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Instem firing on all cylinders

Snapshot

  • Develops and sells software that aids data collection and the regulatory submission process for drug-makers
  • Recent update showed data collection, informatics and regulatory solutions businesses performed well 
  • Has a strong order book, which sets it up for growth
Instem PLC -

Quick facts: Instem PLC

Price: 515.5001 GBX

AIM:INS
Market: AIM
Market Cap: £85.95 m
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Our stated strategy of moving clients from perpetual licences to SaaS has been more successful than we anticipated and consequently some short-term licence revenue is being replaced

CEO Phil Reason

 

What the company does

Instem PLC (LON:INS) develops and sells software that aids data collection and the regulatory submission process for drugmakers.

In short, its tech helps its customers to bring their products to market faster.

The AIM firm owns more than a dozen software applications, including its flagship SEND technology. SEND stands for Standard for the Exchange of Nonclinical Data and is a protocol set up by the US Food and Drug Administration. It ensures that companies present data in a consistent format.

Among Instem’s other top products is Samarind – a software-as-a-service (SaaS) platform that enables companies to register and track their regulated products worldwide by maintaining a single integrated database, which is then used to update drugs watchdogs as products change over time.

Leadscope, which has developed a suite of products that use sophisticated artificial intelligence and machine-learning algorithms to predict potentially harmful drug side effects, was acquired in November.

 

How is it doing?

The company said in January that 2019 revenues were around 12% higher than the year before, with underlying earnings (EBITDA) in line with management's expectations.

Recurring revenues increased as the company continues to make the transition towards a software-as-a-service (SaaS) business model.

All three parts of the business – data collection, informatics and regulatory solutions – all performed well, investors were told.

Progress at the Informatics division has been driven in part by the increasing use of artificial intelligence (AI) across the pharmaceutical sector.

By processing and storing data it has garnered, the company has been able to develop gene- or drug-specific target safety assessments (TSAs), which are used to assess unintended adverse consequences of potential treatments before investment is made and long before they are administered to people. 

With TSAs enjoying growing demand, the acquisition of Leadscope was made to complement this business by extending the group's reach, providing cross-selling opportunities and improving earnings visibility.

 

What the chief executive says - CEO Phil Reason

“The company continues to benefit from a buoyant market and remains well placed across all parts of the life sciences industry, from discovery to post-marketing,” Reason said in January.

“We have developed a strategy that sees the business benefiting from increasing levels of recurring revenues and a broad portfolio of products, enabling increased cross-selling opportunities. Added to this, the move to SaaS provides for improved margins and quality of earnings,” he added.

 

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