Good evening, and welcome to the hVIVO PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Just click on Q&A, scroll to the bottom, type your question, and press Send. The company may not be in a position to answer every question received during the meeting itself, but we review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Yamin Khan, CEO. Good evening, Mo.
Good evening, Paul. Thanks for the introduction. Good evening, everyone, wherever you may be, and welcome to hVIVO's First Half of 2023 Trading Update. I'm sure you've been eagerly looking forward to this presentation, as have I. We've had a wonderful six-month period, we'll get into the details on the numbers and what's happening in the background to give you a better update of what we've been up to in the last six months, and also what we intend to do in the next six months and beyond. First of all, some admin to get out the way. This is the standard disclaimer for the presentation. For those of you who don't know me, I'm Yamin Khan. I'm the CEO of hVIVO.
I've been with the company as CEO since February of last year. Prior to that, I've had over 25 years in the clinical research industry. I have with me today our CFO, Stephen. Stephen, would you mind saying a couple of words about yourself?
Yeah. Hello, everyone. Good evening. I'm Stephen Pinkerton, I've been the CFO. I was appointed in October last year, I've been with the business for about seven years. Prior to that, I worked in the financial industry, with Thomson Reuters and Chartered Capital.
Thank you, Stephen. Let's get straight into this first half. Well, for those of you who don't know, hVIVO is the world leading provider in human challenge trials. We are the number 1, in fact, the only challenge trial-dedicated CRO in the world. Our mission is to effectively deliver today's healthcare by empowering tomorrow's innovation. I firmly believe that the human challenge trial concept is an underutilized concept when it comes to developing vaccines and antivirals. I think over the last 18 months or so, we have seen a significant uptake in the human challenge trials from a number of our pharmaceutical and biotech customers.
A lot of these customers are now also seeing benefits, be there through getting additional incentives from the regulatory authorities such as the FDA or biotechs who are selling their assets, or the company being acquired because of the results from human challenge trials. For us, the human challenge trials, we believe, is a key way to expedite the drug development for the right types of vaccines and antivirals that work against infections that cause a acute, short-term, stable, measurable disease. That's what we focus on. Going straight into the numbers for the first half. We delivered a revenue of GBP 27.3 million in the first half of 2023. This is a 52% increase year-on-year. I do want to clarify something here.
We have decided to report our revenue, excluding other income. Historically, we have reported revenue, including our other income, but the other income, which consists mostly of R&D tax credit, does not really provide a true reflection of our operational ability to increase the revenue we generate. For increased transparency and being in line with the common industry practices, we feel that now is the right time to report revenue so you have a better idea about how we are performing as a company. We will be excluding other income going forward. Like for like, we have a 52% year-on-year increase. I'm also pleased to inform you that we will be expecting to report an EBITDA margin of around 19%. Again, this is a significant increase from the first half of last year.
To cap it all, we have proven to be an extremely good cash-generative business. We're showing increases in revenue, improvements in EBITDA margins, and we have, at the end of June of this year, GBP 31.3 million in cash. This is after, of course, paying the one-off GBP 3 million dividend, which was shared out in early June. With regards to our operational capabilities, as I'm sure you're aware, we've conducted over 70 human challenge trials. Just to give you a little bit of context, our next competitor, we believe, has less than 5 challenge trials under their belt.
We've also inoculated over 4,000 healthy volunteers. Patient recruitment is really a key obstacle in conducting challenge trials, and we have put in place some really good people and good systems to improve our patient recruitment. This is something I will be touching upon later on. To this extent, we've also increased our lead generation. FluCamp is our marketing platform that we use to recruit healthy volunteers to the different media channels. We recruited around, we had leads of around 74,000 individuals in the first half of this year. We have, of course, as you may have seen from the recent press releases, introduced two new challenge models that we are developing. hMPV, human metapneumovirus, and also the Flu B type of influenza, are two of the contracts we have announced this year.
We are developing these challenge agents to be utilized in human challenge trials, hopefully in the future. We are also adding new revenue streams. I have spoken to some of you about this already, but one of the key new steps is that we have signed a contract this year with a phase 1 unit to repurpose the healthy volunteers who are not eligible to take part in our human challenge trials. This is something we are looking to add on to, and of course, there are additional revenue streams that we continue to look at and continue to explore. For the first time, really, in the history of the company, we've been able to increase business in the Asia Pac region. We signed 2 contracts in 2023 with customers based in the Asia Pac region.
This is something that I wanted to get into this space for a while, and this success is really good. Also shows that, you know, we are not just working with the U.S. and the European clients anymore. We do have a more global appeal. With regards to the order book, which personally for me, I see one of the key numbers, especially when you look at forward-looking and potential future revenues we will recognize, the GBP 78 million is the current value of our weighted order book. Remember, it's weighted based on different opportunities. Whether a client has already completed a phase 1, or whether they have some funding issues, or whether there may be other obstacle preventing us from actually recognizing the full revenue.
That GBP 78 million is a fourth or maybe even a fifth year-on-year growth, or sorry, period-by-period we've seen in the last two and a half years. The annual target we are reiterating at GBP 53 million. On top of that, of course, there's an additional GBP 2 million of other income. For the EBITDA, we expect to realize mid to high teens. More towards the high teens than mid-teens, but of course, we will continue to update you guys as we go on, and we will be providing a full trading update in September of this year. I will now move to Stephen.
Good evening. All right, let's take it from there. Mo has already sort of touched on the strong growth for H1. It is a great start to the year, and hopefully, that will continue into the second half. The key drivers for this is that, in delivering our revenue, is having a strong order book, which, you know, we had GBP 76 million at the beginning of the year, and certainly for the first half, fairly, fully contracted, and we're fully contracted for the full year. You do need to start off with that strong order book in the beginning of the year. The other aspect is that, we're running multiple studies concurrently. In the unit, in H1, we had five studies, of different variants.
That allows you to make sure that the. You know, you have enough volunteers to put into the unit. That also helps drive a strong performance year-on-year. The study size has also increased. It's now around about just over 100 volunteers, and that helps also continuity. Wherever you get, you know, IND might not materialize on time on the study, you still have another study which you can accelerate and push through into the unit. That helps, again, having bigger study sizes to have a strong continuity of work going through.
The other aspect is, as Mo has highlighted, we signed two full service contracts, but we're still delivering on a couple of, you know, full service contracts that we had last year. Those continued being delivered into H1 2023. This gives us two sort of additional streams of revenue. The manufacturing stream of revenue grew quite a lot in H2 2022 last year, and it continues to grow in this year. That's adding to, you know, the revenue growth year-on-year. I think what I'm very pleased to highlight is that we have invested...
In the beginning of the year, we made a conscious effort to drive performance in life sciences, and we've invested in a new BD, we've put some lead generation in there, and we've got a lot more activity happening around this business, and I think Mo will touch on that a little later on, but we're delivering 20%. This business has grown 20% year-on-year, and that is a fantastic result, and we're very pleased with that. EBITDA, as Mo has mentioned, has grown from 12.7% to 19%, and in absolute value terms, EBITDA has more or less, more than doubled versus H1 2022.
The higher margin has really come down to better utilization, and I just hinted in the when we talked about revenue, is just having multiple variant studies in the unit, which we had 5, and that allows you to have more volunteers in the unit, because you can recruit more easily, and so you get your cohorts nice and full in the unit, and therefore you have much better utilization in the quarantine and staff. That, not only do we deliver more for our clients, but we get much better utilization from our team. Having a strong order book at the beginning of the year has always helped, because you have consistency of volume of work, and so you can plan operationally much better, and you can start getting the efficiencies that you're looking for.
We're also investing in quality improvement, it's a combination of good, strong performance last year. Really, you know, the rate of the business profits is increasing. Strong cash, at the end of the year, at the end of H1 2023, we had GBP 31.3 million. This is up from last year, obviously at GBP 15.9 million this time last year. It was also up from our December figure of GBP 28.4 million. As Mo has highlighted, this is after the GBP 3 million dividend paid to shareholders in June. It's a nice growth in our cash from December and from compared to last year. The company remains debt-free.
We have a very robust net working capital, some of that improvement has got to do that, you know, at the end of December, we did have some debtors to collect, that has come down, and we have collected it. That's also got to do with very much the timing of the projects and the timing that deals have signed. You know, this is going to move around a little bit, but it is growing, and it's growing as expected, if not a bit higher than we expect. Key drivers. I think we have touched on in previous presentations and things like that, you know, our order book is contracted. It comes with a booking fee.
So therefore, every time we sign a new contract, we get a related booking fee. Also, the milestones on our contracts are they are set to fund the next activity. So with that, because we have a strong operational delivery and we're hitting these milestones, we get the cash upfront before we have to deliver. So that allows, you know, that's also a key driver behind the cash growth. Our capital spend remains very modest. It's very, you know, we have a strong discipline to make sure that we get a decent ROI on any investments that we make. I think from that, I'm gonna hand over back to Mo.
Thank you, Stephen, for that. As you can see from the numbers that Stephen has reported, we have performed excellent across all the financial fundamentals. I thought it'd be nice to give you a little bit of background on how we are achieving these numbers and why we are pretty bullish about the future and how we think we can hit our targets for 2023 or potentially maybe even beat them, then look into 2024 and what that holds for us. One of the goals of our team has been to diversify the portfolio of challenge agents. A challenge agent is a virus that we basically manufacture. We develop, we isolate and manufacture, so it's ready for human clinical use. Then, of course, we need to make sure it's at the right dose.
I want to describe that process in a little bit more detail because we are the industry leader. In fact, we are the only global service provider that can provide the full end-to-end service. This is a really good diagram of the different viruses we have currently on our books. The green viruses, the variants we have here listed, are currently available for use. They're fully developed models that we are currently using or at least marketing to our customers. The ones in orange are the ones we're currently developing, and the two highlighted here, the hMPV and the Flu B, of course, are the ones that have been awarded recently.
One of the key things to kind of take home from this is that we now only develop viruses, at least new viruses, new challenge models with a partner. We look to develop these viruses with a customer who is potentially looking to do a human challenge trial. We have been successful in this, and as Stephen mentioned, we have conducted five full programs in the human challenge development, and we will continue to grow this. As I mentioned in my last presentation, we have potential new opportunities in viruses such as the norovirus and Zika and pneumococcal. Of course, we will take full benefit of the opportunity if it arises. This is flexible. We will move and change depending on the market demands.
Currently, we don't have a dengue model ready now. This is something we will be looking to develop if we do get a partner signed up. What is this unique process we have? First, step in the whole process is really to get a viral isolate. This is where basically we take a swab sample from an individual who has an infection. We take that, we purify it, we sequence it, then we basically put it into what's called a GMP facility, a good manufacturing practice facility, to grow it to a certain titer so that it can be used for human use on multiple human uses. Because we want to have a sufficient amount to be able to run multiple trials. Excuse me.
Highlighted below, over the last 3 years, we have developed actually a really good revenue stream just in actually manufacturing the viruses. The second step in this process is to characterize the virus. We do this by running, effectively, a mini challenge trial without an actual drug. What we do is we take typically 20 to 30 healthy volunteers, and we give them a exposure to a certain dose of the virus, and then we see whether we get sufficient number of them to become infected. If you have a too low fraction of the individuals becoming infected, we then step it up and increase the dose. Then repeat that process until we have around 60%-70% of the individuals infected.
We know we have the optimal dose to be able to cause infection within a certain patient population. What you don't want to do, of course, is give too high a dose of a virus where everyone becomes infected. The challenge with that is the viral load in the nasal passage of the individual is so high that even an effective vaccine or antiviral will not be able to overcome this. We are the world leader. In fact, we are the only company that has done this multiple times in manufacturing these viruses to GMP level, and then being able to characterize it so it can be used in a human challenge trial model. Of course, the final step is to conduct the human challenge trial in itself. This is where we select a number of healthy volunteers.
The sample, the number of healthy volunteers within each trial does vary, but we're seeing an increase in the number of healthy volunteers per trial, which effectively means that we're seeing an increase in the value of the projects we conduct. The value of the project is directly related to the number of healthy volunteers we are asked to inoculate. What we do is we complete the placebo and the active group to see whether the vaccine or the antiviral works. One of the key reasons why we're seeing an increase in the sample size these days, is that our clients now are not just looking at whether the drug works or not. They also want to determine, for example, at what dose does the drug work? Whereas so previously, we would have two arms, a placebo and an active arm.
We have a placebo arm, a dose level 1, and a dose level 2. All this means is the client is better able to design the phase three program, get the right dose for the phase three, and also choose the right endpoints to give their phase three the best chance to show efficacy. On the bottom right here, you can see a list of recent awards that we've had over the last couple of years with regards to this full end-to-end. This is not to say that we expect these to continue at the current rate, because at some point we will have a sufficient body of challenge models that we can use. In those cases, we won't have to do the development process.
We won't have to do the manufacturing, we won't have to do the characterization, we can actually go straight into the challenge trial. For example, the next client to sign up for a hMPV trial, well, we won't have to do the manufacturing or the characterization because we would already have a well-developed challenge model. We will go straight into doing a challenge trial. This, of course, saves time and money for the customer, but also it gives us an additional arsenal in our army to be able to continue to fight these viruses, be they with vaccines or antivirals. A brief overview or background on the couple of the new models that we are developing right now. Influenza B is a type of influenza.
In fact, there are 4 different types of Influenza A, B, C, and D. Influenza A is, of course, the major subtype, it's the most prevalent. When you get influenza, the likelihood is that you would have an Influenza A virus. But Influenza B is also highly prevalent, or much more than C or D. Around 25% of people infected are infected with Influenza B. But the biggest challenge with Influenza B is the proportion of the people infected with Influenza B within a influenza epidemic is very volatile, which makes it very difficult to conduct a phase 3 or a phase 2 field trial, because you don't know whether you will get a sufficient sample of patients who are infected with the Influenza B virus.
This, of course, makes the human challenge model the ideal tool to determine whether your drug is efficacious against the Flu B variant, because we are, of course, can isolate the Flu B virus and inoculate our individuals with that particular virus. We don't have the complication of not knowing whether a certain person who has influenza or flu-like symptoms is infected with A or B, because we know what we inoculated with in the first place. Currently, there are no vaccines available for Flu B. In fact, a couple of the large pharma have recently shown failures in the phase 3 point with regards to showing efficacy against Flu B. This is potentially a good market for us.
We already, of course, have a client lined up to conduct a human challenge trial if the manufacturing and the characterization is successful. We're also getting a good level of interest from additional biopharma companies who are interested in conducting Flu B challenge trials. hMPV, this is a human metapneumovirus, is from the same family as RSV. It's not as prevalent as RSV. It has a sufficient amount of prevalence that it is causing an issue. I remember one of the doctors called this the most important virus that no one has heard of. There is, in some cases, high incidence year on year. This is something we need to be worried about.
We are looking at the numbers where 5%-16% of children infected with hMPV do develop severe symptoms. You can see that the number of deaths worldwide of children under 5 attributed to hMPV is over 16,000. On top of that, there's no current vaccine or antiviral available right, for hMPV. One of the key reasons why we continue to develop these new virus models is that as we move forward and as vaccine technology develops, you will end up seeing bivalent, trivalent, or quadrivalent vaccines. This is where one vaccine works against multiple viruses. Of course, if we have an RSV challenge model and also a hMPV challenge model, then that's a really good space for a company to come in and see whether their vaccine is effective against one or both viruses.
I mentioned earlier FluCamp. Patient recruitment or healthy volunteer recruitment is the number one challenge for most clinical research organizations. Anyone who looks to do clinical trials knows that patient recruitment delays around 80% of the clinical trials that are starting. We have invested significantly over the last 18 months or so in the staff and the team who are responsible for the patient recruitment and the healthy volunteer recruitment. As I've mentioned before, we have brought the call center in-house. We have hired a new management team. We have implemented a new CRM and built new algorithms in gaining and retaining healthy volunteers. You can see our database is over a quarter of a million healthy volunteers.
We have 100% success rate in recruiting all of our studies, and we continue to improve and become better at converting the leads into visit 1, into visit 2s, and into inoculated patients going into quarantine. As you can see already, the number of calls we have made from our call center is very significant. This is a big machine, and it's one of the key reasons why we have been so successful. I'm aware of one phase I CRO that happened to be running a few human challenge trials, but because of recruitment issues, they've had to close down. This really is something that we know we are really good at. Of course, we will not become complacent.
We're always looking at new ways to improve, the multi channels we use, we use TikTok, Instagram, Facebook, and so on, as well as attending student freshers affairs and other local events to kind of highlight the FluCamp name. Not so long ago, a guy called Tom Scott, who's a YouTube influencer with over 6 million subscribers, gave a tour of our facilities. If you haven't seen that may be a good way to introduce yourself to hVIVO and its quarantine facilities. That post has to date had around 1.5 million views. Again, a really good platform to promote FluCamp and our name out there. On top of that, I also...
I already mentioned, we've now been able to strike a deal with a phase 1 unit. The majority of the healthy volunteers we screen do not actually qualify to go into a challenge trial. The screening process is very stringent with regards to health and so on. On top of that, of course, you have to be serosuitable, so you can't have antibodies against the virus we are testing. For this reason, we have struck a deal with a phase 1 CRO, whereby the healthy volunteers we screen are ineligible to go into our human challenge trials, can be repurposed and put into phase 1 trials that the phase 1 CRO is running. Of course, the number of human challenge trials we are running at the moment continues to go up.
As this graph shows, we've seen a successive increase in the number of trials. This basically means, of course, that we have more revenue. It's also due to the diversification of the human challenge models we have, and of course, the fact that we can deliver more healthy volunteers in a time frame. This is something I expect to continue to increase. Not only are we delivering for today, but we're also building for the future. Some of the investments we have made with regards to technology is not just to address today's needs, but also improve the deliverability of 24 and 25 numbers and so on. The number of healthy volunteers required in each trial is also increasing. I mentioned why that case is.
As we move forward, as our clients tend to see bigger benefits from the trial data they're producing from human challenge trials, then I think we will see even bigger trials. Of course, we continue to work with the regulators, the nonprofit organizations, to promote the utility of human challenge trials and the human challenge trial data to expedite vaccine and antiviral development. A couple of case studies. We recently completed a human challenge trial for Cidara. They used that data to partner with Janssen, which was announced in a press release not so long ago. In addition, the first or one of the first RSV vaccine hit the market or approved, got marketing authorization in May of this year. This was Pfizer.
We, of course, ran the human challenge trial for Pfizer. As a result of that challenge trial, or at least as a contributing factor of the challenge trial data, Pfizer were able to get Fast Track designation, thereby expediting the regulatory review of their product and saving up to 2 years in the regulatory timelines. As this RSV vaccine has come to market, we see this as a great sign that a drug that has been studied in a human challenge trial setting is now ready to go into patients. Because the challenge trial, of course, is getting to patients much faster. For this, for us, this is a hugely successful story, and we want to repeat this again and again.
As a result of this, we've seen an even more increase in human challenge trials. People see the results of the human challenge trial data and what they can do, whereas before we used to say, It can do this, it can do that, now we can say, It has done this. The benefits of human challenge trials are now tangible. I wanted to give you an idea of the diversification of the pipeline. The pipeline refers to the sales opportunities that our sales team is currently managing and handling. This is not contracted work, this is potential future work. Of course, not all of this will be signed, not all of this will happen.
Some clients will decide not to do the human challenge trial, some will have no funding, some maybe will postpone about 3-5 years, but some will go ahead. The key reason I am highlighting this on a slide for you is to show the diversification of our client base. By geographical region, you can see we now have a client base across North America, Europe, and APAC. With regards to the type of company, we now work with both pharma and the biotech. The most important pie chart really is at the bottom, and the multi colors you can see in that shows you that we now have interest in multiple challenge trials. Whereas historically, we maybe only have one or two challenge models that were really contributing significantly to our revenue and order book, now we have a much more variety.
Of course, each time we knew we add a new challenge model, we open up a new revenue stream. This is important for us as we plan to continue to grow as fast as we think we are going to grow. This chart is from GlobalData, which is a database for clinical trial analytics. What I wanted to show you here was that the continued increase in the number of phase I, phase II clinical trials that are being initiated in the indications where we have a human challenge model. I'm not saying that all of these trials are eligible to be converted into a human challenge trial, but this is the type of market we have that we wean from to conduct human challenge trial. As you can see, this continues to increase year-over-year.
I have intentionally not included COVID in this, because, of course, COVID peaks, and it is too high of a factor to be able to show what is the real underlying trend in this increase in the number of trials being conducted by different companies. We will continue to add new revenue streams to our portfolio. One of the items we are working very hard on is increasing our hVIVO lab services. We're now actively marketing and selling our lab services to third parties to conduct non-human challenge trial work, and this is something that's currently ongoing. As I mentioned to you before, we have signed a contract to provide clinical site services for a phase two or phase three trial. The voluntary repurposing, I have already mentioned, and something that's currently active.
In addition to that, we have successfully, as of towards the end of last year, started consulting services, especially in quality assurance and also in clinical development. This is in addition to the consulting services that Venn Life Sciences provides. Venn Life Sciences, of course, most of you know, is a subsidiary with offices in Breda, in the Netherlands, and also Paris, in France. We have added a new office in Leiden, in northern Netherlands, in the Leiden Biotech. That's a great location for us to be in, considering the huge biotech opportunity available in that biotech park. I'm pleased to say that Venn Life Sciences is now coming in its own with a 20% growth in revenue in year-on-year.
We have invested in sales and marketing resources there as well, to let it begin to realize its potential. Of course, it continues to cater for the human challenge trial that HV will work. The medical writing of the protocol development is conducted by Ven Breda, and the end part of a challenge trial, the biometrics, which includes data management and biostat, is conducted by our colleagues in Paris. You can see from the chart here, we are marketing the clinical development services that Ven has, and we're now also adding new consulting services to their portfolio of services.
As we see changes in the market and new services being offered, such as the Advanced Therapy Medicinal Products, this is gene therapy and cell therapy, and we are beginning to see good amount of interest coming into those regions. Stephen, back to you.
Yeah. I think it's very nice to see that our revenue, our contracted order book of GBP 78 million, is up from our December figure of GBP 76 million. This is after delivering GBP 27.3 million of revenue in the first half. We're more than replenishing our contracted order book. I think that's, you know. It really gives you a sort of a sense of potential growth in this business. I think some of the highlights in that order book is, you know, we have signed two full service contract wins in Flu B and hMPV. Because these are new models, this will in itself perpetuate more volume of work in future years.
you know, it also comes on back of the fact that we signed before last year, so at least 3 last year. A total of 5 full service contracts, some of it is still being delivered as we speak, so it's in great shape. The other aspect is that the order book now also includes 2 Asia Pac biotech challenge wins that we won during the year. That just shows you the, you know, the, you know, the effort that we're starting to put in the BD is there's opportunity in Asia Pac, that's growing nicely. I think we're very also pleased to see that a global pharma consulting contract of $3 million won for Venn services, that shows, you know, that reflects that, you know, Venn is growing.
It's grown 20% for H1, that is a very nice result. That GBP 78 million means we're fully contracted for the full year, for the rest of this year, and it's also giving us a very good visibility into 2024. You know, despite... Well, we've had a very good half year, H1, GBP 27.3 million, and we're holding to our guidance at this stage for GBP 53 million for the full year. Wanna make note that we are fully contracted to deliver that GBP 53 million, and as I've just mentioned, we have very good visibility with our order book into 2024. EBITDA margin remains target remains mid to high teens.
We are in a very good position to deliver this guidance. In September, when we announce our interim results, our full interim results, we'll provide a further update on 2023. Should be able to give you a view on 2024. I'm gonna hand back to Mo, who will wrap up.
Thanks, Stephen. Hopefully you've been hopefully impressed by the trading update. We think we have delivered good on our numbers, and we will continue to look to do better as we go forward. The investment case, I believe remains strong. The fundamentals across the board are very strong. I'm not gonna go through each one again, but one of the things we are looking at is to continue to improve our efficiencies and continue to improve our margins. We have the world-leading capabilities. I don't think anyone can argue against us on that. We are the only human challenge trial dedicated CRO in the world. We've got the team that has unique experience and expertise in manufacturing viruses and characterizing viruses, and also conducting human challenge trials.
In fact, the only company in the world that has created bespoke challenge models, multiple times. The market continued to expand as we look to add new challenge models. There's some new opportunities out there for us. We're looking to add new revenue streams, which work hand-in-hand with the facilities and the resources we have. Although they're not gonna be huge in regards to total revenue, they should give us high margins, because we will look to conduct those services without adding too many resources, and within the same facilities we currently work in. We're also targeting new biotechs. You know, we've added 2 new biotech companies already this year, and of course, new region in APAC for new clients.
The hurdle to entry remains very high. I do expect at some point we will have competition, but it's gonna take somebody with very deep pockets to try and compete with us. Of course, the experience we have is impossible to compete against, and that's something that money cannot buy, and something we really utilize significantly when we are marketing our services and trying to close new business. The outlook going forward, you know, GBP 53 million in revenue, we reaffirmed that. Depending on what the MHRA does, you know, we look to hopefully beat that. The mid to teen, mid to high teens EBITDA, again, I'm very confident in hitting those numbers.
I think if you were to take one message home is, look at the order book. I think that's the key message because the order book tells you that now, even though we are burning revenue, we're generating revenue, GBP 27.3 million of it, in the first half of this year, we are actually winning more work than what we are actually doing. The healthy GBP 78 million weighted order book that gives us full 100% revenue visibility for the rest of this year, but in fact, well into the second half of next year. We will continue to aggressively market and sell our services to the biopharma industry, not only the human challenge trials, but the lab sciences services, as well as the additional revenue streams I talked about. I thank you for your attention.
I hope you are happy with the trading update as I am. I congratulate the team on doing a wonderful job. We are highly motivated in making sure that we hit or beat our numbers for the full year. Thank you.
That's fantastic. Thank you very much indeed, Mo, Stephen, thanks for updating and the presentation. Ladies and gentlemen, do please continue to submit your questions using the Q&A tab just situated on the right-hand corner of the screen. Just while the team take a few moments to review those questions submitted today, I'd like to remind you the recording of the presentation, along with a copy of the slides and the published Q&A.
... We're able to be accessed via your investor dashboard. Just like to remind the attendees today that due to the number of attendees on today's call, company may not be in a position to answer every question it receives. We'll review all questions submitted today, and we'll publish responses where appropriate to do so on the Investor Meet Company platform. Mo, Stephen , as you can see, we've had a number of questions, both pre-submitted and throughout today's live presentation. If perhaps, Mark, I'd hand back to you, and just, sort of, read out those questions where appropriate to do so, and I'll pick up from you at the end, please.
Thank you for that, Paul. I, I can tell you right now, there's no way we will be able to go through all of these questions. We've got a large number of pre-submitted and also new questions that come through during the presentation. I will go through them as fast as I can so that I, I try and get as many question as I can. Is the current bank balance in line with expectations for this point of the year, or is it leading or lagging it? Stephen, you wanna take that one?
Yeah. I think the current balance is, well, it's a little bit better than we expected. It is growing, which is always very nice. It really reflects the growing order book and a strong delivery, so it should continue to grow. It will move around a bit because our figures can be a bit lumpy in terms of when we sign the contracts or when the milestones are hit. Generally, I would expect a consistent growth rate in that cash.
Thank you. Okay, what do you see as the biggest driver of growth in hVIVO revenue in H2 2023 and beyond?
The biggest driver, of course, is human challenge trials, right? As we continue to add new challenge models, it opens up new opportunities. We will continue to see increase in the revenue that the current life sciences deliver, but the human challenge trial still will make up the majority of the revenue for the second half of this year. On top of that, of course, we will be doing some manufacturing, so the hMPV, for example, and some of the FLU-v work that continues to happen at the moment.
Mo, you and Cathal are experienced men and presumably having regular meetings with investors, correct? When would you expect institutional investors to recognize hVIVO's potential and finally trust what is happening here and invest?
In fact, Stephen and I have met a number of institutions over the last 9, 10 months or so, we are seeing an increased interest from institutions. In fact, some of them have come on board onto the shareholder register. Not as many as I would like personally, I think one of the key things that we can do is to continue to deliver on our expectations, I believe it's only a matter of time that the institutions will come on board, the share price start to reflect the true value of our company.
Any contact from the UK government re future collaboration on COVID? No.
A simple one: When will the latest model for COVID-19 be given approval for running challenge studies? We have an Omicron variant of the COVID-19 already manufactured. We are currently looking for a partner to help to characterize this and to conduct a challenge trial. That's something we are currently actively pursuing on a number of fronts. I'm hoping that in 2024, we will have a good level of activity when it comes to COVID. The reason why I'm more confident maybe than I have been previously, is because the next generation of COVID vaccines will be mucosal vaccines, which either inhaled or tablets. They prevent you from getting infection and potentially prevent transmission.
I think that generation of vaccine would be an ideal fit for a human challenge trial model. Has the company approached hVIVO expressing an interest in takeover? No, we've not had any formal approaches yet. Is Nasdaq listing possible in the future as FDA approval of our work with Big Pharma? I don't think the FDA approval is linked to a Nasdaq listing. I know I don't have any current plans to be Nasdaq listed. Our clinical trials are conducted to the internationally accepted ICH GCP guidelines, which are accepted by the FDA, too. Independent of where you conduct those trials, the data is accepted by the FDA, and four of our clients have been given Fast Track designation through data conducted in our U.K.-based human challenge trial unit.
With the general improvement in landscape and acceptance of human challenge studies by regulators, how has the company benefited from this? Well, as you can see, the increase in the number of the human challenge trials we're conducting, the increase in the project size of the human challenge trials we're conducting, these are the results of the increase of responsiveness from the regulators. It has happened more than once, in fact, where a client has come to us, that they want us to do for them what we had done previously for a client who has got Fast Track designation. That is currently happening. Are the company able to harness this change in outlook by regulators to expand more rapidly? That's, I mean, 100% something we are looking to build on.
We know we are in a sweet spot here, and we need to make the most of that. Not only are we working with the regulators, nonprofit organizations, to increase the profile of our human challenge trials, we are, of course, working together with the clients and meeting with the regulators in optimizing the design of the challenge trial that would be best suited for the regulators and benefit the client in getting expedited drug development timelines. In February, I asked a question about the release of RNS for contract wins, and Mo mentioned they were in discussion with the brokers to determine the threshold required. Can you share this information as to what value is required for the contract win to be announced, so investors are better informed?
Yes, we have, I mean, I have weekly conversations with our Nomad broker, and we discuss each contract that is awarded to us. According to the guidelines from AIM, we of course, have to announce any contract that has a significant or material bearing on any of our financial fundamentals. Those are the key rules, and of course, our Nomad ensures that we keep that. We will continue to, of course, abide by all our AIM regulations. What is the current situation with the weighted order book pipeline, where GBP 78 million? Also, how much of the projected 2022, 2024 revenue is now secured? Well, as I mentioned, the 2024 revenue, we believe, goes well into second half of the year in 2024.
Of course, we have not given guidance for 2024. That's something we will do later on this year, so I can't give you a percent value as to how much of 2024 revenue is already contracted, but definitely more than 50%, let me say it that way. What's your business plan regarding the data agreement that you have with Poolbeg? When it expires, do you plan to renew it, and if so, will you continue to allow Poolbeg to access your data? Well, Poolbeg is our customer, in fact, so it's really up to Poolbeg to see whether they would like to purchase an extension to the access. This is something we will be working with them, and to see whether the demand is still there. Why do we never see Cathal Friel anymore at some of the company's shareholder meetings?
Cathal Friel moved into a non-executive chairman role. As a non-executive, he's not involved into the day and day. Myself and Stephen, together with the executive team, are held responsible for the delivery of the targets that we set ourselves. Of course, myself and Stephen report to the board on a regular basis, which, of course, Cathal Friel is the Chairman of. The pace of new business seems to have slowed down from previous years. Can you outline the reasons? Well, hopefully, you've seen from the order book, it's not actually slowed down. It's actually speeding up. The order book is the highest it's been for a long time that I can think of. Also, we've seen a 50% increase in year-on-year revenue.
Even though we have generated much higher revenue compared to first half of last year, we've still been able to grow the order book. Would you accept that no contract for five months and little communication with shareholders for the same amount of time is not the way to drive shareholder value? If you don't agree, can you please explain? Basically, from my point of view, you know, we, of course, value and cherish our retail shareholders. They are the backbone of the company. I mean, you are part owners of the company, and I'm responsible to deliver value to yourselves, and that's important to me and to the rest of the executive team. The board represents every shareholder we have in the company.
The continued increase in the size of the project has resulted in continued growth, and I don't see that reducing. We will be doing more shareholder-facing events. For example, we will be doing an IMC in September, and we also presented in April, and we will be presenting, or we are registered for a webinar during the Master Investor Healthcare in September. We will be increasing, basically, we will be giving, or I will be more FaceTime, so hopefully that's good. What steps have you taken planning to improve your ratings on websites like Glassdoor? What percentage of your clinical lab employees are permanent staff? Around 80% of our clinical lab employees are permanent. Glassdoor is...
I mean, I wouldn't give Glassdoor as a true reflection of the status of what the employees think of the company. I think the people who do register their feedback on Glassdoor tend to have a grudge against the company. Just to give you an indication of our employees, we've started, initiated a company-wide bonus scheme and incentive plan, increased our training program. We've actually improved our retention rate significantly, so we're keeping a lot more of the staff than we ever had. I believe, I know they're happy, otherwise, why would they continue to be with us? I think everyone is excited with the continued growth you've seen. I mean, who doesn't want to be working in a growth company, working clinical trials at a cutting edge?
Have you determined any methodology to extrapolate vaccine efficacy for lower respiratory tract infection? This is something we are looking at, but you have to also remember that we don't have many volunteers getting lower tract respiratory infection, because we are working with healthy volunteers. We are looking to see how we can increase the measurement of lower tract respiratory infection to improve the correlation with field-based trials. What does the future pipeline look like? I think I've hopefully answered that question already. Coming to the questions from today. What is the limiting factor that is causing delays at the MHRA, and is it fixable? It's resource constraints within the MHRA. There has been a bottleneck in the review of new protocols and protocol amendments.
We have been working very closely with the MHRA, as well as our customers, to put together plans to expedite the responses. We had a risk mitigation policy in place, and that's one reason why we are able to reiterate our full year guidance. Is it fixable? I wish I could fix it myself. Of course, it's a government entity, a regulator, and as much as we can work with them, we are working with them, but we are seeing signals of improvement very recently. We are seeing approval starting to come through now, so I'm hoping that the major impact is already over. Maybe, this is one for you, Stephen: How is Venn contributing to hVIVO, considering hVIVO was a merger of the two companies to start with?
Venn Life Sciences provide two services. They do all the medical writing, the synopsis design, and all the CSR report for our challenge studies. As you can imagine, with our studies, challenge revenue is growing and is a key driver in the growth of this business. They are also having a stronger impact in delivering that. As Mo mentioned in the back engine, at the end of the study, all our, you know, providers, it's not dealing with Big Pharma, all our contracts use our Biostatistics, our biometric team in France, who do all our data management and Biostatistics, statistical analysis. They're very involved, and we have a regular weekly meeting with them to update how the challenge business is moving, because they have to contribute to it.
Thank you very much. What plans do you have for your increase in cash flow? Well done for everyone's hard work. Well, thank you for the well done. We do have plans for the cash. Watch this space, really. Let's see what happens as we move forward. This is one for you, Stephen. Can you start reporting cash split between available cash and cash held in the form of customer advance payment? I ask this from the viewpoint of customer advance payments being non-refundable.
Yes, we can do that. It's actually quite easy to calculate off the balance sheet. When we publish the balance sheet, you can literally take trade debtors less deferred revenue. That gives you the sense of the cash that we received up front on our clients.
Okay, great to see the cash position. Stephen, this is one for you again. What interest rate are you currently receiving on this, please?
We do have quite a bit of cash invested, obviously, on deposit of stages between 30 days, 60 days, and 90 days. We do also invest across a couple of institutions, well, actually three institutions, to make sure that we wouldn't, you know, don't want to have the iceberg, Iceland effect again. I suppose in short, the answer, it's close to bankers rate, and it's flexible, so every time the bankers rate moves, Bank of England rate moves, it also increases at the same time. It's just under that bankers rate, so it's quite close. It's good.
How is the mix for the order book developing, e.g. larger or longer individual contracts? Yes, we are actually winning larger contracts, as you would have seen from the RNS that we re-released this year. Has the order book value increased as a result of yesterday's GBP 13.1 million contracts? Someone's being very astute there. Yes, it has increased, but not by GBP 13.1, because some of the work has already been recognized. As we continue to generate revenue, it eats into the order book, and then, of course, we need to generate new sales to continue to supplement that. Are currency movements likely to be a factor in the result this year? No, because we don't really have any foreign currency contracts.
Do you expect EBITDA margin to continue to increase or plateau? I expect to increase and then eventually plateau. Where it plateaus, well, that's something to look forward to, but continue to increase, I think is the key take-home message there. Are you considering paying another dividend at year-end results? No, commitment right now, but of course, all options are open. We'll see what the management team and the board decides at the right time. Can you explain in detail your revenue recognition policy? Maybe not too much detail, Stephen, but maybe an overview.
Right. In simple terms, we recognize revenue based on delivery. Our projects, contracts are very detailed via line item, and to the extent that that line item is delivered, whether it's an hour or whether it's a unit, or whether it's a visit, or whether it's a day in the unit, there's a charge that goes on to the client study, and revenue is recognized accordingly. It's very much revenue is recognized on delivery.
Okay, if you're not going to use your cash on hand for acquisition, would it be of interest for a company to institute a share buyback, maybe a quarterly Dutch auction to support the share price during low liquidity periods? At the moment, I think the key message really is that we are very pleased with the cash that we're generating. The fact that we are generating cash, I think, is a very. Well, it's a good plus, let's say. We will be looking at that together with the board and determine the future path of the company. So all options are currently on the table. Why is the guidance so conservative for 2023, given the pipeline of work?
One of the reason really is the MHRA. We just wanna make sure that we are a little conservative because we are relying on the third party, like the MHRA, to give us approval to be able to start a clinical trial. That's one of the main drivers.
Mo, Stephen, I know you've rattled through a lot of questions there. Thanks for picking out so many from investors. I'm sure they're very grateful. We are just coming up to the hour mark, and of course, all those questions that have been submitted, the company will be able to review any further questions that come in, and we'll publish responses on the investment company platform, where appropriate to do so. Perhaps at that mark, Mo, I could just ask you just for a few closing comments before we redirect the administrators to give you some feedback.
Thank you, Paul. I, first of all, I apologize for maybe talking too fast during those Q&A, but I wanted to get to as many of your questions as possible. As we will be increasing our interaction with our shareholders, I'm sure you will be given ample opportunity to ask your questions again, if you haven't been able to get an answer that you're happy with today. Happy to do that given the right opportunity. I hope you feel as optimistic as I do with regards to the company's future. The fact that we have now consecutively hit our financial targets, I think is really a plus.
I'm also very proud of the group of people that we now have employed at hVIVO and its subsidiaries. They're a very strong team, all in the right positions. The fact that retention is the best it has been for a long while, means that we're able to create a really good culture within the company. I've had received so many comments from external visitors as to how motivated and happy the teams are that are working for us. Of course, you have to remember, what we do is cutting edge. Nobody else does what we do as well as we do it's not like something that's routine.
We are developing viruses and challenge models that have never been developed before, and conducting trials that are basically first in class. Thank you for your time. I hope you found this useful, but as ever, I'm here at your service, and if you have any further questions, I look forward to answering those. In the meantime, thank you for your time, and thank you for attending this call. Thank you.
Thanks, Stephen. Thanks indeed for updating investors and taking so many questions. Can I please ask investors not to close the session, as you'll be automatically redirected to provide your feedback, and all the team can better understand your views and expectations. This will only take a few moments to complete, and is greatly valued by the company. On behalf of the management team of hVIVO PLC, we'd like to thank you for attending today's presentation, and good evening to you all.