Verici DX (LSE:VRCI) — Investor Presentation

0:01 Afternoon, ladies and gentlemen, welcome to the VERICI DX Investor Presentation. Situated on the right hand corner of your screen. Just simply type in your questions at any time 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, and we'll publish those where it's appropriate to do so. Before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand over to CEO, Sarah Barrington. Good afternoon.

0:35 Thank you, everybody. Appreciate the time. Let me just flip through. This is a progress report, and we will also have a financial section on the results, that were issued, earlier in June, for the year end. Okay. So what I'd like to do is just give you a an update. Obviously, the company is in its pivotal year, moving from just a pure play r and d company over to a commercial company. And that's, reflected, in the launch of Trutivia. That was at the beginning of the year. And we'll cover, some of those points and some of the feedback that we've got. Obviously, as previously noted, we are using an early adopter program, for that initial rollout.

1:28 The benefits being that, firstly, we can have KOL development. That means that the clinicians that are using it in their sites will be able to be out in the marketplace talking to other clinicians as you recall. Your best credibility is clinician to clinician. So that will be a very practical way forward. Also for us, it enables us to understand how this gets rolled out both commercially, how it sits with within the clinic, how clinicians view it and I'll go through that feedback and also how you get into repeat ordering both in the center across clinicians and also across patients.

2:17 So last week, the good news on Clarava. So that was, successfully exited from the validation study, and we'll go through the results and what those means. And then we'll have our initial commercial launch by the end of the year. On the commercial track, we did get a provisional pricing from Medicare. So what does that actually mean? So first of all, we we talk about a code, a price, a coverage determination. This is on the pricing. The way that CMS is organized in The US is that it's got sub areas. We're in the Palmetto region under the multi x area. There are two very influential, what they call max. Those are the governing bodies for CMS that gave their view and their recommendation on the pricing.

3:08 That tends to carry the day. So we are expecting this to carry through to national listing at the end of the year after public comment. This is the price that we asked for. So we were very happy to get get that endorsed by our major area. And then and then, of course, just a reminder that given this was recommended by the pound meter that and all of our claims will go through the Palmetto, that is the pricing that we're expecting. For anyone that has seen, a reduced price, in the marketplace from us, that is our long term aspiration, which is to pull down this pricing. It's a bit like a volume discount. This is the price that we want to launch with. It's under the competitor's pricing, but not so much so that it raises into question the credibility of the technology.

3:57 But over time, we will pull that down if we can get into monitoring claims and the volumes go up. So this is, this is exactly our sweet spot for launch. Then also, we have, what we call the fourth product. So if I can remind you, our clinical products are the pretransplant, Clorava, Tutivia, early acute rejection, Protaga long term. The first two are out of the, clinical validation now. The third one's still in the validation study, has a longer term outcome. But then behind all of that, we have a research asset and that's what we call our fourth product. That was subject to the wider collaboration with Illumina that we announced.

4:44 And then essentially that enables us to have revenue generating collaborations in the research space. So again, that's what we see for as our fourth product. Just as a reminder, we do have a large total addressable market. Happy to go through how we calculate that. That end to end platform is unique in our in our own space. It not only is advantageous in terms of that continuum, but as we have noted before, the early data suggests that each test informs one another. And so you move out of launching three individual tests into being able to offer a solution, a platform as it were, and that is something that's highly differentiated in the marketplace.

5:37 And then obviously, behind all of that, that data that's one of the largest sets in this area, in this disease group, and obviously of great interest for collaborations moving forward.

5:54 Operationally, one of the things you will have heard us do is respond to the changing market conditions. As you all know, we IPO'd in what we might call a growth market. We've recognized that that tone of the market has moved away from growth into revenue focused and prudent cash management. We have pivoted. We did issue before that we had extended our cash runway into the end of June twenty twenty four, and you will see us being smaller than than we might have expected at IPO as we conserve those cash. So we have still hit our milestones, but we continue to very actively manage our cash and how we how we move on to the next few milestones.

6:51 Operationally, just just just so we can have a note to the regulatory, we were already clear approved in 45 states. That was also subject to an audit before you get your full certification. We did that this year. It was very successful. And now this is somewhat out of date as we address the remaining states. We're now 47 states and we are filed. Something that is of interest to both the clear regulators and the clinicians themselves is something called an analytical validation. Essentially, purpose of that is to is to really look at the reproducibility of testing in our lab. The last thing you want is, varied responses depending on who is running the tests at what time, etcetera.

7:42 And we do the studies to prove that it's very, very consistent and that was successful. Obviously, we've talked before about the code. We're now on pricing. And the other bit of, if you like, housekeeping that was exciting for us this year was the two key patents in The United States. Obviously, we've been having approvals on our patent portfolio worldwide, but I think these two were of particular interest given The US is our initial large market. And these are the two that covered our two lead products. Excuse me. Clarava and Trutivia. And so it was good to see those. Obviously, with patent protection, it's only one leg in in terms of how you preserve your assets. You have a defensive position.

8:31 And what we have done is as we progress as a company with further developments, we ring fence this initial patent portfolio with our own filings so that you keep extending not only the protection but the time limits on those. And then, obviously, we've talked about the research asset, which at some point we will name a little bit more elegantly. So feedback from Trutivia. Obviously, as we've gone out into the marketplace, as I've said, we're trying to get feedback. How does this really how is this perceived, by clinicians? How do they want to use it? How do we, you know, get that widespread adoption? And I thought it would be very helpful to hear from the clinicians themselves. So here are three key quotes.

9:22 Let me just talk to you about the themes. You know, when we look at two TVA, there's this early theme. One is early in time. So if I can re refresh your memory on the main competition in this area, it's from a technology called cell free DNA. I've always said it's a bit like measuring the debris in the blood after the injury. It's a late biomarker. And, obviously, our technology is hugely differentiated insofar that it gives a reliable response anywhere from the first week post transplant. So those first few months are quite critical. A lot goes on then. Clinicians have felt that they haven't really had anything that they really rely upon in that time frame. So the other gene expression test is to be used in a surveillance or protocol biopsy center.

10:15 That's after ninety days. And the cell free DNA, although they have an apparent coverage from the from fourteen days, we've heard clinicians say that they don't really trust the results until sort of sixty to ninety days in.

10:33 And so, you know, this idea that we have, if you like, the first reliable early biomarker is reflected in that first quote. Excuse me. There is another aspect to being early and that is being proactive and you'll see that from Doctor. Von Mika's quotes where he is seeing this advantage to being proactive not only for patient outcome but in terms of looking at your resources. Obviously, in a busy clinic, it's very easy to just allocate the same sort of time to each patient. But if you've got those so in our clinical validation, only twenty five percent of the patient population were high risk. If you know who they are in your clinic, those are the ones you spend a little bit more time with. But also you're gonna have the expertise of the top clinicians in that clinic very focused on the increased testing to monitor what's going on with those patients.

11:34 So for him, the idea of being very proactive and being able to really focus on the importance of having a risk score, I think is very important. Ross has always been a fan. She was in our original press release, if you can remember that. And one of the things that she has noted is

11:56 the advantage of the clinical study. You know, it's what we call an all comers. That really means in colloquial terms, we threw the kitchen sink at it. And that is what you're going to see in the clinic. You don't know your subgroups. You don't know who you're looking at. And so you want all types to be included in a clinical study to be able to show that that's really the performance you can expect in your clinic. And that's what we did. We did a good PPV, and, you know, that responded very favorably to our competitors. But mostly, it was really impressive because there were no subgroups. There were no problematic groups removed from that performance. That is highly reflective of what I might call the kitchen sink approach.

12:42 So so far, we're seeing some very good responses from our clinicians, and I'm looking forward to sort of building upon that as we go further into the marketplace on the and, you know, obviously use these kind of comments and reassurances clinician to clinician. Some of you may have seen some chitchats about CMS. So CMS obviously being a reimbursement, agency on behalf of the government, for Medicare, Medicare being the major source of reimbursement for transplant care. And they did an update, and, this is our, review of that, update.

13:29 CMS have, ModiX have basically said that this is just clarification, but that has led to a little bit more of confusion in the marketplace. And we expect to see some further clarifications coming from that. So what does that mean to VERICI? Well, long term, highly beneficial. One of the things we have been already marketing was that we were a single biomarker test, you know, with this balanced accuracy. That means that the performance are are good on both measures, the PPV and NPV, your sensitivity and specificity. It's good to to sort of update that where, you know, the tests that have come before us were very, very high on the NPV, not so good on the PPV. So very much a rollout test. We had now come forward and said, with one test, we can, you know, progress the field in those performances.

14:20 We were up against a trend in the marketplace about putting two tests together, a gene expression plus a cell free DNA. It's what was being used as termed as multimodality by some of our competitors. CMS said, no. We're not going to reimburse two tests. Choose one. It's one biomarker per patient encounter. That led to two products being immediately withdrawn from the marketplace. And again, you know, it sort of preserves what I call is our rare space. So as a single biomarker, this was therefore, you know, came to the forefront once again. Highly beneficial long term to reaching. Where we do see some confusion and where I would expect to see further, you know, from MolDX is they use surveillance and protocol interchangeably.

15:16 There are two ways of looking at at this area, the word surveillance. One is protocol. It's time based. So centers that say at a certain time point, we will have all patients come in for a biopsy. That's a protocol center. About seventeen percent, fifteen to seventeen percent of all centers in The US do that. Quite a low percentage. And if you have a surveillance, if you like coverage, it's prob they're pushing you to to being used in those protocol centers. But surveillance is also being used by the clinical community for monitoring, and that's more patient centric. And so this clarification saying that it had to be where only used in a protocol center, but it was surveillance led to some confusion.

16:04 And I would see us I would see CMS going down that route in response to clinical comment about that that was more you know, that needs some further clarification. For calls, there was also a clarification, a time clarification. A pretest is used before biomarker test that's very standard of care. They then put in a time limit on that of seven days. This obviously has had quite a lot of of comments back that that that flies in the face of diversity and inclusion measures. Obviously, for patients, that's not only high highly inconvenient, but in some cases, detrimental. If you think about we, I think, have seen estimates of about a third of all patients live more than 50 miles from their transplant centers. You can understand the difficulties of having to come back at regular intervals just to do your labs.

17:01 And we do expect, given the reactions from a lot of the not for profits on this area, to see some further clarifications. So if you do see some things, you'll you'll see some clarifications in this area. I think that will be highly beneficial. We do note that we are spending time in the marketplace chatting with clinicians on the CMS clarification. It somewhat detracts from the, you know, just the pure clinical conversation, but we we anticipate overcoming that this year. It's just, I think, interesting to note that there are these industry wide progressions in the background. Okay. Let's talk about Clarava.

17:47 Now, a wonderful curve there. If you're not a scientist, you will wonder what some of these terms mean. I can point out if you see that red diagram, that represents random chance. And you obviously want to have an area or a curve that is to the left of that showing that you are statistically significant. You are more than random chance. That's what area under the curve AUC represents. As you can see, point seven two. We're very happy with that. That the p value just represents that it was statistically significant there. So good results there. The performance, which is up against outcome and biopsy, that sensitivity and specificity, good results there. And I think one of the things that is highly significant and becomes really intuitive as to why clinicians may be very encouraged by these results is the odds ratio.

18:41 What does that mean? Well, we're a risk score, we return you're either high risk or low risk, this patient. And the high risk patients are six times more likely to have a rejection than those low risk patients. And what that really means is the, the test does differentiate in a very meaningful manner. There are more measures. There are more positioning that we would like to do before a commercial launch. This is a novel test. We are seeing evolving thinking from our clinical community on how they might use this. So we are convening an advisory board to get some consensus on how we might roll that out before the end of the year. Obviously, we're in the summer, you know, the joys of summer holiday schedules. So we would do that in the fall ready for our abstracts further down the line and commercial launch before the end of the year.

19:32 But very encouraging. We were delighted to see that. And we do you know, the feedback that we have got, in these initial responses is that it's going to be clinically relevant and very useful. And there's a lot of excitement about that.

19:49 Let's do numbers. David, over to you. Thank you, Sarah. Good afternoon, everybody. So at the end of December, we had 9,800,000 of cash and spending just over 10,000,000 operations and 1.3 on investing. Terms of investing, the largest element of that was our build of the Tennessee lab of just over 820,000. That's obviously now complete. In terms of going forward, we would expect we do expect that level of of spend to reduce and One being that we are over the hump in terms of our clinical trial costs. And secondly, as you would expect, taking an an eager eye in terms of expenditure and monitoring that carefully and spending what we need. That said, in terms of with our projections and also our assumed levels of revenue, as Sarah referenced earlier, we expect our cash runway through to the midpoint of 2024.

20:46 So the income statement gained largest elements of expenditure being wages and r and d. As I mentioned earlier, r and d will come down this year. In terms of wages, we had at the end of the year 15 people in business, and we currently have 14 people in business. And then in terms of the balance sheet sorry, Sarah. Oh, sorry. I just missed. Yep. We're getting over the the the link. In terms of the balance sheet, so tangible assets just over 2,000,000, reflecting really the spend on the clinical lab in the year. The intangible is the base license that we purchased from relative to 1,500,000 plus the additional costs on the patents and other things to protect that.

21:32 And then the other thing I mentioned is we continue to hold the large accruals. That's mainly for site accruals. This is where the individual sites have incurred costs that have yet to bill us, so that number is monitored and is quite large at the end of the year. Thank you, Sarah. Over to you. Thank you, David. I think many of you will have seen this slide. This sort of helps us, you know, provide a background to our market sizing. And then obviously, you know, we have put out a market size of about 5,000,000,000 over five years. Why do I do that? It's because Protagor is run over a time continuum. Just so that everybody understands how we came to these numbers, we put it on about a 100,000 transplants being run every year, kidney transplants, I beg your pardon. Let's be a little bit more precise there.

22:29 And then we've assumed our own market size being how many times we would expect Carava, Tutivia and Protegra to be run. You can see up here. Carava will initially be one. I see that extending. To Tivia, we we did assume three times. We still wouldn't see this being all over the place in terms of mom and mom. I see there's one outlier that did 11 times for this kind of testing from a leading institution. Was surprised by that. So I think three times is a safe average. And then Protaga will be run over a number of years. That's the long term outcome in terms of fibrosis. And then obviously, this is just the addressable market in kidney transplants.

23:16 If I can just refresh everybody on the the hot, you know, overall vision, That's as you can see in the middle, the time continuum. We've talked about that. Obviously, this technology is likely to be highly applicable to other organs. And many of our PIs in the clinical trial also deal with other organs. So that would be kind of an easy, you know, expansion to our technology. And we did see early technology with early results in other diseases. I think RNA signatures, that's our base technology, very, very applicable to many different areas, highly expandable.

24:05 And so there's plenty of further opportunity should we so wish. And then, obviously, behind that, you see all the the in-depth data that we call our fourth product. Let's talk about what's coming up in terms of likely news flow. We've divided into two. This is one of the kind of more operational signs. So, obviously, New York and California are two big states. We are subject to audits there. It's a little bit in their hands in terms of that timelines, but I would hope to see, you know, some news flow on that. We would like to, you know, obviously publicize some of the research collaborations that we expect to be coming up.

24:52 And then, obviously, with the lead product to Tivia, this year is the year we put in the file for the technical assessment for the coverage under the local coverage determination. So I'd like to see that come out successfully. And, obviously, the team in the background is working continuously on further accreditation. This, you know, obviously supports the robustness of the of the lab and and our offering in the marketplace. Publications, publications, publications. Right? That's the year the theme of, the next twelve months. Tutivia, is, submitted into a peer review journal. We're we're working through the comments, right now. So I hope that that, is, satisfactory and concluded shortly.

25:41 It'll be great to see that out there. And obviously, once we have that, we'll move on to into our application for coverage. The clarification, clearly, we've got some work in terms of positioning. Once we've done that, once we've got consensus, we can shape that publication. I'd like to see that out there. We've had to wait for the clinical performance metrics before finalizing our health economics. I'd like to see some publications come out on that. Very encouraging there. And, obviously, you know, we had always done back of a napkin that intuitively doing these tests makes sense, and I I'd like to see that done in a little bit more detail. Obviously, supports ourselves as we move beyond clinic clinician to clinician and move into the c suites at hospitals to be written into protocols.

26:29 Obviously, being having a flexible budget impact model is going to be one of those selling tools that'll be very useful. And then lastly, you know, we'll put the abstract in on Grava. It'd be nice to have a presentation slot at ASN. But nevertheless, we'll probably be advertising our attendance there. You know, it's a direct conversation with the transplant community, you know, in a face to face. It's always very useful going to conferences. Okay. So let's just wrap up. You know, obviously, our main focus now, although we have other sort of research questions, we still have Protaga in the background. Really the focus of the company now is that commercial expansion.

27:14 And you'll see, you know, as we are looking at this, all the things that go into supporting widespread adoption there, health economics, utility studies, price determinations, coverage, etcetera. And then, you know, that's going to be the focus of the majority of the company. And that concludes presentation today. I'm just going to move on and look at the questions. That's perfect. Thank you very much indeed, Sarah and David, for updating investors this afternoon. Ladies and gentlemen, please do continue to submit your questions. Just using the Q and A tab situated on the right hand corner of the screen, but just while Sarah and David just take a couple of moments to review your questions, I'd like to remind you the recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor platform.

28:02 Sarah, David, as you can see, you've had a number of questions from investors today. So thank you for your engagement this afternoon. If I may, Sarah, hand back to you. If I could ask you please just to read out the questions and give a response where it's appropriate to do so, and I'll pick up from you at the end. Thank you. Thank you. And thank you everybody for the questions. It's always very encouraging to have interaction on these. So the first question is how big is the commercial opportunity for Trutivia? So we, you know, obviously, we just walked through the total addressable market. One of the things that we do point people to is, you know, obviously what's gone before us. And so I would urge you to review the CareDx. They're the company that I feel that you can are most accessible in terms of how testing has manifested into revenues, you know, the past because they are just transplant testing.

28:59 Other companies are within larger conglomerates, so it's very difficult to get to that information. Last seen in a couple of 100,000,000 revenue that is shared between heart and kidney, but, you know, maybe it's half and half and that may give you an opportunity to assess what one of our competitors have done and what their curve look like. They are one of three big companies in that space. There's Natera, Eurofins and CareDx really have the cell free DNA. There are others and there are more entrants coming into that marketplace, but it does give you an opportunity to understand what has come before us. So, Tom, what news flow? Hopefully, answered that already. So I'll refer you to the slides there.

29:47 Michael, what is the likelihood of reimbursement happening? When do you think this will receive confirmation of this? Again, in the news flow. Let me just give a comment on reimbursement. Coverage makes reimbursement very easy. It streamlines the opportune the process. Before then, we still get reimbursed. It's just a little bit more messy. There are processes with CMS, with private payers to to pay out. Is called under an appeals process or that they'll just, you know, give you a payment right up front if they've seen enough of your claims.

30:34 But there is reimbursement before the coverage determination, but coverage determination obviously makes that very streamlined. That's where you get reimbursed by Medicare within, you know, fourteen days and, you know, at full price. So that's the significance of the coverage determination to reimbursement there. What's the difference between TUTIVIO and other biomarker tests? Are those differences significant enough to win clinical adoption? Okay. Let me just go over effectively how we how we differentiate TUTIVEA early. So that's the early in time, early by being, proactive.

31:23 That's the risk score. There are other differentiators, one being that it's highly dynamic. At the moment, if you are a clinician and you see, an underlying change in your patient both naturally and in response to medication, you don't have a test that is responsive enough. Cell free DNA is, as one clinician put it to me, a little sluggish in its response and they are looking for biomarkers now in that monitoring question. If you think about it, RNA is all the messaging of the body instructions and so it is highly dynamic. And then lastly, we do emphasize that, clinical trials have been run-in a way that has, garnered a lot of criticisms from, clinicians and they have been wanting more.

32:16 We met that need with our clinical trial all comers, international perspective, blinded, throw the kitchen sink at it. So all of those were highly significant and, you know, rated by clinicians. So as you can see, if you take those messages of, only personalized dynamic, and obviously, run to a high level, you can see that in your clinical practice. Those are enough I think to be able to differentiate, have some rare space that no one else is competing in and that should be significant enough to win clinical adoption. Is there any likelihood of a takeover offer within 2023?

33:03 You know, one of the things that I would say is as a company, we are always open to all alternatives. My job is to maximize shareholder return. And therefore, we are likely to be nimble and reflect and and respond to market conditions. And and so we're always open. I couldn't possibly try and quantify a likelihood. Have you had any interest from strategic partners? If not, why not? You know, I think that this is very much the same question realistically. We talk to everyone. It's quite a small community and there is a lot of interest in multiple ways. And obviously, you know, we'll look forward to reporting anything as and when it manifests.

33:54 That's great. Sarah, David, thank you very much, and thank you to everybody for your questions. I think you've addressed all those questions submitted from investors. If any other questions do make their way to us, Sarah will make those available to you post today's meeting. I know investor feedback will be important to you, and I'll shortly redirect those on the call to provide you with their thoughts and expectations. But before doing so, unless there's any other questions you wish to take, I'd like to just ask you for a few closing comments. Thank you. We had one late question come in. So and this is about when we start reporting volumes on a regular basis. We'll start that at you know, obviously, there'll be a lot of interest on how the year went, Tim. And so we would anticipate, obviously, addressing that, you know, at the end. Let's see how 2023, you know, pans out.

34:46 So thank you all. Lots of great questions, Seth. Do appreciate the time. Obviously, is a very exciting year for ICI. You know, it is a dynamic year for us moving from r and d into into the commercial arena, undertaking those lessons, really understanding how we address 2024 as being, you know, the widespread adoption year for our first products. So very exciting. Look forward to giving you further updates later on this year. That's great. Sarah, David, thank you once again for updating investors today. Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the management team can better understand your views and expectations.

35:35 This may take a few moments to complete, but I'm sure it be greatly valued by the company. On behalf of the management team of VERICI DX PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all. Thank you. Thank you very much.