Just three years ago, Clever Culture Systems (CC5: $0.027) was struggling to gain traction with its APAS Independence instrument. It was trying to sell its instrument into pathology clinics across the US and Europe through its distributor Thermo Fisher but with little success.
To change system practices at busy pathology clinics proved to be a challenge. But then in early 2023 a new application for the technology surfaced in pharmaceutical manufacturing. CCS partnered with AstraZeneca to develop the instrument for that use, which today has seen seven pharmaceutical companies across the world adopt the system.
In FY2025, the company generated product revenue of $5.5 million (up 350%) with a maiden profit recorded of $1.7 million. CCS now has a pipeline of leads which could generate $75 million in upfront sales, and represent recurring revenue of up to $15 million according to management.
Its current pharmaceutical customers include five of the top 20 – AstraZeneca, Bristol Myers Squibb, Prizer, Boehringer Ingelheim and Novo Nordisk. The company is currently in discussions with 14 of the top 20 big pharma.
One of the restrictions for adoption is that the company had configured and validated its systems for agar settle plates (used in clean room drug manufacture), but not for contact plates (which are smaller) to detect bacterial presence on items such as clothing.
The development of the contact plate integration and validation for the APAS instrument started in September last year and was launched in August this year. That has seen sales initiated with Novo Nordisk and Boehringer Ingelheim this year, who were both waiting for the dual application of contact and settle plates.
In drug manufacturing, most of the samples are clean, but still need to be checked for the presence of bacteria. The APAS instrument automatically separates positive and negative samples. For a large manufacturing site that may need to check 1,000 plates a day, automating the system is a cost saver (two staff), as well as potentially being more reliable.
The company's customers need to validate the APAS instrument at their own manufacturing sites. Pfizer recently released results from a 6,000 settle plate study showing 100% accuracy in detecting growth on plates. It is now moving to validate the system on contact plates.
Once validated, there is a strong chance of adopting the technology across all manufacturing sites within that organization. This has occurred with AstraZeneca, which has now bought 10 instruments. Each instrument costs US$350,000, with ongoing software fees payable to CCS.
CCS now has 32 systems installed across the globe – 18 in Europe, eight in the US and six in the Asia Pacific region.
Competition
The company's main competition comes from Rapid Micro Biosystems. That company expects revenue in 2025 of US$33 million (up 18% over PCP), with 27 system placements during the year (total 189 at year's end). The company has a market capitalization of US$161 million (trading at 4.9 times sales). It generated a loss of US$47 million last year. It held cash of US$41 million at the end of September this year.
Rapid Micro Biosystems uses autofluorescence imaging. The drawbacks are that it requires the company's media to be used, is more costly, and includes an incubator which restricts flowthrough capacity and sample processing flexibility.
Summary
Clever Culture Systems is capitalized at $59 million. It held cash of $1.4 million at the end of September although with $4.1 million expected from product sales and an R&D tax rebate.
Bioshares recommendation: Speculative Hold Class B
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