IP Group Plc (IPO) Earnings Call Transcript & Summary

[Audio Gap] They've also played a significant role in innovation during the battle against the pandemic, which we are all fighting and engaged with across the world. So just to move on. A little bit of admin. So the purpose of this event is 3 key themes: one is to highlight the depth and the value in IP Group's portfolio; two is to give more access to capital markets participants to our portfolio of companies' management teams; and third is -- and probably the most important, actually, is to identify some of the really key themes, both in terms of scientific trends and growth trends within the portfolio. The format for today's event is it's a live webinar. Hopefully, it won't be too glitchy, but I can't promise that 100%. The presentations will be between kind of 15 and 20 minutes by Gordon and Hugh, and then we will go straight into Q&A, which will be chaired by me. So please, please send your questions in. We will look at them, and we will do the best to answer them. And before I hand over to Hugh, I'd like to just give a little bit of background to both Oxehealth and Nanopore, and the CEO is present. So turning first to Oxehealth. So Oxehealth sits in our health care portfolio, and it's one of our focused companies within that portfolio. We own 26% roughly of Oxehealth. It's a world leader in remote vital signs monitoring through standard webcams. I mean this is really smart and very scalable. Their Digital Care Assistant product actually helps hospitals improve patient care. And if there's ever a time when this is important, it's got to be now. Just turning to Hugh for a second. Hugh studied law at Cambridge and trained as a strategy consultant. And then he founded a business called Xinfu, which was very much focused on emerging markets. When he left Xinfu, he joined Oxehealth, which is a start-up out of the Oxford Biomedical Department of Oxford University. So turning our attention to Oxford Nanopore Technologies. So it's the largest company in our portfolio. We own approximately 15%. And the holding is managed by Alan Aubry, our CEO, in our strategic assets kind of bucket. It has a unique technology, which Gordon will tell you much more about, in single molecule detection. And Gordon himself, after training as a chemist, did a PhD in bioelectronic sensing. And this was absolutely key in delivering a new generation of blood glucose testing products at Medisense. Subsequent to the takeover by Medisense by Abbott Labs, Gordon stayed at Abbott for a number of years in very significant positions, both in the U.K. and in the U.S., before leaving to cofound Oxford Nanopore with Hagan Bayley and IP Group. So I'd just like to thank, at this point, everybody, for joining. And I'd like to hand over -- now to hand over to Hugh to do his presentation. Thank you, Hugh.

Thanks, Mike. Let me share a screen and check that that's working. So I hope that you are now able to see a picture of some nurses and the Oxehealth logo. Can you see that, Mike?

Yes.

Great. Fabulous. Well, thanks again, Mike. Yes. Hugh Lloyd-Jukes, Chief Executive at Oxehealth. I feel that we're getting quite numb to coronavirus, and particularly the statistics, albeit that many of us have suffered personal tragedy. The infection rates, the death rates, the lockdown statistics are, I think, to some degree, numbing. So for the next 10, 15 minutes or so, I'm going to take 1 patient story, Mary's story, a patient case, and use it to explore 3 questions. The first is how have we directly helped frontline staff cope with the pressures of pandemic. Secondly, what do we do to make sure that that's well understood? And then third, an interesting question from Mike of how can we afford a resilient health care system now and into the years to come, one of the pressing economic problems for all of our economies, particularly advanced economies. So I take those 3 questions but try and land them in the individual experience of Mary. So who's Mary? Mary is in her 80s. She was in the local general hospital in the Midlands, where she was being treated for a physical health condition, I think COPD. But medication triggered mental health challenges, and she was admitted to an older adult complex needs dementia ward at the Manor Hospital in Coventry. Unfortunately for her, while she was undergoing that treatment, she received a positive COVID test. And so this is really the story of how Felix Sebastian, the ward manager, looked after Mary. Clearly, that's a pseudonymized patient name. He -- Felix used the Oxevision system. Apologies, Mike, we rebranded it last week. So Digital Care Assistant is now Oxevision.

We want to be current, yes.

He used it to support the full clinical actions of his staff. So first of all, as you may be aware, in inpatient and residential care, the acute hospital and mental health hospital, the care home, one visits the patient periodically to check they're safe. That normally involves shining a light into the room and often waking them up just to confirm proof of life. He used -- Felix used our Oxevision system to look into the room with a video feed and to take pulse and breathing rate, totally contact-free, so he could confirm safety, exercise clinical judgment and not enter the room whilst harvesting pulse and breathing data to check on Mary's state.

Brilliant.

Second piece is, of course, Mary then presented, unfortunately, a risk to her colleagues -- fellow patients on the ward, wandering unwittingly in her confused state, infecting others. So the system would alert to the risk Mary leaving the room and doing that and also to the risk that she fell in, again, that confused, medicated state, and hurts herself, which would have clearly been a cause of great suffering for her but would have introduced COVID further up into the acute hospital again. And finally, Felix and the team use the vital sign trends functionality to track the progress of her disease and to see a recovery in the breathing and respiratory rates displayed there. So in short, what Felix did is he harnessed the full potential of our Oxevision platform to deliver truly data-enabled care that brought Mary through her condition as quickly as possible but manage the risk of infection to her -- to staff and to other patients while she was in that inpatient setting. So Mary had a much more compassionate and effective stay within the hospital, a quick stay, and others were kept safe, particularly staff, crucial at the moment with the pandemic. So I think it's a nice sort of vignette that hopefully brings to life how we actively support frontline care. Having given you that sense of impact, let me just take you through exactly what Oxevision does, so you can see for yourself. So I'd just roll a video. There you have it. That's a secure housing, has an optical sensor and infrared. Nothing is on the patient. We've accentuated here the micro blush. Every time your heart beats, your skin turns red, not red. You count that for a pulse rate. And breathing is the movement of the body engendered by the chest. So this is a Class IIa medical device, as accurate as contact device, totally contact-free. Now here, the patient gets out of bed. Elderly patients dwell for about 40 seconds on the edge of bed, 40 to 60 seconds on average. And then you can also alert that and to the out of bed state. So if you know that Mary is at risk of falling, you can go in and help her. You can see the rest overnight, time in bed, sleep opportunity, behaviors. And you can also see other risky activities. Has Mary been in the bathroom too long? Your ward is there at a glance. No video feed, just statuses, red, amber, green. And you also then can dive into the vital sign trends. So Oxevision is giving movement alerts to risks that could be self-harm risk in psychiatric settings, could be falls risk or other misadventure in the fail settings, bathroom, multiple people entering a room, wandering off, as I've indicated with Mary. So movement alerts to risk activity. It provides daily and weekly reports on critical activities and sleep. And it provides then, and I suppose this is our party piece, we're the first and only company to have a cleared medical device using software to allow an optical sensor, an off-the-shelf video camera, to develop pulse and breathing rates. And just to emphasize, the smarts are all in the software. This is a completely generic camera bought from a major manufacturer, and we're just interpreting the light signals it receives to give pulse and breathing as accurately as if we place a finger pulse oximeter on your finger as a GP would. And it's giving you spot check observations, and it's giving you trend data. And in terms of innovating for the pandemic, I'm very proud of the team. You'll be aware that medical device clearance can take many years or months. We actually extended our medical device from spot checks to spot checks and trends to support the work of our clinical colleagues in just 8 weeks. So we added that trends capability. And I think it gives you a little glimpse into the power of the platform and the team we have assembled that allows us to push very dynamically, through this connected software as a service platform, new functionality into the world to support patient care. We also pushed, at the same time, a tagging capability so that Felix again could see at a glance on his ward who had or is suspected to have COVID and needed isolation management and who did not. So it's that real-time support of patients as well as having the underlying functionality of the platform. So that's the Oxevision capability, but it has one other capability that's crucial in these inpatient step down and residential setting to the elderly, which is, on demand, a clinician who could otherwise enter the room can get a secure video feed. It's not set up to us. It's very privacy controlled. And as you can see, it's not the default feed. It's in no way CCTV. But it allows you to exercise judgment, how is an area moving today? Is the behavior I've been alerted to worrying that I should intervene? Or should I actually give that individual their privacy and leave them where they are? So video, particularly for poorly understood conditions, is crucial to clinical judgment. So it's the combination of telemetry and on-demand secure controlled video feed that really creates the benefit to staff and allows them to create these data-enabled care environments for Mary and her patient colleagues. So just to bring that together for you, Oxehealth provides a service, which is a technology called Oxevision, a scalable platform, plus the onboarding of clinicians to that and also ROI measurements so that we typically take you on for, say, 5 wards and quickly upsell you through perhaps a 3-month early insight report to say, as we've just done in [ Essex ], another 10 wards. So we quickly become a standard of care off the back of a proven ROI using our research capability. And in essence, we operate off one insight, clinical foresight saves lives and reduces injury. So we'll give your clinical team the insights they require to plan patient care and to intervene proactively. So that you, as a care team, delivers safer, higher quality and more efficient care, that includes improving the patients' experience and particularly their privacy and sense of dignity. That gives you a step change in care delivery outcomes, safety, quality and the efficiency of care. But also what's fascinating is once you introduce the platform, you find that this data-enabled care regime finds continuous improvement. You see teams -- people using data in unexpected ways to plan care more proactively. You've seen data has not been lost between ward transfers. And so we don't just see a step change, but we see year-on-year improvements. And we deliver that into the acute general hospital, into mental health, into dementia care and into elderly care in the U.K. and Europe. To give you a sense of scale, we are now scaling up. We're contracted on 1,000 rooms across U.K. and Sweden, and we are actually contracted to 1 in 3 English mental health and dementia trusts. So you can really see us as becoming part of the standard of care in modern dementia and mental health care. So I hope that gives you a little introduction to how we're supporting the frontline staff in attending to the consequences of the pandemic and also to exactly what we provide to our customers. In terms of business model, I should note, it's an annual license fee, bundling the software and the hardware that's paid on a per ward basis and is paid for in business cases I'll come to a little later. But let's turn now, if I may, to Mike's question, how can we actually afford a more resilient health system now and into the future? So actually, the economics, as we see it, operating across these geographies, the economics haven't changed under coronavirus. I think they could come into sharp relief. Before coronavirus, we had 66 million more elderly in the OECD countries by 2030. Before coronavirus, we had a mental health epidemic, sadly, perhaps now more in evidence. And of course, we had coronavirus circulating, we have a real killer on the loose at the moment. So we have a demand tsunami. What the Americans call the silver tsunami. And in the face of that, we have a nurse shortage. So World Health Organization estimate OECD countries will be up to 3 million nurses short by 2030. We're already running about 25% vacancy rates in acute psychiatric care. And last year, in the NHS, 38% of nurses were absent for 1 day through work-related stress. So as demand tsunami and nurse shortage happened, we have had that accentuated by coronavirus. And the question yesterday and today is how can inpatient and residential care cope. That's the problem we have to engineer. And we think it is a clinical engineering problem. Fundamentally, we think the answer lies in the fact that today, we have a productivity problem. Today, we have reactive care. Typically, staff will find a patient injured. Felix will come in and find Mary has fallen over or she's got into the corridor and got confused and bumped into someone else and something or that you haven't spotted her cardiac arrest or respiratory distress. So in many instances, staff complain that they are repairing, not caring. And so you get excess suffering, excess death, excess emergency room, excess health burden. That's where the unaffordable cost that Mike has highlighted comes from. The productivity solution comes in being proactive. If you can get an upstream of the incident, if you can prevent even by seconds before, if you can spot the respiratory distress before it gets too far advanced, you can prevent incidents, and you have more time to deal with that, and you don't have to repair. The consequent cost of care is always higher than prevention. So you have inherently more productive staff and care pathways. You have fewer injuries, fewer hospitalizations, fewer deaths, less suffering. And that's how you get to a more affordable cost. So we believe the answer for care systems lies in proactive rather than reactive care. And Oxevision can give you a good sense of what a really effective proactive system of care gives you. And it's always about enabling the action of staff. But staff, by using Oxevision in the way Felix has done with Mary, reduce force by about 50%. Assaults in psychiatric care are down 1/4. Self-harm is down 22% in bathrooms. In fact, female ligatures in bathrooms, which is a huge problem in psychiatric care, is down 2/3, 66% reduction in suicide attempts through ligature in the bathroom. And you get increased privacy and patient experience. So you have dramatic, measurable clinical improvement through proactive rather than reactive care in residential and inpatient settings. Carer experience is so important for retention. 88% of carers using Oxevision report they're less stressed. We talked about emerging health risks. A good example is UTIs, urinary tract infections. We've seen staff pick those up very early with the system and head them off. And so infection is managed rather than dealt with as a consequence. We talked about infection control. And it seems so obvious, but a digital safety check is not only more effective than in-person and waking up patient, but it takes half the time. So if we then look from Oxehealth and we reason back out to this question of affordable resilience, data-enabled care gives you a triple win that allows you to meet that need. So the patient gets safer care, faster recovery and a more private, dignified experience. The provider gets to reduce the workload on their wards. They're suffering less harm in their patient groups, they have less work to do. The number of hours of care required has come down, essential tasks like digital safety checks have their time capacity slashed, and you don't have the infection risk at the same extent. Secondly, you improve the staffing model. So your ward workload, number of hours has gone down, but the model you can use to meet that clinical need can change. So effectively, Oxevision faces a floor on quality. It keeps quality above a certain level because even very inexperienced or new staff can perform an effective digital safety check. Even less skilled staff can look at certain data and draw clinical conclusions. So everyone, to use a parlance, starts working at the top of their license. And so what that means is your very scarce senior staff can be redeployed appropriately, and you can create better outcomes on the lower skilled staff that the staff shortage is forcing you to use. You can also improve retention, and anecdotally, you can remove -- improve absence. So the provider is getting reduced workload, improved staffing economics and reduce the risk of reputational harm. Meanwhile, at the payer level, this proactive care is giving you these safer, higher-quality outcomes at a lower cost with a slower increase in your overall staff requirement as population grows. And I think that, in our experience, is where this affordable resilience is going to come from. And certainly, that's what the payers and the providers who work with us call on us to do. Just quickly to give you a sense of what that means for us at the end of this presentation. It means there's an enormous market for Oxehealth. We're playing into well over, I think, GBP 29 billion of ARR. We've made a great start in dementia and mental health, 1 in 3 English mental health trust. This slide has just become dated. We've just signed our sick care home chain, almost all of which in Sweden. So our business, primarily U.K. dementia and mental health and Swedish care homes. But we also work in police and prison and, to some small degree, in home care. So you can see there's a huge segment actively being served across the U.K. and Europe. And although we remain of the scale a step or 2 behind Nanopore, we're just crossing up towards GBP 3 million of ARR, year-on-year in September, we were 5x ARR growth. We're running at about 1,300 now contracted rooms with the latest deals across U.K. and Europe. We have medical device clearance in Europe, and we are very late-stage with the FDA. So I think we are very well on track to achieve our goal, which is to help clinicians engineer ever better care globally and therefore deal with this demand tsunami, whilst putting staff right at the forefront of care but reducing our dependency on this staff shortage and saving lives and improving health care for everyone. So I hope that gives you a little bit of sense of what Oxehealth Service, power of Oxevision does, a little sense of how we're helping Felix and his colleagues on the frontline, dealing with the epidemic and hopefully a little bit of an understanding how we see proactive care transforming the economics of health care delivery over the coming decades and frankly why we believe Oxehealth will become part of the standard of care in inpatient and residential settings. Thanks, Mike.

Excellent, Hugh. Well, thank you very much for that very interesting, informative, lots of nuggets to pick out of that, I'm sure, in the Q&A, not least the stresses and strains of the NHS service that we -- and its staff that we find ourselves in at the moment. So thank you very much for that. We'll come back to questions a bit later. So Gordon, can I turn to you now, please, to do your presentation?

Yes. Give me a sec. I've lost my presentation.

We will, don't worry.

Don't worry. I've got it here. I have a very...

I was going to say if you couldn't find it...

It's a Mac.

Okay.

I'm very much a Betamax person. Bear with me a second.

No. No problem.

Thanks, Mike. Okay. Afternoon. In the immortal words of Monty Python, and now for something completely different, I'm going to talk about emerging trends in DNA and RNA. And as much as everybody knows about DNA, RNA, just to remind you all that the size and shape of the genome is complicated. It's the source code of all living things. You're at tens of thousands of bases of GTAC for a virus, right up to tens of billions for plants, a couple of billions for human and bacteria. And it's your -- DNA is the source code of all living things. So it's absolutely fundamental in understanding what is it, what's in it, is it disease, is it healthy, how is it changing, is it harmful. Your RNA, if -- in the music vernacular, if your DNA is your full digital music collection, your RNA is your mood music right now. So you're getting real-time insights in your biology. And then what Oxford Nanopore has is a platform that can measure DNA and RNA in real time. And when we think about affordable health care and the question that was posed by Mike, what we have thought about, and this is a technology trend that we've seen played out in the computer industry, at the moment, we sit, when we think about access to the DNA information, in the mainframe moment. So it's very complicated, multimillion-dollar purchases of equipment and multimillion-dollar infrastructures. And to put that into context for you, there are only around about something like 1,500 key accounts that purchased DNA information and about 4,500 to 6,000 DNA sequences in these mainframes. And that, therefore, de facto, is the preserve of the elite. What we've been doing, and if you think back to the slide on the size and shape of different genomes, we have developed a range of platforms based on electronic measurement rather than optical. So we're able to leverage trillion-dollar electronics industry to produce devices such as the MinION, the GridION and the PromethION, and you could almost go viruses and bacteria, small plants and some human on a GridION and high-scale sequencing on PromethION. So you start to create platforms that fit the biology you're trying to do. At the right-hand side with MinION, GridION, you're talking about less than $1,000 to acquire these instruments. On the PromethION side, they're much, much larger scale. In each case, we offer a commercial model where you do not have to make an upfront capital purchase. The business model is such that you are able to access these very sophisticated DNA sequences, Nanopore sequences, just purely on a consumable spend, which is the razor-razorblade commercial model we have. Now everybody is going to expect me to rush in and talk about this pandemic and COVID-19, and I will in a moment. But we must not forget that there are a whole plethora of diseases out there. And as a way of thinking about how genomics is really at the center of a health revolution, we're very much -- first human genome was completed in 2003. Almost 20 years on, we're right in the heart of the genomic revolution. And I'm going to focus on a couple of areas before I come on and talk about the pandemic. First of all, I want to talk about large-scale population genomics. It's really important as we piece together the source codes of humans and how they are diverse across regions, we start to think about building that information database. At this moment, there are over 10 million live POPSEQ projects running, 10 million genomes being sequenced. And we have penned our first deal on population genomics a year ago. And a couple of features I want to point out on the technology. So if we look at current market leaders who use short reads, so essentially Illumina, BGI pretty much dominate this market space. And in that genome, 8% of the genome is unmapped. It's very difficult to map with short-read sequencing. And Oxford Nanopore has a long-read sequencing technology, which allows us to uncover those dark regions. And those regions are really important for giving us information on diseases such as neurodegeneration. So not only are we providing, for the first time, a high throughput, scalable device that competes on cost and quality, it is providing much richer content. And that's key in helping to better understand the source code. Now from that source code, we're then able to home in on different facets of the human genome and biology. And I'm going to flip and talk a little bit about what has been a really rapidly growing area, which is liquid biopsy. So what is a liquid biopsy? Before you see a tumor with traditional optical imaging systems, you can sense free-floating tumor DNA from a blood sample. A very simple blood test will allow you to get an early indication of naturally shared tumor DNA. So that's a signature. And what's important is if you can pick out tumors, whether it's first time or under treatment or remission, early detection of tumors always gives you a much better probability of suppressing it and preventing the disease. And there's been a range of companies and a few billion dollars poured into this space. And I'm going to show you a couple of examples of how this concept of moving from a mainframe server into much smaller units allows you to penetrate the applied markets. So 2 things here. There's a little bit of technology I want to point out. I mentioned that the dominant market leaders today are BGI and Illumina, and they measure short reads. So what I mean by that is the fragment length of the DNA is about 100 bases, and there's a misunderstanding that Oxford Nanopore can only measure very long reads, which are biologically richer in content. But what this customer has done, it's a small spinout in Holland called Cyclomics, just got going, they take that small fragment of 100 bases in your blood sample from your tumor DNA, and it's shown in the bottom left. They stitch it together so that you have 8 times 100 base pairs. So it's really nicely suited for our platform. And those 8 times 100 reads, in effect, you're reading the 100 bases where the mutation is, in this case, in a gene called TP53, which gives an indication on a range of cancers. But they were focused on head and neck cancers, and they looked at this in real patients. And they were able to target and show highly accurately the single point mutation in the region of interest and do that on a MinION. That's really important because when we think about how we make cost-effective health care, setting up a multimillion-dollar DNA sequencing infrastructure is just not going to cut it. This is a MinION, a starter package of $1,000. So you can see how you can decentralize the ability to do cancer oncology screening routinely in -- at the point-of-care in a decentralized setting. And you get more than that. So this example, this is -- it's quite an emotive area. It's aggressive childhood brain cancer, high-grade glioma. And you can see that tumor in that young child. The problem is when the treatment is given, sometimes one of the side effects is actually the radiation therapy can make the tumor look like it's actually swelling, so not responding. So using spinal fluid and reading the signature of the tumor, this study that was done in the U.S.A., looked at 130 children and showed how the treatment was reducing the effect of the -- there was less tumor DNA. Therefore, you know that the treatment is being effective. Another really great example of how that decentralization, that one size fits all, moves to tailored, applied applications in cancer genomics. I focused on cancer today because I think the whole liquid biopsy area is going to be one where there is going to be a phase shift in early screening of cancer. I will -- I was told I had 10 minutes, but then I found out at the start of this I had about 15. So -- I was never going to get this done in 10 minutes, so that was a huge side relief. I'm going to talk about COVID-19. Along came a pandemic, and none of us thought 2020 was going to be the way it actually is. So how have we been involved? Or in some ways, this gives you a really great oversight of how genomics platforms can be used across multiple health verticals. We can look at the epidemiology. So we are sequencing the genome. Those sequences and how they change are important in vaccine development, in drug development, and we can do diagnostics. And I'm going to talk about each of those briefly. So at the start of the pandemic, we shipped to China 200 MinIONs to help fight the infection. And if you look at from the emergence of this new virus to sequencing it and understanding it, it's been the shortest ever. And that is entirely catalyzed by the ability to take the sequencer to the point of infection. The Chinese CDC have now adopted MinION as its threat level for future pandemics as well. And the map on the right shows a broad brush of where Nanopore has been helping to sequence the COVID genome. The complicated chart on the left shows the transmission. There are 2 major strains, and these are all the different changes you're seeing in real time. And that is really neatly summarized here. So this was a region in China where they initially were able to be the first to determine that it was a SARS-like genome and had a lot of similarity to SARS, SARS COVID. And as they came out of the first wave with lockdown, they were then able to continue to do the genomic epidemiology and see that the second wave was mostly from Hong Kong. So they were able to do micro restrictions and really focus in on that. And now they continue to monitor and move through, looking at how asymptomatic cases are working. And using the MinION, they were the first in Hong Kong to show that patient who showed a second attack of COVID-19 and what that genome looked like. So -- and it's not just that. Interestingly, the U.K. has actually taken a leadership position. This is something called the COG network, COVID-19 genome sequencing. And these centers shown on the map here are at the forefront of building a repository of all the different changes, subtle changes in the COVID genome. And we have one of the biggest databases in the world. This is all uploaded into a global database as well, the U.K. is a leading light in this. And how does that help on a day-to-day basis? In a hospital in Cambridge, 6 patients very early on presented with COVID-19. And through sequencing the COVID-19 genome, it was found that they all had the same -- exact same mutations. And they all were then linked back to a dialysis clinic. By tidying up that and take -- looking at where the point of infection came from, they were able to eradicate further spread of the virus. So you've got an ultramicro homing in of how we control and contain the pandemic at a micro level through genomic epidemiology. Now one of the things that have not happened in sequencing, particularly with sequencing by synthesis, the mainframes, is there has not been a cross of the chasm to applied markets. And 6 months ago, we started to look at how we could use the Nanopore sequencing platform to develop a diagnostic. And I'm conscious of the time. So we're at 15 minutes. So I'll just -- the test is very similar to what is a gold standard, the RT-PCR test. And -- but the key feature that we have, we can refractor the platform to have phenomenal throughput capabilities. Remember, these platforms are designed to measure billions and billions of DNA bases. To look at absence-presence in SARS COVID-19 is a simple case of further copying some unique regions and reading several thousand DNA bases, which means your capacity per consumable is huge. And with bar coding, you can get through 96 samples in 2 hours, right up to 23,000 samples over a full 24-hour run. So there is huge depth in capacity. And the accuracy is equivalent to the gold standard, yet with the [ mark 1 C ], you can deploy that in a decentralized setting. So in effect, you are taking the lab to the point of infection. And if you want to stop these wildfires in this tinderbox environment, you want to be going straight to the point of inflection and rapidly closing down those areas. And we have completed this test. We've had it MHRA approved. It's CE IVD marked. It's commercially available in mobile units for community care and even getting out into the private sector and airports and other ports of entry and other key worker testing. In a way, one of the questions investors ask, in summary, what exactly can you do with sequencing? And I think the SARS COVID use case really shows you how it's sort of wrap around genomics from the source code, what is it, what does it look like? It looks like SARS, but it's not SARS, which then impacts research. So there's a huge revenue from a vertically integrated business, then you can take subsections. Think of the population genomic example I talked about, where we will find amazing biomarker insights, whether that's companion diagnostic or tracking disease or predicting -- being predictive of disease, we can then push those into diagnostics. And because we have a range of platforms that can answer those different segments, we're able to cross the chasm. We are the only company in the world in sequencing who has got a fully fledged diagnostic, and this will be the beginning of our diagnostic foray into other tests. On that point, I'm going to stop and say thanks for your attention, and thanks to Mike and the team for the invitation to present today.

Gordon, thank you. Thank you very much indeed. That was fascinating. And I think we will move directly now to the Q&A. So we've got about 15 minutes left. You were bang-slap on time, Gordon. That's what I thought, I had expected. So that's great.

So a couple of questions for you, Hugh, to kind of kick off and get you back in the game. [Technical Difficulty]

Which is the thick of the question, how many psychiatric patients, right? And it's their benefit. They realized they are not getting woken up, realized that they feel safe. We actually have patients ask be moved into a room with our system because they feel safer. So it's extraordinarily around psychiatric care. We've had it in a couple of instances in the police setting. We changed the design of the housing to reduce that. Where patients have, for example, been in extreme state and taken their room apart, taken [ their line -- or taken the toolkit ] off the wall, the only item left standing has been our system, extraordinarily resilient. So surprisingly, damage is not a concern. On moats, there's a question around patents and moats. We have 24 filed or granted patents protecting various parts of the essential pipeline in the software. So we think we have a very strong set of protection there. I actually think competitively, the real protection is time because to deliver this, not only do you need the patented technology, but you need the clinical evidence base and the service delivery capability. And to give you a sense, the falls data I quoted, the 48% reduction in falls, that's a 24-month study. So you literally need 2 years to get equivalent data. So between [ that since -- ] and the time to evidence in this kind of a market, I think we have a tremendous set of moats, actually. On the commercial strategy, the strategy on markets, Charles, is to focus on owning a large -- it's becoming the standard of care and very high market share in certain pieces of this large market and to focus our resources in quite a tight way and then grow as we expand the business. So currently, it's U.K. mental health, Swedish care home. The next market we're hitting all out overseas is U.S. skilled nursing facilities, and we're just now starting to grow into some other high-value segments in the U.K. In terms of the commercial strategy, we've -- the adoption KPI, the key one we look at is we have a land and expand strategy. So we were interested in the accounts per room and the revenue per -- sorry the rooms per account and the revenue per account, which has roughly doubled in the last year. We've gone from low mid-20s to 50, 60 rooms per account. And we're seeing very, very favorable account economics. So for example, in 1 Southern customer, we went in on a very short sales cycle into 4 wards. It's about GBP 140,000 of revenue a year. 3 months later, we upsold them another 13 wards. So that's 17 of their wards. That's pushing GBP 0.5 million of revenue a year. And that's most of their pathways. And we see that happening increasingly across our accounts where very quick, a very sizable initial sale in the GBP 150,000 a year range and then quickly upselling more towards the GBP 0.5 million or more per year account. And in Europe, we're ahead of plan, which was GBP 2 million, pushing the stretch, which is GBP 3 million. So we'll be in that, Charles.

Brilliant. I've had a couple of questions coming to me by e-mail as well. So one for you, Gordon. Given the growth in both Nanopore products and perhaps opportunity over the last kind of 6 months in particular, how do you approach kind of the rapid scale-up in manufacturing? Has that proven to be a big issue? Or is it something you've kind of gotten under control?

So we opened a factory last summer which was geared to meet our 5-year LRP. And from the outset, we've always had a scalable factor in there for what we just deemed applied markets. So we didn't put in diagnostics. In fact, I would have said diagnostics was 2 or 3 years down the road. It was more food safety testing or environmental testing or military and defense applications, where we thought there'd be applied market traction. The pandemic has just accelerated the pull forward on the scalability. The factory was built to be able to go from 100,000 units, which is what we shipped last year, up to 1 million within 5 years. But the space was already created, and the expansion is modular. So we've been able to accelerate that to take advantage of the scalability we need for -- during the COVID-19 testing as well as expanding core business.

Okay, great. And just one ancillary question to that. Can you -- you touched on the applied markets. Obviously, we've seen a well-documented slowdown in the kind of research market across the industry. But in the -- are the applied markets still giving the growth that we thought they would deliver a few years ago?

Well, the potential -- the applied market I'm talking about is COVID-19. So I mean that is driving our ramp-up quite aggressively. And so in terms of other testing. The kind of -- the trend is the same for everybody. If you start with Asia Pac, it started to shut down in Q1, and it started to come back in June. And pretty much Europe and U.S.A. and U.K. are about 3 months behind that. So we -- and there's particularly the fourth quarter with the universities coming back online. For how long, we don't know. There is a very active order book coming. So there seems to be a sort of start-up again, but very hard to predict. And we'll know how long that will last given the second wave is at us now.

Okay. Thank you. And Hugh, we've got one that's come in directly. Can you comment on, post COVID, have you noticed any improvements in the NHS processes for adopting new technology?

I think that what we saw with COVID was a blip in sales velocity in the second quarter because everyone went into [ government ] command and lock down to try and work out how to deal with the pressures. And we're seeing that demand come back in, and we've made that up. So that's, I think, very positive. In buying technology, I think there's a greater openness across the board to novel ways of working. So our doctors, people putting us into nursing directors, putting us into every account in the country is consistent before and after. But you find a greater openness in secondary stakeholders to appreciate that technology can play what roles that may surprise them. So I think it creates -- continues to build a very permissive environment for us and a very -- it helps us move the business case through secondary sign-offs, having got our main sponsor. So I think it's helpful. I don't think it's transformative for us because people are typically seeing the benefits in the community, of kind of the obvious benefits of use teams to patients, but it certainly sets up a more lubricated sale.

Okay. Gordon, a couple for you on kind of [ LAMP forward ] demand situation, and you probably got -- clearly give definitive numbers. But the question is more about the kind of [Technical Difficulty]

So when you look at the amplification we use LAMP. It's different to RT-PCR. So we are sourcing different reagents. And we secured those supplies early on. And other areas that are challenging are the plates that you do the reaction in, for the amplification, even tips of pipettes for automatic liquid handling robots. There's a worldwide shortage of these things, but we have some very good partners in Asia Pac. And as you know us, Mike, we can be very creative when we need to be. So we've been very careful to ensure that our supply chains are properly locked and loaded before -- so when we came out of the gate, it was with a test that would be equivalent in quality and performance to the gold standard, but it will be scalable, and it will be rapid, and it will be both central, decentralized and distributed as well.

Question for Hugh. There are a lot of questions, but I'm triaging them, my best medical skills. How has COVID impacted -- actually, it's appropriate for you Gordon as well, but how has COVID impacted your plans for international growth, and particularly the U.S.?

I say I think that the U.S. challenges are supportive of us because of the infection control piece that we can bring alongside the classical benefit. So I see it as supportive. I think clearly some states are more challenged than others, and we're going to be mindful of that. We've actually just hired to start on the 1st of December our first U.S. business development executive to start that market though.

Okay. Gordon?

I think, for us, international expansion, it's been slowed down because we're more cautious about hiring more people. We're focused on the people who we have and ensuring their well-being and working from home. So we've tended to try and focus on who we've got. So there clearly has been a slowdown. But we are now slowly starting to expand in our commercial -- international commercial businesses. America remains challenging, not only because it's 50 many countries. And that, in itself, is challenging at the best of times. And with this pandemic, it's difficult. But we continue to slowly feel our way in America. I'd say it is challenging compared to, say, China or the Gulf region or Europe, where things move much more swiftly for us.

Okay. Great. We're kind of drawing to a close. So a couple of questions just to end up. The first one, which I think any shareholder of IP Group would be happy for me to ask, is what are the benefits, or hopefully there are benefits, of working with IP Group, both our long experience working with you both but also specifically over the last kind of 6 to 9 months, which have obviously been challenging for all businesses. So we'll let you have a pop at that, Hugh, before going on to Gordon.

Well, I think we've tremendously benefited since you actually helped bring the company out of Oxford a number of years ago. I think it's a sense of how to flow the capital in against the R&D and then to shift into deploying capital to grow sales, which is what I've really with you in the last couple of years, my 4 years of the business. And then I think over the last few months, there's been -- it's been a delicate mix for us because we've just hit that S-curve, so wanting to be aggressive with that. But a little -- as Gordon said, a note of caution, just balancing that with some pragmatism this year in the face of the pandemic. So I think Craig on our Board has been a voice of experience in that sense. So it's a capital partnership, and then it's the kind of throttling or pushing the kind of discussions we have at Board level are probably the things I've most noticed. Thank you very much.

Thanks, Hugh. How about you, Gordon, still a long journey?

I think -- yes. Well, it's interesting. And I didn't really bang on about the fact that we can do direct methylation. But to see base genomics sold for $410 million, you sometimes wonder whether we should have sold way before we started to do silly things like try and make a profitable company work or something like that, sell on futures. So it's been a 15-year journey. And from inception, there was a bit of a gamble because I hadn't been CEO, I've been CTO, on me. And that was 15 years ago, setting up -- it was important for anybody who is setting up, the support we got was critical. And as the company has evolved, and I've moved from being an unruly teenager at times through to hopefully a bit more mature as a CEO and having IP Group supportive all along all the way and continuing to support us, hopefully, we will repay that 15-year trust with some spectacular growth in the next 2 to 3 years.

Great. Well, we've certainly seen a lot of growth to date, and we've been very, very impressed by both your journeys, and we've really enjoyed working and do enjoy working with you both in the partnership that IP Group tries to do and make differently to other investors. We've been going another -- for an hour now. We've got kind of questions still flooding in. But I suggest we call it a day for the moment. And I will get those questions forwarded on to you. And if you'd like, you can or your teams can reply to those. So on that note, I will thank -- Hugh, thank you so much, been really, really interesting for the update and really enjoyable. And Gordon, thank you also so much, been great updates from you, and we're obviously very excited and very proud of Nanopore but also Oxehealth and what your companies are doing in this difficult time. So with that, I'll draw it to close. Thank you very much to our presenters, but also thank you very much for all the participants who have taken the time and effort to join us. So thank you very much. Goodbye, everybody.

Thank you.

Thank you.