hVIVO plc (HVO) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the hVIVO Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself, however, the company can review questions for Investor Day, and we'll publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. And as usual, I'm sure the company will be most grateful for your participation. And now, I'd like to hand over to the management team from hVIVO. Mo, good afternoon.

Good afternoon. Thank you, Mark. Good morning, good evening to everyone wherever you are in the world. So it's my pleasure to welcome to our annual trading update beginning of January here in 2024. We will be providing a trading update summary on the unaudited results for 2023. Both Stephen and myself are currently at home due to the train strike, so hopefully, the home Internet speed will behave and we'll be able to go through this smoothly. Let's move forward to the normal disclaimer. And I myself, Yamin Mo Khan, I'm the CEO of the company. I've been with the company for just under 2 years right now, over 25 years in the CRO industry, and I joined Open Orphan, as it was then as a Non-Executive Director. And took over the role of the CEO in February of 2022. So it's my pleasure to welcome you here. Stephen, would you mind giving a brief intro to yourself?

I'm Stephen Pinkerton. I became CFO in October 2022. I've been with the company for 7 years, coming up to 8 years. And prior to that, I worked for Thomson Reuters for 11 years in the financial industry.

Thank you very much. Today, what we'll do is give you brief highlights of some of the top numbers. Stephen will give you a little more color on our financials, and I'll talk about our 2023 performance, as well as some of the key targets and objectives we have going forward into 2024 and beyond. But before we get into that, for those of you who may be new to hVIVO, I hope you have the opportunity to go to a website and see what we actually do, which is human challenge trials, which is a fairly unique business, in the sense that we do provide contract research organization services, but we are different to almost every other CRO because we intentionally inoculate individuals with a pathogen, a virus, and then we test other vaccines or antivirals. So majority of our clinical trials are in the IV or respiratory space. At hVIVO, in the group, we have 2 subsidiaries, hVIVO services, that's the human challenge trials, which is done by recruiting healthy volunteers. And then keeping them in quarantine and tracking the data. We also have a second subsidiary called Venn Life Sciences, who has made their presence in Netherlands and in Paris, France. And what they do is that they are able to provide early clinical development consulting services, as well as provide the start and the back-end services in conducting human challenge trials. In 2023, we did open a small new office for Venn Life Sciences in Leiden near the Bio Science Park. And this year, we will be moving to a new facility with regards to our quarantine and the corporate headquarters to Canary Wharf -- from Whitechapel to Canary Wharf come to the end of this half of the year. Getting straight on to the numbers. I'm very pleased to hear that we've delivered fantastic results this year with GBP 56 million in revenue. This is a 15% year-on-year increase in revenue, and this does not include the GBP 2.6 million in other income on top of that. We've also improved our margin. So we've gone to 22%. With regards to absolute EBITDA, this is a more than 30% increase in EBITDA. And on top of that, we've improved our cash balance to GBP 37 million. As I said, Stephen will talk through the numbers in a little bit more detail in subsequent slides. From an operational point of view, we had 9 different active trials, going to quarantine this year, which is a great number. We've also had a 100% increase in our laboratory assays. So our lab capacity has basically been fully utilized. And it's one of the reasons why we are moving to a bigger facility this year. Our recruit arm, our FluCamp arm has also done an amazing job in generating more than 140,000 leads on to our website with new healthy volunteers. As we move forward, we want to continue to build on what we have and deliver better efficiencies and enhance margins. So to that, we are consolidating our services into one facility at Canary Wharf. We're also diversifying our portfolio of services and challenge agents, adding at least 2, if not more challenges into our portfolio and diversify into new services, including laboratory, clinical site and patient recruitment services. We believe we are well positioned for growth. As we move forward, we're guiding for GBP 62 million of revenue in 2024, as well as having GBP 80 million of order book. And this is a net weighted order book. So this is a key foundation and probably the primary forward-looking indicator when you look at the company's performance as we go into 2024 and beyond. On top of that, we are giving guidance now. In 5 years' time, we expect to hit GBP 100 million in revenue. And this will be mostly of organic growth through expansion of our human challenge trial work, adding new services, but also some M&A activity. And I will touch on that in a little bit. But before we go into anything else, I'll ask Stephen to give an update on the numbers for 2023.

Thank you, Mo. It's a -- good evening, everybody, and it's a pleasure to present another set of record numbers. So as Mo said, revenue is GBP 56 million for 2023 and it's a 15% increase. Some of the highlights behind this, we should just remember, just the highlight is that this time last year, we gave a guidance of GBP 53 million. And in September, we gave an upgrade to about GBP 55 million. So I thought the GBP 56 million was a very good response to our guidance in the first place. A few highlights, the highlights we've had is that we had 3 bespoke full-service contract wins. Just a reminder, full-service contracts means where we have unusually large contracts, where we have contracted to manufacture, a challenge agent, characterize it and then do a challenge study. So we've had 3 new ones signed this year. But also remember, we also had 2 that were signed in 2022, that carried us over in the current year and one of them actually only completes in 2024 -- H1, 2024. Of the 3 that we've just signed this year, I believe 1 or 2 will actually close in Q1 2025. So having such big contracts is always useful to have a length of work and visibility of that work going forward. We did start the year with GBP 76 million -- a net weighted book of GBP 76 million, which obviously helps you to sort of operationally plan for the full year. We ran multiple studies concurrently. And by this, we also mean is that we overlap our studies. We book more than one study at the same time in trial units. In a sense, we double-book because these studies do move around, and things do change. And that allows us to provide -- make sure we don't have any gap in our revenue or in our delivery. And to the point in the revenue, I think one of the statistics we should highlight is that our volunteers were increased by 31%. So we increased our volunteers through the unit by 31% in the current year in 2023. Then our [EDS] sort of our early clinical services business in Netherlands had a fantastic year. They delivered over 30% growth. And that business is really doing well. We have made -- I think Mo will allude to that a little bit more in detail where we have really sort of focused this year on driving the performance of that business. So MHRA, I don't know if everybody knows the market, but MHRA is the Medical Health Regulation Authority, that approves all our contracts and all our studies as such -- not the contracts, the studies themselves, the protocols. And we did incur a few delays. But because we had larger studies, the impact was very -- kept to a minimum. And we also received facility acceleration fees. Now a remind on that is that a few clients have paid us an additional fee to accelerate their study. And we are using those fees to effectively deliver the Canary Wharf unit, and I'll move to Canary Wharf. However, we have to start, but those fees are recognized in relation to delivery points to those clients. So we did recognize some of that revenue in 2023, and we will recognize some revenue in 2024, but they don't necessarily link to the amount of spend in setting up the new facilities. Next slide. So EBITDA, we had a great EBITDA, it grew from 18.7% to 22%. And I think just to go back a little bit on this, when Mo joined, and I think what we have done is change the management team and brought in more stronger operational management team, and they have delivered quite a lot this year. And they're very focused on getting efficiencies and streamlining the processes. And consequently, they have improved our efficiencies and our utilization and we're getting a much better margin on the delivery of our contracts. Again, the other aspect is the multiple studies that we run concurrently. And here, whilst we only had 9 only -- we had 9 studies on the go in actual quarantine. There are more contracts that we're managing in terms of starting and completing -- in starting and completing phases or in the manufacturing phase. But those units that were in the quarantine unit and those contracts that were in the quarantine unit, all 9 of them, we're across 6 different variants, right? And we mean -- by that, we mean 6 different strengths. So that allows us to recruit a hell a lot more efficiently. So if every lead and every recruitment opportunity that -- every lead that we get from a volunteer who is interested in joining one of our studies, we -- our chances are increased by sixfold on getting that individual onto a study. And that is probably the main driver in our efficiencies to date, but we are expecting more. As we consolidate into Canary Wharf, we will get some upside going forward on the operational side. But we are delivering on the operational -- clinical operations is also becoming a lot more efficient than it used to be. But to date, recruitment efficiencies are definitely prevalent. So greater volume, as I said, we had 31% greater -- more volunteers through the unit, and that's obviously better utilization of staff and facilities. So that is, I think, obviously, the facility -- the EBITDA is slightly more improved because we did recognize some facility acceleration fees and the cost of that is actually sitting on the balance sheet, rather than there's a direct cost to it. So that is also a benefit. But it will be a benefit this year, and it will be a benefit next year as well. And then in 2025, we'll have the new unit, which should obviously again be another step change in the margin potentially. So as we move on to cash, cash is strong. It's grown from GBP 28.4 million to GBP 37 million, and this is after the dividend of GBP 3 million or just under GBP 3.1 million, that we paid in June this year. We don't have any debt. A couple of things is that of that GBP 37 million, GBP 31 million is held in deposit, earning about 5%, and we earned about GBP 1 million worth of interest in the year on it. The other aspect is of that GBP 37 million, roughly GBP 17 million relates to cash receipts that we received in advance of delivering to our clients. So that leaves you with GBP 20 million behind, which is really for our working capital or for M&A or inorganic growth that we're looking to do. So yes, we have received a large portion of our facility -- accelerated facility fees from our clients. But we've also spent a good portion of that on Canary Wharf and that will come more prevalent when we announce our preliminary results in April. But it's not that significant in the totality of things over here. The other reason for the cash is, the order book has continued to grow. So your working capital continues to be positive. We're hitting our contract delivery milestones and we -- our margins are improving. So that's all adding to additional cash and the growth of our cash position. We're looking to deliver an annual dividend. We are looking to pay an annual dividend regularly from 2024 onwards. And the details of that and the quantum of that will be confirmed in April, and we also set up the policy at that stage, too. I think the next slide is sort of a slide why we always wanted to just make sure that people understand why we are cash positive. And as we grow and we continue delivering, this business will continue generating cash upfront. This graph that you see in front of you is of a typical -- in fact, it's of a single study, one of our single studies which is very typical challenge trial. And what we're looking here is that the cash receipts versus the revenue. And this is the life cycle of a study. The green line is the revenue, revenue recognition in our accounts and the dark green black line is the cash that is -- the cumulative cash that we have received over the time period of that challenge trial. And then as you can see how we move on that challenge trial through the different phases. Phase I being where we sign the issue, where we take up a booking fee. Remember, it is nonrefundable, so if the client cancels or postpones, we keep that cash. So they also pay us sort of a services fee for designing, doing synopsis and doing the protocol. Then in the Phase II, we move into -- once the protocol is approved, we move into the recruitment phase and we get more money upfront because this is actually one of the most expensive part of a delivery of a study, about 35% of the contract value is the recruitment element of any challenge trial. So we've received the cash. And you can see, as it goes into the quarantine phase, both recruitment and the quarantine phase are the bulk of where we are earning our money and what we are delivering for the client. And right at the end, you can -- where it flips around where we've recognized a little bit more revenue than we receive cash, but it's no more than about GBP 200,000. And it's very minor when you think about the profit and the margin that we're making on the study. So it is why overall, a typical challenge trial this graph reflects while we are pretty cash generative in the study. And then with that, I'll hand you back to Mo, who will take you through some of our operational highlights. Thank you.

Thank you, Stephen. Just to kind of reiterate, these are unaudited results, trading update. The full audited results will be available in April of the year, which, of course, will be a lot more detailed. So what have we done? What have we been up to? So 2023, on the right-hand side, you can see some of the key milestones that we hit, some of the kind of objectives we have achieved. We had a very good year in sales, which has resulted in a growing order book even though we have recognized more revenue than ever before in the history of the company. We've also been able to attract new clients. We signed MSAs, Master Service Agreements, with some of our clients. We had a record number of patients or volunteer coming to our screening, also into our inoculations and quarantine unit. We're developing more challenge models than ever before, again, a huge sign of success at the current year, as in 2023, but also looking forward as we get these new challenge agents into clinic and start generating more challenged trial revenue from these. We've also cited the construction at Canary Wharf, which again, is a huge step for us as a company. We've also upgraded our IT cybersecurity, and we formalized the ESG group within our company. On the left-hand side, the reason why I wanted to show you this chart because it shows you that the number of clients who are contributing more than GBP 1 million, in a given quarter to our revenue is increasing. This means that we are getting bigger trials. It also means that we are now doing more trials concurrently than ever before. This is a base -- a big step-wise because it means we can do more, we can increase our utilization of our staff, also our capacity, but also improve the efficiencies at which we conduct this trial because as I will describe later, we can screen one volunteer for multiple different pathogens or multiple trials at the same time. Our volunteer recruitment arm is going strong as ever and -- we're seeing an increase in order book. But as I will describe below, we've also seen a greater diversification of the order book, be by challenge agent or by a number of clients we are working with. One of the things that Stephen alluded to is the fact that we are doing more and more, what's called, full-service trials. These full service trials have 3 distinct steps. So one is the manufacturing of the virus. This is what we start with, taking a swap sample for a person who has a cold or flu, whichever pathogen we're trying to study. We basically isolate that, we grow it. We then take it to a GMP facility and grow it. So it's very [indiscernible] thing to use. Once we complete that step, what we -- we have to do next is to determine what dose of the pathogen to use to basically get a stimulated infection from an individual. So we do, what's called a, calculation study, which is effectively a small challenge trial to find the right dosing at the right number of infectivity rates in our target patient population. Once we've done that, then we actually do the main human challenge trial. Now these projects typically they last longer because of the different steps, but also the contract value of these projects is also much higher. So we have 4 of these that are almost coming to completion or some are just starting and some are midway through. But the key thing here is that once we finish that main challenge trial with a client, we are then free to use that challenge agent in subsequent trials for other customers. And this basically means that we are diversifying and increasing our portfolio of challenge agents we can use. And we are unique in the world to have so many different challenge agents that are ready for human clinical use. But also, we have data on these challenge agents from their exposure to human beings. And that's a key step when we look to win new projects or use the date to design new clinical trials. The single biggest challenge in clinker trials is recruitment. Patient recruitment results in about 80% of the delays, that happened in clinical trial delivery. For us, we, of course, have to focus mainly on healthy human volunteers, as well as asthmatics. We have a FluCamp brand platform that we use to recruit these patients, and that's been hugely successful. We have made some changes in the management team. We have implemented a new CRM, basically a system to be able to manage the voluntary experience and we have seen significant success. In fact, we've been able to reduce our advertising spend to get to the target volunteers, even though we are now recruiting more and more volunteers, compared to historic years. And you can see from some of the numbers there, we've got very good feedback from the volunteers. We have great ratings on [indiscernible]. One of the key changes we made last year was that bring the kitchen in-house, the volunteers are now getting freshly cooked food, and they really appreciate that. And on the back of that, I think we'll see a lot more people recommending us to families and friends, and our main channels are Instagram and TikTok which are contributing significant numbers into our volunteer database. We screened 17,000 healthy volunteers last year, and we'll continue to build on that. And just remember, we have to do this in a certain way. So we have to have -- every ad what we produce that's directly to our healthy volunteers, has to be approved by an ethics committees. All our trials are approved by the U.K. regulator. Venn Life Sciences have had an amazing year. So with regards to just looking at revenue year-on-year, they've increased by over 30%. So a really good year for them to continue to build on what we have already done. They also, of course, had an increase in head count by 18%. And the great business model for Venn is that they have a high level of repeat business. In fact, it goes up to 75% of the customers that come back to them year-on-year. We also know from our customer survey that we ran last year that 100% of the clients will be willing to come back to us or recommend us to someone else. And the other key milestone for Venn Life Sciences this year was to add an office at Leiden. So Leiden is a small city in northern Netherlands, but it has a very big by biotech park. So we've been able to place ourselves at the center of that. So Venn Life Sciences typically targets small up-and-coming biotech companies are either in preclinical or early clinical stage and that biotech park is a great place to locate themselves to be able to increase their exposure and build up to this clients, who may start with small projects. But of course, as these clients grow, the product size grow and we get larger clinical work from these guys. So what are we going to be up to in the next 12 months or so? So for me, the most important forward-looking parameter that you should really focus on is the order book, okay? We currently have GBP 80 million in the weighted order book. And you may remember, the weighted order book, it consists of the gross order book multiplied by the probability of whether that contract, that project will go all way to the end. So this may be a little conservative. But in the past 2 years, when I've delivered these numbers, we've always picked our numbers. And this is key to us. So every clinical trial that we run, every clinical trial company that's out there, they see this [indiscernible] where clinical trials get canceled, or they are reduced size or they get pushed out. So just to make sure we cover that contingency, we only report on the net order book. And the GBP 80 million order book effectively means that we are over 90% fully contracted for 2024, and we have good visibility going into 2025. The right-hand chart shows you how the growth order book. It's aligned as it burns through the next 24 months. Now this is giving us long-term visibility, compared to what we've seen in the past. In fact, this is the best visibility we've had in the history of the company. So this is what gives me confidence that not only have we've been able to deliver the numbers that we promised in '22 and '23, but these are really good foundations that we will be able to deliver our numbers in 2024. In fact, we are already building a pipeline of work going into 2025. This comes from the human challenge trial and the existing models we have. But in addition to that, the new challenge models, we're adding almost every other month these days. The second point on the order book is that it's very well diversified. Historically, there may be 2 or 3 clients that dominated the order book. So that increases your risk. So for example, when the client suddenly cancels or goes in trouble and reduces their pipeline of work, it could have a major effect on the provider or the vendor. We've now been able to diversify that risk. And as you can see, the number of clients contributing to our overall order book is significant. Client A and B, for example, are 2 large pharmas, some of the most stable companies in the market. Client C is a biotech, client D is a midsized pharma. So if you see from the middle chart, we are really well diversified between biotech and big pharma. And for us, this is important because we don't want to rely on one group of industry to fuel our future growth. We want to make sure that we diversify many clients in the biotech and in the pharma sector. And on top of that, we've also been able to diversify the order book into different pathogens. Again, we're not relying on one specific pathogen to deliver our order book. I remember when GSK and Pfizer received the marketing authorization for the RSV vaccine in May and June of last year, we got the feedback from some investors that is this the end of RSV human challenge trials. Well, that's not been the case. As you can see, RSV has the largest component with regards to future looking -- well, this is the order book, the work we have contracted, but not yet conducted yet. So on the back of the authorization of the 2 vaccines that are now currently available, I think more and more customers or pharma and biotech companies have realized there is a vaccine out there that they can actually discover or produce and bring to market. And now they can bring a vaccine that has a better stability, maybe a better route of administration, better than was currently on the market. So I believe RSV will continue to grow. Influenza is also key. We have a new flu B coming through, human metapneumovirus. And that's not to say that we are still talking to some of the clients with regards to SARS-CoV-2 too. So with regards to this order book, I wanted to show you how this order book aligns to the number of healthy volunteers we need to inoculate into our studies by month, okay? And the key thing to look at this chart really is the different colors in the bars because the different colors indicate that we are recruiting patients into different viral challenge models. So for example, if you look at January, the top dark green section. This refers to RSV volunteers. The middle brown part refers to influenza and the bottom yellow part refers to a human rhinovirus or the common cold. And this is important because typically, when we screen one healthy volunteer, they maybe have a 15% chance to being suitable for one particular pathogen. Now if you're running 3 different challenge trials at the same time, you can screen the same blood across the 3 different protocol that you're running in the 3 different viruses, you automatically increase your chance of recruiting that person into one of these trials by almost up to 3 times. This basically means that we want to keep the number of web leads or the number of patients who are screening level atop, but increase the number of patients we're inoculating and putting into quarantine. And this hasn't been our goal. One of the first things I said to the team is I want to have at least 3 pathogens in a given month. So we basically have 3x the chance of putting somebody into a clinical trial, compared to when we ran one single trial in a given month. And this has helped us in improving our margins significantly. A huge milestone for us in 2024 will be our move to a new -- a big sale to Canary Wharf. All the paperwork is signed. We have the planning permissions. The work has started. In fact, all floor plans and the designs are all done. As you can see on the bottom left here, we -- the walls have been put out, the ventilation is in place, flooring, planting, lighting, has all been placed. The facility looks amazing. And you can see some of the pictures on the right hand-side and some of the quarantine room views will be pretty -- well, some of the best views in all of London. On the top right-hand side, another small picture, but hopefully, you can make out, this is a plant room that helps in the ventilation and making sure that the negative pressure is maintained within the rooms and within the cargo. One of the key differences between this facility and where we're at right now is that the Canary Wharf Facility will have a -- will be a CL-3 level compatible. This means that we can work with higher-risk pathogens, such as COVID. It also will have a CLC dedicated lab, so we can run all our assays on site rather than shipping them on to a different location. It will have an outpatient unit and all the corporate offices will also be located here. The screening facility in Whitechapel will remain in place as it's close to some really good transport links and we also have the Manchester Screening Facility also in place in Manchester. The key thing to remember, again, for this facility is largely funded by our clients. It increases our revenue cap to GBP 90 million to GBP 95 million, which is significant. It increases the bed capacity to 50, but each bed is a quarantine zone on itself. We currently have in the current facility, 3 different groups of quarantine zones. This basically means that you cannot run different pathogens within those zones. But because the new facility, we basically have 50 new quarantine zones, we can run up to 50 different challenge trials at the same time. A second key action point for us in 2024 is to increase automation, adopt IT into how we run our trials and become as much as paperless as we can. So in that, we have already started implementing a Laboratory Information Management System or LIMS. This basically will mean that we will be barcoding, all our tubes, we have scanners and be able to track all the [indiscernible] and they're taken from the healthy volunteers and scan through the different laboratories. And this is key for us to improve efficiencies and also on top of that, improve quality. The second one I mentioned briefly already, we have already in place a new management system to help our FluCamp colleagues. Remember there are about around 40 FTEs dedicated to FluCamp in ensuring we recruit the right candidates, we screen them appropriately, and we communicate through our manager experience through the whole journey from the first contact and going into completing the quarantine unit. And finally, we will be looking at adopting a new tool to consent individuals using electronic iPads, for example, or the tablets, as well as using e-source. This basically replaces the paper medical notes, and we collect all the medical data electronically. And this, again, will improve the efficiencies, as well as improve quality. We will also then have it linked to what's called the electronic data capture, which is used to analyze the data we collect during the study. So we talked about our medium-term goal is to get to GBP 100 million of revenue by 2028. The majority of this will be achieved through organic growth, both by human challenge trials, expanding the portfolio of challenges we have as well as growing Venn Life Sciences subsidiary and the consultant services they provide. On top of that, we will be adding new services to our portfolio. This again will be organic. This includes growing our lab services. In the current space right now, our lab space is basically filled. So once we move into the Canary Wharf facility, we'll have bigger capacity to conduct more lab work, and we will be targeting more nonchallenged lab work. We will also be targeting field-based Phase II work, work at the clinical site and also using our FluCamp platform to be able to recruit more patients into non-challenge trials or help other CROs to recruit patients or healthy volunteers into their studies. On top of that, as we have this huge cash file, we will also be looking at conducting some M&A activity. Now this is something we will not rush into. We will wait. We'll make sure we have the right target. So we're announcing this plant, because we will be starting the process. But don't be worried if it doesn't happen tomorrow. For us, the key thing is that we have the right asset that's going to give us synergistic efficiencies with what we already do. So we're not looking to acquire a company to put us into a completely new area of service. What we want to do is maximize the utilization of what we already do and try and monetize that. So I'll give you an example, a Phase I unit. Phase I unit has a challenge when it comes to recruitment. Now we know 99% of the people we screen are not suitable for human challenge trial. But they could be suitable for Phase I trial. So as an example, we be able to leverage our FluCamp capabilities into fulfilling that. But there are also other areas, for example, patient recruitment company that can again work with FluCamp, small to midsized consulting companies that could sit well with Venn Life Sciences. So we have a number of areas we are targeting, but we will wait to make sure we get the right target before we execute. Going forward, this is our outlook for 2024. We are guiding towards GBP 60 million -- GBP 62 million in revenue in this year. As I mentioned, over 90% of this is already contacted. So we have good confidence in being able to deliver this number. We also have visibility going into 2025. Again, as I mentioned, this is the highest visibility we've seen in the history of the company. And this fully by the GBP 80 million weighted order book that we currently have. So just to sum this all up with regards to what we've done in 2023, I hope you feel that we've held to our commitments. My key ethos really is to underpromise and overdeliver. And I think this is the second year we've been able to do that. And we want to continue to build on that. And I think the growth has been very good, very strong. But it's based on a good foundation. It's not just going for 2 years as [I believe], but growing at continued sustainable levels. And that's what we will see as we move forward. We are scaling up already. So the new Canary Wharf, with our CLT capability adds to that scaling up. We're adding new challenge agent. We have new services that will become active during the next 12 months. As we move forward long term, of course, we're looking at GBP 100 million in revenue in 2028. We have a very strong order book. On top of that, we have a very strong pipeline of new queries, and we are talking to our clients about that, hopefully, will sign in the next 6, 12 months. Thank you very much for your attention. That's your lot for today.

That's great. Mo, Stephen, thank you very much indeed for updating our investors this afternoon. [Operator Instructions] I'd just like to remind you that recording of this presentation with a copy of the slides and the published Q&A can be accessed via your Investor Meet company dashboard. Mo and Stephen, you can see you've had a considerable number of questions as usual from investors throughout your presentation. So thank you to everybody for your engagement. If I may Mo, just hand back to you. And if I could ask you just to read out the question and give response as appropriate to do so and I'll pick up from you at the end.

Absolutely. So thank you for that. I'll try and go through as many of these as possible. After the welcome increase in the share, I sold half of my position at 27p. I want to understand and become more comfortable that the company can scale. At first sight, there is a capacity limit. Please explain why growth is not restricted by physical bed availability? Well, it is restricted by physical bed availability. And that's why we've increased the number of beds. Not only is that because we increased the number of quarantine zones, we should be able to increase the percentage utilization of the bed. So this basically gives us a much higher cap in our revenue. So we estimate that we can hit without M&A, GBP 90 million to GBP 95 million in revenue if the capacity -- the bed capacity at Canary Wharf was fully utilized. So that, to me, is a strong message. But you're absolutely right. There are 3 key factors that limit our growth. One is the number of beds, we have addressed that. We have increased the capacity. In fact, if the demand continues to grow. We can add more beds to our Canary Wharf Facility. Second is the number of volunteers. We need to make sure we can recruit enough volunteers to fill the bed. And as I mentioned earlier, we've actually reduced our advertising spend because we're able to hit our targets at the rate we need them to. The third one is the order book. So we need to grow the order book, grow the demand and continue to do more challenge trials. So those are your 3 key steps to our growth. In the presentation last year, it was strongly indicated that cash would be used to acquire compatible profit and housing company. Any uptake of this? Hopefully, I've addressed that on the presentation. We will be going out in the field and looking for certain targets. But again, we're not in a rush. We have a very good business concept. We know what we do. We do it really well. We are the world leader. We have 90%-plus share of the market. We are well renowned for doing human challenge trials. So we just want to make sure that remains our core business, but we will add to that in the coming months or at least 12 to 18 months, let's say. As you have 90% of the human challenge trial market, that's very optimistic, where is growth going to come from? Well, first of all, the market is growing because you've already seen that from our order book. So year-on-year, you've seen the growth in the order book which basically means that not only are we recognizing more revenue share, but we are selling even more. That's one place. Secondly, we are increasing the portfolio of challenge agents that we are selling. So this means that basically, 12 months ago, for example, we didn't have a human metapneumovirus. But come toward the end of this year, we will have fully faced HMPV challenge model. So now the clients who are working in the HMPV space, certainly, they are target clients. So that's another way of expanding that. We will be adding new services. That's another way. We also will be increasing the Venn Life Sciences consulting portfolio search they offer. So there's lots of different ways we're looking to address, to expand and grow the human challenge trial services. I'm also interested to hear about how you are faring against the competition, including Ergomed, now that they will be presumably pushed by Primera? So we're not really a competitor of Ergomed. Ergomed do not do human challenge trials. They conduct normal field-based non-challenge trials. So we are fairly unique in what we do. So they're really not that competitive. And as I mentioned earlier, the more trials we run, the more data we have on our challenge agents, the better vendor we become for our clients with regards to human challenge trials. Okay, what you do or can you make of artificial intelligence, does it make it easier for competitors to challenge you? No, it doesn't make it easier for our competitors. So one of the key restrictions for our competitors is the actual -- the challenge model, the virus, okay? Now each virus takes about GBP 5 million to manufacture and to characterize. But the key thing is you need to have human data on that module, on that virus to be able to use in your clinical trial. And we have an abundance of that. We've done all the 70 challenge trials. We have now over 4,000 healthy volunteers. So we are in a unique position and no amount of artificial intelligence can overcome that. We are using AI. So for example, one of the ways we are looking at that is to basically scan and take certain data points from our healthy volunteer medical records and to use -- to database that and use that to target the right trials for them in the future. Could you take us through a typical project? What are the problems? How do you do recruit the volunteers? Who conducts the inoculation? What are primary challenges? A lot of questions in one there. So Stephen has already taken you through the financial profile of the project. So we basically start with writing a protocol which is done by Venn Life Sciences. We then put together a whole channel and now we use FluCamp to screen and recruit these patients. We have a screening facility in Manchester, in London, they screen the volunteers, make sure they are eligible for the trial. We are recruiting into our quarantine where we have doctors and nurses to basically make sure they are eligible, they are free from every other pathogen. So for example, there's a 17 pathogens screening platform we use before they like to go into quarantine. We are not using our [architect] and then we basically keep them in-house for 10 to 14 days depending on the trial. And we monitor to make sure they're safe, they're well, we collect the data. That data is then analyzed by Venn Life Sciences -- Venn Life Science Group; and then they produce the final, what's called, a closed clinical study report that goes to a client. I hope that gives you kind of a brief overview. That's a big question, to be honest, to cover in this forum. You have a target of GBP 100 million revenue for 2028. Maybe, I think, Stephen, you can answer this. You have a target of GBP 100 million revenue for 2028, but the capacity of Canary Wharf is limited to GBP 90 million as per your interview today, do you have an option to extend your capacity at Canary Wharf or will you look at other locations?

I can take that, yes. So I do have a first right refusal on another floor in Canary Wharf. So if we need to really expand big, we can take it up the floor quite easily at Canary Wharf. We've also set up the office area in Canary Wharf. It's more easily able to convert to an additional 20 beds. So we can take -- we have a couple of options there to look at. So yes, we do have those options available to us. And of course, we can go to a different country or expand elsewhere in the world.

Thank you. Time line for new facilities generating revenue? So we would expect to generate revenue from Canary Wharf in Q2 of this year. Although we will have the official opening later on, but we will have healthy voluntaries in Canary Wharf in Q2 of 2024, and we will generate revenue. With prospective purchase of a bolt-on company, be it with shares or cash or combination? It depends on the case. It may be impossible for me right now to be able to answer that question. We have a significant cash reserve here at hVIVO. We were not expecting to make huge, large acquisitions. We want to be able to fund an acquisition with the cash we have. Unless we find a spectacular opportunity, then, of course, we would act on that. But generally speaking, we would want to fund that with the money we have already in place. Did the dividend attract any institution at that time? Yes, it did. We've seen a higher percentage of institutions on our shareholder register. I'm sure, most of you guys are probably more active than the I am going on the FTE website for example or the Morningstar website, and you can check on the different institutions that now hold equity in our company. And as you can see, the percentage of equity held by the institution is continuing to increase. What unique features are looking for in respect of bolt-on acquisitions? So I think I've already covered this. So basically, an asset where we can use our current services we're offering to leverage more revenue. So as I mentioned, the volunteers that we can't place into our clinical trials, can we place them into a different trial? And what company would we need to monetize that, as an example? Generally, have you seen an improvement in the biotech financing environment? No, I have not, me personally anyway. I mean, we have a large contingency of potential clients that is still looking for funding. But people say the signs are there that it is improving, but I'll be lying to you if I said, yes, it's already happening and has this [indiscernible] through to your later order book? So I mean, our order book really is made up of our pharma clients or biotech companies, who are well funded. You must remember that every contract we signed, a client has to commit 15% to 20% upfront of nonrefundable fee. So for them to be able to sign the contract, they must really make sure that they've got funding in place to run that trial. So we will not have issue of cancellation, for example, as much as a typical nonchallenge trial CRO, who do not have the luxury of a nonrefundable upfront payment. Is Canary Wharf not a strange location for a business like human trials? I'd have thought there were plenty of locations in the U.K. or abroad that will be lower cost. So we wanted to keep the U.K. because, I mean, we can only recruit healthy volunteers that have a U.K. GP registry. Also, we really have an amazing platform in FluCamp and the brand name establishing in the target audience really well. We really utilize that, I mean, amazingly, and I think in my earlier slide, you could see our performance against some of our competitors when it comes to -- on the web traffic of new volunteer. So there's no way we want to lose that. Canary Wharf has a goal to become the next Life Science hub. So I'm sure you may have already seen this. But going forward, there will be further announcements of new biotechs, new pharma, new laboratory companies moving into Canary Wharf. Are there any current blocks in approval by the MHRA that has happened last year? So thankfully, no. So we actually got an approval earlier this month for [indiscernible] trial, which is right on time as we should have got it. So yes, we are good. Will the dividend be only a nominal -- maybe one for you, Stephen, will the dividend be only a nominal dividend? Or will it be a nominal plus special dividend?

It will be a sort of regular -- we're looking to set up a dividend policy. So it is based on our regular performance. So as our EPS improves, so will the dividend improve. We're yet to confirm with the Board precisely what that policy will look like. We're erring towards more of a nominal type of dividend, but there will be an annual dividend that will be scalable to the growth of the business.

Thank you very much. How well-insured is the company in case of severe adverse effects in subjects in the trial? We are very well insured. So there's kind of different levels of insurance that we have in place. So one is, for example, errors and emissions with regards to our own staff. We also have an insurance of any ill effect or side effect of the challenge agents that we use. And there's also an additional insurance, which is taken by -- taken out by our pharma or biotech customers for any ill-effects due to their product or their drug. And some of these insurances are compulsory and they had to be submitted to the MHRA trial before we can start a human clinical trial. So absolutely, we have sufficient insurance in place across -- for the different scenarios. I'm reading about China doing further work on -- that disappeared. I'm reading more about China doing further work on coronaviruses. Could hay fever have a role in defense to counteract any biological warfare? I'm not sure I'm the right person to ask that question. We do a research to bring drugs faster to patients. That's our interest and goal. We want to make sure that any vaccines or antivirals that are being developed by our customers are tested rigorously in a standard manner, so that they can get to the patients faster than they could otherwise. That's our goal. We're not really into this part. Could you franchise the concept? So we have looked at this. We've had queries. We feel that our challenge agents are our own IP. So we want to make sure that we protect that. We also have our methodology and the way we work, the way we conduct this product which is the written protocol. That's very unique to us. So I want to continue to build ourselves rather than going to a franchise model. One for you, Stephen. In terms of margins, is 22% the new base going forward? And what might the margin profile look like in full year '24 and beyond?

Okay. Well, in terms of 2024, you've got to recognize that we are managing 3 different facilities. So there's an overlap of the old facilities and there is the setup of the new facility. So there is an overlap of costs, so I wouldn't expect any improvement on the margin. Is the margin turning into a new base? Most likely, you could say so. Certainly, when you get to 2025, we hope to have an uptick on that.

Thank you very much. I think we'll face a couple of more questions maybe. You have talked about having multiple studies running concurrently? We do. What sort of utilization factor have you been at? And how will that change with the move to Canary Wharf? We typically do not publish the utilization, but you can rest assured by doing multiple studies concurrently in different pathogens. At Canary Wharf will definitely significantly increase our revenues. So I mean you can, to a certain extent, work [indiscernible]. So we're going from 43 beds to 50 beds, but our cap is going from about GBP 65 million to GBP 90 million. So you can see the difference in the bed isn't proportional to the difference in the revenue, and that's mainly driven by the fact that we have 50 different quarantine zones at the Canary Wharf facility, thereby improving the utilization rate. The last question, it's an easy one. Who owns FluCamp? HVIVO owns FluCamp. Thank you. Thank you very much for all your questions.

That's great guys. Perfect timing as we just come up to the hour. So thank you once again to everybody for your questions and for your engagement. And of course, we will make all questions available to you post today's meeting. Mo, I know and Stephen, I know investor feedback is particularly important to you both. I'll shortly redirect everybody on the call to give you their thoughts and expectations, but Mo perhaps I could just ask you for a couple of closing comments.

Well, thank you for that. Absolutely. So I myself have been here for 2 years, and Stephen and I have got together, and we basically said to everyone that we will set the right expectation, but we would deliver to those expectations. And we have done that in '22 and '23. We have good challenging goals for 2024, but the work that the team has done, the expanded team within hVIVO has done with regards to putting together a very efficient operating model, with regards to the sale of the marketing activity we've done and the recruit of more healthy volunteers, I'm very confident and very bullish as we go forward. I'm very confident we will hit the GBP 62 million in revenue for 2024 and then build on that to get to GBP 100 million within 5 years. Hopefully, you'll continue with us on this very, very good journey. Thank you for your time and efforts.

That's great. Mo, Stephen, thank you once again for updating investors. [Operator Instructions] On behalf of the management team of hVIVO, we'd like to thank you for attending today's presentation, and good evening to you all. Thank you.