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

Thank you very much. Indeed, so fabulous to see you, and hello, everybody. I'm really looking forward to telling you what's happening at ANGLE because there's a lot of exciting stuff going on right at the moment. And I know that we've got some of our existing shareholders, who are well-versed in what ANGLE's doing, on this webinar. But also, we've got some brand new investors, who have not seen the company before. So I'm going to try and give you a relatively concise description of what we do in ANGLE, and why we think that's going to revolutionize the way that cancer is treated and cared for in the future. But to save enough time, so that Ian Griffiths, the Chief Financial Officer, can join me, and we can have a reasonably wide ranging set of questions. So do feel free to put in whatever questions you want for Sarah to explain to us. So what ANGLE's got is a unique technology, which is going to change the way that cancer is treated in the future, and in so doing is going to enable us to build a very substantial business. And as Sarah mentioned, we are focused on something called liquid biopsy. And liquid biopsy relates to improving patient outcomes and reducing health care costs. Well, how does it do that? It changes the way that biopsy is done, so that whereas currently, there's a solid tissue biopsy, where material is cut out, we pioneered a new approach, which involves a blood test and obtaining cancer cells from that blood test for analysis. Now this is a very large business opportunity. It's been independently assessed, the market opportunity in the United States market only, which is the biggest market in the world, but probably about 1/3 of the total, is in excess of USD 100 billion per annum. Now it's nothing like that at the moment. That's what it's expected to emerge to. And we all know that there is a need for this because cancer is different from patient to patient. And each patient, therefore, needs different treatment and different treatment over time. So there's a need for repeat biopsies, and that's what we're addressing. If you can get cancer cells from a blood test, then you can do a lot of different things, as shown on this slide. You can detect the presence of cancer. You can assess which therapy will be most likely to be successful for that patient. You can assess whether the treatment, in fact, is being successful. And you can monitor patients who are in remission in order to get an early warning of potential relapse. And long term, it may be possible to actually produce a screening test to screen for the cancer. So this is an extremely large market. ANGLE is currently active in 3 main areas: the diagnosis of cancer, the selection of treatment and the assessment as to whether the treatment is working. So current standard of care, the approach that would be offered to anybody who had cancer today is a solid tissue biopsy. So I'll take the example of breast cancer, but it equally well applies to all solid tumor cancers. So lung cancer, colorectal cancer, prostate cancer, brain cancer, melanoma and so on and so forth. Our system works for all of them without modification. But if we take the example of breast cancer, the woman will normally present with a lump in the breast, and that will be cut out. Now that is what we mean by a tissue biopsy. It can either be electrosurgical excision of the whole lump, or it can be what's called a fine needle aspiration, where a needle is put into it and tissue is pulled out. And that tissue is taken to laboratory for analysis, to determine, firstly, does the patient have cancer; and secondly, if so, what would be the most appropriate treatment for that patient. Now we're not trying to replace that part of the process because if there's a lump presented, then it's relatively easy to -- and sensible to do a tissue biopsy. And indeed, in most cases, almost all cases, in breast cancer, there would be a surgical removal of such cancer lump anyway, in the form of a lumpectomy or a mastectomy. But what we're involved in is the need for repeat biopsies. So during the course of the patient's cancer, the cancer can change, and therefore, there's a need for an additional repeat biopsy. But, of course, if the woman by this time has had treatment, a lumpectomy or a mastectomy, there is no local tissue that can be accessed. And in fact, you're then -- the doctors then have to fly blind in their treatment without any information on how the cancer is mutating and progressing until such time as the cancer has spread, and there is a secondary cancer location, which might or might not be accessible for biopsy. So what we pioneered is an alternative, very, very simple, low-cost, noninvasive alternative to the tissue biopsy. And it's a simple blood test. Exactly the same blood test that we've all had many times in our lives when we needed to have a blood test or give blood, just in the peripheral blood test in the arm. And from a single tube of blood, it's possible to extract cancer cells if the patient has got cancer. And that's because the cancer spreads via the blood circulation system. So there will be a small number of cancer cells in the blood, maybe between -- maybe -- perhaps 1 cancer cell in 1,000 million blood cells. So it's exceptionally difficult to obtain these cancer cells from the blood. And in fact, although it's been known about for 40 or 50 years that the cancer cells are present, it's only now that technology such as our Parsortix system is coming to the market, which are capable of reliably getting hold of these cells. And the way our system works is it use -- it's a microfluidic system, which uses the combination of the larger size of the cancer cell and its lack of compressibility by comparison to blood cells to separate them from the blood cell components. So what we see here on the left-hand side of the slide is an illustration of the Parsortix cassette, which is the same size of the microscope slide, and the blood flows inside the Parsortix cassette, down the inlet channel here, and to exit the outlet, it has to go either left or right with these arrows, which takes it up in this cross section, which is a patented step structure such -- white and red blood cells and the plasma liquid component can flow throughout to waste, whereas the cancer cells are held gently at the final critical gap shown on the bottom diagram. And that means that you can then reverse flow and take the cancer cells out. So this is all driven by an automated instrument shown here on the left. This is a Parsortix instrument. And as you can see, there's a standard blood draw tube. That's an EDTA blood draw tube that's used in routine practice. So just a single tube of blood attached to our machine, hit go, and machine will advance the blood through the microfluidics, through one of these Parsortix cassettes, which on the right-hand side, you see how it's held in a clamp, so that the microfluidic attachments are held in exactly the right place, blood flows through. Once the machine detects it's finished, it doesn't wash, and then it automates a reverse flow to remove the cells, and then they can be analyzed. So in this very simple process, we've solved a tremendously difficult technical challenge, which is how do you recover cancer cells when they exist in only 1 in 1,000 million blood cells, so that they can be analyzed. So Thomas, if you could just put on the first video. And what we're going to see -- I'm hoping this will come through fast enough to see it. What we're looking at here is a Parsortix cassette, an animation of how it works. And as you zoom in on those channels, what you see is the step structure that I was describing. And you'll see an animation of red and white blood cells streaming up the staircase, they goes through the critical gap at the top and flow away, whereas the cancer cells shown here in green are held gently on the final step. And it's just as simple as that. If you move to the next video, Thomas, I'm going to show you how it looks in reality in a Parsortix cassette, at least, I hope I am. Just sit -- 1 more second, and here we go. So this is a -- please ignore the sound on this. It's 100x magnification looking down a microscope as an actual Parsortix cassette, running actual cancer patient blood. So those lines there are the steps of the -- looking down on top of the staircase, the light colored area is the critical gap, and that's the exit channel. So this is the critical gap at the bottom [indiscernible]. And here, you see a single cancer cell, held amongst thousands of millions of blood cells, which continue to flow around it because it indeed flow, doesn't caught up in any way. And then we're left with the larger cancer cells on the final step. And as I mentioned, then what happens is the instruments will reverse flow, so that you can remove the cells. Can I have the slide share back up again, please? So we now go on to the next slide. So this is a system that's been well characterized now. There are over 200 Parsortix systems in active use, including those in ANGLE's own facility. And there has now been over 35 peer-reviewed publications. So these are -- I think it's over 23 independent cancer research centers have used our system as customers or key opinion leaders, and they have published in very reputable journals, including the one picture there, that's a picture of a Parsortix cassette with -- and the cells have been colored in by an artist. But that shows a comp of cancer cells, and there's the curves of the Parsortix cassette. So it's on the front page of Cell, one of the world's leading scientific journals. And here we see on the left-hand side, the number of Parsortix samples being processed. And it is now well beyond 100,000 different samples that have been processed in characterization and use of this instrument. So as Sarah mentioned in her introduction, we're closing in on an FDA submission. Unfortunately, Sarah, it's not going to happen, we get a clearance next month, but we are hoping by the end of the month, we will be able to make our formal submission to FDA in support of a U.S. regulatory clearance. So what is the significance of that? Well, in order to use any medical system for treating patients, it has to basically be approved by the relevant regulatory authority in the relevant country. And the United States system is called FDA, Food and Drug Administration. They are deemed the global standard. So all other countries tend to look at FDA and customers would look at FDA. We're seeking to be the first ever FDA-cleared system for harvesting cancer cells from cancer patient blood for subsequent analysis, and that will absolutely drive the adoption of liquid biopsy for treating patients. We're doing that first in the area of metastatic breast cancer. The FDA advised us to focus in on one particular cancer type, and that's the one they recommended. But our objective is to get such a cancer clearance for multiple different cancer types, and that's what we're pursuing. We've completed a large-scale clinical study run by University of Texas, MD Anderson Cancer Center, supported by the other 3 centers there. So these are the top cancer centers in the United States. And that's already been completed, we're finishing off the analytical studies. Now just to give a range of how complex study is, we've had to run over 10,000 samples in pursuit of our FDA clearance. This is no mean effort, and it is something that we've been working on for 4 years now. So it's a very, very major endeavor by ANGLE and a key part of our strategy because we know that an FDA clearance will differentiate us from the entire competition, not just in circulating tumor cells, but from everybody in liquid biopsy space can -- in its entirety. We most recently met with the FDA in a Q-Submission meeting in January following a formal submission in October. And that showed us that we were on track. We're now finishing off the final analytical studies in order to make a submission, hopefully, by the end of next month, with a view to clearance, obviously, as soon as possible thereafter. But probably the earliest point is about 6 months thereafter. We're also progressing in ovarian cancer test, which has been shown in -- its initial 200-patient study to far outperform anything else on the market for the detection of ovarian cancer. And in particular, it's very specific, which means it has a low number of false positives and area under the curve accuracy of over 95%. We're in the process of running a clinical verification study in order to be able to offer that in our own laboratory. And that patient enrollment in that study, which is run by the University of Rochester, Wilmot Center, is due to complete by the end of the calendar year. So I'm just going to wrap up in 2 more slides, and then we're going to go through -- or maybe 2 more slides, and then we're going to go to questions, as I said. So the commercial pathway opens up superbly after post-FDA clearance. The research use sales that we're already making are expected to expand greatly. And we're developing a sample-to answer solution to make it very easy to use the cancer cells that come out. We're building a pharma services business to assist in cancer drug trials. That's a very large-scale market opportunity for us in its own right. And we have this product-led strategy, which will enable us once we've got an FDA clearance to start selling the Parsortix products direct into hospitals in the United States. We're setting up a clinical laboratory, actually 2, 1 in the United States and 1 in the United Kingdom as an accelerator and demonstrator to allow us to offer tests as soon as possible. So this is my final slide. So Ian will join me in a second. And we're addressing a very large market. We have an opportunity to build a dominant position in that market. We have the prospect of the first-ever FDA clearance. We have the prospect of ovarian cancer detection test far better than anything else that is presently available. And the final point is that we are working with a number of large companies to commercialize this on a wide-scale basis. So not only are we seeking to offer breast and ovarian test ourselves, but we want to partner with these big companies, so they can deploy our method of getting hold of cancer cells alongside of their existing solid tissue biopsy analysis techniques. So Ian, if you'd like to join us. And Sarah, if you'd like to pick up questions.

Thank you very much indeed. And there you go. There's confidence for me. I was 6 or 7 months premature, talking about you getting your clearance by the end of September. But there you go. It is just a matter of time now. So I've been thinking about this date. You've been widening your shareholder base. You've got more U.S. shareholders. You're talking about that clinical lab in the U.S. submission with a view to clearance. Once that Porsortix process is cleared, wouldn't it make sense to have a NASDAQ listing?

Maybe I could ask Ian to make some comments on that one, Sarah.

Yes. It's a fairly well-trodden path. It's what I'd say in the first instance, obviously, aim has suited us very well. But we recognize that we have a platform technology. As Andrew has mentioned, every single solid tumor cancer that we tried it on, Parsortix has worked. Now we've only got the resources at the moment to focus on the metastatic breast cancer and ovarian. And if we want to take advantage and do essentially a bit of a land grab on all of the different cancers, and we can use Parsortix in all of the different areas from detection and improve therapeutic treatment, then we need to deploy a large amount of capital to run the necessary studies to get the evidence and the data to prove the clinical utility of that. Now we won't want to do all of the specific cancer applications because in some cases, it's going to absolutely make sense to partner with some of these such as Abbott with HER-2 PathVysion test, as they have already been an FDA-cleared product, so we will use a combination. And if we want to prove it out off a test, such as ovarian cancer, we'll need to run studies. They're expensive. They cost a lot of money. And the U.S. markets are more favorable in supporting companies in terms both the quantum of the capital and how that's deployed and very much approach of doing a land grab. So if the circumstances are right, then yes, a NASDAQ listing would be very good. And I think that would allow us to access to capital, but also we see the values being reflected more fairly on the companies. In the U.K., there's a bit of a challenge. There's a limited number is in the peer group. But in U.S., it's much more significant. And we are seeing large amounts of capital deployed. So now that would make sense, but we've got to make sure it's at the appropriate stage with the company. What we're doing in the meantime is making sure that we've got a number of new U.S. investors who came on board, and we're also doing a lot of non-deal roadshows whether the U.S. investors to build to that down the line.

Okay. So [ Malcolm Sargent ] asking the question that you both touched upon. Could Parsortix be used for mass population cancer screening?

I'll take that. So the idea of screening otherwise healthy individuals is technically possible, but we would consider it as a later area for us to focus on. And the reason for that is that there is a significant set of problems with bringing in screening for people with no underlying conditions. And those relate to the need for very, very long extensive trials, which are highly, highly expensive. So for example, there is one company seeking to do this, which has raised $2 billion to try and develop a test. And we anticipate it would take them a minimum of 10 years to get a product. So that's one issue. The other issue is the need to prove that whatever the test resulted is actually correct, and what you don't want is over diagnosis of essentially indolent cancers. Now where we think there's a much better area for us to target, and where we are active is in where there is a known high-risk situation. So now in ovarian cancer, there is the woman who will get our test have already got a diagnosed pelvic mass, which is a large number of women between 5% and 10% of all women will have a pelvic mass. Most of them have a benign condition, which is like it might require hysterectomy or something like that. But 10% or so might have ovarian cancer, and there's a need to know which one. So the woman who've got diagnosed pelvic mass, that's what we're testing for with the blood test, so that they get the right treatment. And analogy for men is prostate cancer. So a lot of men have benign prospect conditions, and it don't really relish the idea of the invasive tissue biopsy. So they may be on a watchful waiting scenario. So those -- that kind of category would be a very, very good area to focus on. And we've had some initial work by Bart Cancer Institute on pre biopsy, we're using Parsortix, which was very successful.

So [ Michael Farrell ] is asking this, would Parsortix work in testing people pre lump to catch any forms of cancer even earlier?

Well, that's really the same answer that I've given to the earlier question. And just to add a little bit more color. There's been several high-profile peer-reviewed publications that show that cancer is actually shed circulating tumor cells into the blood stream ahead of the patient having symptoms and ahead of the cancer being possible to be imaged. So you can't actually see anything, and you have no symptoms, and there will be circulating tumor cells. So yes, it is definitely theoretically possible. What we would prefer to do is to do it in high risk and then have government or charities or some other bodies pay for studies. So for example, in ovarian cancer, the U.K. Government funded a very cancer screening trial for 15 years with 200,000 women in it, and it concluded at the end of 15 years that they need another 2 years to see if they'd improve the mortality rate. So essentially, we estimated if we've just been using that trial at a cut price for our system, we would have made GBP 300 million in revenue. So it's a far better model for us to get somebody else to pay for those 15-, 20-year trials than do ourselves.

So could the cancer cells be used by the likes of BioNTech and GeneTech to build personalized cancer vaccines?

Well, I can answer that in a slightly different way, which is that once you have the cancer cell, you can do with it, the same things that you would do with a cancer cell obtain from a tissue biopsy. So it's a very wide range of things you can do with it. One of the areas in pharmaceutical development that we are very keenly interested in is in immunotherapy. So there's been 3 different independent cancer centers now, who have shown that they can use Parsortix to investigate PD-L1, which is a key target for immunotherapy drugs on the cancer cells. And very recently, University of Creek published that they could assess, which patients were likely to respond to lead immunotherapy drugs, using a blood test with Parsortix. Now that opens a tremendous opportunity for us because the immunotherapy drugs cost around GBP 200,000 per patient, but only work for 1 in 5 patients. And you cannot determine via tissue biopsy reliably, which patients, nor can you do it by circulating tumor DNA. So, so far as we can see, the only way at the moment with potential of doing that is by the circulating tumor cells, which is why we put effort into developing an assay in that space.

Ian, did you want to pick up on something before I...

Now all I'd like to do is add to Andrew's point and the screening is that because of the number of patients you need because there's very few with cancer given the demographic, but also the time it takes and the cost, then we don't think the city and other investors would have the patience for us 5, 10 years to get the readouts for that. So we're focused on areas that there's a shorter-term readout, and we get a much more decision or a clinical utility decision based on the analysis we do. So further down the line, it might be possible if there's access to capital, but a lot of these studies are quite long term.

Early on in the presentation, you stated that you're 3 years ahead of the competition, so who is the competition? And [ Tim Graton ] says there was a company called Vortex, are they still in the race?

Not that I'm aware of. The net scientific divested them for I was going to say top and say, but not very much money, and they were underfunded. I think they may now be coming back into that fold. But to be frank, Tim, Vortex is -- I mean, I haven't seen anything from Vortex for probably 3 or 4 years, so I don't really know what they've been doing in the interim period. But they're definitely not the competition that we're worried about. We're much more concerned about the larger companies in circulating tumor DNA. the Garden House, the foundation medicines and so forth because not that we would be supplanted by them, but that's the way the market is going. So the question for us is to persuade the market that you can actually get real living cancer cells, not just fragmented dead cells. So once you've got that, you can actually, not just do DNA, but you can do RNA and protein expression. And so those big companies that are specializing in that area, we're seeking to cooperate with them actually to expand their offering rather than compete with them. In terms of other CTC companies, there are very few. There's a couple -- there's one called Epic Sciences, which is a U.S.-based company, it's doing pretty well. But it's a lab-based thing. It doesn't have a product, and it doesn't have a way of enriching the CTC, it can put all the cells on to a microscope side and looks at everything. So if you imagine looking for 5 cancer cells amongst 5 billion of cells, it's very much more tricky.

Now Ian, you must -- carry on.

Yes. I was just going to add to that. Another sort of metric you could use is that, as I said, we focused on initial sales to the leading cancer research institution publications. There is one other FDA-cleared product called CELLSEARCH with Menarini. It's an enumeration, accounting of cells where it's cleared in metastatic breast, prostate and colorectal cancer. That has the leading number of publications by some way. People are still using it mainly because it's FDA cleared, and that's why we think the FDA clearance will turbocharge our researcher sales because although it's acknowledged there's a lot of problems with CELLSEARCH because of the way it captures the cells, which is antibody-based, it only gets a specific subset. So we believe we'll get our cells to overcharge and the researchers. Now in terms of publications over the last sort of 3.5 years, ANGLE is the second most published CTC separation system now. So we've definitely moved ahead of a lot of the other companies. We're in a good position. We're working with leading cancer centers. We're building that evidence. We're building that data, and it puts us in a good position to deliver an FDA-cleared product.

Okay. Turbocharged. You're normally such a cautious man, Ian. So that's a very telling comment indeed. Another question from Tim, what are your latest thoughts on pricing for the consumables if and when you get that FDA approval?

Well, it's different markets. So the research use market at the moment, which is both related to the leading translational researchers, but also to the pharma services. At the moment, we've got an established price because we're selling in at least for the cassette, so at either EUR 100 or $100 and that gives us about an 86% gross margin. As the volumes go up, actually, our cost of goods is dropping, will hopefully be below EUR 10 soon. On the pharma, it depends what we're developing, and how we're developing it. So there'll be different pricing around that, not just the consumables, but the work and everything that's required. So that will be done on a bespoke basis, but we'd expect much higher value for that because quite often the pharma would pay up to $1,000 for patient samples, and there's a lot of additional cost then to secure the tissue biopsy or as they currently use, whereas liquid box is much easier and cheaper, but it's the value-based element. And then as we move into the clinical setting that means either a laboratory to test or selling the product. What we've seen, and this is for selling a complete solution, so typically by that what I mean is sample to answer. So we get the sample, we then do the analysis, you get the results, you interpret them and say, right, this is the answer. This is what you need to do. So what we typically see in the U.S. is that, that type of sample plan, which is priced at $3,000 to $5,000, obviously, there's different components to just the consumable, but you need that in order to start that process off. So we would hope that down the line, as we get further clearance of the ovarian cancer test would be in that $2,000 to $3,000 and similarly for some others. That -- what you're going to do, remember with that is although that may sound a lot versus our cost of goods, we're actually saving the health care system a huge amount because you imagine the cost of a tissue biopsy, where you've got to have the hospital, the hospital bed, nurses, the surgeon who need the test, hospital stay. It's very expensive to complete the procedure. And obviously, there can potentially higher risk of complications versus a simple blood draw. So we're a better outcome. We're a cheaper outcome for the health care. And in fact, one of the key advantages for us over existing standard is that it's repeatable. And that's one of the problems is the cancer mutates, it changes its status in response to drug treatment, and how the body responds. And frankly, tissue biopsies, you're making decisions based on out-of-date information. So you really need liquid biopsies, so you've got current information, and you need it because it's in a fashion that's very easy for patients to provide blood. I mean, quite often, a part of the reason for the metastatic breast cancer setting is in the U.S., for example, it's mandated in the NCCN guidelines that you should have a secondary biopsy in metastatic breast cancer, the sites are typically the brain, the lung, the liver or the bones. Now obviously, brain is very hard to biopsy. And the other areas also have significant complications. And indeed, quite often, they can't get sufficient sample in 50% of the cases. That means the oncologists are flying blind in their treatment. That's not good for the patients. So liquid biopsy is happening, and it's delivering better outcomes for patients.

Okay, gentlemen, we are unfortunately overrunning now. So one final question. You talk about the current situation. Are you well funded? And what is the IP position, how long do the patents last for?

So I'll do the IP, and then Ian, you can finish with the cash. So we're well protected on intellectual property. We have granted patents in the United States, China and Europe. And they last out until 2034. So we're in a good position. It's worth bearing in mind that it's -- when the patents expire, doesn't mean that somebody can just suddenly jump into our market because they would have to develop a product, they would have to go through all of the validation phases that we've been through over the last 5 years and then they would have to go out and get regulatory clearance because there's no way that a hospital is going to switch from an FDA-tier product to a non-FDA China import, if you like. So you've got 2034 plus many years to actually catch us up. Ian?

Yes. In terms of the cash position, so our last reported earnings on the financials at 31st of December was just under GBP 90 million. We've got GBP 1.8 million tax credit after that and another GBP 1.6 million just gone in. So that's sort of just over GBP 22 million before any additional income from sales, which we're building both with research uses. It's paused a bit with the COVID-19 because a lot of the research sites have been closed down, but we believe that's deferred rather than lost, and we're also developing a service lab that will build further revenues. The cash burn on a normalized basis has been about GBP 1 million. So that takes you out to sort of Q4 '21. Obviously, there are some areas where it gets higher, where we've had on some of the FDA costs, but equally, they dropped down. And then we're building up some costs around, as I said, the service lab in other areas. But on a normalized basis, it's around that GBP 1 million, and we've got quite a lot of the discretionary spend. So we have been able to either defer or pause some aspects of the spend, whilst we've been working with the COVID-19. So we're in good shape on cash, no immediate need for any funding.

Okay. Unfortunately, we have run out of time. There's been many more questions that have been put in for you. What we're going to do is, I'll send you those questions and if we can do a follow-up video. You've had a big day. I know it was a virtual AGM for the peer review. And you met in the office for the first time physically. I hope that was a lovely tactile experience for the peer review.

It wasn't quite the first time. We've been in and out of it. But we did socially distance. Thank you very much.

Thank you very much, gentlemen. Thank you.