James Faulkner’s small cap of the week: Seeking a New Angle

Previously an IP management and investment company, AIM listed Angle (AGL) has recently transformed itself into a medtech company in order to focus solely on its cancer cell capture technology, Parsortix.

Parsortix was originally developed as the first ever non-invasive testing platform for the unborn baby. Pregnant women have a very small number of their baby’s cells circulating in their blood – at most one foetal cell for 500 million maternal cells. Parsortix developed a separation device, which can isolate intact foetal cells in maternal blood (as opposed to merely DNA fragments) when only 1.5ml of maternal blood is flowed through the device.

However, it soon became apparent that a much more lucrative opportunity for the device existed in the cancer diagnostics market.

In September 2011 the firm achieved a major milestone by validating that its cell separation device can capture cancer cells added to blood. Angle reported that it had “already established discussions with several of the world’s leading cancer research institutes and there is strong interest in such a product, which would not require regulatory approval for use for research purposes.” The company also noted “encouraging interest” from many of the larger medical diagnostics companies regarding a potential commercial collaboration.

The potential market for such a product is huge.

In addition to the substantial commercial opportunities available prior to regulatory approval in respect of sales of product for research purposes and corporate partnerships, it is estimated that major clinical markets for a simple CTC counting product exceed $4 billion per annum in the United States market alone.

As house broker Cenkos opines, “There are very few cancer patients today who would not derive a potential benefit from being evaluated with the Parsortix device in order to not only detect circulating tumour cells (either before or post diagnosis of cancer) but also in terms of the evaluation of treatment regimens (using genomics and proteomics) and monitoring patients who are in remission and at risk of recurrence.”

The latter point is particularly noteworthy. PricewaterhouseCoopers projects that the market for a more personalized approach to health and wellness will grow to as much as $452 billion by 2015. Although the largest share of this market is projected to be accounted for by the nutrition and wellness market, it is the core diagnostic and therapeutic segment of the market – comprised primarily of pharmaceutical, medical device and diagnostics companies and expected to grow by 10% annually, reaching $42 billion by 2015 – where the real excitement lies. Parsortix could therefore play a key role in identifying the particular therapeutic needs of a patient.

What’s it worth?

Angle could be one to watch in 2015, as the firm is currently in the process of securing US regulatory approval for Parsortix from the FDA. At present the only CTC system that has been approved by the FDA is CellSearch (Veridex, Johnson & Johnson) which, unlike Parsortix, is unable to harvest CTCs for molecular analysis, and can only be used to isolate CTCs from a limited number of cancer types.

“It is this feature that makes Parsortix unique”, argues house broker Cenkos, “and due to the urgent need for a system with the capabilities of Parsortix we believe that the FDA will be keen to drive this forward.” With the US regulatory filing underway, there have been hints that Angle is preparing the ground for greater things to come. In particular, the appointment of Peggy Robinson to the senior management team looks prescient, as Peggy was involved in the commercialisation of none other than CellSearch, which should provide Angle with invaluable contacts and expertise in the field.

In addition to this, Angle secured a US quote in October through ADRs (American Depository Receipts), which should help improve liquidity and raise the firm’s profile in the medtech-hungry US market. Given the scale and scope of the opportunity here, this is a share that could soar on positive newsflow. 2015 looks set to be an interesting year for Angle.