Trading Update

RNS Number : 8432X

Microsaic Systems plc

10 January 2022

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018) ("UK MAR")

10 January 2022

Microsaic Systems plc

("Microsaic" or the "Company")

Pre-close Trading Update

Microsaic Systems plc (AIM: MSYS), the developer of point of need mass spectrometry ("MS") instruments, provides an unaudited trading update for the year ended 31 December 2021 ("FY21").

Financial Performance Indicators

The Company confirms that revenues for FY21 have significantly exceeded those of FY20, recovering to a level slightly ahead of that in FY19, a pre-pandemic benchmark. This improved position reflects the recapitalisation of the business in January 2021 via an over-subscribed placing raising £5.5m in gross proceeds, a revised board composition and the strategic change of the Company's business model from an instrument-centric sales focus to a more commercial and collaboratively-based business model centred on customer workflows, providing instrumentation, software, service and analytics to help solve real-world problems.

Microsaic expects to report FY21 revenues of £0.90m, a notable increase on FY20 (£0.20m) and a recovery to beyond that seen in FY19 (£0.87m).  Orders for the year have exceeded £1m, representing a significant milestone for the Company. Following the effects of COVID-19 in FY20, sales in the first half of FY21 (£0.50m) predominantly comprised demand from 2020 converting to orders, and the second half of the year saw a strong intake of fresh orders, driven in part by newly secured instrument and service business in the Environmental and Human Health sector.  

Microsaic's backlog of orders remaining from 2021 will be shipped in early FY22, which mainly reflects global supply chain pressures resulting from COVID-19. The Company is working hard to mitigate disruption to its key supply chain such that any future impact will continue to be minimal.

Glenn Tracey, CEO of Microsaic, commented: "If 2021 was about turnaround and transition, then 2022 is about significant business inflection. We have worked tirelessly in 2021, putting in place the necessary building blocks in and around our technology, extending our business model to cover workflows, software and services.

"The COVID-19 era has demonstrated the resilience of humans and ingenuity of our scientists, and Microsaic's ability to respond quickly with solutions to real-world problems. Real-time detection is a central facet of advancing this human endeavour. Microsaic solutions are exceptionally well placed with their capability to operate in real-time and, increasingly, informed by prior data analysis.

"I am absolutely delighted about how Microsaic has emerged from the COVID-19 era, stronger than how we entered it. I am very optimistic about the future prospects for the business."

Strategic and Operational Developments

During the year, Microsaic took a number of important steps to develop its commercial offering to support a number of new, high-value applications in major markets and geographies. 

New configurations of the Company's MS technology are now included in water monitoring solutions for chemicals and pathogens (including so-called 'forever chemicals', drugs of abuse and pharmaceutical ingredients, as well as SARS-CoV-2) being provided by our partner, DeepVerge plc, with whom our relationship is also providing access to international markets across three continents.  Significant progress has been made since the signing of a commercial framework agreement in March 2021 with initial equipment orders, and further orders in July, October and December.

July also saw the launch of real-time monitoring of on-line production of biotherapeutic drugs (vaccines and anti-cancer treatments) using a Microsaic micro-engineered MS solution, targeted at contract research and manufacturing organisations, integration partners and biopharmaceutical companies.  The use of continuous MS monitoring process monitoring can provide timely and critical safety and quality assurance as potentially very expensive adverse outcomes can be mitigated upstream.  The Company has continued its discussions with potential bioprocessing CRO partners, and with the alleviation of international travel, progress is anticipated to accelerate in FY22.

In November, Microsaic's point-of-need platform was further extended to include Gas Chromatography ("GC") alongside its existing liquid chromatography ("LC") capability, enabling automated detection of organic chemicals in both non-volatile and volatile compounds. This significantly expands the range of detectable compounds and fields of use for the Company's technology, with potential applications across therapeutics, antibiotics, pesticides, petrochemicals, and personal care products. 

The Company has also developed relationships with a range of partners in China. In September the Company entered into an agreement with new partner Jiangsu Henzhihe Technologies Co. Ltd. ("HZH"), to source manufacturing, integration, and service for distribution and prospective OEM partnerships in China. With strict international travel restrictions in force well into 2021 hopefully easing in 2022, it is now hoped that progress will accelerate with a view to the Company securing a medical licence to ship products in China, and subject to local regulatory requirements, into markets globally.

Microsaic is also continuing its collaboration with Swansea University to combine real-time monitoring of environmental water using AI in determining the link between environmental chemical pollution and human health.

Operationally, the Company made five key commercial hires to support business development in new areas, including: environmental detection of water contamination and in human health markets; delivering real-time on-site monitoring; connected data analytics for installed equipment; and AI and support services.

Business model transition from capital instrument sales to complete workflows in Human and Environmental Health, including data analytics

While equipment sales opportunities still feature for the Company's MS technology and will continue to feature as part of our revenue mix, the Board believes the Company's transition to workflow solution sales will establish higher-level end-user engagement.

Progress on this strategy has been made in 2021 contributing to the Company's order increase, particularly in H2 2021, and the Board believes this progress will yield significant gains in 2022.

Further progress is being made towards driving the value of data through collaborations on software and AI in Environmental Health.  This includes both our work with DeepVerge's subsidiary Modern Water, adding portable real-time sewage monitoring, using AI to power analysis for substances such as drugs of abuse and active pharmaceutical ingredients, and our work with Swansea University Medical School looking at the interaction of epigenetics and environmental factors including pollutants.  In October, Microsaic launched its services business, providing a suite of solutions that provide the knowledge, applications and services including environmental, bioprocessing optimization and analytics and workflow solutions, and emerging translational medicine. Potential markets span industries including Pharmaceuticals/Biopharmaceuticals, Food Safety, Environmental and Clinical, and this business will further augment the Company's ongoing transition towards offering complete solutions to end-users in Human and Environmental Health.

Outlook

The Company has entered 2022 with a healthy sales opportunities pipeline. The Board is targeting a significant increase in revenues in 2022, underpinned by scientific services opportunities, particularly in bioprocessing and water markets, but also the extension of Microsaic's detection platform into Human and Environmental Health real-time monitoring. The Company continues to take a measured approach to market access with a keen focus on expenditure.  Microsaic intends to grow its business in conjunction with partners, such as DeepVerge in water detection collaborations, with contract research organisations in bioprocessing, through the extension of its Chinese business with a range of local partners, and via OEM and other strategic partnerships under discussion.

Enquiries:
Microsaic Systems plc Glenn Tracey, CEO	[phone]
Singer Capital Markets (Nominated Adviser & Joint Broker)	[phone]
Aubrey Powell / Tom Salvesen / George Tzimas
Turner Pope Investments (TPI) Limited (Joint Broker) Andy Thacker / James Pope	[phone]

About Microsaic

Microsaic develops and commercialises globally micro-engineering chip-based mass spectrometry equipment. Microsaic has a robust patent portfolio in cutting-edge technology purpose built for "Industry 4.0" which enables analytical detection and characterisation at the point-of-need: whether within a human health environment; conventional laboratory setting; within a bioprocessing facility for continuous mass spectrometer detection and monitoring of data at any step in the process workflow; or in front-line environmental monitoring.

 

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