Proteome Sciences (LSE:PRM) — Final Results for the Year Ending 31st December 2024

0:00 Good morning, and welcome to the PROTEOME SCIENCES PLC final results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, they can be submitted at any time by the q and a tab situated in the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives in the meeting itself. However, the company can review the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to the executive chairman, Christopher Pierce. Good morning to you, sir.

0:33 Good morning. Thank you very much indeed. I thought that I would start the shareholder presentation today with a brief overview of the final results that we announced yesterday. Firstly, I'll just cover the initial dis the normal disclaimer, and, I will now go lead off. Against a difficult economic and industry background, in the first half of twenty twenty four, our PROTEOME SCIENCES business was adversely affected by the challenging background to the biotech and pharma markets with reduced r and d budgets out there and continued postponements of projects which carried over from 2023.

1:19 First half revenue declined by 31% to 2,220,000 compared with 3,210,000 in 2023. Following the 1,000,000 reduction in revenues in the interim results, the, as anticipated at that time, things rebounded with a 47% increase in the second half to 2,670,000 versus the 1,820,000 in the similar period in 2023 with full year revenue for the year to December 2024 recovering to 4,890,000 versus the 5 point naught 3,000,000 we had in 2023. This reflected the strong increases in services orders and TMT.

2:09 A number of the services orders commenced in the second half, but the bulk of these have carried over into 2025, representing a tenfold increase over the similar period at the start of 2024. The launch and availability, of TMT PRO 35 plex tags had a very strong positive impact in the market. And TMT sales and royalties that showed a 16% reduction at the interims to 1,850,000 performed strongly in the second half with full year revenue increasing a total of 18% to 4 point naught 1,000,000, which compared with 3,400,000 in 2023.

3:00 Company won a substantial good clinical laboratory practice contract in excess of $500,000 pounds, excuse me, from a US biopharmaceutical company in April 2024. And the same customer awarded us a follow-up GCLP order in excess of $1,000,000 in February 2025, part of a clinical study to be undertaken in 2025 and 2026. The back end of 2024 showed a strong recovery from the impact of the global downturn in biotech and pharma markets over the previous year. Following the considerable increase that we received in customer orders and services in the second half of the year, we're optimistic that our PROTEOME SCIENCES INFLECTION POINT and it can now deliver substantial increases in returns.

4:06 Excuse me. In 2002, we started a strategic review of complementary technologies and opportunities available both internally and externally to evaluate and assess the associated risks and costs. After careful consideration, we decided the best options available were from within our own developments and technical capabilities, and that these should provide lower risk and higher rewards for the business. We decided we should invest to create three new revenue streams to add to our existing PROTEOME SCIENCES platforms. First one of these was to establish a US facility.

4:52 The second one was to develop single cell proteomics. And the third one was to expand the range of proprietary isobaric and isotopical chemical tags. I think all shareholders are familiar are isobaric tags of TMT. But at the same time, we wanted to create and develop novel complementary DIA tags for volume applications, particularly in things like clinical trials. And at the same time, what we wanted to do was to be able to try and increase our capacity for clinical trials and projects in Frankfurt. Purpose of this was to try and remain competitive, provide additional revenue streams, and build revenue growth for 2025 and beyond.

5:49 I'm now going to talk about how we have implemented that strategy over the last two years. Expansion in The US. The we established our first facility in The US in San Diego with a good and growing order book. It was a strategically important decision and investment to meet the needs of a large US customer base. With hindsight and the current global turmoil with tariffs, we had not anticipated how good that timing was, and I think it will stand us in very good stead. The second aspect was very much in single cell proteomics. Over the period, we've developed robust, SCP workflows and then started to undertake projects with academia, and we completed our first commercial SCP contract in quarter four twenty twenty four.

6:51 We are very excited by the excellent results that have been generated to date, and we expect with their visibility, the number of projects is likely to increase sharply in 2025. New tag developments, casting our minds back. We successfully launched what is our new range of TMT PRO 35 Plex tags at the ASMS meeting in The US in June 2024, which had, really, they were very warmly received, and clearly, the business picked up sharply in the second half of the year. To that, I mentioned previously that we were going to add DIA, and we've added the DIA technique effectively to our own services offerings.

7:41 And we've made significant progress with what we call DXT, which is our multiplex DIA tags where we've actually been able to go and file, patents now to secure their future, and most importantly, to enter into what is the key aspect commercially for us, which is actually entering into a new tag licenses. We have discussions currently underway with a short list of prospective licensees with a DXT license expected to be concluded in 2025.

8:23 Building clinical trial capacity. We successfully, had, originally established GLCP audit technique in 2017, and we have to be, reapply for it. And, clearly, in order to go and gain the recent contracts, the GCLP audit is essential. In the second half of twenty twenty four, we increased our staff capacity to entrust to address the increased customer demand. And at the same time in that the fourth quarter, we purchased two new mass spectrometry systems, both being Exploris, very high end and expensive machines.

9:08 And in parallel to that, it was essential that we need to go and train additional staff to work on these GCLP projects. It is these developments that have enabled us to excuse me, secure the growing pipeline of sizable clinical study contracts that have been announced in 2024 and 2025, and we expect to extend because of the timing of investments already made to provide that extra capacity.

9:44 On the services business, in terms of an update, halfway through 2024, the adverse headwinds responsible for the biopharma slowdown from 2023 fortunately disappeared, and more favorable conditions returned in the second half of the year. We received over £2,000,000 in service orders in 2024, mainly from The USA, which was more than three times the total order value in 2023. And that has been evidenced further by the strong increase in repeat orders from key customers in The US and UK. We had high levels of carryover in those services orders at the end of twenty twenty four.

10:31 And at the start of 2025, there was 1,300,000 with an expected pipeline of 2,000,002 million pounds of additional orders to contribute to 2025 and 2026 revenue. It was essential that we had to expand capacity to match the strong customer demand with the purchase of a top end Exploris mass spectrometer early in q four with a second explorer's mass spectrometer ordered at the end of twenty twenty four because of that burgeoning pipeline. That additional capacity, as anticipated, is already at full use. We as a company have never been in such a strong position, and it should underpin substantial revenue growth for the next two years.

11:27 To recap, on the outlook, we've seen a very strong recovery in the second half of twenty twenty four from the global biotech pharma downturn in '23. Our proteomics activities remained healthy over that period nevertheless with a good and growing order book. Translation into revenues started rapidly to rebound in the second half of twenty twenty four and continues in 2025. With strong increases in orders for TMT PRO and our services businesses, we're convinced that the downturn is behind us. We have significantly invested in machine capacity and staff to satisfy growing customer demand.

12:17 The momentum from the second half of last year, we are pleased confirm, has continued into 2025 with its pipeline extending well into 2026. We're optimistic that our business has gone through a strong inflection point in its development, and it can deliver substantial increases and returns in the future. That, for the time being, concludes the formal part of the business, and I'll now hand over for the question and answer session. That's great, Christopher. Thank you very much for the presentation. Ladies and gentlemen, please do continue to submit your questions, and you can do so just by using the q and a tab that's situated on the top right corner of your screen. But just while the company take a few moments to read the questions that have been submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed by your investor dashboard.

13:12 As you know, we have received a number of questions both pre submitted and throughout today's live event. And, Ian, at this point, if I could hand over to you to chair the q and a, that would be great, and then I'll pick up from you at the end. Yeah. Thanks very much indeed. So, it's nice to be, meeting everybody again, as we deliver our report for 2024. And as mentioned, we have, excuse me, already received a good number of questions, some of which tend to overlap as usual, so we'll address them as we go. But the first question, Chris, is is a bit of an unusual one there. It's not one we've had recently. But someone has asked when cash and profits allow, will the company consider buying in shares for cancellation?

14:04 Okay. Right. As far as we're concerned, all options will be considered. We always will act in the best interests of shareholders with our priority primarily to invest invest appropriately for the future growth of the business, and clearly mindful of what is going to be the best advantage of all shareholders.

14:30 Yeah. Thanks, Richard. And probably staying with you for this one as well. Do you still think that we'll complete a license for the Plex DIA reagents in h one this year was the question? Good question. Clearly, life has changed a little bit recently, but, shareholders were informed in the final results, yesterday that discussions are underway with a shortlisted group of prospective licensees, and a license should be completed in 2025. We intend to maximize shareholder value through the transaction, notwithstanding the global turmoil in markets resulting from the changes in US tariffs.

15:15 But clearly, we want to expedite that process as early as we can within 2025. And time will tell, but, we we clearly think that we're well on track in that process. Thanks, Krista. So I think I can take on the next one, which is, our regular favorite when do we think Randox, stroke test will be launched? Well, as we've often said, this is primarily a matter for Randox. And regrettably, changes to the regulations in Europe where most diagnostic tests first get get approved to the new in vitro diagnostics regulations more than doubled the approval time it takes.

16:04 And whilst we keep in regular touch with Randox, they're they're very

16:09 sparse in the information they give out. And I suspect that part of part of the delay has been due to this change in the IVDR. Nevertheless, they do have a research use only product that uses some of the markers, and we continue to mark monitor them to see if they're actually making sales of those. To date, we we have not received any royalties from them. And just to complete the stroke story, we also had a very similar question about the stroke test being developed by our sublicensee Galaxy, and then also asking about their CWD program. For those who don't know, CWD is chronic wasting disease, the deer form of mad cow that is currently ravaging through the hunting herds in The US.

17:08 So unlike Randox, we do have a slightly different position with Galaxy as we're a significant shareholder. But, ultimately, how that product is is pursued and its launch time will be a matter for Galaxy to decide. And as I've already commented, the IVDR regulations do make these approvals a bit slower. Nonetheless, Galaxy has been running a trial up in Glasgow. This is not a regulatory trial. It's verification of the usability of their device and also looking at the performance of the GSTP marker.

17:54 That trial is just about concluded now, awaiting for the final data. And in the meantime, Galaxy did learn that it was necessary to increase the sensitivity of the test, which they've successfully done with their manufacturing partner and a plan for

18:15 a regulatory trial to start ideally by the end of this year or very early next year is certainly in their minds. And, also, there there is additional IP filed around the particular combination of antibodies on the lateral flow device, which will see them well into the 20. In terms of the CWD story, the question is, does their assay use any of PROTEOME SCIENCES biomarkers? Well, we never performed any research into CWD itself. We did research into chronic waste sorry, not chronic waste, into BSE, mad cow disease.

19:01 And we did identify a number of biomarkers, but we have no residual IP in that space. Obviously, once the BSE crisis was over, there there was little residual value in those biomarkers. But for CWD, there is a need for different biomarkers. It could be that some of the things that we had found in BSE may translate across into CWD. And, obviously, with our shareholding in Galaxy, any success they have in that will certainly go to the benefits of PROTEOME and its shareholders. Okay. So oh, dear. I think you're stuck with me for a little while now. A run of questions about a Alzheimer's disease. First one is if a company releases an AV test using p tau two one seven and p tau one eight one in blood, would this be covered by PROTEOME SCIENCES Pending and granted patents?

20:05 So that's a very, very good question. We have IP coverage in our issued patents that we can enforce against others. These are in the public domain. You can go and look at the scope of those. And context is everything here. So depending on how that test is being done, depending on what else is being measured, will will affect whether we feel that falls within the scope of our issued IP or not. If one if an assay was, in our opinion, to fall within the scope of our IP, we would then follow a an appropriate action, but always with the view to seek or attain an appropriate agreement with that party so that we will and our shareholders will benefit from those activities.

21:02 There was a similar question around the AD space as well. Let me just find it. Yes. This was suggesting that we had previously stated that we felt our AD therapeutic IP around casein kinase one delta as a target was being infringed by other another company.

21:27 How long do you think it will be before we find out if this is correct? Well, that's not a statement that we recognize. We've never commented on infringement of our AV therapeutic IP. I think we have said that people are looking in the space, which is not the same as infringing IP. We still have our IP in force in several territories, and we certainly continue to review the activities of the pharma industry around that target. And if we see opportunities for partnering, licensing, and monetization for the benefit of the company and and shareholders, we will certainly pursue that. And then I think that deals with the AD related questions.

22:19 Next up are some more questions about IP and about assays. And that's talking about our tryptophan assay. So long term shareholders will remember that we developed in partnership with the German Cancer Research Institute, DKFZ, a test using an amino acid, tryptophan, and its metabolism to detect early recurrence of glioblastoma, a form of brain cancer. It's a fact that many solid tumors are able to metabolize tryptophan as an alternative form of energy instead of using traditional glucose like most cells.

23:10 And as they metabolize the tryptophan, they release, the tryptophan metabolites, which can influence the performance of the immune system, in fact, suppressing the immune system's ability to target the tumor. So measuring tryptophan has two uses. One is to detect a a solid tumor is present, and that's particularly useful in the context of post surgery and continued surveillance for detection of early recurrence. But then also detecting the immune status or likely immune status of tumors as an adjunct or companion diagnostic for immunotherapy treatments, which you will have heard have really transformed cancer care and outcomes over the last decade.

24:01 We continue to work on the assay itself

24:07 And particularly with a couple of new discoveries, we're we're trying to extend the utility of that. We received grant funding from a German research program. So in partner with the DKFZ, we're looking to extend the ability to measure the tryptophan metabolites, but also the enzymes that convert it to a level of single cell proteomics so that we can potentially isolate circulating tumor cells and then measure the status of the tryptophan metabolism in those cells as as an adjunct to diagnosis and therapy selection. So it's very much an ongoing space, and we'll certainly update shareholders as that program continues.

24:55 Right. I'm gonna bring Christopher back in just so I can have a break. Chris, next question. Are you still planning to engage a new CEO? And if so, how much longer do you think it will take? Thanks. Thank you, Ian. It it's very important for us to find a new CEO for the business. We are a leading specialist in proteomics with locations in Germany, USA and The UK. It is essential that we find a replacement with appropriate expertise, experienced in US and European business, conversant with proteomics with relevant language skills.

25:42 It may take a bit of time as it is a specialized area and requires unique skill set. But the process has started and we need to find the right person for the role. And clearly, we may be lucky quickly or it may take us a bit longer, but that process is very much underway. Yeah. Thank you, Christopher. And, yeah, I echo echo that that, it's important that we do, find the right person with the specific skill sets we we require to drive the business forwards as the outsourcing landscape has definitely changed. We're seeing big uptick in that and and particularly towards the GCLP side, people engaging us with clinical trial studies, which obviously have much higher numbers of samples and generally require the mass spec capabilities that we have.

26:43 Okay. Moving on right to the next slew of Alzheimer's disease questions. I got some common themes here. Are PROTEOME SCIENCES in talks negotiations to license any of their Alzheimer's disease biomarker IP for diagnosis and or therapeutic to another company? I can say that we don't have any active discussions ongoing right now, but with recent allowances of a couple of patents in Europe and The US and some other ongoing prosecution work we have at the US patent office for for a third case around our clustering biomarkers. We're certainly interested to see how the landscape is evolving.

27:31 What we do see is a shift perhaps away from the traditional a beta and tau markers, which serve a purpose, but they're not very discriminatory. They don't have a lot of shades of gray in them to looking for panels of proteins that provide more of that granular analysis of individual patients. So we do think there is still significant value in our Alzheimer's IP, and we will undoubtedly be investing a little bit more effort internally to push the validation of one or two of those patented panels. And I think that also addresses the question about the recent allowances and and how that deals with Alzheimer's disease.

28:24 We've also had a question submitted RNX yesterday, which mentioned we have a license for Alzheimer's biomarkers. And the answer to that question, they say, well, can you please explain that? Yes. It's a license we have with a party that has a research use only test for a number of different biomarkers, generally for general neurology, but that includes Alzheimer's disease. So we do receive small royalty contribution from that. It it's it's not significant by any means. But it's been in the market for for about a decade, and it is used from time to time by researchers looking at Alzheimer's blood screening in in an academic context.

29:24 Okay. Christopher, back to you. And we've also had a couple of submitted comments on this one during the call. Do you think PROTEOME SCIENCES will be profitable in 2025? There's a side question to that that's coming now saying, what's our forecast for revenue and e EBITDA for 2025? Okay. Good good combination to come up with. I think, really, as announced yesterday, in our results, with the considerable increases, we have, seen in customer orders and services, from the second half of twenty twenty four that clearly are continuing and growing in 2025 with a pipeline now extending well into 2026.

30:24 We are very optimistic that our PROTEOME SCIENCES business has gone, as I mentioned earlier, through a strong inflection point in its development and that it can deliver substantial increases in returns. But global macroeconomic factors, the tariffs and currency fluctuations make predicting a few days out a very dangerous game. But we're continuing to manage our revenues and costs with the goal of profitability. And as is normal for us, we basically do not make, any projections in in terms of revenue ahead of the year because of the complexity of the background, which is which has been and is affecting our industry. So clearly, we are very positive at where we're being positioned currently.

31:17 We've invested in the right time to expand our capacity. And given the poor, ability we had to go and receive or get, services contracts through this very difficult period from 2023 through until really the second third quarter of twenty twenty four, we think it would be imprudent to say any more than that. But, I would go back to our strategy. We not only have what I call the existing revenue streams, but we have invested for the last two, three years to achieve new ones. So in addition to the normal background, we now have a combination of having a facility in The US, which The US is accounting for probably, just over 70% of our business in total now.

32:13 And I think the timing of that was very good and fortuitous with hindsight as I previously mentioned. Coupled with that, we have spent a lot of time and effort on the development and evolution of single cell proteomics. We think that this is going to offer us what I call a volume capability and a lot of interest, in terms of providing new aspects in terms of drug development. And finally, of course, we have also invested two ways. We've already seen the start of the benefits of TMT, 35 Pro, which came out in June last year. But, DIA, we think, is going to be a very important new market, particularly in the PLETS side. And we see both value being generated from the license agreement, which we intend will probably it will be an exclusive agreement for that product, and also with its application into the services sides of our business.

33:18 So I think all things being equal, we have a much broader portfolio of variable revenue streams, and it's going to put us in a much stronger position for the future. Absolutely. Thank you, Christopher. I an interesting question, sort of alluding to the fact that we've been very active in increasing our capacities in 2024. So the question is how many extra staff have been taken on? Is it likely that more staff will be needed? Are there suitable recruits available? Well, we've certainly been able to recruit high quality staff for all the positions we've needed to. There is a an increasing source of trained graduate students as proteomics has become more mainstream in the educational side of universities.

34:15 Excuse me a second. And it's certainly something that, yes, we do have to try and find quite special people. But at the moment, we really don't see any shortage of those. And particularly in The US, we were able to recruit people from very good roles, relevant roles from biotech where they tend to be laying off their proteomics experts to move to outsourcing rather than retaining those expertises in house. So, yes, it's a dynamic market. We will hopefully be adding more staff as capacity demands are required, and we don't seem to have problems attracting the right people. Another question or a couple of somewhat related questions.

35:09 Why have our margins decreased significantly in 2024 is one question. And what profit margin do you aim for? Well, in terms of margins, they they vary project on project, but I think the global sort of cost to, revenue profile for the services was affected last year by, the costs of setting up, the US lab and and starting it running, plus some of the investments we've had to make, to boost our GCP capacity as Chris has already alluded to. In terms of the profit margin we aim for, that's not something we would disclose. Obviously, that's a commercially sensitive piece of information.

35:58 We do have Richard Dennis, our chief commercial officer, also on the call. And, Richard, I don't know if you want to add anything else to that, but clearly, it's it's the exact profit margins we aim for and not something we disclose. Yeah. I would just say that I'm I'm sure in the services business, they're industry industry standard. But as you say, Ian, you know, that is confidential information because if any of our clients or customers might find out about it, it might give them extra scope to negotiate more on price. So we'd rather keep that internal, if you don't mind. Hello, Ian?

36:47 Sorry, Ian. I think you're just on mute. Chris, sorry. I I muted myself. Yes. Another question coming on the Randox test. I did answer that in my previous statement around the stroke pro portfolio earlier. But just to be clear, if they do sell any of those products, then we will be due to receive royalties on them. The penultimate question I have, if I can find it again, was where has it gone? Oh, yes. That might be the last question, actually. Have you considered a listing on the US stock exchange and use that to improve the valuation of the company? Mean, CRISPR, that's a good opportunity for you to answer that and and then make a a a closing comment before we close out the meeting.

37:47 Okay. The possibility of doing something in The US is always something at the back of our minds. I think what will be important actually is to see what I call the establishment and evolution of our US, activities which are locally based over there and clearly in our total business. But I think as it becomes increasingly significant, it's something which will come more to the front of our minds. Against that, it is an expensive process in terms of of of changing, to go and have a US listing. And for the time being, what we are trying to do, we've had to invest heavily, from our own resources without actually diluting shareholders' interest in terms of the equipment, acquisitions we've made and clearly when we've added additional staff. I I would just like to come back to one other comment actually when, Ian was talking about staff.

38:53 We found naturally with evolution, a number of people have actually come to retirement age, particularly from our facilities, in in Frankfurt. And the skill sets which we were actually using maybe fifteen years ago have clearly changed. And so what we've been doing is we've actually been progressively rehiring people to replace them in the categories, particularly things like in bioinformatics, biostatistics, sample preparation, which is different from from how it manifested itself in the past. So just coming back to the headcount, we do not see any significant increases in headcount for the business as a whole.

39:43 And just as importantly, what we are able to do and we have been able to do is we're very much containing costs now. So we will hopefully have considerable benefit coming through from the investments that we've had to make, from really our our cash flow internally, these last two to three years. So now we're in a phase where we want to see all of that converted into revenue and very much, accommodating the question somebody asked and from profitability because that is what is going to go and fuel up, I think, the next levels of our business for the future. And, really, just by way of conclusion, we've navigated through really tough industry background, the last couple of years.

40:34 I think we've come out of it really very well. We've bounced very fast back because we had the customers, we had the orders, and basically a pipeline which went quiet but stayed during 2024. And we are going to see the benefits of, I think, what we have done. Now we believe with this investment, this key inflection point for us on the services side's been reached. And we think the GCLP and the much larger clinical trials studies as PROTEOME X has been accepted, as as Ian mentioned, and people are looking for specialist outsourcing because the skill sets are high, we think that the the business as a whole is positioned very well with a combination of the tags on the one side and then equally with the services business on the other. So we are optimistic, and we are looking forward to seeing growth basically in in in revenues, across each of the different aspects of our business for the medium and the long term.

41:40 So on that note, thank you very much indeed for your, interesting questions. We hope we've answered them well. And, the the company is in good shape, and we're looking forward to 2025 and 2026. That's great, Christopher. Thanks very much for those comments, and thank you for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This might 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 PROTEOME SCIENCES PLC, we'd like to thank you for attending today's presentation, and good morning to you all.