Fusion Antibodies plc (FAB) Earnings Call Transcript

Good afternoon, and welcome to the Fusion Antibodies plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Adrian Kinkaid, CEO. Good afternoon, sir.

Thank you very much, Lilli. Thank you, everyone, for joining us today. It's good to see the back end of the year that we've got to talk about, but we'll also be covering some of the more recent data. There is another quarter that's already in the public domain. So without any further ado, we'll move on. Of course, we have a disclaimer, which I will leave you to read at your leisure. Thank you very much. What we'll do on the agenda is cover some introduction and highlights, particularly for people who maybe haven't got too familiar with Fusion as yet. We'll do some financial performance slides, which will be led by Stephen and then a strategic focus update, which I'll cover and a short summary. We have had some questions already submitted. So it's good to see the engagement. Thank you very much once again. So as an introduction to Fusion Antibodies. I should introduce myself first. I'm Adrian Kinkaid, I'm CEO of Fusion Antibodies, been with the company now for just over 2 years. I am a Biochemist by training, and PhD in Biochemistry from Southampton University and have been in pharmaceutical discovery, agrichemical discovery, including CRO and biotechs for a good long time, 20-odd years, plus several years in reagents and diagnostics as well. So Fusion is relevant to all of those sectors that I've worked in, so long as they're interested in antibodies. We really are experts in all things to do with antibodies from their discovery right the way through to supply. We don't go into supply for clinical reagents. So what we produce is for the lab, maybe for animal testing, but not for going into people. However, we divide up the work that we do, do into 3 different sections. So discovery in the first instance, someone nominates the target protein or otherwise. And we can discover antibodies for that, that maybe never existed before. We have a number of different technologies available to us. Some of those are proprietary. Some of those are industry standard sort of methods for antibody discovery. The ones that we choose depends on the target, it depends on the client, it depends on their budget, it depends on the target product profile of the antibodies that they're looking for. Once we discover an antibody, it's not the end of the story. What we can do then is engineer those to make them the best possible antibodies that they can be. In some regards, just being the best in the world isn't good enough. We sometimes want the best that it can be and being much better than anything that has existed before. And that's where Fusion has really cut its teeth, got a really excellent reputation as being one of the world leaders in engineering. In particular, humanization was one of the things that the company was really well known for, and we consider that to be part of engineering, changing the genetic makeup of the gene that encodes the antibody so that it's the best that it can possibly be. Of course, you then need material to put into tests, and that's where the supply comes in. We can do that in a relatively rapid format using transient gene expression or we can develop a stable cell line that would give consistent production of the same antibody time and time and time again. It is quite an investment. So people don't tend to do that until they're ready to go into production for clinical purposes, but we can take them all the way up to that point and get them ready for going to clinical manufacturing. So the kind of people that we work with are basically anybody that values antibodies and works with antibodies and wants the best possible antibody for their project. So certainly, drug discoveries where antibodies themselves are often the drug. They're the ones that we particularly engage in. That's fairly by technology-led sort of industry. So the biotech companies are definitely there. Companies nowadays are outsourcing an awful lot of the work that they do. And there are several virtual companies that don't even have labs of their own but still run projects. And they need people like us because we do the lab work for or at least some of that lab work, they might go elsewhere, for example, for animal models. More recently, we've added veterinary medicine to the people that we're engaging with. So drug discovery or diagnostics but for cats and dogs in particular, it tends to be companion animals, much more so than agricultural animals, cows, sheep, et cetera. Although there are an overlap where high-value race horses for equine veterinary med is something of interest. In addition to the drug discovery and therapeutic side of things, we also work with diagnostic companies. We also do research work generating antibodies not for therapeutic purposes or even for diagnostic purposes, but actually for research reagents to add into various different tests that those people might be involved in. And that particularly is research institutions. Frequently, however, the research institutions want to take the antibody that they've discovered one step further and often that requires manipulation. So we do work with universities, et cetera, in that regard and other academic centers. And then lastly, on this list is, of course, the large pharmaceutical companies who probably have access to an awful lot of what we can offer, but still engage with us specifically because we are the best in the world will have that proprietary technology that they really value and want to move forward with. So we work with all sorts of life tech industries of all sorts of different sizes across discovery, engineering and supply and indeed put them all together in an integrated antibody service from Fusion for particularly therapeutics, but increasingly also interested in doing that for diagnostics. The other thing that we do for our client is we accelerate their journey. We've done it before. We've done it many, many times. We know the processes, they're very slick, efficient processes that we run here at Fusion. So it's really excellent to bring that level of expertise, process involved and specialization to even the smallest of businesses so that they get professional platform, professional services, taking them all the way through, eliminating or minimizing risks as far as they can -- that can be done and always thinking ahead, one of the mottos for Fusion Antibodies is to begin with the end in mind. So we consider what the target product profile is for that client, what they're wanting to do with that antibody and make sure that the journey that we plan for that project really picks up on the risk factors and make sure that we give them the best chance of success. So what we're trying to do as Fusion Antibodies, our mission statement is to get better antibodies into the clinic more rapidly. Some of the discovery engines that I mentioned before are worth highlighting. So we have 5 listed here that we can offer to clients. The top 3 on this list are the proprietary ones. Our flagship remains OptiMAL, which many of you will already be aware, is in a validation study with the National Cancer Institute in the United States, part of their National Institutes of Health. It is a fairly involved process. So that validation, we agreed a 2-year term for that with them. So we're partway through that now. The library size that we can offer in that is 10 to the 8 or possibly 10 to the 9. So 1 billion different sequences or different antibodies that we can pan against to find that hit in the first instance, which we can then engineer or manipulate improval in subsequent areas. The important thing about OptiMAL is that we use a mammalian expression system, which presents a fully intact IgG molecule, that's another word for an antibody. So fully intact antibodies, human antibodies. So again, coming back to that, beginning with the end in mind, for particularly human therapeutic projects, this would be a really good way of actually selecting the antibody that's most likely to work and need less optimization going on. So the stage that we're at with that is beta-testing, namely with the NCI, and doing other parts of the -- research part of the in-house. It is still in research mode. It's not fully developed, ready to go in service, but we are working on that. AI/ML-Ab is available now. AI/ML stands for Artificial Intelligence/Machine Learning, hence, the image of the computer on the left-hand side. And this is a new way really of doing in-silico generation of antibody sequences without necessarily even the target being available. You know what the target is typically and then generate antibodies in-silico as to those theoretical sequences that can produce huge number of potential sequences and the computer algorithm then ranks those. In typical format, what people would do is take the top, say, [ 90 ] sequences and have them individually synthesized one by one to make a very short list of antibodies, doing much more than that becomes quite an expensive and involved slow process. We can do that for clients. In fact, we do, do that for clients. But the other thing that we can offer them is the ability to take that output from their algorithms and look at many, many more sequences, so tens of thousands, hundreds of thousands, even of sequences and put them into a library format, which is then synthesized as a library rather than one by one and enables us to then screen that in mammalian display. We need to use mammalian display because the algorithms are ranking things according to their fully intact antibody structure or theoretical structure. And so they want to present the fully intact IgG molecule to do that testing. So it's a perfect fit really for our mammalian display platform. OptiPhage, well, phage display is sort of the industry standard. So we've, to some extent, reverse engineered. Here, we only look at a fragment of the antibody. It's not the full antibody molecule. It's just the endpoint parts of the molecule that would directly interact with the target. That's all that phage display can really routinely cope with but it is the industry standard. So we've taken the other part of OptiMAL rather than the mammalian display part, the Opti library and the gene synthesis that represents a huge proportion in most cases, the human genome or immunome, and we can put that into a phage display format. Now that does 2 things. It makes the industry standard in terms of phage display and makes it cheaper to actually do the planning, and the compromise that you're looking for only a fragment and you then have to build that up. So it adds complexity later, unless, of course, it's a fragment that you're actually looking for. Again, different clients want different things. Some of them are looking fragment OptiPhage way to go forward. That's still what we would classify as being in development. Some of you will have noticed that we released an RNS showing projects that we were undertaking for a client to develop OptiPhage for them in a nonhuman species format. So that's basically starting from scratch, but it was really the design of the Opti library and the principles behind that, that the client was particularly interested in, and they want to be to fit there their phage. So we were quite pleased to bring forward the OptiPhage platform for that client. And then hybridoma's traditional ways of doing screening. So this -- we use an animal host and allow that animal to produce antibodies. We then harvest those and move forward. B-cell cloning is a modification of that where the B cells from the blood of the animal typically rather than used to find the gene sequence and move forward in the usual way. So moving on to the business and how we've been doing. Highlights, and there were certainly some low lights for the year that ended 31st of March. The highlights was significant increase in sales pipeline opportunities during the second half of FY '24. So from around October onwards, we still have things certainly starting to pick up. And by the fourth quarter, in other words, the start of calendar year 2024, things were certainly on the increase. So that was certainly the highlight. The whole industry had a very difficult time. Our clients have had an even more difficult time than we had, had. There are increased numbers of commercial opportunities identified in that improving pipeline. Of course, one of the other highlights for us is that a collaboration agreement with the National Cancer Institute, highly prestigious real experts and key opinion leaders in mammalian display. So we couldn't wish for a better partner to do that validation of OptiMAL. We did undertake a company reorganization in the face of those difficult headwinds that we were going into for the whole market, which resulted in a significant reduction in the cost base, and we're still seeing benefits of that coming through now. And Stephen will take you through some of those in a moment. We also implemented a new commercial strategy. This was partly because we felt we were overexposed to the investments and sensitive VC-funded biotech sector, particularly for therapeutics. Whereas diagnostics, for example, have done extremely well, particularly after the pandemic and have money to spend -- a lot of those diagnostic test use antibodies. And so it's a really good fit with the things that we could offer. So we had a bit of a push to increase our presence in the diagnostics sector. One of the benefits of that strategy, a really important benefit is it reduces the risk of fluctuations from, for example, VC money, venture capital money drying up for our clients. Because not all of our clients in the extended customer base are not sensitive to it. But in addition, there's more clients to go after a bigger market, and so it helps in that sense as well. So as you all know, financially, we had audited revenues of GBP 1.14 million. The order book at the end of that year was a much more healthy GBP 0.75 million, representing about 65% of the FY '24 audited revenues, and that was purchase orders received, ready to go, work in progress, et cetera. The cash position at 31st of March was GBP 1.2 million versus the previous year where we were down at GBP 0.2 million, and the increase in the cash is really due to fundraises that we have done. So I'll hand over to Stephen now if -- Stephen, you could just introduce yourself and then take us through the slides.

Thanks, Adrian. So by way of introduction, my name is Stephen Smyth. I'm a Chartered Accountant and partner at accounting and business services firm, AAV. We have offices throughout the U.K. and Republic of Ireland. And I've been in the role of Interim Chief Financial Officer of Fusion for -- it's about a year. So we'll initially look at the income statement for the audited period. As Adrian mentioned, the company recorded revenue for the year ended March 31, 2024, of GBP 1.136 million. This was a decline of GBP 1.65 million or 60.8% over the previous 12 months. This resulted in a gross loss of GBP 45,000 and a gross margin of minus 4%. This is compared to a gross profit of GBP 574,000 and a gross margin of 20% for the previous reporting year. It is worth noting, and I think Adrian touched on the restructuring efforts, but it is worth noting that restructuring efforts continued well into fiscal '24 with the gross margin, for example, in quarter 1 of fiscal 2024 being minus 54%. So significant overhang from legacy expenses but we're dealt with successfully throughout the year. I think the success of the restructuring process enabled the company to significantly reduce its cost base to the point where GM had recovered our gross margin, I should say, had recovered to 10% positive for the final 9 months of the year. And we've seen that recovery into our fiscal 2025 numbers as well. EBITDA for financial year 2024 was a loss of GBP 2.068 million, a decline of GBP 303,000 or 17.2% over the preceding 12 months. And again, I think, given a GBP 1.765 million fall in revenue, a fall in EBITDA of only GBP 300,000, highlights the success of the restructuring undertaken by the company. We'll turn to the summary financial position, noncurrent assets, which is effectively our plant and equipment, fell from GBP 375,000 to GBP 158,000. That was purely a result of the amortization, depreciation charge for the year. There were no additions or disposals. Inventories have fallen from GBP 539,000 to GBP 460,000 due to both a small obsolescence write-off and a concerted effort by the company to manage its inventory requirements. I would hope but expect inventory to continue to fall as we report these numbers on a cyclical basis. Receivables at the 31st of March were GBP 603,000 of which GBP 437,000 were trade receivables that number is net of GBP 147,000 on provision for bad debts. GBP 46,000 related to our R&D tax credit with GBP 113,000 representing accrued income and prepayments. The reduction in receivables year-over-year from GBP 953,000 to GBP 603,000 is largely driven by a reduction in the R&D tax credit from GBP 262,000 last year to GBP 46,000 for this year. Cash and cash equivalents was GBP 195,000 at this point in time last year, or 31st of March last year, and is sitting at -- was setting of GBP 1.2 million as of the 31st of March 2024. So obviously, a much more healthy position from a cash perspective, given there were 2 raises during the year, but also a significant effort made reducing expenditure. Current payables, stepping to GBP 584,000 at the last year-end. This comprised trade creditors of GBP 283,000 accruals of GBP 125,000, deferred income of GBP 101,000 and payroll and other taxes do GBP 43,000. Pensions payable of GBP 11,000 on the current portion of our higher purchase liability, which is GBP 20,000. And the follow-in current payables year-over-year from GBP 878,000 to GBP 584,000 was primarily driven by GBP 240,000 [ plans for ] in order to create creditors balance. I think it was this time last year, we were sitting on a precarious cash situation, and creditors had sort of the lead time on paying creditors had been longer than we would have liked, but that is not a situation we are currently dealing with. Noncurrent payables, GBP 43,000 is broken down as GBP 23,000 now for the noncurrent portion of our higher purchase agreements and our carryforward GBP 20,000 leasehold dilapidation provision. Equity has increased effectively due to the 2 raises in fiscal 2024 from GBP 1.124 million to GBP 1.1793 million. Fund resin activities for the year totaled GBP 2.7 million net of fees. Return to our summer statement of cash flows. Our cash burn for the year was GBP 1.67 million. We have nothing really other than 1,000x of interest income in the way of investing activities, no additions to capital assets, as I previously mentioned. And then the financing activities, which is the GBP 2.77 million of the 2 fund raises during the year in June and right at year-end in March 2024, totaled GBP 2.77 million net of fees. So a positive cash movement in the period of just over GBP 1 million, moving the balance year-over-year from GBP 195,000 to GBP 1.2 million. Adrian, I will hand it back to you.

Thank you very much, Steve. I particularly prefer to focus on what's happened since the end of the financial year. So some key highlights here for H1 '25 to date. So as I mentioned previously, there was the first OptiPhage contract, which we really brought forward the plans for OptiPhage because the client was out there asking it. We responded to that. Explaining along the way that we're in research mode for it, they're happy to do that and fund us to do the work, developing a nonhuman antibody species, phage display library for them. So we received that work in -- of that order in April. There was a little bit of a delay whilst materials were gathered, which were being gathered by the client, but work is progressing really well. We also received further purchase orders under a master services agreement that we had originally announced April 14, '24. So it's really great to see that one coming back, repeat business, it's building and going extremely well with our client. Very pleased with them. I think they're very pleased with us. Otherwise, they wouldn't be placing so much business with us. Similarly, one of our other major clients is the U.S. biotech and they -- we had announced deals with them, purchase orders with them for $650,000 and GBP 200,000. The reason why we chose to express the latter one in pounds was because it's almost exactly 10% of the market expectation for the company for this current year. Ongoing AI/ML project. So this is not AI/ML-Ab as such, but using AI/ML to investigate what makes antibodies good expresses or less good expresses that works being undertaken with the University of Oxford and again, progressing quite well. It's a research project. It's a little open-ended. We're not doing that really to get an end product as such. But we're certainly learning a lot along the route and really delighted to be working with such bright people at Oxford University. We also, as I mentioned earlier, with our mammalian display platform, which is working really well. We decided to use it for other proteins. So these are -- it was designed for antibodies to be expressed on the surface of the mammalian cell. Could we use that for other proteins than antibodies. So that was a really interesting one as well, and I'll give you a little bit more information on that as we move through the rest of the presentation. Of course, we continue to sign new clients. Not all of them are big projects. In fact, the majority of business is relatively small projects that come through. Collectively, they certainly add up. One of them, which I've highlighted here, I was particularly pleased about was the pharma division of a very well-known Japanese conglomerate. They could go anywhere in the world. They chose to try Fusion and come with us, and we're delighted that they did so. Hopefully, we'll be able to build that relationship going forward. But it was really pleasing not only because they're a company of significant size, but also because they are in Japan. Remarkably difficult market to crack, but it shows that, again, it's just another example of our global reach and the business that we command in -- from here in Belfast. The positivity overall in the industry and in particular, our client base is much better than it had been. Everybody suffered in the industry quite at significant downturn due to the drop-off in investment and that in turn was due to increasing interest rates and inflation rate. So we've seen that, that seems to be washing through and in some cases, has washed through. People are back to progressing their projects at the speed and the rate that they would normally have done and it's really great to be working with those clients. Some people are still suffering. It's still not easy out there. It's still very -- really quite challenging to raise money for our biotech clients who are trying to do that. We appreciate that, but we're particularly pleased about the positivity amongst the industry to show that things are on the right trend and upward. And that's particularly reflected, I think, in the unaudited Q1 revenues that we released in the trading update some time ago of GBP 522,000 compared to GBP 241,000 in the first quarter of the year that we've been discussing in this update today. The revenues from both therapeutics and diagnostic sectors are now growing. So it's really good that it's not just diagnostics that's coming back, it's therapeutics as well. But it is also worthwhile pointing out that the efforts that we put into targeting additional revenues from diagnostics has paid off, continues to pay off. And as a snapshot for now, we are making about 20% of our recognized revenues from year-to-date from the diagnostics sector. Single point, quite crude in terms of numbers, I wouldn't read too much into it, but it's a nice little indication that we did the right thing at the right time. We've significantly improved revenue recognition and that places us on plan, our own internal plan and very much on track to meet the market expectations and GBP 2 million is what the analysts are suggesting. We're not arguing with that. And we can do that without further investment. We are pushing that runway out and very comfortable with the cash position that we have. So move on to strategic focus and a little update on that. So as I've said, during the calendar year 2023, the market was really adversely affected by a reduction of the investment into biotechs in particular, due to increased interest rates caused by a spike in inflation. And we all know the global reasons for that. Fusion revised its commercial positioning to improve traction in its existing markets and the way that we position and sell Fusion, that's had an impact in how successful we are in conversion attracting opportunities but also converting those opportunities, I'm sure. And we've also improved traction, as I mentioned, in diagnostics, veterinary medicine and even research for antibodies, which are often considered to be low value. But if you've got the right one, there's certainly worth a significant amount of money. We also launched the AI/ML-Ab offering, which I think was very timely. A lot of people looking for alternative ways to reduce costs go to see whether AI/ML was going to be able to help them with antibody generation. Jury is still out on that question. I think it's fair to say. There's still certainly a need for the other kind of platforms, including OptiMAL, OptiPhage and of course, the industry standard hybridoma and B-cell cloning, et cetera. But as I mentioned earlier, we were really pleased to bring forward OptiPhage for an early adopter, even though it meant that we had to tailor it to their nonhuman target. So particularly in diagnostics, it's benefited from -- the whole sector has benefited from very, very significant cash flows in -- particularly because of COVID testing. Along with the cash flows, it's also benefited from a significantly increased perception and understanding from the public, from investors as well as demand for their products. People having got very used to doing a nasopharyngeal swab are now wondering what else they should test for and quite willing to take diagnostic tests to get an early indication of what health challenges they may have. An early diagnosis is the route and the key through to better outcomes as well. Our clients in diagnostics and in particular, is seeking to establish new assays for sure against new diseases or new targets of old diseases. But they're also looking to improve their existing assays and get improved security of supply for their antibodies. And all of those things in Fusion has the expertise to solve those issues. And we've been very much proactively engagement with diagnostic companies to make them aware of that and indeed to sign contracts from, as I mentioned before, they now make up about 20% of FY '25 revenues to date. Some of that has come from the deal that we have with the Master Service Agreement, that's for sure. But it's not only them, there's an awful lot more that's come from other diagnostic clients. So it does -- really does bode well and I think confirms that we did the right thing. Mammalian display, I promised to tell you a little bit more about. So that was developed as part of OptiMAL, that's the opti [indiscernible], and then the mammalian display way of doing it, provide surface expression in the way it was originally intended for an antibody on the surface of the mammalian cell. Now we collaborated with a client who asked us, could we try out with 3 of their proteins, which they currently use in highly valuable commercial assays and they're doing a very good business of selling these. So we tried it with 3. And in the first one, we had a tenfold improvement in expression. Second one, 20-fold improvement, and the third one, a 30-fold improvement. So this technology that we have developed primarily is enabling technology to allow us to look at antibody expression in OptiMAL libraries, clearly has a lot more application and if it's doing things that are orders of magnitude improvements over the existing commercial processes for commercial assets that makes us very much worthwhile talking to and people coming to us for our mammalian display, even if it's not the antibody things -- expertise that we're really well known for. So work is ongoing on that, and I will look to update people on progress in due course. But at the moment, suffice it to say that it is extremely exciting for us and shows a tremendous amount of potential. So I'll move on then to summarize and bring the meeting towards close or towards the Q&A first of all. As I mentioned, calendar year 2023 was very challenging. We weren't insulated or isolated in that regard. It was the whole industry that was hit, which meant that we were hit quite difficult. But we not only survived, but we've emerged much more efficient, a much leaner organization. Yes, head count is down, but we're doing more work per head than we did before. And we are fitter. And I mean that both or primarily in the sense that Darwin meant survival of the fittest. And we fit our environment and the market conditions that we now face. Really very well compared -- certainly compared to where we were back at the start of 2023. Yes, we had to do significant cost reduction exercise. It's now completed. It's reduced the burn rate and we're still seeing benefits of that coming through in the figures, et cetera. The platforms that we've commercially launched despite everything else, strengthens our unique selling proposition and our differentiation gives us proprietary technologies where people want to engage with us for them and they do, then they have to come to us. So that's mammalian display, AI/ML-Ab, OptiMAL and OptiPhage moving forward. So we continue to make progress with those, bring them to market, move them forward. And indeed, look for ways to sweat the assets, get more out of what we've done and make the best value return for the company and our shareholders. Antibody markets themselves remain very valuable, highly valuable. About half of the drugs come into market are antibodies, 4 of the top 10 bestsellers or antibodies. And Fusion has world-leading expertise to help the people, help companies move their targets forward not only in therapeutics and in diagnostics as well. So Q1 FY '25, which we've released the trading update for previously showed a marked increase in revenues and in prospects, and we remain on plan, on track to become profitable. The cash runway has been extended to H2 of FY '26, which could give us enough time, certainly if we remain on track to do that and become profitable. There are, therefore, no plans to raise investment through equity placement. One of the other items, which we've done somewhat in the background, but it's probably particularly relevant to this audience is that we launch an investor hub. So if you want to find out more about Fusion, if you want to dig into some of the things that we've got, there are videos, for example, with myself on there. I don't like that put you off. There are opportunities to ask questions, and the company will respond with answers as and when we can. Obviously, things still need to be announced by RNS. So we can't release information through the investor help unless it's gone through the appropriate channels before. The QR code on screen will take you to the relevant page. So please do use that. Do register if you haven't already. And please engage with Fusion through that format. It's there to make the transfer of information easier from the company to the investors, the shareholders but also to give us something of feedback from how you feel the things that concern you and the things that we should really be addressing and giving you information on as best we can. So at that point, I will finish the main session there. And I think we can turn to Q&A.

[Operator Instructions]

Yes, I'll start. I'll take the first one, Adrian. Can you give some indication on how gross margins have developed in financial year 2025 to date for financial year 2024? Gross margin was minus 8%. It's actually minus 4%, but let's not argue over minus 1%. Unaudited gross margins year-to-date, so fiscal year 2025 are actually ahead of our internal budget, which we hope will accelerate the company's return to profitability. I think I spoke in the presentation about by March, it had improved throughout fiscal 2024 as the effects of restructuring took hold, and I think we're really starting to see the benefit of that now in this financial year. Adrian, the second question is for you, I think.

Thank you. What is the development status of OptiMAL, specifically? How much R&D investment is being made? Well, we continue to invest in our R&D programs, but it's fair to say at a very much reduced cost to the business. I've highlighted some of the ways that we've done that. Much of it is due to entering into agreements with clients to tailor R&D projects towards their needs so that we can generate revenues whilst doing our R&D. It just that it overlaps and there's more than one party that's interested in the outcome. So that's a really cost-effective way of doing R&D. It does mean that we somewhat reduce our options, but it's a necessary compromise to ensure that the business remains on track to be profitable. OptiMAL itself, therefore, remains within research whilst we are willing to discuss beta-test options, such as we did and are in the process of doing that validation with NCI. We are happy to discuss that with other potential early adopters and beta testers as well. Stephen, I think it's back to you.

Yes, a very similar question again. Another question on margin. How did restructuring costs affect the gross margin in financial year '24? I think I actually mentioned this in my presentation. Restructuring costs had a significant impact on the gross margin for the year under review, particularly in the first quarter when the gross margin was minus 54%. And that number climbed as the year progressed and -- on an even basis over the final 9 months of the year, gross margin had recovered to 10%, and has continued to climb, more importantly for me anyway, has continued to climb since year-end. Adrian?

Thank you very much. So the next question was, you said the OptiMAL work is going well. Can you give us a more detailed update on the status of the validation? When might you expect some published detail? And are you already marketing a service to clients? So I don't want to say too much more at this stage. Publications on the validation work at NCI are covered by the agreement, and we've agreed to process for that. Essentially publications will be joint publications, so we will be co-authors. They will be peer-reviewed and we will likely be targeting high-impact journals as befitting not only the technology, but also the collaborators that we're working with. They are highly prestigious and we want to make sure that, that continues. So please bear with us. It also is worth considering that peer review process does also take some time to complete. Next question is also for me, which is, does the expanded OptiMAL agreement revenue generating, i.e., are NCI paying for the humanization? No. We undertook the humanization process as a goodwill gesture and look forward to having the benefit of publications with NCI as co-authors or possibly just them as being the authors. As I mentioned before, they are excellent people to be working with. They have a great deal of success in publishing work indeed, the antibodies, which we worked on and humanized. We have completed that work now. Had themselves in their prehumanization form being subject to the nature paper. So pretty high profile and likely to get us noticed. So any costs that we may have incurred are put down to the marketing budget but the costs themselves are minimal. There was only a bit of our time for humanization. We don't have to buy any reagents or anything like that. So I think, overall, a really good deal, we have a really good client, and we should have some really excellent antibodies producing really high-value publications in due course. Next question was how is the OptiPhage contract going? Have you successfully designed the library and have the client taken the exclusivity option? Have you had any more contracts for this service? So this, as I said, is in development. The project was done as ahead of schedule for OptiPhage. It's very much on track. We're not yet at the completion point. And certainly, we're not the client. It's not a position where they can make a decision on exclusivity. So it's on track, but it's ongoing work. Stephen, maybe you can do the next one.