Good morning, everyone. Welcome to this session of the Leerink Global Healthcare Conference. I'm Mike Cherny, the Healthcare Tech Distribution Analyst. It's my pleasure to have, for the, I think, the first time at a Leerink event, the ICON team. We have Steve Cutler, CEO, Kate Haven, who heads up IR, among many other functions. We're just going to jump into some questions and go from there. Steve, I want to level set now, because the market obviously has had some turmoil, some out of your control in terms of changing dynamics of your core pharma customers. As you think about where the company sits right now, maybe just level set and remind us of the importance of the value proposition of ICON, why you continue to be a value-added partner. Even in the face of some of your pharma sponsors going through these portfolio rationalizations pipelines, some of the positive dynamics that you're continuing to see, whether that's factored into the fourth quarter bookings results, which were certainly solid on a gross basis, or how you think about the pipeline as it currently sits. Sure. Thanks, Mike. And good morning, everybody. You know, I think our long-term thesis is very constructive. I look at, I was actually just spent a couple of days with a number of our large pharma and biotech customers at a meeting in Florida. We were talking about the longer-term opportunities in R&D and what they need to do. I mean, certainly our customers have some challenges in terms of loss of exclusivity and a need to bring new medicines to market quickly. Something like $200 billion in revenue is going to be wiped off their top lines over the next five years or so. They need to grow at $100 billion. They need to replace that and then grow at another $100 billion in order to grow at 5% on a CAGR basis. They have some big challenges in front. Now, they're confronting them in different ways. At the moment, there's some budget cuts, there's some looking at models, et cetera, et cetera. When I look at that challenge that they have, I see huge opportunity for our business and our industry over the next five years or so. Now, that's the long term. I am very optimistic about where our company goes and where our industry goes over that period of time. They are going to have to outsource. They are going to have to employ organizations like ICON in order to bring innovative new medicines to market. That will be on a functional basis. That'll be on a full-service basis. There'll be different ways of doing it. We remain very optimistic. In the short term, we are working through something of a transition year, as we've talked about. There are some of them moving their budgets down. We've been impacted fairly significantly from our top two customers. That's working through our system. The biotech environment remains somewhat volatile. There are 800, I think, public biotechs. 200, I think it's about a quarter of them, are worth less than cash value at the moment. They're working through some challenges, no question about that. I do believe we're part of the solution that we can offer them. We have a good relationship. We're seeing some positivity in the opportunities from a biotech point of view. Even in the short term, we're starting to see some green shoots, although that volatility continues and those delays in decision-making continue at the moment. Obviously, one customer is one customer. You've been very transparent, appreciably so, of some of the dynamics going through some of your larger companies. That being said, you're also partially part of the solution for how they rationalize pipelines, figuring out using data sets, what can keep going on, what will be well-positioned going forward. As you think about the real-time discussions you're having, and especially well-timed coming off of your customer meeting, it's really hard to predict. Where do you think we are in terms of them feeling comfortable, be it your two largest, which you noted, some of your other key partners, about coming out the back end of a, call it, new normal of demand, new normal of clinical trial work that they plan to do? Yeah, it's hard to put a timeline on it, Mike. We certainly, with our top two, I think we've been public in terms of saying our number one, we believe we're getting to the nadir, and we're starting to see some stability there and possibly even some mild uptick, modest. We're at the bottom there with our other customer. They're still declining from a revenue point of view and from a sales point of view. We'd like to think that this year we'll see the bottom of that, but we're not quite sure at that at this point. They remain relatively in flux in terms of their model, in terms of some new management that's come in there. There are some uncertainties around that particular customer. From that point of view, one, I think we've got a pretty good handle on. The other, not so much, and we're still seeing that play out. On the other hand, we've got a number of large customers coming into our top five and growing quite rapidly, albeit some of them in a more oncology rare disease sort of space. That burn isn't quite at the rate we'd like. There is no question we're building a nice franchise and a nice backlog with some of those other customers. There are others in our strategic pipeline that are moving in a full-service direction as well, which is very encouraging for us as well and starting to make awards, albeit a little ahead of what we'd expect from new strategic partners. As always, there's a portfolio impact here where we do have a couple of customers who are going the wrong way, but others who are moving in and doing nicely. I know a lot of the focus has been on the cancellation rates, some of that portfolio rationalization, but I believe you've had a new strategic partner announcement each of the last two quarters, if I recall correctly. What's driving some of those expansions? Most pharma companies obviously are not new to you, given the breadth of your services, but what's been behind some of the rationale of those new strategic partnership wins? What are they looking for ICON to do that they weren't accomplishing on their own, weren't accomplishing with other partners before? Yeah, I think with the two we brought on recently, certainly one of them has been traditionally an in-sourcing customer. They've done a lot of work in-house. They've done a lot of work themselves and done it successfully. They have realized with their revenue growth and their pipeline that they're going to have to do something different going forward. We have been selected, along with one or two others, to help them with doing that. The growth, the opportunity, that customer is almost limitless. It's very substantial. The other one has had a number of partners for a number of years. We were not one of those up until now, but we have now replaced one of their strategic partners. They've seen, I think, an opportunity with ICON to bring in a company that's at the forefront in terms of technology, in terms of what they need, when we've been essentially allocated one of their fastest-growing therapeutic areas. That's also very encouraging. We're delighted to be able to help them to play an important role. They've realized, and they've moved very much to a full-service approach. They've realized that they need to do things a little differently, and they've changed it up a bit. They've always had both a component of functional and full service, but with us moving on the full-service side of things. We brought something to the table that perhaps the incumbent didn't have. One or two of our competitors have had a few struggles. I mean, that's not new. We have been able to move in and present them with a case and with a value proposition that they find compelling, which is encouraging. Thinking about the guidance for the year, back in January, you gave a fairly wide range. We've started to talk about this, acknowledge the market dynamics behind it. As you think about using the guidance to frame some of the positions of the business, if we get to December and you're at the high end versus at the low end, what's changed about current market demand that gets you to those ends in terms of what's embedded in the ranges? In terms of the high end, what's changed is obviously the two large vaccine trials that we've been public about have gone forward, albeit on a delayed basis. That is important. We've also made some progress in terms of the biotech demand that we're starting to see from an RFP basis. We've been able to win that work and start to do that work. We've been able to also continue to prosecute and accelerate the projects we have in our backlog. The high end is probably an optimistic scenario, obviously. It does depend certainly upon those two large vaccine studies. On the low end, those vaccine studies move out or get canceled. That remains a possibility. I have to be honest with that. We've been transparent about where we are with those. We do expect the one we've just, we've already delayed the first one. The second one that we announced in our 8-K the other day is on a 90-day delay. I do not have any more information about that. If they did disappear, we'd certainly be at the low end of guidance on those ones. Just using that as a framework, because obviously the two vaccine trials have been very much in focus, can you just remind us of how big your overall vaccine portfolio is relative to the rest of the business? Important context, obviously, given the hyper-focus on the near-term bigger trials versus the broader services you provide. Yep. It is mid-single digits in terms of the percentage of backlog, which those vaccine trials in terms of the COVID work would be inclusive of that. We have talked about the COVID work being in the low single digits in terms of percentage of revenue this year. That mid-single digits would encompass COVID and then other work we are doing, right? Flu, RSV, other vaccine work within that. With regards to the most recent 90-day delay, obviously out of your control, but given the short timeframe of the delay and obviously the hopefulness that after 90 days, the work restarts, how do you deal with the resources allocated towards that trial? You talked on the earnings call about the expectations of basically just kicking off then. Obviously after the earnings call, the pause came. Clearly you were prepared to do the work with such a short timeframe. Obviously we're in a unique situation as well with the administration changing. How are you reacting to the resource allocation? Yeah, it's difficult. When people say to me, "Oh, that must be awful for your business. How do you handle it?" I say, "That's why we exist. That's why our industry is here, because we have to be able to respond to these sorts of ups and downs." While I'd love to think that our work comes in smoothly and consistently and doesn't go up and down, that would be great. That's not our raison d'être, is because the drug development program stopped, start, and continue in Texas. With that in mind, we certainly had a significant amount of resource brought into the organization to do that trial, particularly the trial that was at the time of our call moving forward fairly aggressively. As you know, those vaccine trials require quite a bit of resource over a short period of time. They burn quickly. They burn fast. They burn with strong revenues, et cetera, et cetera. That will have something of an impact on our first half revenues, revenues as well as margins. We've got some cost in there that it's difficult to sort of redeploy immediately. We can do, to some extent, redeploy them to other programs, avoid hiring. We can do all of that to the extent that we can. It will have some impact on our first half margins. There's no question about that. Overall, we'd like to think that as that 90-day, that means the study comes back towards the end of Q2. Assuming that happens, those resources can be pretty actively redeployed at that point, and we're off to the races. There will be some impact on certainly our first half margins. Steve, going back to your biotech comments before, you talked about some elements of green shoots. I mean, downstairs here, it's been a litany of companies going on. You can see the biotech activity at work. If you look back over the course of the last year, it seemed like 2024 started with better biotech funding, maybe slowed a little bit over the second half of the year from a market basis. Are you seeing any differences in the cohorts of biotech companies and the speed of which they're making decisions on making awards based on funding levels versus what you would have seen historically? Is there anything that they're pointing out on uncertainty, on delaying cash burn? Anything else you can point to versus the catchers' mitt you have to continue to obviously pick up awards? Yeah, I don't think it's changed dramatically since our last call, Mike. We still see caution in that sector of the business. As you say, the overall funding was up last year overall, but it was volatile. It was, in my mind anyway, sort of narrowly distributed, certainly to some companies. I think there are a lot of companies out there, and some of them are getting that funding, but there are a lot who aren't. I don't think the funding's perhaps as broadly distributed perhaps as I'd like it to be. That's having some challenge. Even when it is, companies are being cautious about how they're deploying their capital and what studies they're prioritizing. That's not just the biotech. That's in the large pharma as well. The prioritization of programs and making sure that they're moving their most valuable assets along as fast as possible is something that, I mean, as I said, I was at the meeting the last couple of days, and that was a lot of what they talked about, where they're going to take risks and where they're not going to take risks. That caution, that delayed decision-making, it's interesting in that perhaps in the past, it's been about fast, speed, speed, speed, let's go, let's go, let's go. At the moment, it's more about, okay, which assets, which studies, how are we going to do it, what do we need to do with it? There is a delayed aspect to it. That is playing into our burn. That is playing into our awards and playing into how we're planning our business as well. I think that'll probably continue for most of this year. Thinking back to some of the comments from the recent earnings call, and I want to dive in a bit on the RFP outlook. I sense the level of optimism as you looked at the potential for awards coming through. Is there anything you can couch any further on how you're seeing the RFP flow develop, any changes on the competitive dynamics in terms of who you're seeing at the best and finals at the end? I guess maybe, at least in this environment, what are you leading with when you go into pitch for those best in finals on the RFP side? In terms of RFPs, again, the picture has not changed dramatically from where we were a few weeks back. We are certainly seeing a modest uptick on the RFP opportunities within the biotech space. Now, whether that necessarily translates immediately to new awards and into revenue is a little less certain in my mind because of what I talked about with those delayed decision-making. They are going out. They want a budget. They want to be able to raise money. Some of the requests that come to us are really to, how much do I need to raise to do this trial or to prosecute this program? I think there is a bit of an uptick there. They are also, as those opportunities are coming through, and we are seeing, let us say, a modest uptick in the RFPs. On the large pharma side, it's probably a bit more flat, a bit more sort of stable, and overall, modest increase. I think the biotech probably outweighs a little bit on the large pharma. There are opportunities out there. The question is how quickly they get decisions get made. For us, in terms of our pitch, particularly to pharma or to biotech, we are a clinically focused CRO. That's all we do. I think that's something that resonates well, particularly with the biotechs. They're looking for substantial companies who are financially stable and viable, that don't have a huge debt level, but are able to focus very much in the clinical space. We have our executives very focused on our customers. All of our executives have a link with a customer or are allocated as a sponsor to a customer, whether they're in the operational side of things or they're in the Global Business Services. Customers like that. We have good technology. We have a site network, I think, that plays well with them as well. We're able to engage investigators in their discussions on their programs and even bring them along to bid presentations sometimes. We have some of our Alliance site investigators, our Accellacare site investigators come along and talk about how they would, what are the things they would see. We've even had patients come along. We're really trying to connect the company with the opportunity and with what they need to do. That resonates very well, particularly with the smaller customers. I would love to see how a patient presents in a best in final. It'd be interesting. Be careful what you wish for sometimes, Mike, but it does generally resonate well. You've touched a bit as we've gone on the idea of the functional service work versus full service. As you sit here today, whether it's couching it against the recent awards, couching it against the RFP flow, what's leading to when you see a shift either from FSP to full service, from full service back to FSP? What are some of the characteristics of the types of companies that are going one direction or the other? How is, I mean, ICON obviously has flexibility to do both. How do you go and react when either a customer wants to go one avenue versus the other? What active role do you take in pushing them in one direction if you do? I guess at the outset, I'd say it's very customer specific, right? Not surprisingly. I mean, we still see FSP as being very much a large pharma model, right? I think there has been some noise in the channel around whether or not that's moving into the mid-tier or even down into biotechs, and we're not really seeing that trend in a big way. It is still very much large pharma that is considering the functional versus sort of full service. Ultimately, what we see is that they are looking at their sort of that interplay between what they have, right, from an internal infrastructure standpoint already, what they feel like their expertise is, right, around what they own, what they need to own, what they need to have control over, and then looking to augment that, right, with either a functional solution or increasingly on the full service side, right? As they make acquisitions into the biotech space or go into new therapeutic areas where maybe they do not have that particular expertise or existing infrastructure, there is an opportunity to do that more on a full service basis, right? In any given customer, there is often this blended approach, right, where they are looking over time to increasingly have elements of full service and functional. For us, that's actually the perfect scenario, right, because of our offering, right? We have the largest functional, and we obviously go toe to toe with our largest competitor in terms of full service. We can sit across the table from them and say, "Let's customize a solution that works best for you," right, in terms of thinking through, right, if it's functional, if it's full service. Frankly, we don't care either way, right? I mean, obviously, there is a bit of a margin differential at the end of the day, but we want to meet them where they are, right? That is going to evolve over time, right? As they grow, as they have different needs, as they go into different therapeutic areas, that is going to be a constant, that is going to change. We have seen this sort of pendulum, right, where customers have gone more toward functional, more toward full service. For us, actually, the mix has stayed pretty consistent between functional and full service because we have this diversity of our book, right, where it's a mix, where some have gone more toward full service, some have been more functional, and that tends to sort of evolve as the portfolio changes. It was interesting. I had breakfast with a mid-size customer yesterday, yesterday morning, who said to me, "We do this FSP stuff, but I don't think we're getting best value at it. We have a lot of resource, a lot of cost associated with it. It's less flexible." They want to move towards a more full service. N equals one doesn't sort of change the thesis. There's certainly a switch, but it's not exclusively. There's no tidal wave towards FSP. Customers recognize that functional is a model, but it gives them the onus is on them. They have a significant amount of internal cost to be able to manage that functional. They probably don't get the innovation or the creativity that perhaps we can bring as part of a full service provider. Just to follow up on that, Steve, you used the term creative. Kate used the term customize. There's no, I mean, you said there's none of one. There's no one size fits all when it comes to functional service offerings. Are you seeing any common themes in terms of certain functions that your biopharma partners, customers are looking to keep more in-house? Is there anything about data aggregation, data retention, anything that aligns across numerous companies that you're seeing, or is it more a literally one customer equals one customer? I'd say if there's a trend, it's probably towards some of that, like what they would view as a higher value activity, right, or something that's perhaps more regulatory driven or in biostatistics or something where they say that might be core to what they feel like they need to have oversight of and control of from their perspective versus outsourcing it. It is going to be different by customer, but I guess, I don't know, Steve, if you have a different view of this, but that's probably more of the common theme in terms of more of that high value activity, less so on monitoring or pieces like that. Just to wrap up on this, Kate, I know you mentioned the difference in margin rates, but obviously there's a very important margin dollar that comes with FSP work. It's profitable. It's good work. How do you think about contracting and almost reverse engineering to ensuring that you're capturing the margin dollars that you want with the functional contracts? Yeah, we look at both, Mike, pretty carefully. As you say, the margin differences aren't as large as people think, particularly contribution margin level. There's very little internal SG&A sort of associated with our FSP business, and hence that business doesn't carry that cost. The benefits around FSP really relate to consistency of burn, probably faster burn, much less volatility from a revenue point of view. From that point of view, there are lots of good things about FSP over and above the full service stuff, which is more volatile. Margins are better. No question about that. It starts and stops, whereas the FSP just sort of keeps on keeping on. We look at both areas of the business, and we made a, as Kate said, we made a commitment to be in both and to offer our customers good hybrid solutions as we can and commit to that. Some of our competitors are in one or in the other and sort of half in one and half in. We believe that FSP is an important part of our armamentarium to offer to customers if that's the way they want to prosecute their business. I mean, what we are looking at is how we add in additional services around a core functional offering, right, where it's not just headcount. It's not just, "I need 1,000 heads in data management or name your function," right? I mean, it's looking at the elements of service that we can give them on top of that, right, where it can be technology oriented, where they like our systems or the analytics that we can drive in terms of the offering that we have. That, obviously, over time can drive a better margin profile for us, right, and value for our customers. That's really how we think about that margin opportunity in that business as well. Along those lines, I mean, you're an R&D partner, but you mentioned analytics development, technology platform. What do your R&D priorities look like as you continue to build out more functionality for trial work? Oh, in terms of priorities, really, it's about getting patients onto clinical trials as fast as possible. In our full service space, our site network is very important. How we facilitate recruitment into that site network, not just into our site network, of course, but into all the sort of ad hoc sites that we utilize, that's a fundamental part of our R&D strategy and our thinking. We've talked a lot about our automation, AI, robotics, and how we're trying to deploy that around simple stuff like data management and document flow and site selection. We have some good tools in those areas now that we believe are starting to bring strong value in terms of performance and efficiency. Those are the sorts of areas we think about in terms of our sort of R&D. It's really, as I think about it, it's about how do we make our offering more efficient? I keep coming back to the meeting. I've been out for the last couple of days, and the customers recognize that the price of clinical trials is going up and substantially. I did jump up at one point in the meeting and say to them, "It is, and it is because a lot of the companies are doing things that they really shouldn't be doing, and we can help them with that." Part of the, as I say, the R&D focus that we have is how we can get better at essentially getting patients into trials as fast as possible, getting those trials started up as fast as possible. For example, in terms of contracting, startup in our situation is a challenge. It takes up to a year from your sort of first site activated to your last site. If we can make that three months, then we make a material difference. One of the ways of doing that is contracting because contracting is on the critical path. Our AIs now allow us to identify what contracts have been agreed with the sites in the past for different sponsors. Let's go to that site as we go to it in the future with the same sort of terminology, the same sort of, unless the customer says that's just completely unacceptable, and sometimes they do. If they do not, then we can move that contract process along. Accessing these contracts and accessing the clauses within these contracts that have been contentious, and it's a simple thing in the scheme of things, but you can imagine the variety and the volume of contracts we have. We work with 15,000 sites around the world. That is where technology and our R&D and our AI can really help us to practically move forward. We're going to run out of time probably by the time I get through this question, but we'll try and wrap two things in one. I mean, the company obviously had a big changeover with Nigel Clerkin coming in as CFO, following longstanding previous CFO from Brendan Brennan. As you sit here, and you're probably going to put some words in Nigel's mouth, but we'll go with it, but what are some of the priorities he's pursuing to continue to expand the value of ICON, and especially now as you sit here in a year that you've noted as a transition year with a fairly clean balance sheet, with obviously a recent ratings upgrade to change your cost of capital access? How do you think about the priorities around capital deployment currently in an environment where, as you push forward, while your customers still remain in periods of transition, you best position ICON for the post-transition year and getting back to the long-term guidance you had put out last May? Sure. As you say, Nigel's been in for six, eight months now. He's still relatively new. He's been drinking from the fire hose, as you can appreciate. He's doing a great job. He's got on top of a number of the opportunities within our business very quickly. He's very focused on cash. We call him Johnny Cash now because he's out there making sure that we're invoicing on time, we're getting to our milestones, we're collecting that cash. Even within the very short time period he's been here, he's had some impact on there. I couldn't be happier with what Nigel's been focusing on. He's also looking at how we're forecasting our business and making sure that we're doing a better job in that space. We want to be able to do a better job there, and he's been focusing on that. Also looking at what our M&A opportunities are as well. At the moment, we're very focused on share buyback, and we're active in the market. We're very active in the market in Q4. We'll be active in Q1 on that front. That is our immediate focus given where our share price is at the moment. We also, and good luck to us, have a balance sheet that allows us to support both M&A from an acquisition point of view and the share buyback side of things. We can take the opportunity such as it is of where our share price is at the moment and actively deploy capital. We do have a couple of active opportunities in the pipe, again, that facilitate our business. We're not jumping outside of our clinical business, but it facilitates what we do at the moment. It makes us better at what we do at the moment. Back to my conversation with customers over the last couple of days, we want to do it better. We want to be more efficient at what we do. Around patient recruitment, around our site network, around our labs, around real world, those are the sorts of areas that we want to be able to deploy capital on an M&A basis. Steve, the real-time feedback's been very helpful, but as I predict, we're out of time. Steve, Kate, thank you so much for being here. Thank you all for attending.