Diaceutics (LSE:DXRX) — Interim results for the six months ending 30 June 2021

0:01 Good afternoon, ladies and gentlemen, and welcome to the DIACEUTICS PLC Interim Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time by the Q and A tab situated on the right hand corner of your screen. 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 will review all questions submitted today and publish responses where it is appropriate to do so. These will be available via your investor meet company dashboard, and we will

0:33 notify you by email when these are ready for you to review. I would also like to remind you this presentation is being recorded. Before we begin, I would like to submit the following poll. I would now like to hand you over to Philip White, CFO and Peter Keeling, CEO. Good afternoon to you, gentlemen. Good afternoon, Lloyd, and indeed, I extend Our warm welcome to everybody who's joining us today. Welcome to the DXRX PLC half year results presentation. So I am Peter Keeling, CEO of the company Philip, CFO. And hopefully, today, we will be taking you through where we have progressed within the launch of our new platform as well as getting into some of the detail around the results of the business and the financial architecture underpinning the business model that we have.

1:24 And let me start, if I may, by just kind of a couple of slides focusing on exactly what we do. And so as stated here on the slide, our aim at DIACEUTICS is to get every patient the kind of the treatment that they deserve at the right time. And particularly, our focus is to remove the diagnostic hurdles which appear when the pharmaceutical industry launches a new precision medicine or targeted drug. And those precision medicine drugs are very dependent upon making sure the right patients are identified via diagnostic testing. That diagnostic testing can often be a hurdle. I'll come back and talk to you about some metrics around that in a minute. And what we have what we're presenting to today on is the kind of eight months traction of the launch of a platform that we commenced in October last year. And that platform brings together all of the leading pharmaceutical companies that we've been working with, together with a reach to two and a half thousand laboratories across the key pharmaceutical markets.

2:35 And and that in itself is fueled by a data repository and data insights, which are really supporting precision investment in the diagnostic marketplace. And I'll as we go through today, I'll explain a little bit more about how that works. So what's the problem that we are addressing here? Well, as I mentioned, the pharmaceutical industry are increasingly launching a range of these smart or precision medicine drugs. Often, they will only work in they will work well, but they will only work in a subgroup of patients. To find those patients, you need to test all of the patients to find the twenty or thirty percent of patients for whom this drug is viable. The issue, however, is that diagnostics really work kind of walk into the marketplace to a very different drumbeat and are much slower in terms of gaining adoption than a new drug does.

3:33 The consequence of that is that there are a significant number of patients who will miss out on getting access to that treatment, either because the labs don't offer the test, or they don't offer the right test, or even when they do offer the right test, there's a quality difference into how they're performing that test. Collectively, we estimate that the pharmaceutical industry is losing up to fifty percent, five-zero percent of patients who could be on that drug but who are not on the drug. And what we've done in VASODEX is to focus our business model entirely on solving for that issue to remove those multiple diagnostic hurdles, at the same time, ensure more patients are getting onto drug. For us, we perceive today that the pharmaceutical industry is willing to spend up to a $250,000,000 to eliminate these diagnostic lags to its treatment opportunity, and we see that market doubling as new drugs are coming to the market and the pharmaceutical industry is willing to spend more.

4:35 How are we doing that? Well, we have a platform, and we call the platform DXRX. We launched it eight months ago. Itself is the product of of many decades or a decade or so of building the capability to bring that platform to the market. But the platform integrates both our pharma clients with the data indeed with that lab network. I will explain how that works in a slide or two. And if I just kinda start our discussion here today very much in terms of what's our strategic road map with the launch of the platform. As you'll see on this slide, we believe that we spent fifteen years and hundreds of projects that we've worked on in solving for this problem, but we did it in what I would describe as a consulting esque business model.

5:24 And the margins were good, but they were still between 5560% as a margin business. And but what we saw the opportunity was that the market was tipping, I mean, tipping towards more and more of these targeted and precision medicine being drugs being launched. And the the pharmaceutical industry really needed a scalable solution to solve this in in its key global markets. So what we've set out is a three year old map and

5:56 a three year road map to to kind of make sure that the platform that we've launched will be adopted into the market. And that, ultimately, the platform will be will be the ubiquitous way in which the pharmaceutical industry will solve for this issue and that we'll become an embedded and preferred supplier. This year is a really formative year for the business. It's a formative year because although we're only eight months in, what we're what we're wanting to see here is how we've been able to promote the adequate hands on use of that platform. Are we seeing our clients engage with the platform?

6:31 Are we able to bring the laboratory network that we've been working with for over a decade from an offline relationship to an online relationship? And how we started to see that benefit of our project work moving through the platform in terms of the financial architecture of the business. And I'd like to take you through some of the highlights there. We'll come back to the subsequent road map in a later slide. The best way really to tell the DIACEUTICS story is to tell a story. And here's a a case example, which is currently live on the platform. It's working with two pharmaceutical companies, two leading pharmaceutical companies. And and the issue that these two pharmaceutical companies had was highlighted way back in 2019. It was before we launched the platform, but we presented our clients with a dataset that showed that the new drug that they were launching, which happened to be in breast cancer, was going to be met with a significant diagnostic hurdle at the lab level, and that hurdle was that the pathologists would would not be able to interpret the new scoring systems that were very, relevant to making sure patients could get tested the right way.

7:43 As a result of of that kind of initial data, those sharing those initial data insights, our pharmaceutical client said, okay. We need a a solution here to really get the initial laboratories, the really important laboratories, up and running and and competent in terms of interpreting that test. Our solution, which uses a combination of the technology enabled services that we have on the platform, very much is focused on bringing 60 laboratories from a position of inability to read this new test to being able to be competent and, you know, seamlessly offering it to physicians that they serve. We also wanted to make sure that that we were managing the the kind of the baseline here. So we're measuring going in to this particular project, how many patients are being tested the right way or not being tested the right way, and we can use that to show how we've moved the needle through this particular project.

8:42 And we wanted to make sure that we were bringing other collaborators to the table, not just laboratories, not just the pharmaceutical company, but indeed other groups that would be, instrumental in solving for this problem, particularly in this instance, it's a pathology training organization. And as a result of that, what our pharma clients said is at the very end of moving its needle, being able to move these labs up to testing competent, we want to be able to publish that, in a landmark study to show that we, the pharmaceutical industry, have taken a responsible approach to the rollout of this drug. So that was the solution that we conceived, and we started work on that back in February. Where are we today? Well, pleased to say that great progress has been made with some 80 pathologists now, already online and waiting to be trained in over 10 countries. You can see here in the little map on the right hand side where all those countries are distributed.

9:41 Secondly, what we've done is already collected the baseline data on some 8,000 baseline data on those labs, and we will use that baseline data to follow some 8,000 patient tests to show how we were improving the scoring over the next series of months. And all the lab training has been booked, but equally importantly has been the visibility of all of that that we've been able to provide to our pharmaceutical clients. Pre platform, our pharma clients would be investing to fix for this, but really had no ability to trace and follow the actual progress that was being made in terms of improving that kind of lab infrastructure. For the first time, we're able to give them that transparency, And we're all walking towards a study that will show that this particular problem, which typically would take between three and four years to fix, yes, you heard me correctly, three to four years to get that initial set of labs up and running, if without a a kind of an integrated approach.

10:47 We want to be able to do that in between ten and twelve months, so really moving the needle on that. Philip, I don't know whether you want to mention how that impacts our business. Yeah. In terms of the financial underpin of the of the project, it's a $750,000 total contract value for this program. I'm really using multiple modules underpinning that or network access fee and our data subscription, delivering a gross margin in excess of 90% x amortization, a blend of technology enabled services, again, with a gross margin of of 74 percent, so blending up into an 80 plus gross margin. And in addition to that, we're adding laboratories into our onto our platform and, again, adding adding data.

11:38 It's a good example of what we're seeing within our pipeline, greater total contract value proposals. And I think given the mix of modules that we have, as we build our revenue, it builds in a consistent manner.

11:55 I think that's important as as we transition over the next three years. And, again, if I could just kinda remind, you know, we we were fifteen years building that trusted relationships with these pharmaceutical clients. We were building the data. We were building lab relationships. What we've been able to do with the platform is to bring that all together and finally convert that consulting esque model to a high-tech, high margin business. And what you see here is how that business is working for for two of our primary clients. If I zoom out for a minute and and look at so what what is the traction with with the the DXRX platform some eight months, which we're reporting here, after its launch?

12:41 And I'm delighted to say that we now have some 15 pharmaceutical clients engaged, on on the platform. These are clients that have built through the new types of contracting processes that we have on the platform and are now kinda live operating on the platform, an example of which we've just been through. We've also been able to move a key key of our laboratory community, that lab network of two and a half thousand labs that we've been working with in an offline way. We've been able to move some 10% of them into an online environment. And in fact, our lab recruitment at the minute is running at about 10 new labs per week. So really happy to see that that we've been able to bring value to that laboratory community and really engage them as part of as part of the solution.

13:34 Talking of engagement, the platform is all about collaborations. The collaborations is how we fix a particular problem, whether it be in breast cancer or lung cancer or indeed in any other areas. And those collaborations are a fundamental part of making sure that we have labs and pharma and other partners engaged in creating in that fix. We have 11 of those up and running as we speak. We continue to add these service partners into the platform. CERA Care there is is mentioned. CERA Care is a high highly reputable US based diagnostic partner that that services labs. They've joined the platform as a network provider along with seven other key component or or key service providers.

14:20 That helps us to provide the fix in the service without us at DIACEUTICS having to build that entire back office. That's what keeps our margins high in terms of building the business here. Data, we've been gathering data at DIACEUTICS for some ten years. We've amassed what we believe is the most significant patient testing data lake focused focused on that diagnostic journey, that patient diagnostic journey. And we continue to evolve that data, not just by adding new patient records, but by making sure that the data ingestion is both automated, the machine learning that is taking that data and turning it into insights is being done faster, and that the granularity that we're able to provide to our clients, pharmaceutical clients, and beyond, it continues to to increase.

15:11 What we've seen in the last six months, we've already moved from monthly to weekly data ingestion, and we started to see for the first time our ability to provide real insight at a patient level, right down to how individual patients and how their testing journey on on goals. And just to put that into some context, if we think of lung cancer for a minute, the typical patient, of course, there's no such thing in in cancer. But the the the patient journey, by and large, probably starts with a cough before the patient will will ultimately travel three, four years to get on to the right and targeted drug. And in that four years, that cancer has progressed from stage one to two to three to four. And right along that journey, we see huge opportunity to create better and smarter diagnostic interventions.

16:01 We're trapping, we're gathering all of that information so that we can provide insight to our pharma clients and our labs as to how to test those patients better so they get onto those drugs faster. So our data is really important, really enhancing that data lake. And another key component of of operating a platform in the in the health care space is the ability to show that that you have you can harness that platform to project key insights. And pre the platform, we will be applying for two to three external abstracts submissions into key conferences every year just simply because of the difficulty of analyzing that data. It's very time consuming for our for our data science team to do. As we've moved all that onto the platform, we've as we've applied machine learning and algorithms, we're really just able to step up and provide new unique insights into the marketplace. Some of you can see reflected over my left shoulder here in the background. Nine of those submitted this year.

17:09 Really pleased to see that progress too. We've also investigator on a what I think will be a landmark publication coming out at the end of this year. We have said

17:23 over the last four or five years that we believe up to fifty percent of patients are losing out in terms of getting access to these drugs because of bad testing. I've mentioned that metric earlier in the talk today. The issue with that is that it's tacit extent, what we wanted to do here with this study is is to collaborate with others in the pharmaceutical industry and other diagnostic companies through the auspices of a personalized medicine coalition, which is a Washington DC based coalition group. And and what we've done is provide everybody the datasets that we've been working with so that they themselves can see what the real issue is. We hope to publish that later this year. I think that will be a another tipping point at publication in this marketplace, driving forward greater awareness of what the issue is.

18:13 Another advantage that I really think has homemarked the, the arrival of the platform onto, our decks here at DIACEUTICS is our ability to diversify beyond our pharmaceutical base. Of course, pharmaceutical companies are our core. They would remain our core. And but when you have a a data driven platform, what you're able to do is to slice and dice that data in a different way and open and offer that up to different channels. Delighted to see that our first diagnostic significant diagnostic company, we've contracted with them to provide ongoing data to support their commercialization of their diagnostics. We're excited to see that new channel, developed and open up.

19:00 If I

19:04 kinda just summarize a little bit, and then I'll I'll pass to Philip to talk about the business model and the financial metrics. We entered this year with a working assumption based on everything we knew about adoption of health care platforms in in in that kind of a an equal health care ecosystem with an assumption that 20% of our business, our old classic consulting business, would convert over to the platform. Absolutely, as we're sitting in today, we've we've doubled that number largely because of the reception of the platform and largely because we believe that we're offering the right product at the right time to an industry that is rapidly seeking smarter and better alternatives through its smorgasbord of of approaches at the minute. And we see that pipeline of of business, clear pipeline of business, at walking towards the platform as we speak. I've mentioned the labs. I've mentioned the diagnostic partners.

20:03 But the other component here is, has this started to impact the financial architecture of DIACEUTICS? And just as a top line, as a sort of a teaser, if you like, for what Philip will go through, what we see is the efficiency of being able to provide data in minutes versus weeks, as well as our ability to to offer more and enhanced value services has driven a higher revenue per project already starting to come through in the platform. Again, we're only six months in. Really pleased to see these early impact signals coming soon. Philip, if you'd like to maybe zoom in to some of the financial modeling. So before I get into some of the numbers, please allow me a moment to describe and the benefits of our DXRX platform on our business model, something we're very excited about.

21:03 And as I walk through the little graphic on the right, I want you to keep in your mind the the scalability the platform brings and the network effect such that the more the platform is used, the more powerful it becomes. Starting at the top right hand side, we we onboard our clients onto the and laboratories onto the platform. Following the hour round, we carry out projects, these multi modular projects, high gross margin data, 90% plus tech enabled services, 74 plus. That then generates data. It generates data that we that we acquire and buy. It also generates exhaust data.

21:52 That exhaust data, the running through our intellectual property, creates an increase in insights and, again, is important, fitting into our strategy of attracting more pharma clients and attracting more drug brands onto the platform, and the cycle continues. In addition to that, looking at the left, we are transitioning our model to a sub subscription revenue model, which is a better quality of earnings. The the platform is truly scalable, you know, 90% gross margin on the data. And the additional modules that we're providing provides the opportunity, number one, to add value to our clients, and number two, for us as a business in that it increases our share of their wallet.

22:43 Peter touched on the efficiencies within the data capture, moving a laboratory from offline to online, and really generating that automatic ingestion, is huge efficiencies around that. We also see as laboratories come onto the platform, we see a pull factor in other laboratories wanting to join the platform.

23:07 And finally, short to medium term upside revenue channels in addition to our pharmaceutical clients. These are in the data companies, Lavar, Greece, and we've won our first diagnostic company contract within the period.

23:29 So zooming out and taking a look at some of the key financial KPIs, within the period, again, very pleased with the performance, of the period. And if we look from left to right, starting with revenue, revenue has increased by 13% in pound terms, and that's against a significant foreign exchange headwind. And if we look on a constant currency basis, revenue has increased by 24%.

24:01 Our gross margin continues to improve, up from 71% to 74%. I'm gonna take a look at what's going on, on the next slide there. And our EBITDA has improved slightly, and that's a that's a reflection of the increased investment that we've made in our BD and our legal and professional costs supporting the sale of the platform.

24:32 Our cash position has decreased. That's a product of continuing to invest in the platform. We have invested 2,700,000 in the period in the platform. It's a strong cash position, almost 24,000,000. And we have enough more than enough cash to continue to invest in the platform over the next several years. And it's also an objective of ours to have a strong balance sheet, to have a strong cash position as we support higher total contract values and more in line with with what you've seen, what we announced on Monday, and the contract value just south of $1,000,000 for our client.

25:22 So looking at some of the detail behind the numbers just presented, I will refer to the table on the left as I walk down the points on the right. We've touched on the revenue performance increasing by 13%. You'll see that in the table. 24% on a constant currency basis, really driven by the volume of modules that we are now selling to our clients. What we're seeing is a 28% total contract value increase on the same period last year. Our our contract values are increasing, and that's also reflected in the pipeline that we are moving through to to contract. 44% of our of our revenues are already in the platform. We have set ourselves a target of 20%.

26:10 Again, very pleased with the platform adoption within our clients. And, again, we'll see that continue to to feed through into the financial results in the future. Seasonality for our business has always been up. Historically, 30% of our revenue was recognized in h 70% in h two. And we're pleased to to show a more consistent buying pattern by our clients due to the platform such that we have a seasonality which is more balanced, more 45, 55%, and h one, h two weighting. And that really derisks the the the h two position for us. Key regions growing strongly. The US and EU are key markets. US has increased by 20%.

27:03 The EU has rebounded by by 82%, again, from a a lockdown position due to COVID prior year. We continue to invest in in APAC, important market for us. We do support our existing client base with drugs that we've worked on in The US and EU in the APAC region alongside building up an infrastructure so that we can win business with those indigenous companies launching drugs and commercializing the opposite way to what we're used to. If I draw your attention to the gross margin, within the table, 74%, up from 71%, an increase of 4%. And that's after amortization, and the the we launched the platform in October last year.

27:56 We are amortizing the platform. That has created an 11% drag on the gross margin and some £600,000 in h one. But if we look at the gross margin excluding amortization, we can see that there is an efficiency by using the platform of some 15%. So in effect, we are using less less labor within our cost of sales to deliver our revenue and offsetting both of those results in an overall positive growth gross margin of 74%. Lots of movement within our administration costs as we move our costs from our consulting business to our platform business.

28:44 We're calling out some of the the the the additional costs we have invested in in BD and our sales commission structure to support the sale of the platform. Legal and compliance, really supporting contracting and supporting global data compliance, and a a material swing in our foreign exchange position from a prior year gain of 700,000 to a loss, in this particular period. That leads to an adjusted EBITDA, which is 300,000, equivalent to our our prior year at 300,000. And moving to our tax credit position, are we claiming a tax credit of a 500,000 in the period, which is consistent with our previous year, which included a catch up credit.

29:38 So our profit after tax is a result of both the movement in our admin costs and the movement in the tax credit position. Showing a negative 300,000 there, we are not concerned about that. We are are tracking towards a positive position for the year end. And just finally, on the r and d tax credit position, you will note the we have a tax asset on on the balance sheet, a tax debtor of £22,000,000, 1,500,000 of which we will receive in cash terms within the next six months.

30:23 So looking at our balance sheet position, again, pleased, strong balance sheet, and we continue to invest in the platform and data. Little table on the left shows the intangible assets at cost and extract from the interims. I've also included the trade receivables and our cash position. Little chart below that shows the actual spend that we've made in intangibles and the the buckets that that spend sort of falls into. Overall investment in intangibles in the period, 2,700,000. And if you look at the chart within the platform itself, we've invested 1,400,000, which is down from 2,000,000 in the prior year. Obviously, we've launched the platform last October, and this particular investment is in four additional modules within the platform. Peter's gonna come to tell us about those modules in a second.

31:19 We continue to invest in our data. We've invested a million pounds in our data, up from 650,000 the prior year. We've added 44,000,000 patient records. But as as Peter touched on, the the the data we're getting now is more granular, but it's more timing. So previously, we were receiving data on a monthly basis. We are now receiving data on a weekly basis, which enhances our offering to our clients. A new category on the intangibles is our DDP investment. We've invested 200,000 in these DDPs, and this is around creating structure and algorithms around that patient pathway journey, important for future product development for us.

32:11 Moving to trade receivables. You'll see from the table the trade receivables moved from 4.2 to 3.5 on a proved position, and that has helped and that has helped the net cash from operations position to a positive 1,300,000. And if we take that positive 1.3, net that off against our investment, really, the cash outflow in the period is 1,500,000. And just to round off this slide, strong balance sheet position, investment in in key intangibles in the period, and a good working capital management. Thanks, Philip.

32:58 Again, I I think you'll see there the those key components from the platform starting to pulse through into the into the financial KPIs. I want to spend a couple of slides before we go to q and a on sort of more by way of an outlook. And if I can zoom out for a second, maybe this is probably one of the most important slides in this deck. You know, DIACEUTICS was founded on the basis that the future of diagnostic commercialization would see a pharmaceutical industry really needing a very scalable outsourced digital solution for solving a problem that it's been having, for a decade or more, a problem which is holding back its return on investment, and more importantly, a problem which is holding back patients getting access to their drugs.

33:50 And I think what we've done with DXRX is really to deliver on that. But more importantly, we've we've created a multisided marketplace here. We've worked to bring not just laboratories and the pharmaceutical industry together, but a series of diagnostic partners who can then also solve for some of those problems. So really creating that participation in the marketplace, functioning like a proper platform, which is to make sure that everything's working together rather than in the silos, which it has presided over previously. And all of that to make sure that we are providing the data and the information so that investments and interventions are made that are precise, targeted, and more importantly, we can see when we've done something, how much impact that we've had in terms of return on investment and in terms of patients. So that that is, in essence, what we've built here with with DXRX.

34:45 And I think we're delighted to see the adoption of of, the DXRX platform move to exceed our expectations in in the first year. But more more importantly is lay down the seeds of how we will move towards an embedded preferred supplier in the next twenty four months. Just go to the next slide there for me. Thank you. Just back to the road map. So as I said, 2021 is a really important year for us. Pleased with the progress there. Our eyes are on those next two years. In 2022, what we'll want to do is to bring forward real impact studies. How have we moved that needle? How have we managed to take that example that I showed earlier, which would have been a three to four year problem, and have we managed to to to eliminate two to three years away from that so that more patients are getting access to this drug after a year, not three or four years. Those type of impact studies will really have both our clients and, I think, the rest of the industry sit up and take notice. And that itself is a prelude to making sure that we can reach to our clients who have multiple assets that we can see in their pipelines, multiple assets that will benefit from what we do, becoming our preferred supplier. So, again, we can see clear line of sight towards the steps that we need to do to drive that platform adoption.

36:15 One of the junctions along the way coming up in quarter four will be the launch of a further four modules. These are again, we we will will add to 16 modules that we already have operating live within the platform. And these four modules represent kind of a next generation step up, if you like, in terms of the service delivery. I'll highlight two of these and just kind of pull out two examples. So the patient journey is a module that we will be switching on in quarter four. We've always been able to provide insights to our clients of what's going on at a lab level. When we moved to the platform, we were able to provide insights of what's going on at a physician level. How are physicians testing? Who are they testing? How many tests are they ordering? And who are they ordering them from?

37:04 Finally, we're able to now switch on this at a patient level to really truly follow millions of patients on their journey, through their own diagnostic journey. That is, in our view, data gold to our pharma clients who really want to understand why or why not patients are getting access to their drug. So that will go live in in a couple of months. Another one in here is the test announcement module that we're really excited about. And, you know, what what we intend to do over the next twelve to twenty four months is to switch all two and a half thousand labs from the offline to the online relationship. And once we've done that, we have the opportunity to broadcast into that lab network as a channel, and that lab network itself sits right in front of the doctors. So think of it as a communication channel. A communication channel, at the minute, is kind of rather inert, if you like. It's not functioning in terms of communication, and that communication will really serve to get faster and and speedier change of care at the clinical front end. Think of all of our own experiences in COVID over the last year, where labs, before we had vaccines, labs were the first line of response and defense to disease. They are a critical component in moving disease frontiers. We've spotted that. We see that.

38:28 We've put our arms around those labs. And what this will do will help us start to broadcast that channel in a way that makes sure those labs are ready faster and and more precisely. So super excited about those product launches coming up. Really will enhance our offering back into the platform. And so if I kind of conclude by way of saying is, you know, this is a year critical year for us, critical year to drive adoption of the platform, pleased to see that traction ahead of our expectations. Secondly was to make sure that we could bring the lab network live and functioning into a series of collaborations, pleased to see that that is also working. And and last but by no means least is to make sure that that the benefits of the investments that we've made on the platform have started to flow through to the financial architecture and value proposition of DXRX overall.

39:20 And indeed, those those benefits, as you can see for yourself, have started to be visible in in our metrics. So, please, so far, still a lot of work to do, but we have a real line of sight to the goals and objectives that we need to achieve in the next twelve, twenty four months. Happy to open the up for any questions that are coming through. Peter, Philip, thank you very much for your presentation. Ladies and gentlemen, please continue to submit your questions using the q and a tab situated on the top right hand corner of your screen. But just while the company takes a few moments to review those investor questions submitted already, I'd like to remind you the recording of this presentation, along with a copy of the slides and the published q and a, can be accessed via your investor dashboard on the Investor Meet company platform.

40:07 I'd also like to remind you that your feedback is very important to the company. And immediately after the presentation has ended, you will be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. Philip and Peter, investors have submitted a number of questions during the presentation today, and I wanted to hand back to you to respond to those where it's appropriate for you to do so. Could I ask that you please read out the question and also say who it's from? Over to you guys. Yeah. A question from Matthew Young. Is there any geography that is underrepresented in your business at the moment in which you see potential, Peter? Yeah. We've, you know, built a really bedrock of a business in The United States. We did that for even in the early part of our business.

40:58 We brought an increasing outreach to the European markets over the last five, six years, and I think we consolidated our our business there through the lab network. The next frontier for us is APAC, which consists of Australia, Japan, China, South Korea by and large. Those are the markets that we're focused on. And it's interesting. You know, these were operating in APAC with the same therapy brands that were launched in New Jersey or indeed in in Cambridge in The United Kingdom. We're launching or we're operating with those same therapy brands as they percolate right across the markets. So what we want to do is to offer a comprehensive solution in all of the key launch markets. So we continue to invest in those key and critical markets in APAC.

41:44 And and I think we're pleased to see that we've we've been servicing a a really strong, you know, business continuity there for our clients. At the same time, it's now starting to look at what are the indigenous clients in that region that equally will go the other way, and we're wanting to launch product products back in The United States. We start to see that coming through into our pipeline. Thank you, Peter. I'll take this one. It's from Andy m. How do you see investment in r and d progressing moving forward? 2,700,000 invested as noted. Do you see the spend accelerating as the business starts to expand? Good question, Andy. We have earmarked $6,000,000 for R and D spending for this year, 4,000,000 next year, and 3,000,000 by 2023, really moving to what we would call a steady state where investment meets amortization.

42:41 And by 2023, we see that steady state taking place. We will always spend on data. We always need data to function the business, but the the platform spend, I suppose, reduces over that period until we reach that steady state. Okay. So next question, Matthew Young. What impact is COVID still having on our on pharma purchasing behavior? I I would say that there's definitely a shift. You know, in the middle of 2020, the pharmaceutical industry, by and large, like many other industries, was kind of entered into a super cautious period just given the fact that patients weren't going to hospital, weren't being diagnosed, therefore weren't getting on treatments.

43:39 And and that created a disruption in their budgeting plans through 2020. As we entered in the early part of this year, what we saw was a kind of clear return of predictability, Still caution, but predictability nonetheless, where pharma were saying we were gonna do something in February, and they did it in February. And and that has been hugely helpful for us to create equal predictability around our business. I do feel as as we move through this pandemic and hopefully into a management of that pandemic, the pharmaceutical industry will see will continue to kind of keep its product launches on track. So far, that's what we're seeing. There is another kind of component here, and that is when you think about the patients who who didn't present for treatment as a result of staying away from hospitals for other other reasons, And those patients themselves, their disease did not go away. And so what we are dialoguing with our clients, there needs to be a readiness for a surge in in those patients coming back into the system, sadly, at a later stage of disease. And I think this has been well published elsewhere.

44:48 So what do we see in our pharmaceutical plans? I think a reality in terms of budgeting today, but also a preparedness that there is going to be additional challenges, diagnostic challenges in in the years ahead, and I hope, you know, we will be part of the solution in in solving some of those diagnostic challenges. Thank you, Peter. One more question from Andy. How large is the precision medicine market, and what does competition look like? Yeah. The overall precision medicine market is growing at really quite a pace. You know, forecast for the overall precision medicine area, I think, is something close to a $100,000,000,000 business.

45:33 And it it's it's, you know, a a common kind of strange for me to see this having lived with DXRX fifteen years ago when precision medicine was described as a niche. But what has happened along the way is that, as more and more of those oncology drugs, particularly in oncology but not exclusively, have been launched, still dependent upon testing, but have become billion dollar therapy brands and lots of reasons for that. They're doing a better job, pharma's able to charge a higher price, and the adoption of those drugs is faster into the market, creating these billion dollar brands. The business case for precision medicine has has sort of unfolded and revealed itself in front of everybody. So you have clients, our pharmaceutical companies today, I think folks at AstraZeneca have gone on record to say 90% of their pipeline will be enabled by diagnostics in the future. For Roche, it's a 100%.

46:33 For other companies, they're still kind of coming in along behind. What we're witnessing, I think, is a transformation of medicine to be personalized medicine. Our own view in in DIACEUTICS is that ultimately all all drugs have a diagnostic dependency, whether it's diabetes, whether it's Alzheimer's, r and d, whether it's oncology. So I think what we're seeing is an an opening up of an understanding of personalized medicine. For our particular neck of the neighborhood, what we see is an immediate kind of total available market to us of about $250,000,000 as we sit today with the likelihood that that will double in the next two to three years. And the reason for that is that we can see pharma spending more and more on on kind of solving for this issue.

47:30 In terms of competition, you know, DXRX is what I would describe as an inch wide and five miles deep in the particular thing that we do. And we built a business that was fault solving for an issue. We didn't start with a big life science business and try and change it and evolve it to solve this problem. So we do have competition kinda nibbling away at these same pharma budgets, if you like, some data companies, some pharma services companies, but none have built the capability that we've built, and certainly none have launched a platform. Our own view is that we built a moat around our business that is a kind of a two or three year kind of first mover advantage, and and, obviously, we want to make sure that we're capitalizing on that. There is no equivalent platform. There's no equivalent data lake of the scale or size or global impact.

48:24 So we're in a good position. We're not not complacent. We must continue to look over our shoulder at the competition coming behind us. The primary competition in many ways is our pharma clients themselves, who are themselves just trying to understand, should we spend on this? How do we spend on this? And if we do spend on this, should we do it in house, or should we do it on an outsourced basis? So that's mostly the conversations we're having with our pharma clients. Thank you, Peter. And one more, Matthew Young. How much more investment is required into the platform? Are the next four modules the last, or will there be more? And I think I've answered the first part of that question previously. In terms of the four modules, the the the the four modules complete the the the product suite, our client product suite in this particular stage of our investment cycle.

49:20 Where our clients' demands change or where we see additional products to be developed in the future, we will invest to do that. But in terms of this particular investment cycle, four modules complete that suite of products. Peter, Philip, thank you very much. Once again, I think you've addressed the questions you can from the investors. And, of course, the company will review all of the questions submitted by investors today, and we'll publish those answers on the Investor Meet company platform. Peter, perhaps I could ask you just to wrap up, after which I will redirect investors to give you feedback. Yes. Absolutely. Thanks indeed, Lloyd. I think we've walked hopefully walked you through today both an introduction to to DIACEUTICS, but also a a clear understanding of where we are at, what is a critical milestone in the life of the company where we've taken fifteen years' worth of work and knowledge and converted into a high-tech, high margin business, and I think that's moving along quite nicely.

50:24 And and, ultimately, this is about how we got the right product in the market at the right time. I think the right product is being evidenced by the market traction. 20% was our expectation. 40% is the uptick in the in the year one. So I think the right product is is something that we're pleased to say we have. We'll continue to enhance it in the right place. I think that the the market for precision medicine is absolutely tipping. I think there's countless reports, external reports that support support that. It's not just us saying it. And particularly for our corner of the neighborhood, we can see several 100 assets moving to the market quite swiftly that will need what we do. And and it's always one of our timing is our timing right here. And I think for us, that realization by the pharmaceutical industry that not only is it losing fifty percent of patients, is it losing billions of dollars of revenue, but that that it can, with the aid of ourselves and and the deployment of very targeted investment, solve for a very intractable issue. And so I think we we believe we're we're the timing here is right. It's, in many ways, fifteen years to get the product which we've launched in eight years. It puts us all in a position where we're sort of driving a really strong technology surge into the market. We're sort of delighted to be in the space that we're in.

51:55 Peter, Philip, thank you for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order that management can better understand your views and expectation? This will only take a few minutes to complete and is greatly valued by the company. On behalf of the management team at DIACEUTICS PLC, we would like to thank you for attending today's presentation. This now concludes the session. Good afternoon. Thank you. Thank you.