A long-term sustainable growth model

The first half of 2024 has seen a continuation of our strong growth across revenue, EBITDA and cash generation, underlining our long-term sustainable model across multi-year consecutive periods. First half revenue increased 30.6% to £35.6 million (H1 2023: £27.3 million) as the Company inoculated a record number of volunteers across multiple challenge trials. EBITDA was also up 67.6% to £8.7 million with record EBITDA margins of 24.5%. As previously signalled, FY 2024 is expected to be H1 weighted as revenue and margins benefitted from the efficient use of overlapping facilities. From July 2024, the Group's core operations have operated solely from its new state-of-the-art Canary Wharf facility. The increase in margins is a positive indicator of the margin achievable in the medium term with the Canary Wharf site expected to deliver improved, long-term operational efficiencies.

The Company's weighted contracted orderbook stood at £71 million as at 30 June 2024 (H1 2023: £78 million), post-delivery of a record £35.6 million in revenues in H1 2024, with FY 2024 revenue guidance fully contracted and good visibility into 2025. hVIVO has a broad pipeline of live opportunities, including a number in advanced stages, making the Group well-positioned to grow its weighted orderbook going forward. The Group continues to be debt free and highly cash generative, with cash of £37.1 million as at 30 June 2024 (H1 2023: £31.3 million), after the £1.4 million dividend, paid in May 2024.

New facility move completed

The move to our new facility in Canary Wharf including corporate offices, a Containment Level 3 (CL-3) 50 bedroom quarantine unit and cutting-edge virology and immunology laboratories was completed on time in Q1 2024 and was a significant inflection point for the Company reflecting the increasing opportunities in the markets in which we operate. The facility, which was largely funded by hVIVO's clients, will provide significant additional capacity and capabilities, and provides the foundation for the Group's future growth. Notable features include the purpose-built hospital isolation standard quarantine rooms that maximise comfort for our volunteers, who are at the centre of everything we do. The rooms are also equipped with HEPA air filtration systems, negative air pressure and two-way call bell systems that ensure we can be alert to our volunteers' needs and allow our staff to respond to requests more efficiently than was previously possible. The facility has also been designed to accommodate transmission studies, which focus on measuring how quickly a virus spreads from an infected person to a healthy individual. We plan to collaborate with academic institutions and/or industry partners to develop new models to measure transmission rates. This effort aligns with the development of next generation mucosal anti-infective drugs, aimed at both combating the infections and reducing their spread.

On 17 July 2024, we hosted a Capital Markets Day event to showcase the capabilities of the world's largest human challenge trial unit and demonstrate how it has broadened and enhanced our services. The event was well attended by institutional investors, analysts and media as well as virtual attendance for private investors. Speakers included directors from hVIVO as well as industry Key Opinion Leaders. Feedback from the event was extremely positive and I would like to thank our team for delivering such a world-class facility and for organising the successful event. We also held an industry focussed Canary Wharf opening event in July 2024, the event was attended by five of the world's top ten pharmaceutical companies, many existing and potential pharma and biotech clients, regulators, partners and academic institutions.

Strong operational delivery

Looking across our key performance metrics, the first half of 2024 was another period of strong operational delivery across the Group. hVIVO inoculated a record number of volunteers across multiple studies, with a variety of challenge models running simultaneously. The biggest challenge we faced in the period was successfully managing the transition to our new facility, while ensuring the efficient delivery of our orderbook of work across multiple challenge trial units. I was delighted that during this time, the Company utilised the temporary capacity of three facilities to deliver a number of projects ahead of schedule, providing a boost to revenue and profit margins in the first half. This is a testament to the professionalism and expertise of our team at hVIVO. From July 2024 the Group solely operates from its Canary Wharf quarantine site.

Delivering on our growth strategy: Optimise, scale and diversify

Optimising our operations

The main driver of efficiency and margin gains in the period was the efficient use of multiple facilities that allowed the operational and clinical teams to deliver a number of projects ahead of schedule. This was a temporary period of overlapping resources, and I am pleased that we now have a consolidated facility at Canary Wharf, which will significantly improve our resource utilisation and be the principal source of efficiency gains moving forward. Prior to the move, hVIVO operated quarantine rooms across three floors of the Whitechapel Hotel and one floor of the Queen Mary BioEnterprise Centre (QMB). This presented a number of challenges including requiring additional nurses' stations, a slower courier system for sample delivery taking 7-8 minutes to deliver samples to our labs, and poor space utilisation. At Canary Wharf, the quarantine rooms are consolidated onto a single floor, reducing the need for additional nurses' stations. We have also constructed a pneumatic chute system that transports samples to the lab in c.30 seconds. In addition to the efficiency benefits of our new facility, our revamped FluCamp platform with increased automation has also been a driver of efficiency improvements and reduced volunteer recruitment costs.

Scale the business

The first half of 2024 saw the Company inoculate a record number of volunteers across six challenge trials and five separate challenge agents. This has continued the trend of hVIVO successfully conducting multiple challenge trials concurrently across different challenge agents, which has been a significant contributor to the growth in our revenues and margins. This capability has been substantially enhanced by the move to our new facility, as each of the 50 quarantine rooms aligns with CL-3 standards, enabling the Company to conduct a broader range of challenge trials, including Hazard Group 3 pathogens for which we previously had to use external sites.  

We also identified hLAB, the Group's highly specialised virology and immunology laboratory service offering, as a key growth area for the Group. I am pleased that since 2021 we have effectively been able to double the number of lab assays and samples it processes. However, prior to our move to Canary Wharf, this service was at capacity as we focussed on delivering the increasing demand for our human challenge trial services. Following our move to Canary Wharf, we have more than doubled our usable lab space and tripled sample throughput capacity - supported by the introduction of our new LIMS system, due to launch in Q4 2024, and new hardware (e.g BioFire, new PCR, and cell culture automation). The fit-out of our new CL-3 laboratory is now complete, and we have also identified one of our labs as a potential bacterial laboratory which will support our expansion to bacterial challenge models. hLAB has signed three standalone lab contracts in 2024, including its first major field study lab contract. At hVIVO we have a comprehensive repository of a diverse range of human biospecimens which are essential for research and development of new drugs. hLAB has partnered with Scientist.com to make these samples available to researchers.

Finally, Venn Life Sciences ("Venn"), our drug development consulting subsidiary accounted for 11% of total Group revenue in H1 24. Year to date, Venn has expanded its multi-year consultancy work with a major global pharmaceutical client and has also signed contracts in ATMP (advanced therapy medicinal products) and QA (quality assurance) services, following investment in these key growth areas. Venn Paris continues to deliver data management and biostatistics services to third‐party customers, as well as supporting hVIVO's challenge studies. As hVIVO launches its standalone hLAB, clinical site, and recruitment services, we are excited by the cross-selling opportunities between Venn and hVIVO, further strengthening our end-to-end early clinical development service offering.

Diversification of orderbook and services

The diversification of the orderbook is an important goal for the Group and we have progressed several projects that ensure we continue to have a wide variety of work across multiple challenge agents. I can confirm that following the completion of manufacturing of a Flu B challenge agent, we have successfully concluded a characterisation study to determine the safe and infectious dose of Flu B required to achieve a reliable infection in healthy volunteers. As such, we have successfully established our Flu B challenge model and are now able to conduct Flu B challenge trials for our customers. Additionally, we have completed manufacturing of a hMPV challenge agent, and this is now ready for partnering to proceed to a characterisation study. We also signed a £2.5 million contract to conduct an Omicron characterisation study with a mid-sized pharma company, which, if successful and following receipt of relevant regulatory approvals, we expect to be able to conduct Omicron human challenge trials from mid-2025. All of these challenge agents, which were funded by clients, provide access to new markets and diversify the Company's human challenge model portfolio, importantly allowing the business to conduct bivalent / multivalent or universal vaccine or antiviral studies, which are a growing trend in the global biopharma market. During H1 2024 we also invested in the development of a H3N2 and RSV B challenge models to provide updated models to our clients.

Outside of our core service offering, we also initiated a Phase 2b influenza field study, the Company's largest field study to date. hVIVO will enrol up to 1,000 healthy volunteers via our FluCamp volunteer recruitment platform as the sole UK clinical site as part of a multicentre field study, expected to commence in Q4 2024. This is an important new income stream for the business, and we anticipate it will help drive efficiencies by improving staff utilisation and leveraging existing capacity at FluCamp. In September 2024, we completed the expansion of our outpatient unit at Plumbers Row following the conversion of the Company's former corporate offices. This will support our Phase 2 and Phase 3 field study contract service and further leverages the FluCamp platform.

Post-period end, we launched FluCamp's tiered volunteer / patient recruitment service offering. This new service offers Essential, Advance and Premium recruitment services to support CROs and pharma companies to recruit volunteers and patients for their studies. Volunteer / patient recruitment is the number one cause of trial delays, and with FluCamp's 100% trial recruitment success and its database of over 320,000 engaged and motivated participants, FluCamp can offer an effective solution for its clients. In H2 2024, we expect to launch our FluCamp portal which provides an anonymised, live database of volunteers which is accessible to our clients targeting healthy volunteers and patient populations.

Outlook

After a very strong first half delivering record revenues and margins, hVIVO has entered the remainder of the year with full year revenue guidance fully contracted with good visibility into 2025. We have a broad pipeline of live opportunities, including a number in advanced stages, as we look to further develop our orderbook. The Group reaffirms its full year revenue guidance of £62 million with full year EBITDA margins anticipated to be at the upper end of market expectations. In the medium-term, we are targeting Group revenue of £100 million by 2028, which we believe is achievable through continued strong organic growth complemented by small bolt-on acquisitions that meet the Company's strategic and financial criteria. The Group's organic and inorganic growth strategies are underpinned by the move to our new facility at Canary Wharf, hVIVO's strong cash position and our cash generative long term sustainable growth model.

Yamin 'Mo' Khan

CEO

9 September 2024

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2024