Microsaic Systems plc (AIM: MSYS), the developer of point of need mass spectrometry (“MS”) instruments, provides an operational update on the effect of COVID-19 on the business since the announcement of the 2019 full year results on 9 March 2020.
In common with many businesses across the world, Microsaic is currently facing unprecedented challenges arising from COVID-19. In the third week of March, staff were asked to work from home, in line with UK Government guidelines. To maximise cash conservation, action was taken to significantly reduce expenditure at every level of the business, including cutting non-payroll expenditure to essential items only. On 1 April, the Company implemented a temporary 20% reduction in pay for all employees and directors until the business is no longer being negatively impacted by the COVID-19 crisis and the resulting lockdown restrictions. In addition, a small number of employees were furloughed under the UK government job retention scheme.
The Company’s distribution and OEM channels have been unable to operate normally due to the international lockdown restrictions currently in place in many countries. However, where customer or partner sites are operational, the Company is successfully trialling remote installation and training of its systems, capitalising on its easy-to-use software and rapid maintenance procedures that these systems provide.
Despite the challenges imposed by travel restrictions, we continue to make progress with existing and prospective partners through remote communication channels.
In particular, further progress has been made in implementing our strategy of creating a range of complete product systems combining Liquid Chromatography (“LC”) with Microsaic’s MS (“LCMS system”), a market worth an estimated $5 billion in 2018*:
1. Earlier this year, Microsaic announced its partnership with Axcend Corp to integrate the compact Microsaic 4500 MiD® MS with the portable Axcend Focus LC®. The system will be commercialised globally using both companies’ direct sales and selected distribution channels as a small footprint, easy-to-use and cost-competitive nano LCMS system. Progress is also being made with joint marketing initiatives to generate end-user interest in the combined system, which offers significant savings in annual running costs when compared with traditional LCMS systems.
2. Microsaic has recently completed the integration of its MS with an established LC which will enable the launch of its own branded LCMS system for sale both through its direct sales personnel in the UK and selected European markets, and through its growing network of international distribution partners. This offering does not compete with the Axcend Focus LC®.
The Company is also continuing to make progress with ProteinID, its product for on-line bioprocessing monitoring, which has relevance to the manufacture of a range of biologics including, potentially, vaccines and monoclonal therapies. ProteinID is ideally placed to detect the individual components of biologics and their metabolites, and the ability to perform this analysis in real time would enable accelerated development and manufacture of new drugs with high quality control to combat existing and emerging diseases. The collaborations with the Massachusetts Institute of Technology (“MIT”) and the Centre for Process Innovation (“CPI”) continue, though there will be some inevitable delay. However, Microsaic continues to support its collaborators remotely and is available to work with new partners and customers, using previously validated technology, to demonstrate the efficiencies and quality advantages of in-line, real-time analysis in bioprocessing.
In the current conditions, it is difficult to have forward visibility on the potential demand for Microsaic’s products for the current financial year. However, the Board believes that the actions taken to manage costs and cash in the context of lower than anticipated revenues have effectively offset the effects of the COVID-19 pandemic on the cash runway in 2020. The Board continues to believe that the significant opportunities available to the Company offer the potential for strong growth in the future and is continuing to review all financing options available to the Company to ensure it is sufficiently capitalised.
The Board is closely monitoring the evolving situation and its impact on the business and will make further announcements as appropriate.
Glenn Tracey, CEO of Microsaic Systems plc, commented:
“Given the global nature of the COVID-19 crisis and the unprecedented circumstances arising from it, we have had to make some difficult decisions to safeguard Microsaic’s business for the longer-term. The Board understands that the measures taken have required a sacrifice from our employees and from many of our suppliers, and we greatly appreciate the understanding shown by all our stakeholders at this very challenging time.
“Against this difficult backdrop, it has been especially encouraging that we continue to make progress with existing and potential new partners on developing our sales channels, and on extending our product offering with LCMS systems for both our direct sales and selected distribution channels. Further, we are continuing to make progress with our collaborations and developments in bioprocessing, which remains a very exciting growth opportunity for the Company.“