Microsaic confident despite coronavirus slowdown

The AIM-traded firm said its gross margin for the year ended 31 December slipped to 38.8% from 41.8%, although margins in the second half were 42.9% compared to 31.9% in the first half, which it said reflected better pricing from its focus on niche markets.

Its operating expenses were £3.39m, which was a 2.7% rise on the prior year due to additional investment in business development, and research and development.

The company reported a net loss of £2.77m, which was in line with last year, while its cash balances at year-end slid to £2.62m from £5.4m, which was “broadly in line” with the board's expectations.

On the operational front, Microsaic reported “significant progress” in its traditional 'small molecule' chemical and pharmaceutical markets, with four new agreements signed during the year, bringing the total number of original equipment manufacturer (OEM) and distribution agreements to 12.

It said its manufacturing was now fully outsourced, and noted the launch in January 2019 of the ‘MiD ProteinID’ detector products.

Those products can measure in-situ small and large molecules, such as target proteins, their metabolites, and process feedstocks, which the board said had the “broad potential” for applications in life-science markets, including bioprocessing.

A collaboration agreement was signed during the year with the Massachusetts Institute of Technology (MIT) to develop market targeted applications for ProteinID.

Microsaic also saw positive results from a proof-of-concept study for ProteinID undertaken by the Centre for Process Innovation (CPI), which it said highlighted key product benefits of the technology in bioprocessing applications.

A partnership was subsequently announced with the CPI, to demonstrate a working concept for a completely on-line analysis system for real-time control of bioprocessing.

Since the year ended, on 26 February the company signed a global collaboration and joint sales and marketing heads of terms with Axcend, to integrate the compact Microsaic ‘4500 MiD MS’ with the portable Axcend ‘Focus LC’, and to commercialise the combined system globally using both companies' direct sales and selected distribution channels.

Looking ahead, Microsaic said “good” progress had continued to be made with signing new partners, although it noted that the first part of the year had seen a slow start for orders and sales as commercial activities weer impacted, especially in China, south east Asia and other markets affected by the macroeconomic and local impact of the Covid-19 coronavirus.

Still, the board said it believed that there would be further revenue growth in these territories in 2020, provided normal commercial activities resumed “fairly soon”.

The company said its broader international sales growth was expected to come from three main sources - the first being growth from existing and new OEM and distribution partners across multiple application areas and geographies.

Secondly, it was looking to extend its product offering with the launch of a range of new complete system products.

Those products, Microsaic said, would be integrated with its current offering and were aimed at providing a cost-effective approach to traditional liquid separation and protein separation.

Finally, the company said it was looking at direct sales to key targets in Europe, which would benefit from the expanded product portfolio as well as the provision of product servicing and maintenance contracts to drive after sales revenues.

The board said it was also expecting further progress in bioprocessing from its collaboration with the CPI and MIT to deliver a concept for ‘on-line MS’ bioprocessing, having been validated by a range of end-user applications.

Given the progress to date, and the planned expansion of the product portfolio, the board said it remained confident in the longer-term prospects for the business.

In light of that, the directors said they were considering the financing options available to the company, to ensure it was sufficiently capitalised for such opportunities.

“2019 saw good growth as the company progressed its commercialisation strategy,” said chief executive officer Glenn Tracey.

“Microsaic now has 12 OEM and distribution agreements, four of which were signed during the year, which has extended the company's global reach to include areas such as south east Asia, Korea, South Korea, and Japan.”

Tracey said he was “pleased” with the firm’s operational development, noting that at the start of the year it launched ProteinID, which had “wide-ranging potential”.

“Throughout the year [it] gained traction with the likes of MIT and the CPI showing that bioprocessing remains a very exciting growth opportunity for the company.

“Microsaic's continues to enhance its industry profile and we aim to further strengthen our capabilities in 2020 in terms of commercialisation and product development.”

At 0925 GMT, shares in Microsaic Systems were down 20% at 0.8p.