4basebio (LSE:4BB) — Investor Presentation

0:01 Good morning, ladies and gentlemen, and welcome to the 4BASEBIO PLC Investor Presentation. Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions 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 submitted today and we'll publish those responses where it's appropriate to do so on the investor meet company platform. And before we begin, I would just like

0:32 to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to the executive management team from 4BASEBIO PLC. Heikki, good morning, sir. Thank you, Jake, and thank you everybody for for joining us today for the the the usual annual company update. We're excited to have so many people join us, and there's quite a few positive messages to to bring today. Before we start, we have the the usual disclaimer, so I'll give you a couple of seconds to just read through that.

1:07 And then we'll start with introducing ourselves. So you're very familiar with David and myself. We've done a few of these presentations before. But today, I would like to introduce you to doctor Amy Walker as well who will be joining us in this presentation and provide some further detail on some of the commercial development and competitive differentiators of our technology. So Amy, maybe you can introduce yourself. Thank you. So and my name is Amy Walker. I am the VP of research and BD here at 4BASEBIO. My background is in molecular biology and nonbio delivery systems, and my core responsibilities at the company are the developer development of our two technology platforms and their commercial development. Okay. So, today, I'll start off with a a company overview, just giving you a bit of a scope of where the company's at. Most of you are probably are long term holders, but for those of you who are are new to 4BASEBIO, we'll just introduce the company a little bit. As mentioned, Amy will then talk a little bit more about the competitive differentiators and the commercial progression that we've made. And then finally, David will give you an overview of the financials, and we'll close with a summary and some outlooks on 2024.

2:16 So first first of all, what is 4BASEBIO and who are we? Essentially focused on on two platforms. We want to bring synthetic DNA to to the market, to the cell and gene therapy market, but also focus on delivery of nucleic acid payloads and have some solutions around that too. As you all know, we originally incorporated and started in Germany as a Europe a Germany European stock operations, but we've now been in The UK for quite a few years, and we've been aimless at since 2021. As a company, we've progressed quite a bit over the over the last few years. We've now grown to over a 100 FTEs. In

2:54 terms of facilities, we now have an excess of 22,000 square feet of facilities incorporating r and d, commercial, and manufacturing capacity. And, you know, we've been building our seven grade c clean rooms as well, which is part and parcel of our our infrastructure in synthetic DNA. So this kind of slide gives you an overview of who we are and the platforms that we're building on. Right? So as mentioned, synthetic DNA is kind of our our our main commercial driver at this point in time. And our objective there is to replace plasma DNA as the, incumbent nucleic acid source in the cell and gene therapy space. You know, really driving forward the the the benefits of our platform in terms of cost effectiveness, speed, flexibility, and safety of the the products that we make, we feel we can really drive forward the application and the adoption of our our our products and become a leading force in the cell and gene therapy market.

3:54 Hand in hand with that goes, of course, the delivery of these payloads, and a lot of our clients, you know, have a need for payloads, but they also have a need for delivery of these payloads in into patients and and and in the right places into patients as well. So very early on in the company's development, we've invested in a nanoparticle system that will allow us to do that, and Amy will provide a bit more detail around some of the benefits and and focal points of of that platform. Now if you look at the bottom end of the slide, you will see that as a company, we're very much an innovation driven company. You can see this, if you look at our workforce, for instance, you know, 80% of our our staff on scientific degrees with well over 20 PhDs as well. So very much, you know, a a scientifically driven entity, and and all that kind of scientific power leads to a lot of innovation and and generation of new intellectual property.

4:44 As a result, we now have over 20 patent families covering a a broad range of our portfolio, be that enzymes, be that process to process to make DNA or certain specific DNA molecules as well. So there's a lot of breadth in the IP that we've built up over the past few years. And, of course, that's supplemented with a lot of know how that we've been building up over the last few years as well. I think, you know, we can see some recognition of the platform in in the industry and in the market as well. We recently won the best acknowledge of the year award at the Medisciences awards recently here in in in London in June this year. So it kinda shows that the industry is noticing our platform and and recognizing the value in what we do.

5:32 Of course, it's not just all about science. You know, we have to think about commercialization and and manufacturing capabilities as well. So we've invested quite heavily in in building all of that up too. As mentioned in my first slide, we have the the great z clean rooms up and running. We have the QA teams and the manufacturing teams ready to to go. And alongside that as well, we've been investing in the the commercial infrastructure, and that is, of course, then, you know, both the BD team, but also the project management teams who who help us with client onboarding and managing our clients through their journey with the company and and ensuring that we have happy clients that come back for for repeat orders. So all of that kinda shows you that the company is maturing and is developing from a, you know, kind of a research and development company into a fully fledged commercial entity that is able to onboard clients, deliver product, and and drive its revenue and profitability forward.

6:24 So in terms of key milestones for 2023, so revenue has doubled. So, I mean, it's from a fairly small base. So from from my perspective, what's more important is actually that we had a a good influx of fee paying clients and fee paying projects in 2023. And, of course, that will lead to repeat orders in in 2024, and and we wanna continue building that funnel and and driving new projects into the business as as we we we build up our client base. As a result of that, you know, we've sold our first high quality grade material. We also had first order for GMP grade material, and all of that, of course, was done through expanded headcount. And as mentioned in the first slide as well, IP is important to us, and we continue to file new patents protecting our our intellectual property space, and that has continued in 2023 and will continue in 2024 as well.

7:16 I think this slide is quite an interesting slide and kinda shows you the the the makeup of the the company and and how the company has evolved from an an r and d entity into, like, a a more mature commercial entity. And I think if you look on this slide here, you can see that, you know, over half of the kind of FTE count is now fully engaged in commercial activity. So we got our client projects teams, you know, that incorporates, of course, the b d and the PM teams, but also the the MSAT teams and the MPD teams that help, help, you know, onboarding the the projects and and and delivering the the first batches of material. And then, of course, our QA manufacturing team, which is focused on high high quality grade and GMP grade manufacturing and all the quality aspects involved around that. Of course, we still do a lot of r and d as well, and you can see the application validation teams and the and the platform development teams constitute about a third of the the size of the company.

8:09 And there, again, we focus on upstream r and d and downstream r and d, but also on application validation and opening up new markets for new DNA modalities that we plan to to manufacture in due course. So maybe a little more on our competitive positioning and the market opportunity as a whole. So this slide here kinda shows you the market that we're feeding into, and I think, you know, the cell and gene therapy market, of course, is the the the core market that we want to supply DNA into. It's a very rapidly growing market with a compound end of growth rate in excess of 20%. And and and for us, the the most important part of this market is that there's there's a lot of opportunity in the early stages of development. So there's a lot of candidates that sit in the kind of development phases, be that, like, late preclinical, early preclinical, or or early phase one clinical trials. And that's the market segment for us that we want to dive into and and where we want to convert clients and then grow with them through their kind of clinical development journey.

9:09 So a lot of opportunity. The also good part of this is that the the market is fairly differentiated. So you can see at the top of the slide, there's quite a few buckets. So you have mRNA, gene editing, AAV and lentiviral, both viral vectors essentially, and DNA vaccine. So for us, it doesn't really matter so much which application becomes more dominant because all of these application areas require DNA at some stage in the manufacturing. So for us, you know, we can really be quite differentiated in terms of applications that we feed into and and really drive value out of all of those buckets. Maybe also quite interesting to mention is the kind of mRNA vaccine bucket and mRNA as a whole. So you can see whilst these other markets are are are driving quite a lot of growth, mRNA because of COVID had a big surge. And, of course, now the the COVID revenue is somewhat tailing off, but, of course, there's a lot of new opportunities coming through. And and for us, that's actually the the more important part of that market. It's those new opportunities, those new programs that are being developed. That's where the opportunity sits for 4BASEBIO to supply DNA and to because we know evidently, we are not gonna change the DNA source in the Pfizer vaccine from from plasmid to to to synthetic DNA.

10:21 So the strong growth in the cell and gene therapy market drives the growth in in plasma demand. And if you look at the market size for plasma DNA by 2034, this is now anticipated to be around $15,000,000,000. Believe that synthetic DNA, particularly 4BASEBIO DINNER, can take a leading kind of position within that market and within that next surge of of DNA demand simply because we we still see the same problems with plasma DNA in terms of the scalability, in terms of the safety aspects, and and in in terms terms of of the the lead times in particular that clients are waiting for their DNA, and and that becomes quite often, like, in in the development of these therapies. This slide here is kind of demonstrating the the flexibility of our platform. Amy will talk in much more detail about, you know, what these different modalities do. But I think here, again, we wanted to highlight the different buckets and the opportunity within the within these different buckets as well. And you can see, particularly with IVT mRNA and with viral vectors AAV and lenti, a lot of new clinical programs are being started and a lot of opportunity for synthetic DNA to take a a strong position within within those opportunities.

11:29 In the second column, you can also see or the third column, I should say, you can also see a lot of high profile companies. So, you know, we're with a lot of these clients already, and we hope to switch them over to synthetic DNA in the the near term. And then finally, before I hand over to Amy, some competitive positioning in terms of the the the DNA market. So what you can see here on the left hand side is kind of three buckets. Right? So you have the incumbent plasma DNA with the key players within that space and with particularly with as part of the Danaher group having a leading position within that market segment. On the left hand side, you can see the the synthetic market plan there. There's two kind of key market areas. One is kind of de novo synthesis.

12:18 Those players do not really compete directly with us. They sit upstream from us, they tend to focus on making small quantities of DNA, so sub one milligram amounts. So they're not really feeding into clinical trials, etcetera, etcetera, but that's upstream, and they are, you know, potential template providers for us in making bulk scale DNA. So the amplification based platforms really is the the the genuine competition for us. You know, really there, you have PCR based methods, you know, which struggle somewhat with scalability and and fidelity. So, really, we think the RCA based platforms such as our own platform and and, of course, touch touch touch light's platform are the the real technologies that can deliver the the quality and the quantity of DNA required for clinical use in in cell and gene therapy.

13:07 On the right hand side, of course, you can then see how we differentiate ourselves against all of these areas, and you can see, you know, we we we kinda tick all the boxes in terms of competitiveness, flexibility, and speed at which we can operate, operate, fidelity and quality of the product. So we think we're very well differentiated and well positioned to be the leading platform within the synthetic DNA space and the DNA space as a whole.

13:33 That said, I'll now hand over to Amy who will talk a little bit more about the competitive differentiators. Thank you, Becky. So we wanted to briefly highlight some of 4BASEBIO's competitive differentiators as compared to the compared to the incumbent plasma DNA. As Heidi mentioned, plasma DNA is the predominant DNA source feeding into CGT and vaccine applications, and this slide really aims to position the benefits of our synthetic DNA technology. So firstly, we will start with cost effectiveness. By nature, enzymatic processes have significantly lower and capital demands with, reduced process volumes of waste streams associated. Moreover, 4BASEBIO is uniquely positioned against other synthetic providers as we actually manufacture the enzymes that are required for our synthetic DNA manufacture, and this further allows us to reduce costs and allows us to control the quality of such production.

14:24 The next point to mention is the flexibility of our scale of manufacture, and we are able to precisely tailor the scale of the reaction suited to our clients' needs. So our GMP offering, ranges from fifty milligrams right up to ten grams, and the lower of which is ideally suited for personalized medicines such as personalized cancer vaccines or really for those early phases of clinical trials, where many of our clients at these early stages do not need multigrom batches of DNA, which is the typical output for conventional plasmid manufacture. Next, I wanted to highlight the flexibility of our platform. So Heidi already mentioned that we make four different flavors of synthetic DNA, and each of these DNA molecules has application specific benefits for the downstream user.

15:09 So to highlight that, we would, for example, not sell the same DNA product to an mRNA client as we would to a viral vector client. And, really, the flexibility on our platform resonates with the, with our end users and is a key differentiator against other synthetic players within this space. And we have a more streamlined approach to to producing these kind of custom molecules, which allows our clients to realize both cost and performance benefits in the downstream application. Next is safety. I mean, in summary, we are a bacterial fermentation free platform, and so we're free from all of those contaminants associated with conventional plasma manufacture, not limited to endotoxins, to host proteins, or indeed, and critically, to antibiotic resistance genes. Next, and which is a real driver of client conversion and adoption, is actually the speed and efficiency at which we can manufacture synthetic DNA.

16:01 So this is really in a matter of weeks as compared to the typical six to nine months associated with plasmid approaches. This allows our clients to realize benefits in two forms. So on the one hand, they are able to continue to progress their development journeys without locking into a GMP manufacturing slot. But on the other hand, it allows our client base to expedite their journey towards the clinic as compared to conventional plasmid manufacturing. And finally, to point out on this slide, our enzymatic approach is able to deal with very complex sequences that are typically challenging in conventional plasmid fermentation approaches. So this could include, homopolymeric traps required for mRNA production, for example, or ITRs for viral vector production, which are inherently difficult to propagate in bacterial systems.

16:49 So switching paths a little bit, I'm moving on to our second technology platform, which is HERMEES. HERMEES is, of course, our nanoparticle system for the delivery of nucleic acid payloads. And one of the USPs of this platform against conventional LNP delivery systems, such as those used in the Pfizer BioNTech nanoparticle COVID vaccines, are actually the enhanced ability that we have at both fridge and room temperature, which really omits the need for cold chain requirements necessary for the widespread distribution of such vaccines. Recently, there has been a significant uptake in using the Hermes delivery system for vaccine applications both in infectious diseases, but also in personalized cancer vaccines. We've really we've really felt that over the last kind of six to twelve months. I think another USP, with our platform as compared to a conventional LNP is the potential to target these nanoparticles towards specific tissues and organs of interest.

17:44 And this is unlike conventional LMPs, which typically exhibit a tropism towards the lymph towards the liver, sorry, when they are delivered via IV administration. Sorry. I I just wanna interrupt for a minute. We we had a one of our guests complain about the the sound. I'm not sure whether Jay can do something about that and increase the micro mic microphone sound. Hi, Heikki. I can confirm the the sound is clear. If we could maybe move the laptop just slightly closer to Amy, that would that would enhance the sound quality. Okay. That will be that. You. Thank you. So, I mean, I think to summarize on this slide, the platform has really progressed significantly over the last twelve months, and this has really been driven by funding from the Bill and Melinda Gates Foundation to combine our two core technology platforms to develop a thermostable vaccine using our synthetic DNA technology and our family's nanoparticle delivery system.

18:42 So funding from such a prestigious institution has provided further validation for the platform. I think lastly to point out here, the platform remains synergistic with our synthetic DNA offering. And we have a growing number of examples where clients have purchased with initial interest in either the synthetic DNA platform or our the or, Hermes delivery technology and actually end up evaluating those platforms. Next slide, Ricky. Yep. So changing talked a little bit, onto an update in our commercial journey and our revenue visibility over the last maybe twelve to eighteen months. So to start with, we thought it would be useful to position our go to market strategy and why we anticipate the evolution of our client relationship cycle as we progress as a company.

19:30 So as we've mentioned several times, synthetic DNA, of course, is a novel DNA modality, and really the main objective in 2023 was to make our clients comfortable with the use of synthetic DNA. So historically,

19:42 we have picked up clients fairly early in their development stages where they typically would evaluate our synthetic DNA against conventional plasmid. So these were typically research use only materials, and this could come in the form of an off the shelf construct, which is, used for mRNA production or viral vector production, for example. But more often than not, our clients really prefer that we encoded their custom sequences so they could evaluate them in their invoice processes. In these cases, clients typically ordered a low mass of DNA, maybe one to 10 milligrams at research grade, and would typically evaluate one to five sequences, depending on the application area. The PO values were modest with respect to these projects. I think, of course, the objective of such evaluations is to convince clients of the benefits of synthetic DNA and then remain sticky through their development as they progress towards late preclinical and ultimately clinical applications.

20:35 This year, we achieved a significant regulatory milestone with our first client entering the clinic with an mRNA vaccine derived from one of our synthetic o p DNA templates, and I will talk about that a little bit more in the next couple of slides. But we've also seen over the last six months a real shift in our customer entry point to later within their development stages with clients reaching out for high quality, or indeed, GOP requests for material. Of course, the the value of such videos is substantially higher than with research grade material, and our objective over the next twelve months is to onboard more of these clients with HQ and GMP requests. So moving on a little bit to your client base. If we start at the left hand side, we're looking at a pie chart that divides our client base by application, and you can very quickly see how many mRNA clients we have. So this really makes up almost 60% of our client base. You can see very nicely that that segment of the pie is split between clients that are working on vaccine applications versus clients that are working on therapeutic applications. So this could include gene editing applications where people are using our synthetic DNA templates to manufacture mRNA for nucleases required for such approaches.

21:46 The the next biggest segment segment there is our viral vector clients, specifically with the focus of AAV, and we have a growing number of clients in space as well who typically have higher, mass demands of high quality grade DNA.

22:00 And then finally, the remaining 20% or so of our client base is comprised of DNA vaccines, which is a very important segment for us, then for gene editing repair templates, and then some other more secure requests for for our synthetic DNA. Moving into the middle section, we are looking at the client base divided by region. And perhaps unsurprisingly, the majority of our clients sit, in The US, particularly in Boston, with the remaining 50% divided nicely between The EU, and UK. We also have a a growing client base within APAC regions, and this is typically, generated by inbound requests for our synthetic DNA templates. And finally, on the right hand side, we have divided our client base by client type. So we do have a large amount of biotechs who are typically quite quick to pick up a novel DNA technologies that can expedite their development programs.

22:52 But what we've really seen over the last, maybe six to twelve months is growing uptake within larger and inherently more conservator conservative areas of the industry, such as pharma clients who are trying to understand where synthetic DNA fits into their growth and development. Finally, the last the last part of this pie is really made up by, CDMOs and strategic who hope to position synthetic DNA to a wider client base.

23:20 So over the next few slides, we wanted to highlight two recent, customer case studies and the journey that they've made from evaluating research grade material right into the clinic in this case. So in the first instance, we'll talk a little bit about a biotech company. This is a US based biotech working on mRNA vaccines, for various different applications, but initially for infectious disease. And the kind of profile of the molecule we made was a critical starting material, o p d n a template for their mRNA vaccine. So you can see that the relationship with this client, it started back at the end of twenty two, where we reached out to the client and and convinced them to evaluate our synthetic DNA offering in a range of their applications. And you can see that by January, we were able to ship them those initial for evaluation.

24:08 In parallel, the client was very pleased with how the product performed in their internal processes, and so we received a PO for high quality grade DNA, in January that year, which we which we later delivered to the client in June. And this material really fed into all of their GLP talk studies and their IND enabling studies. And then you can jump to, March of this year where, of course, this client ended up dosing, patients in a phase one clinical trial with the mRNA vaccine I spoke about previously. So, again, this was a very significant, regulatory milestone that we achieved. I think jumping onto the bottom of this slide, you can see how this tracks nicely in parallel with their GMP requests. So this particular client wants to facilitate an FDA based IND, enabling study to facilitate a phase one clinical trial in The United States.

25:00 And to that end, we received a successful on-site client audit earlier this year in February with the intention to manufacture a GMP latch batch later this year ahead of their phase one trial in The US. So next, is at the other end of the spectrum. This is actually a pharma company. This is a global pharma company that was interested in using synthetic DNA for their seasonal vaccines and pandemic responses where timeline, significantly, which is timelines is critical in being able to develop and deliver these vaccines. So this was actually an inbound customer request. We were approached by this pharma company who was interested in evaluating synthetic DNA in their seasonal flu programs, and we understood that we were being benchmarked against some other competitors within this space.

25:47 So the first objective at the end of last year was to, deliver a research way of material a batch of okDNA, which we were able to turn around from receipt of sequence to the product shipped in less than five weeks, which was one of the metrics on which the client was evaluating us to determine success. To cut a long story short, this this DNA molecule performed very well in their hands, and we received a quote for we we sent the client a quote for two high quality and two GMP batches earlier this year, which we are working on. Most recently, we had a successful audit from the client next month who came to visit our facilities, and we're happy, with with how they looked. So, I mean, I think to summarize our commercial progress, we have seen significant momentum in client engagement over the last eighteen months, and this is really driven by both new contract wins alongside repeat orders from clients progressing towards the clinic.

26:42 So you can see on this slide that the revenue generated from projects in 2023 was primarily driven by research grade projects and

26:49 those early development evaluations that I mentioned alongside a handful of HQ clients. We anticipate that over the course of the next few years, we will have a significant evolution in the makeup of our revenue with more substantial revenue share coming from these HQ and GMP contracts as client progress through the phases of their clinical trials. Our expectation is that a 12 to 14,000,000 revenue target is required until breakeven, and we estimate that this will take around 10 to 15 HQ or GMP projects per annum, allowing us to reach this next value inflection point in the near term.

27:23 I will hand over to David for the financial overview. Thank you, Amy. Good morning, everyone. I guess before we start, just very briefly, I just want to touch on some of the points I think Heikki and Amy have made. And in terms of the progress we've made over last year, really

27:46 those operational, clinical and customer focused developments, don't necessarily reflect themselves in in the income statement and the cash flow that I'm about to share with you. But it really sets us up extremely well moving forward into '24, '25 and beyond. So moving on to the financials. Really, Lianc has said before, '23 was very much as expected. We obviously have a budgeting cycle. We set our budgets and plans and work on that basis. And the results overall is, as I said, very much consistent with our plan. The main feature, which I think Heikki has alluded to, is where we are in terms of our revenue.

28:27 And while the absolute revenue number has doubled, clearly, somewhat very modest base, But much more significantly, as Heikki has highlighted, it's a number of individual projects that we've managed to undertake during 2023. And clearly, we expect to grow that strongly during the course of 2024 and beyond. We overall, in terms of cost base, there's been a step change from 2022. But I think we are gradually reaching a steady state. So while we expect there to be additional heads and additional investments in the cost base over the course of 2024, really, are now reaching close to a mature steady state position.

29:13 Inevitably, don't have in 2023 a full year of cost reflecting that growth. But during the course of 2024, we will reach that point. We had a headcount during the course of twenty twenty three of eighty six. We expect to grow that over the course of this year to around 110. And that really will hold us in good stead going forward. In terms of the cash flows, I guess the cash flows are very much as expected. They obviously reflect the operational expansion of the business. And in addition to that, we had to draw on the to invest facility, I think as we indicated earlier in the year, and that has really funded the development and the growth during the course of 2023.

30:00 And we expect to draw on that and use that during the course of 2024 as well.

30:14 In terms of the balance sheet, I'm not sure how much I really need to say about this. The assets clearly reflect further investments. So you can see particularly within our property, plants and equipment and our ongoing

30:31 intangible assets capitalization. And we continue to invest both within the property, so the expansion of facilities supporting our clean rooms and also platform development across the board. Closing cash for the period was $3,000,000 Clearly, in order to fund operations during 2024, as I've just mentioned, we will draw on to invest facility to support that cash position.

31:01 In terms of liabilities, the liability position really reflects the use and the utilization of the 2Invest facilities. So you can see within our non current liability, the financial liabilities have stepped up. This represents the drawdown of amounts from 2Invest. And those facilities are available to us until 2028, where repayment is due in October 2028. So clearly, it's not an immediate issue. And really, as consistent with 2023, we will, in 2024, use those facilities, as I mentioned. Finally, looking the financial review and outlook for 2024. We really do expect strong revenue growth during the course of the year.

31:49 The nature of some of the GMP and HQ projects means that this revenue growth can be quite uncertain, both in terms of the timing of customer projects, but also it can be relatively lumpy in terms of overall revenue and when it hits.

32:08 Relative to that, we can see strong growth in the order book. The question is really when that hits during the course of the year. But overall, strong revenue growth expected. We will continue to invest in our operating expenditure. As I mentioned, we're going move from 86 heads to around 110. And that, as I say, will be largely steady state position from which we can then continue to develop our revenue during the course of 2024, 2025 and beyond. And finally, in terms of the funding of that position, I'm just repeating myself again. We will draw on the two invest facility to enable the ongoing growth of the business. Thank you, David. So yes, then we're rapidly moving into the final section of the presentation.

32:59 I think, I mean, on this slide, I kind of wanted to take you through the journey that we've been through over the last few years and kind of value inflection points that we've achieved and also the inflection points towards adoption that we've achieved over time. So, of course, it started off with, you know, kind of the scale up and the application validation. So our application validation teams have generated a lot of data around these different application areas that we want to feed synthetic DNA into. We've got really good data packages that is very convincing to clients and and and as

33:30 a real big step start to to getting conversions. And alongside that, of course, we've had to scale up our platform too. When we started off in 2020, we were making DNA at microgram scale. We might now make DNA in in multi gram batches. So you can see we've achieved, you know, a million log kind of a million times uplift in terms of scale. So that's that's pretty impressive. And the entire platform as well is, you know, kind of dedicated and focused around single use so that we don't have to worry about single about about cross contamination and and can really focus about quality around quality of our our DNA products. That said, you know, now our focus has really turned towards our GMP readiness. And I think, you know, there's probably a bit of context that needs to be understood around GMP readiness as well. I mean, our clients require different grades at different stages and for different applications within their own development program. So, I mean, typically, you know, when clients go through GLP tox studies, so that's kind of late preclinical studies, that will require high quality grade batches from us, which are kind of manufactured in a similar way compared to the full GMP material but doesn't have all the bells and the whistles.

34:45 But in terms of GMP material as well, clients need different things. Our mRNA clients and our viral vector clients need starting materials. So essentially, DNA is converted in a manufacturing process from DNA to mRNA or from DNA to a viral vector, but our DNA product is not part of the final drug substance or drug products that our clients are making. So we're already in a position to to make critical starting material. Of course, the next step for us is to think about drug substance where our DNA product does become part of the final product that will be administered to a patient. And that's kind of the next step on our on our kind of regulatory journey is getting that MHRA certification and that licensed license for for drug substance. Overall, I think from a commercial perspective, we can see good traction building, and we can kind of feel we're we're in a good position to start displacing some of the incumbent materials within the market and then ultimately drive into commercial development as well and getting products in into patients on regular basis.

35:48 So in terms of objectives for 2024, we want to continue to build on momentum that we see within the market and drive forward our revenues. We've got very good GMP visibility now. So, you know, in 2023, we just started going into the market. We started getting some clients in. You know, we're now seeing a demand for GMP building up. We see it's not necessarily an order book, but it's you know, we we refer to it as GMP visibility clients that we know will need GMP grade material in in in the near term and where we expect to be embedded within their programs. However, you know, the the usual issue with these things is that the timing and the cadence of these orders is client dependent. It depends on their progress. It depends on their funding. So as a result of that, we expect some unevenness in in the kind of revenue recognition in in the near term as well as we get, you know, a more stable kind of order book building up.

36:41 We want to advance our GMP certification. So our objective is for this year to get our MHRA IMP license. As I mentioned, we want to be able to make drug substance, and that's something that is a key objective for this year. And then, of course, we want to continue investing in our platforms as well, really focusing around process intensification, which will allow us to make bigger batches from our existing facilities and also continue driving down our cost of goods as well. I mean, we're in very good competitive cost of goods situation already as it is, but we feel there's the scope to further improve this. And finally, we're gonna focus on new DNA modalities, be that single stranded DNA or really advanced enhanced DNA molecules that have performance benefits for our clients and really opening up new market opportunities as a result of that and position ourselves as the leading company within DNA and synthetic DNA in particular.

37:32 So that said, in summary, I think it it it has become clear that we have a very unique company with some very strong technology platforms both in synthetic DNA, but also in delivery of these nucleic acid payloads. And we have a very flexible approach to making DNA molecules, enabling us to really make these added value products and giving us competitive position within the market space. And we've built up infrastructure both in terms of manufacturing DNA, but also in terms of commercializing, onboarding clients and delivering high quality products for our client base. So we feel we're in a very strong position to really drive forward revenues for the company in the near term and bring the company to its breakeven position, as Amy mentioned, that next big value inflection point that we now are trying to achieve.

38:26 So with that said, I'll leave it here, and we'll switch over to the questions and answer session next. Perfect. Hi, Keith. David, Amy, if I may just jump back in there. Thank you very much indeed for your presentation this morning. I will just bring up your camera there. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right hand corner of your screen. But just while the company take a few moments to review those questions that were submitted already, I would just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a, can be accessed via your investor dashboard. Hi, Keith, Amy, David, as you can see there, we have already received a number of questions, throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions.

39:11 But, guys, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. Thank you. So we'll diving through the questions as they were filed. So we'll start off with the first question by Andy. You asked us whether the profitability of the GMP batches would increase over the profitability of the research grade batches. So, yeah, I mean, GMP grade batches and and high quality grade batches in that same bucket. So our our our higher grades materials have really high margins. You know, at that point, we've already had the kind of template generation cost embedded within within the the the project, and, you know, we can drive really high margins of of those those batches.

40:07 They're not really sequence dependent, so it really, you know, it doesn't really matter what type of sequence we make, whether it's a big molecule or a small molecule, whether it's GC rich or or not, whether it has ITRs or or or sequence complexity. And the process really is driving DNA to to one gram at this point in time, and and we can achieve that irrespective of of the sequence. Amy, is there anything you wanna add to that? Yeah. I mean, I I think that that's a very valid point, the sequence independency of the platform itself. So like like Haki already mentioned, we can deal with these complex sequences, but we also don't have any size limitations. So we can make molecules as small as a 150 base pairs right up to 20,000 base pairs. And this really opens up significant market opportunity for us in, for example, applications where they need much larger DNA constructs such as self amplifying mRNAs.

40:56 So that's a real driver for conversion. Yeah. I think maybe one extra point to this as well is that, you know, because we make our own enzymes, we control, of course, the quality of those enzymes, but also the cost of the enzymes is important. And for us, our our enzymes, which is one of the key ingredients in in in making the DNA, is not a a major cost driver for us anymore. We have other cost drivers that are are more dominant. So we're we're in pretty good position to really scale rapidly and become very cost effective and drive high margins at scale. Do want to take a moment? Yes. So the next question, David, it was whether Yes. No, I'll read it out. So Jonathan's asked, the company has previously indicated it would be willing to raise equity to reduce dependence on Mr. Zuer at the £7 to £8 share level.

41:47 What's the latest on this? I guess there are two, three aspects to that. In terms of raising funding, clearly, we've always been open to doing that and been mindful of when it's appropriate. This isn't really about a question of reliance on the Caesars. The Deutsche Balaton Group have always been very supportive of us and continue to be so. So we will consider our options as and when it's appropriate relative to the £7 and 8 mark. I guess, really, thing is time moves on, the company continues to develop, and we become more ambitious in terms of the valuation of the company and what we would consider to be an appropriate price to raise equity.

42:35 Having said all that, there are no plans to raise equity, but it is something we keep under review from time to time. Thanks, David. So I mean, moving on to the next question, which is also by Jonathan about the timing around the GMP certification. So as I mentioned in my last slide, you know, the objective is to get the IMP license. So that's the investigational medicinal product license for for drug substance. You know, the timing of this is is not entirely in our hands. Right? So we're somewhat dependent on the MHRA MHRA as well in in terms of the the timing around their audit and how fast they can progress an application. So, I mean, we're that, you know, we can get this achieved within 2024. But, you know, like like I said, we're we're somewhat dependent on the MHRA and the progress they can make on on this application as well. Yeah. I mean, maybe we can add to that point. That that certification is critically important for our DNA vaccine clients who will actually be be delivering the DNA that we produce as a drug substance. But for the majority of our clients that are using the DNA molecules to manufacture viral vectors or for mRNA, that is of less importance as you can see with our progression into the clinics in these application areas. Yeah. Exactly. Thank you.

43:46 So moving on to the next question by Andy, you know, asking us whether the the platform is generally sequence independent and whether we've tested this on on longer base repeats and GC rich regions, typically, like the ones found in eukaryotic promoter regions. I'll give that one to Amy. Thank you. Yeah. So I think back to your end some point. The enzymes that we manufacture are proprietary, but they've been highly engineered for both their processivity and their fidelity. So we have lots and lots of different examples of their ability to deal with these very complex sequences, including the GC rich sequences that you mentioned. So GC content is really not a driver in the fidelity or the accessibility of our enzymes. And then, of course, there are the homopolymeric tracks, which are typical in, mRNA constructs, for example.

44:35 Again, we have no problems with these sequences, and we can encode into our DNA templates, tracks upwards to a 120 poly a. So this is not this is not significant for us. And indeed, we often see clients come to us with sequences that they just cannot propagate in conventional plasmid systems, so they move to a synthetic approach. Yeah. Thank you, Amy. So next question was more about when we can capture revenue, whether it's an opportunity for us to capture revenue in phase one, phase two, or phase three clinical trials. So I think there, I think we have to be realistic. We're still at the kind of early adoption phase of synthetic DNA. So of course, it's much easier to do this in the kind of late preclinical, early clinical stage or early preclinical stages.

45:21 That said, I think as we build up more momentum and we we get the kind of regulatory validation, we expect more mainstream usage of of synthetic DNA. And I think at that point, given the benefits of synthetic DNA in terms of lead time, cost, and performance, I think there is opportunity to start switching people over in phase one or maybe phase two clinical trials. I mean, the further up the development kind of track a given project has gone, the harder it becomes to convince clients to switch over. But I do think in time, we will be able to see entry points of in later clinical stages as well. But I think at this point in time, we really focus on that kind of late preclinical stage so that we can really follow our clients through their entire clinical development journey. Okay.

46:07 So the next question is gonna be another one for Amy, I think. It's a question from Andy on targeted delivery of nucleic acids and whether that's a key challenge today. And if so, whether Hermes can deliver the this kind of third target delivery. Thank you. So that's quite a difficult question. So I think conventional lipid nanoparticle systems, as I mentioned, have this inherent tropism towards the liver. And that's why you can see all of these new biotech companies that are focusing, their gene editing technologies on liver diseases with really, really good progress. I think that there has also been significant development within the space as people try and detarget the liver and move to more complex organs within the systems that are that are a little bit more too difficult to deliver nucleic acid payloads to.

46:55 And these particular clients may be using very complex manufacturing processes, for example, conjugating an antibody to the surface of the nanoparticle or an antibody fragment. I think the real differentiator with Hermes, which I did not mention, in the in the slides, is actually the kind of ease of manufacture. So we are able to incorporate this targeting moiety into the lipid nanoparticle via microfluidic, manufacturer of the particles, which really helps us to be a very cost effective and scalable process. I think, to your question on what sort of organs that we we target or we come to Switzerland, but we do have some programs running in cell therapy approaches, ex vivo and in vivo. We have a growing number of clients tar trying to target the kidney and the heart.

47:42 Yeah. Thanks. Yeah. I I I would echo the the words from Amy, but I think what we've also seen is is a a big kind of shift in demand of the the the nanoparticle system in the kind of vaccine space. I mean, originally, we didn't anticipate that we would be competing within that space given the success of LMPs during the COVID pandemic, but we do see that there's a a big pool for for the next generation of LMPs within the vaccine space as well, which particularly kind of deals with the issue around the cold chain and the stability of the particles. So for us, that's been an unexpected opportunity, but it's it's looking actually very promising as an opportunity. Okay. So moving on to the next question. So Jonathan Jonathan asked us whether the level of indebtedness impact on our ability to sell through pharma and biotech.

48:35 David, do you want to deal with that? Yes. I have to say it's never come up as a feature. Obviously, we have supplier onboarding processes we need to go through. I think that the the the most comfortable one so far is being asked to confirm that we're not a criminal organization. And if we are, we're in big trouble. But, really, we we fill in these forms very regularly, and it hasn't been a feature. Thanks, David. So next question, again, from Jonathan is whether we will need to submit a drug master file to the FDA in order for customers to be able to file INDs and what's the timing on this. So that that is not a requirement. So whilst we have that on our kind of wish list of things to do, we eventually actually focused our energies more on getting the IMP license and the MHRA certification because we think that that's much higher added value than than having the the the DMF file that's at the FDA, particularly for our clients, our pharma clients, and our high higher level biotech clients. You know, the the the IMP license is is of higher value than the DMF.

49:41 So it's something that we will do in time, but we focus on official certifications at this point in time. So next question was from Freddie. So how much of the opportunity pipeline is contingent upon achieving full GMP accreditation, and are you hoping for that to be achieved this current year? So the bottom end of the question, yes. We're hoping for this to be achieved this year. And, again, in terms of certification, I wanna make it clear we're going for an IMP license for drug substance. You know, there's other things beyond that that you can go for for right now for our client base. That is what we feel we we we need to open up some of that kind of DNA vaccine space and and gene editing space. But that said, you know, if we look at our GMP visibility list, you know, a lot of our client base is within that mRNA space where you need a critical starting material. So for for those clients that that that IMP license isn't essential, so we can already sell within mRNA applications, within viral vector applications without that license.

50:40 So as Amy has mentioned, you know, a lot of our kind of existing client base and opportunity list, you know, isn't needing that IMP license today. And then and then finally, another question from Jonathan asking whether well, actually, Annie, you can read the question. It's addressed to you. Yes. Thank you, Jonathan. So I was quoted in an article early earlier this year that 4BASEBIO anticipates the entry of several additional clients towards phase one clinical trials. And can we expect further announcement this year along the lines of the tier one pharma announcement? I think high level, yes. We anticipate a number of our clients, to to make an announcement as such.

51:26 I think it's it's important to mention that the timing and cadence of this remains in our client's hands. So whether that would happen in h two of this year or maybe early next year remains to be seen. But we have several clients progressing nicely towards the clinic and probably worth mentioning that these are in a range of different geographical jurisdictions, so under FDA, EMA, or indeed the MHRA. So we feel very positive about that. Yeah. I mean, only context I would set to this as well is that we we we we're probably unlikely to be able to name the clients because, you know, a lot of those clients tend to prefer confidentiality around around that. But we we we we're expecting to be able to make announcements similar to the T1 Pharma announcements in due course. So I think that I believe that was the last question. So I'll turn it back over to Jake.

52:13 Hi. Absolutely. And David and Amy as well. Thank you very much indeed for being so generous of your time there and addressing all of those questions that came in from investors this morning. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform. But, Heikki, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, I if could please just ask you for a few closing comments to wrap up with, that'd be great. Yeah. No. I'd like to thank everybody for for for joining the the session today, and I hope you found it all very informative. I mean, the questions were very interactive, and and we really appreciate you guys taking the time out to to come and listen to us and ask us the questions. So we look forward to updating in due course, and we believe the company is in a great position to deliver to continue delivering shareholder value as well. So we look forward to the next update. Thank you very much.

53:11 Perfect. Hi, Keith. That's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only 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 4BASEBIO PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.