Day: December 7, 2023

On January 26, 2023, I shared an article titled – Akoya Biosciences: One thing Particular for Investing in a Spatial Bioscience Firm. Wanting again now, I admit my timing for this text was not excellent timing on my half. General, small biotechs with little or no income have, in lots of instances, seen important declines of their inventory costs YTD. Akoya Biosciences (NASDAQ:AKYA) was undoubtedly on this declining group. Based mostly on my article’s publishing date, the inventory was buying and selling for $10.88 and subsequently traded right down to $3.04 a share. Since this yearly low, the inventory has traded again to $4.72 for a pleasant 55% bounce off the current low, however it’s nonetheless a couple of 50% decline from my preliminary article. Nevertheless, I not too long ago started so as to add to my holdings within the inventory on the value of $4.44. The explanation for this new article is solely that my preliminary opinion about the shares has solely modified for the betterment of my view, because the interim outcomes have given me extra confidence in the way forward for Akoya.

One fixed mantra that I’ve about investing in small biotechs or medical tools corporations has been that Buyers shouldn’t put money into a inventory solely based mostly on it being a buyout candidate within the close to time period. With out the corporate having an underlying sound enterprise mannequin, operations funding, and stellar administration that may execute its long-term targets, many corporations in search of to take a position their cash would keep away from such an organization missing these attributes. Nevertheless, contemplating an organization’s doubtless potential for being taken over needs to be part of your due diligence throughout your analysis of a inventory.

As I shared in my January 26, 2023, article, the next is the unique foundational creation for investing in Akoya:

Historians credit score Zacharias Janssen, a Dutch eyeglass maker, for locating the microscope. The yr was 1590 when the discoverer was a mere teenager, so some historians suppose it was his father, Hans Janssen, a spectacle maker, who in all probability contributed to younger Jannsen’s discovery. This discovery opened the primary use of such an instrument, and it has been a major contributor to medical science. The flexibility to look and see what is occurring inside a human physique, the place there have been enhancements of Janssen’s discovery of Jannsen’s discovery, has seen many devices and programs being developed by scientists.”

At this time, when a gaggle is on the lookout for methods to resolve points, they usually say – “Let’s put it underneath the microsphere.” By advantage of this adage, with this new article, I wish to replace my earlier article associated to Akoya. Within the interim months of 2023, a lot has occurred with Akoya. The numerous components are transferring them ahead to having a stream of revenues approaching $100,000,000.00 and finally changing into a worthwhile firm.

Spatial: Referring to or occupying area. In different phrases, spatial describes how objects match collectively in area. And the phrase area isn’t restricted to outer area. Within the case of Akoya, it permits scientists to see how human cells perform contained in the area of the human physique. For these wanting to grasp higher what this implies to the bioscience work that’s being finished, I might suggest that you just receive a duplicate of Akoya’s white paper – How Spatial Phenotyping Can Uncover Novel Insights in Tissue Biology. This paper is designed for bioscience corporations desirous to know extra about what they may convey to their laboratories and scientists.

On a private observe, my spouse is presently being handled for breast most cancers. The excellent news is that my spouse has a yearly mammogram finished, so her most cancers was discovered early, and it hasn’t migrated to her lymph nodes. The opposite good state of affairs is that she is being handled by docs related to MD Anderson Hospital, which is rated the #1 remedy heart for most cancers sufferers. The quotation of her case right here pertains to the necessity for a system or programs that supply a seamless workflow with the diagnostic testing utilized to every affected person. The next is a listing of diagnostic assessments finished on my spouse. Only for the file, Akoya has a working partnership with MD Anderson and the diagnostic instruments they use for his or her sufferers:

• Echocardiogram
• EKG
• Sonogram
• Mammogram
• PT-Scan
• Biopsy (3)
• MRI
• Full Panel Blood Evaluation
• Geriatric Testing

Trendy-Day Background Historical past of Akoya

Akoya could be traced again to 2015 when it got here from a robust pedigree lineage. The corporate was based to commercialize the CODEX System to allow ultra-high multiplexing for biomarker discovery.

The Phenoptics™ expertise was initially conceived and developed by Cambridge Analysis & Instrumentation, acquired by Caliper in 2010, and subsequently acquired by PerkinElmer in 2011. The Phenoptics™ expertise rapidly turned the trade normal for multiplexed tissue evaluation for translational and medical analysis.

The partnership between PerkinElmer and Telegraph Hill Companions, introduced in November 2018, created the present Akoya Biosciences by the sale of Phenoptics™ by PerkinElmer and its incorporation into Akoya. This mixture of complementary CODEX and Phenoptics™ applied sciences is fueling groundbreaking development in most cancers immunology, immunotherapy, and a variety of pathology analysis.

Income Progress Developments for Akoya

The next information displays the YOY development in Akoya’s income stream. As they develop and add new capabilities to their product choices, bioscience labs can improve their methodology of designing and creating new therapies, primarily for cancers. Nevertheless, one can see that incremental development has been achieved over the past 4 years.

• 2019 – $42,236.000 -Complete Income
• 2020 – $42,443.000 – Complete Income (Impacted by Covid)
• 2021 – $54,917,000 – Complete Income with 29% YoY development
• 2022 – $74,859,000 – Complete Income with 36% YOY development

Quarterly Income Progress 2023

1stQ – $21.4M Income

• $60.2M Money
• 57.4% Gross Margin

2ndQ – $23.521M Income

• $93.3M Money
• 51.5% Gross Margin

3rdQ – $25.215M Income

• $78.6M Money
• 60.6% Gross Margin

2023 Income Projection As much as $98 Million, a YOY Progress of 30%.

Interim Occasions Since My Preliminary SA Article

• As of the third Q, 2023, Akoya has an put in base of 1,132 devices. That is the most important placement of these competing within the spatial biology market.
• Since their preliminary IPO in 2021, they’ve proven constant development in placement and associated income development. However needless to say because the IPO, the share costs have declined precipitously.
• Having their merchandise evaluated and shared in peer-reviewed publications is now greater than 1,070 such evaluations. These evaluations originate from scientific researchers from all over the world.
• Gross earnings from their product income have grown dramatically to 60.6%. This development is offering them with a runaway to turn out to be money circulation optimistic quickly.
• Because the instrument placements develop, it will improve the reagent and repair income stream.
• The money place as of the third Quarter of 2023 stands at $78.60 million in money and money equivalents. Plus, they’ve an $11.Three million drawdown steadiness from an present debt facility, giving them obtainable capital of $89.Eight million.
• Akoya has reiterated their income vary, being as much as $98 million, which remains to be anticipated for 2023. This may replicate a 31% development in YoY income.
• Complete belongings presently stand at $177.2 million, and complete liabilities are solely $115.Three million, giving stockholder’s fairness of $61.9 million.
• October Peer-Reviewed Publication Utilizing Akoya’s medical units for Head and Neck Most cancers finished by researchers on the College of Queensland Frazer Institute

Akoya May Be a Buyout Candidate

I believe many buyers within the inventory market can agree that Akoya is working in a dynamic market space the place there needs to be development in streamlining the workload for analysis and precise fast wants in healthcare amenities the place sufferers are being handled and the place definitive solutions are wanted for remedy choices.

Traditionally, small drug builders and medical machine corporations have been the goal for being purchased out and sometimes at premium costs from the place they have been presently buying and selling. Such exercise has turn out to be extra pronounced as a result of important drug corporations seeing their blockbuster medication and income technology going through patent expirations. The quickest and easiest way for replenishing their pipeline or precise medication already within the market is thru shopping for smaller corporations with a excessive potential to be a income supply.

As I started penning this SA article, AbbVie (ABBV) agreed to purchase ImmunoGen (IMGN) for $10.1 billion, which is the place they’d get their promising oncology medication. This buyout provide gave the present shareholders an instantaneous 82% premium for his or her shares. As I completed this present article at this time (12/4/2023), Roche (OTCQX:RHHBY) introduced they have been paying Carmot $2.7 billion {dollars} for the rights to their weight problems drug candidates which might be in medical trials. Two earlier medical corporations for which I’ve written SA articles about their potential have been purchased out this yr: Abcam (ABCM) and IVERIC bio, Inc. (ISEE). On December third, 2023, an SA article confirmed a major upward motion for biotech shares and the explanations these optimistic outcomes would possibly proceed to occur to medical-related shares.

As acknowledged in Akoya’s 2022 Annual Report, they’re competing in a $14 billion market the place they’ve taken a management place. The next is taken straight from their SEC filed newest annual report:

Massive, addressable, and quickly evolving market. The spatial biology market sits inside a bigger life sciences expertise market. Inside this market, spatial biology is presently estimated to be roughly $14 billion. The marketplace for spatial biology encompasses the total analysis and drug growth continuum, starting from discovery by translational and medical analysis and, finally, the medical markets. Every of those particular market segments have distinctive utility and workflow wants and require match for objective product choices. At this time, our merchandise and options are primarily bought into the most cancers discovery and translational markets, representing a $7 billion addressable market. We imagine that our choices could be readily prolonged to serve adjoining utility areas, together with immunology and neurobiology, and within the close to future functions in medical markets, which can embody acquiring FDA approval for our merchandise. We presently estimate that throughout the spatial biology market, half of the chance is within the discovery and translational analysis markets and the opposite half is within the medical market. With the rising adoption and innovation of spatial biology options and as spatial phenotyping is additional validated by fast acceleration of peer-reviewed publications, we imagine the worldwide TAM will proceed to develop over the close to and long-term horizon. Given the crucial want for spatial biology, we imagine our merchandise are uniquely suited to deal with the precise wants of researchers throughout this continuum from discovery by translational and medical markets.

The Akoya and Agilent Partnership May Be the Begin of a Marriage

At first of 2023, on January 6, 2023, in a joint press announcement, Akoya and Agilent (A) revealed they’d shaped a partnership the place Agilent would offer certainly one of their merchandise that may be mixed and marketed with Akoya’s system. The product from Agilent is their Dako Omnis instrument and Akoya’s Phenolmager®HT. This mixed product would offer a product creating singular assays in an end-to-end workflow, together with reagents, staining, imaging, and evaluation.

Below a separate Worth-Added Reseller settlement, Akoya would distribute and resell the Dako Omnis product as part of their end-to-end multiplex resolution. The Agilent worldwide buyer base can be made obtainable to help their efforts.

Agilent is the proper accomplice for Akoya as they have already got a number of merchandise utilized in bioscience laboratories the place medical analysis is being finished worldwide.

• Agilent Market Cap: $37.623B (As of 12/1/2023.) This displays a YTD decline from about $55B
• Agilent 52-Week Value Vary-$160.00-$97.00
• Value Earnings Ratio-30.74

There isn’t a doubt that Agilent has been a profitable participant within the medical instrument markets, as proven by its share value and market capitalization. However to return to the earlier lofty market capitalization, they need to develop revenues and earnings. The quickest approach to do that is thru new merchandise that may instantly be income and revenue/accretive. Within the case of Akoya, their merchandise will likely be synergistic, the place mixing into Agilent’s operations may very well be accretive because of price financial savings for Akoya’s income stream. However buyers ought to be mindful even with the stellar quarterly growth of their income stream, it needs to be a minimal of two calendar years earlier than the size of income to bills will tip to there being a revenue.

Caveats

• Akoya has a market cap of solely $231.64 million, inserting them within the Micro-Cap classification, thus being within the class many institutional buyers will keep away from.
• The 52-week low has been $3.04, and the shut on 12/1/2023, the worth was $4.72. This closing value displays a superb rebound of 55%. Nevertheless, it needs to be famous that intraday, the share value has extensive swings, with promoting coming in close to the each day shut.
• Present each day quantity doesn’t present a protected entry or exit alternative with their inventory shares. Consumers of their inventory ought to have a agency bid value for his or her purchase orders.
• Just lately, the marketplace for medical merchandise (medication and units) has been buoyant within the upward motion of their share pricing. After such runs, the extraordinary course is for profit-taking to be finished. That is usually extra pronounced for end-of-year buying and selling for rebalancing one’s portfolio.

Conclusion

• Akoya is an organization taking part in what’s projected to be a $14 billion greenback market.
• Over the past two full calendar years, together with what’s being projected for 2023, Akoya has grown annual revenues at a 30% price.
• Akoya has not too long ago shaped a partnership with a multi-billion-dollar firm, Agilent, a major participant within the medical machine market. Such a partnership may very well be the prelude to a merger.
• Gross earnings on Akoya’s income stream have reached the 60% degree.
• Akoya is approaching the $5.00 per share value, whereby reaching this value degree might convey these patrons who keep away from sub-five-dollar shares into the marketplace for Akoya shares.
• Upon exceeding the $5.00 value degree, we might see the following cap on patrons on the $8.00 degree.

Good luck together with your future investments!

Editor’s Notice: This text was submitted as a part of In search of Alpha’s High 2024 Lengthy/Brief Decide funding competitors, which runs by December 31. With money prizes, this competitors — open to all contributors — is one you do not wish to miss. If you’re thinking about changing into a contributor and participating within the competitors, click on right here to seek out out extra and submit your article at this time!