Avacta Group (LSE:AVCT) — Interim Results

0:01 Good morning and welcome to the AVACTA GROUP PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may now be in a position to answer every question received in the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll.

0:29 And I'd now like to hand you over to Alastair Smith, CEO. Good morning, sir. Morning. Thanks very much. Morning, everyone, and thank you for sparing the time to to listen to the interim results presentation. Cracked straight on. It's quite a lengthy deck. So I'm aware that most of you will be very familiar with the company. So, you know, just very brief introductory slides. The the group is comprises two divisions, therapeutics and diagnostics with a, combined objective of improving patients' lives, leveraging the two the two platforms, the two proprietary platforms, AVACMA and Precision, that we own. I won't read through all of the investment highlights, but let let me just sort of focus on the key points and certainly throughout the reporting period and post period as well, the outstanding progress with AVACTA in the clinic is clearly attracting a huge amount of, attention. And we'll talk through that, and I'll, everyone is up to date, but I'll I'll go through, the the most recent, announcements, again in this deck.

1:35 Following behind that, our second PRECISION prodrug, which is three thousand nine hundred ninety six. We'll talk a little bit about that. Still on target to get into human, so the second precision drug into human later next year. On the Diagnostics side, I'll give you a quick update on the progress building a significant pan European Diagnostics business. We'll talk through the vision and the mission for that division. Focus right now is on

2:06 growing the acquired businesses. So the two businesses we'll talk about briefly, the focus now is not on additional m and a to add to that at this point in time, but really focused on on benefiting from the the synergies across the division. I think it's it's worth saying, and Tony will speak through the the financials in a moment, but it's worth saying that with that balanced business model and a really, you know, a clear understanding of where capital allocation has to be made within the group at the moment for, you know, greatest growth in shareholder value. We are, you know, well funded, and we have plenty of optionality around nondilutive commercial sources of funding as well as, of course, dilutive funding. But we're well funded through to late next year to achieve the milestones that we're, you know, we're all focused on. I'll hand over to Tony to talk through the numbers, please. Thanks, Alison. Good morning, everybody. Just to run through the financials for the half year.

3:07 In the income statement, we reported revenue of just shy of $12,000,000 which was the biggest revenue number of AVACTAs reported in a six month period. And as you can see from the slide, significantly ahead of the position 2022. The revenue in the first half of the year obviously has the benefits of launch diagnostics for the full period. And we've the acquisition of Chorus, which came on board at the start of June. Scrolling down the P and L, the most important number, I guess, on the face of the P and L is the adjusted EBITDA line, which is essentially our cash usage from a P and L point. We're shy of £8,000,000 cash EBITDA loss in the period compared to £15,000,000 at December 22.

3:55 The items below that on the P and L are all essentially noncash items, with the exception of the tax, which is R and D tax credits, which we will receive back over the course of the coming years. The retained loss, obviously, 11,500,000. And if we just move on to the next slide, we can see how we've broken that down by the divisions. And the important point here is the Diagnostics division, which we are aiming to be a profitable EBITDA business in the near term. And you can see the loss in six months was just over £400,000 compared to £500,000 the previous six month period. So that is progressing well. And we will obviously have the full benefit of six months of Chorus and launch in the second half of the year. So we're hoping to see that become positive in the not too distant future. The biggest spend, obviously, is the research costs in therapeutics there. You can see the GBP 5,300,000 as we continue to progress the clinical trials.

5:02 Moving on to the cash flow. We started the year with GBP 42,000,000. The GBP 8,000,000 outflow ties back to the adjusted EBITDA that we mentioned earlier. The investing activities of GBP 7,000,000 relates to the acquisition of Chorus, whereas obviously in the period December 22, we had the acquisition of launch, the disposal of the animal health business and some CapEx costs there. So the cash at the end of June was $26,000,000 At the end of August, it's about 24,500,000

5:33 And we've received a tax refund of £2,300,000 to do with 2022 tax. So that cash runway gives us a good runway through right into the back end of 2024. From a balance sheet perspective, obviously, the key assets are the goodwill and the leases around buildings and facilities, given the increase in the Chorus acquisition, the cash position there of £26,000,000 and then the convertible bond. There's been a subsequent amortization of conversion since the end of June. So the amount outstanding on the bond is now down to £43,000,000 which we anticipate will all be settled in equity. I'll pass back to Alastair. Thank you. Great.

6:19 Thanks, Tony. Okay. So let's go through the business update, obviously looking back at the reporting period but also post period end. So focusing on therapeutics predominantly. And just to run through a few introductory slides for those of you who aren't familiar with the company. So the I mentioned that we have two proprietary platforms. We're focusing initially on the Precision platform, but I I will talk through, give a little bit more detail on the AVACTAMA platform later on in the in the deck. So the challenge that we are addressing with the Precision platform is one of the fact that chemotherapy, when it's delivered to a patient's IV, the whole patient's body gets exposed to that therapy. And these are quite potent toxins, the whole body receives a systemic exposure to these toxins. That limits the tolerability for patients.

7:18 Well, I think we're all aware from personal experience of people who've had chemotherapy treatment, and it can be very unpleasant. So that limits the tolerability, and through that limits the way in which, the drugs are dosed, so the dosing regimen, and that has an effect on on efficacy, of course. So so it's that, safety aspect and tolerability for patients that's the real issue with chemotherapy. Many of them are very effective drugs, but they're not tolerated by patients. So the solution to that, a solution to that is to target the active chemotherapy into the tumor tissue. And the way we are doing that with the precision platform is to selectively activate the chemotherapy in the tumor. As you'll see on the subsequent slides, when a drug is modified with precision, it is inert as it goes around the body and then activated in the tumor. So we get a significant reduction in the systemic exposure and that improves the safety and tolerability and thereby the efficacy.

8:28 So precision is made to work effectively by an enzyme called FAP, FAP. And and so it's worth just talking through very, very briefly some details around FAP and the precision platform. So precision, as you'll see in a moment, is a bit of chemistry ultimately. It's a bit of chemistry which is recognized by this enzyme, FAP, and it is, removed from the chemotherapy by this enzyme. So that that's the mechanism by which precision drugs are activated. And you'll see in the middle panel on the slide, that shows you the amount of FAP in a range of different tumors. You can see going from the bottom upwards, sarcoma, salivary gland, CUP, if you didn't know, is cancer of unknown primary, esophageal, and so on. So these these cancers have very high levels of FAP, and FAP is not present in most healthy tissues. So this is an enzyme which is very much, you know, very much specific and particular to tumor tissues.

9:37 So when the precision modification is made to the the the chemotherapy and it and it then can't enter the cells as it's going around the body, that renders it inert and relatively harmless. And we'll see that when we talk through the the clinical safety data that we're observing for the first of these drugs, AVACTA six thousand. When it gets into the tumor, as I said, the the modification's removed, and it's it's only removed by FAP. So really to emphasize that third bullet on the left, that's where the IP and the real, the value lies in the IP, the fact that precision is absolutely specific to FAP. There is no other human enzyme that will release the drug, and therefore, you get a very tumor specific release. That's the key to the real value of the technology.

10:28 So just a little bit, just to delve into that a little bit more because I want to make a specific point. You know, it's very easy to get focused on AVACTA and forget the fact that this is a platform. Okay? So the the fact that AVACTAL is generating such good clinical data, which we'll talk through, it it serves to validate the mechanism of precision in human. Therefore, the platform, you know, the mechanism of the platform is being validated by 6,000. So we're not just developing an individual asset. We have a platform. Very briefly to talk through the nature of that platform, give you a little bit more detail I I may have done in the past. So there's four components to a precision drug. The it's easiest to think about on the right hand side to begin with, the active agent, the drug. In, six thousand's case, it's doxorubicin.

11:17 In the case of three thousand nine hundred ninety six, which is the example I've used here on the slide, it's a proteasome inhibitor. So that's the drug. That's the cytotoxin. There are then three other components. You can insert a spacer, after the drug before you get to the, FAP substrate. We don't do that for 6000 or 03/09/1996, but it can be done and it affects the rate at which the drug is released. So that then that's an important control lever, if you like, in the structure of a precision drug. The FAP substrate, I guess what we we ultimately call precision, is the bit that is selective for FAP. And you can see that in red, below. As I said, it's a small chemical.

12:03 It's actually a peptide that's very specific to FAP. And then there is a additional tail, if you like, on molecule that, again, can be used to modulate the way in which the drug is released and the way in which the drug is cleared and so on. So there are four components to the structure of a precision drug. And to try and illustrate that in simple way, I've indicated the drug as a a pill. So that's the that's the drug on the right. And then the precision substrate is the bit that keeps that locked up as it's in circulation. And FAP is the key that releases it. And, of course, FAP is predominantly in the tumor. So just to use that, you know, that that that way of looking at things with AVACTA six thousand

12:51 where do we get rid of that? On somebody else's computer. There we go. The doxorubicin then on the left is connected to precision, and that's AVACTALZ. Okay? Locked up and inert as it's administered to the patient IV. That goes around in the circulation until it goes through the tumor tissue in the circulation where it encounters FAP, which, again, just to add a little bit more detail as people understand the technology more and more, that FAP is predominantly on what are called, cancer associated fibroblasts. So this is really you may have heard the word stroma. This is really the bulk of the of the tumor, the, you know, the dense, stroma that surrounds, and makes up most of the tumor mass.

13:39 And that is what is very rich in FAP. And and when, of course, the the 6,000 encounters the FAP, which is the key, unlocks the unlocks the drug and releases doxorubicin. So, hopefully, that mechanism is, a, very clear, but, b, it's very clear that it is a platform technology. So the value here is not just in a single asset, it's in a whole range a whole range of, established chemotherapies and other, more potent toxins that have never been used as chemotherapies because they're too potent. And we can now begin to think about using those as systemic treatments. Well, we're moving along.

14:30 There we go. Thank you. Okay. So AVACTA GROUP is, as you all know, in a phase one a safety study. The We, primary outcomes of a safety study are obviously safety and tolerability. We will, touch on and talk about the efficacy signals that we're now seeing, which has been a I mean, that's a huge landmark, step for us to be to be seeing efficacy in this group of patients as well as getting the remarkable safety data that we've been getting is a huge step forward, and we'll we'll talk about that briefly in a moment. But the phase one a dose escalation study is a safety study. The primary objectives are to understand the safety and the tolerability and to identify, if there is one, a maximum tolerated dose or define the dose to move on to the phase two study. So as the name suggests, it's a it's a dose escalation through increasing levels of of treatment, with AVACTA six thousand.

15:29 To cut a long story short, we are now into the seventh cohort, which is dosing patients at three hundred and eighty five mgs per meter squared, which to give you a benchmark there is equivalent to at three and a half times the normal dose of, doxorubicin that a patient would receive. Significantly higher levels of equivalent levels of doxorubicin being given to patients. And to then just talk through many of you will have seen this slide before, but clearly I've updated it for the most recent completion of cohorts five and six. And I've underlined the the changes that I've made here. So we've now had 35 patients through through the study with a broad range of solid tumors, actually.

16:17 Know, many with soft tissue sarcoma, but many with a range of other, cancers as well. We are currently dosing patients in the seventh cohort, as I said. And a couple of weeks ago, we announced that cohort seven, would be the final cohort. We'll discuss the reasons for that, on the next slide. So thinking about the safety data, we continue to see what I've described as remarkable safety data. All the clinicians involved in the study would use the same word. It's better than we really imagined it could be. We are seeing an almost complete absence of the serious toxicities, the grade three and above toxicities that we see all the time and would expect to see with Doxorubicin.

17:05 There are some of the most serious ones, neutropenia, thrombocytopenia, anemia that affect the dosing of doxorubicin and limit it to three weekly dosing. We'll talk about that on the next slide. We're seeing an almost complete absence of that whereas neutropenia is a fifty percent incidence with doxorubicin, I believe. So despite delivering multiples of the normal, dose of doxorubicin, we're also seeing none of the typical drug related cardiotoxicity that affects the long term, number of cycles a patient can receive because of cumulative damage to the heart. So, in a nutshell, the safety, and tolerability for the patient is very good indeed. We have done a number of biopsies from patients where we gain consent.

17:56 That's up to nine patients now. We've reported previously and I don't have the detailed table in this slide because it's quite a long presentation, so but we've reported previously that we're seeing very high levels of doxorubicin in the tumor tissue. And that continues with the new biopsies that we've taken out of cohort five. So that trend is continuing with the new biopsies that we've got. And then the new news, I guess, that we announced a couple of weeks ago and really, really important progress for us is that we have seen, very clear signs of clinical activity for the drug, which you would expect of course, but, if you're releasing DOCS in the tumour then some of these tumours will respond, you would hope, even though these are late stage patients.

18:42 But have we those clinical signs of activity. In particular, one patient that's, shown a very significant reduction in tumour volume. That's a patient with, soft tissue sarcoma. But other patients which have stable disease or who have stable disease, that may be sarcoma patients or indeed, patients with with other cancers. So, all in all, phase one a dose escalation is going extremely well and we're now into the final cohort which will complete before year end. So then thinking forward about the clinical development strategy, some of this is not not new. Focus on soft tissue sarcoma for the reasons I think you're all, aware of.

19:28 But what is new is that now that we have, got these very clear signs of efficacy, we don't believe it's necessary to go through quite an extensive and expensive, phase one b, expansion to to to convince ourselves of the efficacy signal before we go into the the phase two. So what we plan to do now is to run alongside the last cohort in the phase one a three weekly dosing, a fortnightly dosing, group. Now that there's a reason for that, obviously. I mean, it's well known in the development of cytotoxics that more frequent dosing often gives, better outcomes for patients. So rather than keep putting more drug into patients with a three weekly dosing regimen, which is only the regimen because of doxorubicin's historical toxicities, it is very likely to give better outcomes for patients if we can move to fortnightly dosing. And we should be able to with the safety profile that we've got. So we've designed a relatively short, two weekly dosing study that will take us through to the middle of next year when we'll be able to define the dosing regimen for the phase two and initiate that study, which would have, previously begun in 2025, but is now brought forward, we hope, into 2024.

20:56 So that phase two study will be in, soft tissue sarcoma. We'll release more information on, you know, which subtypes and, you know, more detail on that phase two study when we when we can. But it'll be a a study in soft tissue sarcoma, and it will be designed to be a registrational study in The US. So as I say, we'll give more detail on that, you know, as we as we can, when we can. But right now, we should be at least looking forward to a registrational study that begins in 2024, and which should finish we we would expect, because these things are variable by the the end of twenty six or into early twenty seven. Okay. So let me move move on. You know, on on on the back of that very, very positive clinical progress for AVACTALZ and those thoughts about, you know, the potential of a platform, the potential to take, you know, existing chemotherapies or new potent chemotherapies and improve the safety and efficacy.

21:58 You know, the thoughts about, you know, what what comes next in the pipeline, you know, there's huge, huge opportunity. So 3996 is the second in in the pipeline. We've talked a little about this before. The warhead you see on the right circled in blue, which we rather natterly name, AVAC2727D, that's a proteasome inhibitor. And the proteasome inhibitor affects the way in which cells clear up degraded protein. It's effectively, if you want to call it the garbage disposal of cells. If you block that up, then that leads to cell death. Proteasome inhibitors are approved and are on the market, but their toxicities, their systemic toxicities have really limited their use to liquid tumours, to multiple myeloma effectively.

22:53 So our approach, of course, is not to think about going head to head in multiple myeloma. Now we have an opportunity to take proteasome inhibitors into solid tumour indications because we should not suffer from the same systemic toxicities, but we should be able to release that proteasome inhibitor in the solid tumor. So really interesting, exciting opportunity. I'm not gonna talk more about the rest of the pipeline now, but, of course, we have we have other, other precision molecules in the pipeline. I hope we can get to a point where where we can talk about that, you know, relatively soon. But 3996 is the is the next one. This is a little bit dense on data, but I think those of you are, you know, who would like to see the data will will enjoy seeing this. You know, the three nine nine six is looking very good in preclinical. We're we're aiming to file an IND next year, and we're still on track for that.

23:49 And this is this is mouse data that shows the efficacy of three thousand nine hundred ninety six in a melanoma skin skin, cancer model, but also shows the improvement in safety compared to, compared to Velcade, which is the leading proteasome inhibitor on the market. So the, very quickly, these graphs that you see here are the increase in the tumor size in a mouse. So it's a human tumor that's implanted in a mouse and the tumor grows very quickly if you do nothing, which is the the black line. If you treat the animals with Velcade or Bortezomib as it's known or with three thousand nine hundred ninety six, you get quite a significant reduction in that tumour growth. So there's clearly an effect, an efficacious effect on reducing tumour growth.

24:37 But if you look at the animal's body weight, when they're treated with bortezomib, the animals lose significant body weight. And that's a surrogate for and the systemic toxicities. Whereas, of course, with three thousand nine hundred ninety six, because it's released in the tumor, the animals are not suffering in the same way. In fact, the animals on bortezomib had to be given a five day break and then put back onto the treatment. So this is a mouse model, of course. It's not human data, but it's very, very encouraging. When you compare in this final graph, this is again tumor volume, and the green line is the standard of care for melanoma. So you can see that three thousand nine hundred ninety six is performing as well as the standard of care trametinib in this, melanoma PDX model. So in summary, the takeaway for three thousand nine hundred ninety six is really promising preclinical data.

25:30 We're now into the IND enabling studies around tox and so forth, which should bring us to an IND filing next year and a second Precision drug in the clinic before the end of next year. Just moving then on to the AVACTAMA platform. Now this this has, I guess, played second fiddle to the Precision platform for a little while purely because of focusing resources on on Precision for for for understandable reasons. The AVACTAMA platform, for those of you who are not not familiar, is a is a biologic platform. So it's a in simple terms, it's a replacement for, antibodies. So it's a simple, protein, that you can use to generate binders to drug targets in the same way that you can use, antibodies to do that. But there are a number of technical commercial benefits. I mean, it's a small protein.

26:29 It's very stable. Small and stable usually means that you get good good pharmacokinetics, good tissue penetration into solid tumors. It's a very, flexible molecule in the sense, as you'll see on the next slide, that we can build, other structures by combining one or two or three or four AVACTAMAs to create multi specifics that really allow you to start thinking about some interesting drug modalities. So that flexibility and that stability, and and then the feeds through into the, the fact that we can make these things. Know, a lot of technologies like this suffer from manufacturing issues once you get into the more more exotic structures. But the AVACTAMA platform behaves really well. Even in those,

27:18 multi specific structures, we can still manufacture these things. That's what high expression levels means. You can manufacture these things quite straightforwardly. From a commercial perspective, this platform is proprietary to AVACTA, of course. So there is it's completely unencumbered in terms of IP whereas the antibody space is is relatively complex from a from an IP perspective. So the other interesting angle around the AVMA platform is it's not an antibody, clearly, and it's not related to an antibody in any way. So there is freedom to operate where there is heavily based, you know, antibody based IP. So the I mean, the key things really are how can you differentiate the therapies that you develop?

28:05 And and there's a number of, elements to the Afema benefits. One is we have shown numerous times over, over the past few years that we can, get binders to targets that are traditionally difficult for antibodies. So one example, is something called GPCRs, which are a very interesting and important, drug class, but very difficult to generate antibodies to bind against, and we can generate afimas that bind this important drug class. So one of the differentiators for afimas is that we do seem to be able to generate binders to what are quite tricky drug classes for antibodies. The second is that we can make afimas that are very, very specific to the target, so exquisitely selective for the target that we're aiming for, which is clearly important, in drug development, as well as diagnostics, of course.

29:00 And then that final point around flexibility and being able to build multi specific formats. That's not straightforward with many of these types of technologies or with antibodies, whereas it has proven, serendipitously, if I'm honest, to be very straightforward with, with the AVACTAMA platform. So that's the that's the platform. You know, we have three programs, internal programs and two partner programs that I'll talk through briefly. As I say, the AVACTAMA programs have, to some extent, played second fiddle for obvious reasons to the precision. That's where we've put our our capital over the last couple of years to get the the clinical proof of concept with with the precision platform done.

29:48 But let me talk you through the, you know, the programs that we've been keeping going and now properly resourcing. And in fact, we'll be presenting some data on the the first of those in a in a couple of weeks. So the, I guess, the lead Afema program is a is a bispecific, PD L1 antagonist with a cytokine called, IL-fifteen. So clearly, are, good biological and clinical reasons for wanting to combine PD L1 with a, you know, with a cytokine and IL fifteen. There are others you could choose. IL fifteen is our lead and preferred option. So that's the data that the preclinical data that we have, which is looking quite interesting.

30:33 That data will be presented very shortly in a couple of weeks, and we'll we'll then get that poster onto our website. And I'll I'll produce a, you know, teaching video to try and talk you through that that preclinical data, say, is looking looking very interesting. The second multi specific program that we moving forwards is a PD L1 LAG three bispecific. So those are both immune checkpoint targets, as I'm sure many of you are aware. So those use, as you see in the picture at the bottom, those use aphimas to bind the drug targets. And the central part is actually, a part of an antibody to provide, size to give the right amount of, time in the bloodstream before the drug is cleared.

31:27 In contrast, the PD L1 IL-fifteen, drug uses our own half life extension technology, the Afema XT. So in fact, it's a, you know, it's a tri specific binding PD L1 IL-fifteen and a human serum albumin. So all of those programs are now in in later stage research, and and we'll be publishing the data, let's say, later this year and through into early next year. The third program, which is is a really interesting way, you know, many of you I'll have talked to many of you about the TMAT program in the past. That that remains we've now actually built built out our chemistry team a little further to be able to keep pushing that forward. That is a combination of the two technologies.

32:13 So the Afema, and the precision, chemistry to create a novel drug conjugate where the payload, the toxin, whatever that is, is released, in the tumor microenvironment. But just to put things into context that, you know, there are a lot of, a lot of unknowns in a in a TMAT molecule. You know, there's the there's a new, toxin in there. There's precision, which of course now is much more validated in the clinic, but there's the aphema, which has not yet been into human. We'll talk about that with the partners in a in a moment. So there's a a greater degree of risk in terms of developing a TMAT molecule. You know, those those are the reasons why we have focused resource from an AVMA perspective on the, better understood bispecific, programs on the left hand side of the screen. But, you know, that does not mean that TMAC is not, still in our sights.

33:07 It's just a lower priority for us. So going on to those partner programs, the and I'll I'll again, I think you you know what these are, but I'll briefly introduce them for for those who don't. We have a a partnership with Dae Young Pharmaceutical, and that's actually a joint venture. So we are a co owner in a joint venture in South Korea called AVACCEL, which is actually a cell therapy company. So Dae Young's IP that's in AVACCEL is around stem cell therapies. What what we have shown is that we can, put the genetic code of an ephemer into a stem cell to get the stem cell to make its own immunotherapy. So when the stem cell is in situ, it will generate its own immunotherapy to support its its function. Really novel, you know, a real next generation step in terms of stem cell therapy.

34:03 Clearly early stage, but we've been making really good progress with the first of those, which uses an anti c d forty ligand afema, in GVHD.

34:14 So that that program, if you just look over on the right, that is, still slated for an IND filing next year. So we, we we believe and we we certainly hope that AVACTAL will get an Afema, into human, later next year if we can, work with them to to support that, that IND filing in 2024. The second program, we we've got we've got a target that we've generated from us against. Those have now gone into AVACTAL. And the way our the way our relationship from an equity perspective works with AVACTAL is we we don't put cash in at their funding rounds. So they raise capital with regional VCs, some some ventures, others.

35:05 And, of course, we get diluted at that point because we don't book cash into that that JV. But when we put the AFIMA to a target in and we transfer the IP, so the patent ownership into AVACL, then we regain, an equity share. And and we've just gone through one of those processes. We are going through a formal process in South Korea as to exactly the increase what the increase in our ownership will be, but it is going to rise from about 19% to about 25%. So AVACTAL making really good progress with with the first and the second program, and they they have the ability to choose other targets as well. Now LG Chem is is more straightforward from a, you know, from a technology perspective.

35:52 It is a a partnership, a research partnership with LG Chem for multiple targets, the first of which is a PD L1 inhibitor. So this is a straightforward immune checkpoint inhibitor. I guess, in the sense that it's an Afema, but also novel that the half life extension is provided by our own Afema XT, which binds to serum albumin in the blood and thereby, extends the amount of time the drug spends in the, in the bloodstream before it's it's cleared. So we believe that, LG are taking that program, forward. The work is done entirely internally within LG Chem. We we don't have any involvement in that.

36:40 So we we would expect and hope to see an IND filing from them sometime next year. They also have rights to other targets, which, of course, we we're working with them on what those other targets might be. So I think the takeaway from the partner program, certainly with AVACTAL, is we've got sight of an IND filing, and that would be the first time that we've had the Afema platform in human. Okay. Then just to summarize, and I won't I won't read through the the pipeline. Just to summarize, that that is now the the pipeline as it stands about Precision and AVACTAMA wholly owned and partnered programs. Okay. So just just five minutes on the, diagnostics division to provide you with a with an update. I know we we've got plenty of questions, and I I want to get around to to those. So so the the vision that we have for diagnostics is to build a significant European IVD business.

37:44 I'll I'll explain what I mean by full spectrum in in a moment, focused on, professional health care and also broadening access to diagnostics. And the mission really is to make sure we deliver high quality, diagnostics, to a broad range of people for both treatments, know, for both diagnostics in that sense, but also to to monitor monitor health and fitness, for for individuals. Okay. So full spectrum, you can look at that in two ways. I mean, we we are focused on the professional health care market, so not not consumer testing, buying tests online and testing yourself. A home focused on professional use, and there's two settings for that really, the centralized hospital laboratory testing and the decentralized testing, which is more GP clinics and and pharmacies and and other settings now. There's a a big push in The UK for community diagnostic centers. So there's there's more efforts in the Uganda and, of course, in Europe and The US going into decentralized testing to take that pressure off centralized path labs.

38:56 And then the the modalities of testing run from pathology laboratory, which is big, big equipment and very high throughput in hospitals through rapid point of care testing, which primarily means lateral flow tests. And those are used in hospitals as well as in the more decentralized setting. And then there is, an opportunity to get individuals to sample but not do the test themselves to then send the sample away for the test to be done in a professional setting and for the results to be communicated with some clinical support. So that's that's our, universe, if you like, of, the way we see a full spectrum, I IVD business. If you think about the value chain, and this goes to our m and a strategy, and we'll we'll see how launching Chorus fit into the strategy on the next slide. This this talks to our strategy. We see the we see the value in the diagnostics, value chain at the start and at the end, frankly.

39:58 So the the sales channels, the customer relationships, the market intelligence that tells you which test to develop, that's very high value. And the IP, the the new novel product development, the competitive product development, that is, also of high value. Manufacturing is a little bit more commoditized. As know, Coris have a manufacturing capability, it tends to come with. But if you need more volume than you outsource, it's a very commoditized market in terms of manufacturing IVDs. So then just thinking how the acquisitions we've made fit that strategy and thinking about that full spectrum IVD market, Launch is the largest distributor of or the largest independent distributor now part of AVACTA GROUP, but the largest distributor of IVDs in The UK has a a growing business in France and some business in Belgium and and Ireland, and we'll talk about expanding that in a moment. It's a very well respected, well established, profitable business, selling into, centralized professional health care. So mainly hospitals in The UK, and Europe. So the NHS, obviously, is a huge customer for launch, but private hospitals in The UK as well and in in France and and other places in Europe.

41:28 Coris, so the the strategy, just to step back, is simple. Right? If we can build those routes to market and own those routes to market and then expand our own product portfolio through development and acquisition and put those down our sales channels, then we get decent margin sales. The the margins on IVDs sold through third party distributors are pretty tight. So what's attractive about this is owning the routes to market as well as owning the as well as owning the products or some of the products. And Chorus is a lateral flow test, a rapid test developer. They have a range of tests primarily focused on infectious diseases. The an an area of their portfolio that I think is we all think is particularly interesting is in antimicrobial resistance.

42:21 So that's perhaps you know it as antibiotic resistance. So those are a range of tests that allow you to determine which resistance pathway. So if you an infection that is resistant to antibiotics, you know, what is it? Which antibiotic should you choose? And that's a growing market and and again, one one that we can grow with with Chorus going forward. So so that's how those two acquisitions fit in, and and I'll talk about the synergy with AVACTA in a moment in a moment. Of course, that that's related to the Afema platform and Chorus' products primarily. So it's critical that we we grow these businesses. We've talked through these slides before, so I won't dwell on them, then we can get on to the questions. But the the key area in which we we think we can grow launch significantly in the coming sort of three years or so is by expanding their their business into Germany, and we're we're actively pursuing that. I hope I'll be able to give you an update on that soon.

43:24 So Germany is the biggest IVD market in Europe. Launch have a fantastic reputation in The UK and France, and they're well known in Europe. So expanding that business model into Germany makes absolute sense. And that that, as I say, I hope I'll be able to give you an update in the not too distant future. And then with Coris, clearly expanding their product portfolio using the the Afema platform to improve or create new tests for the the Chorus portfolio. That's a really important synergy that we're we're working very hard on on realizing. But also, actually, with with Chorus growing and improving their distribution network, obviously, using launch within the markets where launch operates, but but also just improving the quality and the management of the distribution network globally to to grow Corus sales through that route.

44:25 Okay. And the final slide just to make the point I've just just made, is that the AVACTAMA platform, you know, we've talked a lot about therapeutic opportunities, but it it also, is an ideal, reagent platform for generating, immunodiagnostics, which the lateral flow test, of course, is. So it gives us a real opportunity to create competitive advantage with better performance ultimately, and also new targets that are difficult for antibodies to difficult for antibodies to to reach. So that that is work that's ongoing now. As I said right at the start, I think, you know, the real focus now is on realizing those synergies. So we've paused any any further acquisitions and we're we're working on those those mechanisms for growth, organic growth in those businesses, expansion of launch into Germany, and getting Afema reagents into Coris products.

45:22 Okay. So I won't read read through the whole the whole summary, but I think the key points are, really the the the outstanding performance of AVACTA six thousand in the clinic and to and I'm saying these things multiple times, but that really has validated the mechanism of precision in human. Precision works. So we now need to think about what the pipeline really looks like beyond, six thousand and three nine nine six. And I I hope in, you know, that in due course, we'll be able to talk to you about other other opportunities. And and we certainly at the AGM, we talked about the commercial opportunities now that we have. The the clinical data that we have, we're getting, increased commercial attention, of course, because everyone's been waiting to see whether, you know, whether we get those clinical signs of efficacy.

46:09 And that allows us to think about partnering, not our assets necessarily because we want to take those take those forwards, but allows us to think about partnering the platform potentially with top sins owned by other companies and and so on. We talked through that in detail at the AGM earlier this year. And just a final note on on the capital allocation. As I said, no no further m and a activity. We we we have great optionality that I've spoken about in terms of commercial opportunities with precision for nondilutive funding. And that's a very high priority for us, you know, as as well as potential for for dilutive funding. But as Tony mentioned, our current cash runway is to to the back end of twenty four to be able to deliver on six thousand and three nine nine six as we as we all would hope to. So I'll pause there, and perhaps we can start to, take some questions.

47:08 Perfect. Alastair, Tony, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab, which is situated on the top right hand corner of your screen. We have received a number of questions from investors today, and I want to start up the Q and A session with this question here, which reads as follows. What funding options for further phase of the Precision platform, both AVACTA GROUP PLC, are AVACTA considering? Will these be in the best interest of shareholders and create minimal dilution? Yes. It's obviously a good question. I think I've I've probably dealt with that in the last sentence at the end of the presentation. But, you know, we are fortunate to have plenty of optionality regarding, you know, the way the way we fund the business non dilutively as well as as dilutively. The the clinical progress that we've made is, you know, is giving us, you know, an uptick in commercial interest, as I mentioned recently. So, you know, that that gives us that gives us one option for non dilutive funding, which is the real focus of the question, of course. And, you know, we've we've also hinted at the potential to spin out the diagnostics business at some point.

48:14 And, again, that that's another way to to produce nondilutive funding for the group. So, you know, we we have plenty of optionality and, you know, that's always at the front of our as a board of directors, always at the front of our minds. So so don't worry about that. Perfect. Thank you very much. Turning to the next question. Will the short fortnightly dosing study that is to run-in parallel with c seven of phase one a also be a dose escalation study? Or you pick a single dose level based on the phase one a date up to c six or c seven? Yes. Yeah. So it will be a dose escalation study, but it'll be quite a short one because without going into lots of detail, from the three weekly study, we we know where we can start as it were, so we don't have to go back to the beginning. So we'll be starting in the middle in the middle of the dose range, and we would expect two, three dose escalations, you know, maybe four at the most. But we we know where we can start in the middle. And the idea is to to run that very quickly and have it finished by by the middle of next year.

49:23 Perfect. Turning to the next question. Will phase two treat early stage STS patients or only very late stage patients? Yes. So phase yeah. Phase two is an efficacy study. So it's it's designed to be a a registrational study and then it it so it will be first line treatment, for soft tissue sarcoma patients. So very different from a a phase one study where many of those patients are in in late stage disease and, of course, many of them not not soft tissue sarcoma. So, yeah, so the answer to the question is it will be, first line treatment. So early stage is the question to put it. First line treatment of, soft tissue sarcoma. It'll be particular subtypes of soft tissue sarcoma as well, and we'll we'll get more information about that when we can.

50:15 Perfect. That's great. Why did investigators elect a three hundred and eighty five mg final dose if no MTD is likely to be found and not four hundred mg? What factors led to this decision? Okay. Well, that's very straightforward. The, during the study, the FDA put a limit of a 25% increase in the dosing between the cohorts. So it's a simple calculation of 25% increase over the previous cohort. So it's it was an FDA requirement that later in the study, we stuck to, 25% increase. Perfect. Thank you very much. Can you explain how effective AVACTALZ is at attacking the stroma in more detail? Yeah. So we touched on this a little bit in the presentation, but the, you know, the stroma, as I mentioned, is noncancerous cells, nonimmune cells, and it's the, you know, the tissue that's associated with the with the tumor. So it's the bulk of the tumor, really. And and generally, the stroma's a very dense mesh of fibroblasts, I think I mentioned during the presentation. That it's actually that structure that, that dense structure that prevents some therapeutics, the larger therapeutics like antibodies from from penetrating.

51:36 So so that, you know, the question about attacking the stroma is a really important one because, breaking down the stroma allows other therapies to penetrate the tumor more effectively. That's another thing we didn't talk about during the presentation, but it is important to think about opportunities for use of doxorubicin or AVACTA six thousand to to work in combination with immunotherapies. And to answer the question, the the majority of the of the stroma is made up of cancer associated fibroblasts, or CAFs. Those are the those are the the bulk of the tissue, and they're the, cells which have FAP on them, you remember. So those are the ones that are directly targeted by AVACTA six thousand.

52:27 So, we so we we know that doxorubicin has an effect on the on the stroma to break it down. We've got data where we have, so so in vitro data where we've what's called co cultured. So we've grown calf cells with tumor cells, and we can show that the sensitivity, of the tumor cells to AVACTAL is is greatly enhanced when we have the presence of CAS. So all all the data that we have and the knowledge about doxorubicin, points towards the fact that AVACTA six thousand is likely to have, as doxorubicin does, you know, an effect on breaking down the stroma, which means it can be used in combination with immunotherapies as well. Perfect. Thank you very much. I know you might have just touched on this. I know you'd mentioned CAFs, but could you also explain how effective AVACTALZ is at attacking that as well?

53:21 Yeah. So that's I mean, it's quite a specialist question, isn't it? But for for for most people, MAFs are metastasis associated fibroblasts. So these are the so CAFs are the fibroblasts in the tumor, the primary tumor, and MAFs are similar, the equivalent, if you like, in the metastases. And we know that MAFs also have a high level of FAP, which is really interesting because, you know, from a from a treatment perspective, you don't you don't need to know with a with a precision drug, you don't need to know where the metastases are because they're rich in FAP. So the the drug will find them through the circulation and and and it'll release the chemotherapy and the metastases.

54:09 So, our biopsy samples from the clinical trial are almost all, they may all be, but certainly almost all from metastases, from metastatic sites. So, you know, so we, you know, we know that we can detect significant levels of doxorubicin at those sites. So that suggests that six thousand is going to be as effective on the metastatic sites, the MAFs, as it is on the CAFs. Perfect. Thank you very much. Next question here. What is happening with FAPPET? Okay. So maybe worth explaining to some people on the on the call what FAPI PET is as well. So so the, the I in FAPI refers to a small molecule that binds to FAP, and stops it working. It's an inhibitor, hence the letter I. So the first the first bit of that thing, FAPI PET, is, it is basically a small molecule that binds to FAP.

55:16 PET imaging, if ever everyone's heard of PET imaging. So that that inhibitor, that small molecule carries a a radionucleotide with it, so allows us to do PET imaging in the normal way that you're you're aware of. So FAPI PET gives us a way of doing whole body imaging and and seeing where the FAP is within the body, if that makes sense, because the radionucleotide binds through this small molecule to FAP. So for us, it's a really useful research tool. So so one that we can use during drug development. It's potentially a companion diagnostic, although I would just sort of make the comment that it's a very expensive imaging system.

56:08 So it's not widely available, and I think that might be challenging in terms of companion diagnostic. But just just to answer the question, what's happening with it, we are getting close to getting FAPI PET working in Memorial Sloan Kettering Cancer Center. So that's the center running the AVACTA 6,000 study in, in New York. So that that should happen in the next few months. So that that will be very important for research, as I've said, but also for, for the phase two study next year. So the the real challenge I mean, we've been talking about FAPIPET for a while. I think the the questioner is is basically saying, you know, why haven't we got it working yet? So to answer that, the the challenge lies in manufacturing because the radioactive label has to be manufactured right next to the site where it's gonna be used because it's got a short half life.

57:03 So, basically, it's not very easy to implement in a hospital and you need specialist facilities and that's that's not worked, in The UK in the way that we'd hoped. But I say we we plan to have that in place in in Sloan Kettering, in the next few months. Perfect. Thank you very much. I think we've probably got time for maybe two more questions. So let's go for this one here. Will AVACTA consider adding additional indications in p two? Not initially. So the the phase two study that I've outlined I mean, I I realize I've given very little detail, but the phase two study I've outlined is gonna be focused on one or two subtypes of soft soft tissue sarcoma, and that is a regulatory strategy that's designed to get registrational approval.

57:52 That can be done in The US. It's more difficult to take that approach in Europe. So it's a strategy to make sure that we get to the end of phase two and get approval for AVACTAL in those selected indications. Now clearly, that can then be expanded into other sarcoma subtypes and other indications that we spoke about in the past. I know we we had a meeting before this where we talked about breast cancer, that's an obvious one. So so we will, and those opportunities may be, you know, may be partnered because studies in breast cancer, as I'm sure you're aware of, very large studies, and and maybe maybe something that we would partner rather than do ourselves. Perfect. And and maybe the final question. Going forward, will the FDA be the lead regulator?

58:40 Well, I mean, we we obviously keep all our options open. I think everyone's aware that there's delays in The UK with the MHRA. So I think it's it's very likely that the FDA is gonna be the lead regulator for a, you know, for for a period. Let's hope those delays, shorten in The UK, but we'll keep all our options open. Perfect. Alice and Tony, thank you very much for that. We've just hit the hour and I think you've addressed those questions you can for investors. And, of course, the company will review all the questions submitted today, and we'll publish those responses on the Investor Meet company platform. But just before redirecting investors to provide you with their feedback, which you know is particularly important to the company, Alastair, could I just ask you for a few closing comments? Yeah. Sure. Mean, thank you for your time.

59:26 It's it's a real pleasure to be talking about such an exciting period in the, you know, in the in the therapeutic division's development and the group as a whole. It's it's been a a super, you know, twelve months and the last few months as we've we've we've seen those efficacy signals is is genuinely transformational for the company in in many, many ways. So it's a very exciting time to be in the company, hopefully an exciting time to be an investor. We have so much to do. But, yeah, it's an exciting exciting picture moving forward. So thank you for your time, and looking forward to next opportunity to speak to you. Perfect. Alastair, Tony, thank you once again for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

1:00:19 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 AVACTA GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you.