Clever Culture Systems (CC5: $0.022) continues its penetration into the big pharma market with an order from CSL for its APAS Independence instrument. The instrument is used to assess agar plates in manufacturing clean rooms, excluding all negative plates, which in drug manufacturing environments is most of them (98%).
The system has a daily volume throughput of 1,600 plates. One of the advantages to the competition is that it does not include an incubator, which limits the daily throughput of competitors to 60 and 132 plates a day.
CCS now has 31 systems installed worldwide with a total of 37 either installed, under evaluation or where orders have been committed. The CSL order follows two orders last month from two customers including one big pharma.
The APAS instrument sells for US$350,000, with ongoing license fees and service income around $100,000 a year. It is about half that for instruments used in the pathology industry (15 installed units). The main emphasis now is the pharmaceutical sector.
The aim this year has been to broaden the number of top 20 pharma companies using the product. From one sale it can lead to multiple sales as with AstraZeneca which has purchased 12 to roll out across its manufacturing sites. Following evaluation by CSL, it could end up in around 10 instruments sales to that group for its global manufacturing sites.
A reasonable target for the company would be to have an installed base of around 50 units by the end of 2027. In the next 12 months the aim is to continue to broaden initial use by big pharma, and to generate multiple orders following the initial sale. The potential market from existing customers alone (if adopted across all sites) is around 100 units, which represents $50 million in sales and $10 million in recurring revenue.
AstraZeneca recently held an APAS Discovery Day in the UK, which had 24 participants from 10 different countries. A user meeting group has been set up, with one of the aims being to create a group validation process to reduce the need for individual evaluations by different companies.
Clever Culture Systems is capitalized at $48 million.
Bioshares recommendation: Speculative Buy Class A
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