Hvivo (LSE:HVO) — FY25 Trading Update

0:01 Good afternoon, ladies and gentlemen. Welcome to the HVIVO FY twenty twenty five Trading Update. Throughout this recorded presentation, investors will be in listen only mode. Please submit your questions at any time just using the Q and A tab situated on the right hand corner of your screen. The company may not be in a position given the attendance on today's call to answer every question it receives. However, the company can review your questions and we'll publish those responses via the platform. Before we begin, we'd like to submit the following poll. And as usual, I'm sure the company will be delighted with your participation. I'd now like to hand over to the management team, Stephen. Mo, good afternoon. Good afternoon. Thank you for that. So just before we start, thank you very much for taking the time out to listen to this presentation. I'm Yamin Mo Khan. I'm the CEO of HVIVO. I've been here around four years, and I have here with me Steven.

0:49 Hi. I'm Steven Pinkerton, and I've been with the company for about eight, nine years, coming up to nine years now, CFO for the last four. Thank you. So this is the trading update for full year 2025, the unordered trading update. We provide full audited results coming up in April 2026. One of the things we have changed from previous years is that we will try and focus giving more detailed information in our April and September updates rather than in January. As you can imagine, these are very busy times, and it's very difficult to gather all the information in one place for for all of you. But this is something we will be going forward with in line with most publicly quoted companies, I believe.

1:35 So as we go into this, this is the the obligatory disclaimer that we have to go through. What I'll do is I'll I'll basically have Steven go through the the numbers first, then I'll describe some some of the key highlights of the company and how we've reorganized ourselves in the new service lines. I'll talk a little bit about the market and where it stands at the moment, and we'll close by providing you some evidence why we feel the outlook is for return to future growth. So this will be a fairly short presentation, but we will then give the opportunity to all of you to text in your questions. So in the meantime, I'll hand over to Steven to provide some color into the numbers.

2:23 Good evening, everyone. Again, just to highlight that these key financial numbers are unaudited financial highlights, and, obviously, they had to go through due diligence and process. So these represent our expectations as we see the numbers today. Revenue is 46,700,000. This compares to the 7,000,000 47,000,000 that we guided in May 2025. So we are in line with guidance, we would say. Obviously, somewhat lower than 2024, and that has been touched on, talked about on the macro changes in in The US affecting the ACT trials. However, we have done well in the EBITDA. We are expecting a positive low single digit adjusted margin. That's a positive figure, whereas consensus and guidance was a low negative, positive sort of an EBITDA loss.

3:22 So that's an upside in terms of performance of the business. And this is due to three factors. One, we did have a strong November, December where we were delivering high volume of volunteers onto site studies, a phase two and a phase three. And then that's because of the volume and because of our recruitment database, the margin is somewhat better. Also, CRA signed a number of contracts in November and December, and then allowed them to recognize some revenue for the work that they have completed. But obviously, the main factor that is driving the positive EBITDA margin at this at this volume of work is the high level of cancellations that we experienced in 2025. And you want us to understand we have these contractual protections in our contracts on HCT contracts, and those cancellation fees do not attract any variable spend. And so those cancellation fees flow straight through the bottom.

4:23 And we have maintained very strong, you know, managed our costs as tightly as we can in 2025. With this upside on EBITDA, our cash at the end of the year is looking at 14,300,000. This is better than the market was expecting of about 12,000,000. This 14,300,000 stands us in very good stead, for, and provide sufficient cash for our investment and our ongoing growth projections for this business. So we're in good place. There is no debt on the balance sheet. And yes, it is somewhat lower than the 12/31/2024.

5:09 That difference is largely being spent on the acquisitions. So with that, I'll hand you back over to Moe. Thank you for that, Steven. Good update. So I mean, if you compare us to 2024, of course, it's been a challenging year for 2025, but we have delivered on the numbers that we reset during 2025. In fact, a couple of the parameters that Steven described were ahead of expectations. So a good solid result. Of course, we want to return to growth in 2026, and I will describe how we achieve that for the next twelve months. And the key highlights though from 2025, of course, a key highlight is the acquisition of CryoStor and the CRS sites at Kiel and Mannheim. So CryoStor is a is a biobank story provider for biological and clinical samples based in out of Greenwich, and they're doing tremendously well, and we are recognizing revenue and profitability as we had expected during our due diligence process.

6:14 The second acquisition is the CRS sites, and both of them are now doing well. In fact, CRS was cash positive for quarter four of twenty twenty five. We expect them to be EBITDA accretive in 2026 that we had previously reported. So for us, the addition of these new acquisition gives us a much more fuller service. So if you imagine previously, we had the consulting service or preclinical service platform, and then we had the the phase two, and we focused really mainly on infectious diseases and challenge trials. Now we can provide consulting services, preclinical services. We can do phase one or first in human clinical trials and do phase two clinical trials as a CRO as well as phase three at the site. So we offer a much more conclusive end to end platform for our customers.

7:10 So we can hold their hand effectively, especially for small to mid sized biotech, we don't have large amount of resources to outsource these types of programs or trials. So for us, having this new end to end platform offers great resilience and also diversification in what we're offering. In addition, this acquisition, especially CRS, diversifies our therapeutic expertise. So we're no longer just a infectious disease CRO doing human challenge trials. We are also now running trials, especially in respiratory field trials, the nonchallenge phase two, phase three trials, as well as specializing in cardiometabolic trials, especially in obesity and diabetes, which as I'm sure most of you know are now key areas for clinical development after what Novo Nordisk and Eli Lilly have especially achieved with their products.

8:06 We've also strengthened our our board with the addition of a new nonexecutive chairman and also a new nonexecutive director, both of whom have got long term experience both in executive position and board positions in public quality companies. As I mentioned earlier, we do reorganize ourselves across four different service line because we feel that this is the best way to meet our customers' needs. So firstly, have the consulting services under the event, lifetime, Savannah mostly, but also some of the other entities within HVIVO providing consulting services. So this is where our consultants, our experts are helping our customers, both biotech and pharma, in reviewing their preclinical data and PK data, looking at the CMC formulation of drugs, and also helping them put together dossiers for regulatory bodies and walking walking them through as to what is required to get into first in human clingotrial.

9:15 And typically, historically, these consultants would recommend third party phase one units, and this is something we have now in house. So it gives us the capability of giving a more fuller service to our customers. The second line is really clinical trials. So this is nonhuman challenge trials. So this comes from all the way from first in human trials to phase three clinical trials. So we do first in human phase one trials in in Germany. On top of that, we can do drug drug interaction studies, food effect studies, TQT studies, renal and hepatic impairment trials. All these are fairly specialist type of clinical trials that are undertaken by biotechs and pharma and doing the development of the drugs to make sure it's safe and effective before it is given market authorization.

10:07 And on top of that, of course, we continue to do phase two and phase three clinical site services where we act as a clinical site and recruit patients for our clients on behalf of other CROs. So as one of the examples to this is the fact that we recruited around, what, eight seventeen patient volunteers for the Sadara phase two program in 2025. The human challenge trials, so having said that we are diversifying into other indications and other therapeutic areas, it's important not to forget that we are still the world leader in human challenge trials. But the key here is that we no longer solely rely on human challenge trials. So HCT is still full of a good proportion of our sales pipeline, but they no longer dominate that. So this is our diversification into non HCT and also different phases and different therapeutic areas. And the final service line is, of course, a laboratory. So when we moved from Plumbers Road to a Canadian warfare, we tripled the body capacity. I'm really pleased we did that because as a result, we've been able to accommodate the, for example, the Sidara clinical trial program where we are the the sole virology lab for all the clinical sites around the world that are taking part in the clinical trials, and we're doing all the virology and immunology assays for the final primary analysis. So all of this means that we are diversified

11:38 across different service line, but the key here is if you look at the bottom up is that we now can approach our potential customers at any given stage in the clinical development for us to be able to nurture them through the development plan and also provide them with the service. Whereas historically, for example, we would never been able to provide them with a a phase one service. We can do that. We can take a client from pre clinical all the way to end of phase three. And and the different service line can support our customers at different stages in the clinical trial development. And we are already seeing some really good examples of cross selling between our different companies, especially some of the new companies coming through the acquisitions in 2025. So one of the challenges we faced in 2025, of course, was the macroeconomic situation, especially with regards to vaccines. I'm sure all of you had heard the status of the vaccines, which had been depressed, to say the least in 2025.

12:40 In addition to that, the biotech funding was also depressed, but we're now seeing positive signs for both. We've seen more biotech funding, more M and A activity. We highlight on this chart some of the key therapeutic areas. So the orange bar at the end, it shows you the the the deals done in the different therapeutic areas in 2025. And if you compare that to 2024, the increases we've seen especially in infectious diseases and cardiometabolic and respiratory are significant. And as an example for us, this $9,000,000,000 acquisition of Sadara by Merck is a key milestone for us considering we were a key provider of a majority of the data in that clinical program. So very pleased for Sadara and for Merck that they have this asset which they can now advance to phase three and hopefully to market authorization.

13:37 On top of that, we've seen increased activity across the other therapeutic areas. But for me, a lot of this M and A activity releases more funding for future programs. And for infectious diseases, if you focus on that, there's been some negative press, especially with regards to mRNA vaccines, which have led to, for example, mRNA Moderna, sorry, scrapping the late stage development, and Sanofi also making changes. But overall for ID, I think there's some good news for the fact that, for example, the Sadara deal, the fact that Pfizer have struck a licensing deal with Novavax to use the technology, and the hiring of Peter Marks, an ex FDA head for Eli Lilly to help them develop an ID franchise going forward. So I do believe there is a good future in infectious diseases.

14:31 But as I said, we're no longer a one trick pony. We can offer a subset in a variety of therapeutic areas as well as different stages of clinical development. This is the final slide to give you a little bit color on how we are going to achieve our growth in 2026. So we're saying that we will achieve high single digit margin increase in 2026. This is driven by HCT and non HCT opportunities. We have a couple of preferred partnerships signed up at CRS where we are getting good level of repeat business. I've always mentioned that we've had an excellent sales pipeline historically, and that has always been the case. But I've also iterated that a lot of the sales pipeline was not moving. There was a of decisions being deferred into the future. But I'm pleased to say that not only we are seeing more decisions being made, so hopefully, we'll see more awards and contracts, but also there's a lot more variety in our sales pipeline, not only for HCT and non HCT, but including laboratory work and field studies that make up our sales pipeline.

15:44 In addition, full year 2025, we made more new proposal submission than we did in 2024. So that again is a good indicator for future growth. We've also looked at our service line and identified key areas where we see growth. So we identified four key initiatives that we are implementing in 2025 in 2026, sorry, to make most of the the current market. So one, we are really marketing hard on cardiometabolic diseases. We have doctor Thomas Force, a key opinion leader in endocrinology, who's helping us work with small, mid, and big pharma to increase the amount of work we're doing in diabetes and obesity especially.

16:30 We've also seen good growth in respiratory. On the previous slide, you saw that respiratory has had significant amount of M and A activity in 2025, and that also will result in more clinical trials hopefully taking place in 2026. Our lab capacity is much more advanced. We've acquired more space at Canary Walk. We've acquired some new equipment. So we're doing DDPCR, for example, and this is giving us capability, and we will be launching our NGS capability this year. So the outlook for 2026 is that we are very confident that we will see a year on year growth. Appreciate 2025 was challenging, but we reiterate our guidance for 2026. Thank you for your attention. Stephen, thank you very much indeed for updating investors. Ladies and gentlemen, please do continue to submit your questions just using the Q and A tab on the right hand corner of your screen. Mo, Stephen, as you can see, you've had a number of questions from investors.

17:28 Thank you to everybody for your engagement. Perhaps, Mo, I if hand back to you in your usual fashion and take us through the Q and A. Thank you. Of course. Thank you for all the questions. We're here for you. So I wanted to make sure that you had the time and the chance to ask your questions. And I'm happy to answer all and any questions because it's important for us to give you some confidence that we will achieve growth in 2026. So here we go. We've seen significant trading volume recently despite the share price remaining near fifty two week lows. Management showed confidence by purchasing shares personally in December. Does the Board feel the current market valuation accurately reflects the value of the order book and new opportunities? If not, why? No. We don't feel it reflects the valuation of the company correctly. But this is the current market we're in. I think a lot of other companies on the AIM stock exchanges are also suffering. And also, we've had the the added hit with regards to missing our original 2025 guidance and and the headwind with regards to the vaccine market especially.

18:37 Now we've allayed some of those fears. We've shown good numbers for 2025, a number of them ahead of expectations. And the fact that we are going to grow in 2026 and maintain a good cash flow, I think we are still strong. So in my opinion, no, the valuation is currently not correct and we hope to bring that valuation back to where we think it should be in the coming months. The share price just continues to decline. That's true. It's all very well painting an optimistic outlook, but we've heard this for years now. Those invested five years go on to a happy. Well, to be honest, we've had three continuous years of really good growth, at least since I I've been here at the company.

19:26 2025 was the first year where we've had a blip, and I hope you agree that the main root cause of that was macroeconomic events that we could not really control. As a company, our strategy, our model remains robust and strong and profitable if the business is there. But unfortunately, for multiple reasons that are outside of our control, we've had to overcome these headwinds. But going forward, as I say, we've de risked ourselves, we've acquired a company in a timely manner, we have multinational presence now, so that even de risks even further. So we are now prepared that if one typical one indication or one therapeutic area is impacted, we have other therapeutic areas and other countries to continue to ensure we meet our guidance numbers for 2026.

20:21 The past twelve months have been a disaster for the company and the share price and investors are rightly furious. Why have you found it so difficult to generate any meaningful contracts? I totally understand your your anger. The share price has gone the wrong way. I totally understand that. But the contracts have been difficult to sign as I mentioned for the reasons I've hopefully highlighted already. But we now feel that the momentum is changing. We have seen movement in our sales pipeline, more opportunities being advanced. I think and that is the start of the good story. We need to get have good sales pipeline. We need to convert that sales pipeline into awards and contracts and then do the work to recognize the revenue at a good EBITDA margin. And that's our goal as we move forward.

21:16 Where are we with the Iliad LOI? So the LOI was already signed as previously announced. We're now waiting for Iliad to finalize their funding round. Following that, we will hopefully sign the full contract and move on. So that continues to be an opportunity in our sales pipeline at the moment. Why are you advertising to hire more permanent nursing staff? So it depends on the timing. So we are still very busy in the clinic. So we are running multiple clinical trials at the moment. So they require resources at different levels and different roles. So on an ongoing basis, of course, we will be recruiting good staff that can help us deliver the contracts that we assigned to date.

22:09 It's been longer than I can remember since you guys won a HCT contract over one year, I think. This has devastated the share price. What can we expect to see us winning contracts again? So when can we expect to see us winning contracts again and return to the good old days and get the share price back to what it was. So I hope that this year we expect to sign more ACTs sooner rather than later. That is the plan. I'm confident that the fact that we are reiterating our guidance in 2026, which is a high single digit growth year on year, should give you some level of confidence that we expect to see growth in HCT. But in addition, let's not forget, there are non HCT capabilities that we now have across a variety of therapeutic areas and a variety of clinical stages.

23:05 Scrolling down here. Would it be correct to say that HVIVO hasn't yet recovered from loss of revenue due to contract cancellation in 2025 and the base annual revenue has been reset at a lower level going forward. I. E, we are not going back to 2024 revenue level anytime soon. Stephen, you want to get that? Sure. So we have reiterated our guidance for 2026, and it is a single high single digit growth. Much of that growth is coming through from our acquisitions. And as AT and T returns back into the market and the pipeline's looking good, we feel there will be some upside on that on the delivering our our revenues for 2026.

24:08 Yeah. Thank you very much. Why are you not getting credit for the breadth and depth of services you can now offer? Your evaluation really seemed to fail to reflect this. I I do agree with that comment. I'm sure you can imagine. It it is a little bit of a conundrum that we've built a CRO right now with the foundation it has to deliver much more than it could have done even twelve months ago. So across many clinical stages, having the phase one capability, renal hepatocarcinoma impairment, the cardiometabolic respiratory franchises. So but we, I think, need to show that we can deliver on those. So I I I have a feeling that we are being punished because of the the profit warning last year, but also the market sentiment, I think, still needs to change.

25:03 But our cause has to be, as an executive team, to sign more contracts and and do that work, then hopefully, the share price will take care of itself. So when you say you are a debt free business, if I remember correctly, didn't we buy the German business through debt? Does this mean you have paid off the debt for the purchase of the German business? Steven? So we are a debt free business. There's no debt on our balance sheet. We did not use debt to acquire the German business. We used our own cash. It's the main reason why the cash well, big reason why the cash dropped from 44,000,000 at the beginning of twenty twenty four at at least at the beginning of twenty twenty five and stands at 14,300,000 this year, at the end of December this year.

25:57 Thank you. Is Karl Friel associated with HVIVO in any capacity? No. He he he is not. We have a new non executive chairman, Sean Chilton, who has a long history of executive team experience as well as board membership. One for you, Stephen. What is the quantum of the positive EBITDA figure? So we've purposely said positive low single digits and ideally to give a range. As you can imagine, we have an acquisition to fall through. So we are looking at a range of positive versus last versus our guidance. So when we say low single digits, we're looking at 2% to percent of revenue.

26:50 Thank you. Will HCTs come back in favor? From the conversation I've had with potential clients and our sales team are having, yes, I do believe that HCT will come back in favor. But also just kind of to touch on this again, we are not no longer solely reliant on ACTs to ensure we hit our numbers. We have a greater diversification than we've ever had in the company. How would you compare the current pipeline for human challenge trials with that at the end of twenty twenty four? I think the key difference between what it was then and what is now is that these opportunities we now are moving forward. We had a strong pipeline in 2024. We now also have a a strong pipeline in 2025.

27:37 But the key difference I'd mention the momentum and the advancement of these opportunity is occurring now, where even in 2024, I think there was a lot of deferred decision. On top of that, of course, the proportion of non ACV pipeline is greater than it was in 2024. One for you, Steven. How sustainable is the current cash position without a fundraise? We can't seriously estimate that the 14,300,000 is more than sufficient to deliver this year's performance and our expected investment program and organic growth that we're providing on this business. Yeah. So unless some things substantially change, we're not expecting a fundraise.

28:25 What does success look like in three years? So we intentionally have not forecasted to that time term yet. We we will do in the in the future, but the key here is that we want to reduce the volatility. We know human channel trust are great to have, but they also have a a lumpy business in nature because they're huge and they happen sporadically. So our goal really is to grow the non HCT business. So we have a a large, stable, steady growth business underpinning what we're doing with regards to HCT. So this gives us greater predictability going forward, less volatility, and that, of course, is what we are all after. So consistency and good sustainable growth.

29:13 If you consider that the share price is cheap, then why not proceed with buybacks? If you're right, we will all benefit of the irrationality of the market. Steven? So this I mean, we need the 14,300,000 to continue investing in this business and driving its growth plans. We think it's better money is better spent in on those activities to make sure to drive growth and sustain this business going forward. Great. It's another one for you, Stephen. Cash levels are down significantly year on year. Do you expect the current business to generate positive cash flow in 2026?

30:00 We're seeing certainly some positive cash flow in 2026. There will be a at this level of guidance in the high single digit revenue growth, we will still burn some cash, but not a significant amount, nowhere near to the levels that we have in 2025. But we'll still land up at the end of the year with sufficient amount of cash to continue into 2027 at these levels. HCTs tend to be in excess of £10,000,000 So one new contract should add significant revenues and will allow us to beat 2026 forecast. Is this correct? So on average, HCT can range from 5,000,000 to up to $1,012,000,000.

30:53 So you're you're correct on that. Within our budget for 2026, we've assumed a certain number of HCTs to sign. So it all depends on how many we sign, what their value is, and what in what time do we sign because we need to recognize that revenue in the current year. So depending on those factors will determine whether we will beat our 2026 forecast. With the new more diversified business model, what level of sustainable margin do you expect to achieve? So that's a really good question and not very easy to answer because it depends on the relative mix of the different businesses. So as you know, HCTs are inherently relatively higher margin compared to phase one, for example. So depending on what the different mix is, we'll determine the final margin.

31:48 But we want to be able to use different service lines in parallel to gain accretive benefits and synergies with regards to getting a higher EBITDA margin at the end of the day. Non HCT does provide diversification, but does it provide a unique selling point similar to HCT? So not in all cases. So for example, when it comes to phase one, there are many other providers in that. But we have some unique offerings, which brings me out to a final slide, and I'd like to close with that. I think we've done most of the questions. So the key question, I think, is why are we different? So why would clients use us rather than any other vendor when it comes to some of these highly competitive businesses?

32:39 And what we offer is unique, and there are a few things that I like to highlight and why I feel that we will be successful in the areas we are expanding into. So first of all, we only work with the sites we own. Now there are not many multinational, multi site CRO partners, at least in the small, mid sized bracket like we are, that can offer international capability with sites multiple sites that they own themselves. This is really important because patient recruitment is the single biggest factor for delays and postponements of clinical trials. And if you own your clinical site, it effectively means you control patient recruitment because you control the the quality of the staff, the the resource level, your patient recruitment database, and so on. So having that certainty gives clients confidence that we can deliver on our numbers, and that's really key.

33:31 Having patient recruitment and delivering a quality product is really key, and having that international capability owning your site is really key. The second one is we have one of the largest databases of one patient for clinical trial purposes in Europe, but that's what at least what we believe. I don't know of many other companies that have a bigger database than ours. And we do this by running a genetic screening protocol ourselves, and that's something that's also unique. Most companies start screening after they've been awarded the contract and run their trial. We have the advantage that when we sign a contract, because we've been screening patients, especially for the human challenge trials, we are ready to put them into a clinical trial. And this saves time and effort for our customers. We can deliver higher number of patients in a shorter timeframe compared to our competition.

34:22 And finally, we have some excellent KOLs. I mean, highlight a couple of them. So Doctor. Andrew Catchpole is literally the guru of human challenge trials. He has done more challenge trials than anybody else in the commercial setting. We've done around 80 human challenge trials, which he has overseen and also developed multiple agents, new challenge models that no one has done. Secondly, we had doctor Thomas Forst, who is a high caliber, high highly experienced key opinion leader in endocrinology with a very strong CV and has presented on multiple conferences and sits on a scientific advisory board in biotech as well as big pharma. So these are some of the key points why we feel we will be successful in the new areas we're expanding to. On that, I'd like to thank you all for your time and effort. I really appreciate your focus and your questions. Hopefully, we've been able to answer that in a good manner. But any other questions, you can go to the website and send in through the IR section.

35:25 But thank you for your time today. That's great. Most even thank you once again for updating investors. Ladies and please don't close this session. We'll now automatically redirect you for your feedback. On behalf of the management team of HVIVO, we'd like to thank you for attending today's presentation. And thanks