PIQ announces delay in commercial US launch of Promarker D. SP has had a strong run lately but it will be hit by this news. However giving a positive spin on the experience with bringing other tests to market and continuing to pursue other global markets.

Proteomics International advises that, based on its latest assessment of the necessary technical and commercial work required to launch PromarkerD in the USA, the USA launch previously planned for Q2 2024, is now likely to be delayed.

Significantly, our experience with PromarkerD has provided the Company with invaluable knowledge and experience to accelerate the commercialisation of other tests in development. To this end, the necessary technical work has already commenced to prepare for the commercialisation of PromarkerEndo, the Company’s test for endometriosis, and PromarkerEso, the Company’s test for oesophageal cancer.

The Company remains focussed on executing further licensing and distribution deals in new jurisdictions for its PromarkerD test and is currently in discussions with a number of parties.

Q1FY24

The Good

• Industry tailwinds with the recent success of the use of Ozempic in the treatment of kidney disease trials. Increased range of treatments with improved efficacy are likely to lead to increased demand in screening for risk of DKD.

https://www.biopharmadive.com/news/novo-nordisk-ozempic-kidney-outcomes-trial-semaglutide/696273/

• PromarkerEso demonstrating promising results. Next steps through to the end of FY24

The Not So Good

• Cash receipts continue to remain low and will continue to do so until Promarker D starts to generate revenue.

• $4.9m cash remaining. Expenses haven’t changed significantly but will likely see a run up in product costs if there is take up in the soft launch with Sonic.

• TGA declined inclusion on the ATGR. Resubmission and acceptance is likely, however this will cost the company further money and resources.

What Status:  

What To Watch

• Outcome on final CMS payment rate for PromarkerD after the 30 day comment period.
• CMS payment rate going into effect. Target 1st Jan 2024.
• Update on PromarkerEndo in Q2FY24
• R&D tax incentive of $1.85m expected in Q2FY24
• Soft launch of PromarkerD in the US in Q4CY23. (Carried Over)
• Further PromarkerD distribution agreements in Japan, Hong Kong and the Middle East. (Carried Over)
• Resubmission of MBS application. No timelines provided on when the company is targeting this. (Carried over)
• PromarkerD inclusion in NICE guidelines which will assist with the UK roll out (Carried over x 3)



UPDATE - PIQ funded report with Kidney Research UK to promote diagnosis and treatment.

https://www.kidneyresearchuk.org/about-us/influencing-change/health-economics-report/

• Engagement with NHS supply chain (Carried over x 3)
• Extending distribution agreement with Apacor into Europe (Carried over x 3)
• Update on Israel distribution now that sales have commenced (Carried over x 3)

UPDATE - recent events are likely to impact any progress in this market

After a long trading halt announcement finally released on reimbursement price for US of $390 for DKD test effective CY24.

Total US/Europe diabetic population of 90+million. AUS 1.5 million

Australian TGA approval knocked back on what appears to be a technicality. Data supplied was from before the manufacturing moved to Europe. It seems the company thought they could get it through but will have to complete more testing.

IP protection for PIQ spin off OxiDx. OxiDx's next generation diagnostics technology offers a comprehensive solution for monitoring oxidative stress levels using a simple fingerprick blood test. Interesting that first trials are in elite athletes and racehorses!

First of a new family of patents for the OxiDx technology has been granted in Japan

Oxidative stress has been implicated in many chronic diseases - target applications include chronic fatigue, muscular dystrophy, high-performance athletes and the horse racing industry.

The Good

• Continuing research on expanding the product suite with new additions of DKD-T1D (Promarker D For Type 1 Diabetes) and Diabetic Neuropathy. While this is good for PIQ in the long run to diversify products and potential revenue sources, the increased R&D spend is hurting cash flow

The Not So Good

• Depressed cash receipts with only $198k received for Q4. This was slightly improved by the $140k of government rebates.

• Cash burn of $2.2m for the quarter, with only $6m in cash left. Even though the company does expect to receive an R&D rebate of $1.8m in Q2FY24, this leaves the company in a pretty tight cash situation. Can likely expect a capital raise announcement on the back of the final CMS announcement in Q3.

What Status:  Warning

What To Watch

• Oesophageal Cancer test update currently indicated for Q1FY24

• September CMS proposed pricing published for comment. If this timeline is not hit, it is unlikely the final CMS pricing will be published in January which the full market launch is waiting on.

• Soft launch of PromarkerD in the US in Q4CY23.
• Further distribution agreements in Japan, Hong Kong and the Middle East.
• “Looks forward to providing detailed updates on OxiDx as the year progresses''. This is a fairly vague statement, but any announced updates will validate it.
• Resubmission of MBS application. No timelines provided on when the company is targeting this. (Carried over)
• Outcome of the TGA application which was previously indicated around Q4 (Carried over. Now anticipated in H1FY24)
• PromarkerD inclusion in NICE guidelines which will assist with the UK roll out (Carried over x 2)
• Engagement with NHS supply chain (Carried over x 2)
• Extending distribution agreement with Apacor into Europe (Carried over x 2)
• Update on Israel distribution now that sales have commenced (Carried over x 2)

Continuing to build the suite of tests

Promarker pipeline - Oesophageal cancer diagnostic test update

Proteomics International invited to present latest results on blood test for oesophageal cancer at the 19th ISDE World Congress for Esophageal Diseases in Toronto, Canada

Test targets both oesophageal adenocarcinoma and pre-malignant condition Barrett’s oesophagus

Research expanded to include a further 350 cancer samples from the Victorian Cancer Biobank

“This technology has the potential to act as a screening test for oesophageal adenocarcinoma, providing earlier diagnosis without the need for an invasive endoscopy. We believe an externally-validated test will garner significant interest, both commercially and in the clinic.”

A good week for PIQ. A trading halt pending release of agreement for US commercialisation of PromarkerD and showcasing the endometriosis blood test to the world.

Trading halt of its securities pending the release of an announcement regarding an exclusive licence agreement with Sonic Healthcare USA for the use and commercialisation of the Company’s PromarkerD test in the US market.

New diagnostic blood test showcased at world’s premier endometriosis conference

Proteomics International presents potential new blood test for endometriosis at the 15th World Congress on Endometriosis in Edinburgh, Scotland, held by the World Endometriosis Society

Test offers improved early screening for the disease, correctly identifying up to 90 per cent of patients with the condition in a study of over 900 participants

Research also suggests the current gold standard for diagnosis—an invasive surgical procedure— may be misdiagnosing some patients

PIQ test used in research that supports the argument that PromarkerD test can be used to improve treatment and outcomes in prevention of diabetic kidney disease.

Canagliflozin lowers PromarkerD diabetic kidney disease risk prediction scores

Research conducted with Janssen Research & Development looked at PromarkerD results of patients taking diabetes medication canagliflozin in those who took the medication compared to placebo.

Effect was greatest in participants predicted by PromarkerD to be at high-risk of a decline in kidney function at the start of the study

Research published as a feature article in the peer-reviewed Journal of Clinical Medicine

Study shows the power of using PromarkerD as a Precision Medicine tool to assist in the treatment and prevention of diabetic kidney disease

”it's exciting that we can identify patients who are asymptomatic for diabetic kidney disease but still at high risk of developing the disease, and that canagliflozin significantly lowers their risk of developing diabetic kidney disease . It's an elegant example of using precision medicine to enable early intervention and slow or stop the onset of disease.”

An update from PIQ this morning from a recent conference. Essentially showing the blood test they have been developing as a screening test for endometriosis is is 90% effective at detecting endometriosis.

Important to note that the study was comparing no disease Vs endoscopically confirmed severe disease. However this is still a promising step forwards. Sensitivity was 89% (rules out) & specificity 95% (rules in). The test was reactive according to disease activity.

New-endometriosis-test-presented-at-international-conference.pdf

Currently, there is no diagnostic test, when a high level of suspicion is present and the symptoms are debilitating a diagnostic laparoscope is used to visualise endometrial tissue within the pelvic cavity (yet outside the uterus, which is the definition of the disease). The mainstay of treatment is NSAID pain relief for mild to moderate disease. For woman with more severe disease/ symptoms surgical intervention can be required. Important to note that this disease can severely affect fertility, and so can the treatments. In some cases surgical intervention is done in an effort to improve fertility efforts.

Next step would be for them to prove it can detect mild and moderate disease.

The most important thing would be to demonstrate how detecting the disease earlier would affect outcomes. Obviously earlier confirmation of diagnosis would assist in pain management, which is amazing for patients, however, I would argue that unless a new test actually changes the disease outcome via better interventions then this isn't going to reinvent the wheel.

Held on strawman (for the test for CKD, which earlier detection would improve outcomes because it is so insidious).

This is exactly the question I want to ask them if we can arrange an interview. How will this new test alter practice, and therefor patient outcomes. It is positive that MSAC acknowledge that long term this test could save money (translation: improve patient outcomes and reduce morbidity and hospital admissions) but without a clear positive impact on whether it would alter current clinical care for chronic kidney disease (CKD) this is up in the air.

I would think it would alter care, earlier intervention, earlier and more aggressive prescribing of nephroprotective drugs, better informed care for patients who with this knowledge may alter lifestyle factors (which are nephrotoxic in many cases).

I hold on SM because the money isn't real. But following IRL

:)

The Good

• First sales of PromarkerD achieved in Central America. This is likely at a very small scale so far as there hasn’t been an impact to the cash receipts this quarter and I would have expected the company to promote the milestone further. The Half Year results may provide a breakdown on PromarkerD to see what the revenue is like over the short period. At this point I will estimate a 1% market penetration for remainder of FY23, which results in around an additional $75k per quarter ($15USD/test, 1.3m TAM)

• Improved cash position with balance of $6.8m at the end of the quarter. Can also expect further cash improvements from the exercise of options (~$2m+) and the potentially also the second half of the facility upgrade payment ($850k)

The Not So Good

• As is standard with PIQ there were no new business updates provided in the announcement, just a summary of the announcements over the quarter. I.e No new updates from OxiDX
• Cash receipts although looking good for the quarter are actually lower than normal. This is after expansions to the analytical services. These are being expanded further with the WA Proteomics Facility partnership, so potentially there will be some small revenue growth from the upgrade.

• Operating expenses are increasing over previous quarters, however this could be in preparation for sales in the US. The current cash levels can support these increases for a short period.

What To Watch

• Finalise Exclusive Licence Agreement with Sonic Healthcare by 28 Feb
• CPT PLA code taking effect from 1 April. & addition of PromarkerD to clinical labs fees schedules
• PromarkerD inclusion in NICE guidelines
• Engagement with NHS supply chain
• TGA & MSAC approvals currently expected in Q4FY23.
• Extending distribution agreement with Apacor into Europe
• Update on Israel now that sales have commenced
• Progress of R&D for Promarker range. Both are currently indicated as H2FY23 in the presentation slides.

Going through the PIQ slides from the AGM I noticed that there is a new licencing agreement that has been secured for Central America. This was not on some of the slide decks from presentations at the start of November so it must be a reasonably new development. The potential market isn’t massive, however any new agreements are a step in the right direction.

The other interesting part is that it states first sales commenced. Commenced can be a bit of a grey description for pinning down a timeline on cash in the bank, but if this is the case, it could be a turning point after several drawn out sagas in Italy (Agreement now terminated), Israel and the UK. The other change in status is that product registration is now on hold pending first sales in other regions, where this previously was awaiting ISO13485 certification.

I haven’t been able to find a copy of the video of the presentation, so if anyone has any more details I would be interested to hear if this was elaborated on further.

Not much new information was presented in the PIQ quarterly update which was mostly a summary of the announcements over the last 4 months. 

The commercialisation milestones with Sonic Healthcare are supposedly still on track but no news on the UK or European licenses.

Cash burn continues but the companies capital position has been stabilised by a capital raise and grant funding with ~$9.2m in cash and a forecast ongoing operational cost of ~$1.5m for future quarters.

This continues to a speculative wait and see.

@Bradbury picked it a CR leaving out retail holders. Good that funds have been raised to cover planned activities will most likely hold the SP down until significant revenue arrives.

Proteomics International Laboratories Ltd (Proteomics International; ASX: PIQ), a pioneer in predictive diagnostics, is pleased to advise that it has received firm commitments for a share placement to raise $8 million (before costs) through the issue of 9.41 million shares in the Company (the “Placement”).

The Placement was at an issue price of $0.85 per share, a discount of 11.1% to the 5 day VWAP and was heavily oversubscribed, supported by Australian-based institutions, and sophisticated and professional investors.

Funds from the Placement (after costs) will be used for:

Inventory build for the PromarkerD predictive test for diabetic kidney disease

Implement US sales and marketing for PromarkerD

Development of the PromarkerTM diagnostics pipeline

General working capital

“Proteomics International has reached a major inflexion point in its corporate development - substantial capital injection ensures our currently planned activities in these areas are fully funded, and I take this opportunity to thank existing shareholders for their continued support and to welcome new investors to the Proteomics International register.”

The shares under the Placement are expected to be issued on or around 22 August 2022 pursuant to the Company’s 15% placement capacity under Listing Rule 7.1. Tranche 1 of the Placement ($7.75m) is expected to settle on or around 19 August and, subject to shareholder approval, Proteomics International Directors Neville Gardiner, Paul House and Roger Moore will participate in Tranche 2 of the Placement (total $0.25m).

 PIQ has had a stream of announcements recently, Endometriosis validation study results, published journal articles and now followed by a “Letter of Intent” for exclusive licencing of PromarkerD in the US with Sonic Healthcare.

All are good news on face value, however don’t provide any significant near term changes to short term business operations which resolve the cash balance issues.

• Agreement to be finalised by 31-12-22 after 15 months in progress.
• Progress milestones within the next 5 months:
• Optimising test for high throughput labs
• Preparing for PLA reimbursement code submission (Initially announced in May-21)
• Forecasting US sales targets 

The agreement with Sonic Healthcare does represent progress and it will be interesting to see what initial sales targets are released noting these will all need to be through the laboratory developed test as an FDA submission appears to have faded into the background in the "Share Price Catalysts" section of the investor presentations.

Investor Presentation April 22

Investor Presentation July 22

Given the company's precarious cash position, I think the timing of this announcement along with the milestone approach will be a setup for an upcoming capital raise in the near term, particularly if they can conjure up some meaty looking sales targets.

Clinical Utility Study demonstrates PromarkerD test offers improved treatment options for doctors in the fight against diabetic kidney disease

Well covered by @laoshi regarding the endo update yesterday but interesting media release today regarding PLOS ONE.

 Results published today in the peer-reviewed journal PLOS ONE show the PromarkerD test ranked as more important to physicians than current standard-of-care tests

 78% of doctors were very or extremely likely to use PromarkerD in the future for the management of their diabetes patients

 The Clinical Utility Study shows the PromarkerD predictive test for diabetic kidney disease could significantly change doctors’ treatment decisions and improve outcomes for patients

 The published clinical utility study will form a key element of the dossier supporting a United States PLA code reimbursement application for PromarkerD

MEDIA RELEASE

PLOS ONE Conclusion

PromarkerD could increase adoption of renoprotective interventions in patients at high risk for renal decline and lower the likelihood of aggressive treatment in those at low risk. Further studies are needed to assess patient outcomes with PromarkerD in real-world practice

PLOS ONE

4C slight decline in revenue, acknowledging anylytical services and tax rebates are currently only income, delays to projects. Language suggests Promarker revenue still a way off. Tax rebate in H1 FY23 might avoid a raise if revenue increases but likely to have to raise in Q4 FY22?

Promarker pipeline update

Whilst significant advances in the Promarker diagnostics pipeline were achieved several projects have been delayed or are on-hold. This reflects instrument capacity constraints, in part caused by maintenance issues arising from border closures, and has also meant some datasets have not achieved levels of sensitivity that the Company desires for its development of novel diagnostics tests.

Proteomics International has instigated a number of initiatives to overcome these obstacles, which will yield improved results going forward, and looks forward to providing updates on the outcomes of these steps in due course.

Proteomics International's business model is to continue the commercialisation of PromarkerD whilst using its Promarker technology platform to create a pipeline of novel diagnostic tests, and offset the cash burn from R&D and product development through its analytical services revenue, coupled with the R&D tax incentive rebate.

Revenue & Expenditure

Proteomics International achieved receipts from customers for the June quarter of $292,000 (March quarter: $335,000) and an additional $340,000 in grants. Receipts continue to be driven by revenue from analytical services. In particular, the Company has observed a significant increase in demand for its pharmacokinetic testing services , and renewed interest in biosimilars testing.

The net operating cash outflow for the June quarter was $1.04 million (March quarter: $1.28 million).

Expenditure centred on the following areas: • Business development and commercialisation costs for the roll-out of PromarkerD Manufacturing costs for the PromarkerD immunoassay

Regulatory and reimbursement activities to support PromarkerD commercialisation

R&D for projects in the Promarker diagnostics pipeline

Cash position At 30 June 2022 the Company had cash reserves of $2.1 million (March $3.3 million). These reserves will be strengthened by a forecast R&D tax incentive rebate of circa $1.5 million to be received in the 1H FY23. The Company is confident that its diversified business model places it in a sound financial position to fund its current objectives.

PIQ looking to increase TAM (2x) by expanding European patent to include prediabetic kidney disease testing. Needs clinical studies before generating revenue.

Patent protection (valid until September 20, 2031) for Proteomics International's PromarkerD predictive test for diabetic kidney disease expanded to cover prediabetes in Europe

There are currently 537 million adults with diabetes, and an additional 541 million (10.6% of the world's adult population) with prediabetes

Diabetes is the leading cause of chronic kidney disease which affects 100 million Europeans and is estimated to cost the European health system EUR140 billion annually

Proteomics International's original European patent was restricted to diabetic kidney disease only. The new patent will now provide protection for the use of the PromarkerD test for any individuals with prediabetes, which is an at-risk category for kidney disease.

Further clinical studies are needed to demonstrate that PromarkerD can be used to diagnose kidney disease beyond those with diabetes, however, there is already evidence that the biomarkers in the PromarkerD panel are important in chronic kidney disease more broadly.

PIQ slowly moving towards scale manufacturing and sales

PromarkerD manufacturing tech-transfer completed - Successful production of components for over 50,000 tests

Pilot batch is a significant milestone in transfer of technology needed for large-scale global distribution

Increased production capacity will allow Proteomics International to meet anticipated demand for PromarkerD in the Northern Hemisphere

PIQ has finally submitted PromarkerD registration to TGA. With a guidance of 6-9 month review period provided, approval is not likely to happen until Q4FY23. As this is still a fair way off, I hope the company is not relying on TGA approval for too many other jurisdiction applications.

Announcement

Appendix 4D – Half-Year Report to Dec 2021

Proteomics released their Half-Year Report.

Review of Operations

PIQs principal activities fall into 3 key areas

•Commercialisation of PromarkerD

•R&D for new diagnostic tests

•Analytical services

To implement this strategy, the  business model focuses on the commercialisation of PromarkerD whilst using its Promarker technology platform to create a pipeline of diagnostic tests, offsetting the cash burn from R&D and product development through its analytical services revenue, coupled with the R&D tax rebate.

PromarkerD Commercialisation

While they're gaining some traction, it's still a lot of promises without much to show.

Analytical Services

Secured a $400,000 contract to test a novel drug for degenerative and inflammatory diseases

Financials

•On the surface revenue was down 23%; however, ignoring miscellaneous items such as grants and subsidies, revenue was actually up slightly.

•Expenses up 41% to commercialise PromarkerD and other R&D activities

•Loss of $3.2M

•Cash and cash equivalents of $4.5M

•Net assets of $4.8M

•Cash outflow from operating activities of $1.2M

The company is slowly taking baby steps to commercialising PromarkerD. Unless this can be done quickly, a 41% increase in expenses, cash burn of $1.2M+ and $4.5M cash on hand could mean a capital raise in the future. Historically, their Analytical Services division revenue was able to, mostly, offset their cash burn. With a more aggressive pursuit to commercialise their diabetic kidney disease test (PromarkerD) this is no longer the case.

PIQ released their quarterly activities report

A few highlights

PIQ continues to slowly gain traction with the commercialisation of PromarkerD

Hiring of a CCO & CFO

$5.6M cash reserves as of June 30th with 3.9* quarters of funding available; however,

*$1.1M R&D tax incentive expected next quarter & one-off costs this quarter will not be repeated next quarter

Quarterly receipts from customers (from their analytical services) relatively flat compared to average of previous 3Qs

Radio Interview

Co Founder & CEO Dr Richard Lipscombe with a short radio interview on Bulls and Bears.

https://www.6pr.com.au/proteomics-predicting-a-disease-before-you-get-it-now-thats-novel/

What to Make of PIQs Recent Announcements

PIQ asked for a voluntary suspension of their securities. This was pending the release of an announcement following a presentation given at the American Diabetes Association’s 81st Scientific Sessions from June 25 – 29th.

This announcement & suspension of securities left me scratching my head. It’s not in management’s character to be overly promotional. The ASX has reigned them in:

“Following consultation with ASX, and to ensure the findings from the study are not interpreted as forecast financial information under ASIC Regulatory Guide 170, Proteomics International has agreed to retract that Announcement. In retracting that Announcement, Proteomics International notes that investors should not rely on the information as a basis for making an investment decision about its shares.”

I’m not the only one a bit confused by this move as outlined in Storge’s straw. However, I have a slightly different take. I agree there are questions surrounding management but historically they haven’t been over promotional. They’ve failed to commercialise their PromarkerD test for several years and my concern is does management have the humility to bring in outside help? Do they know what they don’t know?

The hiring of a CFO and engaging Boston Healthcare Associates suggests management is now addressing my concerns. Boston Healthcare Associates (BHA) was engaged to conduct the economic & clinical utility studies required as part of the company’s application for a unique reimbursement code for their PromarkerD test. A unique reimbursement code is required to get insurance companies to reimburse the costs associated with a test – in this case PIQs PromarkerD test.

I’m not sure what to make of the voluntary suspension as it seems excessive. Maybe management knows something they can’t say? Considering $100,000 worth of shares were bought between management last year, they’ve recently hired a CFO, achieved CE certification in Europe & engaged BHA I think this is more likely as they don’t have a history of over promotion.

While I’m a bit confused as to the need of a voluntary suspension & market sensitive announcement, management continue to address my concerns and take small steps towards commercialisation of PromarkerD in the US. The company’s downside is reducing; however, management has a history of over promising and under delivering and will need to successfully commercialise their test in the American market to shake this stigma.

About BHA

https://www.bostonhealthcare.com/about/

During the extended suspension. PIQ put out another announcement last night retracting the previous announcement regarding the $380 billion saving.

Have to concur with the last straw from Storge about the goldplating.

Not a good look on management when these things happen.

Management instead need to be focused on hitting timelines and tangible results (ie: testing testing testing). The verdict is still out on this point for PIQ.

(Held but bit divided on PIQ right now - I'm sure I'm going to get some downvotes on this :))

Proteomics International secures major analytical services contract in pharmacokinetic testing

Proteomics announced an analytical services contract win today, their largest single analytical services contract win to date. PIQ will carry out pharmacokinetic testing to examine a novel lysosomal storage disorder drug as part of phase I clinical trials.

"Pharmacokinetics is the study of what happens to drugs once they are inside the body, including the rate at which they are absorbed, distributed, metabolised and excreted."

Analytical services revenue “helps offset our diagnostic R&D and commercialisation expenditure,”

The contract, valued at $243,000, will be carried out over the next 3 months. For reference, previous Q cash receipts were $332,000.

It's good to see a contract win in the services segment of the business as analytical services revenue funds R&D and limits cash burn. However, the blue sky upside of PIQ is in it's commercialisation of the PromarkerD test, something investors have been patiently awaiting for a number of years.

Highlights

•Cash receipts of $332,000 for the quarter

•Balance sheet remains strong with $7.06M cash

•Company is recruiting a Chief Commercialisation Officer and a CFO

I found this last point of particular interest. The PIQ story hangs on whether they can successfully commercialise their PromarkerD test kit. The hiring of a commercialisation officer as well as a CFO could be a leading indicator the company sees a realistic pathway to successful commercialisation.

PIQ currently derives its revenue from analytical services. Ignoring government grants received in the December quarter, they’re burning roughly $0.5 - $1M per quarter with $7M cash on hand. The explanation provided for the March operating cash outflow:

•Business development and commercialisation costs for the roll-out of PromarkerD

•Manufacturing costs for the PromarkerD immunoassay kit

•Regulatory and reimbursement activities in the USA to support PromarkerD commercialisation

•R&D for projects in the PromarkerTM diagnostics pipeline

Regardless, PIQ is well funded going forward.

Appendix 4D

At quick glance not too much stands out. PIQs success still depends on the successful commercialisation of their PromarkerD test which they have yet to accomplish.

Currently loss making -$1.8M & cash flow negative ~$365,000
Strong Balance sheet with zero debt & $7.5M cash following a $6M capital raise

Received a $1.1M R&D tax incentive

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02345956-6A1021809?access_token=83ff96335c2d45a094df02a206a39ff4
 

Proteomics International seeks FDA approval for PromarkerD

~ Pre-submission package for diabetic kidney disease (DKD) test lodged with the US Food and Drug Administration (FDA)

~ Proteomics International expected to meet with the FDA to progress clearance within 10 weeks

~ FDA pre-submission follows CE Mark regulatory approval for PromarkerD in Europe

~Globally there are 463 million adults living with diabetes, including 31 million in the US

~ The Covid-19 pandemic has increased public awareness of the importance of diagnostic testing but caused a backlog in diagnostic services for other serious illnesses such as DKD - an issue that healthcare systems and diagnostic companies are now looking to address

Annual Report Presentation

Income Statement

Revenues reported to increase 8%; however, if we ignore Covid-19 grants and subsidies as well as research grants revenue is flat.

Considering the difficult environment, I’m not too concerned with this. Revenue from their analytical services is important to fund R&D; however, it’s the commercialization of PromarkerD that will bring in substantial future revenue.

Cash Flow

Cash flow from operating activities 20 vs 19 – cash outflow halved if we ignore increases in Covid grants and supports and increase in R&D tax incentive

Outflow from financing activities is due to the investment in PP&E (upgrading their Western Australia facility).

Financing cash inflow vs outflow in 2019 is mostly flat if proceeds from cap raise are ignored.

BOD are all reasonably paid and hold no other directorships.

Not a whole lot new aside from the company appearing to move closer to commercialization of PromarkerD. This is what the potential of the company is riding on and has been for several years. The company continues to be run well fiscally with the cap raise only required to fund a substantial upgrade on their Western Australia facility.

https://asx.api.markitdigital.com/asx-research/1.0/file/2924-02274845-6A993722?access_token=83ff96335c2d45a094df02a206a39ff4

Thesis

•Passionate, talented, founder led company

•Founder/CEO has a reasonable salary and ~22% ownership with recent insider buying on market indicating aligned management

•Board members Paul House and Ian Roger Moore have also recently purchased shares on market

•Talented and experienced senior management team (4 PhDs) and BOD with proven track records

•Founder uses terms like “we” vs “I” when discussing company

•IP and patents filed in Europe, Japan, Australia, Russia, Singapore, Indonesia, China & USA*. Were the first proteomics lab (2009) to be recognised and accredited worldwide.

•Possess a competitive advantage – PromarkerD test - currently no other test for predicting a patient’s risk of developing diabetic kidney disease. Commercialised, low-cost, high-speed test.

•Potential for further moats with pipeline of R&D – for example detection of endometriosis via blood sample as opposed to laparoscopy (minor surgery), among others.

•Potential to serve customers globally (working on expanding into US), operates in a stable market, serves/potential to serve multiple industries (healthcare, biopharma, agricultural, elite sport health and animal health)*. For example, they test proteins for A2 Milk.

•Possess economies of scale

•Have large addressable markets, short clinical development time for new products (24 to 27 months) and proprietary platform technology

•Has several projects in pipeline, 4 of which are roughly 1 year from commercialisation

•Little coverage (unknown)

•Tailwinds – rates of diabetes are increasing – one of the world’s fastest growing diseases. Growing biosimilars market further fuelled as existing drugs come off patent.

•Free cash flow positive

•Debt free with a current ratio >7

•Scalable with high margins - employ an out-licensing model for their current & future diagnostic tests allowing them to leverage sales and marketing of their distribution partners

•Analytical services revenue ($1.5M FY19) helps offset R&D and product development expenditure – not your typical biotech nor does it have a binary outcome (ie. success or complete failure)

•World leading facility in Western Australia (recently upgraded) with a $4m co-investment from Federal and State Government agencies

*R&D pipeline (not yet proven) exploring diagnostic tests for endometriosis, giardia, asthma & COPD, plant dieback, diabetic retinopathy, oxidative stress (human & animal applications), cancer, COVID-19

Summary

PIQ has asymmetrical payoff atypical of your standard biotech company. Revenue from their analytics division de-risks and lowers the downside by funding the R&D arm of the company. They are currently free cash flow positive as a result. PIQ has patents approved and pending (including the US) which provide them with a strong competitive advantage until 2031 in a highly competitive sector. Regulatory (need to reduce healthcare costs) and societal (increasing rate of diabetes) provide tailwinds that will benefit the company.

They have a passionate, founder led management team with plenty of talent; however, management have missed some significant milestones – most notably in the commercialisation of their PromarkerD product in the US and this is where my biggest concern lies. However, recent management buying on market eases this concern.

For a biotech company lacking your typical binary outcome, PIQ may be best suited as a bottom drawer or coffee can stock as the payoff could still be some time away.

Would Sell If

The company’s current focus is to commercialise PromarkerD test in major markets such as the US, develop more diagnostic testing and grow its analytical services revenue.

Therefore, I would sell if:

•Management fails to execute into the US market

•R&D pipeline (diagnostic testing) has multiple failures, limiting their growth into additional markets

•Analytical services revenue declines or flat lines for a significant period or is unable to continue to fund PIQs R&D

Disclaimer: I hold a small position in PIQ and will add as management executes.

Products and Services

PromarkerD Test System

Blood test assessing the risk of diabetic kidney disease (DKD) in diabetic patients.

Simple blood test measuring a panel of three novel protein biomarkers (“fingerprints”) combined with three clinical factors.

The combined data is submitted to the PromarkerD Hub and a test report is generated. PromarkerD Hub is a software tool that contains a proprietary algorithm to calculate the risk of DKD.

The ability of the biomarkers to diagnose and predict diabetic kidney disease has been studied and verified. In validated clinical studies, the PromarkerD test system predicted 86% of otherwise healthy diabetics who went on to develop DKD within four years.

Promarker™ Platform

The Promarker™ platform uses mass spectrometry-based technology to identify the proteins that can be used as biological markers of disease and other conditions.

PromarkerD’s ability to predict and diagnose diabetic kidney disease in patients was verified by the Promarker™ platform and studied in three clinical studies:

The Prognostic Validation Study

In this validation study, PromarkerD correctly predicted 86% of previously disease-free patients who went on to develop chronic kidney disease.

The Prognostic Development Study

In this development study, PromarkerD correctly predicted 95% of otherwise healthy diabetics who go on to develop chronic kidney disease within four years.  (ADA Poster 2017 & JDC 2019)

The Diagnostic Study

The study showed that PromarkerD outperformed both the current gold standard tests used for the diagnosis of patients already suffering from DKD.

The Company has developed two types of tests to capture mass market:

PromarkerD test for diabetic kidney disease is available in two technology platforms (mass spectrometry and immunoassay – also known as in vitro diagnostic IVD), servicing the Laboratory Developed Test (LDT) and IVD markets. This means it can be manufactured as either a kit or configured to run on automated immunoassay platforms to meet the diverse needs of clinical diagnostics laboratories.

LDT - Certified laboratories can carry out PromarkerD analysis using an LDT. In an LDT, specialised laboratories use mass spectrometers to measure the protein fingerprint in the patient’s blood. The data is then sent to the PromarkerD hub for processing and diagnosis.

IVD - Pathology laboratories can carry out PromarkerD analysis using an IVD. In an IVD, laboratories use traditional immunoassay technology, standard to all pathology laboratories, to measure the protein fingerprint. The data is then sent to the PromarkerD hub for processing and diagnosis.

PIQs Analytical Services - serving two main areas:

Pharmacokinetics – study of what happens to a drug when it enters the body, whereas pharmacodynamics and companion diagnostics profile patient response to treatment by measuring markers in the blood. Together they may help doctors develop personalised treatments.

Pharmacokinetic testing is crucial in the development and commercialisation of new drugs. It helps to ensure drugs are safe and effective as well as examining how the drug changes in individual patients.

CDx - When a diagnostic test is used alongside a drug therapy, it is known as a companion or complementary diagnostic (CDx). PromarkerD can act as a companion diagnostic test to help identify patients for whom a drug will or will not work, reducing drug failure rates in clinical trials and improving patient outcomes.

CDx provides PIQ with another way to serve the biopharmaceutical industry or drug development industry.

Biosimilars – are essentially generic versions of drugs. As drugs come off patent they can be copied with biosimilars and marketed.

PIQ can undertake pre-clinical and clinical pharmacokinetic quantitative assays for any investigational drug product.

Cutting-edge protein biomarker analysis facility in Western Australia

The facility will provide increased ability to explore for and identify biological markers across a broad range of sectors. This could lead to the identification of new drug targets and the creation of diagnostic tests across medicine and agriculture, boosting both Proteomics International's analytical services and R&D activities.

Addressable Market

The Problem

Diabetic kidney disease (DKD) is kidney damage caused by diabetes.

The role of your kidneys is to filter waste and excess water from the blood making urine.

High blood glucose levels characteristic of diabetes can progressively damage blood vessels in the kidneys, reducing their ability to filter out waste.

Rates of diabetes are fuelled by obesity, poor diet and inactivity, increasing the fastest in low and middle-income countries.

DKD costs $100k per person per year and if left untreated the patient is at a high risk of kidney failure. The only treatment options for kidney failure are either dialysis or kidney transplant.

More than 500M people have diabetes (1 in 11 adults) with 1 in 3 of these having DKD.

Current tests can only detect the disease by measuring existing kidney damage and cannot predict the risk of developing DKD. 9 out of 10 patients with kidney damage are asymptomatic and live unaware.

The current gold standard tests for diagnosing DKD are:

• a urine test
• a blood test

The shortfalls of the current gold standard tests are:

• Can only detect diabetic kidney disease when there has already been damage
• Current tests not always reliable

PromarkerD test system is the first test globally capable of predicting the onset of DKD before clinical symptoms appear and has been validated in clinical studies - predicting 86% of otherwise healthy diabetics who went on to develop chronic kidney disease within four years.

PromarkerD test allows the patient to implement preventative measures (diet, lifestyle, and blood pressure drugs) before kidney damage occurs leading to better health outcomes and simplifying patient care.

PromarkerD enables a more comprehensive assessment and informed approach to help:

• Identify patients at risk of developing DKD within the next four years
• Implement preventative measures before kidney damage occurs
• Personalise patient treatment plans
• Improve patient monitoring and management

Early detection can significantly help prevent serious kidney damage

The global clinical trials market is projected to reach $22 billion by 2021

Biosimilars Testing Market

Majority of the top 10 selling drugs on the planet are protein-based drugs and it is the generic copies of these drugs, the biosimilars that PIQ is hoping to take advantage of.

PIQ plans to serve the drug development market through its high-end facility in Western Australia.

The global biosimilars market size is expected to reach a value of USD$61.47 billion by 2025 and to expand at a 34.2% CAGR over this period. Several of the existing biological drugs will be reaching patent expiry in the coming decade, which would provide an opportunity for many innovator companies as well as generic manufacturers to offer services, specially tailored toward biosimilars.

Pharmacokinetic Testing Market:

The global pharmacokinetics services market is expected to reach USD1.2 billion by 2025, registering an 8.3% CAGR during the forecast period.

PromarkerD test and proprietary technology platform provide a scalable licensing model with high margins and at minimal cost.

PIQ plans to commercialise any newly developed tests through an out-licensing model via upfront licence fees and royalty-based revenue on every test sold.

Through use of a licensing model, PIQ plans to leverage the sales and marketing knowledge of their distributors providing access to markets, scalability and reduced cost.

Competitors

There are too many companies operating in the space of proteomics (drug discovery as well as diagnostics) to list. PIQ will have to rely on IP and patents, such as PromarkerD, to stay ahead of competitors. Considering the size and diversity of the addressable market is huge (e.g. oncology, neurology, cardiology, inflammatory, infectious disease etc etc) and with IP and patent protections already in place PIQ should be able to have success.

PIQs Promarker technology platform reduces the risk of being disrupted by tech – as this is already being used within the business.

In early 2019, MDNA Life Sciences announces that it is to launch the world's first blood test for endometriosis, able to detect the disease in up to 9 out of 10 cases. Results will be available in a matter of days after the test is carried out. As far as I know PIQ has not commented on this but this could be a big blow to commercialisation of their own endometriosis test.

R&D Pipeline

The Promarker R&D pipeline and typical timeline is as follows:

Ethics & governance approval (3 months), Discovery (6 months), Proof of concept (6 months), Clinical studies/Validation (12 months)

Endometriosis (patent filed for diagnostic test)

Proof of concept study completed. Clinical studies pending.

Affecting 1 in 9 Australian women, endometriosis occurs when the tissues that line the uterus spread outside of the uterine cavity and surround other organs. The current gold standard detection is a surgical procedure.

Given the large unmet medical need and the only existing diagnostic tool being invasive surgery,

Proteomics International believes there will be significant commercial interest in this program post

successful clinical study validation.

Parasite infections: Giardia

Proof of concept study completed. Validation study pending.

In collaboration with the Murdoch University Veterinary School and a leading US veterinary

company.

Giardia is a leading cause of infectious gastroenteritis worldwide and one of the most common

parasitic human diseases. The risk for human health is that some Giardia strains that affect pets can

cross into humans (zoonotic), whilst others do not (host specific). An estimated 280 million people worldwide are infected each year.

Proteomics International has identified strain specific Giardia targets and developed a prototype

immunoassay, which is pending validation using field samples. The commercial viability is pending these results.

A strain specific test could readily benefit the US market where according to the Centers for

Disease Control and Prevention, the prevalence is an estimated 1.2 million people.

Asthma and chronic obstructive pulmonary disease (COPD)

Ethics approved. Discovery study pending.

Aim to identify biomarkers for asthma and chronic obstructive pulmonary disease in collaboration with the Busselton Population Medical Research Institute.

Plant Dieback (Phytophthora cinnamomi)

Discovery study ongoing.

Proteomics International has an ongoing collaboration with the Centre for Crop and Disease Management, Curtin University to target the plant pathogen Phytophthora cinnamomic responsible for plant dieback.

Already more than 1 million hectares of Western Australian bushland (avocados, macadamias, pineapples) have been infected. Phytophthora attacks the roots and inhibits them from being able to take up water and nutrients, resulting in death (Dieback).

Current investigations are focused on proteomic analysis (determining the protein maps) of the life

stages of the organism and how it infects its host. This has the potential to identify weaknesses in

the pathogen that could be targeted to help eradicate this disease.

Diabetic Retinopathy

Discovery study pending.

Collaboration agreement signed with The University of Western Australia to seek early markers for diabetic retinopathy. A third of diabetic patients have diabetic retinopathy, a vision impairment caused by damage to blood vessels at the back of the eye.

Diabetic retinopathy is the major cause of blindness in the USA and finding and treating it early can reduce the risk of blindness by 95%.

This collaboration will apply the Promarker platform to look for prognostic markers in the blood that

can identify patients at risk of retinopathy utilising the Fremantle Diabetes Study – the same sample repository that led to PromarkerD.

Markers for oxidative stress - '2-tag' technology

Proof of concept study completed. Clinical validation pending.

Biomarkers for cancer

Status update: In-licensing discussion (Proof of concept study completed. Clinical validation pending).

Novel disease biomarkers - ARC Centre for Personalised Therapeutics Technologies

Status update: In-licensing discussion (Ethics approved. Discovery study pending).

COVID-19

Status update: Programs initiated.

Management

PIQ is founder led with 4 PhDs and a very talented and proven team in the field of proteomics, diagnostic testing and global business. Dr Lipscombe’s motives and incentives appear to be well aligned with shareholders (22% ownership) and watching him speak he appears confident and passionate. Board is modestly paid, ignoring share-based compensation - options.

3 members of the board have recently purchased $100,000 worth of shares on-market at a price of $0.41 which gives me confidence the company see progress on the horizon.

Execution is the only question surrounding management as they’ve been unable to commercialise their PromarkerD test for a number of years.
 

Dr Richard Lipscombe – Co-Founder PhD, MA; approx. 22% ownership

Highly practised business manager and protein chemist expert in analysing bio-molecules using proteomics techniques.

Extensive expertise in chemistry, immunology, mass spectrometry, peptide synthesis, high performance computing and robotics.

International experience in both science and business gained over a 29-year period in Australia, USA and the UK

Completed his chemistry degree (MA) at Oxford University, his PhD in immunology at London University and was a Post-Doctoral scientist (molecular immunology)

Is well published in peer review journals and holds of several patents.

*Dr Lipscombe has exercised the majority of his options since 2016 and appears passionate and aligned with shareholders.

Mr Terry Sweet – Independent Non-Executive Chairman FAICD

Director of several listed companies over the past 30 years in both executive and non-executive capacities, including XRF Scientific Ltd, where he was Managing Director for 4 years, Western Biotechnology Ltd, Heartlink Ltd, and Scientific Services Ltd.

Originally trained as a chemist, his interests and expertise now lie in the area of development and supervision of a culture of Board integrity, commensurate with technology commercialisation.

*XRF appears to have performed well while Mr Sweet was there

Mr Roger Moore – Independent Non-Executive Director R, BPharm

40 years’ experience in the international pharmaceutical industry, including almost 30 years as President of Novo Nordisk Japan.

Mr Moore established Novo’s organisation in Japan as the first employee in 1977 and worked for the company until his retirement as Chairman at the end of 2007. From 2000, Mr Moore was appointed Senior Vice President, Japan and Oceania Region, responsible for Novo Nordisk’s business in Japan, Australia, New Zealand and the Pacific. Also, appointed a member of the Senior Management Board, Novo Nordisk A/S.

Since 2008 has worked to assist selected Australian biotech companies and selected Japanese pharma companies in their international business development activities.

*Novo Nordisk appears to be actively engaged in the diabetes space displaying relevance to his role with PIQ.

Mr Paul House – Independent Non-Executive Director GAICD, BCom

Served eight years as the Managing Director of SGS India, where he was responsible for a workforce of approximately 4,500 personnel across 65 locations in India, including 38 laboratories. SGS is the world’s leading Testing, Inspection and Certification (TIC) company, and operates a network of offices and laboratories in more than 140 countries.

Previously held Chief Financial Officer and COO roles and was Senior Manager for several years at a leading global management consultancy firm.

Mr House has a track record for delivery of business performance targets, revenue growth, margin improvement, market share and productivity, across multiple services, markets and borders.

*Mr House’s previous experience gives PIQ a foot in the door to the Indian biopharma industry.

Dr Pearl Tan (PromarkerD Business Manager)

2013 PhD (Research), Biochemistry and Molecular Biology, UWA
2008 BSc with honours in Biochemistry, UWA, Australia
2007 BSc, Molecular Biology and Biotechnology, UWA, Australia

Dr Scott Bringans  (Research Manager)

2001  PhD, Department of Chemistry, University of Canterbury
1997  BSc (Hons), Department of Chemistry, University of Canterbury

Dr Kerryn Garrett (General Manager)

Brings extensive research background in various diseases including muscle and neurodegenerative disorders, eye disease, cancers (prostate, colon, breast, lung, gynaecological and melanoma), using a wide range of molecular and genetic technologies. 

2012 FFSc (RCPA) Fellowship Faculty of Science Royal College of Pathologists Australasia
1993 PhD University of Western Australia
1989 BSc (Hons) University of Western Australia
1988 BAppSc (Medical Laboratory Sciences) Curtin University

Mr Chuck Morrison (Head of Business Development)

36 years’ experience in life sciences, biotechnology, and diagnostic industries

Has held several management positions while at NEN Life Sciences and DuPont before focusing his last 15 years in Business Development at PerkinElmer.

MBA, Boston University, Massachusetts, USA

*Based on share price, PerkinElmer appears to have performed very well since 2017

Timeline

2001

Proteomics is established by Dr Richard Lipscombe and Dr Bill Parker and is recognized as a global leader in the field of proteomics.

2009

Proteomics lab is the first in the world to receive ISO 17025 accreditation for proteomic services.

2015

Company lists on the ASX.

2016

Agreement to have Omics Global Solutions distribute PIQs diabetic kidney disease tests in Dominican Republic.

Tests to be manufactured in US territory of Puerto Rico, coming under umbrella of US FDA guidelines providing a potential steppingstone into US and other markets.

Launch of India website as part of PIQ’s strategic marketing initiative to cater to the existing need of the Indian market and drive cash flow through fee-for-service work.

A few key management personnel provide loans to the company at 7% interest (CEO Dr Lipscombe - $428,212 others at $10k and $3k) expiring April 2019.

2017

PIQ completes an oversubscribed $2M capital raising.

Proteomics International's co-founder Dr Bill Parker passes away suddenly in February.

PromarkerD test validated by peer-reviewed scientific journal.

Pharmacokinetic (PK) test services launched (relevance is to therapeutic drug discovery market)

Become world’s most highly accredited protein testing laboratory.

2018

Engaged with number of partners to bring PromarkerD to market as a clinical diagnostic test (IVD or LDT) or companion diagnostic (CDx) in mainland USA, Mexico, Japan, Australia, China and Europe.

Partner with Busselton Population Medical Research Institute to improve the diagnosis and treatment of lung conditions such as asthma and chronic obstructive pulmonary disease (COPD).

90% take-up of PIQs ASX listed options raising $3.4M.

Management predicts strong 2019 financial year.

Proteomics International signs a deal to launch PromarkerD in the USA through a partnership with PrismHealthDx (PHDx), who will launch the LDT version of PromarkerD in its specialist certified laboratories. NOTE – this will eventually fall through

Proteomics International signs a licence agreement with biotech company Patia BioPharma for the LDT version of PromarkerD in Mexico.

Proteomics International discover several potential biomarkers in the blood that could be used to test for endometriosis and plan to progress with research.

2019

Sign a collaborative agreement with Janssen Research & Development, LLC, the research arm of Johnson & Johnson. If the study is successful, PromarkerD may be designated as a Complementary Diagnostic (CDx) test for the treatment of diabetic kidney disease with Janssen’s diabetes drug.

Expand partnership with Linear Clinical Research, signing two new major contracts to conduct pharmacokinetic testing.

2020

Join forces with Bioplatforms Australia and The University of Western Australia to launch a cutting-edge proteomics facility.

PromarkerD, achieves CE Mark registration in Europe for both the immunoassay kit, PromarkerD (IA) and the PromarkerD Hub which will allow laboratories to process much higher numbers of samples at a more cost-effective rate.

Expand diagnostic pipeline to include endometriosis, the Giardia parasite, chronic lung conditions, cancer, oxidative stress, plant dieback, diabetic retinopathy and COVID-19.

Have identified protein ‘fingerprints’ (biomarkers) in the blood that could be used to test for endometriosis with subsequent patent filed.

About

Proteomics International (PIQ) is a medical technology company operating in the predictive diagnostics and bio-analytical services. PIQ aims to use proteomics to develop and commercialise diagnostic tests for chronic diseases.

Proteomics is the large-scale mapping of the structure and function of proteins. Genes are static, the genes we are born with are the genes we die with, but the protein make-up of our bodies differs from cell to cell and changes over time (as we age or if we’re sick). As an example, a cancerous cell will have significantly different proteins to a healthy cell. While a caterpillar and a butterfly will have the same genes their proteins will differ.

It is this difference in proteins that PIQ is exploiting with their diagnostic tests to detect diseases such as chronic kidney disease (CKD) in diabetics.

Proteomics International uses its proteomics-based tech platform in diagnostics, analytical services and therapeutic drug discovery with their current focus to commercialise their PromarkerD test for chronic kidney disease (CKD) in major markets.

PIQs strategy is to:

Commercialise its test for diabetic kidney disease – PromarkerD - in which it will receive licensing fees and royalty payments.

Research and develop other diagnostic tests (see R&D Pipeline write-up) – as these tests are commercialised they will boost revenue through licensing fees and royalty payments.

Provide analytical services on a fee-for-service. This not only offers synergies in access to markets and clients but helps offset R&D and product development expenditure. PIQs analytical services serve the needs of pharmaceutical, biotechnology and life science companies and academic institutions across the world.