Verici DX (LSE:VRCI) — Investor Presentation

0:00 Good afternoon, and welcome to the VERICI DX PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions could be submitted at any time by the q and a tab situated on the right hand corner of your screen. Simply type in your question and press send. Company may not be in a position to answer every question received during the meeting itself. Have a review of all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. Now I'd like to hand you over to Sarah Barrington, CA. Good afternoon.

0:27 Good afternoon. Thanks for having me. Did you say you're next to a poll? That's already gone out there, Sarah. Great. That's fine. Just second. Then we can get started. So welcome, everybody. This is just a strategic update. And, obviously, off the back of last week's announcements, I'm sure there's quite a lot of interest in understanding a little bit more about that announcement. What we'll do in this presentation is we've got a number of, if you like, notes refresher for anybody that that that would like that. I will be quick through that so that it won't dominate the whole presentation. We will then talk obviously, there's a number of other updates that I think it's worth just mentioning. Then, obviously, we'll finish on the Thermo deal and then take q and a afterwards.

1:22 Okay. Just to give an overview of the company, obviously, we are a kidney diagnostic kidney transplant diagnostics company. We do have an offering of three clinical products, and then we have our Asperc as as almost a data science company. We we have a full product in terms of what we call the research asset, and we'll be giving an update on all of those. Into kidney transplants diagnostics, you're really looking at quite a quite a large problem for for clinicians as they manage transplant patients. If you think about it, it's quite an alien treatment. You're putting in an organ that the body doesn't recognize. So the immune system that's normally your best friend is the transplant's worst nightmare, and the way that they treat it is to to use immunosuppressive therapies.

2:23 Even with that, they recognize that anywhere up to half of their patients are meant to have something going on. That doesn't all lead to rejection, but it does lead to a need for the clinician to to intervene or to manage their patients very closely. And, you know, that leads to a you know, for diagnostics, a large rounding. We've estimated that to be a $5,000,000,000 addressable market. We have seen our competitors go anywhere up to 10,000,010 billion. So, you know, between billions, you know, what we can say is this is a large addressable market. We have an underlying technology. I'd like to say we modernized the field. You know, this technology is based on RNA signatures, and, you know, that that's very a a great move towards precision medicine.

3:19 And on that basis of the platform technology, three products that cover the end to end transplant cycle for for patients. And with that, it provides a high degree of data and precision for the two clinicians in that management. We haven't come out of nowhere. This has been a ten year development cycle, well published already in the research front and then transferred into into VERICI. And then, obviously, we've been public now three years. And in that time, two products have been put through the validation studies, one commercially launched, one licensed, and the third product will be coming out to validation studies next year and the year afterwards.

4:13 We talk about therapeutic dilemma for clinicians. That's something that we address all the way through the transplant journey. In pretransplant, they're looking and they have very little information for the in that area. And post that transplant, there is a number of cases missed by the standard of care and being addressed by cell free DNA, which is the what I can like to call being measuring the debris of the after damage has occurred gives you partial information. The reason that this is a diet a therapeutic dilemma is clinicians understand with the immunosuppressive treatment that they give their patients post transplant. And if they do too little, they'll lose the grafts. If they do too much, we're suspending the immune system, and you're making your patients vulnerable to viral infections. That was a big thing in COVID, but drug toxicity issues and, obviously, underlying conditions.

5:12 So what we're looking at is our technology is plugging the the gaps in that knowledge for clinicians where they've either got no information or partial information. How do we do that? We have three standalone products. They do also early early data suggest they also inform one another, but we're launching these three individual products. And they're asking three different questions, Clarava pre transplant, how aggressive or benign is the patient's immune system likely to be with the with the transplant. Very important information in terms of the level of drug treatment post. Trutipia is early acute rejection. That's just, for example, anywhere in the first twelve months.

5:59 That question is, you know, how probable is it that the patient's actually suffering rejection rather than anything else? And is the body able to deal with it or does the clinician need to intervene? And thirdly, a long term outcome, you know, the biggest threat in that area is fibrosis. Protapria is designed to look at the risk stratifying patients in terms of those that are fast and aggressive progressives and those that are not, and again, you know, needing clinical intervention. Our fourth product we'd like to remind everybody is the, you know, data or the research asset. One of the things that we try to do is look for validation cohorts when we were doing our product development. We would have liked to do our clinical trials in preexisting biorepositives.

6:51 There weren't anything that we could use. We recognize this is a huge area, and if you want to pick up pace and innovation, having a sample bag that's very well curated with patient outcomes and collected over time longitudinally would be very valuable. That's what we've done. That's how we designed our study. We collect blood, urine, and tissue. We do sequence all of that. We do have that matched to the patient data, and we do digitize the pathology slides as well. There are quite a few techniques, AI techniques that will pick up trends on on those that the human eye cannot see. So very well curated set, derived from samples from patients of 14 countries, Europe, The US, and Australia, and quite diverse demographics as well. So when we we talk about the physical samples or even the data, this is all part of what we call the full.

7:56 It's really where we're coming as sort of data science or innovation hub. And this enables us to to say, okay. We may have the physical samples that would command premium pricing because it's so well curated. And, obviously, the data that's available to us once we've done the sequencing at deep depths is enormous and ripe for innovation. We've always said that that's not only for us but also for collaborators and other people in the field, both for pharma and other diagnostics companies. And, obviously, I will return back to this as something that we can't often make many announcements about research is rather stealthy. Nobody really wants to show their competition what they're working on.

8:42 But when we have a material transaction like the Thermo deal, we're able to point to that and show this to revenue center all in itself, and we are focused on monetizing that. Just to give you a quick update before we get into the Thermo deal structure and Trotivia, I think we gave an update only a few months ago when we were saying the pain of CMS confusion was was over in our estimation. We were seeing increased momentum, and certainly, in the last quarter, I'm I'm I've seen even more. We are we continue to get positive clinical feedback, but we're also probably able to travel a number of centers now. We'll definitely see the benefit of that in next year's figures. We're seeing an awful lot of increased awareness, and, obviously, we we continue to do activities in terms of publications, speakers bureaus, so on and so forth. All of that goes to the adoption support that's needed in the marketplace, and we're seeing a pickup on that.

9:46 Publication is imminent. We we're expecting that very shortly. We'll give an announcement when that's done, probably post thanksgiving. Tomorrow is thanksgiving in in in The States, but look out for that. Obviously, that then triggers us us able to that's the last piece of the pie as it were for the local coverage determination application. So that will be put in in the next few weeks, and we look forward to to getting that in the next next year. The transplant will will cover with Thermo Fisher deal, but, obviously, that was that was a very that was a deal that was done very fast after the validation. That was back in July. So we're delighted to make that announcement so promptly.

10:34 And then, obviously, one of the things that's appealing in in a fast timescale to commercial launch and is the reimbursement. Now that price has not been challenged. We expect that to publish. That's both for Jativya and Clarava, and we can expect that to be crosswalked over to Protava when that's ready. It was above market expectations. It is valid for three years, and it gives us very great deal of room to operate while still being under the the published price on on our competitive products.

11:12 You know, always good to know that innovation leads to IP protection. You know, we we did license a a very comprehensive patent portfolio from Mount Sinai, the original licensing deal. We continue to add to that. I think it's very important to be able to ring fence your original portfolio. And it does two things. First of all, it makes it wider and more deep in terms of the protection, but it also elongates the life. We've just filed three new patents in the last two weeks. When they issued, we've got twenty years on top of that. But we did get from our core portfolio two US patents issued this year, and it's just nice to see that whole portfolio expanding and taking over. You will see announcements about the lab and compliance and accreditation.

11:58 It may not be the most exciting thing to investors, but in terms of underpinning our commercial launch and credibility, it's an important thing. Hospital groups do look to see how you're progressing in in that area with all the accreditations and quality metrics. Obviously, we become send send out that, and they want to know that they're sending out to to well established labs, and we continue to add to our layers of quality metrics there. We did talk about the speakers' bureau. I am delighted to say that we are attracting very high quality clinicians who enjoy innovation, enjoy talking to the community, and are seen as leading lights in that area, and I'm delighted to be making inroads there. And then, obviously, we'll be talking about the forward assets and the progress we've been doing in terms of, you know, making that revenue center.

12:55 Okay. So let's talk about the Thermo deal. You know, obviously, one of the things that we were able to to do was to align ourselves with with a company that has probably the the best reputation in pretransplant space. They pioneered the the the brand underneath Thermo Fisher, the company is called One Lambda, and the transplant space actually has probably more brownfield than even the Thermo name, and that's all pretty comprehensive. And that's because the founder actually pioneered what we call HLA testing. That's when you in pretransplant, you look at the match between an organ and the patient. It's been around a little while now, but they pioneered and they hold a dominant position in that. And their their sales force are obviously seem to be at the forefront of that that that area pretransplant area.

13:51 So we were delighted that, first of all, our pretransplant product, which they recognized there was nothing else like it in the marketplace, will be integrated into their portfolio. And, obviously, it enables us to have a confidence that they will hit the ground running. They already have the preexisting infrastructure. They already have contacts. They're already talking to the right people, and that's a delightful situation in terms of being able to launch a novel product such as our own. Obviously, we recognize that their education, their sales force would also lay the groundwork for us in terms of the education for the base technology, the RNA signatures, the importance of that, the flexibility and the comprehensive nature of the information being given to clinicians.

14:44 It's not just us talking about that now in the marketplace and it extends our reach. I I like to think about it as all boats float. And, obviously, you know, for us, this was hugely exciting to be able to provide focus in that area, but also to share that education of the marketplace. Another part of the deal, which was important for us, was the monetization of our buyer repository. This, obviously I I will say that, you know, for us, this is an asset that's probably been undervalued at the moment, and it's nice for us to start pointing to that and say that this is an important part of the company. And at at this point, I'd like to, you know, touch back on that and the importance of of what that enables us to do going forward.

15:37 Obviously sorry. The slides are just in the moment. Obviously, if you've read the press release, you will know that how it was structured was a exclusive license on the Corolla. That means that what we're doing is we are taking that test, and we are actually transferring it into their lab. They've got a new 16,000 square foot facility they've opened up for precisely for this kind of testing.

16:07 And so we'll transfer it into that, and they will take it from there. They will first focus on The US, and, obviously, they have optionality in terms of how they approach the the global market there afterwards. I think that's a very exciting proposition for us with their credibility. And so far, so they moved very swiftly after the validation. That was also, you know, hugely gratifying to us that it was something they had been following for a while, and we're we're interested to see how that validation worked out and and, obviously, they moved fast after that. Urine samples, it is a nonexclusive. It is not the whole sample. They've just taken an aliquot.

16:53 It is obviously a premium type sample. It comes with all of that data. That's something they recognize, and it enables us to also think about, you know, how we use that material ourselves and any other collaborations that we choose to do in that area. But I think that's hugely reassuring to investors that that fourth asset truly does have value for us. And obviously, you know, we do look forward to having an increasing presence in our revenue mix as that goes forward. We're not able to disclose the full full deal details, so we compromise on on just showing the cash over the next twelve months. I think that's really the main interest for for investors at current time.

17:41 We total that for 5,000,000. There are lot of payments post that time. We've we've we've put, you know, forecasted that to be in '25, although that could be in '24, but we're not relying on that. And then there's a revenue stream. They are keen to

18:00 launch in q two of twenty four, and we are keen that they do so as well. For us, that could bring in royalty as early as q three. And then, obviously, what that does is that that really is now a an income stream that hits the bottom line directly. It's there's not much support that we need to give for that. It's not like, you know, we're running it in our lab or or anything like that. So that's the outline of the deal. And then I'm going to just conclude at that point so that we can get into the q and a session. Sarah, thank you very much indeed for the presentation. Ladies and gentlemen, please continue to submit your questions using the q and a tab just situated on the right hand corner of your screen. Just want the team to take a few minutes to review those questions submitted, sir, I'd like to remind you that, according to the presentation, along with a copy of the slides and the published q and a, can be accessed via your investor dashboard.

18:57 So as you can see, we've received a number of questions both pre submitted throughout today's presentation. Thank you to all the investors for submitting those. If I make a chance, just read out those questions and give responses where appropriate to do so, and I'll pick up from you at the end. Great. Yes. The first pre submitted question was rather long. So if you don't mind, I'm going to paraphrase it. If I do it badly, I do apologize. But, obviously, I think there's a lot of interest in terms of and and then what? You know, clearly, we see Thermo Fisher having an interest of being outside of the and extending their reach beyond pretransplant, they they actually have other assets that take them out of the pretransplant space into the end to end testing. We see their vision of that.

19:44 We recognize that there are company that that that like to get to know other companies, and we hope that this is the first of deals. And, obviously, there is a, you know, an interest in in various mechanisms that they can be working with us in the future. And I think that, you know, I like the idea of getting to to know us. I like the fact that they're working in an area that they are well known for, their brands works well. And I would be excited to work with them in the future as well.

20:22 Paul, I'm not actually seeing any questions come up. Was there anything you want me to read out then? I wasn't sure if you had any additional ones that were pre submitted. I'm just having a look now. Let me just see if they come through. Bear with me one moment. I believe you may have, to hand a couple of additional questions that, came through, earlier on today that were pre submitted. I don't know if they're at a hand at all right now. If not, we'll just see if there are further questions come through on the q and a tab. I see a question about the length on royalties.

21:09 You know, I obviously, in the interest of confidentiality, I actually can't answer that question, so I do apologize. Let me talk about the cash runway. You know, obviously, we were delighted to be able to have a cash infusion from into the company from this deal. What we've done is forecasted the company on a a sort of status quo basis. So if we operate in a very logical extension of what we've been doing right now, which is being reasonably conservative,

21:52 and also recognizing that the mix of expenditure will be now seeing clinical trial costs go down, but also an increase in the sales and commercial team to support the Tutivia revenue generation. On that basis, where where we keep to the monthly burn, roughly speaking, where we've been, we forecast the end of twenty four and quite likely to to go beyond with that. So for us, this is obviously quite a freeing opportunity to extend that runway, and we're delighted that that that was, you know, something that we came back to the market to announce.

22:43 Are there minimum volume requirements as part of the deal and how large is the opportunity? So let me talk about the opportunity. There are if you look at just The US, there are about twenty five thousand transplants done annually. What we do see is really being seen as a a one test per patient, certainly in the short term. That's what our data is focused. You know? So your addressable US market is 25,000 transplants. What we do see is where you have novel technology, you can expect a a high penetration into that market. As long as there is a need and as long as it's novel, we've seen companies in other fields and other areas within health care have a have a sort of market share of anywhere between 5080%.

23:42 It's it's very hard to get a 100%, obviously. There are also people that will will do nothing, but let's assume it's somewhere between 5080%. There is no signs of any other kind of developments to in this area. Certainly, no clinical trials. And, obviously, you know, if they execute well and get that position, that could be very fast. So I would say that's the initial size of the deal and what we could expect there. And then, obviously, as that as The US market matures, they they probably have a look at, you know, the global market, and and you can take it from there. Globally, it's about a 100,000 done every year. So that gives you a sort of sense of of size of that opportunity.

24:33 The minimum volume requirements, no. We did not put that in, but I can because we have a very fast timeline for that transfer and their stated adoption and launch plans for for next year. When do you expect for each each turn profitable? I think if you're asking under the current, you know, situation, then we could see that in the next few years. I think, you know, realistically, we have a number of choices available to us. You know, you can be profitable on your commercial launch and just do that. That may not yield your best value for the company ultimately if you have other assets that you need to develop and launch and develop. So for us, we do have a series of other things that we would like to pay attention to rather than just focusing in on one product and commercializing that to profitability.

25:42 So a little hard to answer. Excuse me. I'm not trying to be cute there. It literally is. I think perhaps if we looked at it, her product, that might be easier. And then, obviously, as you're looking for sizing out the market to TUTIVEA is we've always assumed that we would have three per patient that may be moderate. I think if we get the data out on monitoring claims and adoption there, you might see a vast, you know, a bigger market that's currently, you know, available to other technologies. And you can see that it doesn't take very long at a reimbursement of $26.50 for those numbers to ramp up into a significant number. We are still a small company. We're currently 14 people.

26:30 We've been very conservative with our cash and our growth. And so, you know, if we continue to do that on on the status quo, you can see that quite quickly. I don't see us doing anything in terms of explosive growth anyway. It's not the right market for that. And quite frankly, we've been very efficient with our capital and we continue to do so. Thank you very much indeed for addressing those questions for investors and of course, the company review any further that have come in and we'll publish responses where appropriate to do so. Sarah, before redirecting investors to provide you with their feedback, which I know is particularly important to you and the team, if I could ask you just for a few closing comments, please? Yes, thank you. Well, I'm just delighted come back with to the market with this news to give everybody an update on something that, you know, is I I think could provide something of interest and and a shining light in the marketplace.

27:27 This has been a tough market. There aren't many deals going on. I was delighted that we were able to pull this together and in such in such speed and with such a great partner. And, ultimately, you know, I'm I'm delighted by the endorsement of our credibility as a player in the marketplace, And I'm looking forward to 2024. Fantastic, Sarah. Thank you indeed for updating investors today. Can I please ask investors not to close the session? It should be automatically redirected to provide your feedback, in order the team could better understand your views and expectations. This will only take a few moments to complete, and that's greatly valued by the company. On behalf of the management team of REACHI DX PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.