IXICO plc (IXI) Earnings Call Transcript & Summary

Good afternoon, ladies gentlemen, and welcome to the IXICO investor presentation. Throughout this quarter's presentation, investors will be in a listen-only mode. [Operator Instructions] Before we begin, we'd like to submit the following poll. And if you could give that your kind attention, I'm sure the company will be most grateful. I'd now like to hand over to the management team from IXICO, good afternoon to you all.

Thank you very much, Mark. Thank you, everybody. I'd just like to thank you for attending today's call in which Grant, our CFO, will cover the financial highlights for our first half of 2023. I will update on the progress we're making in the rollout of our precision in neuroscience strategy introduced at the end of last year. And Robin, our Chief Scientific offer will speak to how we're positioning IXICO to support our detection in post-marketing surveillance in new AD therapies. From the [ first ] slide, you see that our strapline is advanced analytics, intelligent insights. In addition today to hearing how our world-class new imaging analytics capabilities power our ability to win in the marketplace against often much larger competitors, you'll also hear how we've been investing to scale up our operational capabilities to support our growth ambitions. We're now able to deploy a robust end-to-end imaging data and an active platform that enables us to deliver services across a much larger number of clinical trial projects across all phases of development. We believe that it still represents, therefore, a compelling investment case and -- which I'd like to illustrate now by describing our company purpose. Thank you. So The purpose of the company is to advance medicine and human health by turning data into clinically meaningful information, providing valuable new insights in neuroscience to our clients in the pharmaceutical industry. Fundamentally, our measure of success is our ability to improve the return on investment in drug development and reduce the risk and certainty in central nervous system clinical trials for our pharmaceutical clients. We continue to build on our very strong franchise in rare neurological diseases, in particular, in Huntington's disease, but as previously stated, also intend to further penetrate the larger therapeutic areas. To deliver on our purpose over the next 3 to 5 years, we plan to double down on the opportunities we've identified, in particular, in Alzheimer's disease. To do so, we plan to pursue organic and inorganic opportunities to better address the market opportunity in North America in particular and also establish new partnerships to bridge the divide from clinical development into clinical practice. Now we all know it takes billions of dollars to develop new medicines over many years and here in lies the opportunity for it to go as a specialist neuro imaging CRO. For example, global data forecast that ASI's Alzheimer's drug Leqembi, anticipated to be approved later in the summer, is projected to generate $12.9 billion in sales for Eisai by 2028. However, we also know that over 90% of clinic or clinical trials do not result in approved drugs within simulations being part of the landscape that all CROs operate in and with CNS strategic areas being recognized as a particularly difficult area. So this then reflects the short- and long-term risk/rewards we've invested in a company such as IXICO, whose purpose is to support the pharmaceutical industry in the development of new medicines. So with that, I'd like to hand over to Grant to provide the financial highlights.

Thank you, Giulio, and good afternoon to everyone. Before I dive into the detail of our half year numbers, I'd like to give you a reminder of the revenue track record we've delivered over the last few years as well as where we see our revenues heading for this full year and for 2024. I'd like to dig a little bit into the results, so you have an overview of what has and continues to drive our revenues. You'll recall, for those of you who've listened to us before, in a few years up to 2020, we saw rapid revenue growth, driven in particular by the services we provided to a large global Phase III Huntington's disease clinical trial. That was the largest HD trial of a run, was a high revenue project and provided important visibility and validation of our operational and analytical capabilities to the market at large. Our revenues peaked in 2020 at GBP 9.5 million before we received the news from our client that, that HD drug being trialed within that Phase III trial, we're showing insufficient efficacy when compared to associated safety risks. This led to the trial being descoped in 2021 and closed altogether in 2022. The graph on this slide shows our revenues across the period, split between those revenues generated from that Phase III HD trial and those generated by other trials. In total, across the period, you can see the decline in our revenues from GBP 9.5 million in 2020 to what will be a recent low point of GBP 7 million expected this year before we expect to see a return to revenue growth in 2024. Within this, however, is a much more positive picture and underlines why we feel very confident about our medium and longer-term prospects. In 2020, the HD trial constituted more than 50% of our revenues at GBP 5.1 million of the GBP 9.5 million we reported, with revenues coming from other projects of GBP 4.4 million. Since then, we've been successful in winning more contracts, particularly in early phases, with more clients mean that our non-HD Phase III revenues have been growing strongly, and we expect to see a CAGR of compound annual growth rate for revenues from those trials of over 15% across the 4 years from 2020 to 2024. What this means is that whilst in total, our revenues have declined in the last couple of years, the relative risk associated with the revenues we've been reporting has been decreasing alongside the increasing diversity of contracts and clients that we've been winning, which puts us in a strong position to achieve sustainable revenue growth as we look forward. Turning to my next slide. This shows our revenues, our gross margin and our EBITDA for the first 6 months of this financial year. That's shown in teal and turquoise color and is compared to the same metrics over the same periods in the last 3 financial years, which is showing in green. Looking on the graph on the left, with revenues of GBP 3.2 million in the first half of this year, we are seeing the final comparator impact to our revenues of the cessation of that large Phase III HD trial. In other words, we expect to see the revenues reported in the second half of this year and across 2024 to show growth relative to this last 6-month period, meaning that essentially, we see the first 6 months of this year as being the trough in our post-2020 revenue performance, with revenues generated by more recently won contracts continue to grow and with that negative trending overlay of the loss of the revenues from the Phase III HD trial now removed from our performance metrics. If you then look at [ another ] graph at gross margin, we report a first -- a first half gross margin of 46%, which is a drop in the margin compared to our recent history. And it is as we expected and have previously communicated in our updates, both purple and [ VARS ]. As a reminder, this is driven by three factors. The primary factor is that our revenues are now coming from earlier phase trials, which have a relatively lower analysis component compared to other service streams and which are relatively higher cost for us to deliver as they tend to be more labor intensive. Later phase trials, such as the Phase III HD trial, tend to have a higher analysis component, which are higher margin as our analysis pipelines are either fully or semi automated. The second factor in the margin picture is that I highlight the operational leverage element of our margins. We have a cost model that benefits rapidly from operational leverage as we grow and as we've seen over the last few years. But similarly, a decline in revenues, especially one that we anticipate to be short term as is the case with now, quickly becomes visible in our margins. The third point, of course, is that like many other companies at the moment, the impact of inflation is, of course, a challenge and one to which we're not immune. So that combination of weaker revenues and gross margin, along with the important and continued focus on investing for our longer-term opportunity means, as you can see on the graph on the right, we reported loss for the first half period since 2018. This, again, was as expected. As we look forward and we start to see our revenues grow again, the benefits of the investments that we've made during the last few years will become clearer. The cash that we generated by our operations has been invested in our technology, and it's also being invested in our sales and marketing function, which has been impacted by a relatively high level of staff turnover in recent years, but nonetheless, achieved a strong new contract wins record, and we believe there's much more that can come from that. What this all means is that as we look forward, we see the opportunity to grow our revenues both as a consequence of the biopharmaceutical industry's increasing level of investment in neurological disease research, but also our confidence that because of the investments that we've made and the strengthened service offering that we have, we are well positioned to extend our market share within that growing market. The decisions that we've taken as a management team and as a Board reflect our confidence in the market opportunity, which has not gone away and indeed has very much strengthened over recent years as a result, in particular, of significant progress being made in neurological disease drug development, most obviously exemplified currently by the recent announcements that have been well publicized in the Alzheimer's disease space. Our ability to execute on the decisions, however, as is shown in the next slide, if you can turn to that now, is, to a large extent, underpinned by the strength of our balance sheet. This slide shows our cash, our net assets and our order book position at the end of the first 6 months of this year, again, shown in teal or turquoise color as compared to the end of the previous 3 financial years, shown in gray. As a reminder, we raised cash in 2018 for the purpose of investing in our market offering and capabilities. And in investing those monies, alongside money that we've generated our profitability since 2019, has been an important focus of the company of the IXICO team. Specifically, we've strengthened our operational capabilities, extended our portfolio of neurological analysis tools and invested both in our IT infrastructure and our next-generation image capture and analysis platform. Irrespective of those investments, we continue to hold GBP 5 million of cash at the end of March, end of the half year period. Also within that period, we generated GBP 0.2 million of operating cash, and we remain debt free. As those investments that we have been making are, to a large extent, to support our ability to scale across medium and long term, a portion of those investments are reflected in our balance sheet, with our net asset position at 31st of March at GBP 11.9 million, which itself includes working capital of GBP 6.3 million. Across the period, you can see from the graph on the right a decline in our order book. I'll now go into detail on this over the coming couple of slides. But in summary, this reflects the significant impact of the HD Phase III trial descope and cessation, which, along with a couple of smaller trial descopes, have removed approximately GBP 40 million of contracts from our order book across 2021 and 2022 and is a reflection of the number of new, albeit smaller contracts we've won across the same period. That means whilst we see an overall decline in order book value, it remains strong at close to 2x our expected revenues for this year. Turning to the next slide. This slide shows the bridge of movement within our order book since March 2022, i.e., covering the 12-month period through to the half year close at 31st of March of this year. What this reflects is that with the 31st of March 2022 starting point of a GBP 12.6 million order book, our order book has benefited from GBP 11.6 million of new client trial wins, partially offset by GBP 7.9 million of revenues that we've recognized and GBP 3 million of small trial descopes, the largest being GBP 0.6 million descope, which we announced early in December last year. This has resulted in our order book closing the year at GBP 13.3 million at the half year, GBP 0.7 million above the same time point in the prior year, but below where we were at September 2022 at our financial year-end close position, which was GBP 16 million. And what I want to highlight there is that this reflects the nonlinear rate of contract wins, where we had a particularly strong second half of the year last year and have contract descopes where we have suffered the majority of descopes in the first half of this year. So to really get a feel for how our bookings record has been, which will always be lumpy, it's worth looking at across a longer time period. And what we've seen is that we have seen consistently levels of new contract wins over the last 3 full financial years of at least 1.5x and in some cases, more compared to the value of the revenues that we recognized across that same time period. And if you now turn to the next slide, you can see the impact of these new trial wins on the makeup of our order book. What the pie charts on this slide show, to the left, is the change in mix in our order book as at the 31st of March 2023 compared to how the order book was constituted at the 30th of September 2020. The change is dark and reflects a significant shift from an order book dominated by a single large Phase III trial to a much more tilted towards earlier phase trials, i.e., Phases 1 and 2. This has led to a much reduced client and project concentration within our order book, which reduces our reliance and the accompanying risks associated with any particular trial. The bar graph on the right shows this with our largest client, now a little over 20% of our order book today compared to approximately 80% in 2020. What's not shown on this slide, but is within that order book picture, is that we've also seen an approximate 70% increase in the number of studies that we're supporting today compared to 2020. The point here is that with a shift of our order book moving to earlier phase trials, we actually have a significant latent opportunity looking forward, where those trials that are early phase, where they're successful, we are well positioned to follow those trials into Phase II and to Phase III. And that's what gives us significant confidence, based on what's in our order book today, that we have the opportunity to grow sustainably over the coming years. In terms of our therapeutic focus, that remains very much in HD and other rare neurological diseases. But we've been making some good strides in AD as well, with AD now making up approximately 20% of our order book, with our focus, as you'll hear from Giulio and Robin, very much on expanding this further in the coming periods. I'd just like now to move on to my final slide before I hand back to Giulio, and this slide focuses on TrialTracker, where I want to provide a bit more additional color to this significant and critical piece of infrastructure and a significant investment that we've been making as a company over the last few years. So for those of you who haven't heard us speak before, TrialTracker is our end-to-end clinical trials image capture and analysis platform. What it does is it provides a web-based upload for neurological images that enables imaging sites, located across the world, to upload brain scans from imaging scanners, PET MRI, et cetera, as well as relevant clinical data into our centralized image management platform. The system alerts us automatically to scan the poor quality or that contain specific issues and also automatically pseudonymize the scan for data protection purposes. The system then presents the image for manual, visual QC, quality control, to check for any problems with the image not picked up by that automated quality control. If the image is then passed, it then is transferred automatically to our radiological network, who read the scan to check the patient eligibility to make sure the right patients for the trial and also patient safety to ensure that the drug that they're on is not causing any harm. The read results are then provided to the client, and we complete that process of scan upload from anywhere in the world to a complete radiological read within normally a 5-day turnaround and are able to offer expedited services of 3 days. Now following the image read, we then pass that image to our data analysis pipelines, which have been developed using highly contextualized data to identify and measure specific disease-based biomarkers. The analysis can be volumetric, advanced or exploratory, depending on what our client needs. But each set of analysis, then, is submitted to our own internal expert science review, where results are collated and transferred to the sponsor at defined times during the study. This process is quite rightly very highly regulated as it relates to patient data, which are part of clinical trial results, that may ultimately lead to a drug being approved for prescription to patients. Consequently, we are subject to regular client audits. We must be able to show the detail in quality of our system validation evidence, the resilience and robustness of our systems and the system security infrastructure. These are really significant requirements in terms of ongoing investment, especially considering the rate of change within technology and particularly in today's environment of high cyber risk. The point that we're making here is that the differentiator of our platform and a very significant barrier to entry of prospective competitors is not just about what the system can do today, it's also about how it's able to respond to the challenges that will arise tomorrow. Clinical trials take years to complete. The data is highly sensitive and must be stored in a highly organized way with high and increasing levels of security and with the resilience and robustness that delivers a minimum system downtime, mitigates the risk of data loss and maintains the integrity of those data, which may constitute hundreds of thousands of trial participant images collected over several years from multiple global locations and multiple longitudinal time points. To ensure that we stay at the forefront of this, we've invested significantly in our next-generation TrialTracker, which we expect to launch later this year. This builds on over a decade of development of our existing TrialTracker platform, but as a full redesign utilizing Microsoft's Azure cloud technology portfolio. We are hugely excited about the capabilities this platform will provide us. With bringing on [ microservices ] technology available within the cloud, this platform is not only resilient, secure and highly scalable, but it's also highly extensible, meaning we'll be able to add capabilities to it much more -- in a much more streamlined basis than we have been able to with our current system. The ROI on this investment won't be seen in the immediate short term, but is the keystone for the business to scale further and faster as we look to the future. That means that we are well positioned to do so. And with that, I'm now going to pass back to Giulio, who will outline how the system dovetails into our precision in neuroscience strategy.

Thank you, Grant. Thank you very much. So if we jump to Slide 12, which is the precision neuroscience strategy. So I just want to give some highlights on each of the pillars. So the build pillar we've made, as you heard, good progress in building our imaging CRO scale, providing capacity to run a broader range of client projects across all phases of development. We expect to further enhance this capability with the launch of the next-generation platform that Grant just described. During the period, we're also delighted to be awarded a Tier 1 preferred vendor status by a top pharma -- top 5 pharma company. This is for all early- and late-phase MRI imaging studies in Huntington's and Alzheimer's and also in a core PET imaging analysis method across all neuroscience indications. Now whilst this is not an award for any specific contract, it does mean that IXICO will be at the table for all the -- to receive all of the RFPs from this company, going forward, in terms of these given indications. On the flip side, though, during the first half of this year, we did experience some delays in contracting and project start-up timelines. And we need to be mindful that, that could continue into the remainder of the FY '23 and potentially going into FY '24. But as we look forward and with the development of our order book has been a priority and focus of the business, building the business development team and making those investments in our commercial capabilities is key to ensuring we grow and capture the opportunities that are identified in our pipeline. In the Innovate pillar, we continue to see very strong demand for our specialist AI neuroimaging analytic services in particularly support and development of new biomarkers in CNS clinical trials. And this has been exemplified by partnerships with the global Alzheimer's platform in North America and the CHDI Foundation, both evidencing the traction we're building in the important North American market. The partnership between CHDI, IXICO and 3 biotech partners is to develop and validate MRI-based biomarkers in HD analysis of over 6,000 patient-level data sets using our proprietary [ ixico.ai ] algorithms. And since its launch in February 2022, that new platform has been deployed on over 10 clinical trials. So we're delighted with the pickup and the adoption of that new capability. Third pillar, the penetrate pillar. In his financial highlights, Grant has illustrated how the makeup of our order book reflects the progress we're making in penetrating early phase trials so that we have more shots on goal for future later-stage clinical trials. Having demonstrated now our ability to deliver both large studies in HD and AD as well as winning early phase studies, we're well placed to follow the assets of those current projects in our order book into the later stage of development. The final 2 stages, the bridge pillar and the enhance pillar. The bridge pillar, we're very excited about, and Robin will talk to that in a moment. With the anticipated approval of 2 additional amyloid drugs during FY '23, we believe we're well placed to support and develop a post-marketing surveillance [ area ] solution. Robin will go into the details of how we envisage we can achieve what we're describing a bridge from the clinical trial to the clinical practice environment for these new therapies, which have known side effects. And so that post-marketing surveillance that we feel is a very exciting new opportunity for us. And then finally, in terms of the enhance pillar, we continue to explore partnership opportunities and -- where they can accelerate our organic growth trajectory. And obviously, we'll announce those when appropriate to do so. So if we move on to the next slide, a couple I just want to highlight, the 2 areas. One is the innovate and the other one is the bridge pillars. On the Innovate pillar, the fundamentals of precision in neuroscience strata means that you need very rich disease-specific cohort data. And IXICO is very well placed because of our relationships and partnerships and position in the marketplace. And within the clinical trials, marketplace going back to the company purpose, it's why we recognize that recruitment of patients is slow, expensive and is prone to a high degree of variance. So this is an area that we feel we can provide significant value to our clients. The pharmaceutical industry is looking to partners like IXICO to support a more personalized approach to drug development. i.e. recognizing that not all people are the same in terms of how they might respond to new treatments. And very specifically, our access to data sets from partnerships such as Global Alzheimer's in Alzheimer's and the CHDI Foundation in Huntingon's means that we have the access to these data sets that enable us to provide validated, best-in-class analytical solutions to support improved patient recruitment. As a reminder, in relation to GAP, we were chosen by GAP to collect and read PET images in their [ Biome ] studies, which was around about 1,000 patients, with the purpose of validating digital and blood-based biomarkers for Alzheimer's against the gold standard PET imaging techniques of the day. The quote from John Dwyer, the President of GAAP, in this slide illustrates the potential impact of pre-screening algorithms for superior clinical trial design. We also see opportunities to leverage our capabilities to address the recent announced FDA requirements to improve recruitment of traditionally underserved populations into clinical trials and also to support the development of diagnostic biomarkers as these new therapies come to market. And then finally, just as a setting the scene, if you like, for Robin's slides, I'd just like to talk a little bit about the opportunity we see for the [ foregoing ] post-marketing surveillance. Just I was -- literally, I was after Eli Lilly [ release ] positive Phase III data for their anti-amyloid Alzheimer's treatment done on the third of May, the commission of the FDA was already discussing the implications and the need for post-marketing data collection. Now it's unusual for anybody -- for the FDA to publicly comment on drug approvals before they're approved. But here, the commission has obviously made a very strong statement around the likelihood of this drug coming to market and therefore, the requirement for an evidence-ready system that could help accumulate much of the data that's going to be required to ensure that clinical practitioners are confident in prescribing the drugs as they come to market. So with that, I'd like to hand over to Robin, and he can introduce our plans and how we plan to position it go to support the development of such an evidence-ready system for ARIA. Robin?

Thanks, Giulio. If you go to the next slide, please. So that introduces my section. And on the following slides, I will provide some background on the potential market opportunity to deploy our services. in post-market surveillance and AD drugs. I'd like to start by giving a brief recap on the recent progress that we've seen around the valuation and approval of anti-amyloid monoclonal antibodies and then go on to discuss how this offers a potential opportunity to translate our services from a clinical trial application into a post-market application. So as we know, there are 4 relevant drugs that have completed Phase III trials over the past couple of years. Starting on the left, we've seen Eisai announced positive Phase III results on the Lecanemab drug in November. And the company has since received accelerated approval on -- based on the Phase II results of the study, of the drug that was given by the FDA in January. Full approval has been filed based on the Phase III results, with an outcome expected in July 2023. We have since seen an announcement by the U.S. Veterans Association to provide reimbursement for that drug, which is a key step, of course, towards more widespread adoption. More recently, in May, we've seen Lilly announced positive Phase III results on their monoclonal antibody Donanemab. The previously accelerated approval, Lilly was rejected in January, based on the limited data available at the time. However, it is widely expected for Lilly to file for full approval by the end of this year, based on the positive Phase III results. A couple of years ago, we've seen Biogen file or for the first approval of disease-modifying therapy in AD and receive, again, accelerated approval on the Aducanumab drug. It was the first approved -- approval of an AD drug in more than 20 years and the first disease-modifying treatment while we had symptomatic treatment approved previously. It was, however, a highly controversial process as the Phase III data or the Phase III study that Biogen [ won ] wasn't conclusive and the accelerated approval was partially supported by a positive Phase III result and the inconclusive Phase III data. However, reimbursement was then rejected by the Center for Medicare and Medicaid, CMS, in the U.S. And Biogen has later announced to hold commercialization of the drug. Separately, Roche have completed a Phase III study on the Gantenerumab drug, but those results read out negatively in November last year and development has been stopped. However, there's an alternative formulation that is still under development at Roche. So clearly, it was a long journey to develop successful monoclonal antibodies to target amyloid in Alzheimer's disease. But it is very clear that the recent positive Phase III results we've seen on 2 separate drugs from Eisai and Lily, thus, has already moved us into a new era in terms of AD treatment. And it is now widely expected those drugs to become available at scale and being reversed being reimbursed over the next 5 years. So with that background, I would like to move on to the next slide to talk a little bit about a key side effect in those anti-amyloid therapies that requires monitoring by MRI. So amyloid-related imaging abnormalities, again, is the key side effect of those drugs that -- and it does require regular safety monitoring on -- from MRI. There are 2 types of ARIA, hemorrhages and edema, referred to as ARIA [ Agent ], ARIA [ E ]. And the -- we see -- we observe around 15% to 30% of cases treated with those therapies in the Phase III trials showing either ARIA [ E ] or ARIA [ Agent ], with significantly lower percentage developing symptoms from those side effects. It is a well-known side effect for years as anti-amyloid therapy was developed and is, therefore, well understood in clinical trials. And the regular safety monitoring is performed as part of developing those drugs. IXICO has a track record delivering [ safety ] reads in AD clinical trials for more than 10 years. As those drugs now enter clinical practice, we do see a requirement for regular safety monitoring in clinical practice, the [ at-your-home ] and [ can-be ] labels by the FDA based on the accelerated improvement require around 3 safety monitoring within -- safety MRI within the first 6 months and one safety MRI with one year of treatment initiation. Clearly, this poses a significant challenge for widespread adoption and prescription as the healthcare system simply isn't ready to provide those safety reads at scale as to date, the assessment has been limited to clinical trials with expert reads provided through a central services and central platforms like the one we are offering into clinical trials. If you go to the next slide, please. Here, we are looking at potential phases of rollout of this novel treatment into clinical practice and what the requirement for an [ ARIA ] solution may look like. We are now in stage 1, where we have -- drugs that have received accelerated approval from the FDA and have gone through successful Phase III trials, where they are sponsor-initiated and sponsor-controlled Phase IV studies that are being planned to support approval, if that's not received, and specifically to develop evidence to support reimbursement. We see this as the first stage in those drugs moving away from clinical trials into clinical practice. And we are currently discussing with different potential partners to engage in those studies with pharma sponsors providing service not too dissimilar from the one that we provide into clinical trials. The next stage that we see is local prescription by centers of excellence, potentially or likely combined with reimbursement by small insurers and private payment. We've seen first -- we've seen a decision by the VA already on reimbursing the [ Leqembi ]. This then moves provisioning of an ARIA service slightly further away from the control of a clinical trial. And we expect second-opinion safety reads to support those kind of applications, where the central read service similar to what we see in clinical trial can be provided to support prescription at those centers of excellence. More or further away, we see more widespread reimbursement and prescription, where we see adoption at a larger scale. And at this point, ARIA safety monitoring will likely require a support by automation as it can be handled by a visual assessment by radiologists. IXICO is well positioned to support services for ARIA read across all 3 stages. As I said, we do have a track record to deliver ARIA read in clinical trials. We're in this for more 10 years. And this will not be dramatically different as we see Phase IV trials. For stage 2, again, we have experienced providing a second-opinion safety monitoring into post-market surveillance. And on the next slide, I will show our Assessa product that was developed to provide that service in MS and can be transitioned into an application in Alzheimer's in ARIA. Finally, as we enter mass adoption and widespread prescription of those drugs requiring safety monitoring at scale, we are well positioned to develop and deliver AI-based solutions to support automated decision-making, based on our track record and history of delivering automated MRI solutions into clinical trials for more than 15 years now. If you go to the next slide, please. As I said, Here, I'm just showing very briefly in recapping what we have presented in public in the past, a pilot study that we run with Biogen on post-market safety assessment, where IXICO has developed and launched a platform to provide the second-opinion safety read from imaging in a post-market study in MS. This was for Biogen's MS drug Tysabri and was designed to monitor a real side effect called PML and provide a second-opinion expert read to local centers in case of -- for suspicious cases. The platform was rolled out in multiple territories across Euros and -- Europe and was successfully deployed in more than 30 centers. It didn't go beyond pilot stage at a time, this was linked to the commercial plans Biogen on the drug and also the fact that PML is a much rare side effect than what we see in ARIA, with incidents being in the low single-digit numbers compared to the 15% to 13% we've seen for ARIA. The platform has been developed with a potential application in ARIA monitoring in mind, again, with our partners with Biogen at the time and therefore, is ready for potential deployment in that application. And we are currently exploring several partnership opportunities to deploy that platform in post-market studies as a starting point to then development support ARIA safety monitoring across the 3 stages I've laid out on the previous slide. In parallel and for future, we are starting different initiatives with both academic and pharma partners to develop AI-based decision support for ARIA [ term ] monitoring and see this as a potential complement for the radiology-based assessment that we see in the short term to address the problem. And with this, I'll hand back to Giulio.

Excellent. Thank you very much. So I'm going to summarize the highlights of what we've talked about today. So as you can see from the presentation, we've seen what we feel -- what we know now is the final period of comparative revenue impact of the large Phase III Huntington's trial cessation. We now have the benefit of increased diversity of revenue-based derisking future trial descopes. We've got GBP 11.6 million of contract wins in the past 12 months. We have an order book that's now tilted to earlier-stage transactions, which means significant latent value from future uncontracted trials. We also have the broader progress and the anticipated drug approvals in Alzheimer's, led by major pharmaceutic companies, providing a strong opportunity for IXICO for post-marketing surveillance. We have a very strong cash balance sheet of GBP 5 million, and we have a path to driving gross margins back to historical levels. So with that, that's concluding the presentation, and I'd now like to open to Q&A.

Giulio, Grant. Robin, thank you very much, indeed, for updating investors this afternoon. [Operator Instructions ] Giulio, Grant, Robin, as you can see we've had a considerable number of questions from investors. So thank you, firstly, to everybody for your engagement this afternoon. If I may, and back to you, Giulio, to manage that Q&A, and then I'll pick up from you at the end.

Absolutely, Mark. Thank you. So that's the first question from Mark A is, are you seeing any material impact from the cuts to R&D budgets? And what, if anything, can you do to mitigate this? So I think it's fair to say we -- as I mentioned, we have seen longer periods of contracting and project startup. And so yes, we have seen evidence of that. But again, I'd say, remember, we've got a small market share in a relatively large market, which is growing. So the way we're mitigating, it is doubling down to make sure that we tell more people what great products we have and try to be their partner of choice. In actual fact, I think it provides us with an opportunity because the pharmaceutical industry is very conservative. It's difficult to get in front of their clients. So we see it as an opportunity for a company of our size. But of course, it means that we have to build that commercial team to go out and do the outreach we're not -- to go and win people's favor. But it is, I would say, and Grant talked to you earlier, I think it is a tighter market. And the way that we plan to mitigate is to, as you've seen, continue to invest in our differentiation, which is predominantly from the advanced analytics, but also at the same time, continue to be ready to deliver projects. And so building that operational capability is also an important part of our strategy to win in the marketplace. So the next question, I'll direct to Grant, from Mr. [ Rakesh ] is when is the actually -- when is the actual cash received on contracts compared to when the revenue is recognized? Grant.

Yes. So essentially, we have a service-based revenue recognition model. So as we deliver our services, whether that's project management, site management and analysis, radiological read, we invoice, and we recognize that revenue in the month that's delivered. So in terms of what that means in practice, we recognize the revenue, for example, in May, we would invoice for that work in May. And there'll probably be a 60-day payment term attach, the cash would come in a couple of months later. We do have clauses in our contracts that allow for some advanced payments for some particular aspects. So we do carry a little bit of deferred revenue. But by and large, our cash and revenue recognition are matched.

Thank you, Grant. Whilst you are on a roll, I'll give you another question. Actually, I'll answer. I think you'll add a -- you'll add further details. So Tom [ M ] asked what further investment is needed in terms of the IT infrastructure. So my primary answer to that is that we've made considerable investment in IT infrastructure in the last 2.5 to 3 years. But there's always going to be some. Obviously, it's a technology platform and the technology develops. But I would consider that it's been a particular area of focus and rightly so for the reasons that Grant made. But I would expect that level to not be repeated in the coming near term. But I'll hand over to Grant to add a little bit more detail to that.

Yes. No. Thanks, Giulio. And of course, that's right. We have had a -- very much a focus on our IT infrastructure, not only in terms of the on-premise infrastructure that we have in place for all of our existing client trials, but also the investment we've been making in our next-generation TrialTracker platform, which is obviously the cloud infrastructure. Now I think any organization in the sector that we're in, who is not expecting to continue to invest in the IT infrastructure, is likely to encounter issues fairly quickly with the technology. And the risks associated with technology changing so quickly, there is always going to be the need for that level of ongoing investment around IT security risks, resilience, et cetera. But we have invested significantly over the last few years to put ourselves right at the front of where we'd like to be in that respect. And actually, some of the advantage of being investing in the cloud is that where things change and technology changes, the cloud is being regularly, continuously updated by Microsoft. In our case, they're investing huge amounts and will continue to invest huge amounts. And the platform that we operate on top of that can benefit from those investments that Microsoft's making. Whereas for a company that is purely reliant on on-premise solutions, they're constantly going to have to continue and probably rapidly increase the volume of on-premise infrastructure investments. So there's -- you're never going to stop investing in your IT infrastructure or you shouldn't be. But we have invested significantly, and we will see that level coming down over the next few years.

Great. So there are a lot of questions here. The line [indiscernible] trying to be balanced across a number of people rather than sort of one particular person. But if the worst for the company is truly behind us and the revenue growth is set to increase again, then with GBP 5 million cash in the bank, the company's obvious takeover target, please comment. So I'll take that one. Obviously, I can't comment with a specific there other than to say we -- obviously, as a management, we feel our market capitalization doesn't reflect the true value of the business. Our view is that we are clearly bigger and better than we were 2 years ago, and that doesn't seem to be reflected in our share price. So the best thing we can do is continue to do what we believe is the right thing to do. And of course, with the GBP 5 million that we have, we feel we have a strong balance sheet and debt-free as well. So we feel well positioned to be able to execute on some of the plans that we've laid out. There's another question from , which is kind of linked, I guess. Could we see capital raise as a $5 million cash levels decline in the next 12 months? And to that, I would say, that's a very healthy position to be in for a company of our size. Given the investments we've already made in the last 12 or 18 months, so we don't have a technology deficit in our infrastructure or our data platform. So it's really a question of how boldly we want to go after those market opportunities. And that's obviously something that we monitor continuously, and we'll do so in what we feel is the best way for the business for the long term. So let's go to another question. [ Sung N ]. Given your strategy is to gain Phase I and Phase II contracts, seemingly based on the theme that you will not get appointed a Phase III trial without being previously on the Phase II, why do you think you might gain an ARIA market surveillance contract? Is it not in -- is not an in-market surveillance contract an effective [ MEGA ] Phase III trial? I think, Robin, that's one that you'll be more versed in being able to answer, I think.

Sure. As obviously, some truth in that and so far that if the pharma company might want to work with whoever developed the Phase III trial in terms of the imaging requirement. First of all, I guess, without breaking confidentiality, we did work on some of the Phase III trials that were mentioned. So we have contacts into pharma companies running the relevant clinical trials. The other comment is, I think on the -- maybe the last bit is in the [ MEGA ] Phase III trial, it's a slightly -- it's a quite different trial. And so far that it's quite different requirements so far that some of the services delivered into clinical trials, like very rigorous qualification of sites and so on, will relax as we go into post-market surveillance. And therefore, it is a slightly different contract. And I think that linked potentially to a separate question I've seen around size of those kind of contracts. And the last point I would like to make is that one strategy of the following is to develop those kind of solutions through partnerships. Giulio has referred to couple of examples on where we've successfully developed and launched new capabilities through partnerships with consortia or other entities. And this is one other avenue that we are following in terms of the post-market surveillance service model.

Thank you, Robin. I've got two questions for Grant from [ Suga S] . How will ChatGPT AI affect your business? Was there more question?

Yes. So that's an interesting question. I mean I think I guess it depends on -- there are two elements to that question. What we can use it for? And I guess, how it might be a threat, I guess, is the other element to that question. So like many companies, there are opportunities for us to make use of that ChatGPT or other similar AI-based tools. We do a lot of development ourselves. We have tools and processes internally already to do that efficiently, but [ there ] are opportunities to use things like ChatGPT to support the way that we develop to some of the coding development that we do. And of course, there's efficiencies that ChatGPT and other systems can apply across the business. I think the other element perhaps to this question is really often something that -- and Robin often talked to this, and you may have a comment as well. But -- about the distinction between AI per se and applying AI in the context of the business that we do. It's -- having AI is fine, but if you don't have the conceptualized data to run it off or -- and you don't have the operational capability of getting the relevant data into that AI, then you don't have the capability that we have within IXICO. So it's not just about the AI. It's about having the very -- the algorithms that are driven off the relevant data, but also the fact that we are able to collect data from imaging centers all around the world to bring that into a centralized system to do that in a pseudonymized way that protects the identity of that data that organizes that data in such a way that it doesn't get corrupted or errors don't creep in. That allows us then to run the AI on and then deliver those work back to the client. That is something that really sets us apart from many AI companies out there. And I think that, if you like, the AI threat is more to those companies than it will be to us in that respect.

Great. And just another question. Could you give more detail on what you mean by careful cost management? And what cost savings are available?

Yes. So I'm quite glad that question was asked because essentially, what we regard as careful cost management is not just saving cost. I mean, to a certain extent, anyone can save cost, you just take cost out of business, but that doesn't necessarily make it sensible or appropriate. So in terms of what we regard as careful cost management, essentially, it's an exercise that protect as far as possible the financial resources of the company whilst at the same time not undermining the medium or long-term opportunity for that company to succeed. So that's how I define careful cost management. In terms of what that means and what are the specific opportunities to save costs, what we are able to do is we have -- where we -- I know that we're going through a period where we've been declining revenues before we expect them to increase again. We have been careful with things like recruitment. So we've had a small reduction in our headcount, which has been natural, where people have left, we have chosen not to replace. We've been very sensible and prudent in terms of the way that we look at external supply-based cost. So obviously, negotiation of those costs is part of it, where we can bring things in-house. Recruitment, for example, we've been very successful at doing all recruitment ourselves where we have recruited, and that is a significant cost saving for us as a business. But also, going back to the technology question, where we utilize and migrating to the cloud, how you use that cloud, how we set things up, that's been an exercise that's been done in-house and has made sure that we're utilizing that cloud efficiently and we identify savings accordingly. And then more broadly, an ongoing approach for us as a business is how we do things with more efficiency. And so making sure that we are doing things as efficient as we can, we're increasing our productivity levels, that all ultimately relates to careful cost management.

Thank you, Grant. So then I've got three questions from [ Suga S], which I'll combine into one answer. I think one is, how will you increase the order book? There haven't been many contracts won this year. And what's your biggest challenge? So I group all of this in, as I said, going forward, our focus is very much on the development of the order book. And can you, too, do that at an accelerated pace? I mean, earlier, we talked about how we have seen contracting taking longer, start-ups taking longer. So those are obviously the dynamics. But as I said earlier, we're very successful when we get in front of customers. We're very able in being able to articulate the added value that we can provide with our platform and our analytics capabilities. So our biggest challenge really is to build that commercial capability so that we're in front of people and we're able to tell them, and we don't want to remain the best kept secret in the neuro imaging world. So hopefully, that gives a rounded answer to all of those three. So that's our biggest challenge, is basically as a small -- relatively small company competing with much larger organizations, many of which are in North America, that's our biggest challenges, too. It's be seen and be heard in that environment, which is probably a little bit more competitive now than it would have been a couple of years ago, but holds many opportunities for a company of our [ size ] and especially with the backdrop of the developments in Alzheimer's, which is why, in particular, we're doubling down on the opportunity in Alzheimer's. And I think that's all the questions. There's one more from Sam M, and maybe we can finish off on that one. Just to -- which talks to asking the size of what a contract for ARIA markets even might look like. And I think Robin went some ways to answering that. But just -- I mean without putting a number on that, just to put some numbers for people to extrapolate their own, in the U.S., there's around about 6 million people suffering with Alzheimer's proportion of those -- it really comes down to what's the proportion of those that might be prescribed the drug and work your way backwards from that. But clearly, significant contracts that are -- significant work needs to be done in the next year to 2 years by these pharmaceutical companies. The FDA commission has already signaled that there's going to have to be continued data to be supporting the reimbursement of these drugs. So we anticipate pharmaceutical companies will be spending their dollars to support the adoption of these drugs in the market that they spend billions of dollars developing.

Thank you. That's great. Grant, Giulio, Robin, thank you very much indeed. And I think you've addressed all the questions from investors, and thank you once again for your engagement this afternoon. Giulio, I know investor feedback will be particularly important to you and to the rest of the management team, and I'll shortly redirect those on the call to give you their feedback. But before doing so, I wonder, if I may, Giulio, just ask you for a few closing comments, and then I'll redirect investors.

Yes. So again, closing comments is, I hope we've provided you with the information you need to make your own assessments in terms of the value of the platform that we built and our ability to address the market opportunity. And I want to thank you all for your attendance today and wish you well for the rest of your day.

That's great. Giulio, Grant, Robin, thank you once again for updating investors this afternoon. Can I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations? This is going to take a few moments to complete, but I'm sure it'll be greatly welcomed by the company. On behalf of the management team of IXICO Plc, we would like to thank you for attending today's presentation, and good afternoon to you all.