Microsaic Systems plc (LON:MSYS) Chief Executive Officer Glenn Tracey caught up with DirectorsTalk for an exclusive interview to discuss the highlights from their final results, what the 12 OEM & distribution agreements mean to the business operationally, the benefits of the MiD® ProteinID products and how the new financial year has started.
Q1: First off, congratulations on another good set of results, can you just talk us through the highlights Glenn?
A1: In terms of business growth, sales are up 51%, that really is to do with our extended channels to market. Just to put it into context, in 2019, 66% of those sales came from partners that we’ve signed in the last 24 months so you can really see the strategy of signing new partners across the world is now making traction.
Margins were slightly below on the year, actually that was within expectations, we outsourced manufacturing. Really just to highlight H2 we saw a surge of margin come through highlighting better pricing & really more traction in our niche markets where our value proposition is really valued & also, that we bought on direct sales. I mentioned outsourcing manufacturing, we’ve completed that activity & what that means now is we’ve got much greater flexibility & scalability as we start to pull in more sales.
We’d signed 4 more partners last year & that now means we’ve got 12 partners globally & that is across North America, Europe, China, South-East Asia, Australasia & Japan. So, you can really see since 2018 we’ve built out that global network so business actually very promising.
In terms of our strategy, we conveniently break it down into two, we call it small molecule & large molecule. Small molecule, as I’ve just said, is about making partnerships & revenues today, large molecule we launched ProteinID last year for our applications in bioprocessing & we have started a programme with both the CPI & MIT to build a use-case for online bioprocessing this year. So, I’m very excited about that.
Earlier this year, post year-end, we signed a really exciting collaboration with a company called Axcend which I’ll talk a little bit about later.
So, all in all, a very positive year.
Q2: You mentioned you have 12 OEM and distribution agreements, can you explain what this means for the business operationally?
A2: Absolutely. Obviously, it gives us a fantastic channel to market, often those partners have got specialist sales & applications teams in those markets & you can imagine, say a channel for a company in Japan is very different to North America. As I also mentioned, actually in terms of that as being part of our strategy, which I’ve mentioned before, a lot of the revenues in 2019 come from new partnership signings & that’s where we want to see the growth going forward as well.
We signed 2 very nice partners, ST Japan towards the back end of last year so this is a company that has been established now for about 30 years, sales of around $15 million & 40 employees most in Japan & they’ve got very strong expertise in reaction monitoring. In the words of their CEO, what they’re saying is there not other mass spec available that offers the potential in such a compact footprint. So, it took a while to sign them but I’m very pleased with that.
Axcend is another example of an OEM based in the US, they’ve got a direct channel in North America & we’re going to be utilising that with them & also we have a channel in Europe so we’re going to be sharing a sales channel. Really with Axcend, it’s their technology that I’m really excited about, they’ve got a very small compact LC that together with our small compact mass spec is one hell of a system. Recently, there was a post published at Pittcon which showed that we could save around $30,000 worth of solvents per year by combining those two systems so really very excited about that as well.
So, two examples of where we’ve been building out those agreements.
Q3: In January 2019, you launched the MiD® ProteinID detector products, can you explain in more detail what these products are and the benefits that it brings to the business?
A3: ProteinID really is an extension of the Microsaic Systems technology or advantage is that we take analysis out of the central laboratory & the reason that is good is that it allows the end user to make faster realtime decisions which optimising overall productivity. So, we essentially are able to take analysis out of the centralised lab & make measurements in a continuous process, now the benefit of that is that often if you take a sample from say a bioreactor to a centralised lab, you can be waiting hours, if not days & with our technology it’s instantaneous. Plus, ProteinID can measure a whole range of entities in one go so that’s large molecules such as target proteins like moleculonal antibody for example plus also small molecules such as metabolites. Our understanding is there really is nothing on the market today that can measure all of that simultaneously online.
Also, with the help of MIT & CPI, we’ll have a validated online system this year & early results show that we’re at least a factor of ten cheaper than existing technologies & by using our technology online, you could be potentially saving cost of failure, for example batch failure, of around about $0.5 million a shot which is significant, clearly.
Q4: Finally, what is the start of the new financial year looking like for Microsaic Systems?
A4: Admittedly, it’s been a soft start to the year, mainly due to the curtailment of activities particularly in the Asian markets of course but we’re now obviously seeing that in Europe & North America. However, we have been putting in place strategies where we believe that we’ll be able to pick up in a very quick fashion.
So, as I mentioned earlier on, those are we’re building partnerships even now, we’ll still continuing to do that, we’re setting up a direct sales channel in Europe, we’re bringing new products online also this year so I’m very very confident that we’ll be able to pick up momentum very shortly.