Physiomics Plc (PYC) Earnings Call Transcript & Summary

Good afternoon, and welcome to Physiomics PLC Company update. [Operator Instructions] Before we begin, we'd like to set the following poll. I'd now like to hand you over to Dr. Peter Sargent, CEO. Good afternoon, sir.

Thank you for joining our investor meeting today. So for those of you who have not met me before, my name is Peter Sargent. And as of last week I'm the newly appointed CEO here at Physiomics. I'm also joined here today by Dr. Jim Millen, our Non-Executive Chairman, who I'm sure many of you are familiar with, having held the kind of joint role of CEO and Chairman for the last few years. So the purpose of the meeting today is to give you some -- provide more details around last week's announcements where we communicated my appointment as CEO and Director of Physiomics; and Jim's continued support as Chairman. So the intention is to spend probably the next 10, 15 minutes, given a little introduction to myself, talk a tiny bit around the transition between myself and Jim, and provide you with my immediate areas of focus for the business. We will then go on to answering as many of your questions as possible. So we will spend the bulk of the time doing that. I know a lot of you will be keen to learn more about how the business is performing and have more details as to our future plans. So we are planning a kind of a follow-up investor meeting, will be around the March time as we've done previously, just to coincide with our post-interim results. So I know some of you might have heard from me during our last investor meeting back in November last year. But I wanted to take this opportunity to briefly introduce myself before talking more about the transition and my immediate areas of focus. So to give you a bit of a background. So I'm originally from North Yorkshire here in the U.K., where I spent the bulk of my formative years and growing up around the coast of Scarborough. So during most of my childhood, I've always had a kind of a keen interest in science and that is really kind of the driver why I kind of ended up in the University of Liverpool study in for my Bachelor Science, and then Masters at the School of Tropical Medicine there. My studies then took me down to -- down south to London, where I attained a PhD in Biochemistry and Biophysics from King's College London. This PhD was actually an industrial collaborative PhD, working with a biologics business. And that experience kind of gave me really the kind of the first taste for industry, and started me on my journey to understand more about the commercialization of research and ultimately, the kind of the application of that research to health care. Following my PhD, rather than going into academia, I then decided to take the industry route. And I joined an in vitro diagnostic business over in Kent. I eventually headed up the research and development team for that business being part of the senior management team. And during that time, my team and I were involved in developing a number of award-winning new products and helped drive the revenues and for that business quite significantly over a number of multiples. As of the senior management team then positions that company for sale and sold it to a larger group of in vitro diagnostic businesses to which I kind of then joined. So my role at the larger business, was helping them set up and lead an innovation team as kind of a search and evaluation function, going out building networks between academics and other industry partners around the U.K. and Europe, primarily looking for innovations and research, which fell in line with our kind of corporate strategy. I was then involved in packaging those opportunities up into either joint venture partnerships or in-licensing deals to bring that and feed that into the group of businesses. After my time within in vitro diagnostics, I then went more towards the kind of the drug discovery and drug development world, and I joined a niche CRO based in London. My role within that business was lead a hybrid function with one arm being focused around R&D. So developing new capabilities for our clinical trials facility as well as developing new service arms. And the other arm was around kind of more commercially focused team looking more kind of business intelligence and kind of technical sales. So again, we are able to grow that business quite significantly, really kind of given me exposure of and experiencing in the dos and don'ts when scaling and developing new services. Following my time at that business, I then went and joined the National Industry for Health Research. So this is a funder of clinical research in the U.K. And actually, it's the largest fund of clinical research in the U.K. And within that role, I led a team of business development professionals and advisers working closely with the U.K. government departments to support life science businesses across the globe, enter the U.K., and develop their products and businesses here. So our team supported those companies with things like funding, expertise, and access to infrastructure. Finally, prior to joining Physiomics, I spent some time at Syneos Health Consulting, so this is part of the large Syneos Health CRO, a clinical research organization. That role was -- I was in charge of and helped lead a global consultancy practice kind of focus more around strategy, management consultancy, focused again towards kind of biopharma pharmaceuticals to emerge into top-tier pharmaceutical companies. And we were supporting them primarily around kind of R&D transformation projects. So what I mean there is supporting them in developing strategy to help them pivot towards new therapeutic areas, help them build new capabilities, implement new technologies or even adapt to their business processes to meet new regulatory requirements. So quite a varied consultancy practice. So I hope you can see going through that timeline very briefly. I have quite a varied background and experience. But I really do hope that my experience will be our value to Physiomics as in a business. And certainly, having worked closely with Jim and the team over the last few months, I've already started identifying areas for change and opportunities for growth, which I'll perhaps touch upon in the next slide. So that's a bit about my background. I guess just to focus on the kind of the board and management changes announced last week. So Jim and I have been working towards this point over the last few months. And I certainly believe, along with our Board that these changes will help Physiomics take that kind of next significant step in its evolution. And I hope personally, I can bring a new perspective and new ideas to lead that change required. Looking forward from here, as noted in the announcement, Jim will be still involved in the business. And this is why we're lucky to still have him on the call today. But he won't be just with us as the non-exec Chairman, but he's offered to provide his continued support around the transition of key relationships we have and the knowledge he's built up over the years to myself and the team. We've also agreed that he will still play a role from an advisory perspective supporting me myself where required. So I wanted to just touch upon kind of my immediate areas of focus. But perhaps before I do, I just want to acknowledge, kind of leading on from what I was just talking about regarding the transition, acknowledge kind of the work Jim has done over the last few years, really, in my mind, kind of stabilizing the ship here, laying those key foundations in our consultancy business. So for instance, build in kind of the BD function and pipeline as we have it today as well as developing the highly capable consultancy team we have, delivering the consultancy projects. And the team, the quality of work that the team delivers is really reflected in the feedback we've been getting from our clients and the high level of repeat business we get as a business. But I always want to acknowledge the work that has been done around the personalized medicine, medicine tool, and the various grants we have won over the years. So regarding my immediate focus, taking on this role as CEO. So this is now to build upon those foundations, so we can grow and scale the business, driving revenues, and really focused on turning this business into a profitable one. As I described in our last investor presentation, there are 3 immediate areas of focus for the business. The key one for me is around our core mathematical modeling business, whereby we support clients to drive insights and predictions from their data to help them accelerate and derisk their drug development programs. As of today, this core service offering is where all our revenue is being generated. And therefore, I feel it is important that we keep this as a priority and remain focused on growing this side of the business. So how we will grow that business? So we will keep focusing on driving that pipeline but not just look at bringing in the increase in volume of leads into the top of the pipeline, but take a serious look at the conversion rates and how we can increase the conversion rate into those early leads into contracted work. I think we also need to take -- learn some lessons from last year where we ended up being perhaps a bit overexposed to one specific clients. So we keep pushing to kind of diversify our client base, having a healthy mix of emergent top-tier biopharma, keep on exploring relationships, which we have been doing with research institutes. But also kind of take a serious look at how we can leverage other service partners to enter into and expand in the market. Finally, we will also look at kind of how we broaden kind of our service offering into new therapeutic areas as well as expand across the R&D continuum, something which we've been doing already to this date. And actually, we are currently delivering on a project in the dermatology space. So many of you will be aware that Physiomics is primarily an oncology-focused consultancy. So we need to be looking at new therapeutic areas as well as new services across the kind of the R&D continuum. As well as put in more energy into our BD, something I have already been working very closely with our Head of Business Development on. I've also started working very closely with our technical team to look at how we can drive operational excellence and new capabilities so we can offer more to our clients. So in addition to our core service offering, we will continue also to grow and build kind of adjacent service arms. We're starting off with biometrics as we communicated previously. So I know previously we've kind of -- we've talked about biostatistics. So for those of you who are less familiar with this area, so biometric is more of kind of an umbrella term, which includes biostatistics and statistical program. So I'll probably using that kind of that word kind of going forward in a lot of these presentations. We feel that kind of biometric is the next evolutionary step for our core business because it leverages a lot of our kind of core expertise in mathematical and data sciences as to offer kind of a service, which we feel is scalable and should hopefully help us grow the business quicker. So recently, we have kicked off a number of key initiatives around this service. That should really help us accelerate the development of the biometric service. But hopefully, I can provide some more detail in the next investor meeting in March. So the third area is around our personalized medicines. So I know many of you are aware that even though Physiomics were considered primarily as a consultancy business. We also are and have been developing new tools to be used in the kind of personalized medicine space. Certainly around kind of supporting kind of cancer treatments. We announced last year that along with our partners, we have been awarded funding to Innovate U.K. to help generate more data and the refinement of the new tools we've developed. So this program is running well and is on track, and we are looking to set up the observation of clinical trial with our partners over the next few months. So we are going to remain committed to this program. But in addition, we are going to relook at our plans around personalized medicine, our go-to-market and development plans, and look at how we can kind of generate more value around this asset quicker and where to kind of focus on our efforts going forward. So I think that's all I was going to cover. I know that is quite brief, but maybe we can stop there, and Jim and folks answering some questions. As I did say earlier, we are planning another investor meeting in the coming months where I can provide more detail as to our progress. But thank you.

Great. Thanks, Pete, for that very clear presentation. So we received quite a few questions via the website prior to the meeting. I don't see any new ones have come in so far during the presentation, but we'll spend as much time as we need to go through as many of the questions that came in prior to the meeting as we can. So first question here comes from a shareholder saying, Pete took on the role as COO, does that role need to be filled again? So, Pete, maybe you'd like to comment on that?

Yes. No, I can do. I guess the short answer is, no, we will not be looking to replace the COO role at this point in time. So joining Physiomics as a COO back in September has allowed me to work closely with you, Jim, and over the last few months, allowed me to kind of learn about the business and has enabled us to kind of transition to where we are now. I would say, though, however, as we look to kind of grow the business, and consider what expertise and capabilities are required as we do so. Maybe a COO role would be needed in the future. But the short answer is, in the immediate timeline, no, we won't be.

Okay. Great. Related question, will Pete be getting a pay rise at this point? And will I be getting a pay cut? There's also a question around options. So maybe you want to take the first part of that, Peter, and I'll take the second.

Yes, that's fine. Yes, so my pay will not be changing. That is what we agreed, I and Jim, when I joined in September. However, as a result of the transition, Jim's salary will reduce on the same basis of the previous chair. So taking into -- in its totality, there should be a significant cost savings to the business. I don't know whether, Jim, you want to comment on the next second part of that question?

In terms of options, yes, I mean, there will be an award of options in relation to Pete's ascension to the position of CEO, that's under discussion currently and will be announced in the normal way by RNS in the near future. So that's just one to watch out for. Next question, although the Board changes were muted after Peter came in, why this date? Okay. So basically, the question is, is there any significance to the fact that we announced the changes on the 22nd of January, apart from the fact that it was a Monday. Pete?

No, there isn't any significance to the timing. We've been -- as I said, we've been working together for some months now. And we didn't feel it was appropriate to transition too close to the end of the year around the first season, nor did we think it was suitable to kind of transition too close to the start of January when we came back. So by the time we went through the relevant steps which we need to do, meeting up to this transition. It just took us naturally almost, I guess, 3 weeks into the month. So no, there wasn't any significance at the time.

Perfect.

So I think there's a couple of questions. Maybe I can ask you.

Yes. Go for it.

Yes. So the first one, yes, they're both linked. So Jim, what's -- can you expand on your commitment to Physiomics as the non-exec Chairman going forward? And another one which is linked is how long will you remain in the business?

Great. Okay. Thanks always, Pete. I mean the short answer is that I'm remain entirely committed to ensuring the success of the business. Obviously, some of what I was doing previously people will be doing going forward, although in reality, behind the scenes, that's already been going on for the last 5 months, and it's gone very smoothly, which is what led us to the decision to pull the trigger on this a couple of weeks ago. So, I remain available for Pete on an advisory basis. I will remain closely involved in all aspects of the business. And you don't need to worry about me disappearing. I will be here to support Pete and the team to continue to work with clients where I have a close relationship with them, continue to beat the bushes for new business and continue to help set the strategic direction of the company in collaboration with my other non-executive Board members. So hopefully, that addresses that question. Moving on, there's quite an interesting question here, Pete, which is what will you be doing differently to grow revenue? So maybe you want spend a couple minutes commenting on that?