Avacta Group Plc

Good morning, ladies and gentlemen, and welcome to the Evactor Group PLC Final Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Given the attendance on today's call, the company will not be in a position to answer every question it receives during the meeting itself. Before we begin, we would like to submit the following poll, and if you would give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand over to CEO, Alistair Smith. Good morning. Good morning.

Morning. Thank you. Thanks very much. Morning, everyone. Thank you for attending the preliminary results presentation for 2022. Let me just start by running through some of the key highlights. Obviously, we'll touch on these as we go through the presentation. I think it's absolutely true to say a very significant year of progress right across the group. In particular, very pleased to see the progress with ABA 6000 Phase 1 study, which we'll talk through in a little bit more detail. But in summary, we're seeing a very positive safety profile through the first four patient cohorts in the dose escalation study. And of course, we have also confirmed the release of doxorubicin at therapeutically significant levels in the tumor biopsy. So we are seeing a very much improved safety profile, but also release of doxorubicin in the tumor tissue, as we would have hoped. So that really very strongly supports the principle of FAP activation, the precision targeting of drugs into the tumor tissue. And that's led us to accelerate the development of ABA3996, which is the second of the precision drug candidates. It's a tumor-targeted proteasome inhibitor, which recently at the AACR meeting we presented a poster with the preclinical data, and I went through a video to explain that data. I'll touch on a little bit of that in the presentation today. But it's a very exciting opportunity to think about proteasome inhibitors in solid tumors, which has never been, you know, never been the case before. So that's a very exciting opportunity. And then across our partnerships with FXL and LG Chem, good progress, I'll touch on that. And of course, you're aware that we moved the therapeutics division during the year as well from Cambridge into London. The diagnostics division, we are engaged in an M&A-led growth strategy for that division. We raised capital in October, as I'm sure you're aware, and executed the first of those acquisitions of launch diagnostics in October. I'll talk through, as time allows, the strategy for that M&A-led growth strategy. And certainly later in the year, we'll have perhaps at the AGM a lot more opportunity to go into that in a great deal of detail. And finally, the last point on this slide strengthened the board further with the addition of another expert medical oncologist, Chris Coughlin. Okay, I'll hand over to Tony to go through the financial slides and then go through the business update.

Thanks, Alastair. Good morning, everybody, and thank you for joining us today. I'd like to just walk you through the preliminary results for this year. Without a doubt, they have probably been the most complex accounts that we've ever prepared in a practice history, given the number of transactions that have gone on this year, starting with at the sale of the animal health division at the start of the year, followed by the acquisition of Launch Diagnostics in October and the associated fund raising the convertible bond. So there is a fair amount of complex accounting within this. So what we've tried to do is the way that we presented RALTS this year is to draw a line on the face of the income statement called adjusted EBITDA, which will give everyone a real feel for more I think the cash burn within the business that's closely associated that because there's a lot of non-cash items on the profit loss account so please when you look at these numbers the adjusted EBITDA loss of 15 million is far more consistent with a cash flow position as opposed to the loss in the year of 39 million because some of the adjustments that we'll walk through. So just stepping down through the P&L, the revenue this year was just shy of 10 million which is probably the highest revenue number we've ever reported as a group. That was driven by a couple of milestone payments on the therapeutics side, which we'll touch on shortly, and the impact of the launch business on the diagnostics segment. That delivered us a gross profit of just over £7 million. And we then stepped through and we've got the research manufacturing costs from the therapeutics business on its development programmes and also the diagnostics business in terms of the development of the products it's working on. The SG&A costs have stepped up during the year and that's primarily because we're obviously now rolling in the launch SG&A costs as well as the business grows and expands. So our adjusted EBITDA loss position was 15 million in the year compared to just under 22 million the previous year. If we step further down the P&L, there's amortisation and appreciation charges, again, which we appreciate are non-cash items, which are set below there. And then we have share-based payments. And we also take a share of AFI XL, which is our JV. It's lost, so there's just over a million pound charge there. from recognising our share of the JV. We owe 19% of that at the end of the year. So that gives us an operating loss of 32 million compared to 29 million the previous year. There are then some costs that go through the income statement to do with the convertible bonds. We take through the commission costs, the interest costs, and part of the bond is effectively valued as a derivative. So we take through the charge on that and that is really driven by the fluctuations in the share price. So the share price had increased 20% from the time we took the bond out to the end of the year which drives effectively a further charge through the P&L but again that is a non-cash based item. Further down the P&L we've got a taxation of a couple million pounds which again we claim through R&D tax credits so that will come back as cash into the business in future and which leaves us with a retained loss of 39 million compared to 26 million the previous year. I move on to the next slide which breaks down the operating segments. So you clearly see we've got two clear segments now. The animal health business has been treated, discontinued in both years, so isn't in these numbers. And the way I'm presenting this is obviously the diagnostics is a very different structured business and we are looking to grow that into a profitable EBITDA based business. So this set out of the presentation will help you see how we look to move that over the coming years into a profitable business as we then continue through the M&A process. So the revenues in the diagnostics business, the $4 million come primarily from the launch business in the period that we had that this year. And the therapeutics has got just over $5 million. Again, that's from milestones from LG Chem and AFI Excel. As we step down, again, this breaks down the operating loss through to each business from the different segments. And we have a central cost. So all the costs to do with running the group, whether that be central costs in terms of finance, HR, IT, the directors, all the advisor costs and brokers and registrars are all not allocated across the two segments. So there's a separate column there. But we will progress these and continue to report on a consistent basis. so there's clear visibility between the two trading divisions of the group as we work through these numbers. If I move on to the cash flow, now we started 2022 with £26 million of cash. Operating cash outflows from the trading of the business and movements in working capital used £16 million, which is fairly consistent with that operating EBITDA loss of £15 million that was on the face of the P&L. So that gives you the consistency of how those numbers tie through. The investing activities were the acquisition of the launch business for £24 million, proceeds from the side of the animal health business which was just £100 million on the first tranche, and then some capex costs that sit alongside that. In terms of the launch acquisition, £24 million was an upfront payment. There is deferred consideration of up to £13 million to do with the future sale of COVID products, which exceed £2 million in any of the next three years. Our assessment at the end of this year is that there is unlikely to be more than £2 million of COVID sales in any one of these years. So we do not envisage paying any more of the 13 million deferred consideration. And that's clearly stated in the accounts as we sit there. The financing activities of the just shy of 57 million reflects the bond that was received, which was 55 million at a 5% discount. So that was just over 52 million of cash we received. The placing proceeds and the open offer, which totaled another 9 million gross from that, less than any of the transaction costs associated with that. That left us with 42 million cash at the end of the year. Just to give you a bit more of an update, some reassurance, the cash position at the end of March this year, March 23, is circa £39 million because we've had the benefit of the financial year 21 R&D tax credits coming through, which was £2.8 million, which came through in January this year. 39 million good strong cash runway to see us through 23 well into 24 and as you'll appreciate the the level of spend on the third therapeutics programs can vary quite significantly depending on how quickly those programs are accelerated so well well positioned from a cash perspective to take us well through into the back half of next year If I move on to the balance sheet, just to explain some of the categories on here, because again, there's been a lot of different accounting as we look through this. The non-current assets of 37 million reflects plants and equipment. The leases that we have to account for for the buildings that we have around the group. So that's the current VATS buildings, plus those that we acquired with Launch, plus the goodwill in terms of the acquisition from Launch and also our investment in the AFIX LJB. Current assets have increased to just shy of £14 million but again we've taken on the current assets, so the trade debtors and things of the launch business, so we would expect that to grow. Cash of £42 million, the assets held for sale last year was the animal health business as we had to reflect that at the end of last year. Current liabilities of £14 million and then non-current of £60 million. Now that £60 million consists of our leases to do with So that's reflected in a couple of different ways because you have to value a derivative component of it, which has a value of 39 million. And there is a debt value of 19 million. Those combined together give you your 55 million overall bond value, because at the end of the year, none of the bonds had been repaid. Since the end of the year we have had two quarterly amortisations which have been settled in shares and there was an early conversion in February. So the value of the overall bond at today is just under £47 million and we've settled the conversion on those previous ones. and that will continue as we progress our way through this year over the term of that bond. So just to summarise, 42 million cash at the end of the year, 39 million at the end of March, well funded to drive us through well into 2024. I'll now hand back to Alastair to give the business update.

That's great, thanks Tony, thanks very much. Okay, so I'm going to start with the therapeutics division, and I assume that some people on the call perhaps are not familiar with Abactrin Detail, so a little bit of background. So the therapeutics division is a clinical stage oncology drug company. Our vision is to deliver genuinely transforming treatments that improve the outcomes for cancer patients and improve their lives. Our approach to doing that is to harness our two proprietary platforms, so the Precision platform and the AFIMA platform, which obviously we'll go through more in the presentation. very much in the last couple of years on the precision platform because of its potential to drive near-term value. But I'll certainly touch on the AFMA platform, and we'll talk much more about that later in the year as well at the AGM. So our approach is to leverage those two platforms to develop best in class and first in class cancer therapies. Very much a focus on growing our clinical pipeline alongside focused but selective out licensing opportunities. It's important that we maintain our own in-house clinical pipeline. So I know there's a question later on about licensing strategy, and we certainly would not be looking to out-license our lead clinical assets to a third party. And then combine our in-house drug development capabilities with partnerships that allow us to develop off our balance sheet the two platforms in different therapeutic areas. So the pipeline really reflects that strategy and that vision. I won't read through all of this. We'll go through it in subsequent slides. But the two lead programs are the precision programs, ABA 6000 and ABA 3996, which I'll spend some time on. Then the AFIMA programs, the multi-specific AFIMA programs and the TMAC program, as well as a number of undisclosed precision and AFIMA targets that are very much in the early research phase. And at the bottom of this pipeline are our partner programs, which I'll give you an update on towards the back end of the presentation. Okay, again, assuming there are some people on the call who are not familiar with the precision platform, just take a minute to introduce that technology. So the precision technology is a proprietary chemical modification. And we're all familiar with the systemic toxicities of chemotherapies, which really affect the tolerability for patients and thereby the efficacy. So it's the systemic toxicities rather than the efficacies of these toxins that are the issue. A solution to that is to target the release or the activation of the chemotherapy to the tumor tissue. Precision allows us to do that because it allows the chemotherapy to be selectively activated in the tumor tissue by an enzyme that is upregulated in most solid tumors and at a low level in healthy tissue. So it gives us a tumor-specific activation mechanism. of the precision chemotherapy. And that, therefore, is designed to improve the safety and tolerability because you reduce the systemic exposure and thereby improve the efficacy. And I can illustrate that with ABA6000 in particular. So ABA6000 is a modified, a precision modified form of doxorubicin. So you can see in the left-hand panel on this slide the doxorubicin molecule that's circled and then the precision chemistry which is a simple dipeptide that precision chemistry which is added to doxorubicin to create AVA 6000 and the key point here is that AVA 6000 that modification prevents the molecule from crossing the cell membrane and therefore getting into cells to kill them. So ABA6000, to put it crudely, is inert when administered to the patients as it goes around in the circulation. As it goes around in the circulation, it will go through the tumor microenvironment where it will encounter the enzyme that I mentioned, FAP, fibroblast activation protein alpha, FAP alpha. And when it encounters, when ABA6000 encounters that enzyme, which is primarily in stromal tissue on fibroblasts as well as on some cancer cells, but predominantly in the tumor tissue, as I said, and not in healthy tissue. So when ABA6000 encounters FAP, it removes the precision chemistry that we've added. So you can see in the panel on the right, The removal by the enzyme of the chemistry that we've added, releasing doxorubicin, which can at that point in the tumour enter stromal and other cells in the tumour tissue, causing the cell killing that we're looking for. Okay, so we are in the later stages of a dose escalation study. So this is a safety study. We'll talk a little bit more about that when we talk about the dose expansion phase as well. I know there's a question or two on this as well. So the phase 1A dose escalation study is designed to deliver safety and tolerability information. The patients that are recruited into this study are not recruited specifically to give a potential of an efficacy signal, so they will be heavily pretreated, late-stage cancer patients. And the dose escalation study is exactly as the name suggests, beginning at a relatively low dosing of ABA6000, equivalent to approximately the normal dose of doxorubicin in cohort one, and then escalating through increasing doses in order to identify the maximum tolerated dose, the dose range for ABA6000. When we designed the original clinical trial, we designed it for four cohorts. We have not, in the first four cohorts, reached the maximum tolerated dose, which is obviously better than we could have hoped and extremely promising. So we've now progressed on to the fifth cohort. And we've opened a couple of US sites as well that will contribute into the phase 1A study as well as the phase 1B, which I'll touch on in a second. But to summarize in the interest of time, the phase 1A dose escalation data from a safety perspective. AVA6000 has been well tolerated across those first four dose cohorts. So we've seen a really significant reduction in the frequency and the severity of the usual toxicities, including the serious hematological toxicities, neutropenia, thrombocytopenia, anemia, and also the cardiotoxicity, which we've not observed. So it is the cardiotoxicity that is responsible for causing the lifetime maximum cumulative dose that a patient can have of doxorubicin. So from a safety and tolerability perspective, very promising safety profile, seeing a very marked reduction in the sorts of toxicities, and in particular not seeing the cardiotox that is a key issue for doxorubicin. There is, of course, the potential that we're never releasing, 6,000 is never releasing doxorubicin, and that clearly would not be the objective. But I'm very pleased that in January we could confirm from tumor biopsies, which were not mandatory in the dose escalation phase, but from tumor biopsies, analysis of those biopsies taken from six patients, we can confirm that we are seeing doxorubicin released in the tumor tissue at a much higher level than we're seeing systemically at the same time point. So to summarize, really promising safety profile, And the biopsy data do indicate that we're getting release of doxorubicin, reflecting the preclinical data that we saw and obviously supporting the concept of the precision targeting of FAP-rich tumour tissue. So just to move on to the phase 1B study, which will start later this year as we complete the phase 1A. So the phase 1B is designed and the patient recruitment will be such that we can see an efficacy signal. So the group of patients, the rationale is, for selecting soft tissue sarcoma as the indication to go into is that doxorubicin is the only therapy that's indicated first line for advanced soft tissue sarcoma. Doxorubicin itself has a fairly marginal efficacy of 18%. overall response rate with six months progression-free survival. The design of the study takes into account the fact that the PK data, so the pharmacokinetics that we're seeing in the phase 1a, so the pharmacokinetics is telling us what the systemic exposure of the patients are to doxorubicin released by ABA6000. So that's telling us that we can extend the number of cycles at least two to three times because of the targeting of the doxorubicin into the tumor tissue and that reduction in systemic exposure. So all of that goes into the design of the Phase 1b. And as you'll see, there are three arms to that. So it's intended to be an open-label, randomized design. in metastatic soft tissue sarcoma there are two different dose levels of ABA 6000 planned as well as a doxorubicin arm to give us that comparative data when we talked recently on a video we produced about the about the biopsy data the clinical data to date and I made the point that there really isn't any published data on the levels of doxorubicin that you would see in a tumor. That data isn't out there, at least it's never been published. So that third arm will allow us to get comparative data of our own, and that will then inform the design of the phase two study, which could be pivotal. Okay, so let me move on to preclinical programs and first of all to talk about AVA3996, which I think is a really interesting molecule with huge potential. So let me first of all talk about proteasome inhibitors. And again, we... We recently, in that video, spoke about the data, the preclinical data for AVA3996 that was presented at AACR. So if you want a more fulsome run through the preclinical data, which is quite extensive on that poster, then there's a video on our website you can download as well as the poster. But a brief bit of background then on 3996. It is a precision-modified proteasome inhibitor. The proteasome inhibitor, you can see in the right-hand panel, circled in blue, is a very close analogue of bortezomib, which is Takeda's Velcade. It's not identical, but it's very, very close. And the precision chemistry that modifies that proteasome inhibitor, which we call 2727D, the precision is circled in red to give you the ABA3996 molecule as a whole. So the proteasome is the part of a cell that gets rid of protein waste. So I apologize for the simplification of this, but the garbage disposal system, if you like, of the cell. Now, if you prevent the cell from getting rid of that protein waste, then that can be fatal to the cell, is fatal to the cell. So a proteasome inhibitor that stops the garbage disposal system working is going to lead to cell death in most types of cells. So, thinking about the proteasome market, it's forecast to grow to over 2 billion by 2026, but it's really important to note that that is a market that's Actually, very restricted by the severe dose limiting toxicity. So these types of drugs, proteasome inhibitors are only really approved in B cell malignancies. So principally multiple myeloma. So this this market is very much restricted to hematological tumors because you simply cannot get enough. into a patient to get enough into a solid tumor without very, very severe or fatal side effects. So just to make a comment about drug positioning and AVA3996 positioning, we would not be positioning AVA3996 head-to-head with Velcade in multiple myeloma. That is not the intention. You'll see on the next slide, as we talk about the PDX efficacy data from the AACR poster, that there is good indication that we can target the 2727D, the proteasome inhibitor, to solid tumor tissue, which opens up the possibility of treating solid tumors with a proteasome inhibitor for the first time. So don't think about going head to head in the multiple myeloma market. That's not the intention. It's to create an entirely new opportunity in solid tumor treatment. So that data, and this is the only data that I pulled in from the poster we recently presented in Orlando, but there's quite a lot on this which really sort of tells the story. So let me first of all deal with the top panel. So these are mouse models of efficacy. They're called PDX models, so patient-derived xenograft models where you take cancer tissue or cancer cells from a cancer patient and implant them in mice. If you look at the left hand graph, so the top panel is a melanoma model. So this is melanoma PDX model in mice. The left hand graph shows the growth of the tumor in the mouse over time. with the black line being what we call vehicle, which is effectively just a placebo, so that the tumor clearly grows quite significantly over the period. And then two other groups of animals treated with AVA-3996 and bortezomib, which is Velcade. And what you see there is that 3996 is as effective as bortezomib in effectively flatlining the growth of that tumor in that melanoma PDX model. What's interesting to to see is in the middle panel where the body weight of the animals is monitored as an indication generally of of of toxicity of the treatment and you can see with the the blue line which is the bortezomib that the animals lost significant body weight and in fact had to be given a break from the treatment with bortezomib at one mig per kick in order to recover whereas those toxicities were not seen with the vehicle or with 3996. So, you know, very much an indication of that targeting to FAP-rich tumor tissue in the PDX model. So we repeated the model on the left-hand panel, and you see the results on the right-hand panel with a reduced level of bortezomib, which is more tolerable for the animals. So there you see a comparison of AVA3996 again with bortezomib at a lower level. also dosing the animals directly with 2727D, so not being released from 3996, but directly delivered, and also compared with trimetinib, which is the standard of care for unresectable melanoma. And you'll see that all of those, 3996, 2727D, bortezomib, and trimetinib, were all equally effective in stopping the tumour from growing in that melanoma PDX model. So, as I said, a proteasome inhibitor, you know, is a very, very broad cell killing instrument. And, you know, opens up the possibility of at least thinking about tumor agnostic treatment. So we've run more models than this. Now we continue to run other models. But there are two here in the bottom panel, a sarcoma. PDX model and a colorectal cancer PDX model. And again, you see that 3996 and bortezomib are certainly comparable in their reduction in tumor growth rates in both of those PDX models. So as I say, you know, potential to be at least thinking about a tumor agnostic therapy. So the key takeaways, at least from this, you know, this set of data is that 3996 is as effective in releasing a proteasome inhibitor in FAP-rich tumor tissue as effective as bortezomib, Velcade, and drometinib, the standard of care for melanoma in that melanoma model. and that we didn't see the same level of toxicities in that first set of experiments with 3996 compared to when when the animals were treated with a MIG per gig of bortezomib. So very encouraging. We're now obviously pushing through the IND enabling preclinical studies, toxicity, you know, tox models and so on, with a view to IND filing as soon as possible, probably early next year. Okay, we don't have a huge amount of time today and I want to talk in some depth about the Diagnostics Division. I'll just go through a couple of slides on the AFMA platform, but also just put a marker down that at the AGM this year we'll spend a lot more time talking about the AFMA platform and have an opportunity for a lot more Q&A across the board. So just very briefly, for those who aren't familiar with the AFMA platform, the second of our proprietary technologies is an antibody mimetic, so an antibody alternative, if you like, which is a small protein that's engineered to have a binding surface so you can develop inhibitors or agonists as you would do with an antibody. But there's a number of technical benefits to having a small, stable binding protein that you can select against different targets in an in vitro selection assay rather than generating antibodies through any other method. So those technical benefits are driving our strategy to differentiate the AFIMA So first of all, they allow us to address some difficult targets that have historically been very challenging for antibodies to address such as GPCRs. It allows us to also drive the selectivity during the phase display and the way we generate the athmos to get exquisite selectivity for the target antigen. So that's another key advantage to differentiate this platform from antibodies and other memetics. And to be able to build multi-specific, but importantly, And by that, I mean, when you build dimers and trimers, they are stable and you can manufacture them with reasonable yields. So developable multi-specifics. And that's reflected in the summary of our presentation. internal research programs on the next slide, which, as I say, we will at the AGM take more time to go through these and update on some progress. So there are three main programs, one bispecific combination of PD-L1 antagonist with cytokine, one PD-L1 bispecific with LAG3, And the other, a tumor microenvironment activated drug conjugate. So actually combining the precision chemistry in the linker with an aphema, or of course potentially an antibody, but an aphema in our case, the precision linker with a very potent toxin that can be released in the tumor microenvironment. Okay, in the interest of time, let me touch on the partnerships and then into the diagnostics section, because I do want to get to some of the questions that have been asked. So from a partnerships perspective, Affiexcel is a joint venture that we have in South Korea with Daeung Pharmaceutical. As Tony mentioned, we have a 19% shareholding in that joint venture now. It's a really interesting basis for a cell and gene therapy company. So what we have demonstrated with Dayoung and Affiexcel is that we can modify stem cells. to be able to make and secrete AFIMA immunotherapies such that the stem cell in situ in the body can make its own immunotherapies to support the stem cell activity. So there are two key programs there. One is based on mesenchymal stem cells secreting an anti-CD40 ligand AFIMA for use in something called guest versus host disease. And the second is MSC secreting an agonist that hasn't been disclosed yet, but this data will be presented later in the year for use in MS and type 1 diabetes. So AFI Excel itself has made good progress over the last 12 months in terms of partnerships and fundraising. And as I mentioned, 19% shareholding, which the way we've structured this arrangement is that we can claw back equity. We don't put cash into this joint venture. So when we're diluted through funding rounds, we can claw back equity as we put AFIMA IP into the business. For example, the anti-CD40 ligand AFIMA IP. LG Chem is by coincidence another South Korean pharmaceutical company, obviously a subsidiary of LG. The key program here which quite likely will be the first AFIMA program into the clinic, into human, is a PD-L1 antagonist. What's really interesting from our perspective is not only is it an AFIMA PD-L1 inhibitor, an immunotherapy, but also it's a bispecific using an AFIMA for half-life extension. So this really will prove the platform in terms of the multi-specificity that I've talked about, the selectivity, and of course the key data in human is the safety and tolerability to the AFIMA platform, which is significant value add for the platform and the company as a whole. We expect LG to take that into the clinic before we do. We don't have a precise timing on that. I think it's unlikely to be this calendar year, but that probably suggests next calendar year. So it is a PD-L1 antagonist with a human serum albumin afima binder to extend the half-life towards antibody-like half-lives, despite the fact that this is a much, much smaller molecule. Okay, let me move on then to the diagnostics division. So the vision that we have now having embarked on an M&A-led growth strategy for the diagnostics division is to build a fully integrated and through the use of the AFIMA platform in terms of immunodiagnostics, a differentiated IVD business, a European IVD business, with significant global reach. We'll talk about the strategy in a moment on the next slide, but the mission is straightforward, is to support professional healthcare, healthcare professionals, but also broaden access, broaden access to diagnostics for everyone to improve treatment monitoring and improve health and fitness. So let me, again, we certainly will at the AGM take more time to go through the strategy. You know, we don't have a huge amount of time today if we're going to get through questions. But let me sort of set the scene about how we look at the IVD sector, how we think about that, and then also the diagnostics value chain and how that's driving our strategy in terms of the M&A-led growth of the diagnostics division. So, as I said, the key... The key objectives are to support healthcare professionals and improve access to diagnostics. The way we look at the diagnostics market to be able to address both of those objectives is through centralized testing, which is in hospitals effectively. So centralized pathology, laboratory testing, and also decentralized testing, which does occur in hospitals, in triage, for example. but also in GP clinics, in pharmacies and via obviously selling tests directly to consumers, but also selling sampling kits to get consumers, patients to sample themselves and then send the test off where the test can be run within a professional environment. And I think that's a That's probably a key theme that's central to our thinking is the execution of the test to be within that professional environment. So as I say, centralized testing, pathology laboratories in hospitals, but also some rapid near patient point of care testing, which is predominantly lateral flow tests, although there are There are certainly new technologies to allow molecular testing, PCR type testing to be carried out at point of care. And then point of care tests and lateral flow tests and self sampling to improve that access in the more decentralized setting in GP clinics, pharmacies and at home. And we'll talk about LAUNCH on the next couple of slides, but LAUNCH very much fits, you know, that picture is a piece of the jigsaw, if you like, that fits that picture in the centralized testing, whether that's through rapid tests or automated equipment and reagents and consumables in the pathology laboratory. So that's the way we are looking at the markets and certainly how LAUNCH fits as a first piece of that jigsaw. It is worth just talking again in order to understand what's driving our M&A strategy, talking about the diagnostics value chain from the left hand side of the value chain, which is the IP rich strategy. product development, innovation, the generation of value at that end of the value chain to the right-hand side of the value chain where the value is through obviously the sales revenue, the customer relationships, that market intelligence that then drives future product development. So manufacturing in the middle is not something that we are focused on We are interested in what we would think of as the higher value parts of the value chain at the right-hand side, the commercial customer relationships, and the left-hand side, the innovation and product development. Okay, so LAUNCH, as I said, really fits in that strategy in terms of the centralised pathology laboratory and near-patient testing in the hospital setting. So LAUNCH was the largest independent UK IVD distributor, obviously now part of the Avactor Group. As Tony mentioned, we acquired the business in October last year for for 24 million sterling, has a significant business in the UK and also growing in France as well as some activity in some other countries. I'll talk about the next slide. Been around for over 30 years, very well established business with a very, very good reputation in the industry. And as I said, the rationale is to buy a profitable distribution capability into that centralized part of the diagnostic market that I've just described. So just to talk through a little bit more detail, founded in 1990, provides a broad range of immunodiagnostic and molecular test products, along with the reagents and consumables that have that sort of recurring annuity of revenue to go into those products, as well as the technical support and maintenance, primarily in the UK and France, about 75-25% split UK and France. uh but with some business in belgium luxembourg and the republic of ireland as well customers are primarily public and private hospitals obviously nhs in the uk as well as private hospitals and a mix in in france a very very experienced management team they've been with the business a long time very very good reputation in the industry as i've said so a great business model to think about expanding into other geographies which i'll mention in a moment And sales delivered largely through tenders, contracts, long-term contracts that have a high level of repeat business. So quite sticky revenues that we get a very good visibility on in terms of planning. So if we think about launch in terms of the numbers, What's really important to emphasise is that like a number of diagnostic businesses, there was significant COVID windfall. So we've been very careful, first of all, when we acquired the business, not to value that because we don't see it continuing. It's not continuing. But to also describe this very transparently, the core business in 21 was a £14.2 million non-COVID business. In 22, recovered to pretty much pre-pandemic levels at £16.5 million. And Stiefel forecast for 23 is £18 million non-COVID, nothing to do with COVID revenue. So that's from the sale of a a broad range of products and reagents and consumables in the UK and France, as I described. Most of the activity and people are in the UK, but there is a logistics, a new logistics facility in Oul in northern France, which obviously services France and potentially other countries as well. So just a final slide on launch then. I mean, it's clearly important that we grow this business as we expect to do in 23 and onwards. There's a number of opportunities for growth, short, medium, and long-term, but obviously growing the sales and marketing activity can drive near-term sales, particularly into the base of a much larger base of PCR equipment that's now in place because of the pandemic. In the medium term, adding new products, which may be developed by us, may be small acquisitions of product portfolios that we can put down this channel. But certainly, we added a new automated autoimmune analogy system into the business last year from Hobb. So expanding the portfolio of products is clearly a way of growing this business. But the most significant opportunity that we believe for growing this business is to expand it geographically. And there are no sales in Germany at the moment, which is the largest European diagnostics market. And that is a key part of our strategy to grow this business. And as we make progress with that strategy, with that project. I'll update the market at the right moment. So that brings us to the summary slide. We can get into some of the questions. So really just to sort of highlight those comments I made at the start. It has been a Very, very good phase 1A study for ABA6000. Very pleased with the results we're seeing in terms of the safety profile, but also the very clear significant release of Dr. Rubison in the tumor tissue. That's as good as we could have hoped for. That has meant that we've really accelerated ABA3996, which is the tumor-targeted proteasome inhibitor. And again, just to underline, you know, the market currently is really focused around hematological B-cell malignancies. But that's not the disease positioning that we are thinking about. If we can target into solid tumors, as those PDX models suggest we can. that creates a very, very interesting opportunity for the first time for proteasome inhibitors in solid tumors. And that did get a lot of attention at the AACR meeting around the AVA-3996 preclinical poster a couple of weeks ago. On the diagnostic side, the Funding is there to give us the flexibility, having now acquired launch diagnostics for some careful and focused M&A, potentially buying product portfolio. But obviously, we are very mindful of the achievement of the need to achieve the key therapeutic milestones as well. I'll leave it there, Mark. And if you want to go through some of the questions, that'd be.

That's great. Alistair, Tony, thank you very much indeed for updating investors. And just before we turn to questions, I'd just like to remind investors that recording of today's presentation along with a copy of the slides and the published Q&A can be accessed via your investment company dashboard. Alistair, Tony, we did, as you know, receive a considerable amount of questions submitted today and a number of questions throughout today's meeting. So thank you to everybody for your engagement. What we try to do, I guess, is try to put these into themes and hopefully by addressing these themes, it will address some of the questions that maybe we may not be able to read out specifically, but hopefully that these questions will cover a number of those themes. So let's kick off, if I may, with the first one, which is what is a VACTA's commercial strategy for its current therapeutic assets, including AVA6000 and AVA3996 and beyond?

Yes, I mean, I touched on that in the presentation. I think the key point is that we we're committed to the clinical development of both of those assets internally in-house to maximize value. So it would be a strategic mistake to license our lead assets in any significant way. We would certainly be opportunistic to. partnering assets in a sort of well-defined area for high-value licensing opportunities, but it's critical that we keep those lead clinical programs and preclinical programs in-house. So there is, of course, the potential to monetize the precision platform outside of those two assets. You know, more broadly with third parties that have warheads in an ADC setting or toxins that they want to develop to target into the tumor in the way that we're doing with 6000. So there's an opportunity to monetize that platform outside of 6000 and 3996 as well.

That's great. Thank you. And I know there's a number of these questions you may have gone through the presentation, but anything else that you can add would be great. The second question reads as follows. Can the company confirm that the completion of AVA6000's Phase 1A is still on track for H123?

Yes. Yeah. So broadly on track, I mean, obviously, it depends on the size and number of cohorts that we go through. You're all aware that it's a it's a three plus three dose escalation study. So that means if you see a DLT in a cohort, then you expand with another three patients. And if you don't see a DLT, you continue to the next cohort. So clearly, if you run six patients through a cohort, it takes longer than three. So, you know, it's difficult to predict exactly what we're going to see. But yes, we expect to finish around the mid-year and then progress on to the phase 1B. So I think if what's behind the question is, is the phase 1A going to drag on to the back end of the year, the answer is no, and we'll update the market. you know, as appropriate as we go into each cohort and reach the MTD.

Thanks ever so much, Alistair. Why is the company continuing to dose escalate in its Phase 1A trial to find a maximum tolerated dose when enough doxorubicin is getting into the tumour in Cohort 4?

Yeah, it's a good question. And I mean, the first point is that the MTD, the maximum tolerated dose, is critical to define the dose range for all future studies, whether that's us or by a partner, as we just discussed. So we need to be able to define the maximum dose range so that people can, in future, plan their clinical developments of the assets. So I think you also need to remember that we're getting, as we do this and we reach an MTD, we're getting a very detailed picture of safety, tolerability, PK, pharmacodynamics, and all of that is the first time that the precision platform itself has been inter-human. And therefore, all of the data that we're gathering is tremendously valuable in terms of the value of the platform and partnering and so on. So it's really important that we fully explore the dose range, even though it's taking longer than we originally thought. But that's a really positive thing because we're way above where we thought we would get to in terms of dosing.

Thanks very much, Alistair. Next question has a couple of parts to it, so let's go through those. We've heard a few times the patients in cohort 1 to 4 were not expected to respond to AVA6000 given their types of tumours. However, one of these patients, C1, was ovarian and 1, C3, was soft tissue scarcoma. Why were these patients not anticipated to respond to AVA6000 given their tumor types? How will AVA6000 eventually be administered? And is it not as simple as the more doxorubicin in the tumor microenvironment, the better?

Okay, so there's quite a bit in there. Nothing simple in drug development would be the first comment, but let me sort of answer the questions. So what That point about efficacy, I think I touched on that in the presentation. So what you have to note is that the patients that are recruited into a phase 1a safety study are heavily pretreated late stage or end stage patients. And their cancers will be well advanced and will probably have developed escape mechanisms to evade therapy. So you cannot recruit patients into a phase one safety study that have an alternative. You know, if they haven't yet been treated, then they will go into the standard of care for whatever cancer they have. So you can't take those patients into a phase one safety study. So they're all heavily pretreated. They're all late stage cancer patients. They probably have escape mechanisms. For example, tumor cells and other cells develop pumps that take the drugs out of the cells. So PGP pumps that take the drugs that you put in out of the cell. And another mechanism that's very common is what's called senescence, where the cells. simply stop dividing to try and avoid things like topoisomerase inhibitors, which doxorubicin is. So you would not expect, even in an ovarian or a soft tissue sarcoma patient that's at this stage, to necessarily respond to a topoisomerase inhibitor like doxorubicin. That's because of the patients that are chosen. In the phase 1b, A different group of patients will be selected for exactly that reason so that we can have a good chance of seeing efficacy. So hopefully they will be first line treatment. So anthracycline naive patients in the phase 1B, that's certainly what we're aiming for. Then I think the next part of the question was how is it going to eventually be administered and is it as simple as just getting more doxorubicin into the tumor? The answer to that is almost certainly no. Of course, that's what the Phase 1b is designed to evaluate. But we don't think that just getting more drug into the tumor in a short space of time is going to improve the outcomes of patients. So, for example, in terms of progression-free survival, we think that a lower dosing, let's call it a normal level of dosing, but over many more cycles is going to be more effective. So the phase 1B is designed to determine that, obviously.

That's great. Thank you. Will the U.S. sites be recruiting to help with the final cohorts of AVA 6000's Phase 1A trial and then play a major role in the Phase 1B?

Quick answer to that. Yes. So the U.K. sites, the U.S. sites, all recruiting into Phase 1A. and they will all play, along with other sites, a key role in Phase 1B.

That's great. Thank you. You've always talked about the value of AVA6000's data will bring to the precision platform. Could a vector elaborate on what successful AVA6000 trial would provide to the platform?

Yeah. So thinking about the Phase 1 as a whole, so the 1A and 1B together, the first thing is proof of concept, which is the evidence that we're seeing that the preclinical data translates into humans. So in other words, we're targeting the release of a chemotherapy into FAP rich tissue and thereby reducing the systemic exposure. So we are already seeing the emergence of those data, which is great. The second thing for the platform that denotes success is getting really detailed pharmacokinetic and pharmacodynamic data that really lets us understand exactly that process I've just described, how that happens over time, because that leads to the design of future clinical studies. Getting a clinically clear, better safety profile for a drug like doxorubicin. Those are all indications of success. So for the platform as a whole. And then for 6000 in particular, of course, it'll come when we get into the phase 1B to see efficacy at least as good as with a much improved safety profile and longer treatment and possibly better than doxorubicin.

That's great. Thank you very much, Alistair. A few more, if we may, just tackle these. What is the process for FDA fast-track approval? Does a successful Phase 1b data readout in soft tissue scarcoma mean that there's potential for the drug to be given fast-track approval from the FDA or other means of accelerated approval and ultimately generate revenue for the drug sooner than anticipated?

Yeah, so obviously we are committed to move ABA 6000 through clinical development through the best possible route and get it generating revenue as soon as possible. But the answer to that question is no, the phase 1B data is not sufficient. So with the phase 1B and the phase 2 data, that would be taken and reviewed for fast-track approval. But we should bear in mind, and the question sets it out as well, there are other routes through the regulatory process which could be more suitable for ABA 6000, given that it's releasing doxorubicin, which is an established drug, and we're exploring all of those options. So we will pick the best regulatory route to get the drug to market as soon as possible.

Thank you. I am mindful that this is day one of your results roadshow. I'm very grateful that we've got a slot so early on that roadshow, so I'm mindful not to overtake our time. But maybe if we finish up with the last question, Takeda's Velke patent expired in 2022. Does Avactor see this as a significant market opportunity for AVA 3996? And as a result, is there an additional focus on partnering with pharma, such as Takeda, to expedite market access?

Yeah, so again, hopefully I was clear in the presentation that certainly we're not intending to compete with Velcade for use in blood cancers. The idea of 3996 is to position it as an FAP activator treatment for solid tumour, so a different market. But the answer to the question about partnering is clearly, under the right circumstances, with a high-value partnership that isn't detrimental to our own value generation in the clinic. That would certainly be of interest. We can't possibly develop all the precision chemotherapies that we can we can think of. So we have to partner them in order to get them to market in a sensible time.

Well, Alistair, Tony, thank you very much indeed. And once again, thank you to everybody for your engagement, both ahead of today's event and your engagement throughout. I know investor feedback will be important to you both, and I'll shortly redirect those on the call to give you their thoughts and expectations. But Alistair, before doing so, I wondered if I may just ask you for a few closing comments, and then I'll send investors to give you their feedback.

Yeah, thanks, Mark. Well, I mean, first of all, thank you for everyone sparing the time to go through the presentation with us. Really, just to reiterate the point, you know, we haven't managed to get onto the questions about diagnostic strategy and so on. I'm sort of very aware of that. And we will take the first opportunity, if not at the AGM. As I say, we're going to spend more time at the AGM to give shareholders an opportunity to go through these things. So apologies for not getting through all the questions that were submitted. There was a very large number, but we will do. We're not ignoring them. Thank you, everyone.

That's great. Alistair, Tony, thank you once again for updating investors. Can I please ask those investors on the call 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 it will be greatly valued by the company. On behalf of the management team of Vactor Group PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all.