PHYSIOMICS PLC – Interim Results Update – Q & A

PHYSIOMICS PLC – Interim Results Update – Q & A

Q: The tie-up with Tabula Rasa and their DosemeRx platform was considered to be a potential game changer for Physiomics.  Now that Tabula Rasa have advised the market that they are selling their interest in DosemeRx does this in any way diminish this commercial potential

The answer to this was also covered during the main presentation however just to say that DoseMeRx remains interested in working with Physiomics and we are actively looking at other opportunities to commercialise our personalised dosing tool and platform.  Physiomics has no knowledge of who might be interested in buying DoseMeRx but believes there is a reasonable chance that whoever it is, is going to be at least as interested in personalised dosing as DoseMeRx’s current owner.


Q: Around three years ago the market capitalisation of Physiomics was around £4 million.  Today it remains around the same level, despite the addition of many prestige clients in the intervening years.  I wondered what the aspirations of the Company are with regards to growing the business

We did take a bit of a hit in financial year 2021 due to COVID and to investment of our time in risk-sharing opportunities, as previously discussed.  You can see from the figures that have been announced this week that we appear to be bouncing back pretty strongly, hopefully to a level of revenue even higher than we have achieved previously.  My personal belief is that we’re going to build strongly from here, going forwards.  We appreciate investors’ continued support for the Company and we want you to know that we are all working as hard as we can in order to generate value.


Q: Around twelve months ago you announced the setting up of an Advisory Board to look at potential business opportunities at Physiomics.  To date there has been no formal feedback.  Is there any positive progress you can report with regards to this?

This was also covered to some extent in the presentation.  In the last year we were really all hands to the pumps addressing the shortfall that resulted from the COVID crisis. Since that has now mitigated, we’re now refocusing both on growing the core business, but also investigating some of these more strategic initiatives that were the subject of that advisory board. And again, we will update the market just as soon as we can with progress that we’re making on that front


Q: Physiomics waived its charges in respect of work carried out for Valirx in favour of a results-based fee.   Do any such arrangements exist with any other clients

We announced last year that we were doing some risk-based work with Valirx whereby we would waive our normal fee in return for a percentage royalty on revenues associated with the product that we were supporting them with.

If were we to enter into such an arrangement, we would of course aim to make that public and it is possible that we could consider other similar arrangements going forwards. We have to make a careful, carefully balanced judgement about, sacrificing revenues that are here and now for the possibility of revenues in the future.  We do that on a case by case basis, depending on the relationship that we have with a client or potential client and depending on the quality of the asset that they’re developing. But we will continue to look at those sorts of opportunities.


Q: The NIHR-funded partner study at Portsmouth Hospitals is due to complete next month.  What will happen to the data collected from the study and will this be used to update the DosemeRx tool

The purpose of that study is to gather data to further validate and to suggest further directions of development for the personalised dosing tool that would certainly apply to the version of the tool that we are progressing with DoseMeRx.  Once that data is in and we’ve analysed it, which will probably take place in the second half of this calendar year, then any learnings or opportunities that we see arising from it, we will communicate externally if we can.  In addition, we would certainly try and see whether there were opportunities to enhance, upgrade or further develop the tools that we’re developing.


Q: What competitive advantage does Physiomics have?

That’s a great question. We have several. On the one hand, we are a specialist in oncology mathematical modelling, and there are few companies out there that can say that with their hand on heart.  We have competitors that do mathematical modelling who tend to be generalists.  We have competitors that focus on oncology, but they don’t tend to be specialists in modelling.  So I believe the confluence of those two things is a position where we have a unique market opportunity.  The second thing I would say is our people and our experience are really second to none.  They work hard, they’re smart and they’re universally well respected by the clients that we take on.  I also believe that we’re making genuinely important contributions to the R&D efforts of the clients that that we work with, and that has led to a significant boost in our reputation.

When I arrived at the Company 5-6 years ago, we were fairly little known other than amongst a small circle of clients that we’d been working with for a while.  Now we’re getting referrals; people that we work with, talk to their friends and literally relatives sometimes, and we get phone calls from those individuals who may be working in in other companies. We’ve had several projects commissioned in this way, and this is extremely gratifying.   I think it’s a real demonstration that what we do makes a difference and that our clients continue to value that.


Q: Please say a few words on the current pipeline?

The pipeline is genuinely the strongest it’s ever been. For the first time, we’ve really been able to quantify that by disclosing that we have contracted revenue of over £460,000 for this half that we’re in now. We’ve never been able to say that before. We’ve never had that degree of visibility for the next five months.  And obviously that’s just the revenues that we have signed up at this point in time.

Above these contracted revenues in the pyramid of Business Development we have a number of contracts that are in discussion, one of which is with another big pharma Company.   If we can clinch that one, that is another very exciting opportunity and could be a big step forward for the Company. But it’s not the only opportunity.  We now have a more rigorous process for categorising the different opportunities thanks to our new BD lead.  While this isn’t something that I can explain in a few words, I can assure you that at every stage within that BD funnel we now looking stronger than I think we ever have done before.


Q: In a world where CEOs are quick to hide behind all manner of different excuses. What keeps you afloat? When things could so easily drag you down.

What keeps me motivated is we really make a difference.   I try not to make excuses either for my own personal performance, that of my team or that of the Company.

I think for the most part that when we say we’re going to do something we do it. Obviously, there’s always uncertainty and there are some things that we can’t promise hand on heart. But for the most part, we deliver materially on the specific targets that we’ve set ourselves. We’re going to continue to try and raise the bar so that our targets are always stretch targets. But what motivates me is making a difference for our clients, both as individuals at a personal level, to help them be successful and as companies, and then ultimately to be making a contribution to the development of cancer drugs that are going to help save lives for conditions that have a terrible negative impact on people’s lives and cost economies huge amounts of money.  So that’s what keeps me motivated and in the business!


Q: Is the cash runway sufficient?

Our cash position is pretty stable. In the full year ended 30 June 2021 our net change in cash was a reduction of just ~£5k.  In each of the last two full financial years we’ve maintained cash and equivalents of over £1m. Now we may choose selectively to make some investments from that cash pile (as we have done in hiring a new BD lead for example), but we want to be cautious and leave ourselves a reserve float just in case of unexpected circumstances.


Q: You mentioned Project Optimus in your last presentation. Could you please elaborate on this?

Well, just to remind everyone that Project Optimus is an FDA initiative aimed at helping companies developing drugs to focus more on the personalisation of dosing.  So, although I don’t think it’s an initiative we would necessarily directly engage with, it’s certainly a clear signal that regulators are interested in how companies come to decisions about dosing in clinical trials.  It’s certainly a key driver of the interest by our clients in engaging with mathematical modelling and specifically with us in the field of oncology to provide some weight behind and quantification of the decisions that they’re making on trial design, specifically in relation to dosing and scheduling decisions that have been made on a more heuristic basis in the past.  If you go back 20 or 30 years in pharmaceutical industries, the way in which people calculated initial human doses was really just based on very simple algorithms, whereas now we’re able to bring to bear far more sophisticated tools and this is becoming an expectation.  As a result I think the market for this sort of activity is going to continue to grow.


Q: Why are your presentations always so short? And why do you appear alone. Some presentations on this platform have more than one of the team. Easily done remotely.

I would love to get more of the team involved in these presentations. I think that’s a fantastic suggestion. We will take that on board and try and make that happen perhaps later this year.


Q: Could you comment on your work or involvement with Merck KGaA?

We’ve been engaged with Merck for many years, even before I arrived in the Company.  As you will recall shortly after my arrival in the Company in around December 2017 we signed our first umbrella agreement with Merck where they aspired to spend at least €500,000 with us annually.  I’m proud to say that we’ve done at least that every year since then.  It’s not guaranteed and yet they’ve come back for more on a regular basis.  Our close relationship has survived management changes and reorganisations and importantly our relationship with them today, I believe, is the best it’s ever been.  Our work provides a key input to a number of important decisions they make relating to their active clinical programs and that makes me very proud.  This relationship is a very real validation of our Virtual Tumour platform.


Q: Is there any particular reason for the value of contracts remaining undisclosed?

We can’t always disclose both the identity of our client and the value of the contract because they won’t let us.  In my view, it’s more important for our shareholders and other stakeholders to understand who it is that we’re working with and what we’re doing rather than announce that we have a contract with an undisclosed pharmaceutical or biotech Company, because that sort of announcement never feels very satisfying and generally means that we can’t then really talk in any detail about what we’re doing with that client.   I believe the value of being able to disclose the identity of clients is greater than the value of just disclosing the contract size.  Where we’re required to disclose for reasons of compliance with regulations, then then we do so.


Q: Are you working on or close to developing a solution that operates similarly to SaaS whereby companies can purchase licenses to your services and integrate them into their own platforms?

That is something that we look at periodically and have alluded to in earlier updates.  We continue to be open minded about the possibility however I would just highlight that the solutions we provide are complex and it wouldn’t be like pre-packaged software where a user can easily, quickly read an instruction manual, tap a couple of keys and get an answer out.  We have, in fact, created stand alone executable version of Virtual Tumour in the past that we have left with clients as part of projects. But they’ve tended to be bespoke for the particular engagement that we’ve been working with the client on, and have not gone as far as full access to the to the platform for the purpose of developing new models. However, that is something that we continue to keep an open mind in regard of and if we saw an opportunity to do that, then we would certainly take a close look at that and see whether that could be interesting for us.


Q: Given the size of the global oncology pipeline, could you significantly increase modelling revenues? What are the barriers in scaling your highly specialised skills and how can you mitigate them?

Okay, well, that’s a great question. I do think that the market for what we do, as I said earlier, is continuing to expand. I think that’s part of the reason we have such a strong pipeline at the moment.  In terms of scaling, given the base that we started from when I joined the Company, we were initially a little bit cautious in wanting to take on a lot of additional fixed cost however we are certainly now in a position where we could expand the team and are in fact actively looking at options to do that.  Having only recruited  a technical team member last July I think it’s a sign of our confidence that we’re looking to expand the team again so soon and will make further announcements as and when that’s possible.


Q: Can you please elaborate on the potential significance of DoseMeRx being integrated into other platforms?

So just to clarify, DoseMeRx is a subsidiary of TabulaRasa Healthcare Inc (TRH).  It was the name of a private Australian company at the time it was acquired by TRH.  It’s also the name of their software platform, which is wholly owned by them and sold to clinical customers all over the world.  What we have done together with them is create an implementation of our personalised dosing tool on their platform.  That was done on a research basis and we’re now looking to see in what other areas of oncology we can expand that in order to produce an offering which could be really commercially interesting to some of the some of their clients.  I still believe it’s a significant initiative.


Q:  Can we say how long we’ve been in discussion with the potential new big pharmaceutical client?

We’ve been in discussion with them for over 12 months, and that is common for big pharma clients.  They take a long time to bring on board, but once you once you’ve got through all of their myriad procurement processes as well as the commercial negotiation around the contract then, with a following wind, they can turn out to be a client like Merck.  So the opportunity is significant.  It’s the sort of investment of time that, as a CEO or head of business development, you never mind making.  As I said in our interims RNS, we are in in in advanced discussions with the company and we’ll say more as soon as we’re able to.


Q: Is there any update with regard to the commercialisation of the Valirx deal and any revenue Physiomics will benefit from?

Unfortunately, I can’t comment on that as these are not our assets.  You’ll have to ask that question to the CEO of Valirx and I’m sure she’d be happy to address it.  All I can say is that we do have an agreement with Valirx whereby we share in revenues associated with certain of their assets in return for which we have been providing modelling support and advice through membership of their Scientific Advisory Board.  We really enjoy working with Valirx and feel that we’ve been able to make a great contribution to the progress of the programs we’ve been involved with.