Skinbiotherapeutics (LSE:SBTX) — Interim Results

0:00 Good afternoon, and welcome to the SKINBIOTHERAPEUTICS PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Stuart Ashman, CEO. Good afternoon to you, sir.

0:33 Good afternoon. Thank you all for joining us today as we present our interim results. I'd like to give a a short introduction to who we are and what it is that we do for those of you who are new to the company, and then I'll give a general update on where we are following on from this morning's RNS.

0:53 So my name is Stuart Ashman. I'm the chief executive of the company. I have about twenty seven years experience in in life sciences medical devices, generally speaking, the commercialization of complex science. I'm often the sort of bridge between r and d teams and the commercial and sales team, often the architect of strategies to bring products to the market at the right time, the right place, right price. Often that's supported by strategic mergers and acquisitions. Previously led the innovation teams at and the mergers and acquisition teams at Smith and Nephew and then again at BSN Medical in life sciences and and wound care. And I joined the company a little over four years ago when we were ready to move into the strategic development stage. Prior to joining this company, I was the chief exec at a Finnish med tech company where Manpreet Randhauer was my chief finance officer.

1:44 Manpreet? Thank you, Stuart. Manpreet Randhauer is chief financial officer at SKINBIOTHERAPEUTICS, a regional chart accountant, began my career with Deloitte in in London. Over eleven years of involvement at senior strategic level with start ups and mature businesses in listed and private equity environments in in sectors such as med tech, deep tech, and software businesses.

2:12 Throughout my experience, I've managed both financial and operational teams, and I've been with the business just under two years, having joined in June 2022. Thank you, Mancrypt. So a quick word about who we are and what we do. Our focus is on very much on skin health, specifically how skin looks, how it feels, and and more importantly, how it repairs itself from injury and various diseases. In the past, there's been an awful lot of work done on the gut microbiome and the impact of probiotics therein, and consumers have become very much more aware recently of gut health and its impact on overall well-being through the likes of Yakult, Activa, kombucha, kimchi, etcetera. But little have been known about the skin microbiome and the impact of probiotics therein. The company was formed out of the University of Manchester and and the work done by professor Kath O'Neill and professor Andrew McBain who looked

3:05 to extract positive bacterial probiotics from the gut and apply them to the surface of the skin to see if they demonstrate the same attributes, positive attributes as they did within the host environment. That led on to the the discovery and then production of a lysate, a lysate of bacteria, in this case, lactobacillus rhabnosis, which is an extremely famous and and and very positive bacteria probiotic. When this is applied to the surface of the skin, it enhances barrier function, closes tight junctions, etcetera. So that's how the company that's what the company was floated and formed and funded to do was to basically push that lysate out through commercial agreements. The first commercial agreement was signed in the closing days of 2019 with Croda PLC, and I'll come on to detail that in just a moment. And we do expect that that project to come to an end this year, and you will hear during this presentation directly from Croda.

4:03 We also have another side of our our our technology is AXISBIOTHERAPECT. So this addresses the the complex area of of of the gut skin axis that's super high within exists between the gut and the the the surface of the skin. We launched a product during the pandemic for the alleviation of symptoms associated with psoriasis. That was a very difficult project to do during lockdown, but we launched a product which we now currently sell through an e portal and also through Amazon. We have had discussions with multinationals about pushing this further out. And we are also looking in an acne study to complement the psoriasis product. We are revenue generating from our pilot launch with very little marketing spend, and we have extremely high retention rates well north of 80% in terms of retention of customers.

4:56 We translated all of that into a five pillar strategy, which it's been the hallmark of our of our growth thus far. From left to right, this this is not just a pretty picture. It's actually a legal structure. Each one of those pillars is a separate limited company that is wholly owned by Topco, the the the PLC, and the IP is licensed through each pillar the event that we we wanted to divest any one of those. From left to right, SKINBIOTIX. This is the company's core technology, that lysated technology that I talked about that's designed to promote skin health by harnessing those beneficial properties of probiotic bacteria and specifically in cosmetic applications in this case. This is where the Croda transaction sits. This addresses, you know, makeup, cosmetics, moisturizers, antiaging creams, shampoos, conditioners, sun care, skincare, etcetera, all in in inactive skincare.

5:50 Very much an aesthetic approach here. Secondly, AXISBIOTHERAPEUTICS. This is the area where we bring to market that gut skin access product, those food supplements that one takes on a daily basis to alleviate the symptoms associated with with irritable skin conditions like psoriasis and acne. This is, as I said, an area where we directly sell. The third pillar is medibiotics. This is the medical device and regulated application of the same lysated technology in pillar one, but used to enhance a barrier around an open wound or potentially accelerate the closure of a wound therein. The fourth area is clean biotics. This is about introducing good bacteria into areas where bad bacteria have become prevalent.

6:35 This is a much more regulated there and much further down the line. Likewise, the fifth pillar, pharmabiotics, which is not something we tend to dwell on, but it would be remiss of me not to talk about it as an area of opportunity. And this would be an Rx or prescribed version of the same products that we use in food supplements in pillar two.

6:57 So just focusing now on on Croda and on that SKINBIOTHERAPEUTICS product. So so this was the lowest hanging fruit. This was the fastest route to market. What was required here was a safety study that was successfully carried out in 2019. And then discussions were well underway with Croda PLC. And they're they're a FTSE 100 company, multibillion pound turnover. But very specifically, they have a a specialized division called Souderma, who are based in Paris, deal with cosmetic ingredients. We did have discussions and we have had discussions with direct consumer brands, but we would have been very much limited to their customer loyalty and their customers therein. By dealing with broader or more specifically, Soderma, we would get access to their global portfolio of customers for cosmetic ingredients, which is in excess of 12,000 customers.

7:50 They agreed to, basically replicate our science and then produce it on an industrial scale and sell this out as a cosmetic ingredient to those 12,000 customers. In doing so, building a dedicated production facility for the lysate to produce on mass. We also negotiated access to that raw material for use across all of the other strategic pillars. This has been a lengthy pro project thus far. It began in the in the dying days of of 2019, in November 2019, and we come to the very end of that now, and you're gonna hear that directly from Kroger in just a moment. We'd expect royalties to begin towards the back end of this year. And we do have we have negotiated own label potential here. So we can basically take this and put it into our own product should we wish to do so. This is a huge area of growth and and and and basically has been an extremely worthwhile project thus far.

8:45 We latterly announced towards the sort of the autumn of last year that there'd been additional activity, additional positive activity or unexpected technical benefits as described by doctor Damian Kelly. They asked us for a twelve month extension to the agreement so that they could explore that additional activity in detail. That's a difficult decision for us to turn down, a difficult request for us to deny, given that the object of this additional activity and this additional scale, was to be measured in a clinical trial, in clinical studies, so that they could then potentially charge a much higher price for the product than they were initially anticipating. We, we granted that that extension, and those clinical trials then then commenced.

9:32 Manpreet and myself, just recently visited the plant in Sarderma literally a couple of weeks ago. And and I've got to say we were we were stunned by the level of complexity of the processes that we've gone through. These are the posters that are demonstrated or shown outside of each of the labs. Now there are seven labs within that facility, all very large, all very specialized. Ignoring the first one, which is plant cell culture, any any basically, any strain that comes into that facility goes, be it from a plant, an animal, or a human being, goes through a very, very rigorous and very controlled process. In our case, that process is 38 steps long, and that's what's taken the time. So this goes to molecular qualification, structural analysis, mapping, etcetera, method development.

10:22 It then goes through in vitro and in vivo testing. And then more importantly, from our perspective, it goes to downstream processing and scale up. We are at the final stage of this now. We are at the point where we are claim substantiation or claim validation. In our case, that's clinical studies. The regulatory side of things and the intellectual property side of things are all but done now. And what remains following the clinical studies are the marketing and the sales side of things. So what Soderma call industrialization, what we would call commercialization. So this ends with cosmetic active ingredients. And and I I asked Sudirma if they would say a few words about this themselves rather than

11:06 you listen to my dulcet tones, which you've done for so very long. I asked them if they would basically just say a few words a video. So this is a rather rough and ready video, but I think it it portrays the the the sentiment and and and and and the the pride behind which Kronos sit on this. This is a seven year process normally. So Matrixyl and many of the other products that have gone very successfully through the same process with SIDERMA, has been a seven year process. We will complete this project in less than five years. And and rather than me, go on about this, I'd like to play you a short video from Cecile Jeancier, who is the project lead, for SKINBIOTIX. Could you play the video, please? I'm Cecile. I'm in charge of R and D biotech department at SEDARMA.

11:55 After four years of research to develop the project related to high potential ingredient for the cosmetic market, we have now reached the last stage of this project, meaning the investigation of clinical trials. There are two trials running concurrently and the final courts will be completed during summer. This key step in case of positive responses will validate efficacy and marketing claims. We are excited to reach the end of this long journey, which will add a high level efficacy product for the cosmetic market. We are also very proud to have progressed so quickly by saving two years comparatively with other similar project.

12:43 Thank you. As I said, that that that was a it's short video, but I think it was important for you to hear that directly from Soderma. So the exact words that that Cecilia has used are are written down in today's r n s interims r n s. So let me just be very clear about this. There are, they're very, very proud that they've done this in under five years. There are two trials that are running, almost concurrently. One trial is external and is done by an independent third party. The other trial runs to exactly the same protocol and is run internally. This is the Soderma way. This is what they do. That way they can monitor progress. It's the same process that they've used many, many times before that have led on to blockbuster products. The internal protocol allows them to basically monitor progress.

13:32 We are told by them directly that the progress is very, very strong indeed. The first, cohort, if you like, or the internal trial finishes at the end of May. The second external trial finishes at the end of the first week in June, at which stage this then goes into write up. And concurrently, they start the commercialization process, the mainstream marketing, and and and and, basically, the forward selling of the product. So let me be quite clear here. This project is not binary in any way. We've passed the go, no go stage gates. The the the various hurdles that we've had to go through that could have stopped this pro project dead in its tracks. We passed them a long time ago. We were asked to extend this project for reasons of pricing. They feel very strongly Saddam, they feel very strongly that if they can get solid clinical evidence, and they can get some metrics behind this, they have a significant opportunity to raise the price of this. Now if that let's let's let's answer the the the questions for the naysayers out there. If the clinical evidence was not to be super strong, this product still launches, but it doesn't launch at a much higher premium price. The evidence that we have thus far and we're led to believe by SIDOMA that from an internal perspective, the project is running extremely well. This finishes end of May on one cohort and end of the first week in June on the other. So we are very, very nearly there. You've heard that direct from Cecile. They're very, very happy with the progress. They've saved two years over over the normal project, and it will complete in less than five years.

15:03 So there's nothing binary about this at all. In terms of a timeline, I thought it important to put this up pictorially. We signed the contract in November 2019. The lysate was then replicated the following year and then moved on to mapping and selectivity. Downstream processing followed that. In 2023,

15:22 they they they pushed on the scale up and the stability. In October of last year, they asked us for the extension and then moved into the clinicals. And in June 2024, this industrialization or what is left from that industrialization commences, which is sales and marketing that runs concurrently with the write up. So I'm kinda hoping that this that puts this to bed and that people now realize this is not binary. This is very, very real. So for those of you that invested in this company off the back of Croda, this is not only very real and happening, it is considerably derisked. We are, in their words, at the very last stage of this project. They believe the additional activity is extremely positive. I've already mentioned the timelines. The the clinic clinical trial is expected to facilitate that increase in evidence based pricing.

16:12 We have not spent any money on this at all. This is all being funded by Krolla and Silderma in terms of the extension. This ends in a matter of months, and there's very high expectations internally. And as I've said, commercialization follows right up.

16:29 Just moving on to AxisBioTX now. You'll remember, for those of you who don't know, that we launched this product a couple of years ago. We did this right in the middle of lockdown. We did a study that we have to rewrite in the in the middle of the pandemic that meant that we designed a mobile phone application and tested this over a number of participants over fifty six days. The results were very, very good indeed, much better than we initially expected given what was going on in the world at the time. I think the compliance levels were extremely good as well. In the seventy percents for itchiness, redness, and irritability, and then and 65% for fewer flaky patches. This continues to be a a stunning product. Let's just look at this. This is the latest one that came in, and this was literally last week. We continue to see huge differences to people's life. This lady suffered for with psoriasis for more than half of her life, and within eight days, to use her words, she's seen an unbelievable difference. And we have more and more of these reports that come through day in, day out. We were very much asked if we were a one trick pony when it came to, you know, this this particular product. We were asked if there's anything else we could do. As I said, we talked about the acne results. We released them midway. We wouldn't normally do that.

17:49 But in in order for the market to see how successful that midpoint was, we decided to release results there. So we did this. We've launched these products from a standing start. We are not a b to c business. We were formed, funded, and floated to be a b to b business. We did this from a standing start. We're now on Amazon Prime, and we we continue to acquire new channels through acquisitions. We've launched this in The UK and The US initially, and then we pushed this out through Spain, Italy and France. And we're now working through a company called World Products, which Mangrit is going to talk about in a little while. That acne study finishes pretty much the end of quarter one. Finished. Cohort two finishes next week. And cohort three will finish at the end of the first week or the middle of the second week in in in April. And the reason for that is you always get some stragglers that don't start on the on the date that you want them to because they have life events, they have weddings, they have, you know, sort of family functions, parties, they're on vacation, etcetera. So we have a straggler cohort, which we'll report in sort of, as I say, mid April. We'll then write that up, and then we we sincerely hope to be able to launch a product in 2024.

18:59 It still would be our desire to put this into a a vehicle that is appropriate for the target audience, something like a chewing gum or a capsule, but a lot of that will depend on the cost of that finished item. We, Manpreet and I have just come back from The Netherlands this week where we met with Windclove, and we've been talking about the delivery mechanism for that acne product and what that might look like.

19:21 In other news on Axis Biotics, we are now looking at bulk formulation, and we've just been looking at samples of what those those containers and tubs would look like with a scoop. And hopefully, that will bring the price down quite significantly, which is still, you know, a problem for us. Finding that sweet spot on pricing is critical. We're not there yet, but we're certainly getting there.

19:46 Manpreet, would you just like to talk a little bit about World Biotics oh, sorry, World Products? Sure. Thank you, sir. Obviously, as you can see, you know, we we've got a a fantastic product in AXIS BIOTHERAPEUTICS with with remarkable remarkable results. We've got an increasing subscriber base with quite a loyal following. And we get asked the question by investors, you know, why aren't you selling millions of pounds of this product? Well, Stuart pointed out that our B2B business, but we think we're going target B2B business. And we don't have the huge marketing budgets that would get us to, you know, millions of pounds of revenue every year. So what we have to do is utilize our marketing spend in in the most effective way.

20:35 And if we look at the six months through to December 2023, you know, we spent a little under £100,000 on on marketing. As we noted in our RNS, we've we've partnered with World Products who are an Amazon Accelerate partner specializing purely in healthcare products. They're based in Leicestershire in The UK. If you go onto their website, some of the products they deal with are household names, you know, names like Vaseline, Dove, Luxe, and many more. And we came into contact with with World Products as they already supply or distribute for for Dermatronics, the the business we acquired in January 2024. The reason we've partnered with World Products is to try and accelerate our exposure into France, Italy, Spain, and The US purely through Amazon.

21:27 No other channels were purely through Amazon.

21:30 They operate in four continents and are a top ranked healthcare distributor on Amazon. We're expected to initially launch in France through Amazon and we'll follow that with Spain and Italy shortly thereafter and then later in the year in The US as well. So what products we'll be doing for AXIS BIOX will be receiving the product and storing it and that will be locally as well. So in Europe, they will have our product stored in their Polish warehouse. We'll then do the listing optimization management on Amazon, same again with advertising and promotional management as well. And then the products will go directly to the customers from their warehouses and thus increasing our exposure on Amazon and hopefully increasing our sales as well in those territories.

22:24 Thank you, Madhukri. I'll just talk a little bit now about MEDIBOTIX. This was all about application in advanced wound care, preventing the spread of an infected wound by strengthening the barrier around that wound site and and and accelerating wound closure, at the same time. This is is applicable in hard to heal wounds and very important in in that specific niche environment. Things like venous legos as an

22:51 very topically, quite right on point in diabetic foot ulcers. And if you think about the acquisition that we've just made, which I'll talk about in a moment of Dermatronics, you have excellent connections and excellent relations with that that world. That there is a potential for us to to to put some of this science in in into those channels. We've just signed another contract with the University of Manchester, which we call Project Epiderm. This is led by professor Sheena Kukchak and professor Andrew McBain, who we've worked with in the past. And and this this is designed to run for six months with a potential six months extension leading to a clinical trial that would secure us a deal with a multinational. We've already had long discussions with these multinationals. There have been positioning papers that have been presented to them. We have spoken about microbiome driven technologies for advanced wound care. It's a very, very hot topic in that space at the moment, And we we we're very confident indeed that the the conclusion of this project will get us absolutely where we want to be and get us to deal with a very large multinational in this space.

23:58 Just talking briefly now about inorganic opportunities. We spoke in the past about, accretive acquisitions, and we've completed the first one of those. Looking at sort of companies that would bring us technology either from the inside out in terms of supplements or outside in in terms of topicals, dermatologists clearly being the latter. This is a very highly fragmented market, and we'd like to look at a sort of dermatology consolidation, putting some smart companies together where we can leverage off each other's science, technology, or sales sales presence or sales strengths and routes to market. So companies that have got next generation science or or companies that have some micro buying driven element as well, but also they have to be revenue generating. This is what attracts the multinationals. You get that mad magic £1,000,000 in turnover. They can see that scalability, and it also accelerates our our path to profitability.

24:50 I spoke a little earlier with Greg Andrell, who is the CEO and founder of Dermatronics. And I I asked him a couple of questions about, we got on a conversation about a little bit about his background and about why he formed this company, why he founded it, and why he thinks it's so very different. And I thought it might be again, rather than listening to me, it might be interesting for our investors and our shareholders to to listen to Greg in his own words. So if we could play that next video, please.

25:32 So I'm a Kiwi chartered accountant, trained with Ernst and Young, and then worked in FMCG with Unilever Shell. I've been in The UK over thirty years. Some years later, I had the opportunity to I I felt that I could create my own brand and and which so that showed my values. So those values are integrity, honesty, working and respecting my staff, and, also, I have some green tinge my to values as well. So the new range we have has got lots of natural ingredients in it, including a manuka honey from from New Zealand. And we're also moving we've just moved to having a a carbon neutral claim for our once heel balm, which is the the the main product in the range. It it is prescribed by four and a half thousand GP surgeries.

26:33 So on the subject of of of the actual products themselves, let's just talk a little bit about what makes them different from everything else in the market. You know, what what what's what's made them so special? Yes. So so we're very much focused on an evidence base. We have more published papers for our once heel balm than any of our competitors have, and we work very closely with key opinion leaders. We also work internationally, so we we sell in 40 countries internationally, and, we're quite well tied in with the the professionals who who run international diabetic foot groups, as I say, across the globe.

27:14 Great. And and and on the subject of of the products and and actually the routes to market, you know, we know that, you know, the products are widely available across podiatry clinics, but there's also the the the there's the there's the OTC pharmacy stuff as well, so the likes of super drug, etcetera. And and and and that it's pretty widely available across all those areas. Right? Yes. So we have a broad distribution. So we're OTC. SuperDrive did a particularly good job of merchandising our products across their store range. We're also in boots. And we're in around a thousand podiatry clinics to private podiatry clinics where we're growing very rapidly. They they love our products. Right. Right. Let let let's talk a little bit about the the the last announcement that we put out about Dermatonic's post acquisition, drawing back to a meeting that you and I had in London with with Will Pugh and mister Moldy himself from the UMesh Moldy group, which was a, you know, a wonderful meeting. I think we were both stunned and, you know, pretty shocked at the speed at which they'd accelerated, the the launch of these products to market.

28:24 Do you just wanna talk a little bit about that? Because, obviously, those discussions started quite some time ago. Yes. We were introduced to them by UK trade and industry, who who do a fantastic job with helping us, sell internationally. We signed the contract in June, and I went out, September time to to New Delhi, and I met with the management team. I had two days of meetings with them. So, you know, being able to speak to them face to face and and assure them of the product's quality and and and our our credentials as well was was hugely important. I've gotta say, you know, that that meeting that we had in London, obviously, the jewel in the crown being the the announcement that they were ready to launch and ready to go way, way, way ahead of schedule was excellent. But I've got to say also that the presentation that they gave and the the briefing on on the size and scope of the company, but also the the the level of diligence that you you talk about there, you know, sort of 1,200 sales staff going out there selling this product across not just India, but that that entire region.

29:29 That that residential training facility that they own, which is constantly churning people through it, you know, seven days a week that are learning these products. I I gotta say it fills us all full of confidence. So, yeah, that hell of a deal. Well done. One of the questions that I wanted to ask you that I get asked this by your institutional investors and also a lot of the retail investors that, you know, look. Greg's founded this company. Been around a long time. It's turning over a couple of million pounds a year. It makes 500,000 EBITDA. It's profitable. It's very, very well respected. Products well received all over the place. Why did you wanna sell it? And more

30:02 specifically, why did you sell to us? We were really impressed with the your products and with the potential synergies that that will come from that. Then, also, it gives us the opportunity if we're looking at expanding into other parts of the foot care market that, you know, we'll have access to to funds that will help us through that. Yeah. And, you know, drawing back just just a month or so ago, we had the two teams together, and there was a real sort of electricity in that room. I think, you know, both the teams got on really, really well. You know, our our team, the SKINBIO team, were really, really sort of excited about the future, about, the the the the cross fertilization of products. And and certainly, I felt that that that your team responded the the same. Any feedback on that?

30:48 Yes. So I think in that in that meeting, the the brains were ticking over, and people were seeing the opportunities to to combine your technology with our products. Our diabetic foot specialist is very, very well linked with international leaders in the diabetic profession, and he instantly saw an opportunity to meet with one of those leaders and explain the rationale behind your products and the skin barrier effects that you have and the wound wound healing effects you can have. So, you know, that was one example. And we also had the synergies. You know, we've discussed the synergies. With the Moody Group, you know, there's more than just Moody's selling our product. There's there's the potential down the line of selling your products as well.

31:57 Can we move on to the next slide, please?

32:02 So let's just talk a little bit about, the the UMESHMODI Group and the Dermatonic's tie up. You know, as we mentioned before, they've got 12,000, sales rep sort of 1,200 sales reps in India, Africa, Middle East, and Asia. And and and I mentioned, in a question to Greg there, this dedicated training facility. So, you know, the the the the the the pulling those reps through that facility and training them on the on the, the the pros of the the unique selling points of of the, Dermatronics products. They are number one, two, or three in the over the counter pharmacy categories, you know, within those regions. The total addressable market for those products and for diabetes management is is in excess of £5,000,000,000. We we have had discussions with them regarding, your other products, but it's not just the one seal balm that's being launched out there.

32:50 As we go through this phase, there's two and three other products, that are following on from that, and we are having discussions with them about what are the types we could do. There's been a lot of questions asked about forecasts. You know, surely, you must have them. Well, we don't have them, that are firm enough for us to issue. And the moment that we do have them, you'll be the very first to know that that is absolutely material price sensitive. The moment that we receive those forecasts, we will issue them to the market. Right now, they've gotta get through 1,200 people and launch across, you know, as I say, Africa, Middle East, and Asia as well as India. So it's gonna take them some time to gauge market reaction to the product and then come back with a solid forecast. So but I hope that gives you that video with Greg gives you a a little insight into the man, the company, and, you know, we're very proud of made that acquisition.

33:35 And and and that integration has gone extremely well indeed, you know, much better than we we could have hoped for.

33:44 So over to Manpreet, who will kind of talk about the the financial results and and outlook. Thank you, Stuart. So I'm pleased to present our half year results for the six months, through to December 2023. So looking at this period of time, you know, we've seen an uptick in activity across all areas of the group, including Soderma, which we've we've discussed in in great detail, Access PS, and the rollout of that product through Amazon and and Europe. The acne program that's coming to its fruition, and, you know, we'll we'll announce the results of those as soon as the write ups done. Our r and d programs, so the the oral inflammation programs that are ongoing, and this all culminated in our first strategic acquisition post period end in January 2024 with the acquisition of Dermatonics.

34:38 Please note that the results, the financial results do not include any financials from Dermatronics. So going through our financials, our revenues, which is based on unit sales of AXIS PS, continued to grow year on year and month on month. We saw an increase in half year revenues compared to the comparative period, 12/31/2022, of 38% from 77,000 to 107,000. The growth in revenue is largely attributable to the increase in our subscriber numbers from a 134 at the end of December twenty twenty two to five hundred and twenty twenty three at the end of December twenty twenty three. Our gross profit margin reduced by 3% from the prior period, and this is largely due to inflationary increases that we've taken on compared to the prior year from our supply chain.

35:39 Stuart and I were with WingClove during the week, and we were discussing ways to reduce our costs going forward. We will announce that in due course as to as to what that looks like. In terms of r and d expenditure, that declined as the number of programs either declined or finished pending their next phases, which will commence post period end. So this is mainly attributable to the oral program, which which finished its its most recent phase during those six months, and we will announce next phase of that in due course. Overall, our overhead base did increase by 26%. This is largely driven by inflationary pressures, and we aren't the only business to have experienced this.

36:26 Many others did experience this in the last twelve months, as well as one off costs in relation to the acquisition of Dermatronics. The loss before tax as a result increased by 2.5% as those costs flowed through the bottom line. Cash as of the end of December was just under GBP 2,900,000. This was following a very successful fundraise as of the end of November twenty twenty three, where we announced or raised £3,300,000 of gross proceeds.

36:59 I'd just like to, you know, show the growth in in Access PS sales through subscriber numbers and retention. So as you can see, there's been quite a significant uptick in the number of subscribers in Access PS, mainly in the six month periods that we're reporting. We've we've found an effective way to get more subscribers on board through pricing and social media advertising as well. In terms of the retention rate, you can see that they're generally within the 80% plus range, achieving 90% in in certain months during the year. You can see in August that the retention rate does decline, and we have seen this in comparable years as well.

37:48 A large part part of that reason is that during summer months, symptoms of psoriasis do tend to naturally disappear. And then as we approach sort of autumn and winter, those symptoms do come back. And what you see then is subscribers coming back to to to buying the product, which is where the uptick comes back into play in September.

38:16 Now on to our trading outlook. As communicated to the market at the time of the acquisition, we expect Dermatronics to deliver 800,000 in revenues and 200,000 in profit before tax for the five months through to 06/30/2024. On a pro form a basis, so if the acquisition was made on the 07/01/2023, it would have represented £2,000,000 in revenues and 450,000 in profit before tax. This is an increase on the prior year of 100,000 in revenue and £250,000 in profit before tax. In terms of forecast for Dermatronics, for the FY '25 financial year at the end of 06/30/2025, our expectations are that the numbers remain in line with the analyst forecast of £2,600,000 in revenue and £600,000 of profit before tax.

39:14 I'm pleased to say that the integration process with Dermatonics is complete both from a people and systems perspective, and the respective teams are working very well together, and we see potential synergies across the group. In terms of AXIS PS, we continue to see monthly revenues increase and expect to supplement this with our exit our new and exciting partnership with World Products, which we outlined earlier. We expect revenues to be in line with management expectations for the year end, 06/30/2024, of 250,000, which represents an almost doubling of the FY 2023 revenues. As I mentioned earlier regarding our gross margins, we are working on ways to reduce our our cost of of direct costs.

39:59 Just going back to the subscriber numbers, one of the the main reasons that people either stop subscribing or don't buy the product is because of the sales price. And when we compare our price to competitors, we know we are at the top end. But this is a premium product, and it works, and we've got startling results. However, we would like to reduce the the sales price going forward. And as we continue negotiations with WingClub, we will announce those reductions in due course. Finally, we've seen the results of the interim stage of the acne trial, which we announced most a few weeks ago. We've already discussed commenced discussions with our supply chain partners to begin the design of the packaging, etcetera, for an acne product, which we expect to launch at some point in 2024, and that will be followed with some forecasts that we expect to issue to the market as well.

40:59 Moving on to the CLN, the the convertible bond facility, which we signed up to in January 2024. We clearly did this to acquire Dermatonics, and we entered in this facility with Macquarie Bank and CLG Capital for a total facility size of £5,000,000. Now we've drawn down 1,600,000 for the Dermatronics acquisition. Following the investor sentiment post that deal, we have agreed and obviously, we announced it to the market that we will not use the remaining facility and will instead look at more traditional methods of financing such as, you know, leverage loans. Now that we have assets on board, other financing vehicles do become available to us.

41:47 To date, we've had three conversions from Macquarie Bank. And looking at the total trade of the convert stock in February, that represented overall about 13% of overall volume. As we move through the CLN, with each conversion, the amount of interest we accrue reduces. So as an illustrative point, if future conversions were to continue at the same rate as they have done, we would expect a total interest cash requirement or payment of about £55,000 for the £1,600,000 facility that we have drawn down. Thank you. Stuart, you're on mute.

42:39 Thank you, Manpreet. Sorry about that. Just to be quite clear here, and I am gonna be quite clear. There's been a lot of talk about Kroll as a binary project, etcetera, etcetera. You've just heard directly from Cecile who is the project lead for this. This is not binary. We are at the final stage. That stage is is the is is the clinical studies. They end, respectively, end of May and end of first week in June. We then go on to write up. If they are hugely successful and every indication we've got at the moment is that it's going to plan, then we charge a premium. If it's not, then we charge the price that we're going to charge. This is not that's not a binary. Any use of that word binary is is quite silly, actually. This commercialization phase starts in June 2024. Very high expectations internally at Silderma.

43:27 I hope that having seen the announcements today, having listened directly to Cecile, having seen the process flowchart directly from Soderma themselves, that that puts that to bed once and for all. So if you invested in this company to see Croda, come to fruition, then this is still the same company you invested in. The the opportunity is still there. It is still exactly as it was if you invested at fifteen p or fifty five p. It unfortunately, there are some sentiment that's brought this this price down. That opportunity is still there, And that's the last I'll say on the matter. On AXIS BIOTHERAPETS PS, those sales are increasing, 38% growth. We are not throwing the kitchen sink at marketing. We're not throwing a ton of money at social media, advertising, and national presses or billboards in Leicester Square. That's not what we do. We're taking this slowly, steadily, and cautiously because that's what will ultimately show to the multinationals that this product is absolutely scalable.

44:24 Those acne results that that prove that we're not a one trick pony are due imminently and expected to be based on the interim results very, very good indeed. Project Epiderm is now live. That's partially grant funded and and hopefully will end up being significantly grant funded. And this could lead to other significant commercial partnerships. The first acquisition is complete, that of Dermatonics. We're very proud of that. We're very pleased with it. It is accretive from a cash perspective, as I think Manpreet's just spoken about. That Moldy contract was pulled forward significantly by seven or eight months, maybe even a little longer than that. We've still got some final synergies to pull through. Unfortunately, the use of the CLM facility was was is was deemed as not appropriate by many people out there. There's been a lot of talk on the boards. There's been a lot of talk amongst the retail and the institutional community about that. Unfortunately, financing is often, as we've said in the IRS this morning, a massive distraction not only for management and and and and those of us who operate on this day to day, but also for investors.

45:28 It it tracks the wrong words, the wrong descriptions, death spiral. We are not using this for working capital. We raised enough working capital in December last year. This is used to buy accretive assets. We've we've taken what you've said on board in terms of market sentiment, in terms of the use of a convertible. Unfortunately, the position that we were in, that was one of the only instruments that was available to us to secure that acquisition. We've we've made the announcement that we will not use that any further. We've not angered, the providers as some people have said, quite quite the opposite. The providers are working with us. We are looking at alternatives, and we do have term sheets from alternative providers out there. We need to find the most appropriate financial vehicle and an instrument to use for any any further acquisitions.

46:17 We do have further acquisitions in the pipeline, and it would be inappropriate for me to talk about them or who they are right now. And finally, in terms of executive remuneration, we listen to what you've had to say. We have taken a 20% reduction quite voluntarily. We understand what you've had to say, and we backdated that to the start of the year. That pretty much ends the formal part of the presentation here. So I think if I may, I'll move on to the questions. Perfect. Stuart Manpreet, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen. But just while the company take a few moments to review those questions that have been submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

47:09 As you can see, we have received a number of questions throughout today's presentation. And, Stuart, if I could just ask you to read out those questions and give responses where it is appropriate to do so, I'll pick up from you at the end. Thank you. I'll just open by saying here, we can see a list of questions. They're often filtered out by our PR team when there's a duplication of the same question time after time after time just to make it easier for us to read through. So if you feel that you've asked a question and I haven't answered it, you always have access to us through the investor relations side. You send an email to that. We we we respond to as many as we possibly can. Sometimes it takes us a few days depending on workload, but we will always endeavor to respond. So the first question, reads, the RNS says the clinical study is well progressed and are set to conclude in early summer, which will be immediately followed by finalization of the manufacturing process and commercialization, which will run concurrently.

48:06 This is written as though quarter is a done deal as there's no mention of if successful. Your comments, please. So I I think I've I've pretty much answered that. I I I what I what I was saying there is that this is not binary. This goes ahead. It either goes at a higher price or it goes at the price that it initially intended. It is that, discovery of additional activity that was witnessed on scale up that led to the extension. That's exactly what brought the clinical studies around. We had not intended on doing clinical studies. It was, Soderma and Croda's request that they do so, and that was in the belief that the evidencing of that additional activity could lead to a higher price point in market. So, there's not an if successful. This is much more about how much evidence we can get and how much would that influence the price. As I said, that that the what what we know of the the progress thus far from the internal protocol is that this is progressing very well.

49:02 Having the running to exactly the same protocol as the external third party. The next question is despite the announcement that Feet Dermatronics has been launched by Umesh Moli, there appears to be no marketing presence on the Internet. Can we expect a high profile marketing campaign from the partner in the near future to rapidly grow sales? So, yeah, we discussed that at length with with the Modi Group, with mister Modi and and and his senior team. And, you know, as they pull the Salesforce through the training facility and they're released out into the market selling the product directly, you will start to see an increase in the marketing activity therein. A lot of it will depend on the feedback that they're getting on initial approaches and initial sales, but we are expecting a forecast, and you can expect a more increased high profile marketing campaign.

49:51 They they are very, very good at what they do. The Modi Group, we've seen excellent examples of their acne scar products, which has been marketed on television right across that region and also in in trade journals as well. So the answer to that question is, yes, you can expect that, and it's a a it's a good question. Moving on. Assuming you are in discussions for refinancing of the current facility, please confirm regarding the existing drawdown of 1,600,000. Will this be part will this part be refinanced to and therefore, most importantly, prevent further future forward sales by Macquarie? How are these refinancing discussions progressing? So it'd be a little bit premature for me to talk about what's in the term sheets. That's not publicly available information at the moment. We are in discussions with a number of providers.

50:41 One of the options is that we take the whole facility out. One of them is that we work closer with the providers to to work on tolerance side letters that talk about converting at a rate and at a price that is more appropriate to the to the company's future. So we are very heavily involved in that at the moment. The next question, has Project Epiderm been launched with the incorporation of the SKINBIOTHERAPEUTICS once heal balm in height? That's that's an excellent question. Yes. Of course, we talked about hard to heal wounds, and one of those bigger areas of hard to heal wounds as well as venous leg ulcers is diabetic foot ulcers. That is an ex area of expertise of the dermatomics team and in in in particular their clinical lead in house.

51:29 It is a conversation that we've had. It is part of the reason that we want to explore this deeply, and we it is absolutely one of one one of the things that's guiding us through this project. So the answer to that is yes. The next question, why the CFO and the CEO not buying stock? That is an easy one to answer, but also a tricky one. And what I mean by that is that up until now, we've been in a closed period. What I can tell you is is our staff have been buying quite frankly this morning because we're out of that closed period. We are, generally speaking, very often seen as inside. For example, Manfred and I have inside knowledge on what the next acquisition target is and how that financing those financing discussions are progressing.

52:20 So it would be totally inappropriate for us to be buying now. And every opportunity we've been given to buy, we have bought as have the board. We are heavily incentivized by share options, which are all milestone driven. Those milestones are share price. My next share options don't kick in until the share price hits 80 p. I think, Manpreet, your next your options hit in at 50 p. So we are highly motivated to get the share price right back to where it was. And and when given the opportunity, when we're deemed as not inside, we will absolutely acquire what we can. I hope that answers the question. Is the SKINBIOTHERAPEUTICS for project epiderm likely to be complementary to or seen as an alternative for the SKINBIOTHERAPEUTICS lysate in the wound healing area?

53:10 So it it it would be complementary to and actually as an aside too. So it is a different project altogether. There is very strong evidence that the lysate that we have enhances the wound the the barrier effect around the wound, but, you know, we need to do more work on on on that lysate and the other areas that we're looking at in Epiderm. So it would be it's a difficult question to answer. The answer to it is is we are working in that space, and it is an area of huge opportunity, and we are talking to the right the right people. Is the global distribution deal still on the table? Given that we have less than 600 customers and large costs in place to service them, can you explain why we passed on the deal again? You've shown that you can accept when a mistake is being made, so why not go back and accept the deal to reduce outgoings and promote the product and benefit from the economies of scale?

54:03 That's a great question. I'm happy to answer it. The the deals that we had on the table were forecasted distribution deals. They had some some quite significant stocking orders in, and on top of that, they were forecasted sales from the the distributors themselves. The margin surrender was eye watering. We would have been earning single digit margins. Right now, as Manpreet explains, that's sort of circa 67%, now 64%. So we are significantly better off with the margins that we we we we're earning now than we would have been with a distribution deal. Furthermore, we wouldn't we've had no control over access to the customers, branding, more greater understanding of how this product works, on why it works on some people quickly and why it works on other people slower, and that's something that we're we're we're very, very interested in learning. None of that would have been available if we'd gone through distributors.

54:58 So that decision was not likely made. There are distributors that do contact us. For example, the accelerator program that we've we've just signed up to with World Products, there is a cost to that, but it's nowhere near as eye watering as the distribution deals that we were looking at with the the Holland and Barrets of this world. I think the other point I was gonna say, I think the other point to note is that that the payment terms are truly terrific. You know, from a cash flow perspective, you you were looking at three to six months before we would see cash, whereas now we, you know, we see cash drop in day in, day out. Correct. Thank you. So I think that answers that. Are there any terms to pay back the original CLN loan, or can it only be settled by conversion? No. It could be settled outright. There is a cost to that.

55:44 And and, you know, one of the financing options would be to take the whole thing out, Or it can be settled by conversion and and, you know, we discuss with the providers, you know, how appropriate that is. One thing that I need to make clear is, and I know that, you know, this is controversial, but we use that facility because it was the most appropriate at the time. You can't keep everybody happy all of the time. There is going to be a period of of dilution. But in terms of cost of the loan, the coupon is extremely low. A lot of our institutions have acknowledged that this will wash through. And when it has washed through, we are in possession and ownership of an extremely profitable and accretive asset as in dermatomics that will continue to grow the Umesh Modi deal itself as as well as all of the other opportunities that lie in diabetic foot ulcers, etcetera, will more than justify the cost of this acquisition. And I think, you know, in a year or so's time, people will look and say, okay. That was painful at the time, but look what it led on to. You know, we really do stand on our own two feet now. We would like to add further acquisitions to that, but we appreciate that the the sentiment around a convertible loan note is is is so loud that we we can't ignore it. So as I say, we've stepped back from that.

57:00 AXIS PS seems to have spectacular results for those with severe forms of psoriasis. Why is it that the target market is seen as mild to moderate sufferers? That that just seems to be the the the bulk of our our audience, our our subscribers, are mild to moderate. We do have some severe sufferers, and they do see quite significant results. But some people that take this see, you know, very mild results. They see very little results as well. So it is something that we are exploring. It is it is right proper that it's been brought up. It is something we're exploring in greater detail. How come the lady that we showed in the slides today sees such spectacular results after eight days? Some people it takes three months. We know that body mass, it it plays a large part in this.

57:45 We know that diet plays a huge part in this. We know that hydration, stress, sleep, etcetera, etcetera, all play a part in this. So can we get a perfect target audience? Wouldn't that be wonderful? Unfortunately or fortunately, we're all very different, and it impacts people's, gut microbiome and their immune system in in different ways. What we do know is that if people persevere with this, it works, and it works for an awful lot of the people that take it. Have crawled it in intimated on how keen the the customers are to take on the lysate? I I I'm I'm not able to answer that question. That that's not been r and s, so I'm unfortunately, I can't answer that question. They as I said, all I can say is they are extremely, confident internally.

58:35 Expectations are very high, and I think that came across in Cecile's in Cecile's short video there. Appreciate that that was heavily accented, but, you know, as I say, her words are written verbatim in the in the RNS. Can you please comment on Flexitol made and sold globally by a multinational is clinically proven. How will heal bomb compete without huge marketing spend? Sudirma said, if positive, what if human data shows nothing? Are you saying that they still launch a product that shows nothing in human formulations? No. We're not saying okay. So let me answer the first one. The the Dermatronics product outperforms Flexadol pretty much on every in every area. That's why we've done a deal with people like Umeish Moli to get this product more widely known.

59:22 I think we can prove, and we will we'll shortly be putting things on our website about, the the the dermatomics product and how it compares. Greg mentioned in his his his short video there that we have more, published papers than any other product in in in this this place. Flexitol has an enormous marketing budget behind it. We don't. You know, you've always already mentioned the huge marketing spend. The second part of your question, Sudirma said a positive what if human data shows nothing. We've already answered that question. It goes with a higher price if it's got solid data behind it, or it goes at a standard price without that. Even at the standard price, which we all bought in on the back of, and that's what we did the deal on. This is still one hell of a project. Boots, etcetera, sell dermatomics products amongst many others.

1:00:10 What's going to make me buy dermatomics in preference to others? It has more papers behind it. It is a better product all around. It's sold heavily in boots. It's sold heavily in super drug, and its expansion continues. Hugh is now running the science programs. Update on CSO, please. Yeah. Professor Kath moved from her full position well, her position is chief science officer, which was part time, 50% of her time. She's now returned back to academia. She's always been the head of the translational dermatology lab in at the University of Manchester. She returns to that, but remains as the scientific adviser of the company. We are running a program with professor Sheena Krukshan, professor McBain. We still have the inflammation program running with the University of Manchester with professor Cath. So I think I think it was all we have to say, and that was in the r and s with a with a very positive quote from professor Cath.

1:01:05 I think I'm being told that that's all we have time for. I've overrun the one hour slot. Thank you all for your time. If I didn't get to answer all of the questions of which there are many, many, many that I haven't got to, if you'd like to email them into the investor relations email, I'd be happy to respond to them. Once again, thank you for your time. That ends the interim. I thank you for your loyalty, your patience, in in in the company. We are very, very positive indeed on driving the share price upwards. We faced a little bit of a backlash from various fronts on the convertible loan note. We're looking to work through that now, but I think that today's news on on SIDERA and on progress on all fronts will hopefully stabilize the market somewhat until we can work through that. Thank you for your time. Thank you.

1:01:53 Perfect. Stuart, Manpreet, thank you very much for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This won't take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of SKINBIOTHERAPEUTICS PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all. Thank you. Okay.