IP Group (LSE:IPO) Q2 2026 Earnings Call

0:00 Good morning, ladies and gentlemen, and welcome to the IP Group Plc half year results investor presentation. Questions are encouraged. They can be submitted at any time via the Q&A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish our responses where it's appropriate to do so. Before we begin, as usual, we would just like to submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO Greg Smith. Greg, good morning, sir.

0:34 Good morning, Jake. Thank you very much. And welcome everyone to IP Group's 2026 half year results presentation. And thanks very much to all the InvestorMeet company team and Mark for hosting today's session. Much appreciated as always. For those who don't know me, I'm Greg Smith. I'm the Chief Executive of IP Group. With me today is David Baines, our Chief Financial and Operating Officer. We deliberately tried to keep today's presentation a bit shorter and more focused. It's the half year after all. So I will cover the half year highlights and progress across the portfolio and our strategic priorities. I'll get DB to take you through the financials, before I return to summarise and then of course there will be time for questions.

1:23 And I would say the headline for today's results is that we have carried the momentum that we had from 2025 into 2026 with further NAV per share growth, strong cash realisations and as I hope we will demonstrate broad based portfolio progress. As usual, the disclaimer is here. Please note these sort of important disclaimers, particularly the bit about forward looking statements. This presentation will be up on the investor relations section of our website for review post the call.

2:09 So in terms of what we'll cover today, four short sections, the half year overview, portfolio progress, I think particularly the future value opportunity within that then financial results and then a brief summary so please post questions through the platform as we go as Jake said we'll then group them by theme and answer as many as we can and we'll do that clearly and directly so turning first to what we delivered for shareholders in the first half And before we do that, I just wanted to note that this year marks IP Group's 25th anniversary. And over that period, we've invested over one and a half billion pounds. We've helped to form and support more than 600 companies.

2:57 And those companies have created more than 15,000 jobs. That track record matters because science investing, in our view, rewards experience, specialist judgment and also long-term relationships and from a shareholder point of view it also gives this a large and increasingly mature portfolio from which future value and cash realizations can emerge but today is principally about the delivery in the first half and the little period afterwards so let's move straight into the first half results so the group made disciplined and tangible progress in the first half. NAV per share increased by about 3% to 114 pence, taking net asset value above a billion. Since the period end, NAV per share has actually increased further to approximately 117 pence a share as at 11th of September last Friday. we generated 69 million of cash proceeds in the six months which was slightly more actually than the whole of full year 25.

4:06 A further 17 million since June takes our year-to-date proceeds to the mid 80 millions. Portfolio companies raised over half a billion of third-party capital and we contributed about five percent of this so this is strong external evidence that other investors are prepared to commit substantial capital to companies as they progress. Now, the largest fair value driver in the period was the further de-risking of Pfizer's obesity programs that increased the value of our royalty interest by 27 million to just over 150 million. And we ended the period with a healthy cash balance of 239 million gross.

4:55 So the message is not that one asset performed well, NAV growth, cash realizations, external funding and operational milestones all generally moved forward together. Now, before going into the detail behind that in the portfolio, I just want to briefly acknowledge the possible offer process during the summer. I would say as we put in our R&S release, the board sought to engage constructively with Railpen and its partners, and we remain very grateful for their effort and the constructive engagement of all of the shareholders who we spoke to during that period. as you will have seen the process did not result in an acceptable proposal and so our focus as a management team and a board is firmly on delivering the substantial value that we see in the group.

5:48 On that note, let's turn to Pfizer. So at the full year, I spent a bit of time explaining why that Pfizer obesity royalty interest had become such a significant asset for IP Group and our shareholders. The first half has added further evidence to that and also reduced development risk. During the period, Pfizer released positive clinical data for the lead program, Berrabenetide, showing competitive weight loss efficacy alongside favorable tolerability and supporting the potential for a monthly maintenance regimen. The Berrabenetide and amylin combination also advanced into Phase 2b, and that was the primary driver of the 27 million uplift that I mentioned.

6:40 Now, this is an increasingly competitive market, so differentiation matters. I think the potential combination of competitive efficacy, favourable tolerability and this sort of monthly maintenance profile remains one of the main reasons that Pfizer believes this programme can be highly differentiated in that increasingly competitive market. And also to reiterate, Pfizer has committed substantial resource to this. It is progressing 10 phase three studies this year and launches targeted in 2028. So as we have said in previous notes, there remains clinical, regulatory and commercial risk. And as a result, our valuation is based around a probability weighted method and is discounted. But the progress in the half strengthens both the quality and the breadth of our exposure to a market that is externally forecast at around sort of 100 billion to 150 billion or thereabouts annually by 2030. So hopefully give you a little bit more colour.

7:52 This slide shows the route to market across the programmes where we've got economic exposure. And as I mentioned, the most advanced of the assets at the top there is Beravenetide. Two phase three studies are expected to reach primary completion in October 2027, and that supports a potential first approval in 2028. There's also a monthly dosing study and seven further phase three studies that are that could provide potential to broaden the label and therefore the commercial opportunity. Worth noting that just yesterday at a conference, Pfizer also indicated that recruitment across essentially all of the vera-venotide phase three studies is now close to completion. From our point of view, from your point of view as shareholders, that's very encouraging because patient recruitment is often the biggest factor in determining when studies read out and complete, and so it supports good confidence in the current programme timetable.

8:58 As I mentioned, the berabenotide and amylin combination is now in phase 2b, so you can see that there, and that's got primary completion currently expected in April 27. We also have exposure to an amylin monotherapy and some earlier oral and next-gen programs. And there's a couple, as Dave will come on to explain, a couple of phase one assets that are not currently attributed value in our model. So I think the important takeaway from this for shareholders is that this isn't exposure to a single binary program. it extends across the lead program which is an injectable and some combination therapies and the potential for less frequent dosing and a number of these earlier stage programs so that gives us several possible routes to value as Pfizer develops the franchise And I think this this point on the carrying value, I think the 150 million we've got it in at this definitely doesn't reflect Pfizer's commercial ambition.

9:59 And it's based on these risk adjusted probabilities. And so DB will take you through those assumptions in a little bit more detail later today. In terms of our investment thesis, our default is to hold the asset and receive the royalties and they're anticipated to begin in 2028 if the development and launch proceed to the plan that is set out here. This is highly consistent with the venture model. A small number of exceptional outcomes can drive a very disproportionate share of returns and this asset, we believe, gives shareholders direct exposure to that potential. that being said having a deep default path definitely doesn't mean that we stop exploring ways to accelerate value creation for shareholders so as the program matures and de-risks over this period we would expect the range of strategic options available to us to broaden out and we will continue to assess these carefully through the lens of long-term shareholder value and of course we remain open to exceptional opportunities should they arise On Oxford Nanoport, they made, I would say, encouraging progress in the half and has performed strongly since the period end from a share price point of view.

11:23 As you can see from the slide, and many of you would have tracked this directly, revenue was at 117 million, which is about a 12% growth at constant currency. A big thing for us was the fact that gross margin increased by 400 basis points to 62%. But I think even more important, and I think this was the bit that came out particularly in the half year results more than the trading statement, was the adjusted EBITDA loss more than halving to just over 22 million. I think one of the key developments has been the strengthening of the leadership team. joined the CEO in March and the company has also added a number of senior hires in areas of key capabilities as it prepares for its next phase of commercial growth.

12:10 And I think under that leadership team, it feels to us that there is a more focused customer led growth strategy the company has spoken about narrowing down the 47 areas in which its technology could compete to the 18 that it considers most attractive and interestingly management's own analysis indicates that around 40 to 45 percent of revenue generated over the last three years already comes from those priority markets so the existing revenues therefore provide something of a strong foundation for that strategy and give the company a credible base from which to expand and the opportunity available which is clearly set out and within their materials gives very substantial room for expansion.

12:56 So I think we see this as very much a refinement of focus rather than a wholesale change of direction and that gives us confidence in the team's ability to execute. That point on profitability or the progress towards profitability, that has been absolutely central to our investment thesis, and I think the results were ahead of where the market appeared to be. The company remains on track for that EBIT breakeven in full year 27 and positive free cash flow in 2028. And the other point of note is the cross licensing agreement with a global diagnostics company that brings $35 million of committed revenue over the next couple of years. But importantly, ongoing royalties, which we believe could be substantial. They are not currently included in the medium term guidance.

13:49 So any early adoption, which we might see as soon as as this year actually, could increase recognition of that strategic value to the platform. And there's been a bit of an increase in the value of our holding since the half year of about 26 million. But we remain very focused on that sort of operating thesis and the route to sustainable profitability. Delivery against that should also create more attractive monetization options for us over time without prejudging the timing of those. On the wider portfolio, don't worry, I'm not going to go into all of these in detail, but I think that the central message from this slide is breadth and the fact that the progress was not confined to Pfizer or Oxford Nanopore, Quantum Motion, Quantum Circuits, OXA completed major funding rounds, First Light Fusion and Mantle 8 raised capital. Pysarta secured its first commercial electrolyzer order.

14:50 Sentessa was acquired by Eli Lilly. So there's been good progress across the portfolio. I would just say, Oxford is worth a brief comment in there. So following its strategic rate reset last year and this sharper focus on what we term industrial mobile autonomy, it has formed a new joint venture with the Dubai Future Foundation called Shift. and the venture is designed to put autonomous vehicles to work in ports and airports in an integrated product that combines ox's self-driving software its fleet management platform and its autonomy hardware and this is really targeting practical gains in things like productivity efficiency safety and operational resilience within these environments and the first scalable commercial deployment is planned before the end of 2027.

15:51 From Dubai's point of view of course it's trying to support the stated ambition to double its foreign trade by 2033. Of course, given the current regional uncertainty, the near term emphasis from the company is correctly on disciplined execution and securing those early deployments. Management definitely deserves the principal credit for delivering that partnership but it's worth saying IP Group supported the company in bringing it about and this is hopefully a useful example of how our network and our international network can help portfolio companies across these strategic international partners to accelerate into large markets. Still delivery ahead, but pretty encouraging process from one of the companies that was affected by a significant valuation reduction last year.

16:45 So overall, the breadth of the financing, the clinical progress and the commercial partnerships provides evidence of greater maturity across the portfolio, with a couple of negative movements as a reminder that execution risk always remains in the portfolio. Cash generation was one of the clearest positives from our first half. We realised 69 million, which compared with about 30 million in the first half of last year. And as I mentioned, it's actually now more than the whole of 2025. The principal contributors are set out on the slide, Monolith, Centesa and Hinge Health. And I think they both provide sort of some good illustrations of our model.

17:33 Hinge Health, following their 2025 IPO, we've now generated a total of 46 million of total proceeds. That was a 50 times multiple of invested capital and almost a 50% IRR. Monolith is a bit different that provides an example of where we've had a strategic acquisition of an important deep tech capability and that was an acquisition by CoreWeave and since then we've generated around 23 million of proceeds this year with again greater than 50% overall IRR so I think they show that we can create and realize value from different parts of the portfolio whether that's a you know public market success or a strategic acquisition And it's exactly the sort of profile that we would expect from a diversified science and technology portfolio, including post period end receipts. We've now delivered 154 million, just over 150 million since the beginning of 2025.

18:32 So we're well over halfway towards our 250 million target by the end of 2027. Looking forward, we continue to see a healthy pipeline of maturing assets and potential realization opportunities over the next 12 to 18 months. Fair to say that timing is never entirely within our control, but the breadth of the portfolio gives us a number of different paths to achieving that target. As a reminder of the way the components of IP Group work together, Partwalk provides differentiated access at pre-SEED, SEED and into Series A through our dedicated AIS funds and relationships with leading universities.

19:20 The permanent balance sheet, which shareholders are exposed to, supports selected companies as they mature, while our private funds can add science and technology scale-up capital alongside the balance sheet. That additional capital matters in three ways. It can accelerate our strongest businesses across a broader opportunity set. It can generate management fees to help reduce our net overheads over time and strong investment performance in those funds can generate performance fees for shareholders. So the model gives us proprietary sourcing, long term ownership and the potential to increase the capital available to portfolio companies without relying solely on our balance sheet. On the subject of third party capital, we made progress in expanding that platform during the period, although I would say the focus is now firmly on delivery of the two new mandates that we announced during the first half. our strategic relationship with Aberdeen is moving quickly towards its first investment and we expect the initial portfolio to be up and running by the end of the year and this is definitely an early example of a dedicated defined contribution mandate providing access to scaling science and technology businesses and you know we believe there is good potential for it to provide a route for further long-term capital savings

20:50 coming into this sector. In Australia, just after our full year results, we also launched the 50 million IP Group Climate Catalyst Fund. That was with the Clean Energy Finance Corporation in Australia, which is the sort of equivalent of the Australian Green Bank. And similarly for that fund, the next milestone is to begin investing that capital by the end of the year into Australian companies that are addressing hard to abate industries. So together with Parkwalk and Hostplus and those funds, we manage around 550 million of third party capital. And we have further opportunities in the pipeline where we aim to demonstrate material progress over the next six to 12 months.

21:37 So this remains at the moment a smaller part of today's shareholder value story. But over time, it should help us support more companies, reduce our overheads and create this performance fee potential if we can deliver strong returns. So I'll now turn to the first half outcomes in the portfolio but also the future value opportunities that we see within them. So 30th of June, the total portfolio is valued at about 900 million, and that's equivalent to about 100 pence per share, 103 pence per share. And the top five assets account for about 50 pence per share. You see them set out on the slide and Probably just worth recognising, each of these has different value drivers, so royalty income and clinical de-risking for our licence, listed market performance and path to profitability at Nanopore, clinical milestones at Esteso and Mission and industrial scale-up at Hisata.

22:43 As I mentioned, Hisarta secured its first binding megawatt scale order during the first half and delivery is expected in the first half of 2027 and I should also note that Mission Therapeutics their acute kidney injury program was acquired by Dimerix for potential consideration of up to nearly 300 million dollars and that that upfront The top five assets do provide distinct routes to value, but the other 53 pence per share gives us and shareholders exposure to a much wider group of businesses and a good level of optionality within those. And I'm just going to highlight a few of those over the course of the next few slides.

23:43 Before I do that, it would be worth just pointing out our successful exit in Centessa. This is another example of realized value, not paper value. Our involvement in this company began through a University of Cambridge spin-out that we backed back in 2017. AppSyntex became part of a roll-up Centessa, which then listed on NASDAQ in 2021. and then earlier this year it was acquired by Eli Lilly for about six billion dollars upfront with a further one and a half billion in potential milestones for us and we sold during the course of the development of that company during its Nasdaq life and the remaining balance and we sold during at the point of completion this year that has given us a realized IRR of about 24% and there's a bit of potential CVR payments that could be up another sort of three four million pounds potentially.

24:44 I think really this is just to illustrate the validation of the model so breakthrough university science supported through several stages and has exited to a global pharmaceutical buyer and We believe that there are a number of assets that look today like AppSyntex did back then at the early part of its journey. In terms of the rest of the Therapeutics portfolio, I think there's just a few things to highlight. Three milestones, particularly from the half stand out. Two of these were catalysts that we flagged at the full year that have now delivered. So Enterprise Therapeutics met its primary endpoint in a phase two system.

25:30 fibrosis trial and that showed improved lung function over 28 days compared with placebo and microbiotica delivered a second positive phase 1b this time data set and that was in melanoma and I think that's building evidence that its precision microbiome platform its sort of gut microbiome platform can increase or improve responses in these quite difficult to treat indications Esteso began dosing the new Phase 2 study of loramastat in June. As everyone will know, the previous rheumatoid arthritis study didn't meet its primary endpoint, but it showed significant improvements in things like disability, fatigue and reduction in markers of muscle loss.

26:18 and so this trial therefore follows those signals into secondary sarcopenia caused by an RA and we are testing muscle quality repair and function in a randomized double-blind placebo-controlled study that we'll read out in the second half of 27. This is worth noting that this sort of sarcopenia market is very significant it affects around 110 million people globally and there are no treatments currently approved to treat it so a safe oral treatment that improves function would be a very significant unmet need Esteso remains a significant holding from the group from a valuation point of view and we will of course review its valuation through the normal year-end processes in light of the evolving clinical evidence and the commercial opportunity and I think for today the important point is that the company has followed the biology into a more focused trial with a clear unmet need and a very differentiated oral regenerative approach. So the common thread across these is large indications, high unmet need and programs moving into study that provide clearer evidence and if they're successful, support, partnering and value realization.

27:41 Two of our companies in the quantum space raised significant capital this period. And the common thread amongst these is that IP Group and Parkwalk were early investors and our balance sheet exposure to quantum companies is probably worth about two pence per share at the half year. And these rounds bring substantial third party capital into that sector and validate the sort of strategic importance of that. And quantum remains genuinely exciting. It's a longer duration opportunity. But I think alongside it, we also have significant ownership in businesses tackling quite immediate constraints in AI computing. And I'll just turn to some of those now to round up this section.

28:31 I think one of the themes for us, and I'm sure you are all seeing it across your lives, is that AI is rapidly moving from experimentation into large scale industrial deployment. And as models become more embedded in products and services the constraints are increasingly physical in nature so things like electricity available to data centers the heat being produced by conventional processes and also the energy and time required to move data between the memory bit and the compute bit GPUs remain absolutely central to the system, but they definitely can't solve every part of that equation on their own. So we have three complementary physics-led approaches, light, memory and probability.

29:22 on the first Lumai which is valued at about nine million pounds about a one peer share where we have a 26% holding uses three-dimensional optical computing for the matrix multiplication that goes on at the heart of AI inference during the period it announced that its first iris system is now running billion parameter language models in real time so that Hopefully means something to some of you, I guess sort of in commercial terms, this is designed for high throughput works workloads and data centers. And the plan here is to develop that system and work it will work alongside conventional GPUs rather than trying to replace the whole computing stack. And if you look at their website, you can see those sort of initial products.

30:16 Intrinsic on the memory side, again, valued at about a penny a share. We had about 28% of this. This is generating and developing what we call next generation reran memory. And this is it's important because Getting faster and non-volatile, i.e. it remembers and low power memory can sit much closer to the processor and reduce the energy and a little bit of time moving data between memory and the processing. relevant applications here can include things like edge ai autonomous vehicles and wearables remote sensing that sort of thing and the company is well capitalized and is seeing strong commercial interest from important industry participants and then finally at about 0.2 or 3p of a share is our holding in quantum dice and this is photonics and it is for probabilistic computing and the aim here is to try and accelerate problems that required repeated sampling under uncertain conditions so there's things like logistics and asset management and asset optimization and financial modeling particularly relevant here and so things that are used in robotics and machine vision so three very complementary areas of the value

31:48 chain so although these three represent about 20 million issue of carrying value we have 17 to 28 percent as you can see ownership and so a meaningful proportion of any future upside belongs to the group and our shareholders and each has milestones ahead that could become the next value events. We expect and hope to be able to report further technical and funding hopefully some commercial milestones from these businesses over the next six months or so. So with that summary of the main drivers and some of the future value drivers, I will hand over to DB to take you through the financial results.

32:31 Thank you, Greg. Yes, I'll just take you for a quick canter through the financial results, it being only the half year. Most of this you've heard already, but it's always good to reiterate the message. So NAV now about £1.14 was £1.14 at the end of the period. It's actually slightly up, you'll see in the release as of Friday, I think it's about £1.17 following improvement in Oxford Nanopore's price. At the end of June, that was a 3.2% increase in the period, which is following the 13% increase in the period before, so a couple of good periods. Overheads, similar, slightly up. I would expect, I think total overheads last year were just under 16 million, I think for the full year, that is. And I would expect to be something slightly higher than that this year, just due to the nature of inflation. So probably we'll have a similar amount in the second half, maybe slightly more, maybe making it about 17 million.

33:22 But overhead's still in control and only really growing by inflation. Growth cash, very strong, as you've already heard. Growth cash actually up over the period. And I'll talk about that briefly in a minute. balance sheet very simple not much change actually the actual NAV the portfolio value is pretty much exactly flat at about 907 908 million and and you can see the effect of that that is we have invested 30 million in the period fully itemized in the in the report but we've had quite a lot of exits as you heard very strong exits of 69 million and more since the period end another 17 million so exits have been strong With the fair value gain then taking us back to where we started effectively. That's what the movement has been. The value of what we've invested, what we've gained, counts as perhaps exactly the money that's been realised, which of course has moved into cash, as we'll see in a minute. Pfizer Royalty Asset Greg has explained this but always good to actually see what it means in terms of numbers so we're actually up from about 127 to 153 million and the main growth this is a chart I showed you at the time of the full year and it's got the main programs if you look at this there's actually six programs here and the main one there on the left that they're on the lead one of the emergency benetide the monotherapy which is one that's in these phase three clinical trials and no significant change in the value because the probabilities haven't changed it's still in that phase three trial the next kind of key milestone for that will be if it gets successful completion that trial then those percentages will obviously

34:54 go up essentially probability for the value graph at that time there has been an increase in the second bar there so that's a combination therapy the with the GLP and the Amnin, that moved into a Phase 2B trial. So that was 25% probability when we last reported. It's now 39%. If it's successful in that trial, it will ultimately move into 53% when it moves into the next phase, following the same logic. But that has resulted in most of the increase of about 27 million in the period is actually in that bar there. That's the one that's gone up. The third bar, if we're following in the oral bar, we haven't changed the value one. actually no nothing managed report Greg's already explained um Pfizer did talk about the fact that they've actually terminated one of their all assets but that wasn't our one they had one asset they'd sourced from somewhere else um so at the moment we haven't really got anything to report on that all so at the moment we're carrying it still at a very low success and uh talking about local successes we do of course still have three whole programs we're not really valuing at all again Greg mentioned them but there's a um what's called a GIPR so in terms of the amlin that program is now in a phase one clinical trial as is the pro drug and that pro drug you can see in the file right there is actually a quarterly dosage rather than monthly in a phase one trial thing is at the moment it's still we still consider it too early to actually put values on those not least of all it's very difficult to identify market size to do the calculation But if they progress, certainly if they progress into phase two trial, we will then have to start recognising those values, and that will

36:25 have a relatively significant impact on that value at that time, I would guess. So that's why we still go about 152 million. Going quickly on the funding profile, very slightly different, but pretty much similar as we see. I tend to talk about a third funded, a third in a year, and a third in two years. It's changed very slightly. Actually, we've only got about 6% of funds for the rest of this year and 19% for the six months after that. So actually, 12 months now is only about 25%. And quite a lot of the funding actually moves out into the year after that, so after the next half year to the half year after. So if anything, actually, the funding profile has slightly improved over other periods. But the truth is, the message always is, The rate at which our companies need to fund is relatively constant and it gives you a chance to fund things as they come along.

37:13 You don't get a kind of wall of funding requirements. And as always, I say, you know, follow the cash on these things. The cash is really repeating what we've seen before, but the cash has actually improved. And that's because investments in about 30 million have been outweighed considerably by the exits and a relatively small amount of costs to reduce that. And really what's happened is effectively the profit we've seen as a 31 million profit has effectively gone into cash. That's where it is. And as we've mentioned already, we haven't been doing buyback. There's quite a lot of questions about that.

37:44 and we do buy back in the period so that money is sitting in cash at the moment that explains that increase and I'll hand back to Greg thank you very much Dave you're welcome so let's just quickly finish with a recap of the key messages and a little look forward so As I mentioned at the start, the first half of 2026 has been a period of disciplined execution and hopefully growing momentum that you're seeing. NAPA share increased to 114 pence and has increased further to approximately 117 pence since the period end. we delivered 69 million of proceeds in the half and actually mid 80s 86 million I think from for the year to date and that takes total proceeds since the start of 2025 to 154 million and we remain on track for the 250 million by the end of 2027 and from a portfolio point of view the Pfizer programs continue to de-risk Oxford Nanopore made good financial and commercial progress and the broader portfolio attracted over half a billion of third-party capital while delivering milestones that ranged across therapeutics, quantum, autonomy, climate tech and AI enabling compute.

39:06 As Dave said we ended June with 240 million of gross cash and deposits. So I think importantly from our point of view the progress is becoming increasingly visible in outcomes so per share value growth cash realizations external validation through funding rounds and hopefully you're seeing clearer routes to potential future value. This is the same set of priorities that I outlined we would be targeting this year at the full year. I haven't changed the slide. I guess the first point to make is the sort of accountability. So this is what I said we would do and reporting back on the progress that we have made to date. So we've made continued positive NAV for share performance.

39:56 We have generated about 154 million of exits, as I mentioned. including those post-period receipts since the beginning of 2025. We've moved the Aberdeen relationship towards its first investment. We announced that further fund, the Climate Catalyst Fund, and we've maintained a disciplined approach to deployment. And for the remainder of the year, those objectives sort of largely still stand, you know, the continued positive NAV per share performance, making the first investments in those both of those private capital arrangements and keeping executing towards that 250 million exits target. So that's the sort of accountability piece. I would say that the second point though is more around pace and ambition.

40:46 You'll have seen that Michael Queen joined us as chair during the half and he brings a substantial level of experience from his role at 3i where he was chief executive and many private markets companies, most recently Collar Capital where he was chair. and we also heard a range of views from our shareholders during the summer and we will continue that engagement now as part of this half year results roadshow. I would say Michael, the board and management are using all those inputs to determine and implement the most effective ways for us to be able to accelerate realizations, sharpen our capital allocation and convert more of the portfolio's underlying value into per share returns while also retaining the valuation discipline that protects you as shareholders.

41:48 Third party interest And that shareholder engagement we saw during the summer underlined for us the attractiveness of the underlying assets and also the strategy that we're following. And of course, the task for us as a management team now is to convert more of that value into outcomes that you as investors can see in cash and per share returns. and as Dave mentioned we have approximately 50 million of proceeds from realizations that is now available for future shareholder returns under the caps allocation policy that was approved by the board now of course following the AGM vote as you would expect as a public company we are engaging constructively with shareholders on the appropriate form and timing and how we can consider we can deliver against our caps allocation policy From our perspective the principle is clear. We should allocate capital where it creates the best risk-adjusted per share outcomes so I want to be clear that this is not simply business as usual.

42:57 We've got a strong portfolio. We've got a clear strategy for growth and we've got substantial opportunity ahead. Our priority is execution and converting that opportunity into outcomes that shareholders can see and measure. I thank you all very much for your continued support. DB and I will be very happy now to take the questions I'm going to try and try and group them I'm looking at them as they're coming through some of them I think we've now answered in the presentation on areas like caps allocation and we mentioned

43:35 the bid process during the summer and probably can't say an awful lot more I agree on that but yeah let's I agree entirely about exactly what I was going to say we'll have a go so please don't be offended this year if I don't include your question I've traditionally treated every question I'll do some grouping and as Greg correctly said I think we've really we've certainly covered off the capital allocation I feel we've given a fairly good description around also the bid so I probably won't do any more than those So, Cain, analyst in Deutsche, lovely to have you with us, Cain, as always. Lots of long questions, or a long question with lots of complexity in it. Would you consider partially monetising the Pfizer royalty interest, an attractive opportunity of your own, or is the intention to remain fully exposed given the potential upside of the programme's progress?

44:22 I hope I answered that one in full. We have a default position that we would hold it but as the asset de-risks over the course of the next sort of 12 to 18 months then we think there could be opportunities that could be attractive and absolutely you know I always say as do all the investment team here you know everything is for sale in the portfolio at the right price so if there was an attractive offer of course we would look at it.

44:48 Sorry, I'm sometimes reading the questions. I'm sorry. With respect to the portfolio companies still came, raises of which has been a lot. Do you think this reflects a genuine improvement in the funding environment? Or are investors simply becoming more selective and concentrated capital into a smaller number of higher quality assets?

45:08 But both and I mean, we're certainly seeing that in if you look at the broad statistics across the industry, there are some mega rounds that are attracting huge amounts of capital. Maybe a good example is fusion. If you look at the analysis of the fusion funding environment, quite a lot of capital has gone into that space. I haven't got the stats to hand, but it's in the billions. And there are three, four, five companies that have identified or have received a substantial amount of that capital with much of a thinner tail. Interestingly, a stat that we were looking at the other day in our analysis of this sector and of course we have our exposure through First Light Fusion and this is an area of particular interest to them it's something when they analyze the companies in the fusion space about the level of capital that they believe they still needed to access in order to deliver the commercial milestones it was something like four or five x the amount of capital that's been raised even in this increased period so I would say it is selective the environment for and certain of the sectors is strong.

46:29 We see it as a good validation of the portfolio and it's a metric that we track and report on for that reason.

46:37 And the last piece, and Claire and I can probably deal with this, this is related to the 43% of price funding rounds which were down. People noticed in the report we tracked how many funding rounds are up from the last one, how many are flat, how many down, and there's slightly more in this period. And the question was, should we think of this as a lagging effect? Some impairments, would you recognise in prior periods? Or do you see pockets of valuation pressure across the portfolio? Funnily enough, I don't want to read too much into it, but I number it slightly up. into the number that are down slightly increased, I should say, but actually, by value, they haven't. And also, it's important to note, I think that this is true, most every year we've ever done this, these adjustments are from the last funding round. Actually, we had already recognised all those in the last set of accounts. So we're telling we're telling to run ahead of that.

47:22 So where we think something might be down, we've already factored it into our numbers. These aren't things that normally catch us out. Moving on a little bit, we've covered pretty well on the Met Zero stuff, but the particular question, just to clarify, the question was, what's the 27 million uplift milestone? I guess nearly all of it actually was a valuation adjustment. There was a small milestone during the period. It was only about 3 million pounds. The next one back to you Greg I think from Paul B. Bulk of transaction activity both in exits and investments looks to be concentrated in health tech and AI. Can you comment on strength or weakness of activity outside of these areas and in which sectors do you see the bulk of activity in the near term?

48:08 Yeah that's an interesting one. I would say I've hopefully tried to set out, there was quite a breadth, both in terms of the larger portfolio companies and the other milestones and progress underneath that across each of the three main areas in which we invest. I didn't dwell too much on Hisata, for example, which is very much in the cleantech space. delivering hopefully its first commercial order for a megawatt scale plant in South America in early 2027 in the first half of 2027 so we do see opportunity across all of them I mean interestingly your question actually is a great observation on what we're seeing in our opportunity set is actually quite a convergence of Deep Tech, Clean Tech and Health Tech so many of our opportunities touch those areas in different ways so OXA would be a good example that is a company that has a both a software model and a hardware model it is clearly deploying machine learning and ai and software into physical environments in some cases that is being used to increase efficiency in some cases it's

49:38 being used for security and defense for improving resilience and so it's it's touched that that's one that probably doesn't touch health tech for example But if you look, that's a trend that we think is interesting and something that our multidisciplinary science-based approach hopefully gives us a competitive advantage in.

50:01 Thank you. Again, just to tell Pfizer and John B, is the Amlin, does the Amlin belong to the group? Yes, it does, as I explained in the meta and that's of IP group owns a lot of the Pfizer's weight loss franchise. It's quite a few parts, not just the lead programs, but the combination service and the prodrug and the GIBR. So it's quite a wide estate of about six different patent areas, which originates with IP group. Going back to the next one, I would say from Lucas, I think one of our most loyal shareholders, definitely deserves to have your question read out in full, Lucas. Congratulations on the strong results. Given the very positive presentation and very strong underlying performance, we still find it difficult to understand what a stock continues to trade at 40% discount level.

50:46 This is a question we've talked about many times. What do you believe are the key reasons for this discount?

50:54 Well yeah we've discussed this a lot haven't we and that's part of the reason that we have the capital allocation program that we do. I mean I guess there are broad ways we can reduce the discount over time. The first is simply delivery, you know, ultimately discounts narrow when investors gain confidence that our NAV growth, our portfolio progress, our cash realizations are repeatable rather than one off. So that's why we've been so focused on The NAVPA share growth, the exits and the portfolio execution. The second is conversion. So we've talked today about the quality of the portfolio, but investors quite reasonably want to see more of that value translated into cash and then hopefully into shareholder returns and realised outcomes.

51:53 And that's why we set that 250 million cash exit target. We felt that was an ambitious target. That was, I think at the time, more than half our entire market cap that we said we were going to deliver in cash exits. And it's obviously why caps allocation remains such an important area of focus. And then I suppose, The third we're increasingly focused on the on the sort of the structure around the portfolio itself so that obviously includes shareholder returns which we need to engage on further during the rest of this year and the development of our third party capital platform and how we can maximize the value you know we definitely heard a range of views on that front during the summer.

52:40 And we are, of course, now actively considering how best to reflect those views while remaining disciplined and focused on long term value creation. So I think there isn't a single action that closes a discount of this size. I think that sustained delivery, the thoughtful shareholder focus, capital allocation, continued realizations, that seems to me the most credible route to narrowing it over time.

53:07 Yes, and there's, I won't repeat, there's a number of other questions about reducing the discount. A question from John L. Is Sabah a shareholder? Factual answer, yes, they are. They earn about 12%. Next question from Bill H. Has IP Group's new chairman bought any shares in the group? Are there any signs yet of Harry's contribution to the group's effect will be different from the predecessor? You have talked a little bit about this, but just perhaps on the shares.

53:35 Yeah, Michael was very keen to buy shares and bought them, I think, within a week of the end of the offer period. I bought a few more shares too and I think that, well, hopefully signifies to shareholders that we believe in the value of the group, believe that there is upside in the share price and voting with our capital. I'm very exposed to the IP group share price as you would expect as shareholders so it's my number one KPI obviously.

54:18 One from Milosevic, also an analyst, nice to have you with us today. How much M&A appetite do you see for pre-commercial stage biotech companies from Big Pharma?

54:30 I would say there is always active discussion ongoing and the route to value creation for that bit of our portfolio we will hopefully demonstrate over the course of the next 12-18 months I would say. There's a number of the bigger readouts coming and there remains significant appetite for sure.

54:59 Four or five more on the buyback. I won't repeat those again. This is from Sam E., who is also another analyst. Nice to have you with us, Sam. Thank you. How much visibility do you have on realisations at the end of 27 that gives you confidence to deliver on the 250 realisation target? Perhaps I'll answer that one. The forecasting realisations is quite tricky because it's not like the majority of our stocks are public companies. If you just make a decision, you're going to sell something. A lot of them require, obviously, a transaction to come to me. float or for somebody to buy it. However, we found we can get relatively accurate on this by looking really into the probability basis. And based on that, you can see up to 15, 20 different things that have varying probabilities. And overall, I think we're relatively or very confident that we will achieve that target in the next year. And certainly based upon our axiom of forecasting.

55:48 So it comes from a deep knowledge of a large number of companies and understanding relatively realistically what the probabilities of all of them are. And once you wait for that, or allow waiting, if you see what I mean, You can get relatively accurate forecasts. So our visibility is actually good without being precise is what I would say. Looking on down. Okay, Sam again, you're back. Outside of direct AI exposure, what extent do you see AI as a value creator across the portfolio versus something that creates the risk of disruption? I have a topical question.

56:30 Well, it's being used significantly. We've said that a lot of the value drivers for our businesses are heavily aligned with AI and the use of AI. And this ranges from things like Oxford Nanopore's base calling software and ability to be able to improve the efficiency of that we're seeing it being used in therapeutic areas to help around the clinical trial design and analysis and we're seeing it in we've just done a new We're just looking at a new AI supported materials discovery and development company for example that will have to combine a direction of travel that we see which is sort of combining the digital electrons with the physical and materials in a sort of an iterative loop.

57:31 So I think that's a trend that will be important actually for the next two, three years. Where are the places where there is a sustainable competitive advantage brought about by a technological advantage that can be paired or accelerated, paired with or accelerated by the the potential for AI and of course we're using it significantly within IP Group and using it to improve all aspects of our business very significantly. I think it's having a profound effect here just as much as it is in the portfolio and we'll definitely report back more on that over the coming months.

58:15 there's a couple around sort of governmental support here which are going to combine so generally what's your engagement of any with the New Bern government and its focus on backing British business can the government help you follow on are there any concrete developments from the UK government perspective by encouraging pension funds to invest in UK tech yeah the I would say the the trend that began

58:42 Of course it is interesting not to ramble here because it's trying to keep focused but you know sort of look back to where a lot of the current things like Mansion House all started they were back in sort of 2016 or so and it's been a number of years for that to come to fruition. I mean, definitely one thing we've learned over the years is that government support is not something that we build any investment cases around, but it is becoming an increasingly important tailwind for us. I mean, over the last 12 to 18 months we've seen a lot more policy emphasis on innovation science and technology as drivers of UK growth support for scaling companies and that point definitely around greater engagement with institutional capital and this sort of recognition that particularly in the UK more UK businesses need access to growth funding if they're going to remain and grow here I think To sort of specifically answer the question I mean I guess the and there was a recent announcement by a big consortium of pension funds headed up by the or endorsed by the UK government and the UK scale-up fund that's part of wider efforts to bring pension capital into innovation and trying to get address that that sort of funding gap I think and would hope that the relationship that we've started with Aberdeen

1:00:17 also is a way that we can sort of significantly address that gap there's a lot of defined contributions so you've got sort of the defined benefit local government pension schemes pool of capital and then you've got the direct contribution DC savers and pool of capital and both present opportunities. The Aberdeen one is more on this side of the opportunity and I think there is good strategic alignment between us and Aberdeen and the underlying investors about the opportunity here and getting capital into the space. So I think the overall policy is aligned, maybe more aligned around what we're trying to achieve and that's building and scaling leading science and technology companies in the UK?

1:01:06 I'm conscious it's 11 o'clock and obviously those that want to go please do but I'm going to, we've done a fairly good job, we won't be half an hour more there's still sort of seven or eight questions I'll try and try and answer those or combine where I can but quite understand if people have to drop off now which is what I've mentioned that. There's a very specific question I'll just quickly deal with anyway because it was a Clever observation by Andrew M. Can I clarify that the HSAS evaluation at June did not reflect the third-party evaluation that was commissioned? Well, it was clever of you. I guess you spotted it hadn't changed much. We actually did choose not to change it. The valuation actually was slightly higher, but we thought about it. It made sense to leave it until the next funding round. We don't always use evaluations as religion. They don't have to adopt them, but they're a useful guide that we are materially in the right area, and we are. The difference is it's only a material

1:02:00 The valuation was within the range.

1:02:02 Yeah, it was right at the bottom of the range in the end, so we didn't want to change it. Yeah. And there's a slightly technical question about the valuation to make zero. Do the probability ratings go to 100% once an asset's approved, or are there commercial risks including that, or the peak sales estimates? In short, yes, once it launched, your probability is now probably is 100%, but at any time, the forecast will change. There is doubt both about where you'll get there and when you get there, how big it will be. So basically sums it up. So at any time, you know, you could find the forecast increasing a lot of the increase or vice versa. So those are really the two things to bear in mind. But certainly, once these things launch, you've eliminated your risk of the trial component, you're narrowing, I guess, the risk of market size.

1:02:51 Briefly, perhaps question about the most exciting new investments, Greg, maybe some of you might want to touch on briefly.

1:02:57 You could go on for a long time about that, but... Yeah, well, I think the ones that I've tried to set out, and I can give you a whole list of some of them, we've got a very interesting health tech series A business that we just invested into. Again, sort of slightly later stage, there's some opportunities to come into things slightly later stage now, looking at analysing the health of tissues during surgery. Again, it's... AI powered enhanced but is enables the both sort of human surgeons and robot surgeons to be able to analyze the integrity and health of tissue which is very important sort of during the during an operation so that's a sort of an interesting one there's the materials AI driven materials opportunity yeah there's a good breadth all of those sit at the very early stage in that I've tried to highlight the ones that are probably provide the nearest opportunity for sort of shorter term catalysts the next six to 12 months in the presentation. I definitely would say we've had an increase in pace of new investments this year. I think we've done six or so year to date on the balance sheet. We've continued to do plenty in our part walk funds but I think that six to date is I think double what we did last year if I remember correctly on the balance

1:04:30 sheet. I think we did about three last year. So yeah, we're definitely seeing opportunities for investment. And I think with the confidence around realizations, we need to make sure that shareholders capital is at work.

1:04:45 And a couple more. I'm finding quite a lot of my repeating. So there's a very specific one about the increase in the £1.13 to £1.17 and asking, you know, what is attributable in the portfolio? Does it relate to the valuations? Probably making the point it is just generated by the movement in Oxford Nanopore, a shelving Nanopore, which has performed strongly since it reported still yet results. We've not done a full revaluation of the portfolio at that date. So it's just been adjusted by the movement in the public shares, which is mainly Nanopore. I may well be there. I've covered Saba. No, I would say that would cover them all. I think I'm back to repeats now. So we didn't overrun by too much.

1:05:32 There's a couple of small ones on the portfolio. Again, whether people are interested in these, did Oxford or IP Group ever look out or seek to work with Origo? I'd have to double check. And could loramistat be granted orphan drug status by the FDA? It has previously been granted orphan drug status in an indication called idiopathic pulmonary fibrosis, an IPF. So of course, that's something that we our portfolio companies and we work together on in order to build up this sustainable competitive advantage and hopefully contribute to increased commercial value at the time that we get to sort of partnering and exit so it's certainly something that we that we'd be looking at.

1:06:25 There are lots, to be very transparent, there are a number of questions on differing views amongst our shareholder base and things like that but I think we've commented I think to the extent is appropriate. If we've missed any apologies.

1:06:43 Yeah and if you want to reach out please do. Perfect. Greg, David, at this point, if I may just jump back in there. Thank you very much indeed for addressing all of those questions that came in from investors this morning. And of course, if there are any further questions, we'll give them back to you immediately after the presentation for you to review. But Greg, perhaps before really now just looking to redirect those on the call to provide you their feedback, which is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with. That'd be great.

1:07:12 Thanks, Jake. In summary, there's probably three things to highlight. First, we've continued to deliver against the priorities that I set out at the start of the year, furthering out the share growth, strong cash realisations and that brought progress across the portfolio. Second, to give comfort to shareholders. We're seeing that increasing external validation of the quality of those portfolio companies, whether that's fundraising, strategic partnerships or continued progress in the therapeutic areas. And third, we are very focused on turning that progress into tangible shareholder outcomes. And we will work on that cash allocation piece. But the things like active portfolio management and continued cash generation are very high up our priority list.

1:08:02 That's great. Greg, David, thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback. On behalf of the management team of IP Group Plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.