Verici Dx plc

Good afternoon, ladies and gentlemen, and welcome to the VericiDx investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Just simply type in your questions at any time and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions and will publish those where it's appropriate to do so. Before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand over to CEO Sarah Barrington. Good afternoon.

Thank you, everybody. Appreciate the time. Let me just flip through. This is a progress report. and we will also have a financial section on the results that were issued earlier in June for the year end. Okay, so what I'd like to do is just give you an update. Obviously, the company is in its pivotal year, moving from just a pure play R&D company over to a commercial company. And that's reflected in the launch of Tutivia. That was at the beginning of the year. And we'll cover some of those points and some of the feedback that we've got. Obviously, as previously noted, we are using an early adopter program for that initial rollout. The benefits being that firstly, we can have KOL development That means that the clinicians that are using it in their sites will be able to be out in the marketplace talking to other clinicians. As you recall, your best credibility is clinician to clinician. So that will be a very practical way forward. Also for us, it enables us to understand how this gets rolled out. both commercially, how it sits within the clinic, how clinicians view it, and I'll go through that feedback, and also how you get into repeat ordering, both in the centre, across clinicians, and also across patients. So last week, the good news on Clarava. So that was successfully exited from the validation study and we'll go through the results and what those means. And then we'll have our initial commercial launch by the end of the year. On the commercial track, we did get a provisional pricing from Medicare. So what does that actually mean? So first of all, we talk about a code, a price, a coverage determination. This is on the pricing. The way that CMS is organized in the US is that it's got sub areas. We're in the Palmetto region under the Moldy X area. There are two very influential, what they call MACs, those are the governing bodies for CMS, that gave their view and their recommendation on the pricing. That tends to carry the day, so we are expecting this to carry through to national listing at the end of the year after public comment. This is the price that we asked for. So we were very happy to get that endorsed by our major area. And then, of course, just a reminder that given this was recommended by the Palmetto and all of our claims will go through the Palmetto, that is the pricing that we're expecting. For anyone that has seen a reduced price in the marketplace from us, that is our long-term aspiration, which is to pull down this pricing It's a bit like a volume discount. This is the price that we want to launch with. It's under the competitors pricing, but not so much so that it raises into question the credibility of the technology. But over time, we will pull that down if we can get into monitoring claims and the volumes go up. So this is exactly our sweet spot for launch. Then also we have what we call the false products. So if I can remind you, our clinical products are the pre-transplant, Clarava, Tutivia, early acute rejection, Protega long-term. The first two are out of the clinical validation now. The third one's still in the validation study, has a longer term outcome. But then behind all of that, we have a research asset and that's what we call our fourth product. That was subject to the wider collaboration with Illumina that we announced. And then essentially that enables us to have revenue generating collaborations in the research space. Again, that's what we see as our fourth product. Just as a reminder, we do have a large total addressable market. Happy to go through how we calculated that. That end-to-end platform is unique in our space. It not only is advantageous in terms of that continuum, but as we have noted before, the early data suggests that each test informs one another. And so you move out of launching three individual tests into being able to offer a solution, a platform, as it were. And that is something that's highly important. differentiated in the marketplace. And then obviously behind all of that, that data that's one of the largest sets in this area, in this disease group, and obviously of great interest for collaborations moving forward. Operationally, one of the things you will have heard us do is respond to the changing market conditions. As you all know, we IPO'd in what we might call a growth market. We've recognised that that tone of the market has moved away from growth into revenue-focused and prudent cash management. We have pivoted. We did issue before that we had extended our cash runway into the end of June 2024. And you will see us being smaller than we might have expected at IPO as we conserve those cash. So we have still hit our milestones. but we continue to very actively manage our cash and how we move on to the next few milestones. Operationally, just so we can have a nod to the regulatory, we were already clear approved in 45 states. That was also subject to an audit before you get your full certification. We did that this year. It was very successful. And now this is somewhat out of date as we address the remaining states. We're now 47 states and we are filed. Something that is of interest to both the CLEAR regulators and the clinicians themselves is something called an analytical validation. Essentially, the purpose of that is to really look at the reproducibility of testing in our lab. The last thing you want is varied responses depending on who is running the tests, at what time, etc. And we do the studies to prove that it's very, very consistent. And that was successful. Obviously, we've talked before about the code. We're now on pricing. And the other bit of, if you like, housekeeping that was exciting for us this year was the two key patents in the United States. Obviously, we've been having approvals on our patent portfolio worldwide. But I think these two were of particular interest, given the US is our initial large market. And these are the two that covered our two lead products, excuse me, Clarava and Tutivia. And so it was good to see those. Obviously, with patent protection, it's only one leg in in terms of how you preserve your assets. You have a defensive position. And what we have done is as we progress as a company with further developments, we wing fence this initial patent portfolio with our own filings so that you keep extending not only the protection, but the time limits on those. And then obviously we've talked about the research asset, which at some point we will name a little bit more elegantly. So feedback from Tutivia. Obviously, as we've gone out into the marketplace, as I've said, we're trying to get feedback. How is this perceived by clinicians? How do they want to use it? How do we get that widespread adoption? And I thought it would be very helpful to hear from the clinicians themselves. So here are three key quotes. Let me just talk to you about the themes. You know, when we look at tutivia, there's this early theme. One is early in time. So if I can refresh your memory on the main competition in this area, it's from a technology called Cell Free DNA. I've always said it's a bit like measuring the debris in the blood after the injury. It's a late biomarker. And obviously, our technology is hugely differentiated in so far that it gives a reliable response anywhere from the first week post-transplant. So those first few months are quite critical. A lot goes on then. And clinicians have felt that they haven't really had anything that they really rely upon in that timeframe. So the other gene expression test is to be used in a surveillance or protocol biopsy center. That's after 90 days. And the cell-free DNA, although they have an apparent coverage from 14 days, we've heard clinicians say that they don't really trust the results until sort of 60 to 90 days in. And so, you know, this idea that we have, if you like, the first reliable early biomarker is reflected in that first quote. Excuse me. There's another aspect to being early and that is being proactive. And you'll see that from Dr. Von Mica's quotes where he's seeing this advantage to being proactive, not only for patient outcome, but in terms of looking at your resources. Obviously, in a busy clinic, it's very easy to just allocate the same sort of time. to each patient. But if you've got those, so in our clinical validation, only 25% of the patient population were high risk. If you know who they are in your clinic, Those are the ones you spend a little bit more time with, but also you're going to have the expertise of the top clinicians in that clinic very focused on the increased testing to monitor what's going on with those patients. So for him, the idea of being very proactive and being able to really focus on the importance of having a risk score, I think it's very important. Ros has always been a fan. She was in our original press release, if you can remember that. And one of the things that she has noted is the advantage of the clinical study. You know, it's what we call an all comers. That really means in colloquial terms, we threw the kitchen sink at it. And that is what you're going to see in the clinic. You don't know your subgroups. You don't know who you're looking at. And so you want all types to be included in a clinical study to be able to show that that's really the performance you can expect in your clinic. And that's what we did. We did a good PPV. And that responded very favorably to our competitors. But mostly it was really impressive because there were no subgroups. There were no problematic groups removed from that performance. That is highly reflective of what I might call the kitchen sink approach. So, so far we're seeing some very good responses. responses from our clinicians. And I'm looking forward to sort of building upon that as we go further into the marketplace on the and, you know, obviously, use these kind of comments and reassurances clinician to clinician. Some of you may have seen some chit chat about CMS. So CMS obviously being the reimbursement agency on behalf of the government for Medicare. Medicare being the major source of reimbursement for transplant care. And they did an update, and this is our review of that update. Modiacs have basically said that this is just a clarification, but it has led to a little bit more of confusion in the marketplace, and we expect to see some further clarifications coming from them. So what does that mean to Verici? Well, long term, highly beneficial. One of the things we have been already marketing was that we were a single biomarker test with this balanced accuracy. That means that the performance are good on both measures, the PPV and NPV, your sensitivity and specificity. It's good to sort of update that where the tests that had come before us were very high on the NPV, not so good on the PPV. So very much a rule out test. we had now come forward and said, with one test, we can progress the field in those performances. We were up against a trend in the marketplace about putting two tests together, a gene expression plus a cell-free DNA. It's what was being used as termed as multi-modality by some of our competitors. CMS said, no, we're not going to reimburse two tests, choose one. It's one biomarker per patient encounter. uh that led to two products being immediately withdrawn from the marketplace and again you know it sort of preserves what i call is our uh rare space so as a single biomarker this was uh therefore um you know came to the forefront once again highly beneficial long term to breaching Where we do see some confusion and where I would expect to see further, you know, announcements from Maldiex is they use surveillance and protocol interchangeably. There are two ways of looking at this area, the word surveillance. One is protocol. It's time-based. So centres that say at a certain time point, we will have all patients come in for a biopsy. That's a protocol center, about 17%, 15% of all centers in the US do that, quite a low percentage. And if you have a surveillance, if you like coverage, they're pushing them to be used in those protocol centers. But surveillance is also being used by the clinical community for monitoring. That's more patient centric. And so this clarification saying that it had to be only used in a protocol center, but it was surveillance, led to some confusion. And I would see CMS going down that route in response to clinical comment about that that was more, that needs some further clarification. For calls, there was also a clarification, a time clarification, A pre-test is used before a biomarker test. That's very standard of care. They then put in a time limit on that of seven days. This obviously has had quite a lot of comments back. that flies in the face of diversity and inclusion measures. Obviously, for patients, that's not only highly inconvenient, but in some cases, detrimental. If you think about, we, I think, have seen estimates of about a third of all patients live more than 50 miles from their transplant centers. you can understand the difficulties of having to come back at regular intervals just to do your labs. And we do expect, given the reactions from a lot of the not-for-profits on this area, to see some further clarifications. So, if you do see some things, you'll see some clarifications in this area. I think that will be highly beneficial. We do note that we are spending time in the marketplace, chatting with clinicians on the CMS clarification. It somewhat detracts from just the pure clinical conversation, but we anticipate overcoming that this year. It's just, I think, interesting to note that there are these industry-wide progressions in the background. OK, let's talk about Chlorava. Now, a wonderful curve there. If you're not a scientist, you will wonder what some of these terms mean. I can point out, if you see that red diagonal, that represents random chance. And you obviously want to have an area or a curve that is to the left of that, showing that you are statistically significant. You are more than random chance. That's what area under the curve, AUC, represents. As you can see, 0.72. We're very happy with that. The p-value just represents that it was statistically significant there. So good results there. The performance, which is up against outcome and biopsy, That sensitivity and specificity, good results there. And I think one of the things that is highly significant and becomes really intuitive as to why clinicians may be very encouraged by these results is the odds ratio. What does that mean? Well, we're a risk score, so we return you're either high risk or low risk, this patient. And the high risk patients are six times more likely to have a rejection than those low risk patients. And what that really means is the test does differentiate in a very meaningful manner. There are more measures. There are more positioning that we would like to do before a commercial launch. This is a novel test. We are seeing evolving thinking from our clinical community on how they might use this. So we are convening an advisory board to get some consensus on how we might roll that out before the end of the year. Obviously we're in the summer, you know, the joys of summer holiday schedules. So we will do that in the fall, ready for our abstracts further down the line and commercial launch before the end of the year. But very encouraging. We were delighted to see that. And we do, you know, the feedback that we have got in these initial responses is that it's going to be clinically relevant and very useful. And there's a lot of excitement about that. Let's do numbers. David, over to you.

Thank you, Sarah. Good afternoon, everybody. So at the end of December, we had 9.8 million of cash. and spending just over 10 million in operations and 1.3 on investing. In terms of investing, the largest element of that was our build of the Tennessee lab of just over 820,000. That's obviously now complete. In terms of going forward, we would expect, we do expect that level of spend to reduce and reduce for two reasons. One being that we are over the hump in terms of our clinical trial costs. And secondly, as you would expect taking an eager eye in terms of expenditure and monitoring that carefully and spending what we need. That said, in terms of with our projections and also our assumed levels of revenue, as Sarah referenced earlier, we expect our cash one way through to the midpoint of 2024. In terms of the income statement, again, largest elements of expenditure being wages and R&D. As I mentioned earlier, R&D will come down this year. In terms of wages, we had, at the end of the year, 15 people in the business. We currently have 14 people in the business. And then in terms of the balance sheet... Sorry, Sarah.

Oh, sorry.

I was just getting it wrong again. In terms of the balance sheet, so tangible assets, just over 2 million, reflecting really the spend on the clinical lab in the year. The intangible is the base license that we purchased from Renalytics, 1.5 million, plus the additional costs on the patents and other things to protect that. And then the other thing I'd mention is we continue to hold a large accruals. That's mainly for site accruals. This is where the individual sites have incurred costs but have yet to bill us. So that number is monitored and is quite large at the end of the year. Thank you, Sarah. Over to you.

Thank you, David. I think many of you will have seen this slide. This sort of helps us provide a background to our market sizing. And then obviously, you know, we have put out a market size of about 5 billion over five years. Why do I do that? It's because Protaker is run over a time continuum. Just so that everybody understands how we came to these numbers, we put it on about 100,000 transplants being run every year, kidney transplants, I beg your pardon. Let's be a little bit more precise there. And then we've assumed our own market size being how many times we would expect Carava, Tutivia and Protega to be run. You can see up here Carava will initially be one. I see that extending Tutivia. We did assume three times. We still see this being all over the place in terms of market size. I can see there's one outlier that did 11 times for this kind of testing from a leading institution. I was surprised by that. So I think three times is a safe average. And then Protega will be run over a number of years. That's the long-term outcome in terms of fibrosis. And then obviously this is just the addressable market in kidney transplants. If I can just refresh everybody on the overall vision. That's, as you can see, in the middle, the time continuum. We've talked about that. Obviously, this technology is likely to be highly applicable to other organs. And many of our PIs in the clinical trial also deal with other organs. So that would be kind of an easy expansion to our technology. And we did see early technology, early results in other diseases. I think RNA signatures, that's our base technology, very, very applicable to many different areas, highly expandable. And so there's plenty of further opportunity, should we so wish. And then obviously behind that, you see all the in-depth data that we call our fourth product. Let's talk about what's coming up in terms of likely news flow. We've divided into two. This is one of the kind of more operational sides. So obviously, New York and California are two big states. We are subject to audits there, so a little bit in their hands in terms of that timeline. But I would hope to see some news flow on that. We would like to obviously publicize some of the research collaborations that we expect to be coming up. And then obviously with the lead product to TIVIA, this year is the year we put in the file for the technical assessment for the coverage under the local coverage determination. So I would like to see that come out successfully. And obviously the team in the background is working continuously on further accreditation. This obviously supports the robustness of the lab and our offering in the marketplace. Publications, publications, publications. That's the year, the theme of the next 12 months. Tutivia is submitted into a peer review journal. We're working through the comments right now. So I hope that that is satisfactory and concluded shortly. It would be great to see that out there. And obviously, once we have that, we'll move on to... and to our application for coverage. The Clarava publication, clearly we've got some work in terms of positioning. Once we've done that, once we've got consensus, we can shape that publication. I'd like to see that out there. We've had to wait for the clinical performance metrics before finalising our health economics. I'd like to see some publications come out on that. Very encouraging there. And obviously, you know, we had always done back of a napkin that intuitively doing these tests makes sense. And I'd like to see that done in a little bit more detail. Obviously supports our sales as we move beyond clinician to clinician and move into the C-suite at hospitals to be written into protocols. Obviously, having a flexible budget impact model is going to be one of those selling tools that will be very useful there. And then lastly, you know, we'll put the abstract in on Grava. It would be nice to have a presentation slot at ASN. But nevertheless, we'll probably be advertising our attendance there. You know, it's a direct conversation with the transplant community, you know, in a face-to-face. It's always very useful going to conferences. Okay, so let's just wrap up. Obviously our main focus now, although we have other sort of research questions, we still have Protega in the background, really the focus of the company now is that commercial expansion. And you'll see, you know, as we are looking at this, all the things that go into supporting widespread adoption, their health economics, utility studies, price determinations, coverage, etc. And then, you know, that's going to be the focus of the majority of the company. And that concludes our presentation. of our presentation today. I'm just going to move on and look at the questions.

That's perfect. Thank you very much indeed, Sarah, David, for updating investors this afternoon. Ladies and gentlemen, please do continue to submit your questions, just using the Q&A tab situated on the right-hand corner of the screen. sarah and david just take a couple of moments to review your questions i'd like to remind you the recording of this presentation along with the copy of the slides and the published q a can be accessed via your investor platform um sarah david as you can see you've had a number of questions from investors today so thank you for your engagement this afternoon if i may sarah hand back to you if i could ask you please just to read out the questions and give a response where it's appropriate to do so and i'll pick up from you at the end thank you thank you and thank you everybody for the questions it's always uh um

Very encouraging to have more of an interaction on these. So the first question is, how big is the commercial opportunity for Tutivia? So we, you know, obviously we just walked through the total addressable market. One of the things that we do point people to is, you know, obviously what's gone before us. And so I would urge you to review the CareDx. They're the company that I feel that you can, are most accessible in terms of how testing has manifested into revenues. You know, in the past, because they are just transplant testing, other companies are within larger conglomerates. So it's very difficult to get to that information. Last seen in a couple of hundred million revenue that is shared between heart and kidney, but maybe it's half and half and that may give you an opportunity to assess what one of our competitors have done and what their curve looked like. They are one of three big companies in that space. There's Natera, Eurofins and CareDx really have the cell free DNA. There are others and there are more entrants coming into that marketplace, but it does give you an opportunity to understand what has come before us. So, Tom, what news flow? Hopefully we answered that already. So I'll refer you to the slides there. Michael, what is the likelihood of reimbursement happening? When do you think this will receive confirmation of this? Again, covered in... in the news flow. Let me just give a comment on reimbursement. Coverage makes reimbursement very easy. It streamlines the process. Before then, we still get reimbursed. It's just a little bit more messy. There are processes with CMS, with private payers to pay out is called under an appeals process or that they'll just give you a payment right up front if they've seen enough of your claims. But there is reimbursement before the coverage determination, but coverage determination obviously makes that very streamlined. That's where you get reimbursed by Medicare within 14 days and at full price. So that's the significance of the coverage determination to reimbursement there. What's the difference between Tutivia and other biomarker tests? Are those differences significant enough to win clinical adoption? Okay, let me just go over effectively how we differentiate Tutivia. Early, so that's the early in time, early by being proactive, that's the risk score. There are other differentiators, one being that it's highly dynamic. At the moment, if you're a clinician and you see an underlying change in your patient, both naturally and in response to medication, you don't have a test that is responsive enough. Cell-free DNA is, as one clinician put it to me, a little sluggish in its response. And they are looking for biomarkers now in that monitoring question. If you think about it, RNA is all the messaging of the body and the instructions. And so it is highly dynamic. And then lastly, we do emphasize that clinical trials have been run in a way that had garnered a lot of criticisms from clinicians and they have been wanting more. We met that need with our clinical trial all comers, international perspective, blinded, through the kitchen sink at it. So all of those were highly significant and rated by clinicians. So as you can see, if you take those messages of early, personalised, dynamic, and obviously run to a high level, you can see that in your clinical practice, those are enough, I think, to be able to differentiate, have some rare space that no one else is competing in, and that should be significant enough to win clinical adoption. Is there any likelihood of a takeover offer within 2023? You know, one of the things that I would say is as a company, We are always open to all alternatives. My job is to maximize shareholder return, and therefore we are likely to be nimble and respond to market conditions. And so we're always open. I couldn't possibly try and quantify a likelihood. Have you had any interest from strategic partners? If not, why not? I think that this is very much the same question realistically. We talk to everyone, it's quite a small community and there is a lot of interest in multiple ways and obviously we'll look forward to reporting anything as and when it manifests.

That's great. Sarah, David, thank you very much. And thank you to everybody for your questions. I think you've addressed all those questions submitted from investors. If any other questions do make their way to us, Sarah will make those available to you post today's meeting. I know investor feedback will be important to you and I'll shortly redirect those on the call to provide you with their thoughts and expectations. But before doing so, unless there's any other questions you wish to take, I'd like to just ask you for a few closing comments.

Thank you. We had one late question come in. And this is about when we start reporting volumes on a regular basis. We'll start that at, obviously, there'll be a lot of interest on how the year went, Tim. And so we would anticipate, obviously, addressing that at the end. Let's see how 2023 pans out. So thank you all. Lots of great questions there. do appreciate the time. Obviously, this is a very exciting year for Verici. You know, it is a dynamic year for us moving from R&D into the commercial arena, undertaking those lessons, really understanding how we address 2024 as being the widespread adoption year for our first product. So very exciting. Look forward to giving you further updates later on this year.

That's great. Sarah, David, thank you once again for updating investors today. Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of HGDX PLC, we'd like to thank you for attending today's presentation and good afternoon to you all. Thank you.

Thank you very much.