hVIVO plc (HVO) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen, 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, however the company can review all questions submitted today and will publish their responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, as usual, we would like to submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from hVIVO plc. Mo. Good evening, sir.

Good evening. Thanks for that. And welcome, everyone, to the hVIVO presentation for full year 2024. I'm very pleased to have you on board. This is our standard disclaimer as a publicly listed company. I'm Yamin Mo Khan. For those of you who don't know me, I've got over 30 years of experience working in the clinical research industry. I've been on board as CEO of hVIVO for just over 3 years now, and I'm very pleased to be here. We'll jump straight into our full year summary for 2024. So this slide shows our financial performance of the company, and it's been a record year for hVIVO and also a transformational one with regards to operations. So we generated just under GBP 63 million of revenue. That's a 12% year-on-year growth. And a huge GBP 16 million EBITDA at 26% margin. The underlying margin was around 23% if you took out the facility fee that we were offered by clients to build out the Canary Wharf facility and remove the cost for the -- running the overlapping of the various facilities. EPS, a 33% increase. Cash, a very healthy position at GBP 44 million, and we are going ahead with a dividend of GBP 1.4 million. For this year in 2025, we are giving guidance for full year revenue of GBP 73 million. And that's already contracted at 70%, and we're aiming to achieve an EBITDA of -- margin of around mid- to high teens. And we're well placed to get to our GBP 100 million revenue target by 2028. I'm sure most of you are already aware that we did complete a couple of acquisitions earlier this year, and they're highlighted here on the right-hand side in the map. So you can see that in addition to the old hVIVO and Venn Life Sciences locations, we've now added three new locations. That's the two CRS locations in Mannheim, just south of Frankfurt, and in Kiel, just north of Hamburg. We also acquired Cryostore facility in Greenwich, which basically adds on to our biobank capabilities that we already have near Cambridge. So the three key factors that we are focusing on or have been focusing on over the last 2 or 3 years, and we will focus on as we move forward really is optimize, scale and diversify. And we don't use these slogans for the sake of slogan. We do have tangible efforts behind them that we look to achieve. So when we talk about optimize, what we are talking about is the fact that we have built out a purpose-built facility in Canary Wharf, that sole purpose is to run human challenge trials. And as part of this, some of the key attributes of the facility allow us to run human challenge trials much more efficiently than we have ever before. So a couple of key items I do want to point out. So one is, for example, the two-way call center that we have established communication with our healthy volunteers and the nursing and the physicians that are overseeing the clinical trials. So previous to this, at the older facilities, the healthy volunteer would knock on the door and our staff would wear the full PPE gear and then go and meet the needs of the volunteer. Now we have a two-way communication center, so the healthy volunteers can speak to the clinicians without our clinicians having to wear the full PPE gear. We have a new pneumatic chute system for transporting all of the clinical samples from the quarantine floor to the lab floor below. Previously, in the old facilities, we had lab on one location, and we had one of the quarantine facilities in different locations. So the lab technician would go down three floors, walk across the street, go up three floors, take samples and then reverse that journey back into the lab. And as I say, now it takes 10 to 15 seconds for the lab samples to be shipped from the quarantine facilities to the lab where they can be analyzed. We also have more automation. We've invested in technology starting last year and beginning to implement now. So this includes the volunteer management system, which tracks and manages our volunteers. It also includes a new laboratory information management system or LIMS for short, that helps us to automate the different parts of the processing of and handling of the laboratory samples. We're also looking to install and implement an electronic health record system later on this year. With regards to scale, well, I'm sure you already know, we have moved to the world's largest facility for human challenge trials, a 50-bed facility at Canary Wharf. So this gives us now scope to expand to many more trials than we've ever had before. As part of the move, we moved from the upper floor in our Plumbers Row facility to Canary Wharf. And instead of the corporate headquarters, we've added more beds and doubled our screening capabilities. The new lab is 2x bigger as the old lab. We've also added 120 beds in the two CRS units, which I'll talk about in a second. And in addition to that, with the acquisition of Cryostore, we've added additional storage capabilities for clinical and biological samples. So you can see the scale has increased immensely since even just over the 12-month period. Diversify. So we diversified our services across the board. So if you focus on the human challenge trial sector, we've added new talent models. So for example, the hMPV model going live this year, also the Omicron BA.5 model going live. So we're trying to do more and more different viral challenge trials than ever before. We've also signed a letter of intent for a Phase III human challenge trial and also a bacterial challenge trial. Our therapeutic expertise increases by adding the CRS capabilities, which brings on board cardiometabolic, immunology, dermatology and renal hepatic impairment population studies, which we never had the capabilities to run before. And then on top of that, of course, we've got the continuation expansion in the hLAB and the field trials that we're currently running at Plumbers Row. And on top of that, of course, CRS offers a first-in-human Phase I and Phase II trials. So I hope you agree with me that over the last 12 months, we've worked hard on optimizing our facilities so we can run our trials to a much higher level of quality and much more efficiently. On top of that, we've been able to increase scale to be able to get to our 2028 target of about GBP 100 million in revenue. And of course, the diversification is important. But that's not to say that we will lose focus on our core business, which is and will remain the human challenge trial business. So a couple of slides on the two different companies we've acquired. We announced this in January of this year. CRS is a very old 45-year-old facility running Phase I, Phase II clinical trials. So the Mannheim facility runs mostly Phase I, Phase II trials, single and multi-ascending dose as well as proof-of-concept trials, and BE, bioequivalence trials. They have 96 beds, and they've been going on for more than 40-odd years and running a lot of trials. They've got some really good customers. They have a very strong team, good technical expertise. And I think it's a great asset to purchase at the price we achieved. The Kiel facility is a smaller facility. It has 24 beds, but its key attraction really is the fact that they focus on this niche technical type of trials, which is the renal and hepatic impairment trials. Now this is a very hard to recruit patient population. It requires technical expertise to be able to run these trials. But together with what we have with Venn Life Sciences and hVIVO, we're now able to offer a much more fuller service to our clients. Cryostore, of course, is a much smaller organization. It's a single site organization with three employees based in Greenwich. We know them very well because we have worked with them for the last 15, 20 years. They've been one of our vendors that have helped us to store some of our clinical samples and some of our viruses. So it's great to have them on board and being fully integrated into the hVIVO Group. They have a very good pipeline of work. They have a fantastic 90% plus repeat business, and we hope to use their market share to expand their capabilities, including bringing our own biobank that we have near Cambridge into the Cryostore business. So very pleased to have them on board. They are immediately accretive to revenue and EBITDA. So both acquisitions are fully complete, and I'll give you a little bit of an update later on where we are with regards to the integration, especially with CRS, which is the bigger organization. On that note, I will hand over to Stephen.

Thank you, Mo. Good evening, everybody. And for those I haven't met, I'm Stephen Pinkerton, the CFO for hVIVO. Being with hVIVO for about 8 years, and I'm very pleased to present to you guys tonight. Mo has already covered quite a few of the key metrics, and they are all records for this business. I mean we had record revenue, and we are expanding our services even in 2024. Just a couple of highlights on the factors behind the growth of the business. We grew from GBP 56 million to GBP 62 million. And one of the key contributors of that growth, 12% growth was field trial revenue, which contributed 6% of that growth, so half of that growth. The other growing factor was challenge revenues. They grew 13%. That does include the fees that we received for accelerating a study in the year and which we used to develop and pay for Canary Wharf. But even if you strip that out, you still have a good strong revenue growth underneath on challenge revenue. Our consultancy business, our early clinical consulting business in Netherlands, it had, I think, a robust year, given that their performance in currency terms was level with previous years. And I think that's a pretty good result given the backdrop to sort of slow biotechs sort of lacking funding and coming to the market. So I think it was a sterling performance that they have achieved. This has offset the strong performance in the first -- on field trials and challenge revenue has offset some manufacturing revenue. And certainly, in '22 and '23, we signed up a number of full service contracts. And that obviously led to a lot of manufacturing revenue. And that is halved compared to 2023. Another factor here, if you look at the pie chart on the right-hand side, you'll see the little yellow sliver, which is lab revenue. It is less than GBP 1 million. And that really highlights sort of an opportunity. One has to remember that during the year, we moved the lab laboratory system, the laboratory from QMB to Canary Wharf. And we literally had to shut down laboratory work for about 3 weeks, and recalibrate all the machines, redo some of the assays to make sure everything was working well in the new facility. So obviously, we weren't going to achieve significant amounts of growth in 2024. But the opportunity is there. And that's clearly highlighted by the fact that Early in January, we signed a GBP 3.2 million laboratory contract for a field study. And there have been a couple of other contracts that we have signed, but we have not sort of disclosed because they are quite small. So we do see this as a great opportunity. And this is also where the Cryostore biosample revenue will come through as well in this service line. The site revenue, which is the field study, which we signed in June and is first field study of volume that we delivered, 817 vaccinations were achieved. And one mustn't forget that this was delivered in 6 weeks. And it's not only just the vaccination visit, they also have follow-on visits, up to about four to five follow-on visits that have to be accomplished in a very short space of time. So a high volume of work in a very short space of time. And when we acquire -- as we've acquired CRS, this is all the type of revenue that they will deliver, but obviously in Germany. Recruitment services worth mentioning, it's not featured on here. It's very small at this stage, but it is also nice to know that we have been able to sell some recruitment services. So this is us passing on our volunteers to other CROs. And the revenue is very small. It's not worth mentioning it, but I think there's opportunity there as well. Further, we have developed and continue to develop our new models. We -- I think you may remember at the very beginning of 2024, we announced a cancellation. Actually, it was hMPV. The biotech that was supporting that decided to shut down because they were acquired by a big pharma. Well, actually come to hold, we have now sold -- got another biotech to take on that project and finish it off and potentially run a study with us. Similarly, with SARS, we did sign a study in the beginning of the year and then they're completing the model as well. So what I'm trying to highlight here is that challenged revenue is 3/4 of our business. It will continue to be a key part of our business, and we are strengthening that revenue stream by adding more and more models. Going on to EBITDA, not much more to say. This is pretty much what we said in the trading update, but just highlighting it in writing here. We delivered 26.2% margin -- an EBITDA margin of 26.2%. The underlying is 3%. This is taking out the facility funding and the overlapping facility costs, leaving us with 23%. That 23% is a robust 23% in the sense that it does also include quite a bit of continued investment in models, not the hMPV or the Omicron SARS study that I've just mentioned. We have also in the year 2024 and will continue in 2025, have manufactured and started characterization of two new models, and our what we call our house models, an RSV B to replace RSV because we pretty much -- we ran out. And so we had to replace this virus because our clients are still demanding it. As we've just signed another RSV study in the first quarter of this year, 3 and 2 left over from the last strain. The new strain allows us to recruit much more easily. So for example, if you current our existing H3N2 strain screening test, only about 15 will be eligible to go into a study. But now with this new strain, we will get around about 35 to 40 will become eligible for a study for a flu study. And that just obviously leads to more efficiency going forward, and we will continue investing in these opportunities. It is worth highlighting that our recruitment and operating efficiencies have been felt. So despite operating across three different sites for a while and extending and increasing the volume of volunteers going through the system, the field study as well as the inoculated human challenge trial volunteers. Our operating costs were -- well, certainly, recruitment fees were perfectly in line with last year in 2023, and our clinical operating efficiencies reflect a very small increase, nowhere near the scale of what they've delivered. So we're definitely seeing some of the efficiencies already coming through there. Cash, we continue to being a strong cash generated business, GBP 37 million up to GBP 44 million and about GBP 29 million of that is hVIVO cash, cash that is not -- well, we basically I'm saying of the GBP 44 million, GBP 13.1 million is upfront payments that we've received and relates to our order book. It's cash that we paid upfront from the clients, which is nonrefundable. And if the client cancels or postpones, that cash is ours anyway. So we are debt-free. We're paying a dividend, and we'll come on to that a little bit more. We'll pay the dividend in 2024. And on to the next slide, it gives you a sense. And a couple of things here to talk about is we often talk about cash conversion. And I think various people measure it in different ways. The way I generally measure it is cash operations plus working capital less lease payments as a percentage of EBITDA. And in the past, the last couple of years, those have been exceeding, well over 100%. And this year, it is lower than that. It's about 60%, 65%. One of the key factors here is the working capital was negative in the past. I have highlighted that the working capital movement should be generally positive with this business, but it's open to some fluctuations depending on timing of new deals and things like that. So how it's been affected in 2024, at the ending of 2024 is we had an R&D tax credit. This is a 2023 tax claim, R&D tax claim that we made. It was received in January -- 2nd of January, and it's worth GBP 2.6 million. But unfortunately, we received it out of a period on a like-for-like basis. So that's adding to why the working capital was negative. Further, the delivery of the field study was concentrated -- highly concentrated in November, December, and we had to work with the CRO that we're working with to agree the units delivered before we could invoice and get payments. So it was such high volume, we met so many milestones at the same time that we just couldn't process it fast enough and get the cash. Because a field study is -- it doesn't have an upfront payment like the HCT trials. So that's adding to the working capital. I would still guide that generally, on a normal like-for-like basis, year-on-year basis, I would expect working capital movement to be positive. It's also impacted by the lower order book, which was GBP 80 million and it has come down to GBP 67 million. However, we had some benefits as well in Canary Wharf, we obviously didn't -- we had a rental-free period. Our lease payments were just over GBP 900,000. And in previous years, they were about GBP 2.2 million in lease payments. And we expect in 2025, that will go back up. Quite nice to note that our net interest received was GBP 1.8 million. The actual interest, that's net of some FX and interest costs or FX costs that we've incurred. But -- so the underlying interest received was GBP 1.8 million as an average, if we looked at our average cash throughout the year, that represents 4.5%, which I think is a great job that the team have done in investing our cash and getting that interest in the business. All right. Driving growth, I think we are definitely driving -- providing our shareholders some opportunity of growth here. You can see the EPS earnings -- basic adjusted earnings per share has grown over the last 3 years, 32% and 33% in the last year, 1.27p to 1.69p. I think that is a great trajectory and long may continue, maybe not for 2025 because of the acquisition of CRS, but certainly, we should be back on track in 2026. Just worth noting that we are providing a dividend of 0.2p Key dates would be -- the record date is 16th of May, and we're looking to make the payment on the 11th of June. Remember, this is a low cash -- low dividend, you might say, or it's a high dividend cover at this stage. And that's really because we're aiming for IHT funds. We do want to protect the cash because we do have plans to acquire and grow this business. So we're holding the cash for that, and we're paying a dividend to attract IHT funds that require a dividend more than anything. And with that, I hand over back to Mo.

Great. Thank you for the update, Stephen. So we'll quickly go on to what we've been doing for the past 12 months. So, the first slide here really is to kind of give you an overall description of what the new hVIVO Group looks like. So with the acquisition of CRS and Cryostore and what was in place before for Venn and hVIVO, we've really been able to now provide a much more greater spectrum of services to our customers. So right from providing preclinical consulting services from Venn to doing first-in-human Phase I trials or proof-of-concept trials at CRS to doing challenge trials at hVIVO and then providing clinical site services. These are outpatient field trials that we will run at both German site as well as the sites in London. It gives you a full spectrum of what we are able to offer. So our whole strategy of M&A is based on offering services adjacent to our core services, so we can basically offer a much bigger bundle of services to our existing clients as well as new clients. And this graphic just shows you a typical program of trials and how it could work. So for example, a master protocol under which you have basically a Phase I trial, which is run by CRS in Germany, and that's followed by a human challenge trial at hVIVO in London, all under one protocol. And Venn Life Sciences supporting both trials with regards to writing a protocol, developing the data management, the biostats and final clinical study report. So it's a very efficient way for clients to work with us and be able to get a full spectrum of services. And especially for biotech, this is really important because biotechs don't tend to have a lot of free resource to manage and oversee multiple vendors. And if a biotech comes to you and you can offer multiple services under one contract and one quality and governance agreement, it helps them a lot in meeting their own guidelines and targets as well as requiring a lot less resources from their point of view to manage all the vendors. So this is something that we had always aimed to do. And now we have the capabilities to go from nonclinical all the way to Phase III under one single contract across -- looking across the different units within hVIVO. So we started integrating with CRS right from get-go at the beginning of February, basically. We've completed certain steps. So we've done the full audits, including full IT and systems audit. We have found no surprises. I'm pleased to say post orders, we already identified around EUR 800,000 of annualized savings. We've identified EUR 1.6 million of potential cross-selling opportunities from CRS into Venn. So this is basically the pipeline of work that CRS is currently working on, and they were going to outsource beforehand. But now because they're part of the hVIVO Group, Venn Life Sciences can support those services in-house. So less amount of work is outsourced, more is done internally. We have plans, of course, to continue with the integration process after completing the changes in the internal reporting lines. We were aligning departments across the different units. We will now work on the SOPs or the standard operating procedures. The sales and marketing teams are already merged and they're working as one. We have to work on the marketing and the rebranding as we move forward later this year. On top of that, we will look to implement the systems that we currently have at hVIVO into CRS. And that's something we want to do. And I know personally that our staff are very excited to have new IT systems implemented to improve their day-to-day working. With all this acquisition and the diversification of our services, we will not forget that our core service is and will remain the human challenge trial concept. Now we are the world leader in this. We have 90% plus market shares. We've done over 70 clinical trials have inoculated over 5,000 healthy volunteers. And these models we are developing are continuing to grow. So we've signed the ILiAD deal, which is a Phase III human challenge trial. We've characterized the human metapneumovirus, and that's something that will go live this year. The Omicron BA.5 that Stephen mentioned is really ready to go live. And we've also been able to have a number of clients to get good efficacy data -- effectiveness data for their vaccines and antivirals. On top of that, we've seen an increase in the typical size of human challenge trials. So you can see on the right-hand side, the chart depicts that the number of volunteers or subjects required per challenge trial has more or less doubled over the last few years. This basically means that our clients are using human challenge trials, not only determine whether the vaccine or antiviral works or not, but also potentially what is the most optimal dose at which it works best. In addition, they could be working at looking at different endpoints. So whether it's a primary endpoint or a secondary endpoint, if you investigate multiple endpoints at the human challenge trial Phase II stage, then at the Phase III stage, where it's really important to select the right primary endpoint, we can use the Phase II data to determine which endpoint you will use to determine the success or failure of your drug. So for us, human challenge trial remain a long-term business. We're looking at expanding into mucosal vaccines. We're looking at expanding into bivalent or vaccines that work against more than one virus, transmission studies, bacterial studies. We also now have the capability to run CL-3 or more contagious pathogen human challenge trials, such as COVID, for example, and also dengue. For the additional services that we launched late last year, I do want to give you a quick update. So our hLAB services are gone strength to strength. We've recently signed our largest ever hLAB contract where we're providing virology and immunology lab services to a Phase II influenza trial. And that seems to be taking off really well. We've hired a new BD person to solely dedicate in selling hLAB services and the Cryostore, of course, sits underneath and within the hLAB portfolio of services. In addition, the clinical site studies we're running, which are basically field trials because they don't involve any of the quarantine facilities. So patients come in and they get screened, they come in again, they get dosed with the vaccine or the antiviral, they go back and then come in maybe after a month or so. So these are outpatient trials, and we were awarded a large contract late last year, and we were able to contribute over 800 patients in just over 6 weeks. And just to give you kind of a little bit of context, the total number of volunteers required for this study was around 5,000, and that was going to be conducted in over 50 sites. We recruited around 10x more than the average site. So our team at FluCamp and also in our clinic in Plumbers Row did an amazing job in managing the volume of the volunteers and putting them through the clinical study. We recently just actually completed the audit of this study and the sponsor gave us five stars literally for doing a wonderful job for this trial. Taking a step back a little bit and looking at the overall market. So I do want to talk a little bit about ILiAD. We don't typically announce a letter of intent, but we thought this was important because it has a precedent in the human challenge trial concept in that this was the first occasion where the FDA has originally agreed to potentially use data from a human challenge trial as a Phase III pivotal trial. So this basically means that ILiAD, the biotech company that is basically developing this whooping cough vaccine, they will run a human challenge trial and the data from the human challenge trial will go to the FDA to prove whether this vaccine is effective or not. This has never happened before. No other regulator has agreed to such a concept. So we believe this is a very significant milestone for us as a company, having done 70 Phase II human challenge trials to now doing a Phase III challenge trial, but also for the industry in the fact that it could potentially open up other biotechs and other pharma companies who are working in similarly rare or erratic diseases that could open the door to use human challenge trials to get to market authorization. So this is why it's a significant step and why we decided to announce it to all of you to kind of show you the progress of human challenge trials in the regulatory framework of drug development. And you can see U.K., Germany sit very well with regards to number of trials conducted by country. But the bottom left one chart, I think, is key because now this applies not only to hVIVO, but of course, to CRS, because CRS conducts Phase I clinical trials. So this is part of their marketplace. And for hVIVO, the traditional human challenge trials sitting at Phase II or the more Phase I trials that are done, it's a logical step that the more Phase II trials will be done, including human challenge trials. And the diversification of the therapies is given on the bottom right-hand corner. So we are no longer just a respiratory infectious disease CRO. We can work across multiple therapeutic areas. The order and the pipeline, this is top of my mind all the time. We want to develop and increase the order book. We've had some challenges at the second half of last year. Beginning of this year has been extremely good. We have converted some good contracts, and you can see the good diversification in the order book. The pipeline is stronger than ever. We've been getting new opportunities in-house. Of course, we want to speed up the conversion of some of these opportunities into contracts and into the order book, and that's one of our primary goals. If you break down the pipeline by the human challenge trial pathogen, you can see again, a really good rainbow of colors. This means that the new challenge models that we have developed in recent times are now showing traction within the market, and we are getting proposals -- request for proposals for a variety of human challenge models that are currently active with us. The GBP 40 million short-term opportunities I talked about, I think, during my last call, all but one have been now signed. The only exception really is the ILiAD opportunity that was part of that group opportunities. Having said that, we now have added new opportunities since then to the hopper, and we hope to close them in the near future. So the weighted order book looks very good. Of course, it could be improved, but our team is working hard in getting the message out there. The number of challenge trials, we think will go up the size of them will go up. And with ILiAD coming on board as a Phase III client, that opens up a whole new paradigm of potential clinical trials for us in the human challenge trial setting. So you're pleased to hear, this is our final slide. So just to kind of give you a quick summary. So we are expanding our human challenge trial models. This will remain our core business. We are also developing stand-alone business stream business service lines, especially in hLAB and site services. And we now have the foundations and the facilities built to offer this service to get us to GBP 100 million. There are some current headwinds, side wins. I mean, wins coming from everywhere, to be honest, the way the macro climate is going on, especially in the U.S. But I don't want you to feel that we are severely impacted by this. The tariffs don't apply to us because we don't produce any products or send any products to the U.S. The pharma clients we are working with, most of them are at an early stage of drug development, Phase I or Phase II. So it will be at least 4 to 5 years before their products go into the market. So they're also not really impacted. The RFK anti-vaccine stand to be honest, it does change on a daily basis almost. So I'm not sure what the future holds. But you also have to remember, worst-case scenario, all vaccines development stops. What you will see as a consequence is increase in infectious diseases across the globe and increase in the development of antivirals and human challenge trial models work effectively -- equally effectively in antivirals as they do for vaccines. So I don't see that -- that's going to impact us. On the outlook, GBP 73 million this year, we do think there will be a H2 weighting purely because of the delay in signatures. We're looking to get mid- to high teens in EBITDA, 70% of this year's revenue is already contracted. Our key focus right now is, one, on sales, so getting to build up that order book. Second is to complete the integration with CRS and harmonize that team into one single entity. The market volatility, well, it is what it is, to be honest. Our focus and our goal is to make sure that we give good appropriate guidance, and we hit or beat our targets on an annual basis. And that's what we here to deliver. Finally, as we've announced in the RNS, our Founding Chairman, Cathal Friel, will not be setting up for reelection. I want to thank Cathal for all he has done over the last 7, 8 years since he founded Open Orphan effectively from two loss-making companies in Venn and hVIVO. He hired me around 3 years ago, and we've had a very good working relationship. The company now stands in a very good place with 3 successive years of revenue growth, improvements in EBITDA margin. I want to thank Cathal on behalf of everyone at hVIVO for doing a great job. And the Nomination Committee right now is out and looking for a new candidate for the Chairman of the company. With that, I will close the presentation. Thank you all.

Perfect. Mo, Stephen, if I may just jump back in there. Thank you very much indeed for your presentation this evening. [Operator Instructions] I just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your investor dashboard. Mo, Stephen, as you can see that we have received a number of questions that were both pre-submitted ahead of today's event as well as those that have made their way through this evening as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And guys, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that would be great. Thank you.

Thank you very much. So I've seen there's a lot of questions that have come through on the platform. I don't think, well, I know we will not be able to answer all of them, but we'll try and get through as many as we can and probably be group some of the questions because they have very similar answers to be honest. The first one, and I think there's more than one question on this, is a simple, why has the share price dropped 50% when you say you are doing so well? What are you doing to improve the share price and so on. So the items we control really is making sure we deliver on the numbers we put out to the market. That's been our key goal. And hopefully, over the last 3 years, you've seen that. So every time we've given out guidance on revenue, on EBITDA and some of the other financial parameters, we have every time hit or beat all of those targets every year. And that's the first thing. So -- and that remains key for us. We have to deliver on what we say we're going to deliver. Then we do manage the market as well as we can. There are some macro events that really we can't control. What's happening in the world with regards to Ukraine, Russia or the tariffs, the depression in biotech funding, all of those play a factor in why the share price is depressed. But I'm sure you all agree with me. And just like we're speaking to brokers and analysts all day today, they all agree that we are very much undervalued with regards to our market cap. And it's a matter of time before the market realizes the true valuation of hVIVO, especially with the numbers we bring out. I mean for an AIM listed company, we are in very good health. And not just with regards to revenue and EBITDA margins, but the fact that we have such a strong cash generation and built up over GBP 40 million of cash reserve at the end of last year says a lot in the way the business model is built and how the team has been performing and delivering on all the targets. Can you give more insight into contract status and future prospects, in particular, type of size contracts? So in generally speaking, for the human challenge trials, at least, the contract sizes are going up. The sales pipeline, so these are sales requests we received from clients is bigger than ever. The challenge has been, as I mentioned, in converting the sales pipeline into order book. We have seen some good news. Earlier this year, we started to convert some of those into contracts, and we are hopeful that we will continue to convert more. And that is our #1 priority. But so far, after kind of slowness in the second half of last year, we've now seen some improvements. Okay. This is a long question. The share price has more than halved in the last few months. Correct. A primary reason for this is the investor perception around the appointment of RFK in the U.S. and retail investors appear to be assuming that U.S. business will drop off a cliff that hVIVO has little residual value. My hypothesis is that RFK's drive for transparency of data is likely to make Phase II and III trials more expensive. Therefore, hVIVO's services is even more compelling. You will clearly be talking to the farmers and the likely impact and it goes on a little bit more on this. So you're absolutely correct. So RFK does have an anti-vaccine stance. But as I mentioned, I don't think that really impacts us considering both -- we work both with vaccine and also with antivirals. On top of that, we work with vaccine at a fairly early stage. These vaccines typically will not hit the market until 4 to 5 years from now, by that time, who knows what the U.S. government would be like. On top of that, having reviewed the news on the fact that the FDA is reducing inside by 20%, well, a typical human challenge trial has around 5% of the data points that a Phase III study does. So if the FDA was looking to review less data much more faster with less fewer regulators, then a human challenge trial is really a great concept to get back on because the efficacy data, so the data that proves whether the drug is effective or not requires the same number of people. and we delivered that. So we delivered the same number of volunteers who have an infection as a Phase III does. But a Phase III typically requires 10 to 50x more people to be vaccinated than a challenge trial. So for us, we can do the same data with less than 5% of the data points. So for a regulator and for the customer, I mean, it's much more efficient, it's much more cheaper. It's also less riskier because you're exposing a lot fewer people to the vaccine you're testing. So this person, I don't know the name, has got it really on point that the new FDA, the new slimline FDA could actually be -- human challenge trials could actually be more attractive to them than they were previously. There more as regards mergers and acquisition, how optimistic are you of turning the two company fortunes financially around in 2026 as regards to being financially accretive. Stephen, do you want to take that?

So we have a very active integration program. We are targeting to turn it around this year. So by the end of -- so for 2026, we are aiming to be accretive for both Mannheim and Kiel entities. And we've already started in the sense that we had determined sort of GBP 800,000 worth of savings, annualized savings that obviously will impact the full year impact will be for next year. And so I think we're on track for that. And I think that's our target. That's what we're pushing for.

Thank you. Are any more acquisitions planned expected? Yes, but not in the short term. We are looking to focus on making sure that we integrate the two acquisitions we have carried out this year, but we are keeping our eye open to add any other companies that provide services adjacent to what we already provide like Cryostore, like CRS. How realistic are you of obtaining the '28 forecast as regards to GBP 100 million revenue? I'm very realistic. I think we're on the track. I never, from day 1, thought that where we were back in, what, 2021 to 2028, now that it will be a straight line of growth. That's not how business work. But the trend is strong and it's good, and I'm very optimistic that we will achieve the GBP 100 million target by 2028. How many institutional investors are actually involved in holding company shares. But quite a lot, to be honest. I know over 40% of our share register includes institutional holders. It may be even a bit more than that right now. So we have a very good institutional following right now and some of the very kind of large blue-chip institutions as well, by the way. Any interest as regards to the malaria challenge study? So as you know, we did develop a malaria model back in 2021, I think. Malaria challenge models, to be honest, are very cheap to run because the outpatient, they require very few patients too. So yes, we are, but it's not our #1 priority. It's up to me, I would really focus on more influenza, more RSV, more hMPV, more COVID. I think this is one for you, Stephen. I'm not sure if you can answer this. Please, could you confirm the approximate cash position after the acquisition?

So I think we both know -- I mean, if you look at the acquisition, what we've paid for the acquisition is EUR 10 million, and we paid GBP 2.7 million for Cryostore upfront. So that's effectively about GBP 11 million. At beginning of the year, we're GBP 44 million, that's GBP 11 million or so, we're close to just over GBP 30 million.

And of course, this will grow again by the end of this year.

Yes.

Please, could you confirm -- okay. Would the Board consider doing a share buyback given the current share price? Absolutely. This has been discussed at the Board. We are not doing it right now, but it's absolutely on the table, and we would consider it at the right share price. One for you again, Stephen. Excluding CRS, why are revenues expected to fall by about GBP 10 million? Why are margins dropping to mid- to high teens this year? Even with CRS, you are forecasting lower EBITDA than this year. What is the problem here?

Right. So the core business is tracking to normal EBITDA rates between 20% and 23% is where we sort of range our EBITDA percentages for the core business. CRS is actually going to make a loss. So it makes a loss of about GBP 1.5 million, and that's what we're forecasting at this stage. Combined, you're getting to mid- to high teens performance. And that's our guidance. So it will turn around. It will change. Revenues. So CRS revenues in previous years was EUR 19.9 million. Our guidance has been EUR 20 million that's been accounted. That's full year. So that's not prorated for the period of ownership. The underlying performance of the core business is pretty much the same as 2024, excluding the facility fees. So I make that excluding CRS, the revenue is down on core business by about GBP 4 million. So really, you're looking at GBP 58 million plus CRS prorated, giving you your GBP 73 million.

Great. Thank you. Quickly, maybe a couple more. I read that the Canary Wharf facility was mainly paid for by your clients. This is correct. Do they then own the facility? No, they don't own the facility. If not, what is the quid pro quo? The quid pro quo was that we ran -- we finished the trial in an expedited manner, and we did deliver that last year. So we -- as you may remember, the first half of last year, we were running three facilities and part of that was to use the new facility to finish the trials for those companies. There are no other commitments to these clients at all. One for you, Stephen, maybe. Why have you reduced the dividend instead of increasing? It's very disappointing that you have done this as a long-term shareholder, especially along with the share price down 50p from its high.

Okay. So on a year-on-year basis, I mean 2023, we paid a dividend in 2024 of 0.2p, and we are doing the same that this year. So for 2024, we're paying a 0.2p dividend. So it's the same. It hasn't actually gone down. There was a -- in 2022, we paid a special dividend. It was a one-off special dividend that we paid out in 2023, which was much higher than it is currently. We have set the policy that the dividend would be low, it would be nominal, and it will be really aimed at the IHT funds that require a dividend. What we're trying to maintain is the cash so we can grow this business and make acquisitions like we have just done and there will be furthermore. Obviously, if things go -- we don't find the acquisitions that we want on a timely basis, we will be considering and having a look at share buybacks. But at this stage, our policy has been set, and that's what the Board has agreed to move forward on.

Okay. Maybe a final question. I think does the weighted pipeline include Iliad? No, it doesn't include ILiAD. There's a couple of questions about why should I continue to hold in hVIVO. I will come to that at the end. I will hand back to you now.

Perfect. Mo, Stephen, that's great. And thank you very much indeed for addressing those questions that came in. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But Mo, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.

Thank you for that. So Well, hVIVO is a very strong business with a very strong foundation now. You've seen what we have achieved over the last 3 years. We're in a unique position. Nobody else can do what we do. And I mean that literally. We hold 90% plus of the market share. The expertise we hold would cost somebody else around GBP 50 million just to set up the facility, the recruitment database, the challenge models that we currently have. And even then, they won't have the data or the expertise to run these trials and no pipeline of new opportunities. And for that, I think we are in a very strong position. We've now been able to use the funds we have generated ourselves to add and diversify into new services and new stages of clinical development. Of course, when you acquire these companies at the prices that we've acquired, CRS, for example, at 50% time the revenue, it does impact the EBITDA short term, EBITDA margin at least. And you would expect that. But our long-term goal is that CRS will become financially accretive in 2026. Our goals have always been to grow and diversify, and we've hit all of those targets. And I feel that at the moment, in the current climate, we are very much undervalued. Our trajectory is still going in the right direction, and I'm very optimistic for the future of the company. And for those of you who have been shareholders for a long time, thank you for your loyalty. And rest assured, there will be a time in the future where we will definitely have an uptick. Thank you, everyone.

That's great. Mo, Stephen, thank you once again for updating investors this evening. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of hVIVO plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good evening to you all.