hVIVO plc (HVO) Earnings Call Transcript & Summary

Good evening, and welcome to the hVIVO plc Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself, but we'll review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand over to Yamin Mo Khan, CEO. Good evening, Mo.

Good evening, Paul. Thanks for the introduction. So good evening, everyone, wherever you may be, and welcome to hVIVO's first half of 2023 trading update. I'm sure you've been eagerly looking forward to this presentation as have I. We've had a wonderful 6-month period. So we'll get into the details on the numbers and what's happening in the background to give you a better update of what we've been up to in the last 6 months, and also what we intend to do in the next 6 months and beyond. So first of all, some admin to get out the way. This is the standard disclaimer for the presentation. For those of you who don't know me, I'm Yamin Mo Khan, I'm the CEO of hVIVO. I've been with the company as CEO since February of last year. Prior to that, I've had over 25 years in the clinical research industry. I have with me today, our CFO, Stephen. Stephen, would you mind saying a couple of words about yourself?

Yes. Hello, everyone. Good evening. I'm Stephen Pinkerton, I've been the CFO. I was appointed in October last year. And I've been with the business for about 7 years and prior to that, I worked in the financial industry with Thompson Reuters, I'm a Chartered Accountant. So...

Thank you, Stephen. So let's get straight into this first half. So as you know, hVIVO, for those of you who don't know, hVIVO is the world leading provider in human challenge trials. We are the #1. In fact, the only challenge trial dedicated CRO in the world. Our mission is to effectively deliver today's health care by empowering tomorrow's innovation. I firmly believe that the human challenged trial concept is underutilized concept when it comes to developing vaccines and antivirals. And I think over the last 18 months or so, we have seen a significant uptake in the human challenge trials from a number of our pharmaceutical and biotech customers. And a lot of these customers are now also seeing benefits be there through getting additional incentives from the regulatory authorities such as the FDA, or biotech's who are selling their assets, or the companies being acquired because of the results from human challenge trials. So for us, human challenge trials, we believe, is a keyway to expedite the drug developments for the right types of vaccines and antivirals that work against infections that cause acute short-term, stable, measurable disease. And that's what we focus on. And going straight into the numbers for the first half. We delivered a revenue of GBP 27.3 million in the first half of 2023. This is a 52% increase year-on-year. I do want to clarify something here. We have decided to report our revenue, excluding other income. Historically, we have reported revenue, including our other income, but the other income, which consists mostly of R&D tax credit does not really provide a true reflection of our operational ability to increase the revenue we generate. So for increased transparency and being in line with the common industry practices, we feel that now is the right time to report revenue. So you have a better idea about how we are performing as a company. So we will be excluding other income going forward. So like-for-like, we have a 52% year-on-year increase. I'm also pleased to inform you that we will be expecting to report an EBITDA margin of around 19%. Again, this is a significant increase from the first half of last year. And to cap it all, we have proven to be an extremely good cash generative business. So we're showing increases in revenue, improvements in EBITDA margins, and we have, at the end of June of this year GBP 31.3 million in cash. And this is after, of course, paying the one [ up ] GBP 3 million dividend, which was shared out in early June. With regards to our operational capabilities, as I'm sure you're aware, we've conducted over 70 human challenge trials. And just to give you a little bit of context, our next competitor, we believe, has a less than 5 challenge trials under their belt. We've also inoculated over 4,000 healthy volunteers and patient recruitment is really a key obstacle in conducting challenge trials, and we have put in place some really good people and good systems to improve our patient recruitment. And this is something I will be touching upon later on. To this extent, we've also increased our lead generation. So FluCamp is our marketing platform that we use to recruit healthy volunteers to the different media channels. And we recruited around -- we had leads of around 74,000 individuals in the first half of this year. We have, of course, as you may have seen from the recent press releases, introduced 2 new challenge models that we are developing. So hMPV, human metapneumovirus and also the Flu B type of influenza, 2 of the contracts we have announced this year. So we are developing these challenge agents to be utilized in human challenge trials hopefully in the future. We are also adding new revenue streams. I have spoken to some of you about this already, but one of the key new steps is that we have signed the contract this year with a Phase I unit to repurpose the healthy volunteers who are not eligible to take part in our human challenge trial. So this is something we are looking to add on to. And of course, there are additional revenue streams that we are -- we continue to look at and continue to explore. And for the first time, really in the history of the company, we've been able to increase business in the Asia Pac region. So we signed 2 contracts in 2023 with customers based in the Asia Pac region. And this is something that I wanted to get into this space for a while, and this success is really good. It also shows that we are not just working with the U.S. and the European clients anymore. We do have a more global appeal. With regards to the order book, which personally for me, I see one of the key numbers, especially when you look at forward-looking and potential future revenues, we will recognize GBP 78 million is the current value of our weighted order book. And remember, it's weighted based on different opportunities. So whether a client has already completed the Phase I, whether they have some funding issues, or there may be other obstacle preventing us from actually recognizing the full revenue. And that GBP 78 million is 1/4 or maybe even 1/5th year-on-year growth -- I would say, period-by-period we've seen in the last 2, 2.5 years. The annual target, we are reiterating at GBP 53 million. On top of that, of course, there's an additional GBP 2 million of other income. And then for the EBITDA, we expect to realize mid- to high teens, more towards the high teens and mid-teens. But of course, we will continue to update you guys as we go on, and we will be providing a full trading update in September of this year. I will now move to Stephen.

Good evening. All right. Let's dig in out there. So Mo's already touched on the strong growth for H1, it is a great start to the year. And hopefully, that will continue into the second half. And the key drivers for this is that delivering our revenue is having a strong order book, which we had GBP 76 million at the beginning of the year, and certainly for the first half, fairly fully contracted, and we're fully contracted for the full year. But you do need to start off with that strong order book at the beginning of the year. The other aspect is that we're running multiple studies concurrently. And so in the unit in H1, we had 5 studies of different variants. And so that allows you to make sure that you have enough volunteers to put into the unit. So that also helps drive a strong performance year-on-year. The study size has also increased. It's now around about just over 100 volunteers and that helps also continuity. So wherever you get IND -- IND might not materialize on time or IMP might not materialize on time on the study. You still have another study, which you can accelerate and push through into the units. So that helps again having biggest study sizes to have a strong continuity of work going through. The other aspect is, as Mo's highlighted, we signed 2 full-service contracts, but we're still delivering on a couple of 4 service contracts that we had last year, and those continued to being delivered in H1 2023. And this gives us 2 sort of additional streams of revenue. So the manufacturing stream of revenue grew quite a lot in H2, '22 last year, and it continues to grow in this year. So that's adding to the revenue growth year-on-year. I think what I'm very pleased to highlight is that we have invested -- in the beginning of the year, we made a conscious effort to drive performance in Life Sciences. And we've invested in the new BD. We put some lead generation in there, and we've got a lot more activity happening around this business, and I think Mo will touch on that a little later on. But we're delivering 20% -- this business has grown 20% year-on-year, and that is a fantastic result, and we're very pleased with that. EBITDA, as Mo has mentioned, has grown from 12.7% to 19%, and in absolute value terms, our EBITDA has more than doubled versus H1 2022. The higher margin has really come down to better utilization. And I just hinted in the -- when we talked about revenue is just having multiple variant studies in the unit, which we had 5. And that allows you to have more volunteers in the unit because you can recruit more easily. And so you get your cohorts nice and full in the unit. And therefore, you have much better utilization in the quarantine and staff, and that not only do we deliver more for our clients, but we get much better utilization from our team. Having a strong order book at the beginning of the year is always helps, because you have consistency of volume of work and so you can plan operationally much better, and you can start getting the efficiencies that you're looking for. So we're also investing in quality improvement. So it's a combination of good strong performance last year. So really, in conclusion, the rate of the business profit is increasing. Strong cash, yes, at the end of the year -- at the end of H1 2023, we had GBP 31.3 million. This is up from last year, obviously, GBP 15.9 million this time last year, but it was also up from our December figure of GBP 28.4 million. And as Mo's highlighted, this is after the GBP 3 million dividend paid to shareholders in June. So it's a nice, nice growth in our cash from December and from -- compared to last year. The company remains debt free. We have a very robust net working capital. And some of that improvement has got to do that -- then at the end of December, we did have some debtors to collect, and that has come down, and we have collected it. But that's also got to do with very much the timing of the projects and the timing that deals that have signed. So this is going to move around a little bit, but it is growing and is growing as expected. It's a little bit higher than we expect. Key drivers: Well, if you -- I mean, I think we have touched on in previous presentations and things like that, our order book is contracted. It comes with a booking fee. And so therefore, every time we sign a new contract, we get a related booking fee. Also, the milestones on our contracts that are set to fund the next activity. And so with that because we have a strong operational delivery and we're hitting these milestones, we get the cash up front before we have to deliver. So that allows -- so that's also a key driver behind the cash growth. And our capital spend remains very modest. It's very -- we have a strong discipline to make sure that we get a decent ROI on any investments that we make. And I think from that, I'm going to hand it over back to Mo.

Thank you, Stephen for that. So as you can see from the numbers that Stephen has reported, we have performed excellent across all the financial fundamentals. So I thought would be nice to give you a little bit background on how we are achieving these numbers and why we are pretty bullish about the future and how we think we can hit our targets for 2023 or potentially maybe even beat them and then look into 2024 and what that holds for us. So one of the goals of our team has been to diversify the portfolio of challenge agents. A challenge agent is a virus that we basically manufacture. We develop, we isolate and manufacture, so it's ready for human clinical use. And then, of course, we need to make sure it's at the right dose. And I will describe that process in a little bit more detail, but we are the industry leader. In fact, we are the only global service provider that can provide the full end-to-end service. And this is a really good diagram of the different viruses we are currently on our books. So the green viruses, the variants we have here listed are currently available for use. So they're fully developed models that we are currently using or at least marking to our customers. The ones in orange are the ones that we're currently developing. And the 2 highlights here, the hMPV and the Flu B of course, are the ones that have been awarded recently. And one of the key things to kind of take home from this is that we now only develop viruses, elicit new virus new challenge models with the partner. So we look to develop these viruses with a customer who is potentially looking to do a human challenge trial. And we have been successful in this and as Stephen mentioned, we have conducted 5 full programs in the human challenge development. And we will continue to grow this. And as I mentioned in my last presentation, we have potential new opportunities in virus, such as the Norovirus and Zika and Pneumococcal. And of course, we will take full benefit of the opportunity if it arises. This is flexible. We will move and change depending on the market demands. Currently, we don't have a dengue model ready now, but this is something we will be looking to develop if we do get a partner signed up. So what is this unique process do we have? So first, step in the whole process is really to get a viral isolate. So this is where basically we take a swab sample from an individual who has an infection. And we take that and we purify it, we sequence it. And then we basically put it into, what's called, a GMP facility, a good manufacturing practice facility to grow it to a certain titer, so that it can be used for human use -- on multiple human uses because we want to have a sufficient amount to be able to run multiple trials, excuse me. And highlighted below, over the last 3 years, we have developed actually a really good revenue stream just in actually manufacturing the viruses. And this is part of our end-to-end service provision. The second step in this process is to characterize the virus. We do this by running effectively a mini challenge trial without an actual drug. So what we do is, we take typically 20 to 30 healthy volunteers and, we give them an exposure to a certain dose of the virus. And then we see whether we get sufficient number of them to become infected. If you have a too low fraction of the individuals becoming affected, we then step it up and increase the dose, and then repeat that process until we have around 60%, 70% of the individuals infected. Then we know we have the optimal dose to be able to cause infection within a certain patient population. What you don't want to do is, of course, is give too high dose of a virus where everyone becomes infected. And the challenge with that is the viral load in the nasal passage of the individual is so high that even an effective vaccine or antiviral will not be able to overcome this. And we are the world leader. In fact, we are the only company that has done this multiple times in manufacturing these viruses to GMP level, and then being able to characterize it, so it can be used in the human challenge trial model. And of course, the final step is to conduct the human challenge trial in itself. This is where we select a number of healthy volunteers, the sample, the number of healthy voluntary within each trial does vary, but we're seeing an increase in the number of healthy volunteers per trial, which effectively means that we've seen an increase in the value of the projects we conduct. The value of the project is directly related to the number of healthy volunteers we are asked to inoculate. And what we do is we complete the placebo and the active group to see whether the vaccine or the antivirus works. And one of the key reasons why we're seeing an increase in the sample size these days is that our clients now are not just looking at whether the drug works or not. They also wanted to tell me, for example, at what dose does the drug work? But so previously, we would add 2 arms, a placebo and an active arm. Now we have a placebo arm, a dose Level 1 and dose Level 2. So all this means that the client is better able to design the Phase III program, get the right dose for the Phase III and also choose the right endpoints to give their Phase III the best chance to show efficacy. on the bottom right here, you can see a list of recent awards that we've had over the last couple of years with regards to this full end-to-end. Now this is not to say that we expect these to continue at the current rate because at some point, we will have a sufficient body of challenge models that we can use. In those cases, we won't have to do the development process. So we won't have to do the manufacturing. We won't have to do the characterization. We can actually go straight into this challenge trial. So for example, the next client to sign up for a hMPV trial, well, we won't have to do the manufacturing or the characterization because we would already have a well-developed challenge model. We will go straight into doing a challenge trial. This, of course, save time and money for the customer, but also it gives us an additional arsenal in our army to be able to continue to fight these viruses, be it they with vaccines or antivirals. So a brief overview of background, on the couple of the new models that we are developing right now. So influenza B ed is type of influenza. In fact, there are 4 different types of influenza A, B, C and D. Influenza A is, of course being the major subtype, it is the most prevalent when you get influenza, the likelihood is that you would have an influenza A virus. But influenza B is also highly prevalent, much more than C or D. So around 25% of people infected are infected with influenza B. But the biggest challenge with influenza B is the proportion of the people infected with influenza B within influenza epidemic is very volatile, which makes it very difficult to conduct a Phase III or a Phase II field trial, because you don't know whether you will get a sufficient sample of patients who are infected with the influenza B virus. This, of course, makes the human challenge model the ideal to determine whether your drug is efficacious against the Flu B variant, because we are, of course, can isolate the Flu B virus and inoculate our individuals with that particular virus. So we don't have the complication of not knowing whether a certain person who had influenza or flu-like symptoms is infected with A or B because we know what we inoculate with in the first place. And currently, there are no vaccines available for Flu B. In fact, a couple of the large pharma have recently shown failures in the Phase III point with regards to showing efficacy against Flu B. So this is potentially a good market for us. We already, of course, have a client lined up to conduct a human challenge trial, if the manufacturing and the characterization is successful, but we're also getting a good level of interest from additional biopharma companies who are interested in conducting Flu b challenge trials. hMPV, this is a human metapneumovirus. It's from the same family as RSV. Again, it's not as prevalent as RSV, but they had a sufficient amount of prevalence that it is causing an issue. I remember one of the doctors called this the most important virus that no one has heard of. And there is -- in some cases, high instances year-on-year. So this is something we need to be worried about. So we are looking at -- the numbers were 5% to 16% of children infected with hMPV do develop severe symptoms. And you can see that the number of deaths worldwide, the children under 5 attributed to hMPV is over 16,000. And on top of that, there's no current vaccine or antiviral available for hMPV. One of the key reasons why we continue to develop these new virus models is that as we move forward and as vaccine technology develops, you will end up seeing bivalent, trivalent or quadrivalent vaccine. This is where one vaccine works to get multiple viruses. And of course, if we have an RSV challenge model and also an hMPV challenge model, then that's a really good space for the company to come in and see whether the vaccine is affected against one or both viruses. So I mentioned earlier, FluCamp. So patient recruitment or healthy volunteer recruitment is the #1 challenge for most clinical research organization. So anyone who looks to do clinical trials knows that the patient recruitment delays around 80% of the clinical trials that are starting. We have invested significantly over the last 18 months or so in the staff and the team who are responsible for the patient recruitment and the healthy volunteer recruitment. As I've mentioned before, we have brought the call center in-house. We have hired a new management team. We have implemented a new CRM and build new algorithms in gaining and retaining healthy volunteers. So you can see our database is over 0.25 million healthy volunteers. We have 100% success rate in recruiting all of our studies, and we continue to improve and become better at converting the leads into visit 1s, into visit 2s and into inoculating patients going into quarantine. And as you can see already, the number of calls we have made from a call center is very significant. So this is a big machine. And it's one of the key reasons why we have been so successful. I'm aware of one Phase 1 CRO that happened to be running a few human challenge trials. But because of the recruitment issue, they've had to close down. So this really is something that we know we are really good at. Of course, we will not become complacent. We're always looking at new ways to improve. But the multi channels we use, so we use TikTok, Instagram, Facebook and so on, as well as attending student freshers' affairs and other local events to kind of highlight the FluCamp name. And not so long ago, a guy called Tom Scott, who's a YouTube influencer with over 6 million subscribers gave a tour of our facilities. So if you haven't seen that, that may be a good way to introduce yourself to hVIVO and its quarantine facilities. And that post has, to date, has around 1.5 million views. So again, a really good platform to promote FluCamp and our name out there. On top of that, I already mentioned, we've now been able to strike a deal with a Phase I unit. So the majority of the healthy volunteers we screen do not actually qualify to go into a challenge trial. The screening process is very stringent with regards to health and so on. But on top of that, of course, you have to be serosuitable. So you can't have antibodies against the virus we are testing. So for this reason, we have struck a deal with a Phase 1 CRO, whereby the healthy volunteers that we screen are ineligible to go into our human challenge trials can be repurposed and put into Phase I trial that the Phase 1 CRO is running. So of course, the number of human challenge trials we are running at the moment continues to go up. So as this graph shows, we've seen a successive increase in the number of trials. So this basically means, of course, that we have more revenue. It's also due to the diversification of the human challenge models we have. And of course, the fact that we can deliver more healthy volunteers in a time frame. And this is something I expect to continue to increase. So not only are we delivering for today, but we're also building for the future. Some of the investments we have made with regards to technology is not just to address today's needs, but also improve the deliverability of '24 and '25 numbers and so on. The number of healthy volunteers required in each trial is also increasing. I mentioned why that case is. But as we move forward, as our clients tend to see bigger benefits from the trial data, they're producing from human challenge trials that I think we will see even bigger trials. And of course, we continue to work with the regulators, the nonprofit organizations to promote the utility of human challenge trials and the human challenge trial data to expedite vaccine and antiviral development. A couple of case studies. So we recently completed a human challenge trial for Cidara. They used that data to partner with Janssen, which was announced in a press release not so long ago. In addition, the first or one of the first RSV vaccine hit the market or approved -- got marketing authorization in May of this year. This was Pfizer. We, of course, ran the human challenge trial for Pfizer. And as a result of that challenge trial -- or at least as a contributing factor of the challenge trial data, Pfizer were able to get fast track designation, thereby expediting the regulatory review of the product and saving up to 2 years in the regulatory time lines. As this RSV vaccine has come to market, we see this as a great sign that a drug that has been studied in a human challenge trial setting is now ready to go into patients. And because of the challenge trial, of course, is getting to patients much faster. And for us, this is a hugely successful story, and we want to repeat this again and again. And as a result of this, we have seen an increase and even more increase in human challenge trials. So people see the results of the human challenge trial data and what they can do, whereas before, we used to say it can do this, it can't do that. Now we can say it has done this. So the benefits of human challenge trials are now tangible. I wanted to give you an idea of the diversification of the pipeline. So the pipeline refers to the sales opportunities that our sales team is currently managing and handling. This is not contracted work; this is a potential future work. Of course, not all of this will be signed, not all of this will happen. Some clients will decide not to do the human challenge trial, some will have no funding, some maybe will postpone about 3 to 5 years, but some will go ahead. But the key reason I'm highlighting this on the slide for you is to show the diversification of our client base. So by geographic region, you can see we now have a client base across North America, Europe and APAC. With regards to the type of company, we now work with both pharma and the biotech. But the most important piechart really is at the bottom. And the multicolors, you can see and that shows you that we now have interest in multiple challenge trials, whereas historically, we maybe only have 1 or 2 challenged models that will really contributing significantly to our revenue and order book. Now we have a much more variety. Of course, each time we knew we add a new challenge model, we opened up a new revenue stream. And this is important for us as we plan to continue to grow as fast as we think we are going to grow. This chart is from global data, which is a database for clinical trial analytics. And what I wanted to show you here was that the continued increase in the number of Phase I, Phase II clinical trials that are being initiated in the indications where we have a human challenge model. I'm not saying that all of these trials are eligible to be converted into a human challenge trial. But this is the type of market we have that we win from to conduct human challenge trial. And as you can see, this continues to increase year-on-year. And I have intentionally not included COVID in this because, of course, COVID peaks and is too high of a factor to be able to show what is the real underlying trend in this increase in the number of trials being conducted by different companies. We will continue to add new revenue streams to our portfolio. So one of the items we are working very hard on is increasing our hLAB services. So we're now actively marketing and selling our lab services to third parties to conduct nonhuman challenge trial work. This is something that's currently ongoing. As I mentioned to you before, we have signed a contract to provide clinical site services for a Phase II or Phase III trial. They wanted repurposing, I have already mentioned. It's something that's currently active. In addition to that, we have successfully as of towards the end of last year, started consulting services, especially in quality assurance and also in clinical development. And this is in addition to the consulting services that Venn Life Sciences provides. Venn Life Sciences, of course, most of you know is a subsidiary with offices in Breda and the Netherlands and also in Paris and France. We have added a new office in Leiden in Northern Netherlands in the Leiden Biotech. And that's a great location for us to be in considering the huge biotech opportunity available in that biotech park. I'm pleased to say that Venn Life Sciences is now coming in its own with a 20% growth in revenue year-on-year. And we have invested in sales and marketing resources there as well to let it begin to realize its potential. Of course, it continues to cater for the human challenge trial that hVIVO works. So the medical writing or the protocol development is conducted by Venn, Breda and the end part of a challenge trial, the biometrics, which includes data management biostats is conducted by our colleagues in Paris. And we -- you can see from the chart here; we are marketing the clinical development services that Venn had and we're now also adding new consulting services to their portfolio of services. As we see changes in the market and new services being offered, such as the advanced therapy of medicinal products. This is gene therapy and cell therapy, and we are beginning to see good amount of interest coming into those regions. Stephen, back to you.

Yes. So I think it's very nice to see that our revenue -- our contracted order book of GBP 78 million is up from our December figure of GBP 76 million. And this is after delivering GBP 27.3 million of revenue in the first half. So we're more than replenishing our contracted order book. I think that's -- so it really gives you a sort of a sense of potential growth in this business. I think some of the highlights in that order book is that we have signed 2 full-service contract wins in Flu B and hMPV. And because these are new models, this will itself get to you a more volume of work in future years. And it also comes in back up the fact that we signed before last year, so only 3 last year. So a total of 5 full-service contracts, and some of it is still being delivered as we speak. So it's in great shape. The other aspect is that the order book now also includes 2 Asia Pac biotech challenge wins that we won during the year. And that just shows you the effort that we're starting to put in the BD, there's opportunity in Asia Pac and so that's growing nicely. I think we're very also pleased to see that a global pharma consulting contract of $3 million win for Venn services and that shows -- that reflects that Venn is growing. It's grown 20% for H1, so that is a very nice result. So that GBP 78 million means we're fully contracted for the full year -- for the rest of this year, and it was also giving us a very good visibility into 2024. So despite -- we've had a very good half year, H1, GBP 27.3 million, and we're holding to our guidance at this stage for GBP 53 million for the full year. We want to make note that we are fully contracted to deliver that GBP 53 million. And as I've just mentioned, we have very good visibility with our order book into 2024. EBITDA margin remains -- our EBITDA margin remains -- target remains mid- to high teens. And so it's a very good -- we are in a very good position to deliver this guidance. And in September, when we announced our interim results, our full interim results, we'll provide a further update on 2023 and should be able to give you a view on 2024. So I'm going to hand back to Mo, who will wrap up.

Thanks, Stephen. So hopefully, you've been -- hopefully impressed by the trading update. We think we have delivered good on our numbers, and we will continue to look to do better as we go forward. The investment case, I believe, remains strong. The fundamentals across the board are very strong. I'm not going to go through each one again. But one of the things we are looking at is to continue to improve our efficiencies and continue to improve our margins. We have the world-leading capabilities. I don't think anyone can argue against us on that. We are the only human challenge trial dedicated CRO in the world. We've got the team that has unique experience and expertise in manufacturing viruses and characterizing viruses and also conducting human challenge trials. In fact, the only company in the world that has created bespoke challenge models multiple times. The market continued to expand as we look to add new challenge models. There's some new opportunities out there for us. We're looking to add new revenue streams, which work hand-in-hand with the facilities and the resources that we have. So although they're not going to be huge in regards to total revenue, that should give us high margins because we will look to conduct those services without adding too many resources and within the same facilities we currently working. And we're also targeting new biotechs. We've added 2 new biotech companies already this year and of course, new region in APAC for new clients. The hurdle to entry remains very high. So I do expect, at some point, we will have competition, but it's going to take somebody with very deep pockets to try and compete with it. But of course, the experience we have is impossible to compete against. And that's something that money cannot buy and something we really utilize significantly when we are marketing our services and trying to close new business. The outlook going forward, GBP 53 million in revenue, we reaffirmed that. Depending on what the MHRA does, we look to hopefully beat that. The mid- to high teens EBITDA, again, I'm very confident in hitting those numbers. But I think if you want to take one message always, look at the order book. I think that's the key message because the order book tells you that even though we are burning revenue, we're generating revenue $27.3 million of it in the first half of this year. We are actually winning more work than what we're actually doing. So the healthy $78 million weighted order book that gives us full 100% revenue visibility for the rest of this year. But in fact, went into the second half of next year. And we will continue to aggressively market and sell our services to the biopharma industry, not only through a human challenge trials, but Venn Life Sciences services as well as the additional revenue streams, I talked about. So thank you for your attention. I hope you are happy with the trading update as I am. I congratulate the team on doing a wonderful job. And we are highly motivated in making sure that we intend to beat our numbers for the full year. Thank you.

That's fantastic. Thank you very much, indeed. Mo, Stephen, thanks for updating in the presentation. [Operator Instructions] I'd like to remind you the recording of the presentation, along with a copy of the slides and the published Q&A were able to be accessed via our Investor dashboard. I would just like to remind the attendees today that due to the number of attendees on today's call, the company may not be in a position to answer every question it receives. However, we'll review all questions submitted today, and we publish responses where appropriate to do so on the best to the company platform. Mo, Stephen, as you can see, we've had a number of questions, both pre-submitted and throughout today's live presentation. So if perhaps, Mo could hand back to you and just start to read out those questions where appropriate to do so, and I'll pick up from you at the end, please.

So thank you for that, Paul. And I can tell you right now, there's no way we will be able to go through all these questions. We've got a large number of pre-submitted and also new questions that have come through during the presentation. But I will go through them as fast as I can so that I try and get to as many questions as I can. So is the current bank balance in line with expectations for this point of the year? Or is it leading or lagging it? Stephen, do you want to take that one?

I think the current balance is -- it's a little bit better than we expected. It is growing, which is always very nice. And so it really reflects the growing order book and a strong delivery. So it should continue to grow. It will move around a bit because our figures can be a bit lumpy in terms of when we sign the contracts or when the milestones are hit. But generally, I would expect a consistent growth rate in that cash.

Thank you. Okay. What do you see as the biggest driver of growth in hVIVO revenue in H2 '23 and beyond? Or the bigger driver, of course, is human challenge trials, right? So as we continue to add new challenge models, it opens up new opportunities. We will continue to see increase in the revenue that the Venn Life Sciences deliver. But the human challenge trial still will make up the majority of the revenue for the second half of this year. On top of that, of course, we will be doing some manufacturing, so the hMPV, for example, and some of the Flu B work continues to happen at the moment. Mo, you and Cathal are experienced men and presumably having regular meetings with investors. Correct. When would you expect institutional investors to recognize hVIVO's potential and finally, trust what is happening here and rest? So in fact, Stephen and I have met a number of institutions over the last 9, 10 months or so. And we are seeing an increased interest from institutions. In fact, -- some of them have come on board onto the shareholder register. Not as many as I would like, personally, but I think one of the key things that we can do is to continue to deliver on our expectations. And then I believe it's only a matter of time that the institutions will come on board and the share price start to reflect the true value of our company. Any contact from the U.K. government the future collaboration on COVID? No, simpel one. When will the latest model for COVID-19 be given approval for running challenge studies? So we have a Omicron variant of the COVID-19 already manufactured. We are currently looking for a partner to help -- to characterize this and to conduct a challenge trial. And that's something we are currently actively pursuing on a number of fronts. So I'm hoping that in 2024, we will have a good level of activity when it comes to COVID. And the reason why I'm more confident maybe than I have been previously is because the next generation of COVID vaccine will be mucosal vaccines, which will be either inhaled or tablets. And they prevent you from getting infection and potentially prevent transmission. I think that generation of vaccine would be an ideal fit for a human challenge trial model. Has a company approached hVIVO expressing an interest in takeover? No, we've not had any formal approaches yet. Is NASDAQ listing possible in the future as FDA approval of our work with big pharma? I don't think that the FDA approval is linked to a NASDAQ listing. I know -- I don't have any current plans to be NASDAQ listed. Our clinical trials are conducted to the internationally accepted ICA GCP guidelines, which are accepted by the FDA, too. So independent of where you conduct those trials, the data is accepted by the FDA and 4 of our clients have been given fast track designation through data conducted in our U.K.-based human challenge trial unit. With general improvement in landscape and acceptance of human challenge studies by regulators, how has the company benefited from this? Well, as you can see, the increase in the number of the human challenge trials that we're conducting, the increase in the project size of the human challenge trials we are conducting, is as the result of the increase of responsiveness from the regulators. So it has happened more than once, in fact, where a client has come to us that they want us to do for them what we had done previously for a client who has got fast track designation. So that is currently happening. Are the company able to harness this change in outlook by regulators to expand more rapidly? That's -- I mean 100% is something we are looking to build on. We know we are harness that sweet spot here, and we need to make most of that. So not only are we working with the regulators, nonprofit organizations to increase the profile of our human challenge trials. But we are, of course, are working together with the clients and meeting with the regulators in optimizing the design of the challenge trial that will be best suited for the regulators and benefit the client in getting expedited drug development time lines. In February, I asked a question about the release of RNS for contract wins, and Mo mentioned, they were in discussion with the broker to determine the threshold required. Can you share this information as to what value is required for the contract win to be RNS, so investors are better informed? So yes, we have -- I mean, I have weekly conversations with our NOMAD broker. And we have -- we discuss each contract that is awarded to us according to the guidelines from AIM, we, of course, have to announce any contract that has a significant or material bearing on any of our financial fundamentals. So those are the key rules. And of course, our NOMAD ensures that we keep that. And we will continue to, of course, abide by all our AIM regulations. What is the current situation with the weighted order book pipeline were GBP 78 million? Also how much of the project '22 -- '24 revenue is now secured? Well, as I mentioned, the 2024 revenue, we believe it goes well into second half of the year in '24. Of course, we have not given guidance for 2024. That's something we will do later on this year. So I can't give you a percent value as to how much of 2024 revenue is already contracted, but definitely more than 50%. Let me say it that way. What's your business plan regarding the data agreement that you have with Poolbeg? When it expires? Do you plan to renew it? And if so, will you continue to allow Poolbeg to access to your data? Well, Poolbeg is our customer in effect. So it's really up to Poolbeg to see whether they would like to purchase an extension to the access. So this is something we'll be working with them and to see whether the demand is still there. Why do we never see Cathal Friel any more at some of the company's shareholder meeting? Cathal Friel moved into a nonexecutive Chairman role and as a nonexecutive he is not involved into the day in day. Myself and Stephen together with the executive team are held responsible for the delivery of the targets we set ourselves and of course, myself and Stephen report to the Board on a regular basis, which, of course, Cathal Friel is the Chairman of. The pace of new business seems to have slowed down from previous years. Can you outline the reasons? Well, hopefully, you've seen from the order book, it's not actually slowed down. It's actually speeding up. The order book is the highest it's been for a long time that I can think of. And also, we've seen a [ 52% ] increase in year-on-year revenue. So even though we have generated much higher revenue compared to first half of last year, we've still been able to grow the order book. Would do you accept that no contract for 5 months and little communication with shareholders for the same amount of time is not the way to drive shareholder value. If you don't agree, can you please explain? So basically, from my point of view, we, of course, value and cherish our retail shareholders. They are the backbone of the company. I mean you are part owner of the company, and I'm responsible to deliver value to yourselves, and that's important to me and to the rest of the executive team and the Board represent every shareholder we have in the company. But the continued increase in the size of the project has resulted in continued growth and I don't see that reducing. We will be doing more shareholder-facing event. So for that, we will be doing an IMC in September. And we also -- we presented in April, and we will be presenting -- or we have registered for Webinar during the Master Investor Healthcare in September. So we will be increasing -- basically, we will be giving -- or I will do more face time. So hopefully, that's good. What steps have you taken planning to improve your ratings on websites like Glassdoor? What percentage of your clinical lab employees are permanent staff? So around 80% of our clinical lab employees are permanent. Glassdoor is -- I mean I wouldn't give Glassdoor is a true reflection of the status of what the employees think of the company. I think the people do register their feedback on Glassdoor tend to have a grudge against the company. But just to give you an indication of our employees, so we -- we've started -- initiated a company-wide bonus scheme and incentive plan, increased our training program. We've actually improved our retention rate significantly. So we're keeping a lot more of the staff than we ever had. So I believe I know they're happy otherwise, why would they continue to be with us. And I think everyone is exciting with the continued growth you've seen. I mean who doesn't want to be working in a growth company in a working clinical trials at a cutting edge. Have you determined any methodology to extrapolate vaccine efficacy for lower respiratory tract infection? So this is something we are looking at. But you have to also remember that we don't have many volunteers getting lower tract respiratory infection because we are working with healthy volunteers. But we are looking to see how we can increase the measurement of lower tract respiratory infection to improve the correlation with field-based trials. What does the future pipeline look like? I think I've hopefully answered that question already. Okay. Coming to the questions from today, what are the limiting factor that is causing delays at the MHRA? Is it fixable? So its results contained within the MHRA, there has been a bottleneck in the review of new protocols and protocol amendments. We have been working very closely with MHRA as well as our customers to put together plans to expedite the responses. But we had a risk mitigation policy in place, and that's one of the reasons why we are able to reiterate our full year guidance. Is it fixable? I wish I could fix it myself. Of course, it's a government entity, a regulator and as much as we can work with them. We are working with them. But we have seen signals of improvement very recently. So we are seeing approval starting to come through now. So I'm hoping that the major impact is already over. Maybe this is one for you, Stephen. How is Venn contributing to hVIVO considering hVIVO was a merger of the 2 companies to start with?

So Venn Life Sciences provide 2 services. They do all the medical writing, and the synopsis design and all the CSR report for our challenge study. So as you can imagine, our studies, challenged revenue is growing and is a key driver in the growth of this business, they are also having a stronger impact in delivering that. And as Mo mentioned in the back engine, at the end of the study, all our -- provided it's not dealing with big pharma, all our contracts use our biostats, our biometric team and in France who do all our data management and biostatistical analysis. So they're very involved, and we have a regular weekly meeting with them to update how the challenge business is moving because they have to contribute to it.

Thank you very much. What plans do you have for your increase in cash power and well done for everyone's hard work? Well, thank you for the well done. We do have plans for the cash. So watch this space, really, let's see what happens as we move forward. Can you start -- this is one for you, Stephen. Can you start reporting cash split between available cash and cash held in the form of customer advance payment. I asked this from the viewpoint of customer advance payments being nonrefundable.

Yes, we can do that. It's actually quite easy to calculate off the balance sheet. So when we publish the balance sheet, you can literally take a trade debtors less deferred revenue, and that gives you the sense of the cash that we received upfront on our clients.

Okay. Great to see the cash position. Stephen, this is one for you, again. What interest rate are you currently receiving on this please?

We do have quite a bit of cash invested, obviously on deposits of stages between 30 days, 60 days and 90 days. We do also invest across a couple of institutions or actually 3 institutions to make sure that it won't -- I don't want to have the iceberg [indiscernible] effect again. So but I suppose in short, the answer is close to bankers' rate, and it's flexible. So every time the bankers rate moves, Bank of England rate moves, it also increases at the same time. It's just under that banker's rate. So it's quite close. It's good.

How is the mix for the order book developing, is it larger or longer individual contracts? So yes, we are actually winning larger contracts as you would have seen from the RNS that we released this year. Has the order book value increased as a result of yesterday, GBP 13.1 million contracts? So someone's being very astute there. So yes, it has increased, but not by GBP 13.1 million because some of the work has already been recognized. So -- and of course, as we continue to generate revenue, it eats into the order book. And then, of course, we need to generate new sales to continue to supplement that. Our currency move was likely to be affected in the result this year. No, because we don't really have any foreign currency contracts. Do you expect EBITDA margin to continue to increase or plateau? I expect to increase and then eventually plateau, but where it plateaus, well that's something to look forward to, but continue to be increased, I think, is the key take-home message there. Are you considering paying another dividend at year-end results? No commitment right now, but of course, all options are open. We'll see what the management team and the Board decided at the right time. Can you explain in detail your revenue recognition policy? Maybe not too much detail, Stephen, but maybe an overview?

Right. So we're -- in simple terms, we recognize revenue based on delivery. Our project contracts are very detailed via line item and to the extent that, that line item is delivered, whether it's an hour or whether it's a unit or whether it's a visit or whether it's a day in the unit, there's a charge that goes on to the client study and revenue is recognized accordingly. So it's very much revenues recognized on delivery.

Okay. If you're not going to use your cash on hand for acquisition, would it be of interest for a company to institute a share buyback, maybe a quarterly Dutch auction to support the share price during low liquidity period? So at the moment, I think -- the key message really is that we are very pleased with the cash that we're generating. The fact that we are generating cash, I think, is a very -- well, it's a good plus, let's say. And we will be looking at that together with the Board and determine the future path of the company. So all options are currently on the table. What is the guidance -- why is the guidance so conservative for '23 given the pipeline of work? One of the reasons really is the MHRA. So we just want to make sure that -- we are a little conservative because we are relying on the third parties like the MHRA to give its approval to be able to start a clinical trial. And that's one of the main drivers.

Mo, Stephen, I know you've rattled through a lot of questions there. Thanks for picking out so many from investors. I'm sure they're very grateful. We are just coming up to the hour mark. And of course, all those questions have been submitted to the company will be able to review any further questions that come in, and we'll publish responses on the Investor Meet Company platform where appropriate to do so. So perhaps on that, Mo, I could just ask you just for a few closing comments before we redirect remises, if you give some feedback.

So thank you, Paul. So first of all, I apologize for maybe talking too fast doing those Q&A, but I wanted to get through as many of your questions as possible. But as we will be increasing our interaction with our shareholders, I'm sure you will be given ample opportunity to ask your questions again, if you haven't been able to get an answer that you're happy with today. So happy to do that given the right opportunity. I hope you feel as optimistic as I do with regards to the company's future, the fact that we have now consecutively hit our financial targets, I think, is really a plus. I'm also very proud of the group of people that we now have employees at hVIVO and its subsidiaries. They are a very strong team, all in the right positions. The fact that retention is the best it has been for a long while, means that we've been -- we're able to create a really good culture within the company. I've had received so many comments from some of our visitors as to how motivated and happy the teams that are working for us. And of course, you have to remember what we do is cutting-edge. Nobody else does what we do as well as we do it. So it's not like something that's routine. We are developing viruses and challenge models that have never been developed before and conducting trials that are basically first-in-class. So thank you for your time. I hope you found this useful. But as ever, I'm here at your service. And if you have any further questions, I look forward to answering those. In the meantime, thank you for your time, and thank you for attending this call.

Thank you.

Thanks, Stephen, thanks indeed for updating investors and taking so many questions. Can I please ask investors not to close the session, we automatically redirected to provide your feedback and all the team can better understand your views and expectations. This will only take a few moments to complete, and it is greatly valued by the company. So on behalf of the management team of hVIVO plc, we would like to thank you for attending today's presentation, and good evening to you all.