ANGLE: providing a valuable service to pharma

ANGLE’s investment case centres on the how rapidly and broadly the analysis of CTCs (circulating tumour cells) is adopted in cancer diagnosis and guides treatment. Its Parsortix system is a unique technology platform that differs from other liquid biopsy approaches by capturing and harvesting CTCs for subsequent downstream analyses. There is increasing clinical acceptance that CTC-driven diagnostics can provide complementary actionable information to current liquid biopsy methods, such as ctDNA, including invaluable additional insights that such methods cannot. While the industry faces clear near-term macro headwinds, Parsortix’s benefits provide multiple commercial opportunities. Management is focusing its resources to exploit Pharma Services by targeting large pharma players and, increasingly, the key diagnostic companies. Following FY24 results we introduce our estimates for FY26 and update our valuation model. Our DCF-based valuation is now £118m ($147m), or 37p per share.

The benefits, and role, of liquid biopsies have been well documented (Exhibit 1), and their use is finally gaining wider acceptance with health service providers. For example, NHS England is rolling out a “blood test first” approach to lung cancer diagnosis. This is based on analysis of circulating tumour DNA (ctDNA), a valuable biomarker consisting of cell-free DNA that is shed into the bloodstream by tumours. Numerous studies have shown that ctDNA analysis can enhance diagnostic accuracy, improve treatment precision, and optimise patient outcomes. However, as fragments derived from dead cancer cells, ctDNA has known limitations. In contrast circulating tumour cells (CTCs) are living cells that reflect the current state of a tumour and are actively involved in cancer progression.

Exhibit 1: Liquid biopsy can play key roles across the whole care pathway

Source: ANGLE EACR Illumina webinar February 2025

Parsortix is an elegant and versatile technology platform for consistently capturing CTCs from a simple blood sample. As intact living cells, CTCs can provide unique diagnostic information, giving a more complete and relevant picture of a cancer (Exhibit 2); hence, enabling optimal treatment specific to the cancer’s profile.

Exhibit 2: CTCs provide additional actionable data compared to ctDNA

Source: ANGLE EACR Illumina webinar February 2025

Importantly, ANGLE has also developed workflows that enable highly sensitive dual analysis of ctDNA and CTC-DNA (DNA extracted from CTCs) across large gene panels from a single blood draw. The use of such dual analysis provides additional critical biomarker information that would not otherwise be available (Exhibit 3). For instance, it allows longitudinal monitoring that can prompt treatment adjustments as the cancer evolves, a level of insight that is not usually possible with current cancer diagnosis and analysis of solid tumours and, especially, metastases.

Exhibit 3: Dual analysis can guide better targeted treatment

Source: ANGLE

ANGLE has created two next-generation sequencing (NGS) workflows. The first follows a successful proof-of-concept study in lung cancer that showed how a Parsortix harvest and analysis could be seamlessly integrated into the widely established Illumina workflow. The second uses a cutting edge NuProbe pan-cancer gene panel (for which ANGLE has an option to an exclusive licence) following a highly successful pilot study in breast, lung, and ovarian cancers. In both cases more clinically relevant mutations were identified through the addition of CTC-DNA analysis than with ctDNA alone.

The development of such integrated workflows is timely as there is growing recognition among academic and clinical researchers that multi-analyte assessment is required to unlock the full capabilities of liquid biopsies. Although an internally developed complete “sample-to-answer” approach would retain more value, the creation of workflows for third-party platforms such as Illumina’s is highly important as they provide an existing large installed base that ANGLE can more rapidly leverage by providing content.

Management’s aim is to make Parsortix broadly available to the healthcare industry and for it to eventually form part of routine patient care, transforming personalised cancer treatment. Pragmatically, a near-term strategy is in place to maximise the uptake of Parsortix, which is focused on three key business areas:

• Pharma services: notably in oncology trials for patient targeting and monitoring, with the goal of Parsortix-developed assays becoming embedded as companion diagnostics (CDx), fully funded by customers;
• Partnerships: for downstream analysis technologies, focused on medtech companies, and with a view to leveraging sales channels; and
• Product business: supplying equipment and consumables to research and clinical labs, either directly or via distributors.

Pharma services offers clinical trial tools to pharmaceutical and larger biotech companies, notably in oncology, for patient targeting and monitoring. Typically, ANGLE develops and validates the assay (to which it retains the rights) and then processes the blood samples from the clinical trial. Revenue from such patient monitoring can vary, but is around £3,000 per sample processed, with a gross margin of c 55%. This margin would be expected to rise over time as volume economies, process improvements, and greater automation improve efficiencies.

ANGLE has successfully completed three contracts. The first was a pilot study with Eisai; ANGLE’s Portrait HER2 assay was used to quantitatively analyse the HER2 (human epidermal growth factor receptor 2) status of the harvested CTCs for breast cancer patients in the Phase II study of Eisai/BlissBio’s HER2 targeting antibody-drug conjugate BB-1701. More than 200 blood samples were processed and analysed, with a clear identification of HER2 status at the outset and the ability to monitor any changes over the study period. This is important since HER2 status changes over the course of treatment in up to 40% of patients, but it is not feasible to monitor this through tissue biopsies. Study results for BB-1701 are not yet known, however, for strategic reasons, Eisai has returned rights to BlissBio. Management is maintaining contact with BlissBio regarding future plans.

The second contract, also completed in March 2025, is with AstraZeneca for the development and validation of a DNA Damage Response (DDR) assay based on ANGLE’s existing pKAP1 assay. The new micronuclei assay has shown it can successfully identify and track DDR damage response, thus enabling longitudinal, repeat monitoring of treatment response through a liquid biopsy. A third contract, also with AstraZeneca, was for the creation of an Androgen Receptor (AR) detection assay for use in their prostate cancer clinical trials. This too has been approved by AstraZeneca, confirming it meets internal requirements for use in their clinical studies. Both the DDR and AR assays have been added to ANGLE’s growing suite of validated tests and are available for use by third-parties.

ANGLE’s fourth Pharma Services contract is a fully-funded pilot programme with Recursion Pharmaceuticals, a clinical stage biotech company that aims to industrialise drug discovery using machine learning and AI. No details about the scope or area of interest for this project have been disclosed due to commercial sensitivities, but it has been noted that success could lead to further contracts supporting drug development projects that Recursion has under co-development with multiple large pharma companies.

Exhibit 4: Current Pharma Services customers

Source: ANGLE

Management has consciously targeted large pharma, who have a clear unmet need to deliver personalised cancer care. Importantly, large pharma companies also have the financial resources to fund all aspects of Parsortix assay development, clinical trials and market launch, and can be the end customer for any eventual companion diagnostic test. However, the current economic and political headwinds have also created specific industry-wide uncertainties that are impacting even the largest healthcare players. The consequence has been a re-evaluation of priorities, with many service companies experiencing a delay or postponement of planned projects (for instance, hVivo’s recent trading update).

Exhibit 5: Pharma Services potential future revenue opportunities

Source: ANGLE

ANGLE has multiple discussions progressing with both existing and potential new large pharma customers, and its pipeline of potential opportunities is growing. However, in our view, it is the outcome of AstraZeneca’s decisions to progress development of its prostate cancer and/or DDR targeted clinical assets, and their timings, that will have the greatest influence on ANGLE’s near-term commercial prospects. Exhibit 5 highlights the material increases to ANGLE’s revenue potential as Parsortix is employed in successive clinical stages. Both the DDR and AR assays are validated by AstraZeneca and ready to be used in the clinic, hence the outcome of the go/no go decision could make a significant contribution to ANGLE’s FY25 and, in particular, FY26 revenues. Unfortunately, these decisions are beyond the influence of ANGLE management, and the outcomes are binary.

More recently, business development efforts have expanded to include large medtech diagnostics companies, as ANGLE seeks to drive wider adoption of the Parsortix system and more fully exploit its commercial potential. This opportunity has the potential to support development of new and/or companion diagnostics, enhancing the applicability and value of existing diagnostic solutions by converting tissue-based assays to a liquid biopsy workflow. The benefit to the diagnostic partner comes from the repeat revenue potential from each patient as a Parsortix-based assay would enable longitudinal monitoring of tumour status. Other than the potential for an upfront and/or milestone receipts connected to exclusivity, we would expect a similar revenue profile to Pharma Services contracts with ANGLE receiving initial services revenues, followed by sales royalties once the new workflow is commercialised and widely implemented. The first medtech diagnostics partnership is yet to be secured.

Broad adoption of a novel medical device can require a paradigm shift in clinical practice, with sales subsequently taking time to materialise; hence, the importance of targeting larger, and more influential, companies as customers. In our view, ANGLE’s continued focus on growing and augmenting Parsortix-enabled assay applications has the potential to drive significant mid- and longer-term revenues through later-stage clinical trials (and ultimately as a commercial product). While near-term revenues will likely continue to be impacted by industry headwinds during 2025, there remains substantial potential for future revenue growth and business expansion through existing deals (depth), cross-selling (breadth), and execution of new partnerships (halo).

Valuation and Financials

Our ANGLE valuation is based on a three-stage DCF model which includes revenues for the main Products and Services business lines, reflecting the differing markets, revenue potential and growth profiles. These are summed and netted against the central costs of running the business (R&D and S&M spend) and current net cash/debt. Our updated valuation reflects more muted near-term revenues, and while the longer-term Parsortix commercial opportunities remain intact, we have moderated the ramp up in sales and conservatively assume peak sales are reached slightly later. These changes, plus revised financial forecasts post FY24 results, generate a DCF-based valuation of £118m (from £155m previously), equivalent to 37p/share (Exhibit 6).

Exhibit 6: Three-phase DCF valuation of ANGLE

Source: Trinity Delta  Note: PV = present value, 10% discount rate, 1.5% terminal growth rate, 20% tax rate, and $1.25/£ FX rate

ANGLE’s reported FY24 revenues were £2.9m (+31%, FY23: £2.2m), with a gross margin of 62% (H124: 59%; FY23: 70%) reflecting the product-service mix, and provision of some introductory pricing to pharma customers. FY24 revenues were tempered by specific industry-wide headwinds that included the adverse impact of a US FDA regulatory change regarding LDTs (laboratory developed tests) on Products sales, and worsening of the academic and government research funding environment across the globe. However, implementation of cost reduction initiatives during 2024 reduced operating expenses to £16.9m (-27%, FY23: £23.3m), narrowing the net loss to £14.2m (-29%, FY23: £20.1m).

In light of ongoing macro-economic uncertainties, as well as the continued impact of headwinds outlined above, management guidance for FY25 is for modest growth in revenues vs FY24. Management has indicated that demand for ANGLE’s liquid biopsy solutions is growing but, with long lead times and binary outcomes, there is uncertainty around when and if current discussions might transition to active deals and thus contracted revenues. Our updated FY25e revenue forecast is now £3.1m (lowered from £4.3m), and £4.3m in FY26e. Successful execution of significant new Pharma Services deals (or contracts with medtech companies) could result in considerable upside potential.

We acknowledge that discounted or introductory pricing may be offered for new agreements, however, as we assume progression of existing projects into later stage trials, we forecast an uptick in gross margins to 65% in FY25e and to 67% in FY26e as the product-service mix evolves and underlying margins on the Pharma Services business improve. We assume costs will remain broadly flat from the £16.9m base in FY24, forecasting £16.2m in FY25e (largely unchanged from our last published £16.0m), and £16.3m in FY26e. These changes lead to a net loss of £13.6m in FY25e and £12.9m in FY26e. Our updated forecasts are shown in Exhibit 7.

End-December 2024 cash was £10.4m (end-June 2024: £17.9m; end-December 2023: £16.2m) which, together with £2.3m of R&D tax credits due (£1.4m received January 2025 and the £0.9m balance expected during Q325), provides a cash runway into Q126. For the purposes of our model, we include £10m of cash inflows in FY26e (as illustrative short-term debt) which could come from a variety of sources, including higher than expected revenues, commercial milestones, licensing and other income from collaboration with customers and industry partners, and debt and equity funding.

Our near-term FY25e and FY26e revenue forecasts do not assume a significant uptick in Pharma Services revenues; however, our longer-term projections (which underpin our valuation) do assume successful execution of new deals, leading to higher future mid-to-long term revenue growth. This should be driven by new Pharma Services agreements, and progression of existing contracts into larger later-stage trials, with these elements underpinned by growing uptake and broader adoption of liquid biopsies across healthcare providers; these are already starting to gain traction, as outlined earlier.

Exhibit 7: Summary of financials

Source: ANGLE, Trinity Delta. Note: Adjusted numbers exclude exceptionals. FY26e includes a £10m cash inflow (as illustrative short-term debt) which could come from a variety of sources, including financing event(s) and deals.

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