Diaceutics (LSE:DXRX) — Final results presentation

0:02 Good afternoon, ladies and gentlemen, and welcome to the DIACEUTICS investor final results investor presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged, can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Just simply type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor Meet company dashboard, and we will notify you by e mail when they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. And if you could give that your attention, we'd be most grateful. And I'd now like to hand over to Peter Keeling, CEO and Philip White, CFO of DIACEUTICS.

0:51 Good afternoon to you both. Good afternoon, Mark.

0:55 And indeed, Good evening, good morning, good afternoon to everybody. Thank you very much for joining to DIACEUTICS twenty twenty results. Just by way of introduction to myself and Philip,

1:10 So I'm chief executive officer and founder of DIACEUTICS some fifteen years ago, founded the business. I myself am a product of classic pharmaceutical industry training working for Welcome, eventually owned by GlaxoSmithKline, working internationally across multiple markets.

1:31 DIACEUTICS is the second company in the diagnostic realm that I've kind of started and run and spent a little bit of time in industrial research at MIT, which directly led to the foundation of the business model of DIACEUTICS, which we will get to in a minute. Hello? Hi. My name is Philip White. I'm a chartered accountant with a legal background. I have a lot of industry experience in high growth export and m and a businesses. I joined DIACEUTICS some eleven years ago, and we have a global corporate structure with a 120 people in 20 different countries. And I'm passionate about growing this business, and I'm passionate about delivering better outcomes for patients through better testing.

2:19 So what we'd like to do in the presentation today is to take you through, first of all, an initial introduction to precision medicine. Forgive me for those of you who are familiar with this space, but we think it's a very good way to to explain the unmet need that DIACEUTICS delivers into the marketplace. Then we'll introduce key highlights for 2020, look at some of the financials that we delivered through last year, And then move into an introduction to our DXRX platform, which is part of the transformation of our own business model and indeed transformation of a service offering into the precision testing market. We'll talk a little bit about data, and then we'll close out with a few summary slides.

3:07 And, obviously, as Mark said, open that up for q and a's for yourself. So I'm gonna come off camera, and we'll come back on camera on the on the q and a session as some people fill up. So let's talk a little bit about the the precision testing market. In essence, precision the precision testing market is a byproduct of the pharmaceutical industry launching a range of new smart or targeted drugs. As And a little illustration on the left of the slide illustrates. The way that we've traditionally been introduced to medicines has been, know, you're introduced to a a drug. If it worked, it was obviously the right drug for you. But over the last fifteen, maybe some twenty years, the research and development engines of the pharmaceutical industry and indeed research institutes around the world have been focused on making sure that the right drug was given to the right patient. And what that meant was that those patients had to be tested first, thereby creating that interdependency between testing people the right way to make sure that they got the right drug. And you will hear words used both companion diagnostic or biomarker and or precision test. These are interchangeable in a way. They all relate to the use of a diagnostic prior to the patient getting the therapy.

4:37 And on the right hand side, you'll see an oncology pipeline dependency. And in essence, what you're looking there is a march of the pharmaceutical industry pipelines towards drugs where there is a test and drug interdependency. In oncology, that is most pronounced. Almost sixty percent now of all of the oncology drugs being launched into the market have a companion test or a biomarker associated with them. But by no means is this exclusive to oncology and other future exciting areas for precision testing include cardiovascular medicine, autoimmune disease like psoriasis, rheumatoid arthritis, central nervous system diseases like Alzheimer's and, of course, infectious diseases as represented by COVID.

5:24 You'll see also on this slide the number of companies very much focused on this space, and they constitute many, if not all, of the clients that we serve at at DIACEUTICS. And if I if I move on, I think, to the to the kind of the opportunity, the market opportunity. So I will explain in a in a in a in a second that the kind of the market opportunity that exists for us as a business. But what do we at DIACEUTICS do? Well, in essence, what we what we aim to do is to work with the pharmaceutical industry to remove any of the hurdles or barriers which testing presents to patients getting onto the right drug. Often, a patient is traveling through their journey in cancer, perhaps you yourselves know some of those those those stories, a patient will be confronted with a rather protracted diagnostic journey from from cough through to x-ray through to biopsy and so on and so forth, often ten or 11 different testing events. And they all create barriers before the patient get access to the drug.

6:35 And what we've done at DXRX is to is to deliver a a service, if you like, or a solution that aims to remove those barriers, and we do that through through data and through a series of implementation services. And I'll show you an illustration of an example in the deck of how we actually do that.

6:56 But in terms of how many drugs are there in the the kind of the pipelines that are moving towards the market where this type of diagnostic dependency and the need to remove those hurdles around diagnostic testing exist. Today, we know that the FDA have approved some 150 therapies on the market where there is a a drug and a test both mentioned in the drug label, and that that dependency is created. Approximately, pharma will approximately spend between 1 to $2,000,000 per therapy to try and remove those hurdles. Often, that money is spent with us, and we see that number absolutely increasing as their awareness of how to remove those hurdles and the benefit to them of removing those hurdles increases. We see that moving up to a percent of a $10,000,000 per therapy brand spend.

7:50 An An additional component of that is the sheer number of drugs that are moving to the market. In fact, there are well over several thousand clinical trials and being focused on the precision testing space. And if you relate that down into the numbers therapy drugs that are coming to market, our estimate is that there's at least 300 test dependent therapies moving towards the market. So if you think it's a 150 there today, by the time we get to '25, 2026, the market will have doubled and and increased by 50% thereafter. So it's a very considerable change in terms of the way the precision medicine market is moving forward.

8:35 We'll come back, as I say, to explain a little bit more of how we approach this. But what I want to do is if we can jump back to our kind of our 2020 results and what we delivered as a business. And we issued a revised guidance in September last year. We did indeed see some COVID headwinds. We issued a revised guidance on that basis that we would deliver a GBP 12,000,000 revenue business. Pleased to say that we improved on that position. We saw predictability coming back into the pharmaceutical market in terms of the way that they budgeted for this particular unmet need. That allowed us in quarter four to create a more predictable landing position for us as a business. We also improved in terms of the EBITDA versus what we believed in the middle of the year or September would be a £300,000 loss, and we improved on that. We also took the opportunity of launching our new DXRX platform in actually, October of last year.

9:47 And and that opportunity allowed us to, number one, introduce a a totally new service, new product to the market much more fit for purpose. But it also allowed us to look back at our organization and remove what we would describe as sort of legacy services or legacy components to the business. And Philip will walk you through in a few moments some of those specific changes that we made to make us more fit for purpose as we enter into 2021. I've mentioned that we launched our platform. We said that we would launch it on the October 26, and we did. And I'm pleased to say that we are either on or slightly ahead of where we expect it to be, some ninety working days into the launch of that platform. And our expectation and the expectation that we've set with our investors is that when you're bringing a novel way of working into a conservative audience

10:41 like the pharmaceutical industry, our expectation is that 20% of our business in this year, 21, would be conducted through the platform, 60% in 2022 and one hundred percent in 2023. And we'll come back and show you where we believe we are on that trajectory. Just before I leave the slide, we provide services to some of the most important therapy brands on the market today and for some of the leading pharmaceutical companies. And specifically in 2020, we actually worked on over 53 therapy brands. So if you mentioned remember I mentioned there are 150 on the market and some 300 moving to the market. Between those that are on market and those that are moving to the market, we worked on a significant proportion of those therapy brands.

11:32 We also did that globally. We've often said that the pharmaceutical industry does not want a fix to its testing strategy in just one market, whether it be The United Kingdom or Germany or United States. What they want is a global solution. They are rolling these drugs out really quickly, and they want to make sure that they have a partner in their kind of precision testing role to make sure that partner can roll with them. And that's why we built and shaped DIACEUTICS to not just be a kind of a service company in one country, but rather to provide a global offering now in over 29 different online countries. So let's move to some of the key financial metrics that underpin 2020, some of the operational changes that we made, and then we'll come back and look a little bit about what's been going on with the platform, what does it do, and how does it serve our clients. Philip?

12:31 Thank you, Peter. Before I get into the detail on this slide, I'd like to frame the slide first. As Peter stated, COVID has impacted our business in q three, and that was caused by the lead launches and the freezing of some of our clients' discretionary budgets, and that has resulted in the variances that you see in the middle of this slide. But that said, we have carried out a comprehensive cost review. We have carried out a a substantial restructure, and we've met and exceeded our revised guidance for 2020. We have recovered in q four, and that has continued into q one of of twenty twenty one.

13:18 So let's walk down some of the financial metrics on the right of the screen. Overall revenue declined by 6%. That was made up of a 21% increase in h one and a 19% decline in h two, with q three being mostly impacted. It's important to note that q four revenue was 60% up on q three. And as Peter touched on, that predictability within our client budgets has returned, and we've seen that, as I said, move into q one of this year. Data represents 76% of our revenue and implementation services, 24%, and that's broadly in line with with previous years and and a recovery of implementation services in in h two.

14:14 As you know, we are we have a global footprint in in all of our regions. And as we move through the year navigating through multiple regional lockdowns and a decline in revenue, we focused on The US market where we have connections with our clients' global teams and also the country team there. And whilst the other regions declined, we were able to increase the revenue in The US by by 7%. Our gross margin is strong. It has decreased to 75% as the as we have introduced the amortization of the platform in q four, and we are monitoring the the labor costs within cost of sales. We're seeing efficiencies there, which we'll come to in the next slide.

15:06 Administration costs increased by 19%. This represented a hit one investment in people across multiple departments and then a subsequent cost review under restructuring. Within that cost review, late q three and q four, we had a hiring freeze, and we we canceled all discretionary spend, and that saved that saved 400,000 of costs in in q four. We carried out a restructuring to our business in late q four, and that removed 1,900,000 of costs from our business. We have had some cost savings through travel and property as as many businesses had, and that was offset by increased spending in legal and professional fees, things like global data compliance and

16:05 the the the r and d tax credit that I'll come to in a second, and the exceptional costs related to termination agreements around the the the the removal or the the restructuring of the business

16:22 around those termination agreements. You'll see we benefited from good quality r and d. We have a tax credit of 900,000 in the in the p and l, And we'll continue, given the the the investment in the platform, we will see a 1,500,000 cash receipt in h two of this year, and that's around the the r and d tax credit. So we've reported a positive adjusted EBITDA against a guidance of negative 300, and that was achieved by the the cost review, the the saving of that 400,000 and the additional revenue we posted above above our guidance.

17:09 Big focus for us this year, as Peter has articulated, was on the launch of DXRX. We continue to invest 4,600,000 in the platform right up to launch, launched on time and on budget, and we're very pleased with the uptick and the client engagement on the platform.

17:27 We invested 1,500,000 in data and 300,000 in patents software. We have a very strong cash position, 25,000,000, and that's made up of 300,000 of net inflow from operations, 6,000,000 of an overall intangible investment and a £20,000,000 raise that we carried out in Q2 of twenty twenty. Moving into this slide, what I want to do on this slide is really focus in two areas, financial metrics and operational milestones or operational improvements that that we made to the business in in h two.

18:14 And first of all, focusing on the on the financial metrics. In h two, we have touched on our revenue did decline by 19%, but we did see that recovery

18:26 taking place beginning in September and right through in q four, and and that has continued right into into q one of this year. Our clients have focused on their key markets. We helped our clients in 30 key markets globally. We introduced the platform amortization, which commenced in q four, and you will see that impacting the gross margin going forward, but offset by an improved labor efficiency. Labor efficiency improved by 25% in q four, and we're seeing those metrics continue into January and February of this year. But more importantly, the operational improvements led by myself with with Ryan and Peter, We really took a look at at the business and used the restructuring as an opportunity to to look at those legacy costs within the business, reengineering in several areas of business development, finance reporting, client contracting, and and and, you know, looking down every line and identifying those those legacy costs. And we were we stripped out 1,900,000 of savings, and that will be reapplied or relayered on to the cost base really to drive the the growth and the marketing of of the platform.

19:53 For example, it will allow us to double our sales team over the next twelve months. It also allowed us to introduce a a sales commission structure, something we we didn't have in previous years. Another key improvement was the business development infrastructure. In the past, we used a system called clinicaltrials.gov, and we replaced that with with the Informa real time pipeline tracker. We replaced our CRM system with Salesforce. We've merged these together and linked these with our ERP system. And in addition to strengthening the the finance team with a a new VP of finance and a business development engineer, really bringing together the real time reporting metrics such that providing the infrastructure, you know, to support a high functioning sales team.

20:52 We've also increased our bench strength. We have set up a an operational committee in early twenty twenty. And as part of the restructure, we've accelerated the empowerment of those leaders, those 12 individuals that really are taking the operations of the business onto their shoulders, and we have underpinned that with with some key KPIs. And we've continued to support our our people through COVID, and we were pleased that a recent employee survey, ninety eight percent of people of employees said DIACEUTICS was a good place to work, and they would recommend they would recommend our company. And the bottom line is we have built back better, we've built back stronger, and we've built back in a way that supports the platform and supports the platform growth.

21:47 So so let's take a look at the platform. Yeah. Thanks, Philip. So let's introduce the the concept of the platform to us. So DXRX is the name of the platform, and we've been working on it in in earnest in terms of a a a piece of IT infrastructure since our IPO back in April 2019. And in essence, DXRX brings together three components into one place. The first is what we call our DIACEUTICS method. In essence, the 500 plus project experience that we've been working with the leading pharmaceutical companies over the last fifteen years. Experience that allowed us to identify exactly what pharma needed in order to remove these diagnostic hurdles so that patients could get onto the drug. And what we had been doing prior to the launch of DXRX is we were providing data in terms of how those patients were being tested or, in some instances, not being tested, and indeed implementing a change where a problem was identified with individual laboratories across the globe.

22:59 So the DXRX method for us was our way of really understanding what pharma wanted. And we therefore moved from building a from providing a kind of a four product suite or four modules, as we describe it, to being a 16 module platform. And those 16 modules represent the key important initial needs of all of our pharma clients in terms of removing those hurdles. And in a moment, I'll walk you through an example of how that those modules will be used. The second thing that we brought into the platform is data. Now we've been amassing data for well over a decade, and our data comes from multiple sources. It comes from insurance claims. It comes directly from the labs themselves, and it comes from many of the projects that we've been working on where we have new insights that we can bring to the table.

23:49 And we've integrated

23:50 that data for the first time into the platform. If I can put that into context, in the old way of working or what we call DIACEUTICS Classic, if a client had asked for a piece of data and what might be called a landscape, a landscape of what's going on in an in an individual country with testing, that would take us approximately six weeks to pull the data out of the database, do the analysis, put it into PowerPoint slides and deliver it in Excel. On the platform, that same exercise is delivered in under sixty seconds. And the functionality that you would expect from a digital interaction with data allows you to slice and dice that data in different ways that our clients want people to do before.

24:36 And the third component that the platform integrated was a, what we call a laboratory network. So again, over the last decade or so, we have been working in an offline environment with over two and a half thousand laboratories, mostly in oncology. And those labs constitute for us the foot soldiers of change. They're the labs that are both running the tests and changing the tests and improving the tests on behalf of doctors who are prescribing to their patients. And so for us, those labs represented a key kind of extended and global footprint for us as a business. We've been databasing those clients, building those relationships. And finally, on the October 26, we opened up that entire network to our pharma clients

25:26 so that we can bring all those components together. So what does that do for our pharma clients? Well, the promise to them is that, a, they can get direct hands on access with a probably one of the most extensive global patient testing record repositories that exists today. That's real world data. This isn't data that is about clinical trials, but what's happening every day to our brothers and sisters and mothers and fathers and children in terms of the way they're being tested. That real world real world view, a real time view, is is a fundamental requirement. If you're going to change something, you need to know what's going on in the ground. Pharma finally has access to that data directly the first time. Secondly, is we've given them access directly to that lab network so that they can invite those labs into creating levels of change that were previously very, very difficult to coordinate and to manage.

26:26 For us at DIACEUTICS, the platform really opens up a different transformation to our business. On the one hand, it provides an enhanced product offering. As I've mentioned, we've moved from four modules to 16 modules. We're building a further three that we will add on in 2021. And when that is complete, we will believe we will have what we describe as an end to end service, a comprehensive solution for a diagnostic for a pharmaceutical company to make sure that the diagnostic that is launched alongside its drug is launched comprehensively from beginning to end. Secondly, it allows us to introduce a different type of payment mechanism. In the DIACEUTICS classic and our old way of doing things, we are being paid on a project per project basis.

27:12 With the with the platform, finally, we can change that mechanism into data licenses and data subscriptions with all the obvious benefits of that and choose to creating long term predictable revenues for us as a business. And lastly, it's a way of us embedding ourselves in our clients.

27:30 Now I would say that we've always been embedded in our clients in one way or another. We have a very, very strong repeat and loyal client base. But this embeds us in a different way. It embeds us very much in a hands on digital environment in a way that the modern business world, I think, is much more used to. I'm I'm going to skip over the next slide. I know you will get it in your slide sets, and you you'll see that for yourself. What I do want to do is to walk you through an example. So here is an example blinded here of a project that we are scoping out as we sit. And in this in this particular example, there's two pharma companies collaborating together on the launch of a new therapy brand in a leading cancer area.

28:18 And this particular therapy brand is somewhat unusual in that it it is it will require the use of an existing diagnostic test. Not a new diagnostic. It's an existing one. The problem with that existing diagnostic is that the scoring mechanism for that test is not fit for purpose. We knew that because our data was able to illustrate to the client as far back as 2019 that the the pathologists had an overconfidence in reading this new test or this variant variant of the test. And as a result of that, patients would be missed. And and as a consequence of that, we've been working with the client to scope out a ten month program, which combines the best of what we do, our data, our change management, and our lab our global global lab network.

29:11 Specifically, in this instance, in that second column, you'll see that we've identified or will identify 60 of the most relevant and influential labs. Those little black dots that you see on the map are an illustration that this is a global project, and we're identifying the labs in these regions which have the greatest influence in terms of change for all the other labs that they will ultimately need to move to this new scoring system. We will collect data directly from those labs, and that data will constitute of what are they doing today, how many patients are they testing using this method, and ultimately, what are the improvements that they're making to that scoring system, and and what are the additional patients that are going to be captured? Real world, real live data happening in front of their eyes as we speak.

29:59 We have a key opinion leader team, and these are physicians and thought leaders already embedded in in the platform. This is something we announced way back in in 2020. And these named individuals really help our clients know that what we're proposing here is both clinically appropriate and will be managed with the highest degree of integrity as as a program. And the that and those advisers, those independent advisers, sit within the platform, making sure that everything is being managed the right way. We will also provide training to those pathologists. After all, this is about change management. It's not just about identifying what needs to happen. It's about dent it's about actually making the change. And in this particular instance, we need to make sure that pathologists can be retrained to read the new scoring system.

30:55 To do that, we're using one of a number of partners that we've been inviting into the platform. In this instance, there are two partners. You will see an announcement there of two partners named both Targos and HistoCyte. And those partners are really supporting those laboratories, implementing that change. All the training will be done online. All the improvement to what they're doing will be captured within the within the platform. And and then that way, we will be able to both monitor and track the improvement. One of the facets of precision medicine market is the importance of producing high quality scientific publication that support both regulatory submissions and maintenance as well as submitting to key meetings across the year. And again, one of the things that will will benefit from the platform here is we'll have a collaboration around the writing of the outcome of this particular project.

31:56 I've mentioned the marketplace in the middle. Those of you familiar with platform business models will recognize what's happening here, and that is that that what DIACEUTICS is doing is ultimately using its data, its pharma relationships, and its lab network to create a a an environment within which others can provide services, others can support that level of change. We're we're coordinating a an ecosystem, system level change using that marketplace as a as a as a way to give transparency and hands on to everyone involved. What does this do for our client? Well, one of the frustrations, I think, those in the pharmaceutical industry will tell you that they have is that when they are trying to create change at a in laboratories, an area which is not their expertise, often that change is invisible to them. They don't know how it's happening, when it's happening, and indeed, which labs it's happening in. For the first time, our clients will get that level of reach and visibility.

33:00 They will see this change happening in front of their eyes. In fact, they will participate in supporting those labs in making that change. Secondly, they will get a single location access to all of the moving parts, the partners, the key advisers, and indeed the labs themselves without needing to go anywhere else, all done in parallel, not sequentially. One of the things that we are aware of with our project experience that if you want to create a level of change at this type of disease level, often you're looking at a two to three year time frame. And for a pharmaceutical industry, that is an absolute eon when they have a billion dollar brand waiting to get in front of all individual patients. So for us here, this is a way of really accelerating that level of change so that patients are getting to the right drug much, much faster.

33:50 And finally, that removal of that key risk will support their pharma goals clinically from a a regulatory point of view. And of course, indeed, they will present themselves as kind of leaders in the field as really thinking forward about the needs of patients. For us, this particular project that we're scoping out is a single purchase order of some $750,000. It will be when it lands, it and it contains a different type of payment mechanism for us. Ones that you will recognize are much more about network access fee, these subscriptions, and indeed data licenses alongside technology enabled services, which we have a, you know, a fee structure around.

34:36 And this really allows us to maintain extremely high margins on on what we're doing. So what you see here is global reach, clinical relevance, pharmaceutical hands on and visibility. And at the same time, for us as a as a company, it moves us past that kind of consulting and project based approach to one which is much more fit for purpose for a marketplace that's that's tipping towards scale with the number of assets that I mentioned earlier on. So how are we doing? How we're some ninety days into the launch of DXRX. What has been the progress thus far in terms of driving adoption of this platform for our company? And as Philip moves to that slide, just to remind you, as I said at the beginning, when you're launching a platform in a conservative audience like the pharmaceutical industry, our expectation is that 20% of our revenue in this year will come from the platform, 60% next year, and a 100% the year after. So, Philip, how are we doing?

35:41 Yeah. Thank you, Peter. So I'll just frame this this slide. As part of launching the platform, we've created a number of KPIs, and we'll add to these as as the platform matures. Peter has articulated our objectives over the next three years running right through to 2023. And our focus around the platform is really converting those clients onto the platform and also selling more modules to our clients, two key initial focuses for us. So let's walk through the the KPIs from left to right. Six client projects now enabled by DXRX integrated data. An example of this is a a project we we announced in q last year $1,200,000 with a client, and that that project was to run right through 2021.

36:44 And as such, we are now enabling that project with integrated data. There's an efficiency for us in doing that, and there are six projects being enabled by the data. In addition to that, we have won three DXRX project wins with a combined value of 1,200,000, and they all have the the attributes Peter talked about in his example, platform fee, subscription data, and tech enabled services. We have a a solid pipeline, and the pipeline is supportive of that objective of 20% of our revenue being from DXRX activity.

37:31 And an important metric for us is that our average project value has increased year on year by 25%. That's closed one business. It's increased by 25%. So looking at the right hand side of the slide, these are more operational KPIs. We have now six DX partners recruited onto the platform. And an example of that, Peter mentioned, and Targos. They are a partner that supports our our tech enabled services on the platform. We are tracking our our labor efficiencies on the platform. And as as I noted, we are reporting a 25% more efficiency regarding labor within our our cost of sales, and we will continue to track that as the platform scales up.

38:25 And we now have a 101 laboratories registered and collaborating on the platform. We have 12 collaborations ongoing. And, again, important, the laboratories are signed into those terms and conditions, and there's also some data flowing from those laboratories. So let's take a look at what our our data lake looks like. Peter? Yeah. Thanks, Philip. And so one of the key components of those three components I mentioned earlier that underpins the platform is indeed the data. And I think today that what DXRX has gathered over the last decade is a unique pretty unique dataset.

39:13 And it's unique in a couple of ways. First of all is that we are combining multiple sources of data here. It's not a single source dataset. We're using insurance data, real time lab data, and indeed the data that we're collecting in individual projects and in in our own studies. And we're combining that that data and weaving it together to give these long views of what's happening to patients at an individual disease level, what we call diagnostic deductive pathways. I'll give you an example there of a diagnostic deductive pathway or DDP in lung cancer. And one of the the the the diseases that we're focusing on in lung cancer has some nine million patients in that dataset following following patients or patient journeys over an eight year time frame.

40:02 And over that year eight year time frame, we can really see patterns and behaviors as to how those patients are being managed. And, typically, for example, and probably in cancer, there's no such thing as a typical patient. But at a population level, we can see that most of those patients are traveling somewhere in something like a four and a half year journey from cough or to get pain in their back as the first symptom, all the way through, you know, blowing into those little oximeters that you have in GPs, through x rays, through biomarker testing, all the way through to a drug. It could be four and a half years, 10 or 11 different testing events. And why is that information important?

40:47 Well, right now, the pharmaceutical industry and the precision medicine business is largely focused on those patients at the end of their journey when you need to do a test before you treat them on the drug. But as precision medicine evolves, the opportunity to move these drugs into earlier lines of patients, patients where you're gonna have a bigger impact, and it's a big drive of of clinical research at this moment. But that becomes a challenge of of how to find the patients, in other words, a diagnostic challenge. So the reason we've been building these DDPs in the way that we have isn't just to service the existing client demand, but rather to build a capability that allows us to think about what is the right place to locate a drug and a test to capture the most clinical benefit for the patients.

41:37 So these DBPs are a key part of our intellectual property. We added to them in in 2020. Further, 13 DBPs were added, and we're building out towards managing towards a full set of disease coverage. We cover our data covers over 270 diseases. One of the questions we're often asked is, is this all about cancer? And the answer to that is no. Cancer constitutes, I would say, the vanguard of where precision medicine has has kind of rolled into the market. But other areas like cardiovascular medicine, central nervous system like Alzheimer's, and schizophrenia, and and autoimmune diseases like psoriasis and rheumatoid arthritis, along with infectious diseases, are the key next areas where precision medicine is being asked is being researched. And, we are gathering that data in the background.

42:37 So what you see here represented is a key part of our intellectual property. It's available to our clients, but it's also available to us to bring new products, new services, and most importantly, insights to the market over time. So let's round out with, I I think, hopefully, the messages that we've delivered today, and then we can open up for q and a's. I can see quite a number of questions coming through there. So, Philip, you want to move to the next slide, please? So just as a reflection, I think what DXRX allows us to do is to really change the way DIACEUTICS does its business in front of its client. And with the level of of opportunity that sits in the marketplace, those additional hundreds of therapies that are going to need the types of things that DIACEUTICS does, it behooves us to build a a business model and a mechanism to give that level of scale. Hopefully, what we've been able to illustrate today is that via the platform, we will be able to address that scale, multiple therapies, multiple countries, multiple clients.

43:45 That allows us to change the, you know, the the financial construct underneath the ASERX moving more towards that subscription embedded business model. Those who are watching precision medicine absolutely understand that this is a marketplace on the March. And whilst 2020 and COVID obviously created a budget hesitation in q three last year for many of our pharma clients, and that indeed was something that we had to respond to, The overall growth in this market has not gone away. And if anything, the complexity and the needs of precision medicine are something that I think is those that are forecasting it are demonstrating that it will be a real transformative driver of the pharmaceutical industry.

44:32 And I think we're right in the right place at the right time. What we see is greater predictability returning to that pharma budgeting. And as a result of that, we have reinstated guidance for 2021. We absolutely recognize that we're reinstating that at a conservative level. And historically, DIACEUTICS was growing at between 2030% in terms of market growth, more in step with the market. And we do see post COVID that that type of growth profile will absolutely arrive back. The issue, of course, is that we're still all operating under a COVID kind of shadow. And And what we wanted to do here was to be make sure that we were both cautious and measured in terms of how we broadcast to our investors across this year. And I hope that as we move across the year, we'll be able to come back and share some of the events and the optimism that we believe is building back in the marketplace for ourselves and indeed with our platform.

45:32 I hope what Philip's been able to do is to illustrate that we strengthened our business operations. We've moved faster towards the platform business model, releasing some of the benefits that we believe are resident in that. And indeed, once we recognize the ongoing challenges from COVID-nineteen, we, as far as we're concerned, are kind of back and kind of ready to scale and focus on DXRX over the next couple of years. So we put a summary slide up, but I think probably a good time to open up some q and a. Mark, are you happy for me? That's brilliant. Well, let me just give you a small pause just having and thank you both to you and to Philip for the presentation. But ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. But just while the company take a few moments to review those questions submitted already today, I'd 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 Meet company dashboard.

46:30 We will send you an e mail to notify you that they're ready for your review. I would also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. And I think they'd be very grateful to hear from you. I know, Peter, Philip, I'm giving you a lot of time, and there are a number of questions that are in the Q and A tab, which is hopefully, you've got access to that on the right hand side. If I could ask you please to read out the question and perhaps give a response where it's appropriate to do so, and then I'll pick up from you at the end. Thanks. I'm gonna go faster. And so let's there are quite a number of questions here. We'll try and get through as many as we can. And the first question is what are the regulatory and commercial consequences of using machine learning to fill the gaps?

47:19 And why do these exist in the first place? So why do the data gaps exist in the first place? Those in the in the health care data business will tell you that collecting data is it's a very messy and and very difficult supply side. Often, when a patient record is submitted, whether it be into an insurance company or in through the lab, that record is incomplete. But what you're able to do when you're when you can amalgamate multiple sources of data, you're actually able to go back and fill in missing, data bytes with very, very high degrees of confidence. So the use of, machine learning allows you to really complete many of those those records in ways that a single source cannot do.

48:06 A lab might not be able to do it or an individual insurance company might not be able to do it. But because we're handling with multiple sources, we can see that full patient end to end journey. And part of my team is spent making sure that we create as many of those complete patient records as possible. Extremely powerful. The second way that we're using machine learning is to create a series of of business rules and algorithms that allow us to identify patients that are ready for that are being presented for the right treatment. And, you know, often often, this is about making sure that a patient who has been tested is is that that the physician knows that that patient is now is now kind of ready for that treatment. And it's co joining that information both in what the physician is requesting and what the lab is doing that really allows us to use those business rules to make sure that that information is provided seamlessly.

49:05 And and, obviously, that gives us an efficiency in the platform. I'm gonna pass the next question to Philip, and the question is, what is the labor costs, internal and external, associated with the DXRX platform now that it's live? Do these people fall in general admin expense? Philip, do want to grab that one? Yeah. So I also wanna include the the labor within the cost of sales. So so labor and labor efficiency within cost of sales, we will slow down the hiring there as the as the platform scales up. But regarding those those folks actually building the platform, and we have 6,000,000 of additional expenditure in 2021, and that will continue into into 2022.

49:50 Just as we have you know, we're continuously reviewing our our cost based on our cost structure. And I I think one of the next questions is our plan for cash. At that particular point in in mid mid twenty two, we will assess what are the opportunities. We we do we do see future opportunities for the platform and layering on additional functionality to the platform. And at that point, we will review our our cost base and and see what requirement is is needed for for the outlook and a further build at that point. The next question, if I could take it also, is plan with cash. It was 25,000,000 on our balance sheet. How much is identified development spent now, and how much is buffer for the future unknown? So I see three buckets for our cash, one of which I have identified as a a 6,000,000 allocation towards building out those four modules that that Peter has talked about for this year and additional spend on some data.

51:02 The second one is, you know, we we want to have we wanna have a strong balance sheet as we increase our project and tags with our clients, you know, those 2 to $3,000,000 contracts. So there is an amount of money we want to hold as a as a strong balance sheet in the eyes of our clients as we fulfill those increasing contract tickets. The other one is we we have identified some opportunities to accelerate our growth, and perhaps half of half of that money is around looking at those opportunities and investments as we move forward. There's a we have a shortlist currently, and we will continue to to move that through management and the board in in 2021.

52:01 Okay. Thanks, Philip. Our next question here is datasets have a useful life of four years. Does this mean you'll need to replenish or purchase more data on a similar time frame? Well, first of all, I'm gonna push back a little bit. Yes. We are replenishing data all the time. Our our data feeds are constant and live. They're weekly, monthly, daily data feeds. So the data is replenishing, you know, as we're sitting here on this call. And in terms of the useful life, I I think that's I think that's probably one way that that someone in business look at the the the data has a kind of a very short time frame. But we're digging here with patient trajectories.

52:46 Do you think of a patient trajectory in in Alzheimer's? It's not a four year trajectory. It's a fifteen year trajectory or twenty year trajectory. And so the way we look at the reason why we're excited about gathering eight, nine, ten years of data is to really go back and start to look what happened eight or nine years ago with this patient set or this patient cohort and how could we have changed that journey. And that's what our pharma companies are particularly interested in. One of the areas I've mentioned, just touched on there is Alzheimer's. And as we work with our clients as they introduce Alzheimer's projects, what we're trying to do is to find patients maybe in their mid forties or their mid fifties where early dementia has set in triggers and things that might not have necessarily suggested that they were an Alzheimer's patient. And and I think it's that length of data that is what we're building in the background.

53:39 So I think for us, the useful life is now four years. And, you know, so far, we're in eight or nine years of some of these data builds, and I think we'll continue to do that. And question here is about labs. And if labs aren't being paid by DIACEUTICS, why do they engage with the extra complexity? Well, I I first of all, I think what we're ultimately doing with our labs is bringing them help. And labs, regardless of whether DIACEUTICS is there or not, are carrying the burden of introducing new tests all the time. When a pharmaceutical company launches a test and the doctor starts to order that test, somehow that lab has to mount that change. Before DIACEUTICS existed, that lab had to do that on its own. There wasn't any help.

54:27 And what we've done is provide a series of solutions that are low cost or no cost to our laboratories that are really additive to their lives. So for example, if you want to introduce a new biomarker into a lab, typically, that could be six a six month process. Six months to find the reagents, to validate them, to put the quality analysis in place. What we do is really help the labs do that in under a month. So I I think the way we engage with our labs is not as a a complex burden on their shoulders, but rather an alleviation of that. The other thing I would say is, you know, labs across the globe both compete with each other and compete to provide their physicians with the highest quality service.

55:13 They are after all the foot soldiers of change. We can see that in our own kind of landscape of COVID testing, how they have been a frontline resource for the globe. Labs want to do the right things. And I think we have found working with over two and a half thousand labs, hands on with those labs, that ultimately, they want to migrate to the highest quality. And as we step in to help them do that and to monitor how they're doing it, we're, I think, seen as an active partner at the table. And I can take the next one. Sure. Next next question is how do you apportion h two twenty twenty cost savings between strategic, reactive, or opportunistic? I feel it's strategic and opportunistic.

55:59 We were always reviewing our legacy, our best at its classic cost base. And as part of the restructure, we took the opportunity to accelerate that move and accelerate the the the removal of that legacy costs, allowing us the opportunity to to relayer that in to energize and and support the platform. Next question. More consistent period on period KPIs, therapy brands, patient testing records. Will you present this going forward? We we do if you, you know, if you read the the the the announcement, we do report on therapy brands. We do report on patient testing records.

56:45 We have built you know, we're ninety five days into launching the platform. We have built some KPIs, but we will we will add to, we will amend, and we will, you know, we will help investors understand those key KPIs. Absolutely. We'll we'll take that upon ourselves to do that. There's two questions here, I think, that are relevant to kind of market size, and so let me grab those. The the comment here is the guidance of 13.6 and client revenue growth of around 8% from 2020. Doesn't take up much of DXRX. I think what you can see first of all, two things going on there. Number one is I think, again, we are still living in in a kind of a COVID shadow. Our pharma clients are cautious. They are being much more predictable than they were in q three last year, but they are still cautious. And I think we we reflect that caution back in that number. As as COVID passes, so too will the pharmaceutical industry seek to aggressively launch those drugs and get back to their kind of historic growth levels and also step with them. And in terms of DXRX, I think what you see within our numbers is the conversion of our business from this, you know, hands on consulting type model to a a DXRX efficient high margin business with with subscription payment.

58:03 So our our plans for DXRX within our revenue targets, and we'll, I think, continue to see a shift towards DXRX across this year and next year. Total size of the market, it says hard to think what you're shooting for here. Look, those that are are reporting on the precision testing market and describe this as a 2,500,000,000, $3,000,000,000 opportunity. That is if all the therapies ultimately spend between 10 to $15,000,000 solving their diagnostic problem, that is what is out there and available. We are very well placed in the market to go after that to go after that business opportunity.

58:49 And in terms of building our year on year revenues, we see as the pharmacy industry launches these new brands every year and asset spends more appropriately per therapy brand, moving from 1 to $2,000,000 a year to 5 to 6 to 10 to $12,000,000 to really right size that investment, I think we're in the right place. What is the ultimate end goal of that in terms of a number? It it it's it's hard to put a figure on that, but safe to say is that we see this as a a business that is very similar in size to some of the clinical research organizations that have been serving the pharmaceutical industry, for many years and building from a business where pharma outsourced clinical research management to them. We see them outsourcing diagnostic commercialization to us.

59:40 I think we're probably up on time. Mark, is that and we do have a number of initial questions, and we'll seek to answer them perhaps, through through kind of written correspondence. That's perfect. Well, thank you very much. As you say, you are coming out to the hour. So thank you, Peter and Philip, for your time today. And as you say, I think you've addressed most of the questions, and thank you to investors for submitting those. And obviously, we'll make anything that has gone through the net, we'll make those available to you after the meeting. Perhaps I could just ask you, Peter, for just a few closing comments. And then what I'll do, I know feedback is important to you, and I will then divert investors to provide you feedback. Yes, absolutely. If and when you receive a copy of our annual report, I make a comment that the October 26 in 2020 was the day that we launched the platform, but it was much more than that. It's the byproduct of fifteen years of work building towards providing the right product for the pharmaceutical industry at the right time.

1:00:40 And whilst, no doubt, there will be a need to flex that diffusion with our pharma clients over time, we have the right product sitting in front of them, Really pleased with initial market reaction, to that. And that tells me that we that all that homework, all that data build and that lab network build is exactly what the market needs. So for us, it's just DXRX focus next two to three years. Thanks, everybody, for participating. Thank you, Philip. Thank you very, very much indeed, again for updating investors. Can I please ask investors not to close the session? It should now be automatically redirected for the opportunity to provide your feedback. If you access this meeting via our website, then the feedback page will appear. If you access this via the link sent to you by email, you'll simply be asked to log back in to then submit your feedback.

1:01:31 On behalf of the management team of DIACEUTICS, I'd like to thank you very much indeed for attending today's presentation. That now concludes today's session. Good afternoon to you all.