, to cater fall and address the increasing demand in the human challenge work. And you can see that we are actually being able to deliver more revenue from fewer healthy leads. And that's a great thing in the sense that it will make the whole process more efficient. And the reason why we're able to do this is that we are running more than one challenge variant at the same time. So on the left-hand side of this chart, it gives you the breakdown by customer with regards to how many volunteers are required per quarter. Again, you'll see is a good diversification across the board, across all the months. And one of the key things to note here is that, not only do we have visibility over the next 18 months, the level of work is fairly consistent. So this mix that we are a lumpy business. I think hopefully, once and for all, we can get rid of that. So we have now a consistent long-term growth model -- business model that we can actually continue to expand. On the right-hand side is the same chart but broken down by different variants. And the reason why I want to highlight this is that we now can screen 1 particular individual for more than 1 study. We need to make sure we're delivering on our clients' projects. And we can do this by maximizing the number of volunteers will come through are going through into the quarantine. We don't run more than 1 study per variant. We've done different states with different variants at the same time. This maximizes the throughput of healthy volunteers through that pipeline, which is, of course, great for our screening team because they've been able to produce more healthy wall days for the quarantine per [ volunteers that screen ]. It also means that we have a consistent workload across the board as we move forward from '23 to '24 and we are now already talking to customers, booking them into not only for the rest of 2023 to fill or hit our targets for this year, but also to build on the amount of facilities already booked up for 2024. We're also not standing still. We're not setting celebrating our achievements. We need to move forward and continue to expand on what we do. So -- and we're doing this on both [ faces ] challenge and non-challenge. So we're expanding on our challenge portfolio of agents we have. So we're able to offer more models than ever before. Right now, we have 11 active models which is a great achievement, but we will continue to build and look at opportunities to add new models. Secondly, we also want to expand on our nonchallenge works. I have spoken about this before, but we are continuing to consolidate on the nonchallenge clinical study site work for Phase II and Phase III studies. We also achieved our cap accreditation for our laboratory here for virology and immunology. And now this gives us the opportunity to effectively go out and win standalone business. At the moment, the lab effectively caters for all of the challenging studies we do, but I would like us to go out and target other CROs, other pharmaceutical and biotech companies and conduct their laboratory assets, especially when it comes to immunology and virology assets. One of our key focus this year would be to open up the APAC region. As I mentioned before, majority of our work does come from Europe and the U.S. And we really have not tapped into the Asia-Pac market. This year, more clinical trials will be done in China than in the U.S. So it is really a somewhat inflection point, I think. And what we want to do is to get into the market, Asia-Pac effectively means China, Japan and also South Korea. So those are the 3 regions we will be targeting. We've hired a new BD person with a focus on the Asia-Pac region. We've also hired a lead generation person to be able to go out and generate more leads. We have already had success in our first APAC client to sign for a challenge trial for over a decade that happened earlier this year. And I'm pretty sure we will have more soon. My personal target is that I would like to get around 20% of new signatures coming from the APAC region. One of the key differences, we'll see this year is that for the first time in the history of hVIVO, we will have a product going to the market on the back or partly on the backup of human challenge trial. We ran a human challenge trial for an RSV asset for Pfizer. And that asset will hopefully get to market this year. I'm not saying that this drug will not have got to the market without us doing a human challenge trial, but I know that we have definitely sped up the process of the drug development for this asset would now be available to patients much faster. I know historically, we've spoken about the potential benefits that a challenge model, a challenge data, a challenge trial can do to a new product, well now it will no longer be theoretical. It will be a reality. We will be able to say that our customers have seen this particular benefit. In fact, this should be first of 3 RSV vaccines that should be going to market in the next 12 to 18 months. And all 3 of those have been through our human challenge process. So for big pharma, I think there's a huge incentive to continue to use human challenge trials as part of their clinical development process. When it comes to smaller biotech, of course, it's a different type of incentives. Smaller biotechs don't really want to or have the resources to conduct large-scale Phase III field base clinical trials. So what they want to do is to be able to prove effectiveness of the drug at an earlier stage and then sell the product to a big pharma. And this is exactly what ReViral did. We conducted their human challenge trial for their assets. And on the back of that, as you can see from this press release from Pfizer, which effectively cites the human challenge trial that we conducted. On the back of that, ReViral was sold for GBP 500 million to Pfizer. So you can see, the benefits of human challenge trials are now being fully realized by both the big pharma as well as the smaller biotechs. And I think we have been [dumping the speech] for a while now. But the fact that we are seeing this come to reality will, of course, help us in selling our solutions to our customers, but also educate more potential clients in fully appreciating of why a human challenge trial is beneficial in extracting the drug development plans. Because of the wonderful year we've had in 2022 and the extra cash we have been asked, we will be rewarding our shareholders. So there will be a capital allocation event, the nature of this is not fully determined or the amount I know this is a question I'm going to get on the webcast here, but we will wait for our full year results in April, and then we will make a final decision as to the nature of this and also the amount of money we will be willing to allocate back. So really here, it is good news. The fact that we are a cash-generative business. And also the fact that we are in this position to be able to talk about returning value to shareholders, I think it is a very positive outcome for the company. It will be a 1-year event. Looking forward, as we move into 2024, we'll have bigger and better plans for the company. For next year, our guidance is that we will hit GBP 55 million in revenue. Personally speaking, I would be disappointed if we hit GBP 55 million. I expect us to beat the GDP 55 million. This to me is a baseline target that we need to focus on and do more for. But this is what we are promising at the moment. My mantra is to effectively under promise and over deliver. I want to make sure that as a company, we are cautious and conservative but also we challenge ourselves to deliver more than ever. And we're going to build on the great numbers we delivered in 2022 and do even better in 2023. This is my final slide just to kind of summarize the presentation. I hope you feel that the financial fundamentals that we have presented today are second to none. I don't expect many people expected these numbers to be better than they are. Is the work done absolutely not. This is the beginning. This is the start of what we want to be able to do. We came -- when I joined the company, we had to build the backlog, we did that. We had to revamp our operational model to deliver multiple studies at the same time. That is done to a certain level, but of course, there's room for improvement. And then we have to improve the margins. And I believe we are doing that. So we are on the right trajectory to deliver much more. The market is increasing. So we have the opportunity and the timing to make most of this. We are educating our customer base. We have changed our sales strategy to -- from selling hVIVO as a service provider to providing solutions to our customers. Every client, every sponsor has a challenge or a problem they want a solution to. We believe that in certain cases, human challenge trial provide a solution, and that's what we are offering to our customers. The competition really there's not much to speak of. The hurdle to entry remains very high. You have the high initial upfront cost in building a facility hiring the clinicians, the physicians, building the Volante database, building a portfolio of challenge agents, which takes a year per agent around GBP 5 million per agent. And then on top of that, having the experience with the challenge model. we have run 70 different human challenge trials to date with the portfolio of agents we have. You cannot buy that experience. No company will risk testing their product on a model that has not been tested and tested and tested again. And we have that experience, and we are unique in that. The company, as a global service provider, we are and will remain at our core, the human challenge there of. That's important for us. This is a service that is unique to us, and we are the kind of the only solution provider when it comes to human challenge studies. We have great depth and best of expertise. We have an excellent scientific expertise. We have a very good clinical team. We deliver on our recruitment. We are very high on data integrity and quality. And our goal is always to try and hit our time lines that our customers are looking for. The outlook going forward, well, as soon as you announced your revenue and EBITDA figures that become history, they're not going to improve your numbers going forward. The only key forward-looking parameter for you guys to focus on is that backlog? And remember, that's weighted backlog of GBP 76 million. That should give you clear indication and confident that we are on the right track, and we are very confident in hitting our 2023 targets. 95% of our 2023 revenue target already contracted. We are now tapping into new markets, we are also diversifying our offerings to our customers. The key thing to remember, we are now growing sustainable business model. It's key. That's going to deliver increasing revenues and improved and better EBITDA margins. Thank you for your time.

That's great. Mo and Stephen. Thank you very much indeed for updating investors this evening. [Operator Instructions] I'd like to remind you that a recording of this presentation along with a copy of the slides and the published Q&A can be accessed via your Investor Meet Company dashboard. We'll notify you by e-mail, simply log in to access that recording. Mo and Stephen, as you know, you've got a significant attendance on this evening's call. You received a significant amount of questions before you even started. And throughout today's presentation, you've had even more. So with the time remaining, if I may just hand back to you, I'll allow you to respond to any questions where it's appropriate to do so. If I could ask you to read out the questions, that would be also very appreciated.

Thank you for that. I don't want to be rude or anything, but I will answer this in a short, sharp way. It's just for to save time and cover as many questions as possible. So here we go. Has there been any institutional interest? Yes, there has been institutional interest. In fact, some institutions have already started to buy into the company on the open market. So that is good news. One of the key challenge for us was to be able to deliver our market guidance targets, and we have done that. And that, of course, will stimulate further interest. Update on opportunities in the Far East following recent contract win, we have somebody dedicated to focus on Europe and the Far East. We have 1 award already I expect more this year, like I said, a target of around 20% of the total sales for this year. Surplus cash, what is the plan? I think I've described this already, given the company's healthy cash position, our acquisitions on the agenda. Not in the short term, but of course, we will keep our eyes open. We are opportunistic if the right acquisition comes to mind we will, of course, look at that. But the key goal for us right now is to grow the company organically and build on the revenue and the EBITDA we have delivered over 2022. Does hVIVO have a direct competitor in this chosen market? I would say not really. There are 2 Phase I CROs that happen to do a human challenge trials, but we are the only dedicated human challenge CRO. If the contracts continue to come in for a challenge studies, how will hVIVO respond to this extra capacity demand. We have shown in the past that we're able to build and open a new facility within a 4-month period. A new study that we are awarded today takes around 5 months to start. In other words, you have to write the protocols. You have to get approval from the independent asset committee. You have to get approval from the MHRA before you can start recruiting healthy volunteers. So we believe that the demand continues to set we will be able to open a new facility in time. And as you may imagine, we are always looking for new facilities, and we have a pre-identified list of places that we will be able to convert if required. Does hVIVO foresee a time when it may have to refuse new business? Not under my tenure. We will never refuse business only if we're not able to deliver it. But like I said, capacity -- new capacity will be found and will be established to make sure that we can deliver. The other key factor also, just to bear in mind is that we need to make sure we can enroll the healthy volunteers required to deliver our studies. What will the catalyst be, which will turbocharge the share price? I cannot control the share price, but I can definitely control our revenue and EBITDA delivery and other key financial fundamentals. And I think I mentioned this previously on this call. And I said, if we take care of our business, we grow the revenue and the bottom line and build the backlog, the share price will take care of itself. And since I last spoke to you, I think it has significantly increased. We've had many questions in relation to the sales spin-outs, absolutely. So this is something on the agenda. I'm sure all of you know that the current market is pretty depressed. There are not many spin-outs of IPOs happening right now. But as soon as that changes, we will use the opportunity to determine which spin-outs to do first. But that's something that remains on the agenda. But in the meantime, of course, we focus on increasing revenues and EBITDA for the human challenge part. More detail on converting opportunities into revenue. So I think I've given you kind of a brief outline on how we've done that, running multiple studies concurrently is key for us, you got -- our target has to be making sure that we utilize as much as of our facility as possible. In other words, try and keep every bed occupied whenever we can. hVIVO data is being utilized well by Poolbeg, what value is attributed to Poolbeg back use of this data. Poolbeg pay for its license to the data through the distribution and the specie share. So they have an acquired license at that stage last year. So they have all the freedom to go ahead and use the data has as they will. In 30th of June '22, RNS, detailed in the development of new human challenge model, manufacturing of the agent and so on. The questions are, can you advise where we are in the process? Well, we are in the middle of manufacturing the Omicron challenge model, and we hope to move that into clinic later on this year. Does hVIVO has sold the ownership of challenge? Yes, we do. So Baxter have the first right to conduct their Challenge study. But after that, we are free to use as we will. Why do from different brokers have different share price target price. But this really depends on what they expect the company to deliver and also on their own models and how they value the company. So -- maybe this is more of a question for the brokers than myself. But this is something I will continue to work with our brokers would provide them with the updates. In fact, I met them all this morning already to tell them how we achieve what we achieved already and what we intend to achieve in the coming 12 months. So now going to the questions today. So I think, Stephen, the first one is for you. Can you the reported cash balance at the end of last year between advanced contract payments and available cash for the company.

Okay. So the client cash balance that were -- of the GBP 28.4 million, GBP 12 million is related to directly to advance cash receipts. And that will be a combination of early milestones and also deposit fees. And the balance of our working capital is about GBP 12.7 million, GBP 13 million, that gives you a sense of what's available in the company.

Thank you very much. Okay, do you expect much COVID revenue this year? And next, please? Much? No. I wouldn't say much less than 10% of the total order book that we currently are reporting on is COVID. I think this may be an impression that we may have given or people have, we are not a COVID stock, okay, majority of our work is non-COVID related infectious diseases, yes, so respiratory yes. when doing human challenge trials in RSV and different variants of influenza. We've expanded on the number of variants we have for influenza, and we are working across a number of those. And as I mentioned earlier, we will continue to expand into other challenge agents. COVID will form part of this, but not a significant part of this. Great results guys. Thank you. With 90% of 2022 revenues contracted already. Do you have capacity and facilities to sign more contracts in 2023 and see the 10% year-on-year revenue growth. Yes and yes, absolutely. That's our target. We will never stop. This is something that we need to make the most of. We have an opportunity here, and we need to make sure we realize it to the full potential. We need to make sure though we continue to keep the quality of the data we are producing and the time line of the delivery to customer satisfaction. What is the limit to the number of challenge studies that the company can undertake in any year? It's a difficult question to answer because it's not a number of challenge studies that is the kind of restrictive. It's the number of healthy volunteers that go to the books and the number of bad days in the words, how many times they stay quarantine. Those are the key factors. We always keep an eye on and monitor continuously. What feedback are you getting from clients who have completely human challenge studies? Well, I think I've given you some of that already with regards to Pfizer and ReViral feedback is very good overall. And people are now beginning to see the true value of conducting human challenge trials. Do they find you provide significant value? I will speak to refer you to Pfizer and to ReViral and they are happy shareholders dividing GBP 500 million between themselves. Given that the cash pile is offset by deferred income creditor, this is one for you, Stephen. Then surely the money is really clients funds, so it shouldn't be distributed to hVIVO shareholders.

No, no, not really the case. The case is that these are our cash. I mean the clients are paying us upfront to book a slot in our units and a time frame to deliver the study. So those are items and if they postpone or cancel, then we take a back fee, and that becomes a fee to them. So it is our money. We don't have a refund. There's no cases of a refund back to the client. So it's our money.

You seem to have had a great niche. Shortly competitors will copy what you're doing and erode margins. I will be surprised if we don't see competition in the next 12 to 24 months absolutely. But remember, the hurdle to entry is very high, both in time, in cost, scientific expertise, volunteer, database and most importantly, the use of the same agent multiple times to make sure it's a robust model. Any plans to open an hVIVO branch in Far East to cater for that market. Not really. Human challenge trials are not really required in that region, we would expect those customers to come here and have the human challenge trial done in a Caucasian facing population. Long-term market focus is APAC, absolutely one of the focus is how do you plan to drive this we are already driving this, right? So we've already seen some success, and we'll continue to build that. Do you plan to open an office in Asia? Or is it a U.K.-based BD individuals? It's a European-based BD individuals. I don't feel, at this stage, we need to open an office in that region directly. Do you get any financial benefits if RSV human challenge study gets approved? No, we don't. We are purely a service provider, whether the drug fails or doesn't fail we do not get any advantages or disadvantages. We are there to provide the final challenge study data to our customers. You have mentioned you are targeting APAC countries, but I see the Indian market is not under the umbrella. It is, but there are not many large-scale internationally focused Indian pharmaceutical companies. They are more so with regards to China. And that's why we are looking at China, South Korea and Japan first. But of course, if an Indian pharma company wants to do a human challenge trial, we will be eager to work with them. How are we incentivizing key staff in order to retain them? It's a really good question. So we changed the way we contract with our individuals, we have a bonus scheme fully in place. We're adding new perks to our employee contract. So people are able to make use of that. So historically, because of the lumpy nature of the business, we have had to scale up and scale down our employee base. We're no longer doing that. We're creating a very talented core set of permanent employees that we will keep across the board. Like I said, from July of last year to effective June of 2024, that's 24 months of consistently booking the quarantine facilities for conducting human challenge trial. That kind of security consistency we haven't seen in the company. The order book to revenue ratio has increased over the past few years, and it's currently 1.5%. It is. this is reasonable to expect this to increase further in 2023? Or is it better to assume it will level up. Well, I would love it to increase even more, but also increase with regard to time spend. So basically, go out further into 2024. So that's signing contracts now that we will be doing not only maybe in 2023, but also in first and second half of 2024. This one for you, Stephen, how do you manage foreign exchange risk.

All our contracts are in GBP and all our costs are in GBP. And if there are the order occasion, there is a contract in USD so far, we have taken up foreign exchange contracts to hedge U.S. dollar receipts.

Thank you. At what business contract level will you have capacity constrained and what is your plan for dealing with that? So like I mentioned, we don't have capacity constrained. We can add more capacity as and when required. If your question is, what is the revenue cap with regards to the current capacity we have, I would say it's around GBP 65 million GBP 70 million annually. Your ambitions are focused on clinical trial business, how much scope do you see to diversify the business by expanding the Venn science group. Excellent question. So you're absolutely right. We are focused on the clinical trial business only because the potential growth is much greater, right? So if you look at year-on-year growth in human challenge trials, both by the number of human channel trials, but also the size of those trials is increasing significantly. But this year we are investing in our Venn life science subsidiary as well. We want to grow that business. We're adding new services such as ATMP advanced therapy medicinal product services, we hired a new sales person starting in March of this year. So if you add through that we're not taking our eye off the ball, we are building our Venn life sciences too because they are critical in providing early single development services and potentially feeding customers into that human challenge study work too. Chris Cho is involved, I believe, in a dengue study in Vietnam. Is this an APAC target country. Not really. When I talk about targeting APAC is targeting APAC-based pharmaceutical and biotech office to do human channel studies here. I think we're 3 minutes over time. So this will be the last question. What is it that you're doing exactly to increase APAC client base? So we've hired an APAC specialist consultants who had a relationship across different biotech order companies. I myself, for example have engaged with the Bridge Commission in APAC. We've hired a lead generator who is going through the different databases that we subscribe to and looking at leads and how those companies are moving from preclinical into clinical or Phase I to Phase II. We hired a very experienced sales executive to work on closing the opportunities we have. So those are some of the key things we're doing to build on our APAC region.

That's great. Mo, Stephen, thank you very much indeed for taking your time to answer all those questions, most appreciated. Thank you very much indeed. And thank you also to all the investors for submitting your questions during today and ahead of today's meeting. Mo, Stephen, I know investor feedback will be important to you both, and I'll shortly read out those on the call to give you their thoughts and expectations. But before doing so, I wonder, if I may, just ask you Mo for a few closing comments to wrap up with, and then I'll send investors to give you the feedback.

No. Thank you. Well, first of all, I want to thank all the loyal shareholders who have been a bumpy ride. And I think from 12 or maybe about 8, 9 months ago, I promised that if you stick to us, you will see fruits to your labor. And hopefully, at least some of you -- you've seen that improvement. My goal here is not to deliver 1 year on and 1 year up -- is to build a long-term sustainable growth model. And I hope you're seeing historical indicators that we've delivered on what we promised, but also the backlog and other future-looking indicators we show that we're not a 1 trick pony that we will continue to grow and build on the key fundamentals. And by ultimate goal really here is that in 12 months' time, I was sitting in the same seat talking to you guys announcing another record year. Thank you.

That's great. Mo, Stephen, thank you once again for updating investors this evening. Can I please ask investors on the call not to close the session. We'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. Just want to take a few moments to I'm sure will be greatly valued by the company. On behalf of the management team of hVIVO plc would like to thank you for attending today's presentation. Good evening to you all.