Oncimmune’s growing pipeline supporting improved performance and realisation of value

Growth

Oncimmune Holdings plc (LON:ONC), the leading global immunodiagnostics group, has announced its unaudited interim results for the six months ended 30 November 2021.

Financial highlights

·     Recognised revenue for the period was £1.43M (H1 2020: £1.83M) was affected by the easing of COVID-19 restrictions over the 2021 summer holiday period, as previously announced.

·     Gross profit for the period was £0.96M (H1 2020: £1.41M).

·     Administrative expenses were £4.05M (H1 2020: £2.88M) which reflect the planned expansion in our ImmunoINSIGHTS Dortmund facility and accelerated investment in our Commercial team, particularly in the US, in light of the increasing demand for ImmunoINSIGHTS services.

·     Research & development expenses were stable at £0.67M (H1 2020: £0.62M).

·     Loss after tax was £4.86M (H1 2020: £2.60M).

·    Gross cash balance at the period end of £2.97M (H1 2021: £3.28M) and net debt at the period end of £5.39M (H1 2021: £7.22M), after investment including capacity growth. The Company drew down an additional €3.0M (c.£2.50M) of debt post period end to fund the acceleration in the expansion of the US-based Commercial team, serviceable by cash generation from ImmunoINSIGHTS.

Commercial and operational highlights (including post period)

ImmunoINSIGHTS

·     Since launching in 2020 we have secured contracts with 5 of the top 10 global pharma companies which are expected to constitute c.70% of revenue for the financial year ending 31 May 2022 (“FY2022”). Most of these clients have multiple studies, with five separate programmes underway with the world’s leading oncology company.

·     The number of contracted clients has more than doubled year-on-year to 13, 3 of which are currently running multiple contracts each, and momentum has continued to accelerate post period end. The value and number of contracted orders and forecast pipeline expected to convert in the near-term continues to grow. In particular, there is increasing visibility from project extensions and additional contracts in other areas for existing clients.

·     Existing customer contracts are being extended as planned and relationships with these customers are also expanding to include work in adjacent and separate therapeutic areas. Within this the number of customers engaged in multiple contracts is also increasing, pointing to the quality and impact value on therapeutic programmes we are able to deliver.

·     During Q2 and Q3 FY2022 the Company substantially expanded its Commercial team from two with an additional five individuals hired in the US. The rate at which potential studies are moving through the pipeline and converting into contracts has increased markedly from Q2 FY2022 onwards, and we therefore expect near-term revenue growth to reflect this as new members of the team increase their productivity.

·     The scaling up of the Company’s Dortmund facility continued as planned during the period, with the hiring of bioinformaticians and experienced senior scientists to project manage contracts. We have also streamlined our operations to facilitate the rapid turnaround of proof-of-concept studies, which are often the gateway to larger follow-on contracts.

·     New US office established at the Cambridge Innovation Center (“CIC”), Kendall Square in Boston, USA enables the ImmunoINSIGHTS Commercial team to be central to many of the Company’s clients.

EarlyCDT® Lung

·     iDx Lung1 programme ongoing, with 815 patients recruited to date in Southampton and Leeds.

·     Successful real-world screening evaluation pilot with the Norfolk and Waveney Clinical Commissioning Group (“CCG”) completed and final report expected in Q4 FY2022. Adoption of the EarlyCDT Lung test within this NHS CCG is expected in the second half of calendar 2022.

·     A second pilot with an additional CCG screening over 2,000 patients is anticipated to commence in Q4 FY2022 which is also expected to lead to an ongoing contract.

·     Sales revenues from Biodesix in the US are being underpinned by our commercial contract which provides minimum sales volumes.

Recent progress and FY2022 outlook

·     The strength of our strategic ImmunoINSIGHTS relationship with our largest customer continued throughout the period and post period, and we are currently undertaking five separate projects across its group companies. Multiple contracts for existing customers is an increasing characteristic of our contracted revenue, particularly from our clients within the top 10 leading global pharma companies.

·     The number of contract signings has accelerated from Q2 FY2022 and this momentum has continued throughout Q3 FY2022. Management now guide full year ImmunoINSIGHTS revenues to be not less than £6.0M.

·     The contracts signed in FY2022 to date together with those expected to be signed before the end of this financial year underpins the Board’s confidence in the prospects of the business beyond the current year, on which we aim to provide an update by the end of August 2022.

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·     On entering the next financial year (see below regarding year-end change), the Company expects to have materially improved revenue visibility, arising from contracts already signed, from extensions to existing contracts, and from existing clients with already identified studies in other therapeutic areas.

·     The considerable growth in the Commercial team, with five members now based in the US, is expected to increase the commercial pipeline substantially throughout FY2023. The expansion in the commercial team headcount is also driving an increase in the pipeline and in the rate of conversion of the pipeline to contract.

·     A recent market analysis commissioned from an independent strategy consultancy has sized the potential market for ImmunoINSIGHTS pharma services. It is estimated that the addressable market for pharma services is $2.3bn and growing at c.10% per annum. The autoantibody profiling segment of this market, where we operate, is faster growing at approximately 27% per annum. We believe that, as a pure-play service provider, ImmunoINSIGHTS will become a market leader in this segment by 2023 having grown the Company’s market share by more than three times to c.12% over the course of the current financial year.

·     Opportunities exist in segments adjacent to the current autoantibody profiling which are accessible through organic and inorganic development and Oncimmune’s management is focused on further expanding the total addressable market for the ImmunoINSIGHTS business. We are therefore actively engaged in further in-house R&D to develop these additional product offerings as well as identifying potential complementary M&A opportunities.

·     In order to bring the ImmunoINSIGHTS service business in line with the procurement cycles of the Company’s clients and also to provide closer alignment between contract awards and revenue recognised during the same financial year, the Board has resolved to move the Company’s accounting reference date from 31 May to 31 August. As a result of the change in its accounting reference date, the Company intends to release unaudited interim results for the 12 months ending 31 May 2022 by 31 August 2022 and publish its audited accounts for the 15-month period to 31 August 2022 by 31 January 2023. Thereafter, interim and final results will be published each year for the 6 months to the end of February and 12 months to 31 August, respectively. FY2023 refers to the 12 months to 31 August 2022. 

Dr Adam M Hill, CEO of Oncimmune said: “Now that we have far greater visibility on our revised management expectations for this year and beyond, it is anticipated that ImmunoINSIGHTS will become a leading player in the autoantibody profiling segment of pharma services by FY2023, supported by our enviable list of existing blue-chip customers, which includes many of the world’s leading pharmaceutical companies.

“Over the last two quarters we have generated significant momentum in ImmunoINSIGHTS, strengthened our client relationships and bolstered our workforce, expanded our capacity and grown our business development capability. Having largely built the ImmunoINSIGHTS business during the COVID-19 pandemic, we have only very recently been able to meet face-to-face with customers, in many cases for the first time. With closer ongoing interaction we anticipate being able to identify further value that our services can bring to our customers’ research, discovery and development processes.

“Our science continues to play a key role at the frontiers of academic discovery and is increasingly recognised as a tool set able to deliver high quality, value adding data and insight. With our new presence at CIC in Kendall Square, Boston, in the most active life science hub globally, and the build-out of our Commercial team in North America, ImmunoINSIGHTS will enter our new financial year in September with a proportion of its revenue already visible. This reflects revenue already contracted or identified through existing customer relationships, and a growing pipeline to support improved performance and realisation of value.”

1 NHS Lung Health Check Programmes in Wessex and Yorkshire as part of the iDx-LUNG evaluation programme

Investor Presentation and Conference Call

The management team will also host on Investor Meet Company a live presentation of the results at 15.00 GMT this afternoon which will be open to all existing shareholders and potential new investors. Access to Investor Meet Company is free and interested parties can register to attend the presentation via the following link: https://www.investormeetcompany.com/oncimmune-holdings-plc/register-investor

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