IXICO plc (IXI) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the IXICO plc Final Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it received during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. You'll receive a notification from us when they are available for you to review. I would also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. I'd now like to hand over to Giulio Cerroni, CEO, Grant Nash, CFO; and Lammert Albers, CCO of IXICO. Good afternoon to you.

Thank you very much. Good afternoon to everybody. Thank you for joining us today on our earnings presentation for the year ending 30th of September 2020. My name is Giulio Cerroni. I'm the CEO of IXICO. I'm joined today by Grant Nash, our CFO; and Lammert Albers, our Chief Business Officer. What we're going to do today is we're actually going to switch the cameras off for the actual presentations, and then we'll switch them back on for the Q&A session. So with that, if you just bear with us whilst we switch our cameras off. Excellent. So if we go to the first on this slide here, we're highlighting basically that as a company, we are very focused on neurological diseases. Just a bit of background, first of all, on the company. We were established in 2004, listed on AIM since 2013. And we're a fast-growing medical imaging technology company providing advanced analytics services to the global pharmaceutical industry. And what this slide highlights is really why we're particularly focused on the clinical trials market and neurological diseases. So 2 key macro trends that have supported our growth to date, and we'll continue to provide significant runway for growth for the long term is the first one being the fact that drug development is expensive and is -- actually the cost of developing drugs and bring them to market is actually increasing. And despite significant levels of outsourcing over the past decade, that the ROI for pharmaceutical companies is actually worsening rather than bettering. So there's a significant drive for the deployment of technology services, such as those provided by IXICO to improve our ROI. Secondly, the particular focus on neurological diseases and why we are specialists in that area. It's an area of high unmet medical need across a wide range of neurological diseases. The largest of which, and we're all familiar with, which is dementia, which is the only major cause of death that we can't prevent, slow down or cure. But also in the presentations, you'll hear from Lammert that it's much more than just Alzheimer's disease, which is the largest dementia disease, but also that there is a wide range of rare neurological diseases that are a very hot area of research for the pharmaceutical industry. And Lammert will be explaining why again, we see that as an area that we're particularly focused on that we can be very valuable to the pharmaceutical industry in developing their clinical development program to bring new drugs to market. So on the next slide, this one here, I really wanted to highlight. Whilst, obviously, we're going to focus on the financial performance of the year, I did want to take the opportunity to illustrate the way that the company is maturing and growing and really been able to -- being very, very clear on our purpose, which is, of course, to support the development of medicine and human health by turning therapeutic specific data into clinically meaningful information. That's our purpose. And of course, we're doing that at scale by providing data analytics through our remote access TrialTracker platform. And in doing so, we're providing that improved ROI to the pharmaceutical industry by reducing the risk and uncertainty in clinical trials. Also, this highlights our 4A values of aspiration, agility, ability and accountability. Now whilst, again, I'm delighted, of course, that these values have really underpinned the financial performance of the company, I'm particularly proud of the way that these values really played out during the pandemic to make sure that we supported our clients during the uncertainties caused by the pandemic and just wanted to give a big thank you to all of our staff for their endeavors in the past 12 months. If we move to the next slide. This slide here really provides an overview of what we do, and I kind of want to emphasize a few points here. The first one is to emphasize that we're scaling the business and looking to continuously do these things that are laid out here more efficiently. And in doing so, create a company that is valuable and uniquely positioned and one that's difficult for others to emulate. And in doing so, building a platform for sustained profitable growth. The key points to really press for me. The first one is that we have a remote operating model that's been successfully deployed across more than 50 countries over the past decade. Consequently, we have a business model that has never required IXICO staff to travel on-site to provide over 20,000 eligibility and safety reports to our clients. It also means that we have established a neuroimaging site network of over 2,000 IXICO-trained and qualified imaging sites. This enables our clients to onboard patients in their clinical trials efficiently and provide them access to some of the leading imaging sites across the world experienced in the use of IXICO's technology platform. And it also means that we have a growing portfolio of therapeutic-specific proprietary algorithms that have been deployed across all phases of clinical trials across a widening range of neurological diseases. And this, in turn, means that we have algorithms that have been used to analyze over 100,000 brain scans in neurological diseases in these trials across the globe. All of this, of course, means that we've established the valuable market position that we have with a deep neuroscience expertise in this growing specialist neurological disease clinical trials market. And this is basically what we're now scaling. So going to the next slide, Slide 6. This slide talks a little bit to our ambitions to become a leading proponent in the use of artificial intelligence in clinical drug development. Now the slide here highlights 3 key areas that imaging biomarker measurement is important in clinical trials. The first one is patient selection and stratification; the second, early detection of potential drug safety issues; and then finally, assessment of drug efficacy by measuring volumes of specific brain regions. So IXICO has built its unique and proprietary portfolio of algorithm software to monitor safety and efficacy as our primary focus. Now going forward, we're ramping up our investments in this area. And so we're investing in R&D with the aim of accelerating further commercialization of new products in these core applications. But in addition to that, we're also looking to expand into patient selection and potential post-market safety monitoring markets as new treatments become approved. The key takeaway from this slide then is that in addition to the continued commercial success in the current therapeutic areas and applications of our technologies, there are attractive opportunities in a wide range of neurological diseases and adjacent applications that we believe we can extend our technology platform into. My next slide, before I hand over to Grant. I want to talk here a little bit about how our technology sets us apart and also how this innovation has really played a fundamental part in our growth to date and will continue to play a very important part in differentiating offering and supporting IXICO's growth for the long term. The company has a strong record of efficient commercialization of innovation with new products consistently contributing a significant proportion of annual revenues, well over 20% in the case of 2020. This slide highlights the collaboration in consortia that IXICO participates in for Alzheimer's disease, 1 of 7 neurological therapeutic areas that we're working in and developing new products for. So the bubbles here with the IXICO logo are the ones that we're actively involved in developing imaging protocols, identifying appropriate biomarkers and fundamentally, working with the KOLs in these therapeutic areas as well as pharmaceutical partners to initiate new approaches and new innovations in terms of clinical trial design in these particular therapeutic areas. So with this in mind, I really want to emphasize that it's IXICO's in-house expertise, combined with a commitment to a broad network of scientific collaborations that provides us with access to therapeutic-specific data sets to build and commercialize a unique and proprietary portfolio of software algorithms. And this is the crux of our differentiation. And as such, we're planning to launch a significant number of new algorithms in the coming year to support our acquisition of new clients in a broader range of therapeutic areas. And again, Lammert will be talking to this in terms of our pipeline of opportunities that we're targeting. Also in 2020, our scientists presented a new proprietary platform at a scientific conference. We developed a new adaptive segmentation platform that allows us to measure the volume of even the most complex brain structures with an efficacy previously unseen. This means that we will be able to develop even more accurate imaging biomarkers in both our core and new therapeutic indications, further strengthening our ability to acquire new clients in a broader, more diverse range of neurological diseases. And we're really looking forward to making this technology available to clinical trials across the number of therapeutic areas that we're working on in 2021 onwards. So with that one, I would like now to hand over to Grant to talk to the financial '20 performance.

Thank you, Giulio. Good afternoon, everyone. So I'm going to give you a brief whistle-stop talk through our financials. For those of you who've seen us present previously, you'll recognize some of the layouts of the graphs, and hopefully, you'll see very clearly the performance that 2020 has brought. So looking on Slide 8, what you can see on the left here is our revenue graph. And again, what this shows is that in the last 12 months, we have achieved a 26% increase in revenues to GBP 9.5 million, up from GBP 7.6 million in 2019. That equates to a 4-year compound annual growth rate of 33%, and thereby, the company has continued its track record of rapid annual growth. We are particularly pleased with the increase in revenues across 2020, considering the delays that are being experienced across the clinical development sector in the start-up of new trials, other, of course -- other than, of course, COVID-19 trials. This reflects not only the relative size of the market opportunity, and we'll talk about that more further on, but also the strength of our contracted order book on which Lammert will speak further shortly. So the top line revenues have performed very well. But then if you move to the middle graph here, what you'll see is whilst we continue to build those revenues, the company has also been able to do so while sustaining strong gross margins. This reflects, to an extent, the operational leverage that comes with growth, but also corresponds to the beneficial impact on our margins of having signed Phase III studies, which carry significant image analysis components. Now that comes off the back of having historically invested significantly in these analysis pipelines. The return on that investment has become increasingly clear across these last couple of years as a result. And then moving to the right of this slide, following on from the fact that we've had the top line revenue growth and sustained strong gross margins and that, therefore, we're well positioned to both continue our organic growth investment plans, on which I'll speak more shortly, we've also been able to continue and deliver on our promise of double-digit EBITDA profitability. We are very pleased, indeed, to have achieved GBP 1.3 million of EBITDA profitability in the year. That more than doubles our maiden year of profitability since we listed in 2019, which was GBP 0.5 million and has also outperformed market expectations, which are at -- were at GBP 1.1 billion. So a GBP 1.3 million, that EBITDA represents a 14% EBITDA margin and further reflects the strengthening of IXICO as a growth medical imaging technology company. If we could turn now to Slide 9. And what I would like to do here is look a little bit more closely at our operational expenditure investments. Again, this is something that we've shown previously. And hopefully, you'll see that -- the fact that the 2020 investments reflect what we predicted and said we were going to do earlier in the year and at this time last year. And you can see that the focus of our expenditure is very clearly shown by these growths. On the left, the graph shows our investment in R&D over the last 5 years. For those of you who recall our previous presentations, you'll know that when Giulio joined the company in 2017, he enacted a careful review of R&D in investments. It was acknowledged that, at that time, whilst the company had been undertaking some very strong research programs, they weren't all particularly well aligned to market demands. And as a result, they were a little disparate in nature. As a result of that review, the number of programs was reduced across 2017 and 2018, with much more focus being placed on programs that are aligned with market demand. The success of that is clear in our revenue growth over that same period. And on the back of that and across 2019 and the current year 2020, a structured R&D program, focusing on 5 key areas, has been adopted, which was supported by return on investment estimations and a reincrease in the level of investment that we felt confident to apply in R&D, knowing that, that would ultimately drive commercial growth. This is reflected both in the total investment in R&D, which is now at a level of 17% of revenues, and also includes the capitalization of development spend as pipelines that have been developed are deployed and adopted in client trials. And that's been particularly important across the last couple of years. Moving to the graph in the center of this slide. This shows the sales and marketing expenditure, again, over the last 5 years. And as we've presented consistently over the last 2 years, we have taken a focused action to invest in sales and marketing. We've expanded the team, created a commercial footprint in the U.S. for the first time and created a marketing function within the company. This has all contributed to revenue growth, but more so to the contracted order book growth and our opportunity pipeline, which Lammert will speak to later. As a result, in financial year '20, we spent 17% of revenues on sales and marketing, increasing that overall expenditure to GBP 1.6 million. And then finally, on the right, we show our G&A expenditure. Of course, while we continue to grow and there are additional investments required, we have continued -- we have, nonetheless, continued our trend of both real term reductions in the rate of annual increase in investment in this area, as we look to carefully manage this expenditure and the trend of bringing this level of spend down as a percentage of our overall revenues, now being 34%, down from 40% in 2019. You must remember, of course, that as a small but listed company, the level of spend in this area will always be higher than for an equivalent private company. Nonetheless, much of this expenditure is relatively fixed as we continue to grow, so we expect a proportion of G&A cost to continue to reduce relative to revenues. Turning now to Slide 10. This is looking at our balance sheet and our financial position, which, of course, reflects the strengthening of our financial performance, as discussed in the last couple of slides, along with those investments made. What you see on this slide is, on the left, this graph shows our overall cash position, which is the gray and turquoise bars as well as our operational cash out or inflows, which are the orange bars. What you can see from this is, firstly, IXICO has a very strong cash position for a company of its size, with cash at GBP 7.9 million at the end of the year, up just under 10% on the prior year. Not only that, IXICO has also moved to operational cash inflows for the first time since listing on AIM in 2013. This reflects the move to profitability by the company. There's, of course, a significant jump between '20 and '19 of GBP 1.6 million, which reflects the timing of cash flows -- cash inflows in 2018, which flattened to some extent 2018's operational cash position and the expense of 2019's operating cash flows. And therefore, that, of course, extends to the apparent gap between '19 and '20. But the key message here is that as the company has turned profitable, as these profits have become sustainable, so we're generating cash from operations. So in summary, the strength of the company's cash position means we're well placed to support our investment plans. Briefly, then just turning to the middle graph on this slide. This shows our working capital position, which again has further grown in 2020, up to GBP 7.6 million from GBP 7.3 million last year. And again, this reflects the fact that the company continues to be fully debt-free. And then on the right of this slide, this shows our overall net asset position, which has substantially increased to GBP 9.1 million, up from GBP 7.9 million last year. And I think this is important to look at because it reflects that whilst not only have we been increasing our cash in terms of operational cash inflows and working capital across the year, we've also been delivering on our plans that we've been communicating for some time to invest in capital assets, both in terms of enhanced IT infrastructure, newly deployed analysis pipelines and expenditure on next-generation image capture and analysis platform, which we've been talking about a number of times. And that investment in capital is now showing within that balance sheet. In the current uncertain environment of COVID-19 and in a period where we continue to see first patient [ indates ] for new trials being pushed back, although importantly, not canceled, we are delighted to have such a strong financial position that allows us to continue our organic investment plans into 2021, despite expecting more muted levels of financial performance growth across this short-term period, just while those trials are being delayed. Turning then to Slide 11, which is my penultimate slide. I'd like to take the opportunity to highlight just a few of those key investment areas that we've identified for the next 12 months. And in which, our financial performance across 2020 and strong financial position enable us to pursue with confidence despite those uncertainties created by COVID-19. Firstly, on the left, we have alliance management, by which we mean really taking a lead in terms of our strategic leadership in rare neurological trials, improving and developing client relationships, and diversifying and broadening our client base and improving collaboration delivery and expanding business opportunities. Moving to the second column from the left. Something we've talked about in previous presentations is the investment that we're making in our next-generation image capture and analysis platform. This is a Microsoft Azure cloud-based infrastructure using cutting-edge technology. Importantly, we're designing it, so it has an extensible design framework, which then allows us not only to make sure it's fit-for-purpose for the next decade in terms of what we're doing today, but also allows us to expand it to include additional service offerings as and when we bring those online. This allows us to further integrate our data analytics algorithm offering into the platform infrastructure and ultimately improves efficiency and scalability. Moving then further to the right. Talking about the investments we made in R&D. And Giulio spoke about this, and I showed this in the figures earlier. This is about the focused investments in 5 strategic programs in R&D. Growing our portfolio of intelligent AI algorithms, both in terms of our core MRI analysis offering within areas we're already successful in Alzheimer's disease, Huntington's disease, et cetera, but also expanding that offering into adjacent indications as well as investing in PET analysis, digital biomarker offering and internal automation of process. And then on the right, just our focused investment in process improvement. Defined carefully [ scoped ] programs of process and system improvements, training and people development to support the culture of continuous improvement that allows us to deliver increased efficiency, streamline our processes, simplify those processes, reduce waste and allow us to scale more rapidly and more effectively. And so in summary on this slide, whilst we do see headwinds to the levels of growth that we've seen in previous 4 years as a result of the clinical trial delays resulting from COVID-19, we're also even more confident in the medium and long-term growth in the neurological clinical trials market that we seek to address. And as a consequence, our focus on ensuring we are as well positioned as possible and making the investments accordingly to embrace those opportunities that we believe are open to us. So just in summary, on my final slide before handing over to Lammert. I'd like to summarize on Slide 12 that 2020 was another year of significant growth for IXICO, in which we have demonstrated very clearly the resilience of our business model. 2020 represents the fourth consecutive year that IXICO has achieved greater than 25% revenue growth. And a year in which the group has more than doubled EBITDA profitability to exceed 2020 guidance. We ended the year with a record contracted order book, a strengthened balance sheet, and we continue to be debt free. As a result, we are fully focused on our organic investment program to position the group for continued growth. I'd like now to pass over to Lammert.

Thank you, Grant. Good afternoon, everybody. So I'd like to start by spending a little bit of time to talk about the impact that COVID has had on the active study portfolio at IXICO, our current study portfolio that we serve for our sponsors consists of robust trials that are geographically spread across the globe and in many different countries and have a large sample size. Hence, we've actually experienced little impact by COVID-19 with respect to incoming data. Our sponsors have been navigating local laws and regulations, whilst keeping as many of their clinical investigator sites in countries open and active to ensure that participants can continue to enroll in clinical trials. In CNS, specifically, central nervous system indications, we see highly motivated patients, and there are great unmet medical needs. So many patients and their respective study partners have been committed to stay in study through the pandemic as well. Now what we've learned through this pandemic was that in CNS, in contrast to other therapeutic areas, missed doses of investigational or medicinal product or missed study visits haven't necessarily been a reason for discontinuation of the trial participation. So that was a positive impact that we have seen throughout this pandemic that played out well for our sponsors, the trial participants and ourselves. As Giulio alluded to earlier on, we have always had a fully remote-based delivery model. And therefore, we have immediately been able to leverage this as well at the start of the pandemic as well as throughout. Finally, I'd like to reiterate to the folks that the sites that we interact with are, in fact, imaging centers where participants go for brain scans. Those facilities have been considered medical facilities, and therefore, they have remained open for business with less disruption than we had originally feared at the start of the pandemic. I'd now like to move to Slide 14 and talk to you about our revenue and bookings. And before I do so, I'd like to remind everybody that IXICO remains the only full-service imaging biomarker specialist that exclusively focuses on CNS, something that's been core to our strategy. And as such, what we offer to our customers is a highly skilled workforce, specialized expertise in neuro and no distractions or competing priorities in other therapeutic areas. And as such, we have high reproducibility and high-quality data. And that, in turn, has yielded a loyal customer base with solid repeat business. Now a number of years ago, we set out a rare neuro strategy to ensure that we would derisk our book of works and create diversity in the portfolio. This served IXICO extremely well in recent years with the market to see a number of trial failures and early terminations in large therapeutic areas such as Alzheimer's disease. And you can see this play out [indiscernible] this slide, where both our revenue charge and booking charge by indication. And these are somewhat dominated by indications included, but not limited to, Huntington's disease, [indiscernible] supranuclear palsy, multisystem atrophy and Friedreich's ataxia. Now having been through a low period in Alzheimer's disease, the market is now recovering, and we are seeing more trials come on stream again. And IXICO in this fiscal period has signed up a number of Alzheimer's deal, hence, increasing its market share. And I will take some more time later on during the presentation to talk to Alzheimer's specifically. Now IXICO has a legacy of being involved early on in trials and due to the performance on the early stage trials that has meant that we've been able to follow these clinical assets into the later stages of development, either with the originator pharma company that was the original asset holder of the compound or subsequent in-licensing partners that are typically larger pharmaceutical companies. So we've been able to create revenue stickiness. You can see that reflected in the slide of late-stage work represented on the right in dark green, again, both in our revenues and in our bookings. So we're now considered a late-stage business, and this is really something that creates a barrier to entry for our smaller competitors as companies -- pharmaceutical companies are looking for partners that can serve them throughout the continuum of the clinical development plan, not just in the early stage but also in the large scale, late-stage programs. Moving on to Slide 15. You can see that from the slide on the left that we are very happy to report that at the close of fiscal '20, we achieved a record order book of GBP 21.7 million, which is a 36% or GBP 0.058 increase over the prior year. Orders received through the fiscal period drove a book-to-bill of 2.1, which we are particularly pleased about, given the 26% increase in revenue that Grant spoke about earlier in the presentation. On the right-hand side, you see that we have a very diverse pipeline of future opportunities, and we have managed to grow that pipeline steadily during the fiscal period despite COVID headwinds. As we see encouraging signs of tackling the pandemic we expect our sponsors to ramp up further and initiate the planning of further trials, and with that, the pipeline to grow even further at a more rapid pace. Rare neuro, of course, remains a very important part of our business, and we're also starting to see more Alzheimer's opportunities, as I mentioned before. Finally, we're also starting to see an increase in demand in neuro imaging for movement disorders such as Parkinson's disease. So I'd like to take a moment to talk to you a bit more about rare diseases and why this represents such an exciting opportunity for IXICO on the next slide. So the hallmarks of rare disease are very interesting to us. On the right-hand side of this slide, you see the regulatory drug approvals in the last 15 years. And as you can see from this slide, in the recent years, every other drug approval was for a rare disease. There are more than 7,000 rare diseases that have been documented to date, and 95% of those diseases do not have a treatment option. Many are genetic and therefore, researchers and developers now have better tools to develop and target drugs to these indications. Rare neuro assets also offer the opportunity to obtain special regulatory status, such as orphan medicinal product designation with the EMA in Europe, and orphan drug designation by fast track status with the FDA in the United States. What that means in practical is that there is a possible expedited path where to get these treatments in the hands of patients as well as some commercial and regulatory incentives for those who develop the treatments. Now for IXICO, this means that we have quicker sponsored decision-making, shorter cycle times and possible faster revenue burn on projects. We're also seeing an opportunity to get to those late-stage trials much faster. Now all rare diseases are typically novel therapies, such as gene therapies, antisense or the nucleotides or monoclonal antibodies. And therefore, they are very targeted in nature and enjoy what we consider a lower clinical asset attrition profile over more traditional indications or therapies. Or in other words, we believe that there is much less risk of early terminations in these types of trials. The only terminations is a risk that's inherent to the clinical trials industry, of course, as we have seen in 2016 in Alzheimer's disease. The administration of these drugs is often straight into the central nervous system through intrathecal injection or brain microinfusion, meaning that there are neuro imaging requirements for the correct and safe dosing and we're also seeing significant safety and efficacy opportunities in these rare neurological indications. Now not much is known typically about these indications. And therefore, what we're seeing is that typically natural history studies will be run to characterize and optimize biomarkers, including imaging biomarkers ahead of clinical development plans. IXICO has a legacy of operating in these situations and are often run full crew public-private partnerships. And these trials are not your [ copycat ] clinical trials. They're very specific in nature. And therefore, IXICO has superior expertise as compared to others in participating in these programs that further create stickiness for us from a revenue perspective in order to position ourselves for those regulatory studies that are planned later on. Now I'd like to take a moment on the next slide to talk through a very important example of a group of rare diseases in rare neuro, and that is the repeat expansion disorders, where we've done a tremendous amount of work recently. Repeat expansion disorders are diseases that are caused by DNA repetitions in a single gene. Most of these diseases are very severe in nature, do not have disease-modifying therapies and a disorder can vary by the sequence repeat, how we repeat our causal to disease and whether repeat occurs in coding versus non-coding and mode of inheritance. So we just pulled out 3 of these here, where we've done a tremendous amount of work, Huntington's disease where the CAG repeat base causal to disease, when you have [indiscernible] and Friedreich's ataxia, where we've announced collaboration with FARA earlier in the year, and we're starting to work now also in spinocerebellar ataxia with CAG sequence is causal to disease where you have more than 52 of dose repeats. Now in addition to these specific examples, we have also continued our work in some of the other rare indications such as [indiscernible] supranuclear palsy and multisystem atrophy. But finally, I'd like to give you an update on where the market is from an Alzheimer's disease perspective. On the next slide. So Alzheimer's disease is the -- it's still the sixth leading cause of death with no disease-modifying treatment. There are 47 million patients globally suffering from the disease. But by 2050, we will probably have 150 million sufferers. The global disease burden is immense. It is $1 trillion, and it's expected to hit $5 trillion by 2050. It's been 18 gas since we've seen a drug approval in the western world for Alzheimer's disease and there are only a handful of approved drugs. None of these drugs are disease modifying, and they all have little demonstrable clinical benefit in patients. And then finally, all patents on these drugs have expired. So it's not a great commercial picture for those that sell these drugs. Now late-stage development in 2016 through 2018 has mainly focused on limited drug targets. And you can see that on the longitudinal analysis here on this slide. In 2016, the late-stage trials that were in-flight were mainly targeting amyloid removal or reduction in the brain. And of course, the majority of these trials have nearly terminated or have failed since. Now fast forward to 2020, and we see much greater diversity. We have 121 new investigational drugs in the clinical trials pipeline for Alzheimer's disease with a much increased number of different drug targets being prosecuted outside of amyloid. And many of these drugs, almost 100 of them, have disease-modifying potential and therefore, will require neuroimaging. The opportunity for IXICO is the fact that we have very low penetration in Alzheimer's right now. We support less than 5% of the clinical assets, and therefore, we see great potential for further work in this area and plenty of runway to increase our market share. The other important element here to note is the fact that we have moved to all these different drug targets now. So the playing field has leveled very much so as compared to 2016, where our larger competitors had much more experience in the amyloid trials, whereas today, they do not have greater experience in these new drug targets. So with that, I will now hand it back to Giulio for a wrap-up.

Thank you, Lammert. Can I just check that people can hear me because I'm just having...

Yes. We're all good, Giulio. Thank you very much, indeed.

All right. Thank you for that. So to wrap up, I guess the key message here is that we are well positioned for the year ahead, and we're investing for long-term growth. So having transformed the company's financial performance and capabilities in recent years, and we've clearly demonstrated we have an investment program to grow the company through its next phase of growth, I want to highlight 4 key pillars of strength that you've heard Grant and Lammert and myself talk about in our presentation. The first one is that we are launching ever-increasing numbers of innovative new algorithms to measure disease biomarkers. We're leveraging our expertise in both current and new neurological therapeutic indications and looking to extend our technology into attractive adjacencies, including potential new post-marketing safety monitoring markets as new treatments become approved. We're also very busy building scale and operational reach with these ongoing investments in talent management, process improvement and also infrastructure. And finally, we're looking to continue to enhance our value to our clients, which includes investing in an alliance management program to align our focus even closer to that of our clients. During 2020, we've proven the resilience of the underlying technology model and demonstrated that IXICO is well placed to continue to weather the storm of the ongoing pandemic. We go into 2021 then with the benefit of a record contracted order book, a healthy pipeline of new opportunities and a strengthened balance sheet, all of which provide IXICO with a clear path to continued profitable growth over the medium to long term. So with that, I'd like to thank everyone for listening and suggest now will be the right time for the Q&A session.

That's brilliant. Thank you, Giulio, Grant and Lammert, very much indeed for the presentation. [Operator Instructions] I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. Obviously, investors have had the opportunity to pre-submit questions. We did receive a number, some of which we're going to respond on the platform with the typed response just given the quantity. And then we had a couple of others that perhaps I could address to Lammert and to Grant. Lammert, perhaps I could start with you. The first one is, please, could you provide an overview of the typical business model with customers, i.e., length of engagement, revenue model, level of recurring revenues. Perhaps if I could start with that one with you, that would be great.

Yes. Sure. Thank you. So IXICO typically applies a traditional fee-for-service model for the clinical trials that we support on behalf of our biopharmaceutical sponsors. From time to time, we do engage in public-private partnerships, research grounds where we may apply different models, the length of engagement can vary, quite frankly -- 6 to 9 months for a Phase I study or it could be as much as 4 to 5 years for a Phase III trial that IXICO will bill against activity monthly. And typically, we have set terms under an overarching master services agreement with our sponsors and then have work orders against specific trials. We do see some recurring revenues when compounds successfully completed the development states and the company is selected for follow-on trials with that same clinical assets. And as I had mentioned earlier on, there is, of course, considerable revenue stickiness in the clinical trials business when really performed well on early trials, and there's no reason to change teams effectively.

Perfect. Giulio, perhaps if I could -- very kind of you, we're just waiting for Grant. I think he had a connection issue. So Grant, if you could just click on the microphone on the top to turn mic on. If not I could ask you just to come back in on the link and back into the room, whilst I just hand over to Giulio to look at the questions that have come in during the live event. And then perhaps I can just come back to the pre-submitted question relating to revenues. Giulio, could I just ask if it's possible, would you be kind as to click on the Q&A tab on the right-hand side of the screen.

Yes. Done that.

And if I could just ask you to start at the top and perhaps, obviously, we're just waiting for Grant to come back in. I don't know if there's any questions for which you could perhaps pick up between yourself and Lammert, and I will give you a heads up when Grant is back into the room.

Yes. So there's a question here from Sam M. Of course, I don't recognize where he's picking up the numbers from. So he's referring to a geographic split and making a point that, that split isn't articulated in the management summary, but that's because... [Audio Gap]

So we're just waiting for Giulio to connect, Lammert. If you could just bear with us, please, that would be very kind. Thank you very much, Grant, for coming back into the room. We've just, in fact, lost Giulio momentarily. There was a pre-submitted question, Grant, that perhaps I could just address to you while Giulio comes back into the room. The question read, please, could you provide any longer-term goals which the company has for example, aiming to double, triple revenues with an x amount of years or grow revenue by a certain year? That was one of the pre-submitted questions that we received. And perhaps I could hand that to you.

Yes, absolutely. And apologies, I seemed to have some technical problems there. But hopefully, you can hear me fine now.

Absolutely. So, yes.

Great. So yes, thank you.

Otherwise, I can answer that as well. If we're having some technical challenges.

Sir, we have, Grant. Thank you very much, Lammert.

Yes. Thank you. So obviously, whilst we can't make forward-looking statements that we haven't widely publicized through normal channels, I'll absolutely address the premise of the question. And if you look at the results that we had over the last year and few years in terms of 26% increase in revenues this year, up to GBP 9.5 million and a full year compound annual growth rate of 33%, we're obviously showing that we've got a strong track record for growth. Based -- if you add to that, the fact that our management expectations are that we have an addressable market today for doing what we do today of between GBP 125 million and GBP 150 million per annum. So essentially, although we've rapidly increased our revenues over the last few years, we still have less than 10% market share. If you then consider that commercial momentum that we've built, and look at the opportunities that we have ahead of ourselves, plus the growth in terms of EBITDA, although we do expect to see some short-term impact from COVID-19 in terms of the pushing back of start dates for new trials, which we do expect to reduce the level of growth in financial year '21, we are using that opportunity to focus on a program of investments that we are undertaking because we see the long-term growth and opportunity being there. So there is plenty of scope within the existing market for us to grow rapidly and continue to do so in normal times. Plus, of course, we're not neglecting the opportunities for M&A, should the right opportunity arise. It's not something that we need to do. We have a very strong and clear organic growth plan, which we're fully invested in. But there is plenty of opportunity for us to deliver across that period of time.

Perfect. Thank you very much, indeed. Just while we wait just for Giulio, perhaps if you are there, Giulio, just turn the mic on. If not, I would encourage you just to click back on in the link and join with computer audio without turning on the camera. And perhaps just in the meantime, Giulio, is there -- forgive me, Giulio, you're there -- well, you're hiding in the room. I've got you. So could...

I see it dropping in and dropping out, but maybe I'll take -- so in terms of the questions, just one in from Brian S., which is a question that's come up before around quantum computing. So I just want to kind of answer this one. Hopefully, it answers it once and for all. But I think the question is, what are your plans for using quantum computing? And what challenges do you see? So we previously indicated and just to repeat it, we're not currently planning to engage in quantum computing. As the models that we're solving in imaging are relatively small compared to the problems requiring quantum computing. So hopefully, that's pretty clear. And basically, the applications that we're working with can be sold with modern graphics processing units. So that position might change as the applications of quantum computing develop and the limits of GPUs are reached, but not in the foreseeable future. So hopefully, that answers that question for Brian S. The next question, I will -- actually, there's a question from Sam M. And I was saying earlier, I don't understand where he's got his geographic revenue splits from.

Maybe, Giulio, I can come in there.

Yes.

So yes, and apologies, I dropped off earlier. So I didn't hear the question first time around, but yes. So this is the breakdown that we report in our RNS for where the geographical split of revenues. The reason that this sometimes is confusing is that the way that this is reported relates to the location at which the company that we contract with is based. So a lot of our clients, in fact, most of our clients are global pharmaceutical companies. They may have a headquarter in one place, but they may choose to contract with us through another place. So you've got to be a little bit careful taking the geographical split from our RNS as a sort of a statement of where we're working. We're actually working all over the world with imaging centers all over the world with clients all over the world. We just may happen to contract more with a company that's perhaps located in the U.K., for example, because it's easier to contract U.K. company to a U.K. company. So essentially, the key message here is that those splits can move quite a lot year-to-year, but it doesn't mean that we're suddenly finding that our market is shifting from one part of the world to another.

Yes. So thank you, Grant. And then the other point that I'd like to make as well is, obviously, we've recently added 2 senior commercial people, Lammert will being one of them in North America. And that's because in terms of opportunity and penetration, we see a lot of opportunities in North America. So in the coming years, we would expect and anticipate that the trials in the U.S. that we would play a bigger role as a result of our commercial activity in North America. The next question is from Julian G. I'll direct it to Grant. Thanks for the presentation and for the exciting journey to date. Where do you expect gross in EBIT margins to land 3 to 5 years out from here?

Yes. Thank you. Again, another good question. And this sort of ties a little bit to the question that we answered to one of the pre-submitted questions. And obviously, again, we have to be careful that we don't provide forward-looking statements when we haven't published that information through an RNS or other sort of platform. But in terms of the key answer to that is that, obviously, we have been developing our gross margins up to the mid-60s, mid- to high 60s over the last few years. As I said in the presentation, that reflects both terms of operational leverage. So as we get bigger, the relative portion of our cost base that is fixed, reduces, and therefore, there's an opportunity to improve our margins. But it also relates to sales mix. We have benefited in the last couple of years from some large Phase III studies that we won, which ultimately are part of the strategy of going through Phase I, Phase II and into Phase III with a client. And that gives us big image analysis components to our revenues. And that will ultimately push up our gross margins. So in terms of where we sit at gross margin level, we are a technology-driven company. Having margins in the mid- to high 60s is a very good place for that to be. We see that as sustainable. There may be peaks and troughs in terms of the sales mix that we have in any particular year, but essentially, that is a level that we've been able to come up to and be able to sustain over a number of years. In terms of EBIT. So an EBIT margin this year was just under 10%, EBITDA at 14%, where we are, again, this comes down to growth in operational leverage. We have been -- we've got some very clear investment programs, and we anticipate continuing to invest, both from a capital point of view, but also in terms of our operational expenditure. So we are -- we've presented previously that we are looking to be a double-digit EBITDA profitable company. We believe that's sustainable, and we believe that can be consolidated and developed. In terms of EBIT, as we invest more in capital, so EBIT will be impacted with depreciation coming through. But overall, we still see ourselves an 8%, 9%, 10% EBIT company is entirely achievable and sustainable.

Thank you, Grant. Another question from Julian G., which I'll have a crack at, which is, I think I'm hearing revenue growth in the near term to slow down. It chiefly reflects COVID-related delays in the pipeline. Are there any other factors in the slowdown? And when do you expect revenue growth to normalize and to what rate? So yes, first of all, primarily related to COVID. So emphasize the point again. We haven't lost them. They haven't gone away, but they are being contracted later. And also, the other important point is that even if we get them contracted, we expect some delays before the first patients are actually initiated and therefore, for us to receive imaging scans, that comes later. So it's really -- so we're very much focused on continuing to book new contracts. And you'll have seen since we closed the year that we've had quite a flurry of new contracts that Lammert and his team have concluded. And so what we're saying is whilst we've been contracted those new awards, there we're still, in some cases, waiting for confirmation from the clients in terms of when the first patients will be brought in. But realistically, some of those are being delayed versus what might have happened 1 year, 1.5 years ago pre COVID. There's no real other factors other than that. As I said, it's, we think, a short-term issue, which, of course, we've mitigated, to a certain extent, from a revenue point of view, given that we've got a record order book that not only gives us visibility for the next 3 or 4 years, but obviously, also gives us good visibility of delivery for the coming 12 months. And the question around the timing, we think that this slower pace of new contracts and slower pace of onboarding of patients onto new trials will wash its way through during 2021. And so we expect that to kind of wash its way through the system so that by 2022, we should get back to sort of very strong double-digit growth rates that we've demonstrated. And that's really because, again, going back to the point we've got less than 10% market share of a market that is only going to have continued long-term macro trend growth that I described at the beginning. Yes, so it's really a question of -- so I guess we're signaling, we still expect to grow in 2021. And we're one of the few companies, I think, still on the AIM's market that has guidance out in the market, which reflects our confidence to continue to grow, but we're just signaling that it's unrealistic to expect it to be at the same level as it was in the pre-COVID times. Next question, I'll give to Lammert from Ali S. How are you able to accelerate your growth?

Yes. Thank you. So I think in my presentation, you would have seen that we're very well positioned to capture some of these new rare neuro indications. We're also -- we have a great opportunity to grab market share, and we have a window of opportunity in Alzheimer's disease. The company has been very disciplined in doing what we do really well before we go outside of our core therapeutic indications. So therefore, the strategy is very much be the best that we can be in our core indications. And then we take the next step. But there is plenty of opportunity for further growth that's -- there's plenty out there.

Great. And Lammert, the next question from Harris C. What is the typical time frame from signed contract to trial start?

Yes. So this has been a little bit different this year, of course, due to the pandemic. We have signed contracts that then have had a slight pause. So we've seen anything from a few weeks to a few months to 6 months delays in what we call patient in. But typically, we would already start some set of activities at the time of signing a contract in the week immediately following that signature things such as kick off meetings with the sponsor.

Okay. And the last question I'll take from Nick J. What limits do you have on growing? So I think the market opportunity for us is significant. So I guess the limits are our ability to grow at the pace of the opportunity. So I think we've got a pretty good track record. So it's 4 years in a row. As Grant pointed out, that we've grown by a 25% plus. It's obviously in some ways easier from a smaller base. So we're now 3x the size we were 4 years ago. But as I said, we still have single-digit market share. So it's really, I think, for me as a CEO, as I said, we've demonstrated the robustness of the platform. We know the market opportunity. We know the players were well recognized. So it's really about me and the management team capitalizing on the opportunities, demonstrating the values that I talked about of ambition, agility. All those things are all very relevant, and it's really for us to execute on. And then the final thing I'd say is, all of the growth that we've achieved has been organic. And of course, our ambition is also to look for accretive M&A opportunities as and when they present themselves. We're not in control of when those happen, but we want to be ready for the ability to do those as and when we see that the stars align, and we can pull those off. So that we can further accelerate our growth. One final one in from Harris C. Have you seen any change in competition? And could you perhaps mention your major competitors? And how you are differentiated from them? So a few questions there, Harris, I think 3 questions. Harris, [ I'll add this ] and I'll maybe hand over to Lammert. I'll try to be brief. Have you seen any change in competition? Not really, I think, not really is my short answer. The major competitors are either large CRO companies that have a generic ability in imaging, but we don't really see them as competition because of our specialization. Also, we see some specialist companies that are very focused in a particular geography. So they're still in the same geographies. And then how do we differentiate ourselves from all of those? It goes back to what I said in the slide around our ability to develop proprietary algorithms based on unique data sets that we have access to together with our platform that we developed that allows us to develop really very, very smart algorithms to provide clinically meaningful information from the data that we've analyzed. Lammert, would you like to add something to that?

Yes, I do actually. So there is another group of competitors that we see, and we see that in rare neuro now as some of the mainstream indication for that is academic institutions that may have an imaging call app. Sometimes there's pseudo commercial outfits. And whilst they are good options for local trials for single site trials, they don't necessarily have the ability to scale to multi-country, multi-site global trials, but they're also lacking and how we differentiate with them is that we have a stellar audit track record with our customers. So we get audited by our customers and by our partners on a very regular basis. And we're very much compliant within the industry. This is a very regulated industry. So we have to adhere to GCP compliance, 21 -- our IT platforms need to be 21 CFR compliant. And then, of course, it's not necessarily the case by new entrants to the market, smaller retail providers and/or those academic institutions that perhaps have a full life as well.

Giulio, I was just looking, I think you've taken all the questions that have come in during the meeting itself. I think someone's very kindly marked them in orders to answer that made it very easy for me. Thank you, once again. Perhaps, I guess, before we redirect investors to provide feedback. Perhaps I could ask you for a few closing comments, before I head off to provide feedback?

Sure. So again, just on behalf of myself, Lammert and Grant, I want to thank all of you for making the time to keep up-to-date with the IXICO story. We hope you've enjoyed the presentation today, and it's been factually informative and provides good insight into the company and how things are going and the aspirations for continued growth. Thank you very much.

That's very kind. Giulio, Grant, and Lammert, thank you very much indeed for updating investors today as part of your road show. Could I ask investors, please not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback. [Operator Instructions] And we would very much encourage you to give your opinion and views on the company where that is appropriate to do so. On behalf of the management team at IXICO, we'd like to thank you very much indeed for attending today's presentation. That now concludes today's session, and good afternoon to you all, and thanks once again.