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Edited Transcript of CLIN.L earnings conference call or presentation 19-Sep-19 8:30am GMT

Full Year 2019 Clinigen Group PLC Earnings Call

Staffordshire Sep 24, 2019 (Thomson StreetEvents) -- Edited Transcript of Clinigen Group PLC earnings conference call or presentation Thursday, September 19, 2019 at 8:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* David Bryant

Clinigen Group Plc - Director of Corporate Development

* Nicholas Keher

Clinigen Group Plc - CFO & Director

* Shaun Edward Chilton

Clinigen Group Plc - CEO & Executive Director

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Conference Call Participants

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* Amy Lucinda Walker

Peel Hunt LLP, Research Division - Analyst

* Andrew Mark Whitney

Investec Bank plc, Research Division - Analyst

* Charles Robert Weston

RBC Capital Markets, LLC, Research Division - Analyst

* Christopher Ian Glasper

Nplus1 Singer Capital Markets Limited, Research Division - Senior Research Analyst

* Max Stephen Herrmann

Stifel, Nicolaus & Company, Incorporated, Research Division - Head of European Healthcare Equity Research & MD

* Stefan John Hamill

Numis Securities Limited, Research Division - Director of Equity Research

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Presentation

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [1]

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Welcome to Clinigen's presentation of annual results, year-end, 30th of June 2019. Just before I start, so I will -- in terms of running order, I'll open proceedings, quick overview, and I'll hand over to Nick, the group CFO. It's also worth noting that David Bryant, who is the Clinigen's Chief Business Officer, is in the front row. So I've asked him to attend because there may well be some questions on the likes of Proleukin, and the U.S. and our European capabilities that we've added in the year. So while we're talking about yourself, I thought it would be useful for David to answer those as he was the architect for all of those. So I think quite useful. And again, for those who don't know, David, please chat him afterwards, but has -- just proceeds me in Clinigen so was really there right at the beginning. So I think that's something useful for today.

So people use the word transformation. We saw what they abandoned a lot. But I think for us, hopefully, it will become obvious through the presentation, is what we've done in the year. So 4 acquisitions, 2 products, 2 corporate. What that sets us up to do? How that's driven us towards being able to really talk about Clinigen as a genuine platform, I think, is transformational, not just in financial terms in terms of the year, but also what it does for the future. So we will get through this as quickly as we can and then obviously, open it up to questions.

So just to summarize, what -- again, by platform, what do we mean? So we've got 3 businesses, clinical services, Unlicensed Medicines and Commercial Medicines, which are designed ultimately to do 2 things: to create this compelling combination of capabilities oriented at 2 sides of an equation. Because our mission is to be the trusted global leader in access to medicines. So what does that mean? What do you have to be able to do to get to that point?

So the platform is designed -- and everything that goes into that platform is designed to do 2 things, to either to become the logical partner for the pharmaceutical and biotech companies that own the product. So we want exclusivity, we want to be able to control the supply, the source of those products. That's the first part of the equation. The second and equally important part of the equation is, a horrible expression, the end user, but the prescriber who needs those medicines. So you have to be able to own that audience. And that's both off-line, bricks-and-mortar, face-to-face and increasingly importantly online. So that's what the platform's designed to do. Product, platform, customer, that's essentially what the platform is constructed to do. And the statistics that you see there we shall come back to show the scope and the scale of what we now have. But certainly, the Unlicensed Medicines piece in the middle, particularly that Managed Access piece we'll come back to, is important because of what it gives the business and what it can do for the future.

The reason for putting this graph up, I guess, is just to remind people, it has been a build and buy strategy. We will continue to add things into the platform. But fundamentally, and I accept that it is one financial metric, but it is an important one, is that we have performed well on EPS. We've delivered double digit, sometimes strong double-digit growth in EPS since IPO, and we firmly believe that's set to continue. And I think it is a marker of the financial health of the business.

So in summary, all the key financial metrics, we performed well against. Importantly, though, from an operational perspective and strategically, there is balance. There are synergies which are becoming much more obvious, and we really only started to demonstrate how we can deliver on those synergies. We'll come back to the importance of CSM and iQone from a capabilities perspective, but that they do demonstrate the transformational nature of what we've done in the year.

Clinical services, CSM, has exceeded expectations. I do remember when we raised the money to buy it, that there was some skepticism. We have been here before with Clinigen skepticism around acquisitions, but I think we've delivered. Very exciting business, growing very strongly and I think is set for good growth in the medium term. And pleasingly, recovery in CTS had a hard time but has got itself back on track. Unlicensed Medicines, importantly, Managed Access, double-digit organic growth. And again, as part of the strategy, the regional piece is important in that longer-term on-demand Unlicensed Medicines management that we call Global Access. Commercial medicines, Proleukin, Imukin, a departure from previous acquisitions, although similar themes. And it always was about not having to rely on Foscavir. And I think that's the whole point of why we do what we do. But there is more behind commercial medicines, and we'll talk about that.

In terms of outlook, probably the most important point to make that Nick will expand upon is, and you guys have been asking for it for a while, probably about 7 years, so better late than never is to give you guidance. And Nick will talk about our confidence in that and why we're able to make the statement that we do make shortly.

So on that basis, I'll hand over to Nick to go through the financials.

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Nicholas Keher, Clinigen Group Plc - CFO & Director [2]

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My name is Nick Keher, and I am the CFO of Clinigen. Here to talk through the FY '19 results, to talk through the outlook for the company and to provide some technical guidance as well.

So turning, first of all, to financial highlights. It's been a strong performance for the group overall. It has been driven by acquisitions. But actually underneath this is a robust underlying performance, we believe, and I'd like to talk you through it. First of all, is just to go and highlight one of the key things at the top of the revenue.

Now for people that know us and have known us a long time, gross profit has been the quasi metric that people will look at in terms of our top line performance instead of the revenue number because we have a lot of pass-through costs coming through in the Managed Access business. So just to put that into a clarification, the organic number for revenue, negative 4%, actually, when we strip out those pass-through costs, it was positive 5%. So just to emphasize that we are beginning to look more at that top line growth as well. In terms of gross profit, strong reports in constant currency growth, organic of only positive 1% is perhaps not where we would like to be, but we did have 2 headwinds this year that went against us. First of all, it's Foscavir, second one was the U.K. Specials. Removing that and our growth was actually positive 7%. And I'd like to highlight that as a good underlying determinant for the growth of the company. The EBITDA line, positive 4%, was a robust performance, reporting constant currency a lot higher, thanks to those acquisitions. But again, if we strip out those 2 headwinds, the number was 23% in terms of growth. So on an underlying basis, stripping out those headwinds we've had this year, a strong performance overall.

The key -- 2 other metrics to talk about, as Shaun's alluded to, is earnings per share growth of 20%, a strong number, marrying what Shaun has said before in terms of the group's aspirations. And then on net debt, at GBP 252.4 million, broadly in line to slightly below what expectations were. So in terms of better cash generation and a fundamental positive for the company.

If we turn to a bit more detail on the cash flow performance now, it's another good year for the company, and it is a fundamental positive for Clinigen in terms of our cash generation and the conversion of EBITDA to free cash flow. There is an intense focus internally to make sure that, that free cash flow conversion happened in the year after quite consistent feedback from investors on the need to get our net debt down post 4 material acquisitions in the year. We believe we have achieved this in the year that has just happened. We believe we will continue to achieve this where the cash flow metrics in the company continues to trend well.

In terms of just one key highlight for investors and also for the analysts in the room is just on deferred consideration for the year. There are 2 meaningful payments going out of CSM and on Proleukin that will go through the year. For CSM, we have increased the deferred consideration of provision for it from $45 million to $75 million due to the underlying performance of that business trending ahead of expectations. We will, again, update at the interims, where we come to make the final payment once we've gone through the final numbers. For Proleukin, $60 million set to go out this year in 2 bullets, one in the first half, one in the second half. As a result, we believe leverage will remain broadly constant for the next year, but it will fall quite quickly thereafter as the free cash conversion goes straight to the balance sheet.

Turning to more operational metrics and by division. On clinical services, so obviously, the headline numbers are very positive. Gross profit is doubled, and on an underlying basis, it was up 23% as well. This does reflect a low base for the comparator sourcing business from the prior year, but it does show that we are on the front foot again with this business as well.

In terms of the operational highlights, it's all about the integration of CSM, for us now, and that is on track with revenue and cost synergies coming through. With CTS, we are on the front foot with this business and working as a more strategic partner for our customers, and that's why you're seeing the metrics have increased, profit per customer go up. It's now about broadening out that customer base, and that's exactly why the CSM acquisition and integration offer is critical. The customer numbers have gone up over 400 now as a combination compared to just 50 when it was CTS alone. The opportunity is to cross-sell the activities from CSM to our CTS customers and also from CTS into CSM, because it was not a core focus for either business independently.

Turning now to the Unlicensed Medicines division. The headline numbers are again positive, reported and constant currency growth double digit. The organic number of only 3%, slightly below where we would like it to be, but if you scratch beneath the surface on the underlying performance of each of the businesses, I think it shows a better story. So for Managed Access, we saw a double-digit growth on an organic basis. This is obviously one of the key focuses for the group, given our position as the #1 player in the market here as we believe this feeds the rest of the group as well from a following the molecule perspective.

For Global Access, it was a strong performance from the AAA region in particular. It was offset by the headwinds to the U.K. Specials piece. On the U.K. Specials business, it was around a 630 bp headwind to the divisional growth overall. We believe this headwind will continue for the next few years as pricing pressure is outside of our control in the U.K. market. However, if we look at the GA business overall and MA, we are confident we continue to grow at good rates, particularly in GA in the AAA region.

On the digital front, for the Managed Access business, we all know of Cliniport. The number of users continues to grow strongly. It continues to be a high -- a lot of our activity of our business goes primarily through Cliniport now, and we've actually launched the second service to focus on the Global Access market, which is Clinigen Direct. This is launched in June, has already got interest from 99 countries or incoming and is actually seeing bigger footfall to our GA business overall. We hope it will be a driver for medium to long-term growth for the group.

Turning to Commercial Medicines -- look over my notes. Headline numbers again, impressive, 25% constant currency growth. Organic was down 7%, and this is primarily due to the headwind to Foscavir that we saw in the period. The developed products have performed well, and we've made 2 acquisitions -- or 3 acquisitions in the period, 2 in particular we want to talk through.

Turning to the acquired portfolio. So within this division we have acquired assets. We have assets that we develop. We have assets that we're licensing from partners looking to utilize our geographic reach and the capabilities we have in those markets. The acquired portfolio, Foscavir had its toughest year after having its strongest ever year the year before. The product was down broadly 20% year-on-year. It represents a quite material headwind for the division and the group, but through years of broadening, diversifying the platform, it was weathered overall. The Foscavir impact, we have started to see some stabilization in key markets following the launch of the competitor product. But we do not believe it will fully stabilize into the second half of this year.

On the developed portfolio, the key highlight here is for Melatonin and its launch in June. We believe this product will be a good driver for growth for the medium-term and supports the guidance we're putting out today.

On the acquisition front, we have Proleukin, Imukin and iQone. But focusing on Proleukin, the acquisition of the U.S. rights now means that we've set up our U.S. commercial infrastructure, meaning that we'd be able to promote directly in the U.S., the core pharmaceutical market, with 3 out of our 4 products in this area launched in the U.S. So now bringing back in-house Ethyol and Totect to go alongside Proleukin.

For iQone, whilst a much smaller transaction, brings capability that I think over the medium to long-term will be leveraged by the group. 25 MSLs on the ground now able to promote not just our products but potentially partners for the future and broadening out our in-licensing capability.

Turning now to the financial outlook. So why we're putting out group growth guidance today? We believe the group is now at the scale and size and maturity to start to put out this growth guidance for the future. We are putting out a corridor of growth of 5% to 10%, and the key assumptions are listed on the right-hand side. As a reminder, that 5% to 10% is for gross profit growth with operational leverage expected to come through in this year and increasingly in the outer years as we believe the platform in many places is now set. So the key assumptions and the things I'd like to highlight are how we get there.

So for Proleukin revitalization. This will be talked through at length, I'm sure, today, but there are a number of indications, which we think will be material in size for the product that is not included in this guidance. We are not going to go put that in today. We need to take further steps, put further things in place and then perhaps, that will lead to an outperformance, particularly in the medium to long term.

For the underlying performance of the group, we're expecting continuing strength in the end markets. We see no real change there. And to be more balanced for the future as well, this guidance does reflect both the continuing headwind for U.K. Specials and a generic for Foscavir in one of its core markets. We believe we'll be at the upper end of this guidance going forward. And if I pause on that to just go through any potential questions or where they're going to come from, where do we see it coming from for this year? So for clinical services, we're seeing good organic growth in CTS. But actually, we're not going to predict that continues at that same rate. We're going to bring that back down to the market growth, which is around the 3% to 5%. Within CSM, the book-to-bill ratios remained stable at around 1.7x, good visibility. The businesses perform better than expectations as per the deferred consideration going up, and it will start to benefit our organic outlook as we annualize that acquisition.

Within the commercial medicine -- sorry, Unlicensed Medicines business, we think this will have a bit of a benign year going forward as that U.K. Specials headwind continues as because the good growth we're seeing in MA, we would not expect to continue on a flat 10% per year every year as the business still remains lumpy given its size.

Within GA, we expect to see the continued growth. Within the Commercial Medicines business, the key highlight here is we expect continued headwind to Foscavir but not at the same rate, whereas the launch of Melatonin, in particular, should support the growth estimates for that division and the growth and for the upper end guidance we're putting through. We also have other developed assets set to launch in the period other forms of Melatonin, which should support that again.

Turning to the operational and technical guidance, something I believe that many analysts has been asking for, for quite a while, is moving to a divisional EBITDA reporting structure and something we will have in place by the end of this financial year. We've already made inroads on this front and we are comfortable that we can meet our target.

The second point I'd like to highlight is on the operational leverage. We've talked through the fact that we expect it to increase beyond FY '20, but also the fact that we are looking at cost synergies from the large platform to support investments in IT and people to increase capabilities and operational effectiveness. You'll have seen today that we announced the closure of Stratton, which has already taken place. There is more to be benefited from the platform we had from the [NP] -- ERP system going live and consolidating our spend on our drug procurement to see if that can drive the difference between that revenue and gross profit by minimizing our cost of goods.

Point 3 is on CapEx and deferred consideration. CapEx was at GBP 19 million for the year. We expect this to come down slightly as spend in ERP and serialization comes down. It won't be offset fully by Proleukin development costs, which we expect to start increasing materially this year. We expect CapEx in the medium-term to remain broadly constant thereafter. That is to support the activities and the opportunities we see for that medium to long-term growth, which is not within our organic gross profit guidance today.

In deferred payments, we've discussed Proleukin CSM. We also have 2 more on Imukin and Foscavir bags going out in the year. Not as material, but I wouldn't want anybody to forget about those deferred payments because of the impact it will have on our leverage for the year, which we expect to remain broadly constant.

Lastly from me is just turning to the capital allocation framework, which we're setting out today. We're putting this out so the investors and analysts will know how we look to reinvest the cash we generate. Well, the key fundamentals of the business is the strong cash generation we have, we generate a lot of it, where we're going to deploy it for maximum returns. We're going to reinvest for organic growth. This will be in IT, it will be in people, it will be in working capital. We're going to maintain a progressive dividend policy to maximize the return for our shareholders, and we're going to pay down debt to ensure that we fall within a 1x to 2x range on an ordinary basis. The final point is to maintain -- make acquisitions in line with the group's strategy and take a disciplined approach to valuation.

That is all from me. I'll pass back to Shaun to update further.

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [3]

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You get a round of applause for that. It's very nice of the audience. Thank you. Okay. So in terms of what does the future look like? I think we introduced this data at half year that is all very well talking about platform, how do we -- and just as importantly, how do you know it's working. And I guess, if you divide the data into 2, the left hand-side of the slide really shows you in raw terms, go back to that equation, how many relationships we've got, over 500; and how many healthcare professionals we're interacting with increasingly online, which was around 11,000 this time last year. So we are making meaningful progress in terms of interacting with this community.

The right-hand side really is more of a performance metric. And it's really looking at the top 25 currently because they are the bigger companies with the bigger pipelines, the biggest number of assets, which is a worthwhile set to start with, whether you work with 3, 2 or 1 parts of Clinigen, they've all gone forward. So they've all moved from when we put this up in the first 6 months. So the cynics in the audience, you might say, well, it's serendipity. I think we're starting to show that may well have been true in the first place, but it's certainly not true now. So I think we are starting to demonstrate the synergistic effect of the platform and that the strategy continues to work.

So what does the platform mean in practice? And this just shows you where the people are and why they are where they are. So if you remember from the conversations we've had previously, pharmaceutical companies are focusing on core regions or countries to launch their medicines, which is a smaller and smaller number. So there are parts of the world, Europe, Africa, Southeast Asia, Japan, where they are willing and looking to partner, hence, why we've got the locations and the expertise we have. And you have to be close to the customers.

But I think the big green circles demonstrate the impact of the last year because now we genuinely have U.S. and European capability. We've been asked the question a lot, and it's true. And certainly, David's life has got exponentially more busy since we both acquired Proleukin, the full rights, and also now have this European and U.S. infrastructure. There are -- that's pretty much true to say that whether you're an enormous pharmaceutical company or a tiny one, we do have a level of partnership we can offer you to make the most out of your medicines, protect your reputation, minimize risk of supply chain and get closer to your customers. And I think the things that we're looking at and the quantity of them has changed remarkably since we've put that infrastructure in place. There's no getting away from the fact that most companies would see the U.S. and Europe as quite mature markets. But for Clinigen, it's white space still.

So very briefly. And again, this is really an update from the half year. So we've got clarity on each of the 3 businesses, what are the 2 or 3 strategic aims that feed into this focus on becoming the trusted global leader in access to medicines. The reason why this is important and the reason why the CSM/CTS combination is important is because like all service businesses, the earlier you get in, the more senior relationship you develop allows you to follow that if you execute well for a long time. So it's true, the pharmaceuticals is financial, the financial world of any service-based business. And I think here, importantly, what we've now got is higher quality, combination of revenue, longevity of pipeline. And I think that cross-sell into Unlicensed Medicines is a critical synergy between what CSM does and to be able to move those relationships into what we call Managed Access is already happening, and that's a key part of the reason for acquiring CSM and a key part of the strategy.

With Unlicensed, again, no massive change in strategy, it is about execution again. But it's about the pipeline. It's about continuing to manage and dominate the number of products in that Managed Access base. So the pipeline has gone up, which is an indicator. To build on what Nick said, as people might say, "Why have you introduced another platform called Clinigen Direct?" So fast forward to digital strategy, ClinigenOne, which is the project name for the ERP, the Oracle platform, which is due to -- is the only bit of IT terminology, I will use today, drop one, which is part of it already in, but the bulk of it's going to go in shortly before the end of this calendar year. That then allows us to tie in all the digital, all the online activity onto the back end and have an end-to-end seamless platform.

In the meantime, rather than wait for that to happen, Cliniport, which has always been geared towards Managed Access, is password protected and is designed primarily to walk the physician through the regulatory process and allow us to deliver drug directly to them. If you think about the GA space, which is much more about on-demand unlicensed management supply, drug shortage, that type of high-profile time-consuming activity across a whole breadth of Unlicensed Medicines. What you need is a platform that's more convenient, searchable on Google, all those things, and that's what Clinigen Direct is. Plainly, we'll wrap all that technology together into this ClinigenOne platform, but we didn't want to wait, we wanted to, in the meantime, get the audience used to working on Clinigen Direct.

Now if you're a physician and you want both, through our platform, you don't waste time. You're not setting lots of different places. So we've got the solution so that it doesn't be confusing for customers, for these ATPs, but that's the reason for launching it. But the intention is, over the coming year that we will fold all that into one platform, and then it will be end-to-end seamless solution. And that's a key part of what needs to drive this business.

So again, what's it mean for the future? We've talked about U.K. Specials. Ultimately, to preempt the question, what did we buy Quantum for? We bought it for the unlicensed to licensed capability, the Lambda capability in Europe, glycopyrronium and Melatonin and the other products that have come through will speak volumes for that. The U.K. Specials is an owned quantity, we'll manage it. We will look at the cost base to maintain the profitability. It is what it is in the U.K., is part of the Unlicensed Medicines platform. It's not a big part of the business. The focus here is international and carrying on developing the growth parts of the world like Africa, Southeast Asia, Latin America, et cetera.

Commercial Medicines, again, just to remind everybody, there are 3 things we do now. This is not just about more Foscavirs, more Proleukins, more Ethyols. We'll continue to look for those. But if you've got the platform, you've got the regulatory capability, the supply chain expertise and MSLs, you should use that to the maximum capacity. So what does that mean? We'll license products in, and we will also cherry-pick those opportunities where we can develop our own versions using the unlicensed channel as the vetting process, if you like. I can't underestimate how important that U.S. commercial team is, but also, and people won't have seen it yet, but the EU piece is also very important. We will license things into Europe, and we are having active discussions across a number of opportunities.

So yes, known cons about potential weakness of Foscavir. But don't forget, we are taking steps to mitigate that. Launching the pack, HHV-6 indication in Japan. I think, anecdotally, the situation in terms of decline in Foscavir's leveling off in the U.S. already. And I think we are taking steps to deal with it. Without wanting to belabor the point, let's be honest, we've had Foscavir since 2010 and it's a mature product. So the fact it's still relevant and it's still delivering profit is tantamount to the clarity with which and the discipline with which we acquire products, and we are able to extend life. It was never going to be the entirety of the story, and we move on, it's still important. It's just not the be-all and the end-all. So very excited about that. And the pipeline is very strong in terms of all 3 buckets, whether we're looking to acquire, license or develop our own versions.

Now one of the reasons of having David here, not the only reason, is, plainly, there's a lot of interest, excitement, skepticism in some quarters about Proleukin. And the title pipeline in the product probably indicates another departure for Clinigen because the revitalization work that we can do with Proleukin sort of that's taken on to a different dimension. What this slide is meant to show, because it's still very early days for us, we'll give you more information as and when we can, as and when we understand the universe and the product more. But plainly, it demonstrates the breadth of potential indications that Proleukin IL-2 is being used in. And some of them are exciting, and some of them are very early days. But for us, that's a departure in terms of the longevity of this product. And actually, potentially, it's important, particularly in autoimmune and oncological situations. People will have questions. So rather than focus necessarily on this slide, we'll get to Q&A and our expert, David, will fill as many questions as he can. You are now an expert, David, because I've just said it.

So in summary, we try not to use hyperbole that often. And I think transformational can often be used in that context. But I think it genuinely is in terms of building out the platform. It's what we've been focusing on, the build and buy strategy over the last 5 years, particularly last 3, has been to get us to this point. That's why we're able to confidently say we can give you better guidance. We can give you some of the answers, divisional P&L, those types of analysis that will allow you to understand the business better, allow you to model it better because these things have come together with particularly the U.S. and the EU piece.

We started off the year well, and I think it's going to be another good year. We will continue to look at acquisitions. That does not mean we're going to do one tomorrow. But we will continue to look, particularly for assets. And over the next 5 years, where we look at geographic capabilities, where we look at bolt-ins to some of the service pieces, certainly, we will if we can find value. But the focus, as Nick has said, is organic growth, continue to generate a lot of cash and deploy it in the areas that he said. But ultimately, very pleased with the year, very pleased with the team I've got.

Thank you very much for your time. Questions. Amy?

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Questions and Answers

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Amy Lucinda Walker, Peel Hunt LLP, Research Division - Analyst [1]

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I've got a couple, if I can, please. We didn't touch on Brexit in the presentation. And it's something that comes up quite a lot with people being concerned given the macro. So can you just talk us through what have you done? Have you run scenarios? Can you quantify what's your best view on that?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [2]

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So I guess, bigger picture, we do see it as an opportunity as much as anything by nature of what we do, because we sold drug shortages, we are -- we exist to solve the issue of difficult to find medicines. But in terms of Brexit, in particular, there's a number of things we've done over the last 2 or 3 years. So from a license our own products perspective, we have a Dutch entity that holds those marketing authorization, so from a regulatory perspective, that's that we've done a long time ago.

In terms of the practicalities of moving drug around to where we need to have it, we've already done a dry run. We did a dry run a few months ago, and that was done in very quick time. So ultimately, we've raw tested what we need to do. So whatever happens, whether it's October 31 or 2025 or whatever happens, we think we've taken the steps. We sort of assume the worst-case scenario and worked on that basis. So I think the ERP platform, the supply chain management, the regulatory situation is all dealt with. So look, nobody's going to be completely unaffected by it. But I think we've mitigated pretty much every risk we can see, and we just think that we will benefit from the situation rather than be negatively impacted by it.

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Amy Lucinda Walker, Peel Hunt LLP, Research Division - Analyst [3]

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And over those scenarios, would you still fall within the 5% to 10% range that you've projected? Or would that -- okay. And then just on Quantum Pharma, overall, is that business now helpful or dilutive to organic growth and margins in Unlicensed?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [4]

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I -- in Unlicensed -- well, I guess, the reality is with the headwind is not particularly helpful. But ultimately, what we have done and what we will continue to do is look at the cost base against what's happening on the commercial environment and make sure those 2 things continue to balance. So it's still part of the U.K. unlicensed service provision. We still continue to be asked for it, but there are some pressures for it.

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Amy Lucinda Walker, Peel Hunt LLP, Research Division - Analyst [5]

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What portion of gross profit is it for the Unlicensed?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [6]

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It's a small -- it is a relatively small portion of the overall unlicensed piece, for sure. I mean, in specific percentage terms?

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Nicholas Keher, Clinigen Group Plc - CFO & Director [7]

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Yes. So the Specials business will be around 13%. And now, the other point I would just add as well to Shaun is the business is required to have that unlicensed to licensed capability. That is actually driving a lot of the growth that we're forecasting here as well. And actually, from an ideas perspective in the pipeline where they're coming from now is more regional. So there's licensed opportunities from an unlicensed product perspective that are being fed into that. And we also have the capabilities of Lambda from a development...

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David Bryant, Clinigen Group Plc - Director of Corporate Development [8]

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We acquired it -- that was very explicit. We didn't acquired it constant to the U.K. Specials business. We acquired it because of this capability to launch the glycopyrroniums, Melatonins. What people don't see is that Lambda facility is also working on our other products. So it's working on Ethyol on other technical aspects that we would have outsourced before. So it's a very clever piece of capability that will stand as instead for long-term medium growth. This -- I'm not going to run away from the fact that the U.K. Specials piece is under pressure.

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Amy Lucinda Walker, Peel Hunt LLP, Research Division - Analyst [9]

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Sure. And just not to harp on about it too much. But obviously, it's organically declining and the rest of the business is growing. So it will naturally dilute. But are there things that you can do to accelerate that process? Or are there this economies of scale and things that would mean you wouldn't look to reduce SKUs or try to shrink it a bit faster than it will organically dilute out?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [10]

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That's an interesting question, I guess. And if I don't answer the question directly or I give you the answer that you want a different one feeling, let's talk about that. I guess my view on the Specials piece is the same of anything else in the business. It's either core and continues to deliver profit and it stays or it doesn't. So while it does we'll make it work. If it comes a day where we make a different decision, we'll make a different decision. But as it stands, it's part of the business, and we will work hard to make sure it's profitable.

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Charles Robert Weston, RBC Capital Markets, LLC, Research Division - Analyst [11]

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Charles Weston from RBC. 3 questions and a follow-up, please. First of all, CTS, in the first half, it was flat to modestly down. But obviously, for the full year, it's up very, very strongly. But you're being somewhat cautious around the outlook for next year. So can we assume, therefore, that there was some really big lumpy orders coming in the second half? How should we be thinking about the potential upside if we can think of sort of annualizing H2?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [12]

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So the pipeline itself, in terms of what we can see today, is broadly similar to what we had last year. In terms of where we work with customers and some of these larger customers to try and drive some better growth, those things are happening, and we've been talking with the team quite extensively on how confident they are as well for the future is definitely there. Now why aren't we guiding to higher growth, because we have to be cautious on the lumpiness that comes with that business. We don't control the clinical trials. So if those clinical trials get pushed, they can impact our estimates. It's just about how we probability weight the pipeline that comes through.

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Nicholas Keher, Clinigen Group Plc - CFO & Director [13]

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Yes, I think I mean if you look at it strategically, we can't change the underlying characteristics of the core CTS business. But of course, when you wrap it into the broader clinical services, then it -- because the whole thing, a, is bigger; and b, it becomes over time, if you follow the growth, the comparator sourcing piece is proportionately a smaller part of it. It should smooth out that volatility. But again, it's sort of a similar answer to the U.K. Specials piece, which is, look, comparator sourcing, easily competitive lower margin, but we still do a very good job of offering a high-end service to clients who want it. So -- but they want it as part of the bigger basket. So again, we will still continue to highlight for a while the CSM and CTS piece but that's not really how the business is managed because it's wrapped up in this basket of broader service offering. So ideally, the huge client base that CSM now gives us the comparator sourcing piece becomes a bolt-on to what they're doing because that's growing quicker. There's just no getting away from it. So that's really how that works. So I think that you can't eliminate entirely the lumpiness of it. That's just a fact of the CTS business.

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Charles Robert Weston, RBC Capital Markets, LLC, Research Division - Analyst [14]

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Then on the on-demand side, I have in the past been skeptical of your sort of trend of numbers of products. Now Clinigen Direct has got 1,400, which is obviously a massive step up from the sort of number of products that you're offering before the Cliniport. Can you tell me, are these -- is that the sort of portfolio that focuses on, the majority of it are on-demand drugs in the various markets you serve? Is there a lot more to go? Is it one market that you focus on over another?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [15]

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No. I mean the reality is, historically, even pre -- when we acquired Idis and when the Idis business that was called General Access, the General Access that morphed into Global Access as we now call it, they had over 2,000 medicines mainly focused on the U.K. and a couple of countries in Europe. So I think the reality is the actual catalog, if you want to call it that, does stretch into some thousands. What we're focused on though is the exclusivity piece predominantly because which is common sense, hopefully, because -- which is common sense, hopefully, that if -- because you want the customers have to come to you.

So ultimately, we try and do 2 things. One, as you know, try and extend MA contracts into longer-term GA contracts, exclusivity; try and go out and find products that we think the audience are going to need, track drug shortage and all these things, track web products that aren't going to be licensed and try and get exclusivity of those. Outside of that, of course, there are legacy products that we know about from our history that continue to be unlicensed.

So you put all that in together and it's difficult to say, and I do remember answering, I think, your question quite flippantly a couple of years ago, so, well, it must be at least 1,000 products, whatever it is. It's plainly, the sum total of the catalog is many thousands. But the 80/20 rule somewhat applies in terms of we have to balance that with offering a broad service because if the customer wants a certain number of medicines, you need to supply down as quickly as you can. But the real trick of the platform is to try and get the audience to tell you what they want, and then we can use things like the MA pipeline to look at where the higher-value medicines are. So that's really the overall strategy. So it's not easy to give you a specific answer to any of that, but that's the overall view that we're working towards. And hence, what Clinigen Direct does now.

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Charles Robert Weston, RBC Capital Markets, LLC, Research Division - Analyst [16]

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The last question, please. On Proleukin, and specifically the CapEx you talked about, the -- can you explain what CapEx would be needed to be invested to support Proleukin?

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Nicholas Keher, Clinigen Group Plc - CFO & Director [17]

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So essentially the development opportunities -- we could probably pass this on to David in a sec, but the -- essentially, there's a number of indications for different forms of the product where we're working with the manufacturer to put that into place. So there's some development more than CapEx, if you like. Do you want answer that, David?

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David Bryant, Clinigen Group Plc - Director of Corporate Development [18]

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No. Well, unless they'd be putting further questions on Proleukin, but no.

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [19]

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Stefan Hamill from Numis. I've got a few questions but I'll start with Proleukin. I guess it's kind of tricky because there seems to be 2 overall sort of structural trends here. And just wondering what the balance is between the 2. So one is just the general shift in therapy towards more innovative cancer therapies coming through. The other one is just the rise of cell therapy. The use of Proleukin to help support, for instance, TIL -- used TILs, et cetera. What's the balance between those 2 in the market at the moment?

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David Bryant, Clinigen Group Plc - Director of Corporate Development [20]

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I think when we bought Proleukin, we probably -- I think we said we were also buying 2 products, we were buying the kind of traditional high-dose product that has been used in traditional indications, and we were buying a low-dose product. I think in reality, we probably bought 4 potential revenue streams. I think you've got the high-dose business. You've got the low dose, which is typically used in more kind of autoimmune diseases because at high dose, it works to stimulate the immune response, at low dose, it works to kind of dampen it down. I think what we're also finding is we're increasingly getting contacted by manufacturers who were involved in the manufacturing processes of cell and gene therapies, anybody involved in T cell manufacturing. They're coming to us basically to try and access IL-2 because our IL-2 is actually a lot cheaper than the IL-2 they'll buy from their traditional sources. And then the fourth kind of revenue stream is probably we'll start to get involved in more collaboration agreements where you've got kind of multiple companies around the world who are looking at creating kind of T-cell therapies that use IL-2 as part of the -- as part of the process or they actually use IL-2 as part of the active. So I think we already are -- we're getting into discussions with companies. If they start their clinical development with a version of IL-2, realistically, they need to stick with that product all the way through to commercialization, because you can't really -- you can't interchange. So you've probably got 4 revenue streams.

And in terms of the balance, I think what we're trying to do is we've created the kind of asset development group and we've taken -- because, I mean, all of this up here is research that's going on in the marketplace. And it would be easy for -- I mean, the analogy is like when lookers play football and everybody chases the ball. So the new shiny thing, everybody wants to get involved in the new shiny thing. So we try and take the new shiny thing and create an asset development group, whereas the core, the core business will concentrate on the promotion, the support of Proleukin in its licensed indications or with MSL supporting people looking to use it off-label. So I think we're trying to get the balance right. I think -- I'm surprised every week because I mean stuff comes in -- I mean comes in every week from new companies that are trying to get involved in the space.

But I think as we got closer to, particularly a couple of these indications. And since we took the U.S. rights. And then, so by definition, some of the IITs that are going on become our IITs. So we have to get involved with investigators that are undertaking these studies. We're starting to get early insight into some of the data that's coming out. And it's pretty significant. I think our challenge, and this comes back to the kind of -- what the -- where the CapEx is going to be useful, is probably how do you create a viable commercial low-dose presentation. Because I think that, that's not necessarily straightforward. It's not just as simple as you've got an 18 million kind of units in a vial, taking it down to 1 million units and often, it's sub-cut. So I think our deal scenario is if you could develop some sort of pen where someone could auto-inject so lots of these diseases then could be treated at home. But that -- we're doing that quite separate to the kind of day-to-day business to the group.

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [21]

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So to clarify on the CapEx, would there be clinical trials within that? Or is it just some more traditional formulation, et cetera?

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Nicholas Keher, Clinigen Group Plc - CFO & Director [22]

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More traditional. So in terms of the clinical trials that are going on there and the ones that we're focused on, which we're not going to highlight, the key thing is the data is actually being produced by the people. It's just making sure that we get the data, and then it's the development piece and formulation piece that you talked to.

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [23]

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So that clearly comes under some R&D capitalization rules?

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Nicholas Keher, Clinigen Group Plc - CFO & Director [24]

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Yes.

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [25]

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Got you. So just broadening in Commercial Meds. Do you actually have full control of Proleukin? No. And then a wholesale transfer.

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David Bryant, Clinigen Group Plc - Director of Corporate Development [26]

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In terms of the deal with Novartis, I mean, they -- on the second payment, we effectively get full control of everything. I mean, they -- there's a -- it transfers from an unlicensed to full ownership of all of the IP. It's just their way of making sure we pay the second payment.

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Nicholas Keher, Clinigen Group Plc - CFO & Director [27]

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Just to add to that as well, is we have to bear in mind that it was -- the product was with Prometheus. It wasn't with Novartis. So essentially, they haven't necessarily looked at this product.

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David Bryant, Clinigen Group Plc - Director of Corporate Development [28]

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Yes. That's the kind of reading because often, you get asked the question why aren't Novartis kind of seeing this? And I think the reality is Novartis really haven't looked -- been looking at this product for years because it has been with Prometheus. And for whatever reason, the agreement Prometheus had with Novartis, which I think starts in 2010, they were precluded from doing any sort of development work. So I think it's just not been on their radar. Yes.

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [29]

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And then just you're getting control of Ethyol/Totect. Just any potential for disruption there? Are we seeing any sort of adverse effects from that whole transfer that's going on there?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [30]

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No. I mean I think it's been a relatively straightforward process. So I mean you can't eliminate -- it's not necessarily totally seamless -- you have to play a cautionary stance. But the way that we see it, it's been pretty slick. So I don't think there are any meaningful issues in terms of that transition.

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [31]

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Okay. And then just coming back to Quantum Pharma, I guess, slightly stepping away from Commercial Meds. But it seems to me like this become slightly a victim of your divisional structure, where if I understand rightly, the U.K. Specials' decline is solely within the Unlicensed division, whilst the benefits are all getting captured within Commercial Meds essentially, both on the margin and on the revenue side.

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [32]

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Revenue cannibalization between the 2.

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Nicholas Keher, Clinigen Group Plc - CFO & Director [33]

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Which is always the case. And that's where they fell down in the first place. If you remember, around post-IPO, because people didn't necessarily see that and they didn't really communicate that effectively.

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [34]

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So if you were trying to sort of parcel out on its own within the overall structure, it get more and more difficult, because essentially you're saving costs on the R&D -- on the development side within Commercial Meds that just weren't being taken account of before.

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [35]

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The development costs as well are with the -- the development infrastructure actually sits with the Commercial Meds now. So the Unlicensed business of Quantum Pharma is essentially just the U.K. business, the U.K. Specials. The rest of it has been already proportioned out to different areas.

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Nicholas Keher, Clinigen Group Plc - CFO & Director [36]

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But I think, in and of itself, it doesn't preclude at all that unlicensed to licensed strategy, continuing to execute. So for instance, there are a handful of ideas that have gone into that development pipeline that have come out of Africa, Australia, Southeast Asia. So that was always the point, which was in the Quantum piece is U.K. driven. So it's a U.K. opportunity, unlicensed, converts to a U.K. opportunity, licensed. But the point is that the real beauty kind of is it's Lambda facility that actually does the development work. The whole point of dropping that expertise into Clinigen was that it wasn't anymore really about the U.K., it was about, can we take any of those U.K. products international? But more importantly almost, ideas from around the globe go into that unlicensed into that unlicensed/licensed channel. So it was more about the capability than it was U.K. Specials for that reason.

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [37]

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So you are starting to see some international synergies from that UL2L?

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Nicholas Keher, Clinigen Group Plc - CFO & Director [38]

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Yes.

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [39]

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Okay. On Clinigen Direct, again, I've got slightly confused by the numbers here. Is it the case that when pharmacists come to the platform, that they'll still be able to access the exclusive Managed Access products through Clinigen Direct?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [40]

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It comes down to what they want because, ultimately, if the pharmacist or physician needs to access the product that's a Managed Access program, then they were going to get thrown onto Cliniport. So even if they come in to Direct but it's one of the 120, they get seamlessly directed into Cliniport because there are certain steps. Because it's a more hands-on management process. The Clinigen Direct piece is if it's anything else outside of that.

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [41]

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I see. So it's the same front end but the back end sort of looks after them?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [42]

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Yes.

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [43]

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So there's essentially 170-odd exclusive products within there as they sort of drop to the platform. And there was a slight mention of restructuring of some of those exclusive products within the statement. What was that referring to?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [44]

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I think that was about Quantum in the U.K., I think, the U.K. Specials piece, I think, was the exclusive agreements, while they dropped a little bit in totality.

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [45]

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Okay. Got confused. Just one final one on...

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [46]

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Just Stefan, 3 questions, but really 36?

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Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [47]

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Just on trial supply this is becoming more predictable now? Is this sort of a recurring element? It seems like you're broadening the number of large contracts?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [48]

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The recurring element is the client. So we've got a number of clients that, a, have been around for a while, a number of years, but we're adding them now, where they have a strong R&D pipeline because, as you know, the exclusivity really isn't there like it is in a Managed Access program. You sort of got quasi-exclusivity trial by trial. But actually, we've got de facto exclusivity with probably 4 or 5 clients now, which is why you see that playing out in the GBP 1 million per. So I think it still comes back -- to sort of the answer that I gave Charles, which is the whole point of the clinical piece of CSM as opposed to benefiting the entirety of the business but for the clinical piece was to massively expand the client base and see how many of those we can sell comparator sourcing into because they weren't selling it, but also take that packaging and labeling capability into our bigger clients because in simple term, CSM, biotech, smaller pharma, Clinigen focuses maybe very much on big to medium-sized pharma and you cross-sell those capabilities. I still think, fundamentally, though, as Nick rightly said, the CTS piece is quite volatile, is still quite lumpy. You can't entirely eliminate that. But I think if we can cross-sell effectively, it will smooth out some of it. It won't entirely eradicate it.

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Max Stephen Herrmann, Stifel, Nicolaus & Company, Incorporated, Research Division - Head of European Healthcare Equity Research & MD [49]

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This is Max Herrmann from Stifel. Three questions. Firstly, just on Foscavir, you talked about the guidance and including a generic entrant in a major market. So just wondered whether there was an update in terms of is there any more likelihood of that happening than it has been? Or is there something specific within that?

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Nicholas Keher, Clinigen Group Plc - CFO & Director [50]

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I'll take that one. In terms of the guidance, we're kind of in a rock and a hard place because if we didn't put it in and then it happened, we'd get kicked. Now has anything changed in the market? No, not at all. It's just it's more prudent to assume something happens in the future. And that's why the decision was taken to put it into the 5% to 10% range. But it's worth -- I mean, as well, 45 markets that products are sold in. And we are assuming one of the larger ones, but the breadth of the revenue stream means that there's -- the impact of the generic has lessened now.

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Max Stephen Herrmann, Stifel, Nicolaus & Company, Incorporated, Research Division - Head of European Healthcare Equity Research & MD [51]

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Secondly, just on Proleukin again. A couple of questions. One on -- obviously, you've got a lot of different clinical indications there. Obviously, it's a big opportunity in terms of immuno-oncology. I wondered, if there are other products in this space, where IL-2, for your ownership now of Proleukin gives you other opportunities to put another leg on the stool or whatever to build up the exposure in that area, particularly in the U.S. now? And then secondly, just in terms of -- I know when you made the Proleukin acquisition in the U.S., it was driving revenues of about $60 million, just shy of, I think, annualized. I wonder, is your guidance still that, that would be pretty much flat this year?

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Nicholas Keher, Clinigen Group Plc - CFO & Director [52]

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I think if you work backwards, yes, I think, is the answer to the third question. As you know, there's a differential between net sales and growth that we're digging into, but that will take time because it always does. And how much of that we're able to recapture is very difficult to give guidance on so we're not going to at this point, but we think there might be some. The second question, can you boil it down into...

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Max Stephen Herrmann, Stifel, Nicolaus & Company, Incorporated, Research Division - Head of European Healthcare Equity Research & MD [53]

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I'm just trying to see whether there's -- gives you some opportunities or some ideas in terms of future acquisitions that you may make in this space to build on your products.

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David Bryant, Clinigen Group Plc - Director of Corporate Development [54]

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It gives us some ideas, definitely, in terms of collaborations. And I think that there are -- we are -- we'll start kind of reviewing some at the moment where there are companies that have products that are used in conjunction with IL-2 that want to go into commercial collaboration agreements. I think the big obvious one that we are trying to kind of create something in the U.S. is around the Iovance TIL treatment. Okay. If you look at that, and you can do the math for yourself in terms of if that product comes to market, then effectively, every patient gets kind of 6 quarters of IL-2, and those 6 quarters, kind of when you weigh it up, it's about 14 vials of Proleukin. So there's clearly a risk that, that formula won't come to market. But if it does, that's -- the 14 vials in the U.S. is quite a chunk of money. And I think we're going to need to play our part in trying to work out how that product then gets reimbursed in conjunction with another product. So there are definitely, I think, collaborations that which we're trying to forge. And in terms of actual acquisitions, I think it -- just the purchase of Proleukin, I think, has taken us to a different space in terms of, one, our -- obviously our footprint, but also just in terms of the -- we're seen as a much more kind of viable player in that sort of oncology space and in the future, potentially, in the autoimmune space as well.

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Nicholas Keher, Clinigen Group Plc - CFO & Director [55]

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Just to add to the second point on the guidance as well. The area that has been a big driver of growth even since acquisition has actually been the clinical trial supply piece. So selling into that -- selling the product rather than giving it away for free is what was happening before.

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Andrew Mark Whitney, Investec Bank plc, Research Division - Analyst [56]

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It's Andrew Whitney from Investec. Just one question for me. On the Unlicensed business and the registered users in Cliniport, you spoke to the interconnectivity between Cliniport and Clinigen Direct, and that's all going into Clinigen One. Has that interconnectivity between MA and GA always been there? Or is that driving the incremental registered user at the moment because you're offering more services and it's not actually just the Cliniport services driving the growth but more broader?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [57]

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The theoretical link between MA and GA has always been there. We haven't moved as many MA programs into the GA space as we probably should have done the last couple of years. But I think the way that we're structured now and the focus we're giving it gives a better chance of doing that. I think the reality is, because we continue to expand the Managed Access business. That's mostly the driver of the increased audience on Cliniport. However, the reality is, it's pretty much the same physician or pharmacist who needs lots of other Unlicensed Medicines that aren't in the MA space. So I think there's -- it's difficult to entirely tell you the uplift from 11 to 15, how it -- whether it's that MA to GA piece or whether it's just MA. I think it's still true that most of that is the Managed Access piece. We really won't get -- we will be able to analyze that a lot better when it's all on one platform. Because Clinigen Direct has only been in existence about 2 months, 3 months. So the reality is, I could give you some data and stats, but after 3 months, I'm not sure how I can draw extrapolations yet. That's probably going to take another 6 to 12 months, I think, to be able to give you really, really accurate breakdown of data. But it's undoubtedly, the reason why we did it was to drive more of that MA to GA transition.

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Christopher Ian Glasper, Nplus1 Singer Capital Markets Limited, Research Division - Senior Research Analyst [58]

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Chris Glasper from Nplus1 Singer. I've only got one question as well. And that was around the cash exceptionals last year, there are obviously a bit of restructuring charges that went on. Just a question of whether we should expect more again this year? And how much, if so?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [59]

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Sure. So I won't get a round of applause for my answer, but there you go.

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Nicholas Keher, Clinigen Group Plc - CFO & Director [60]

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So obviously, we have some smaller items this year in terms of Stratton. We will earn -- there are some other efficiencies within the Quantum business that we're targeting as well, but these are quite low so in terms of share value materially down on the year before on the cash exceptionals. And in terms of the noncash, obviously, you've got amortization and the pass-through, the provision, et cetera.

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Christopher Ian Glasper, Nplus1 Singer Capital Markets Limited, Research Division - Senior Research Analyst [61]

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So low single-digit million pounds?

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Nicholas Keher, Clinigen Group Plc - CFO & Director [62]

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Yes, because the Clinigen Stratton facility will be positive from a cash flow perspective in about 16 months. But then it is a cash outflow, obviously, in closing it altogether?

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Shaun Edward Chilton, Clinigen Group Plc - CEO & Executive Director [63]

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Well, as ever, thank you for your time. Thank you for your questions.