Gathering momentum in Pharma Services

Update | 14 May 2024

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Three new Pharma Services agreements with large cap pharma in 2024 demonstrate that ANGLE’s business development activities are successfully translating into customer income. These deals will make a valuable contribution to near-term revenues and also have the potential for more sizeable future revenues. Successful development of the underlying Parsortix-based assays could mean a transition into longer-term contracts for larger later-stage clinical studies, perhaps ultimately becoming companion diagnostics for commercial cancer drugs. Furthermore, the external validation provided by large cap pharma partners could facilitate future business development. Equally importantly, the resulting assays will augment ANGLE’s menu that it can offer other customers. ‘Content’ development should support both the products and services business lines, which along with clinical data generated with Parsortix to demonstrate utility in patient management, should help drive adoption. Our DCF-based valuation of ANGLE is £174m, or 67p/share.

Year-end: December 31	2021	2022	2023E	2024E
Revenue (£m)	1.0	1.0	2.2	6.3
Adj. PBT (£m)	(18.7)	(26.7)	(21.8)	(15.8)
Net Income (£m)	(15.0)	(21.7)	(19.9)	(13.0)
Adj. EPS (p)	(7.2)	(9.6)	(7.8)	(5.6)
Cash (£m)	31.8	31.9	15.1	4.2
EBITDA (£m)	(15.7)	(21.4)	(19.3)	(12.3)

Source: Trinity Delta Note: Adjusted numbers exclude exceptionals.

Three new Pharma Services agreements Three partnerships have been secured with large pharma so far in 2024, two with AstraZeneca and one with Eisai. The deals have a c £905k aggregate headline value, which will contribute to FY24e revenue expectations. Importantly, there could be substantial future downstream income should any, or all, lead to further contracts for use of the respective Parsortix-based assays in later clinical trials. This could ultimately lead to a future companion diagnostic that could be a significant commercial opportunity.
Key near-term revenue driver with upside potential ANGLE’s Pharma Services business offers clinical trial tools to pharmaceutical and biotech companies for oncology patient targeting and monitoring. Oncology trials are set to remain one of the most prolific areas of clinical activity and hence, over time, this could become a sizeable revenue stream. Growth will be driven by new customers and as existing customers progress to later stage and larger trials, potentially expanding to other programmes. The external validation provided by these latest large-cap pharma partners could facilitate and accelerate ongoing partnering discussions.
Aiming to drive wider Parsortix industry uptake Alongside Pharma Services, ANGLE’s efforts are also focused on driving Product revenues through developing market-relevant “content” (menus of assays), supported by a growing network of distributors. In addition, continued generation of robust clinical data highlighting Parsortix’s potential in multiple solid tumour treatment regimens should help drive wider industry recognition and partnering opportunities.

Update

14 May 2024


Price	21.0p
Market Cap	£61.2m
Enterprise Value	£26.6m
Shares in issue	260.6m
12 month range	9.07-37.4p
Free float	96.7%
Primary exchange	AIM
Other exchanges	OTC QX
Sector	Healthcare
Company codes	AGL

Corporate client	Yes

Company description

ANGLE is a specialist diagnostics company. Its proprietary Parsortix technology can capture and harvest very rare cells, including CTCs (circulating tumour cells), from a blood sample. The FDA product clearance for its clinical use to guide precision cancer care should open up multiple commercial opportunities.

Analysts

Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043

Philippa Gardner
pgardner@trinitydelta.org
+44 (0) 20 3637 5042

ANGLE: Three new Pharma Services deals

Pharma Services is likely to be a key revenue growth driver in both the near- and over the longer-term. Securing new partners will be key for future growth, and hence recent deals with large-cap pharma are highly encouraging as these could lead to: (1) future upside from later-stage and larger clinical trials; (2) broader future relationships with these partners; and (3) provide external validation to facilitate deal execution with new partners. The three deals recently signed are:

A deal with Eisai for a pilot study in which ANGLE’s Portrait HER2 assay will be used to quantitatively analyse the HER2 (human epidermal growth factor receptor 2) status of CTCs (circulating tumour cells) for breast cancer patients in the Phase II study of Eisai’s HER2 targeting antibody-drug conjugate BB-1701. The pilot phase is worth $250k.
A deal with AstraZeneca, initially worth £150k (over six-months), to develop a methodology to detect CTC micronuclei, a measure of DNA damage response (DDR), using ANGLE’s existing Parsortix-based DDR assay for use in pharma R&D.
A second deal with AstraZeneca for £550k (into Q125) which involves developing a Parsortix-based Androgen Receptor (AR) detection assay for use in multiple prostate cancer clinical studies.

As with all Pharma Services agreements, successful execution and development could mean adoption in future late-stage clinical trials to monitor patients at multiple timepoints. This could bring significant future revenue potential, as shown in Exhibit 1, especially if this leads to development of a companion diagnostic. Whilst this could take several years, the development path will be fully funded by the drug developers running the clinical trials.

Exhibit 1: Pharma Services potential future revenue opportunities

Source: ANGLE

The Pharma Services business is supported by ANGLE’s dedicated UK-based certified laboratory. According to management, this has capacity to process over 40,000 samples per annum with pricing over $3,000 per sample depending on the level of complexity and the degree of evaluation desired. This could be scaled further to match demand as new contracts are executed.

Exhibit 2: Summary of financials

Source: ANGLE, Trinity Delta. Note: Adjusted numbers exclude exceptionals.

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