IXICO plc (IXI) Earnings Call Transcript & Summary

Good afternoon, ladies gentlemen, and welcome to the IXICO investor presentation. [Operator Instructions] Before we begin, we'd like to submit the following poll, and I'm sure the company would be most grateful for your participation. And I'd now like to hand over to Giulio Cerroni, CEO. Good afternoon.

Good afternoon, and thank you, Mark. Thank you, everybody, for attending today's call with our presentation of the FY 2023 results. As IXICO's CEO, I'm delighted to be joined today by Grant Nash, our CFO; and Robin Wolz, our CSO. For those of you that are new to IXICO, a few words of introduction as to what we do and who we are. So, established in 2004, and this is for more than a decade, IXICO has a highly regarded 20-year industry track record in neuroscience, which, in addition to creating a valuable brand of equity in the global industry that we serve, also has validated our technology across an ever-increasing range of therapeutic areas in central nervous systems or CNS diseases. This track record is the core of our partnerships with large and mid-sized pharma companies, as well as a growing portfolio of innovative mid- and small-cap biotech partners across the industry. Put simply, we're experts in end-to-end management and analysis of brain medical imaging scans that are increasingly being used in CNS clinical trials, with our aim being to become a mission-critical partner to the global pharmaceutical industry in support of their efforts to accelerate drug development. You will hear today how we've been investing in our data-driven technology platform to deliver these specialist-tailored analytical services across the globe with a fully integrated, regulatory-compliant platform, which, in our opinion, would be difficult for others to build or replicate. So, with that, if we move to the Slide 3, which, sorry, just moved one ahead, but I'll go back one Mark. So, Slide 3. There we go. So, precision medicine, do you want to articulate what we want to highlight here is basic precision medicine refers to what our client partners are doing, and precision in neuroscience refers to what we are doing at IXICO to align our strategy with that of our partners. The overarching theme of today's call is the significance of the pharmaceutical industry's move to precision medicine, which is a move away from one-size-fits-all drug development. This move requires data-driven, next-generation CNS clinical trial designs, and in today's call, you'll hear how we are positioning IXICO to meet this growing demand so that we can become this mission-critical partner I refer to the global pharmaceutical industry. As I mentioned earlier, we continue to invest in our very strong scientific heritage, and Robin will talk more to that later, as we've built a unique AI-assisted brain imaging biomarker platform that, as I mentioned, Robin will describe in detail. The significance of this is that we own our own technology, and this allows us to provide biopharma companies with the technical expertise and cutting-edge technology they need to improve clinical trial design, but also to increase the opportunity for trial success in their CNS studies. If we move to the next slide, Slide 4, in our purpose, you've seen before, the key thing we want to highlight here is that with the increasing prevalence of neurological diseases in the global aging population, our purpose has far-reaching social benefits supported by long-term macro drivers. Our financial results over the past 12 months have not been as strong as we would have liked at the beginning of the year, but we also acknowledge that 2023 was a more challenging macro environment than was anticipated, with limited availability funding for biotechnology companies resulting in a flattening of sector R&D expenditure. Our view is that, this recent slowdown is a pause in activity rather than a change in the historic trend of increasing R&D spend, and also increasing levels of outsourcing to specialist niche operators such as IXICO. Our purpose supports our conviction that the long-term fundamentals for IXICO's pharmaceutical services remain strong. And just to highlight this with a couple of numbers, 1 in 3 people globally is thought to suffer from a neurological disorder at some point, and in 2017, 1 study estimated that the cost of care for patients suffering from the 9 most common neurological diseases amounted to nearly $800 billion in costs in the U.S. alone. We've talked previously about Alzheimer's, and Robin will expand on the increasing opportunities for IXICO in the broader dementia space, which affects over 6, and with Alzheimer's being the biggest and affecting over 6 million people in the U.S. alone, and expected to rise to 13 million by 2050. Multiple sclerosis is another devastating neurological condition, affecting an estimated 3 million people globally. With a particular focus on Phase I and Phase II studies, we continue to build on our very strong franchise in rare neurological diseases such as Huntington's disease, but as previously stated, our intent of further penetrating these larger therapeutic areas such as Alzheimer's, MS, and also Parkinson's disease, which is the fastest growing neurological disease area. However, we also recognize that CNS therapeutic areas are recognized as particularly challenging, and investors should be cognizant that early terminations are a fundamental part of the pharma services CRO landscape, and can materially impact a company's financial performance, in particular, smaller companies such as IXICO. As Grant talks through our 2023 financial results, you'll see that when our client partners do decide to terminate or delay the start of a study, that this can create material headwinds that impact short term financial performance. Move to the next slide. So again, you'll have seen this precision in neuroscience strategy and 5 pillars that we have, and Grant and Robin will in particular, be linking the points that they highlight in their slides that relate to our investment strategy, directly to this 5 point growth strategy. And the key points I want to highlight here is that, the first 3 are very much about organic growth in our core CNS clinical trials market. The fourth point, Robin will expand a little bit further on an initiative that we have that starts to talk to how we see the technologies that have been validated in the clinical trial space in our 20-year track record, starting to create potential opportunities for future growth and future new markets for IXICO, which I'll leave to Robin to expand on. And then the fifth pillar, which is one of partnership, I actually want to highlight in that clearly this is experience and the ongoing macro environment that we're operating in would suggest that we need to accelerate our thoughts and partnerships that either complement our core capabilities and or extend our geographic reach for IXICO to become a partner of choice in global CNS clinical trials. And so partnering will anticipate become a very important part of our next stage of the company's growth. So we then move to Slide 6. As this is an investor presentation to both current and potential investors, I want to address head on what I think is a disconnect between the financial performance and share price when we compare this to our own management view of IXICO's inherent value. So clearly, the chart articulates and shows that with our revenues go up, our share price goes up. And if our revenues go down, our share price goes down, which is perfectly sensible and reasonable. However, the point I'd like to make is that with the assets and the scientific heritage and track record with the global pharmaceutical companies that we have, that the market valuation to me would seem to be a little bit harsh in that we're currently valued at around about 1x revenues, which hopefully the slides that we share with you over the next 30, 40 minutes gives you some comfort that we're actually building a platform with significant value that gives you confidence in IXICO as a company to invest in. So if we go to my last 2 slides, just want to talk to some of those assets. This slide here talks to how we lead with science and the points at the top highlight some of those macro trends that are favorable to our capabilities. And the fact that we've built this AI automated brain imaging biomarker platform that we own and we plan to see significant ROI from over the next 3-to 5-years. The key point I want to make here is that what I mean by leading with science is that we deliberately are investing in scientific collaborations, both with academics, but also with our client partners. And this is really key to our success and ensures our capabilities and technologies are utilized in commercial contracts where the discovery and deployment of new and better imaging biomarkers are being used in the generation of new clinical trial designs. And this is fundamental, I believe, in the success of precision medicine as a strategy and will pace very strong dividends over the next 3 to 5 years for us. Our business planning then is predicated on success in those Phase I and Phase II studies, many of which are with emerging biotech companies, as we believe this plays to our strength compared to our primary competitors who are significantly larger than IXICO. And then in the final slide, I want to talk to the trusted CNS partnership that we have with many companies that we've built over this 20-year period. I would just want to highlight that this is very valuable. Similar platform to the one that we built is very difficult to build, takes time. And the trust built comes with a requirement to continuously invest in innovation and flawlessly deliver services globally over a long period of time. And that's the track record that IXICO has and that is valued by our existing partners. And we see as being very important as a springboard for growth as we look to acquire new clients over the coming periods. And this is why often when we're bidding for new contracts, IXICO is considered as one of the 3 primary potential partners for both MRI and PET services. And Robin will talk to how in recent years we've expanded our traditional strong position in MRI to also now expand further and further into PET as that becomes increasingly important in some of the therapeutic areas that I've referred to earlier. So final comment before I hand over to Grant is that in recent years, what this all means is that we've partnered with over 30 biopharmaceutical companies across the spectrum and size of company and value these as partnerships that have been highly beneficial to IXICO and have been hardened and provide us with an opportunity to further strengthen our growth by acting as a springboard for future and sustained growth. So with that, I'd like to hand over to Grant to talk to the financial highlights for 2023.

Thank you, Giulio. Mark, if you wouldn't mind going to Slide 10. Great, thank you. In this and over the next few slides, I'm showing our key financial metrics across the last 6-years, either a period that's reflective of the tenure to date of Giulio as our CEO. On this slide, I'm showing the key income statement positions those of revenues, gross margin and EBITDA. Before I get into the detail, the key point that I want to make is that these financials reflect a point in time for us on a longer road to the targets we expect to deliver by pursuing our 5-year precision in neuroscience strategy. To the point that Giulio made earlier, by IXICO being valued essentially on its revenues alone, it's attracting a valuation that even today is materially below the net asset value that the company has built up on its balance sheet. And then when the latent value of those assets is considered, our current market cap suggests that the value is not well understood by the market. Now, as Giulio mentioned, this is not surprising as it can be quite challenging for an investor to know how to attribute value to technology or scientific capabilities. However, when we're in a situation where we are, where the investments in the capabilities is such a cornerstone to our long-term strategy, it's really important and challenging if there's a disconnect in value between the value in what we're investing in and how the company itself is being valued. So what we are seeking to do today is to articulate more clearly, the value of our science, technology, client relationships, and operational capabilities, as well as the drivers of growth within our marketplace. So before getting into those elements and first focusing on our financials, starting with the revenues graph, which is shown on the left of this slide, you can see that between 2018 and 2020, we grew rapidly. We reported circa 30% compound annual growth rates and revenue each year. This followed a very significant success in winning largest Phase 3 HD, Huntington's Disease study ever run with a top 3 pharma company. We won that off the back of our scientific expertise in HD, something Robin will talk to more shortly. This client became approximately 80% of our order book, in 2020, and contributed more than 50% of our revenues in that year. And therefore, consequently, when unfortunately that trial failed, it had a negative impact on our revenues across the period 2021 through to this year. Across that same time period, we were successful in winning new trials with new clients and in new therapeutic indications, meaning that whilst our revenues declined in total, they declined at a much lower rate than would have been the case otherwise. The reason that that's important is that 2023 is the first year since 2018, when there are no material revenues from that large Phase 3 HD trial in the revenues we're reporting. So the GBP 6.7 million revenues reported for this year reflects an order book of clinical trials that are predominantly Phase I and Phase II, and individually all much smaller than that Phase 3 HD trial. In other words, over the last few years, whilst our revenues were declining overall, we had been building a steady level of momentum in signing new contracts that have seen increased revenues from all trials excluding that Phase 3 HD trial. Now, 2023 itself has undoubtedly been a challenging year. The macroeconomic situation has put pressure on the riskier ends of the market, and clinical trials and CNS have definitely felt the impact of that. Biotechs in particular have seen increased challenges in raising capital, and consequently have slowed or delayed their trial plans. From an IXICO point of view, about 50% of our client base is biotech linked, and so we felt the impact of that slowdown. Consequently, where we anticipated a more swift return to growth 12 months ago, we've had to caveat and soften those expectations. Now with 2024 expected to be approximately flat on '23, before returning to growth in 2025. Now, importantly, today we have a stronger offering from a science, a technology, and an operational perspective than we did even 3 years ago when we were at the peak of running that large HD trial. So we're actually better placed today than we were at that time to kick on and achieve material growth levels. As a consequence of having lower revenues and a greater proportion of early trials, which tend to be more complex and less analysis focused, we've seen some pressure on our gross margins, as you can see from the middle graph. Whilst these gross margins remain robust at approximately 50%, some of the operational leverage that we saw over recent years has reversed with a step back in revenue levels. Now, this leverage will return as we return to revenue growth. And with the enhancements that we've made in our technology, we anticipate greater capacity to achieve higher margins with expanding revenues. The final graph on this slide reflects our EBITDA, which is the columns, and our FTE numbers, which is the line. The EBITDA reported is again reflective of the significant operational leverage we see in the business at revenue levels at or above GBP 8 million in revenues. As we consider the long-term trends for CNS and the distinct scientific leadership we have as a specialized neuroscience analysis company, we are very confident that we will see a return to growth in our revenues. As a consequence of that, we have been comfortable with a return to losses for a period of time, whilst we continue to invest in those areas we defined in our precision for neuroscience strategy as being priorities for the longer term success of IXICO and ultimately the long-term benefit of our shareholders. That said, we are not ignoring our short-term financial performance. We have a strong cash position, but similarly, we want to maximize the utility of that cash position. So consequently, we've reduced our headcount by approximately 12% over the last 12 months and following a small restructuring exercise undertaken in October, we will see our headcount reduced by a further 8% by mid-2024 i.e. we've made headcount reductions of about 20% across 18 months. Whilst this has not been a process we've taken lightly, it's allowed us to consider those key elements and key priorities of our strategy and ensure we continue to invest in those key areas whilst we see a more gradual return to growth than we anticipated 12 months ago. Turning to Slide 11, this slide is focused on our balance sheet and it reflects those investment decisions that we've been taking with the long-term targets of IXICO in mind as part of that precision for neuroscience strategy. As many of you recall, we raised GBP 5 million of cash in 2018 and we've utilized that alongside profits that we made over the last few years to invest in our technology platform, our operational capabilities and our scientific analysis offering. That is something that we've been very consistent about and with the reason we raised that money back in 2018, with a clear focus of looking to deliver scale for IXICO over the medium and long-term. What that has meant, as you can see in the graph on the left, is that across that period we have utilized cash. And at the balance sheet date, the 30th of September of this year, we retained a strong cash position of GBP 4 million despite returning to losses and a continuation of those investments. Looking forward, we expect that to continue, albeit at a slowing rate, both as we see our revenues return to growth and also as the cost reductions we have been making flow through. The level of long-term investments that we have made, specifically in technology, data and science, is apparent in the middle graph where in the year we've capitalized just under GBP 2 million, which whilst lower than the previous 2 years remains a substantial investment. And the detail of the technology and science these investments relate to will be covered in more detail in later in this presentation. But what is important to highlight is that, this substantial capital investment that we've been making in our next-generation TrialTracker platform in particular will reduce significantly in 2024 and beyond now that this platform is validated and ready for client trial use. So the impact of these investments has been that IXICO has seen growth in its balance sheet value, i.e. the total value of its assets liabilities across the period as shown in the graph on the right. These assets provide IXICO with leading technology and scientific capabilities, both for now and for the future. We have really only seen the very start of the potential ROI on these investments. And explain the potential for these assets is the focus of the next section of the presentation. But just before we do that, I'm turning to Slide 12. I just wanted to provide an update on our order book. This, as a reminder, is the book of signed contracts where we have not yet delivered the revenues and therefore provides future visibility of our revenues. The loss of the Phase III HD study has impacted our order books since 2020, but also the challenging market conditions in 2023 resulted in a slower year of new contract bookings. And that has meant that whilst we signed GBP 8 million of new contracts in 2023, the recognition of revenues and a couple of client trial descopes meant that we saw order book contraction in the year. So for us, achieving booking levels that progress the order book back towards and then beyond the level we've seen previously is a priority and provides a lead indicator of our returning to revenue growth. To provide with some additional detail on the order book, I've got 2 further slides on this. So just turning to Slide 13. This slide, again, shows the order book total for each of the last 6 year ends split by trial phase. As you can see through to 2021, the largest element of our order book was made up of Phase III trials, which was primarily the large Phase III HD trial. Since 2020, however, we've built up contract wins in the earlier phases, meaning that we now have an order book that is principally constituted by these earlier phase trials, more than 75%. These trials tend to be smaller and means that we're now running more trials than we were in 2020, even though the total order book value has reduced. This increase in the number of trials then provides increased opportunities for growth looking forward, as we're well positioned to follow these trials into later phases, if and when they're successful. In simple terms, we have more shots on goal today with the order book as it is now compared to how it was at 2020, even though it was higher value. And to reiterate the point on Slide 14, this again shows the same information. So the order book position at the end of each of the last 6-years, but this time shows the order book split by the number of clients. The difference in the makeup of client numbers in the last few years reflects the decline in importance of that Phase III HD study in our order book and the increasing number of clients and projects where at the end of September of this year, we were supporting 20 trials with 15 clients across 7 therapeutic indications within neurodegenerative disease. This slide also shows the mix of type of clients where approximately 50% of our trials we are supporting are biotech run. And that is why the macroeconomic impacts of the last 12 months, which have so impacted the biotech sector have also impacted IXICO. And the balance of those trials is approximately evenly split between mid-pharma, top pharma and charities. From a risk profile point of view, our largest client has reduced to 20% of our order book value from over 80% in 2020. And this reduces the risk of individual client trial failure and reflects the additional clients that we've won over the last few years. So then moving on to the next slide, I'm now going to turn to the value that we've built in our next-generation of TrialTracker. The financials, as I said, is really a point in time in terms of the progression in year 2 of a 5-year precision in neuroscience strategy. Where we see the value coming looking forward is from these investments. One of the key investments being this next-generation of TrialTracker. We are very, very excited about the potential of this platform and see it as a key part of our future growth plans. And turning to Slide 16, firstly, as an overview, when I talk about TrialTracker, this is our end-to-end clinical trials, image capture and analysis platform. It provides a web-based upload for neurological images that enables imaging sites all across the world to upload brain scans from imaging scanners, PET, MRI, et cetera, as well as relevant clinical data into our platform. The system automatically processes these scans in a regulatory compliant manner. The system presents the image for quality control to check for any problems with the image. If the image is then passed, it transfers to our radiological network who read the scan to check patient eligibility and patient safety. Following the image read, the image is transferred to our data analysis pipelines, which have been developed using highly contextualized data to identify and measure specific disease-based biomarkers. Each set of analysis is then submitted to an internal expert science review where results are collated and transferred to the sponsor. The process is rightly highly regulated. We are subject to regular client audits where we must show the resilience and robustness of our systems and system security infrastructure. The point that I'm making here is that, the differentiator of our platform and the significant barrier to entry for prospective competitors is not just about what the system is able to do today. It's also about how it is able to respond to challenges that will inevitably arise tomorrow. Clinical trials take years to complete, the data is highly sensitive and must be stored in a highly organized manner, with high and increasing levels of security that maintains the integrity of those data. To ensure we stay at the forefront of this, we've invested significantly in our next-generation TrialTracker, which is now ready for use on client trials. This builds on over 15-years of development of our existing TrialTracker platform, but is a full redesign using Microsoft Azure's cloud technology portfolio. We're very excited about the capabilities the platform provides us with, but the ROI on this investment won't be seen immediately. But ultimately, it's a keystone for the business to scale further and faster as we look to the future. And to illustrate this a bit more, turning to Slide 17. This slide summarizes how the next generation of TrialTracker fits into our precision for neuroscience strategy. Whilst I'll dig a bit more into the technology, shortly, this slide is designed to communicate why the clinical trials market needs our technology, and hence why this platform holds significant value for IXICO looking forwards. For our clients, this technology supports faster deployment of new studies, reducing trial start-up times and therefore cost. It uses the latest in Microsoft security capabilities that are continuously updated as the Azure cloud is updated by Microsoft. It also supports a scaling and the flexibility of the platform, means we can integrate more bespoke drug trials, more trial designs that are particularly important as trials become more complex, which is a definite market trend in CNS. This has the potential to support trials with smaller patient numbers, reducing cost for clients, utilizing numerous analytical pipelines with a single trial. By incorporating new and different analysis pipelines, we can rapidly spin up offerings for adjacent therapeutic areas, both within CNS, but also outside of CNS, which whilst not part of our current strategy, provides new market opportunities for the future. We can also scale up and scale down a deployment, ensuring the cost of delivery is appropriate to the scale and complexity of a trial. Then looking more to the future and towards the right-hand side of the slide with our fourth bridge pillar, this version of TrialTracker is suited to accessing opportunities to expand into clinical practice or post-market assessments. And Robin will talk to one opportunity in this space that we're currently pursuing. This version of TrialTracker also allows us to offer platform capabilities to analysis only companies, thereby allowing them to offer their analytics as part of our wider clinical trials offering in return for an access fee that potentially opens the door for a SaaS type offering. And finally, on this slide, this version of TrialTracker provides a platform that integrates into our M&A strategy. Its flexibility means we can configure it to work with partners, integrate the technologies of others, and has the infrastructure to scale to a level well beyond the current size of IXICO. And this, of course, ties absolutely into what we're driving towards with our strategy and our purpose. So then turning to Slide 18, which is my final slide before passing over to Robin. This is a little bit more technical, but I wanted to explain in brief the architecture of this next generation TrialTracker and to explain how it achieves such a high degree of scalability and flexibility. The box at the bottom of the Page represents the back end of the system, i.e., Microsoft Azure Cloud with a platform database, the platform architecture, security audit trail capabilities, key functionality features, et cetera. The next box up is the front end. It includes the user interface, but also the highly powerful and flexible workflow engine that allows us to configure different workflows to suit different therapeutic indications within CNS currently, but also beyond CNS should we choose to do so, as well as individual study protocol. This is hugely powerful as it enables a system that can be adapted to run complex trials in a robust, compliant, and efficient manner. And then the top half of the diagram is the analytics capabilities and what makes this platform both so scalable, but also cost efficient and flexible. Using orchestration software, known as Kubernetes, within the Azure Cloud environment, we can spin up and spin down processing capacity to an almost unlimited scale to support exactly the level of analysis capabilities we need at any time. This allows for both scale, but also keeps costs to a minimum. At the same time, each of the analysis pipelines sits within a docker wrapper. This essentially enables us to run any of our analysis pipelines, irrespective of the specific libraries or technological design. And this design will allow us to bring in external analysis capabilities via partnerships or M&A, as it can work with almost any technology using a simple development and validation structure, such that we can rapidly expand our analysis capabilities to meet client requirements. This infrastructure is now in place, and it contains more value than we can currently extract from it, as well as ensuring that we put ourselves in a position to develop the leading analysis portfolio within the clinical trials and potentially clinical imaging markets. With that, I will now pass over to Robin to talk a bit more about our science.

Great. Thank you, Grant. So if you go to the next Slide, please. I will be talking a little bit about the scientific engagement we've had in 2023 and progress we've made. As Grant described earlier, we have significantly diversified our portfolio of contracts and the therapeutic areas we now serve into. And I will talk a little bit about the associated work we've done over the past years from a scientific point of view on engaging in scientific development and the respective scientific communities. I will specifically focus on Alzheimer's disease, as this is where we have seen significant development over the past 2-years and where we do indeed see a significant opportunity in the coming years. So I can see we have the next slide already. And I just put this in. Obviously, I just said I'll talk about Alzheimer's disease, but I want to start with Huntington's Disease just to illustrate how we successfully penetrated that market, as Giulio has described earlier. This is an area where we have successfully developed a leading position through our ability to translate difficult scientific requirements into clinical trial applications and where the foundation of commercial success really was laid several years ago through the development and validation of novel biomarkers and the deployment in natural history studies and then onto pharma treatment trials. We continue to innovate in the area and we have previously presented about the HD-IH consortium that leverages our latest IXIQ.Ai analysis platform to validate imaging-based biomarkers with a number of pharma partners. Over the past months, we've seen further progress in the project as we have on-boarded additional pharma partners supporting the consortium as we continue to deliver our analysis plan. As those member companies and other pharma partners are planning HD-IH trials, we will then naturally work with them as an extension of the scientific collaboration. So obviously that's Huntington's disease, Alzheimer's disease is different, it's a different market, it's much bigger, there are different competitive dynamics and so on. However, we do believe that through the work that -- I will present on the following slides and the track record we've also demonstrated over the past years in terms of diversification, we can demonstrate how we are increasingly engaging in those markets in a way that has supported commercial momentum previously in Huntington's disease. If you go to the next Slide, please. I will start by giving a brief update on our imaging portfolio. So as a company, we have a strong heritage in MR imaging, both from an acquisition and analysis point of view, and we have at our disposal a comprehensive set of techniques that support brain imaging across new generative diseases to provide services for safety, eligibility and efficacy across Phase I to III trials. This includes well-established MRI sequences like a structural MRI, but also a range of novel and advanced sequences that more directly measure underlying biological processes and therefore more directly linked to various novel treatment mechanisms or hypothesis that I will go into in the coming slides. If you go to the next Slide for now, I will briefly touch on molecular imaging as well and PET specifically, where over the past 2-to 3-years, we have significantly invested in capabilities there to now have a full service offering also in molecular imaging across the traces established in neurodegenerative diseases, specifically Parkinson's disease and Alzheimer's disease. And if you do one click, please, we see overlaid now which of those services have been first launched into clinical trials over the past 36 months. And in fact, a lot of those we first deployed over the past 12 months to 24 months. We see the momentum really that we've created in the past years in penetrating those therapeutic areas. And we now have the products available that enable us to provide additional services for eligibility and efficacy primarily in those bigger indications, primarily Alzheimer's and Parkinson's disease. If you go to the next Slide, please. I'd like to briefly come back to a slide that Giulio has shown earlier around our scientific network and the way this enables us to engage in the scientific community, but also the pharma partners associated with those consortia. And I will highlight 4 different projects where over the past years, we've made significant progress. So if we start with the global Alzheimer's platform on the top right, this was a thousand patient natural history study where we have provided the amyloid PET imaging for, and that has finished recruitment earlier in this year. We have started preliminary analysis and at the -- this year CTAD conference, which is the most prestigious or most important conference in AD tract development. This enabled us to get a high profile speaker slot on the analysis we've done on the data, which is really demonstrating the emission critical nature of those biomarkers in an enveloping landscape of AD tract development. If you go to the next one, please, I will briefly talk about the AMYPAD and EPAD natural history studies, which have been completed over the past 2 years and are now creating a lot of insights as we together with our partners are going through the data. There were various manuscripts presented this year and there was a conference presentations over the past years that really illustrate how IXICO is engaging in biomarker development, both on MRI and PET in Alzheimer's disease and helps us position ourselves as a vendor in that space. If you go one more click, please, I will briefly talk about technical developments. So we're part of The AI Centre for Value Based Healthcare, which is run by King's College here in London. And what we have done this year there is presented at conferences. It's a validation of our IXIQ.Ai analysis platform for the segmentation of hippocampal subfields, which is a potentially more sensitive AD biomarkers compared to looking at the full volume and which can be derived from a standard MRI alone. What we're seeing with this is really how we're starting to generate some of the differentiators in Alzheimer's disease that we have established in Huntington's disease over the years. And if you go one more click, I'll briefly finally talk about some work we've started engaging in as part of the Critical Path for Alzheimer's Disease, CPAD initiative, which brings together pharma partners pre-competitively and regulators. And there we are now closely working in 2 work streams around the standardization of tau PET analysis, as well as it's used in, as a potential surrogate biomarker in AD clinical trials. So what I'm trying to show with all of these examples is how we are systematically engaging more and more in biomarker development in Alzheimer's disease and we are expecting this to lead to additional opportunities to further penetrate a therapeutic indication and then hopefully continue to support those drugs as they go to later stages. So we are expecting a difference in the pattern again, in the mix of trials to what Grant presented earlier in that as we start supporting those assays from early on and the progress later in the development stage, we will get more into our late stage trials as well. So if you go to the next slide, please, I will briefly just bring it back to the AD drug development landscape. So I guess the question is, why are we developing all of these biomarkers? Why is this relevant? We think it is relevant for 2 key trends that we're seeing. One is a significant diversification in the targets in the mechanism of action that we see in AD drug developments. So if we look at this pie chart here, we see the targets currently in Phase II development and we obviously see amyloid and tau with 13% and 9% respectively, but then we see big chunk in neuroinflammation, 20% and then we see other targets, neurotransmitter receptors, for example. And so what it shows is the diversification away from amyloid and tau into new hypotheses and that's where biomarkers obviously get critical to understand both target engagement, but also efficacy. The other trend we're seeing, again, Giulio has touched on this, is a more general move towards precision medicine. So we are seeing like a major update to the NIA-AA diagnostic criteria for AD diagnosis, the ATN framework towards an increasing use of biomarkers. And we then see at least indirectly related requirement around the increasing recruitment of traditionally underrepresented racial and ethnic populations into clinical trials, where we see some questions around efficacy in some of those populations as they are traditionally underrepresented in the treatment trials and the FDA really pushing to more inclusive trial designs, which is closely linked, for example, to the gap data and study I've mentioned earlier. And all of this requires more careful biomarker assessment, for example, because they are potentially confounding effects between different populations in terms of underlying risk factors for vascular disease and other elements, which we think will lead towards a more detailed workup in terms of biomarkers. And if you go to the next Slide, I will briefly talk about how basically bring it back to imaging and why we think we're well positioned to serve that increasing need for biomarker assessments. So obviously amyloid and tau is measured by PET as a gold standard. And we see that widely used in clinical trials. We see that increasingly complemented by blood-based biomarkers, but we see a continued need for the gold standard assessment. There are some advanced MRI techniques like resting state of MRI to complement tau PET and have been linked to tau spreading in terms of the biomarker assessment. Neurodegeneration MRI is the most widely used technique there as you can look at local brain atrophy. And that actually is a key part of the inclusion criteria in most AD trials. But then we are also seeing imaging biomarkers for those supporting those increasingly widely targeted hypothesis, including neuroinflammation where TSPO PET is a quite direct measure of underlying some Microglial Activation and therefore neuroinflammatory processes. But then we see less invasive techniques like free water diffusion MRI, which has been linked to those processes and can serve as a potentially quite valuable and interesting marker for exploratory efficacy analysis. Vasculature, I touched on the importance in the context of this different racial groups which is highly important in terms of standardization of biomarkers to make sure we're disentangling underlying co-pathology and potential biomarker performance between different subpopulations. And more generally is a critical measure to support differential diagnosis and stratification. And it is really can only be assessed from an MRI. There's no blood based measurement, look at strokes or some other vascular pathologies. So we see that continuing to be a key requirement and probably increasing the advanced measures like ASL that can further complement and support the analysis. With that, I will probably move on to the next slide, which is my last slide. And here I'd just briefly like to mention a new R&D project we are just initiating. And that really starts linking our core clinical trial technology to potential applications in healthcare as described by Giulio as part of our strategy in pillar 4 when we talk about the bridging into healthcare applications. So this is a 12 month partnership project. We are starting as we speak, which is around developing AI technology for an application in trial stratification and then potentially in future clinical applications to support the dementia diagnosis, where we're looking at like a screening funnel where we combine different biomarkers including plasma assays, with imaging, both MRI and PET, to support a differential diagnosis and a confidence in AD diagnosis. The project builds on the technology shown earlier and is, in fact, designed to tackle some of the biomarker challenges we see in AD trial development and that we've looked at earlier. It benefits from the GAP Bio-Hermes data. Again, I've touched on this earlier. We have a full R&D license on the data set, and again, that feeding into this new project is really illustrating the value we get from innovative data sets like this one. There will be a public and formal announcement of this project over the coming weeks, but I wanted to take the opportunity today to provide a high-level introduction to the concept, and we will be discussing this project in more detail in the future. And with that, I will hand back to Giulio.

Great. Let me just get my camera back on. Super. So if we move to Slide 28. So with this Slide, just to emphasize the point that with the increasing prevalence of neurological diseases in the global aging population, our purpose here at IXICO has far-reaching social benefits supported by long-term macro drivers that we've referred to. The number of people with dementia in the world is expected to triple by 2050, increasing the cost and burden to the global health care systems. From the pharmaceutical partner's perspective, the CNS therapeutic market size is very large, estimated to be in excess of $800 billion with a very strong CAGR. But all of this comes with a health warning that drug development takes a long time with low likelihood of approval and costs a lot, in particular in central nervous system diseases. However, herein lies the opportunity for niche technology companies such as IXICO to become a mission-critical partner to the global biopharmaceutical industry to improve clinical trial designs and increase the opportunity of trial success by the means that we've highlighted in Grant and Robin's presentations. If we then go to the final slide, I just want to sort of top and tail the presentation with, again, the precision in neuroscience strategy slide and really just illustrating how hopefully we've been able to articulate the 5-point neuroscience strategy that we have, summarizing how we plan to achieve our objective of becoming a mission-critical partner to the global pharmaceutical industry. So with that, thank you very much for listening. And I think now would be an appropriate time for us to take time to answer some of your questions.

That's great, Grant, Giulio, Robin. Giulio, Robin, thank you very much indeed for updating. [Operator Instructions] Giulio, you received a number of questions throughout today's presentation. So thank you firstly to everybody for your engagement this afternoon. If I may just hand back to you to open up that Q&A tab and just read out the questions and give a response where it's appropriate to do so.

Great, and I'd like to again, thank you everybody as well for submitting your questions. So what I'll do is I'll go down them and I'll read them out and maybe hand them over to, I'll either deal with them myself or hand them over to my colleagues on the call. So the first one is, how can you compete with bigger competitors? So as I hope we've been able to articulate, we're a CNS specialist and we've been partnering with Pharma for a very long time to help discover, develop and deploy the latest imaging techniques to imaging biomarkers and incorporate those in new clinical trial designs. And we're doing this versus quite often generous imaging vendors that are much more transactional in their approach and generic in the services they provide. So that's one aspect. The other thing you hopefully seen in this presentation is that we're aiming to compete on leveraging technology to achieve our differentiated position. So our investment in technologies is aimed at developing highly differentiated, tailored services that we can deliver globally without significant investments in physical presence in the different geographies. So those are the 2 key aspects I would say is how we compete with bigger competitors. So the second question, I'll direct to Grant, which is when will you raise cash?

So raising a cash obviously is an option that we have and we'll continue to always consider. As a reminder, as I said, we raised GBP 5 million cash in 2018 and we use that to drive rapid growth and swift move to profitability. The purpose being to invest in the areas of the business that we see long-term value. That's what we did and we've held the course on that despite some fairly substantial headwinds over the last couple of years. In terms of the question, clearly with our share price level it is currently, a substantial raise would materially dilute our existing shareholders. And so thinking of raising cash would need to bear that in mind. However, in such a scenario, our hope of course would be that our existing shareholders are fully aligned with the substantial latent value of our assets and would see that long-term trends in the market and would wish to hold their corner in any such raise. But these are obviously theoretical points at this time, because we haven't currently made the decision to go ahead and raise cash. It's something as I said, we would continue to keep under review and as at such time as we thought that was the right thing to do, we would and we would be obliged to make the appropriate announcements so that the market is informed.

Thank you, Grant. Next question I will take it's, what do you expect the market to look like in FY 2024? So as we refer to 2023, that we've definitely seen a slowdown in R&D expenditure. And I guess this is also closely linked to the trying to anticipate the economic macro environment that we're in and trying to anticipate what happens in relation to interest rates and wars across the world. Those obviously create a lot of uncertainty and we're definitely seeing the pharma industry being more selective and if like more choosy in terms of how they're prioritizing their pipelines. And indeed, we're also seeing not just biotechs, but also some large pharma companies shedding jobs. So my anticipation at this stage is that we anticipate FY '24 to continue to be a challenging environment. I'm hopeful that in the second half of the year, we start to see evidence that some of those things have been addressed and we start to see a clear path to the reinvigorating of some of the financial constraints that some of the biotechs are under. But also that pharma obviously retain a long term view on their investments. But as I said, the important thing is that we're ready and able to deliver on their requirements when they come to initiate new trials. So I guess I'm saying, I suspect more of the same in terms of the general market environment. But again, that just means that we have to compete more tenaciously and make sure that we get our voice heard in terms of the great science and technology that we've referred to today. So next slide, I think might be one for Grant. Would you be better off listing on the NASDAQ?

That's an interesting question. So I think NASDAQ is obviously an attractive market from the point of view that I think traditionally U.S. investors are particularly keen on technology solutions and capital raise levels can often be pretty significant and often higher, I suspect, than they have been on AIM. And I think it's there for a market that is attractive to biotech companies in particular. However, the downside is that being listed on NASDAQ is pretty expensive. I think I read somewhere that being listed on AIM typically comes with an advisory insurance type overhead cost of a small number of hundreds of thousands per annum. I think being listed on NASDAQ can be an order of magnitude greater than that. Now, I think if you're a biotech company that needs to raise a lot of money to pursue a drug candidate for years before achieving revenues, that relative cost compared to the opportunity to raise those extra levels of capital make it worthwhile. However, for a medtech company that has been profitable and expects to be profitable again in the not too distant future, that kind of cost I think would be difficult to justify. So consequently, assuming of course that AIM market functions in a way that it should, which hasn't necessarily been the case over the last year certainly, then my expectations would be probably better off on AIM than NASDAQ at this point.

Okay. This one, probably a combination of Grant and Robin. What's the plan to R&D spend and what areas is this investment going into? So maybe Grant, if you sort of talk to the size of the envelope and then maybe Robin can obviously expand on what you say.

Yes. So we invested in R&D as total in, from a cost point of view, a P&L point of view was about GBP 900,000 invested in the last 12 months. But we also invested significantly in capitalized development costs where the bulk of our capital capitalized cost of GBP 1.9 million in the year was related to development spend primarily in the next generation TrialTracker but also in analysis pipelines. Looking forward, we expect that level of spend now to come down significantly, primarily because that platform is now ready. So whilst there will always be ongoing developments we want to make, the quantum of that initial, that big spend that we've had over the last 3 years is reducing significantly. So in terms of what those quantum's will be, we'll probably see the R&D in the P&L go up slightly but the capitalized level come down significantly.

And Robin, do you want to just sort of expand a little bit in terms of some of the -- that you can talk to some of the areas that you're looking at?

Sure. So from a scientific point of view, it's really focused on further developing, validating and I would also say positioning our capabilities across MRI and PET in neurodegenerative diseases. So as I've described, we have had a significant focus on PET. I think we now have a competitive offering from an analysis point of view. There are some platform elements. We're still focusing on that and some of the service components that we're investing into. There are then -- we didn't talk about MS a lot today, for example, but that's another area of potential -- where we see potential growth for the future. It's a significant area in terms of the number of trials going on and so on. So we've had some investment in our MRI capabilities in that area, and that will continue. And then it is the -- besides the pure technique technology development or analysis capabilities development, it is to support engagement in those scientific consortia and partnerships that we have outlined.

Great. Okay, so next one. How will the change of Chair impact the strategic direction of the company? I guess it would be nice, if I had the Chair here to be able to answer that question. But I think the short answer is I don't think that change in itself merits a strategic change in the direction of the company. I think what I would say is that in addition to that change, we've also quite recently enhanced our Board, where we've added 2 additional non-execs with pharma background. So I think the best way I could answer that question is that, I would anticipate that the increased expertise on the board and experience in relation to how pharma values innovation and the challenges and the pain points that they have, so that I and my senior leadership team get good support for our strategic direction of how we're running the business, is a very positive thing for the company. So I think that's the most appropriate way for us to think about changes at the board level. But again, the changes of the Chair, we also have the benefit, obviously, the fact that the incoming Chair, Mark Warne, is very experienced with IXICO, knows the company very well. So I think that's a very strong point for continuity in terms of strategic direction of the company. Next question, maybe Robin or Grant, I'll let you fight over who's best qualified. Is AI integrated in IXICO's services or future plans? Maybe Robin, do you want to take that?

Yes. Sure. Yes. So we have running at the company a deep learning program in terms of our R&D development for probably 6-or 7-years now. So we've started transitioning to what a lot of people think of or mean when they talk about AI several years ago. I was talking about IXIQ.Ai, our latest analysis platform, which is fully based on deep learning concepts as well. So it is a firm part of our current product offering, and we see that continue to be integrated in our product development.

Great. Grant, please, can you give more details on how the low share price negatively affects the company's operations? It's a bit of a presumptive question there.

So, well, I think there's a number of factors that play in that. So obviously, day-to-day, the business continues, and the share price doesn't impact day-to-day the operations. We're able to continue doing what we would do, and we would do that to the best of our ability. And the fact that the share price is up or down doesn't necessarily always correspond to how well the business is going in itself. One of the key, I think the key areas, the key areas that does have an impact are the more macro strategic elements. So, for example, there are some opportunities out there that where we are a private company, we're able to value ourselves. We might make a justification that we would be able to acquire companies that perhaps would be currently valued more than we are with our share price as it is. That makes it harder to do M&A when it might be a good thing for us to do as a business. Similarly, were we to think that, we wanted to invest more and grow quicker, then raising capital with a higher share price would be easier to do because it has a less dilutional effect. So there's elements like that as well. And the third consequence, obviously, is when we know that we have the value in the business that we do and our share price is where it is, there is a risk of us being seen as cheap and therefore a potential target. And these are all, I think, potential risks or you could say opportunities in with -- with our share price where it is. But from an operational day-to-day point of view, the impact is not significant.

Thank you, Grant. I'm consciously run over a little bit, but there's just one final question, which I think myself and Robin should answer. So it's do you still have any feasible opportunity to win a market surveillance contract for AD for ARIA? Why do you think this opportunity did not materialize? So I'll start. So, yes, we do believe that there are feasible opportunities out there for. For basically, the implications of amyloid based new drugs coming onto market as surveillance, as actually surveillance trials, but also post-marketing and also potentially in the clinic. Now, there are I mean, the next drug that we anticipate coming to market will further enhance the requirement for monitoring of ARIA. And as you may know, to monitor ARIA, you need to have a deep capability expertise in MRI, which obviously is our core capability. And so, we are we are looking to partner with third parties to help us access the right sort of opportunities and right sort of data so that we can develop the right sort of solutions to meet that demand over the coming years. And just the second part. Why do you think this opportunity did not materialize? I think there's much to be determined in terms of what the opportunity is and the scale of the opportunity. So I definitely would not suggest that opportunity. There's only one and it's it should have been should have materialized by now. So the pharmaceutical companies themselves are still trying to assess how they get their drugs approved. And I can assure you that ARIA monitoring of ARIA and the deployment of the adoption of their drugs in -- in the real world will very much be considering monitoring patient safety and ensuring patients are safe and supporting clinicians to diagnose ARIA as and when it might appear in the real world. So, Robin, I'll hand over to you to maybe give a more informed answer than what I just gave. But that's my view.

Well, that's probably only a small piece that I can add. I think you spoke to the -- the partnership discussions that are going on in the background that we can probably talk in more detail when the time is right. The only thing to add maybe, then, is that we have an active R&D program in that area as well, where we are developing technology. There's an R&D partnership that we're firming up as well that hopefully we can announce at some point. And then last but not least, it does link to the new R&D project we are just initiating that I've mentioned in my in my last slide, in that these are both concepts that from a platform technology point of view are quite similar in that it's clinician facing or health care facing technology, leveraging biomarkers we've developed in -- for clinical trials. So going through that project that I've mentioned will also further support offering a solution in ARIA safety monitoring. So I appreciate that this is all relatively awake, but I hope it still helps to reassure the audience that, this is still an area of active interest, where we have various initiatives ongoing and where we see a significant opportunity for the future.

Great. Thank you. Well, that's Mark. I'll hand it back to you. That's all the questions answered.

You've answered all the questions. So thank you once again to everybody for your engagement. Giulio, I'll certainly shortly redirect those on the call to provide you with their feedback, which I know is particularly important to you and the team. But before doing so, if I could just ask you just for a couple of closing comments and then, as I said, I'll redirect investors to give you their feedback.

Yes. So I'd like to first of all thank Grant and Robin for joining me on this call today. But more importantly, thank all of the people that have joined the call. Thank you for your interest in IXICO. And I hope sincerely that you got a lot from the material that we shared. And again, thank you for your time today in attending today's call.

That's great. Giulio, Robin, Grant, thank you very much indeed for updating investors this afternoon. Companies 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 will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of IXICO plc, we'd like to thank you for attending today's presentation and wish you all a very good afternoon.