Going for growth: IXICO primed to solve the challenge of increased clinical trial complexity through AI advances

Article written by ShareBuyers Editorial Team originally published here

As part of the ShareBuyers’ going for growth series, we take a look into the growth prospects of IXICO (IXI), the AIM-listed specialist in AI data analysis for the international clinical trial market which has seen its share price increase by 80% over the past six months.

Profitable, debt-free with sustained revenue growth over recent years, the company is now looking forward to utilising its unique technology and AI capability to increase its share of the $1.6bn imaging CRO Clinical trial market.

Find out why IXICO CEO Giulio Cerroni is confident that opportunity is ripe for the firm to tackle growing complexity of clinical trials as they are set to resume in volume and how he’d pitch the business to legendary investor Warren Buffett!

Firstly, please could you tell us a bit about IXICO and its value proposition?

IXICO plc develops and deploys neurological disease focussed advanced AI data analysis for the global clinical trial market. IXICO has built a scalable business model and a strong order book of contracts with a wide range of clients across the biopharmaceutical industry. IXICO has consistently delivered double digit revenue growth over the last four years and is on a positive trajectory of profitability.

The Company’s AI algorithms measure imaging biomarkers in MRI & PET brain scans obtained in clinical trials of drug candidates seeking to address neurodegenerative disorders (such as Alzheimer’s, Parkinson’s & Huntington’s diseases). By offering automated analysis, the Company is able to increase consistency of measures and identify small changes in biomarkers in the brain to support the understanding of a drug’s efficacy, monitor patient safety and enable patient selection for clinical trials.

In the growth market of neurological drug development, where there is a major unmet clinical need, rapid growth in the number of people with dementia (a trebling of sufferers is expected by 2050) rapidly increasing costs to global healthcare bodies of treating and supporting sufferers of the disease (an increase from $300bn per annum to >$1tn per annum is expected by 2050) and a regulatory environment supportive of considering licencing drugs with only a relatively modest medical benefit, the Company sees significant opportunity to grow.

IXICO’s USP is the ability to develop and deploy a suite of advanced analytic solutions resulting from the combination of our neuroscience expertise together with access to highly curated data for neurological disease specific patient cohorts from clinical trials. The portfolio of proprietary algorithms also benefit from machine learning improvements developed over several years of deployment within important neurological disease clinical trials.

This means that the quality, in terms of accuracy, consistency and utility of its image analysis, supports the Company’s aim of providing “Advanced Analytics for Intelligent Insights”. IXICO is a specialist in brain image analysis with a widely adopted, trusted and scalable technology platform in an industry dominated by larger, but more generalist, CROs or academic/clinical providers. IXICO is built on the foundations of its scientific expertise in neurological disease and this continues to set the Company apart from commercial competitors often being included in the disease progression studies (natural history studies) and in academic-commercial partnerships seeking to understand the diseases themselves (such as EPAD, ADNI etc). This means that whenever a client speaks to someone at IXICO they are speaking to a neuro expert.

IXICO has a portfolio of over 30 algorithms designed specifically to identify biomarkers associated with an increasingly diverse range of different neurological diseases. These are in-themselves valuable but the ‘full’ value comes from the large number of trials in these disease areas that IXICO has supported (having analysed >100k brain scans) meaning it has been able to ‘train’ its algorithms using contextualised data to provide new and valuable interpretation of the brain images analysed.

The current climate is presenting challenge and opportunity – how has this applied to your business?

IXICO has demonstrated the underlying resilience of its technology through this pandemic with the Company reporting that the impact of COVID-19 to client deliverables and its 2020 financial performance has been modest. Indeed, the Company has indicated it expects to deliver an exceptionally strong second half for the fiscal year ending 30 September 2020; a period in which all employees have been able to operate efficiently, 100% remote. In addition, the business is also well positioned to weather the ongoing potential disruptions caused by COVID-19, benefiting from a significant contracted order book of future revenues and a strong balance sheet.

Whilst existing contracted clinical trials have broadly continued as originally planned, the repercussions of COVID-19 have meant that the number of new trials initiated by the biopharmaceutical industry has reduced significantly. With new contracts taking longer to sign up, the Company continues to expect revenue growth as it looks forward to 2021, although at a more muted level when compared to the previous four year >30% CAGR. Important to note however is that this slowdown in new clinical trials starting reflects trial delays, rather than trial cancellations. This means we can expect a rapid recovery in the number of clinical trials starting once the COVID-19 pandemic abates and the biopharmaceutical companies initiate these studies as well as those of additional assets which, in the meantime, have moved through their discovery pipelines.

This short term delay in the start-up of clinical trials is providing IXICO with the opportunity to further invest in its service offering ensuring it is ready to respond to the expected rapid ramp up in demand in the medium and long term.

Growth catalysts are crucial to business growth – what do you believe yours are?

The Company success has been underpinned by a razor-sharp focus on execution of its five-point growth strategy, detailed below,

  • 1. Focus on scale and operational excellence
  • 2. Accelerate penetration of clinical trials market; diversification into new indications
  • 3. Target early phase to grow into later clinical phases
  • 4. Innovate AI process automation & data analytics
  • 5. Enhance organic growth through selective partnerships and M&A

IXICO is on a very positive trajectory of profitability. This coupled with a strong, debt-free, balance sheet and a blue-chip roster of institutional investors, all of whom have invested over the past two years, buying into this strategy and indicating their view of, and confidence in, the Company’s growth prospects. This, combined with wider macro trends pushing towards an acceleration in growth of neurological clinical trials, provide strong catalysts for growth.

With a strong and further strengthening balance sheet, the Company is well capitalised and able to invest further in innovation, and the commercialisation of this innovation, to continue the growth momentum achieved over the last four years.

What are the biggest headwinds you foresee to achieving growth in the coming months and years? How will you tackle them?

The biggest headwind IXICO is currently experiencing is the impact of COVID-19 on the start-up timelines for new clinical trials, with many clinical trials not commencing whilst the uncertainty of the pandemic remains. Whilst it is important to note that these trials are unlikely to be cancelled, IXICO will not be immune to the associated short-term impacts. However, given the Company’s significant order book of contracted revenues, its pipeline of opportunities and the ongoing expectations for significant ongoing R&D investments by the Pharma industry in neurological diseases, the Company is committed to investing further to scale its operations and commercial capabilities to capture market share and achieve its goals of sustained profitable growth in the medium to long term.

Consequently, for IXICO, which is addressing a growth market, is well capitalised and has plenty of market share to challenge for, the best approach to the current COVID-19 situation is to continue to invest and ensure the Company is as well placed as possible to scale and ensure that the expected rapid scale up in demand when the pandemic abates becomes an opportunity rather than a challenge.

Imagine you find yourself in a lift with Warren Buffett. What would be your ‘elevator pitch’ to summarise why he should invest in your business?

IXICO is a high growth, profitable and well-capitalised technology company, targeting the global $1.6bn imaging CRO clinical trial markets. IXICO focusses on supporting clinical trials in neurological disease areas, of which there are over 1,100 active trials for diseases such as Alzheimer’s, Huntington’s, and Parkinson’s Disease, making this sector of the trials market the second largest for Pharma R&D spend after oncology.

Clinical trials have become more complex and as such IXICO’s proprietary AI algorithms and TrialTracker data management platform have increasingly been deployed by its clients for better and more efficient analysis of data from MRI and PET brain scans. More recently this has been extended to real world data collected from wearable biosensors.

IXICO has been revenue generating for over a decade, reporting +30% CAGR in revenue over the past four years and returning profits since 2019. The Company is a profitable, well managed, well capitalised, debt-free business ideally positioned to invest for growth.


Date: 17/09/2020