Proteomics International Laboratories (ASX:PIQ) reinforced its investment case Friday by taking home an industry award for outstanding international success in the medical, healthcare, and biotechnology fields.
The Health and Biotechnology Export Award was presented to the company at the Western Australian 2015 Industry and Export Awards by WA premier Colin Barnett, validating Proteomics’ world-leading expertise and capabilities in the industrial-scale study of the structure and function of proteins.
The awards are WA’s most prestigious business awards, and acknowledge the hard work and enterprise of the state's best exporters. There were 12 export award categories, and the award winners in each category automatically qualify as finalists for the national Australian Export Awards, to be announced next month.
Proteomics chairman Terry Sweet said:
“We are delighted to receive such a prestigious award. It serves as due recognition of the efforts of the entire Proteomics team as world leaders in our field of endeavour.
“The company is focused on maintaining this momentum to drive value by accessing new markets and commercialising innovative new services and products.”
Well-earned endorsement
Proteomics’ recognition as a leader in exporting medical technology follows consistent progress over the year in internationalising its products and addressing cross-border trends in protein-based drug markets.
Between 2013 and 2017 a dozen protein-based drugs with combined revenue of $50 billion will come off patent and be replaced by generic versions needing specialist analytical testing services of the type provided by Proteomics.
In this context, the company has built a strong record of repeat business, whilst diversifying into new markets. It has long established agencies in India, Malaysia, Singapore and Japan, and has recently expanded into Indonesia, Central America and the Middle East.
Proteomics has a co-marketing agreement with U.S.-headquartered inVentiv Health, a leading provider of global product development services to pharmaceutical companies.
The company has demonstrated an ability to expand a client base of blue chip pharmaceutical and biotechnology companies, while driving success by opening up new avenues in new markets.
Earlier this year, this included the signing of a protein analysing contract with a $330 million Australian milk company.
Asia-focused forays have helped the company grow exports from 28% to 47% of its total sales over FY-2015. The Japanese and Malaysian markets were strong contributors to this result, with sales growth of 39% and 34% respectively.
Important Asian commercialisation momentum has also included an agreement with specialist Chinese technology company, New Summit Biopharma, to develop Proteomics’ diagnostic test for diabetic kidney disease (DKD) in the Chinese market.
PromarkerD and DKD
Proteomics tackles the DKD market with its flagship PromarkerD product, which can detect people with severe or mild kidney disease, as well as individuals missed by the existing tests.
Marketability of PromarkerD is supported by growing rates of DKD and the fact that there is currently no available test for predicting the onset of the disease.
Current urine-based tests for DKD are not robust, with results susceptible to variation due to modest unrelated factors.
PromarkerD’s capacity to generate cash via licensing fees, upfront payments and royalties is strengthened by a diversified range of commercialisation options in various niche diagnostic test applications.
Avenues for monetising the technology have been identified in a range of medical applications; including specialist diagnostic tests run by clinical laboratories, clinical pathology tests produced by diagnostic companies and companion diagnostic tests used to monitor a patient's response to drug therapy.
Growing markets
Proteomics operates across three synergistic proteomics-based business units in massive growth markets.
The specialist proteomics market alone represents a massive global market estimated to be worth $20.8 billion by 2018.
Also, the diagnostics market, where the company focuses on DKD and Alzheimer's disease. The biomarkers market within this segment is estimated to double in size to $45.6 billion by 2020.
Proteomics is likewise pursuing business opportunities in the drug discovery sector, with a focus on painkillers and antibiotics. Within this space, the peptide therapeutics market is currently estimated to be worth $17 billion.
Analysis
This award represents a particularly compelling affirmation of Proteomics’ business model in that it focuses international marketing and product diffusion among high-tech exporters.
Industry recognition of the company’s accomplishments in internationalisation, foreign marketing and product development suggest a growing awareness among stakeholders in this sector that this may be an undervalued stock at its latest price of A$0.28.
Export revenue continues to drive the company’s growth, based on its synergistic proteomics-focused technology platform. It has built upon its existing regional strength and at the same time is targeting key new geographical regions.
A diversified international portfolio of potential income streams offers an element of security to Proteomics’ marketing strategy as success in Asia, in particular, drives revenue growth and prospects for a dramatically expanded customer base.
Proteomics enjoys an advantage in catering to the needs of international clients by maintaining a culturally and linguistically diverse workplace.
Proteomics has achieved average annual growth of more than 30% in sales revenue over the last five years and export sales grew 7.4% over the preceding year, despite this period coinciding with the company’s focus on its successful IPO (it listed on the ASX in April 2015) and partnership development.
The commercial potential of PromarkerD is vast because the test is both versatile and adaptable in the context of a rapidly growing diabetes market.
Existing tests in this market are only diagnostic, detecting disease only after clinical symptoms have started to appear. In contrast, PromarkerD can predict months in advance which patients will go on to have a significant decline in kidney function, thereby allowing medical intervention to prevent that happening.
Upcoming catalysts:
- Expecting patent protection to be granted in key markets;
- Ongoing discussions regarding commercialisation of PromarkerD, diagnostic test for diabetic kidney disease in multiple major markets; and
- Continued growth in Analytical Services business.
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