Aptamer Group (LSE:APTA) — Investor Presentation

0:01 Good afternoon, ladies and gentlemen, and welcome to the APTAMER Investor Presentation. Company may not be in a position to ask every question received during the meeting itself. However, the company review all questions submitted today, and we'll publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. And if you'll give that your kind attention, I'm sure the

0:31 company would be most grateful. And I'd now like to hand over to Alan Tully, CEO. Good afternoon. Good afternoon. Thank you for all turning up to look to listen and look at the presentation. So this is our presentation for introducing APTAMER GROUP, our technology, and the highlights of our first year and our results. So how we'll handle this, I'll do a quick introduction to the presenting team, and then we'll run over the results for the year ended June 2022. We'll I'll do a brief overview of the company, and then we'll switch between myself, David, Jenny for for scientific and financial inputs respectively.

1:13 So this is the effectively, the the presenting team. So I'm the cofounder and CEO, and I have a background in structural biology and biophysics. I've run the day to day activities of APTAMER GROUP for the last ten years, and I play an active role in both the scientific and commercial aspects of the business, sitting on the scientific advisory board alongside Dave. Pass over to Dave. Thanks, Aaron. Good afternoon, everyone. Yep. My name is David Bunker. I'm the chief technical officer and the other cofounder of APTAMER GROUP.

1:45 My background is I have a PhD in molecular biology, and I've worked with APTAMER technologies in one form or another for just over twenty years now. So a lot of experience generating APTMAs against all sorts of targets for all sorts of applications. Jenny? Thanks, Dave. Hello. I'm Jenny Cutler. I joined APTAMER GROUP in June as interim CFO. I'm a chartered accountant, and I have experience in other AIM and main market businesses.

2:17 So I thought I'd start out by giving a snapshot of the business. So as a company, we focus on solving intractable problems for pharma and biotech with our disruptive APTAMER platform. So APTAMER is our affinity ligands, which Dave will come on to explain in the next few slides, which we developed using our highly automated discovery platform. Automating the discovery of APTAMER essentially leads to higher project success rates and faster completion of projects. And this USP has led to us attracting around 75% of the global top 20 pharma companies. We listed on AIM in December 21, raising 10,800,000. We've increased revenues a 150% to around 4,000,000, in line with expectations, which is an important milestone for our maiden year as a business. As of June 22, we retained 6,700,000 of cash. We have relocated to new premises, upscaling from around 7,000 square feet to around 18,000 square feet. We've increased headcount by 45%

3:19 to 57 people, and we continue to keep APTAMER at the cutting edge of science with the development of our next generation OPTIMA binders. So I'll pass over to Dave now for an introduction to the technology. Thanks, Aaron. So as Aaron said, APTAMER GROUP operates in what's called the affinity ligand space or affinity ligand market. So that's a market that's currently valued at around 140,000,000,000 and is growing at a healthy 11.3% annual compound growth.

3:55 It's important to understand what the affinity ligand market is before you see where we sit in there. So if we think back, to everyone's favorite, virus, COVID, we'll all be familiar with the lateral flow tests that we had to do on a daily basis. Now those lateral flows were enabled by an affinity ligand. This is simply a binder molecule that was put into that test that recognized the COVID virus and captured it in a test line. There was then a second affinity ligand that recognized the other side of the virus to enable you to visualize it. So tests like that and lots of others around the world that you'll all be familiar with would not exist without affinity ligands.

4:41 Now this market's traditionally been dominated by antibody and antibody related technologies, owned by companies like, for example, you can see on the slide there, APTAM. Now affinity ligands like antibodies have several problems that are well documented, but there weren't until fairly recently alternatives to that technology. Now recognizing those problems, all the technology started to come to light, like recombinant antibodies and protein based scaffolds. So you can see some of those across the, middle of the slide there, held by companies like ARGENX, APTA, and Molecular Broads. Now all of those technologies are protein based, so they all have similar production and immunogenicity problems.

5:31 Our technology is nucleic acid based, so it has the capability of interacting as an affinity ligand, but it's based on a completely different molecule. So its production, its manufacture, and so on are very, very different, which gives us an advantage in this space. As you'll see across the middle of the slide underneath the diagram there, APTAMERs are actually growing within that market. So they're currently valued at around 2,500,000,000, growing at approximately 20%. So they're actually expanding within the affinity ligand market at a greater rate than the affinity ligand market is growing. That's because OPTIMAs and APTAMERs have preferential characteristics that give them an advantage and helping them to do that.

6:20 Can you skip on the slide, please? So what is an APTAMA or an OPTAMA as we call them? So put simply, it is a short synthetic piece of DNA that's been isolated to do a particular job. And like the, affinity ligands that were in the COVID, lateral flow, that job is usually to bind to a target of interest. Now it doesn't necessarily have to be diagnostic, it could be therapeutic, it could also be a research tool. But you can see on the left hand side of the slide here how an APTAMER actually works. So if you think back to high school, you'll probably think of DNA as this double helix twisted molecule. DNA doesn't just exist in that double stranded state, it can also be single stranded. So you can think of this almost like a piece of Velcro where you've peeled away one strand.

7:15 Now if you do that with Velcro, you will have a strip that has a load of hooks that are essentially free to do other things because they're no longer paired to the other strand. If you look in the middle of the slide here, you can see how that Velcro could then fold up to form all sorts of secondary structures where some of those hooks are involved in bonding within that molecule, and some of those hooks are left exposed to interact with other targets. And those interactions you can see on the right hand side of the slide where the optima is shown in blue, interacting with, in this case, a protein shown in purple, but that could just as easily be a virus, a cell, a small molecule, a drug of interest, whatever a customer is interested in.

8:03 So as we met as Aaron mentioned at the start, we develop these affinity ligands for all sorts of customers to use within their own processes and developing their own products. So we use our APTAMER platform to help solve intractable problems for our customers. And we do this because as I mentioned previously, around 50% of research antibodies fail to meet their performance criteria. So they may not bind at all, they may bind to unwanted targets, so give you off target effects, pick up things they're not supposed to, for example. They're also expensive and slightly unethical to generate, so antibodies are generated inside animals, so rabbit, mice, sheep, goats, etcetera etcetera. So if you think about all the animal husbandry that'd be involved with that, it's a very expensive process.

9:02 As I mentioned, OPTAMAs are totally synthetic, so we don't have any of those problems. We isolate our binders entirely what's called in vitro, which basically means in a test tube. So everything we do is carried out in a lab with no animals involved, but we can also automate that process. So that gives us a lot of bandwidth, lot of capabilities to process a lot of targets in parallel. So it gives us a real advantage in this space. So

9:36 you can see on the slide here, our next generation platform. So on the left hand side of the little cartoon, you can see an APTAMER. So that is the parent affinity ligand, and then the minimal functional fragment, what we refer to as an OPTAMA in the middle of the cartoon there. So trimming that molecule down gives us a number of advantages. As I mentioned, they're synthetic, so it uses fewer building blocks. It's easier to manufacture. It's easier to scale. The next generation of this platform is what we're referring to as Optima Plus. So this essentially gives the best of both worlds in terms of affinity ligands. So we take the manufacturability and scalability of a nucleic acid, and we're introducing functional side chains onto that molecule to give an increased repertoire of interaction types. So we're making our optimists behave a little more like affinity ligands like antibodies.

10:38 So getting the best of both worlds with this novel platform. And as I mentioned, everything that we do is highly automated. So you can see one of our automation clusters on the right hand side of the slide there. Using these platforms allows us to process samples essentially twenty four seven. So the scientists work during the day, the robots work during the night. This gives us greater bandwidth, greater capabilities, greater throughput. It also improves the success rate by removing some of the human error. That platform in itself is difficult to replicate because there's quite a lot of know how over twenty years of developments have gone into that platform.

11:24 So other companies couldn't just come along and do what we do. There's a lot of proprietary know how in that process and in the programs that are running that system. It also gives an gives us an advantage in terms of our scalability. So when we have a requirement for additional capacity, we can essentially build a new cluster like you can see in the picture there and replicate that in house and increase our capacity. So it's very scalable.

11:58 So as I mentioned, the affinity ligand market is very broad. It can be broken down into four broad buckets that you can see across the top of the slide here. So research reagents, bioprocessing tools, so purification reagents, diagnostics, like the COVID lateral flow, and therapeutics.

12:18 And as I mentioned, are a lot of other, technologies operating within this space lift listed down the left hand side of the slide there. Now what this slide is showing is that most of those platforms only operate in two, maybe three of those buckets. But what you can see across the bottom of the slide there is we, APTAMER GROUP, are using our technology to generate revenues and have ongoing projects in all four of those verticals. So we're actually addressing a much broader section of the affinity ligand market than it's traditionally done with other technologies. So I've talked a little bit there about, you know, the space that we operate in. I'll now hand back to Aaron to tell you how we generate revenues from that. Thank you, Dave.

13:07 So APTAMER GROUP broadly have three business units that focus on those four verticals that Dave mentioned. APTAMER Solutions, APTAMER Diagnostics, and APTAMER Therapeutics. APTAMER Solutions effectively is the engine of the business where all of our contract research services and research revenues are generated. We focus in a few broad areas here, apt Optimus for affinity purification or bioprocessing, quality control release reagents, and research reagents. And this business model actually acts as a horizon scanning platform, giving us visibility on the current trends and technologies in the in the market space. The the key here is that this is a reduced risk model. We get paid for what we do as

13:53 a business, and there is no exposure to the customer's R and D risk. And where we're successful in the development of a product or a technology, because we retain the intellectual property, locks in downstream value and allows us to to move towards royalties, success fees, and milestones. And these are best exemplified when the the technology is used in a diagnostic or therapeutic context. So we have essentially a unique platform technology driving these three business models, creating revenue in the near term with potential for substantial value creation through exploitation of intellectual property into the diagnostics and therapeutic space. And because one of the key points here is because we enter the development process at a later stage, royalties and milestones will be typically paid to us on a shorter time frame than if we were to develop either a diagnostic or therapeutic product from first principles. Principles.

14:54 So we've discussed the business model. I'd now like to move on to talk about some operational highlights. Firstly, I'll I'll talk about our growth strategy. So we've introduced the technology, explained the revenue model. And, essentially, we have just listed on Aim and raised 10,800,000, and this has raised our profile as a business and more importantly, given us the growth capital. So how we plan on deploying that capital, will be in these four areas here. So the first is the scale up and automation. So this allows us to improve automation capability and remove operational bottlenecks, enabling us to deliver the the kind of pipeline that we are currently developing as a business. The platform innovation is the second area where we are developing our proprietary scaffold that Dave mentioned earlier and the protection of this technology via patents and know how. The third area is commercial expansion as a business and service development. So this is where we aim to increase our visibility as a company globally and provide and develop new services to deliver, to the market. And then fourthly, the working capital, which we'll deploy while we deliver our strategic plan.

16:14 So one of the first slides that I wanted to show here as well was this was a few pictures of our business and relocation. As I mentioned, we we upscaled our business from around 7,000 square feet at our last premises, and our new headquarters boasts around 18,000 square feet of state of the art lab and office space. And these premises house our expanding team automated solutions. So just a few pictures there of the new building of which we're very proud.

16:45 So running alongside that, we're also investing in the expansion of our team. So we've recently appointed Jenny Cutler as interim chief finance officer. We've appointed an experienced chief operating officer in Alastair Fleming. Our headcount and expertise is increasing with a 44% increase from 40 odd employees to now fifty seven and fifty four at year end. We've increased our sales and marketing team from a team of four to a team of 10, covering all major territories. We've recently passed our ISO 9,001 audit and expanded our quality team to ensure that we are delivering high quality services to our customers. We continue to grow our assay development team, demonstrating APTAMER functions in a variety of different areas, enabling us to provide turnkey solutions for our customers.

17:35 And we've also appointed doctor Shozo Fujita, an international expert in the development of novel nucleotide chemistries for our APTAMER Plus technology platform. So on that neat segue, I'll pass over to Dave to discuss some of the scientific updates in our new platform, APTAMER Plus.

18:02 Thanks, Graham. Yeah. So as we mentioned on the earlier slides, we're developing this platform to integrate these novel nucleotides into our OPTIMA binders. So this will give the company a strong differentiator from all the APTAMER GROUP So customers will not be able to get this platform from anywhere else. This will be solely owned by APTAMER GROUP. So this will be truly proprietary and keep us ahead of all the competition. Let's skip on to the next one. So just in summary, why we've invested in this platform and what we're expecting to achieve with it. So as you can see down the left hand side of the slide there, there's some of the issues associated with the first generation of affinity ligands, so antibodies, and how protein scaffolds and our APTAMER platform help to address those. So we can look at more targets than antibodies, we can develop them in a shorter time frame, they're easier to scale and manufacture, and they can be shipped without the need for cold chain logistics. So that's the benefit of our APTAMER platform over antibodies.

19:17 We're expecting some of those advantages to remain with the third generation APTAMER plus platform. So the deployment not needing cold chain and scalability of manufacture, Those benefits should remain, but we're expecting that this new platform will also allow us to address additional targets that cannot be addressed by either antibodies or APTAMERs, so expanding our repertoire of customers and targets.

19:42 And we're also expecting an improvement in development times, so bringing that down so we can get more targets per year through this process. So that's just a very quick snapshot of why we're developing this APTAMER plus platform. Yep.

20:03 Thank you, Dave. So I'd just like to touch on some of the key business highlights for for the year. So as I mentioned previously, we raised 10,800,000 in conjunction with the name listing in December 21. We've secured deals with top five pharma companies developing APTAMA binders as QC release reagents. We have two large deals with public life sciences companies for proteomics and multiplex platforms. We have started developing purification systems with a company called BIOWERX. In terms of APTAMER diagnostics, we've entered partnerships with Proaxis, and this is interesting because it is to replace antibodies in their respiratory diagnostic assays. And we have also formed agreements with precision oncology companies for the development of companion diagnostics to support novel therapeutic developments.

20:53 With regards to efforts in therapeutics, we've we've signed a research collaboration agreement with WuXi APTAK Research's division, helping them identify new Optima enabled therapeutics. And we have extended the collaboration with a Korean company called Pinot Bio identifying novel optimists against several targets for the development of targeted chemotherapeutic drug conjugates.

21:21 To post year end highlights, as I mentioned, we planned a relocation, and we were successful in doing that and moved to purpose built laboratories to allow APTAMER to scale its automation and operational efficiencies to service the increased demand for the technology. APTAMER solutions continue to sign deals, multiple contracts signed with top 10 pharma companies for more bioprocessing support.

21:48 Leading US based biotechs have signed up for the removal of bioprocessing contaminants during their therapeutic productions. We've signed more deals with top 10 pharma companies developing immunohistochemistry supports and reagents to support their early phase discovery pipeline. And we assigned a multinational consumer goods company for the development of APTAMER binders for novel personal care solutions. And within the diagnostic space, we signed an interesting project for the support of novel prenatal and placental diagnostics. So since our AGM statement, we've continued on our trajectory for contract wins. We've engaged and started the second phase of our collaboration with Cancer Research UK, developing the delivery vehicle portion of a bispecific APTAMA for the treatment of CMML and other myeloid malignancies.

22:45 And we've signed an early stage deal to develop APTAMAs to block the activity of naturally occurring antibodies, which is a potential therapy to prevent transplant rejection. So all exciting deals. APTAMER Solutions has signed a deal with a biomarker services company to support multiplex biomarker assays for mass spec, And we've signed a recent deal with a company called Novavax, who's a vaccine developer improving the selectivity of their in house assays.

23:16 So I'll pass over now to Jenny for an overview of the finances. Thanks, Irene. So if we can just skip to the next one. So this slide shows the financial performance of the group for the twelve months to the 06/30/2022 compared to the fifteen month prior period. Our key performance metrics were all in line with market expectation, and we're pleased with the results for our first year as a listed business. Group revenue was GBP 4,000,002,400,000 ahead of the fifteen month period to the 06/30/2021, and this growth reflects strong operational delivery of contract research work for customer projects across our three business units. Gross profit margin has improved from 42% to 67% year on year as the group utilized available operational capacity to deliver the revenue.

24:13 This improvement in gross profit margin offset by an increase in admin expenses of GBP 1,300,000 resulted in an adjusted EBITDA loss of 1,700,000 for the year compared to a loss of 2,400,000 last year. The increase in admin expenses is the result of investment in the group's commercial and production teams, and this is reflected in the headcount increase of 44%. If we can turn to the next slide, please, Erin. Thank you. So this slide shows the financial position for the group. Net assets at the 06/30/2022 were £8,100,000 of which cash was £6,700,000 and includes the net proceeds from the placing.

25:00 The increase in the right of use assets and corresponding liability is primarily related to the signing of the new lease at York Science Park pre year end. If we can just move to the next slide, please. Thank you. So this slide shows the group's cash inflow over the twelve month period. The group had a net cash outflow from operations of 2,400,000, represented by the adjusted EBITDA loss of 1,700,000, an outflow in working capital of 1,300,000, offset by an r and d tax credit of £600,000 The group also invested £400,000 in assets, received £9,600,000 from the placing and spent £500,000 on lease payments.

25:47 Thank you. I'll hand back to Warren. Okay. So I'll just make a few comments on the summary and outlook of the business. So we continue strong growth and demonstrated the market need and acceptance of the technology that we have developed, giving confidence revenues will be in line with expectations. We continue to build strong traction on a global level, winning contracts with global players, including top 10 and top five pharma. And we continue to invest in our novel technology platform, and invest in r and d and IP. So in summary, the key takeaways from the presentation that I would like to leave you with are we hit our maiden year numbers of 4,000,000. We have invested in additional capacity in state of the art lab space in order to grow. We have built brought on the extra people for operational support. We've expanded the commercial team and have members in all global territories worldwide.

26:41 We have strengthened the finance team, and we've increased our r and d focus with exciting new product lines in the pipeline in order to develop and offer new services to the market. And we continue to protect our IP position within our IP portfolio. We're making exciting progress also in the development of data packs to support our therapeutic arm of the business by building exemplification data for the use of APTAMER as therapeutic delivery vehicles. So that concludes today's presentation. We would now like to open up to questions from the floor. That's great. Aaron, Matthew, Jenny, thank you very much indeed for your presentation, this afternoon. Later, please do continue to submit your questions using the Q and A tab just situated on the right hand corner of your screen. Just like the company take a few moments to look at these questions submitted already. I'd to remind you the recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your Investor Meet company dashboard.

27:37 Firstly, thank you to everybody who submitted questions this afternoon and for your engagement. And we have a number to go through. So if I may just jump straight into it, and I guess I'll leave it to you guys to see who wants to respond. But the first question I have here is from David. Thank you, David. When will you, be cash flow positive, or do you expect to still need a further fundraising? Jenny? Yep. I can take that. So in terms of numbers, I'll refer you to the analyst notes. We only, did the IPO twelve months ago. And at the end of June, we had 6,700,000 of cash. So we're well funded to deliver the strategic objectives that that Aaron set out. That's great. And I think, Edward's question, probably just an expansion on that, if I may.

28:25 Just given the current, macro and, environment that's in the background, biotechs appear to be struggling for cash. Has this had an impact on discussions progressing in terms of new business, business development, and so on? Do want me to take this one? Yeah. So far, not. I think it it's fair to say that some of our customers come to us because of our ability to deliver against a shorter time frame, and at a price competitive point. So therefore, in situations like this, we expect to actually come out with more opportunities. Great. Thank you very much indeed. I'll turn to the next question. I know you did touch on the sales and and and the process, but the question reads as follows. Can you talk a bit about your sales pipeline and conversion timeline?

29:14 How long does it really take from, I guess, those initial discussions to signing of contracts? I don't if you can add some color to that question. Yeah. Absolutely. That depends on the on the size of the contract. So we typically deal with any projects anywhere between 50,000 and a 150,000. And in some cases, last year, we we'd signed deals with total value of 3,800,000, and the timeline for the conversion of those projects is usually related to the size of the deal and the complexity of the negotiation for intellectual property or licensing. So it can be anywhere between four weeks or a month to three months to six months, dependent on the size of the project.

30:01 Great. And I think a natural extension to that question that's just coming in from Steve. Thank you, Steve. Reads as follows. In terms of your revenue, does any one customer represent a majority of that revenue, or is it pretty well diversified? So there there is a couple of large customers that actually did make up the 4,000,000 of revenue, both at 800,000 each, and and you'll see that in the revenue note to the accounts. However, we do have a significantly large number of customers making up the revenue. Great. Thanks very much indeed, Jenny. I'll turn to a question from David who has a follow on question. Do you have intellectual property patents to protect your position in the market?

30:46 Yeah. Go ahead. It's a good question. It's actually quite a diverse answer as well. So in the Optima Plus platform, yes, we do have patents protecting that. There are just over 60 of them forming a quite an intricate web around the production and manufacture of those binders. In terms of our automation and our selection processes that sit on those robots, We don't have any patents around those. We've protected those through in house sorry. Pattern not patent protection. Sorry. Know how. Thank you. That's the word I was looking for. So we protect them through know how because we don't want to publish how those processes are done because that makes it easier for people to rep replicate that. So that's been done based on advice from our IP advisers.

31:44 That's great. Thank you. Question here really, are there any new technologies on the horizon that you might feel that compete with yours? And indeed, if there were any, what can you do really to protect your position? Well, there there are I'll take that one. There are always new technologies on the horizon and faster and better ways of doing things. However, you know, we believe that we do APTAMER better than anyone else, so we're at the forefront of that technology already. And as Dave mentioned earlier, the APTAMER Plus platform, which is the integration of protein like side chains with our existing nucleic acid scaffold, aim to give us the next evolution of the technology. So we actually feel that we are building capability to be ahead of the curve. That's great. And, obviously, you've been listed for for for a year. What what are the real k key KPIs that one should use to measure your progress?

32:38 And, really, what should we expect to hear in the short term? I think the the the main KPIs are revenue number over the full year. Also, some of the more speculative projects that we're engaging in that could that could lead to large lucrative downstream payments. Those are the the main KPIs for us, and that's certainly what we focus on as a business. That's great. Well, look, thank you very much indeed, and thank you to everybody for your questions this afternoon. And, of course, if any further questions come into the platform, Aaron, David, Jenny, we'll make those available for your review post today's call. Well, thank you once again. As I say, that concludes the presentation. That concludes the Q and A. I know investor feedback will be particularly important to you guys, and I'll shortly redirect the attendees on today's call to give you their thoughts and expectations. But I wonder before doing so, if I may, just ask one of you for a few closing comments just to wrap up with, and then I'll send investors for their feedback. Yeah. I'll keep this one very short and swift. I'd like to thank everybody for coming and listening to our kind of our pitch and our update, and we're all very much looking forward to 2023, doing exciting deals and keeping you all updated on our progress.

33:52 Well, that's great. Darren Aaron, sorry, Jenny and David, thank you very much indeed for your time this afternoon. Ladies and gentlemen, please, could I ask you not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations? This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of APTAMER PLC, we'd like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all. Cheers. Thank you.