CelLBxHealth plc (CLBX.L) Earnings Call Transcript & Summary

Good evening, everybody, and welcome to this webinar. This is the first time we've done it quite like this. And so I can't actually see you in the audience clearly, but my understanding is that there will be some existing ANGLE holders present. But in addition, some completely new investors who haven't heard our story. And what I'm planning, therefore, is to provide an overview of the business in the first part of our time slot. And then what I'm going to do is to move to questions probably a little bit sooner than you might expect in order that Ian Griffiths, our Chief Financial Officer, can join me, and we can take questions. And that means those of you who are already familiar with our story will have an opportunity to get an update on key matters that you might be interested in. So what I want to describe to you is how ANGLE has a unique technology that we believe is going to revolutionize cancer care and how cancer is treated, and in so doing, enable us to build a very substantial business. And that's the objective of what we're working on. So the first point to know about is that cancer cells are used to make a wide range of important decisions in cancer care. And unfortunately, the current standard of care is really that all patients will receive the same sort of treatment, whereas in fact, what we actually want is a much more personalized treatment. So ANGLE is offering an approach which can enable treatment of cancer to be tailored to the individual patient's cancer at a particular point in time. And as cancer changes over time, it's absolutely critical to have that. Now what we're doing is we're addressing a very large marketplace. As you can see there, there's an estimate that this market is going to be worth over USD 100 billion per annum in the United States alone. And the reason for that is that the liquid biopsy approach, the method of getting cancer cells from blood from analysis addresses a lot of different aspects of cancer. So as you can see from the slide there, the diagnosis of cancer, the selection of treatment, the assessment of treatment and the monitoring of patients in remission and indeed even in screening for early cancer. So what ANGLE's business is involved in is 3 specific things: the detection of cancer, the treatment of cancer and the monitoring of cancer. And the way that we do that is a proprietary approach, and it's unique to ANGLE. So we have some unique patented positions that enable us to do this. Now what actually happens is that in current standard of care, cancer cells are used to make a wide range of important decisions. And the way that's done is via the what's known as the traditional solid tissue biopsy. So this is where the physicians or the medics will cut out some of the cancer. So if it's a melanoma, they'll cut out some of the skin where the cancer is. If it's a breast cancer, they'll cut out a lump of cancer. And that's taken away to a laboratory and analyze. Obviously, first question is to confirm whether or not there is, in fact, cancer present. But beyond that, there are lots of different decisions that can be made once you can get these cancer cells for analysis. Now the big problem is that cancer changes over time. So the patients need repeat biopsies, but it's not actually possible to repeat the tissue biopsy because by that time, you've cut out the cancer and your left, not able to repeat it. So what ANGLE is pioneering is a completely new approach, which is to obtain cancer cells from blood. Now obviously, the advantage of that is you can repeat that test as often as you want to. It's a simple peripheral blood test, just the same as any blood test that you may have given in the past. And within that blood, there may be a small number of cancer cells. Now these cancer cells are known as circulating tumor cells, or CTCs, for short. Now why would a solid tumor have cancer cells in the blood? Well, that's because that's how the cancer spreads. So if we take as an example, breast cancer, but it equally well applies to all solid tumor cancers. The breast cancer, primary in the breast from day 1, will be shedding cancer cells into the bloodstream, which circulate. So these are the circulating tumor cells that we're talking about. Now those cancer cells are present in the blood because they are spreading the disease. And that's why the cancer can spread from the breast to, for example, the lungs or the bone or the brain. And of course, over 90% of people who die of cancer die from the metastatic spread of the disease. So these circulating tumor cells in the blood are not only just cancer cells but they are actually clinically extremely important cells because they are the ones that are spreading the disease. So it's been known for many, many years that circulating tumor cells are present in blood, but only in a very small number. The question has been how do you get them out? And that is the technical challenge which our company, ANGLE, has solved. And what you see here on this slide is that ANGLE system, which is called Parsortix. That is a schematic of a Parsortix onetime use consumable called Parsortix cassette. That's the same size as a microscope slide. And the blood has flowed inside that microscope slide, inside the Parsortix cassette. Through our microphonic setup, which as described there, forces the blood to flow up a series of steps, and that's a patented structure. And that structure manages to hold on to the cancer cells, which are significantly larger and less compressible than the blood cells, but let the red and white blood cells flow through. And so by doing that, we've solved this very difficult problem of how do you get the cancer cells out of the blood. Now we've automated that whole process with the Parsortix instrument, which is an automated process where you attach a standard tumor blood, as shown on the left-hand side of that slide. That's a standard tumor blood attach, and then hit start on the machine, and the machine will automatically flow the blood through one of these Parsortix cassettes, which is held in a purpose-made plan shown here on the right-hand side. Now the beauty of that is that the blood and all the blood components, the white and red blood cells and the plasma flow straight through the cassette, whereas the cancer cells are held inside the Parsortix cassette. And then the machine automatically washes away the remnants of the blood cells using a phosphate buffer saline solution, basically a salt solution. And then the machine will automatically reverse flow and take the cells back out for analysis. So now I'm going to show you an animation of how this works. So now you're looking at a Parsortix cassette and the blood will flow in the inlet here. It then flows down the microphonic channel. And as you zoom in on the channel, what you see is a series of steps. And now you can see the animation showing schematic of red and white blood cells flowing up the staircase and then through the critical gap in a way, whereas the cancer cells shown in green here are held at the final step. So after the process is finished, you'll left with a small number of remnant blood cells and the cancer cells. So that very uniquely solves the problem of how you get 1 cancer cell out of 1,000 million blood cells. Now this is not the right one. This is the video showing actual blood flow inside of a Parsortix cassette. So this is a 100x magnification of a Parsortix cassette. The lines here, the curve lines are the staircase. And so the blood in the deep red color is flowing up the staircase, then it's flowing through the critical gap. That's only 1 cell which is why that's a light color. And this is the exit trench. So what you see is the blood cells and plasma flowing beautifully smoothly through. And here is a captured cancer cell. So that is a single cancer cell in the patient's blood, which is held on the final step. And all the blood cells continue to flow through, and you're then left with the large cancer cells on the final step. The instrument will automatically reverse flow, and then we have the cancer cells in a tube of liquid so they can be analyzed in exactly the same way that you would analyze cancer cells that you might get from tissue. So we've solved this problem, there we go. And what we have here is a wide use of this system by a large number of world-leading cancer centers. So we've got now 35 peer-reviewed scientific publications, which have been published by 24 independent cancer centers. Every single one of those is a positive report on different things that you can do with the system. So these researchers are investigating if you get these cancer cells out, what can you look at on the cancer cell, which is useful for patient treatment. And so we've got a very useful setup, whereby we get paid to sell this product for researchers. And then the customer is doing investigation work, which then produces new potential clinical uses for ANGLE in the future. You see there a picture of the front cover of cell, which is one of the leading scientific journals in the world. And on that cover, it's been animated by an illustrative. That's not exactly how the cells look, but that is actually a cluster of cancer cells. And those curved lines they are actually the steps from the Parsortix cassette. So it's even made it onto the front cover of one of the world's leading journals. And on the left-hand side of the slide, you can see the sort of level of activity at the moment. We have around 200 Parsortix systems in active use around the world, including those in our own lab. And we've now run over 100,000 samples through to the system. So it's becoming a very well-established and characterized system. In terms of getting the product used for treating patients, which, of course, is the most important thing for us, and there's the whole purpose of what we're doing. It's a requirement to have regulatory clearance, government clearance to sell a medical product. The American -- United States clearance is called FDA, Food and Drug Administration clearance, and that is that they fact to gold standard worldwide. So customers worldwide respect the U.S. FDA clearance. And we're seeking to be the first company ever to achieve an FDA clearance for harvesting cancer cells from cancer patient blood for a subsequent analysis. We've completed a 200-patient clinical study led by 4 leading U.S. cancer centers, including University of Texas and the Anderson Cancer Center, which is the #1 cancer center in the United States. And we've already reported positive results of that. We've also been doing very extensive analytical studies to meet FDA requirements. This whole process has taken us already 4 years of effort. So it's a tremendous effort and puts us a long way clear of our competition. We have imminently getting to the point where we're going to be making a submission to the FDA for the FDA clearance. And we're targeting the end of September for that submission. We're right in the middle of the final analytical studies to support that, and a great deal of work has been done on preparing the submission. We expect that we'll be submitting over 10,000 pages of text and scientific data to support our submission and over 250 different reports to do that. It's obviously a challenge with FDA to get the first-ever clearance, and that's why it's called a de novo because they've never ever cleared anything in this space before. But we know that FDA is enthusiastic about clearing a product. And we're confident that eventually we will get clearance from FDA. We hope to make the submission, as I said, by end of September. Meantime, we are also progressing a very specific clinical application in ovarian cancer. Now ovarian cancer is a silent but deadly cancer. And it's exceptionally difficult to diagnose, which is one of the reasons that we decided to focus our early efforts on the detection of ovarian cancer because it is about the best exemplar as the most challenging one to identify. We've already completed 2 200 patient studies in relation to detecting ovarian cancer from winning with a known abnormal pelvic mass requiring surgery. Now just within context, there were over 750,000 women every year in the United States diagnosed with an abnormal pelvic mass. And of course, the real worry is whether that mass might actually be an ovarian cancer. And when these women are having surgery for their pelvic mass, some of them around 10% or 11% may have ovarian cancer. And it makes a tremendous difference to their outcome if they're treated as having cancer. And at the moment, there is no satisfactory way of determining whether or not they do have ovarian cancer. We're running a validation -- a clinical verification and validation study in ovarian cancer present, and it's due to complete enrollment by the end of this year. Once we've got our FDA clearance, we see a major growth opportunity for the business. The growth in the existing research use sales will be very large, we believe. And we're coupling that with some further product development to make it easy to work with the cancer cells that come out of Parsortix in what we call our sample-to-answer solutions. We are in the process of setting up a pharma services business. There are a large number of pharmaceutical cancer drug trials, which could utilize our product. And of course, those pharma industry can pay for those trials, and they spend a lot of money on those trials, and we can help make them more efficient. And furthermore, there's -- once we've got the FDA clearance, of course, that means we'll be allowed to sell the product for treating metastatic breast cancer patients, which is the area we're focused on for this first FDA clearance in the United States. The other major point is that we are setting up clinical laboratories, which will be accredited laboratories allowed to offer directly clinical tests. So we will ourselves be able to offer tests. Now then in terms of the overall position, we believe that we are on track to build a dominant position in this extremely large emerging liquid biopsy market. We have a highly differentiated solution, and it's protected so people cannot copy it. We're on track to be the first-ever FDA clearance in this space, which would really step us forward. We're looking to an ovarian cancer assay, a test being available in the first part of next year, and we're setting up our own sample to answer pharma services and clinical service laboratory. In addition to all of that, and you can see from the logos at the bottom right of this slide, we have a very strong partnership program to work with established large companies. And there's a very good reason why they would want to work with us because these companies and many others like them offer tests which work with tissue biopsy, and they would like to expand their sales into working with blood tests because then they could do repeat tests, and we offer them the potential to do that. So Roland, if you want to take over and bring Ian on board, we'll happily take questions and do that. Thank you very much, indeed.

Somebody sent in a number of different questions. And I'm guessing some of these is from existing shareholders, as you mentioned, Andrew, as you expected. And so I was going to start rattling through, it's going to be interrogation, we might jump around quite a lot, but please do bear with me. Okay. And so first off, do you know the reason for Jupiter selling down their shares?

Ian, do you want to answer on?

Yes. So we're not aware of any specific reason. As I'm sure many people are aware, sometimes funds need to sell their shares to rebalance their holding. We believe the fund holds about 30 different company, so they need to rebalance their portfolio. Sometimes they need to meet redemptions and sometimes they need to generate some cash for investment in other opportunities. So as far as we're aware, it's just normal trading in terms of balancing the portfolio.

Can you please release the full data from the previous ovarian and metastatic breast cancer trials? Or let us know why this has not been done?

I'll take that one, Ian. Yes, we will be releasing the full data, but that will be done in the normal process, which is the leading cancer centers responsible for doing those studies, release them, and they're released at leading cancer conferences. We've already released in terms of the ovarian -- first ovarian study that's been released as a poster at SGO, which is the leading ovarian cancer conference. So yes, of course, the data will be released in the normal course of events.

With any CTCs in the blood being potentially fewer number, if a patient goes in for a blood draw on a particular day, would 1 blood draw be sufficient? Or would they need multiple draws at short intervals to capture present cells?

So it depends on the condition. What we find is that if the patients got progressing cancer, then we will certainly find those cells. Hopefully, if they're in remission, they may well not have the cell. So it all depends on the condition of the patient. It's not -- it's definitely -- all of our test work is based on a single blood tube -- blood taken at one time point. The only reason you'd have successive time points is to assess how the disease has progressed over time. And that is a very important issue. For example, if you want to assess whether a patient is responding well to a drug, you could look and see what happens to circulating tumor cells present.

If/when FDA approval is given, what is the estimated time scale for ramp-up of production/sales of the Parsortix system?

I'm sorry, I didn't catch that. Could you say again this?

Sure. And if/when FDA approval is given, what is the estimated time scale for ramp-up of production and sales of the Parsortix system?

So the first thing is we're looking to make the submission by the end of next month. The question is when will the FDA clearance come as the first part of the question. That is an unknown because, obviously, it's a first time ever with the FDA, but we're working on the basis that the earliest possible clearance will be 6 months after submission. And it could be later depending on what the questions are. In terms of our own ramp-up, we are significantly ramping up already. So we're setting up 2 clinical laboratories, one in the United States, one in the U.K. We're developing more instruments, and we're getting ready for an increase in sales. Ian, did you want to add to that or not?

Yes, I will. So on the FDA clearance, what we expect is that certain components, the revenues will build quite rapidly in the research use area because we've now got FDA clearance, and we know that the researchers, for example, still use cell search despite its limitations because it's FDA cleared. So that would be a rapid ramp-up in the research use sales. In addition to working with pharma, again, because of FDA clearance, that makes it much easier for us to act as a companion diagnostic for any drugs that they're working on. So we'd expect the companion diagnostics grow partnership at the site to develop fairly rapidly. And indeed, that's part of the arrangements with Abbott in relation to their HER2 PathVysion test. But normally to prove that out, you've still got to do some additional studies, combining the different technologies. So it doesn't lead to immediate revenues. It -- unless there's a milestone type payment with the Abbott for exclusivity, which is something we'd be exploring. So does -- it still takes a little bit of time for those revenues to build because you're going to need to do some additional studies. In terms of the clinical side of things, that's part of the reason that we're developing a clear lab that will allow us to sell to private payers immediately, but that market will be modest because what we've got to do is secure reimbursement. So the U.S. will be our #1 launch market because it's the largest market by value. But -- so that's where we'll be launching both for the metastatic breast cancer clinical applications but also for the ovarian cancer. And that will be going through initially through our service lab so that we can target private payers and also some of the other hospitals and so forth, whilst we go through getting the payer coverage and reimbursement codes. Now that still takes a bit of time. So it's a few years before you get a massive ramp-up. What you want to do is get that reimbursement code, get the payer coverage. Once you've got those in place, the objective then is to get into the guidelines where we are mandated to be used, went mandated to be used, and that is when the -- you get the significant take off on revenues. So it's not an immediate process revenue build up, but there are different components that are earlier, but there's still some others that you have to complete various aspects in order to fully commercialize and exploit the FDA clearance. That's a well-recognized process by U.S. investors and others on the back of the FDA clearance that is how you build the business and the revenues. And there's plenty of examples of that in the U.S. or companies that you can look at that have shown relatively modest or low revenues and then really ramping up to build multibillion-dollar cancer companies.

Just a question for me. We've had a few presentations in the last few months from kind of biotech-type companies, more than maybe medical devices. And a lot of them are looking at NASDAQ listings and U.S. listings and looking at the valuations of companies on NASDAQ. Have you looked -- would that be appropriate for you guys? Would you see that as being -- if you assume you get this approval a way to increase the value of the company?

Yes. Do you want me to answer first, Andrew? So yes, that's about -- sorry, go ahead, Andrew.

I'll quickly go for that one. So absolutely, there's tremendous opportunity for ANGLE to be a NASDAQ-listed company. We've made the initial preparations. We have an ADR setup trading on the OTCQX. We recently changed our year-end to conform with the United States, and we are looking at it. If markets are appropriate, we may well look for NASDAQ listing next year. No decisions being made at this point in time, but we are making the preparation for it because there's big valuation differences in the United States and a lot of capital available, and we want to build a very large business. So we need to go to the U.S. market to support that. And in addition to that, the U.S. investors are acutely favorably focused on the FDA submission. We really understand all of that. So there's a big opportunity, we think, in that space.

And what I'd add to that is because we've got a platform technology, I mean every solid tissue cancer, we've tried it with Parsortix worked, and that's obviously been demonstrated through our partners and customers as well. And therefore, there's an opportunity -- a significant opportunity to deploy Parsortix across all cancers at all different stages. That in order to make the most of that, some of that will require working with other partners because they've got another part of the test that's optimal. Others would be better off for us to develop ourselves, that will require quite a bit of capital in order to maximize that opportunity. So that is where NASDAQ is very well suited to allowing companies to really build a dominant position.

And 2 questions from the same gentleman. When was ANGLE set up, and how many people does ANGLE employee?

So ANGLE was set up in 1994. We specialized in commercializing technology and working with leading major research establishments with devoted intellectual property. We listed the business in 2004. At the time, we had multiple technology companies that we had developed and owned. And the reason we did that was to try and get one standout opportunity, which we got about 6 to 7 years, it was 7 years ago now, which was the Parsortix system, which is a U.S.-based company that we founded. And then we have sold off everything else. For the last 6 years or so, we've been solely focused on the commercialization of the Parsortix system that we've just been describing this evening. And we've got about 100 employees, roughly 2/3 are in the U.K.-based -- sorry, research park in Gilford and roughly 1/3 are in North America with most of them in Toronto, where we acquired a company a couple of years back.

Question here. I was going to read out, can you speak a little about how the Axela/Ziplex assets you purchased for gene sequencing compared to latest industry developments in next-generation sequencing methods? Is there any danger Ziplex could be overtaken by new technologies?

Okay. So HyCEAD Ziplex which we abbreviated to HyCEAD is the technology we're using to analyze the ovarian cancer cells in our ovarian cancer test...

I've just lost Andrew.

Yes, Andrew, we've afraid we lost you mid flow.

Okay. Well, I'll carry on. So HyCEAD Ziplex, as Andrew said, that is the technology that was acquired. It's a multiplex technology. So it's positioned differently versus next-generation sequencing. So next-generation sequencing is, I think, going to build a very, very strong position in the market as we go forward. And that allows you to really look at all sort of gene expression -- we've lost Andrew entirely now, particularly the DNA side of things, which is where a lot of the liquid biopsy companies are using next-generation sequencing. So that is very good for research and exploration. It's a bit more costly for clinical use, which is where we're focused on. And indeed, if you've got a particular gene panel, so our ovarian cancer is targeted at about 70 genes. The HyCEAD Ziplex is of the order of $20 to $40 a test and can easily handle 100 up to 200 genes. So we've got a significant cost advantage for targeted genes, but next-generation sequencing would be stronger if you're looking at all genes. But of course, you don't need to look at all genes for cancer purposes. So I think it's horses for courses. We'll see NGS used on, as I said, discovery type things and in certain applications, but actually you should view the HyCEAD Ziplex as just being a much stronger version of sort of PCR, which is another very established technique that's used for small number of genes. What we can do is handle a large number of genes in a very cost-effective fashion. So we've got the significant benefits and advantages over PCR, but we're not going to be all things to all people. So for discovery, we will still use NGS. And indeed, the way we capture the cells, they're designed to be able to work with all different forms of downstream analysis.

And just -- we are now out of time. So Andrew's departure, I think we are pretty much done. Andrew, just in case you can hear us, can you still hear us?

I think we've lost him entirely.

I think we've lost him entirely. Well, Andrew, thank you very much. Ian, thank you very much indeed. Really interesting presentation. Again, thank you for all of your questions.