INS.L Regulatory News (INS)

Instem plc

 ("Instem", or the "Company")

Transfer of ToxHub Platform and launch of Centrus®

Significant commercialisation opportunities

Instem plc (AIM: INS), a leading provider of IT solutions to the global life sciences market, announces that the Company has been granted exclusive rights to transition the ToxHub Platform (the "Platform") from eTRANSAFE.

The Platform, which has benefited from c.€41m investment to date and has been designed to speed up the development of medicines, will be commercialised by Instem following integration into the Company's unique in silico suite, which it has rebranded as Centrus®.

ToxHub will sit alongside the Company's existing, data sharing, predictive modelling and insight generation solutions; areas where Instem already processes complex data using advanced technologies such as artificial intelligence ("AI") and natural language processing. 

The Company has also received the first Software-as-a-Service ("SaaS") subscription order for the Platform from Bayer AG, one of 13 international life sciences companies involved in the eTRANSAFE consortium www.eTRANSAFE.eu (the "Consortium"). Bayer AG's Head of Investigational Toxicology commented: "ToxHub, a powerful suite of predictive tools and visualization software for translational data analyses, offers a valuable and innovative addition to enhance safety assessment for our drug development programs."

Building on Strong Foundations

The Consortium commenced work in 2017 and spent over five years and c.€41m specifying, designing and developing the Platform, with funding from the Innovative Medicines Initiative (IMI), Europe's largest public-private initiative aiming to speed up the development of better and safer medicines for patients. Recognising the accelerated investment that Instem will be making to commercialise the Platform and the commitment to continue to work with several of the key technology partners in the Consortium, there is no initial capital outlay for the Company associated with the transition of the Platform.

Grant funding was provided to eTRANSAFE by the IMI2 Joint Undertaking, which receives support from the European Union and the European Federation of Pharmaceutical Industries and Associations (EFPIA). A key objective of the Consortium, and a significant justification for funding, was to reduce the number of animals used in the development of new drugs and chemicals.

Centrus, a powerful technology and data sharing suite, provides a range of translational science solutions designed to strengthen translation of data and insight between the discovery, nonclinical and clinical phases of research and development, increasing confidence, efficiency and velocity, materially reducing the cost of life sciences R&D and helping Instem's clients bring their life changing products to market faster.

The Consortium members have addressed the technically and operationally challenging aspiration to share much of their proprietary historical data for mutual benefit, while also enabling them to securely incorporate their still private data into the system. The Consortium members had already contributed data from approximately 10,000 non-clinical studies and a small number of clinical studies, creating a significant repository of valuable data, most of which had not previously been shared. Having received the Bayer AG contract, approximately 1,000 of their non-clinical studies are now available in Centrus. As other Consortium members place Centrus subscription orders with Instem, their data will be added into the Platform. The Company will also provide a service to continually add studies from new and existing subscribers.

Growth Opportunity

As the eTRANSAFE project approached the end of its IMI2 grant funding, it was proposed that Instem assumes ownership of and commercialises the ToxHub platform, integrating it with Instem's existing in silico solution portfolio, to create compelling new capabilities, expand the user-base and ensure continuity in the exceptional data collaboration and innovation achieved already by the Consortium. Already a long-term supplier to all 13 pharmaceutical and chemical companies in the Consortium, Instem was quickly recognised as an obvious, trustworthy custodian for the valuable data (or "honest broker" as defined by the Consortium), and a company capable of establishing a secure, global collaborative translational science platform.

Modelling, simulation and data exploration solutions, frequently incorporating artificial intelligence capabilities, are the fastest growing areas of software investment in life sciences R&D. With a current total addressable market of over £600m, a serviceable addressable market of c.£150m and multiple opportunities to grow its new Centrus solution suite and market share in a rapidly evolving environment, Instem believes it is well positioned to accelerate growth organically and acquisitively.

While the Platform and data assets are being transferred to Instem without the Company incurring a capital outlay, there will be essential ongoing investment in the Instem team that will continue to develop, support and commercialise the solution. Third party expenses will be incurred by Instem with several of the Consortium technology partners, either as technology subcontractors, or through royalty payments for a small number of Platform components. Instem will also incur initial expenses for the Amazon Web Services technology platform through which the solution is deployed, with some incremental cost as client and data volume grows.

Instem expects to expense c.£2.5 million of start-up costs in the first 12 months of the project, during which the Board expects that SaaS subscription revenues will build steadily as the Company focuses on on-boarding the Consortium members, other interested life sciences companies and influential research institutions. Following an initial period of investment, the Company believes there is potential for significant revenue growth and EBITDA contribution from 2025 onwards - building from a modest base in calendar year 2024.

In addition to the IP ownership of core elements of the Platform, the Company will also benefit from access to open-source technology and the perpetual right to use data from many of the studies that have been contributed already by the Consortium.

Strengthening the whole Portfolio

The addition of the Platform, technology and data will complement Instem's existing in silico solutions and the proven mechanism for data sharing is expected to accelerate the potential for additional data sharing from Instem's workflow software solutions, which have been used over several decades to collect and analyse data from many thousands of non-clinical and clinical studies.

Centrus utilises US Food & Drug Administration mandated standards SEND (Standard for the Exchange of Nonclinical Data) and clinical equivalent SDTM (Study Data Tabulation Model) as preferred formats to ingest new data. Instem's deep understanding of, and its market leading technology solutions that create and use, SEND and SDTM, makes the transition of our customers' operational data into Centrus a logical progression and opportunity to unlock further value from their investments.

With the recent growth of Instem's portfolio, the breadth of customer data that the Company now works with stretches from the earliest days of drug discovery to the latest stages of Clinical development. This unparalleled reach is now matched with a Centrus platform that offers customers a single repository from which to unlock new knowledge through the application and deployment of cutting-edge algorithms that draw on this unique, enterprise-wide resource.

Positioned for Growth

In the near term, the Company will invest in onboarding the Platform, ramping up the commercial and technical teams, establishing the technology environment and continuing the highest priority functional enhancements, with an additional cost of sale associated with each new client subscription. To facilitate this, there will be a reallocation of internal resource to reflect the increasing emphasis on data, AI and insight generation.

Centrus will further build out and then accelerate the Company's in silico presence from its current base, with management focused on increasing exposure to this segment of the market, which provides higher margin opportunities and increased revenue visibility. This will enable the Company to establish a blended growth strategy, building on the relationships and fundamentals of its established business.

Dr Thomas Steger-Hartman, Head of Investigational Toxicology and Vice President at Bayer AG commented: "ToxHub, now part of Centrus, is a unique platform for accessing and analysing our own nonclinical data head-to-head with unpublished data from other pharmaceutical companies. The incorporation of clinical databases makes Centrus the first tool to approach translational questions in a seamless way."

Phil Reason, Instem CEO, commented: "We are delighted that our long-standing history as a market leading technology provider and trusted partner to most of the world's leading life sciences R&D organizations has enabled us to take ownership of ToxHub. We will benefit from over €40m spent on the Platform by eTRANSAFE since 2017 and their substantial data contributions. The Consortium members (and wider industry) will benefit from our accelerated investment in the commercialisation of the platform, integration into our new Centrus in silico solution suite and an ever-expanding repository of usable data.

"We have had tremendous support from the Instem team, clients and investors over the last 10 years as we have grown our solution portfolio, domain expertise and client base organically and acquisitively. We have been resolute in our belief in the potential to leverage our access to and understanding of large volumes of complex chemistry and biology data from early discovery to late-stage clinical trials to radically reduce the cost and time of drug development and we believe the launch of Centrus provides a transformational growth opportunity for Instem.

"Instem's capabilities, client necessity, emerging technology and regulatory authority acceptance are coinciding to enable rapidly developing industry collaboration and innovation. This has the potential to deliver new life changing products at unprecedented pace to address unmet societal needs. A large repository of current and historical data together with a broad suite of SaaS solutions and the potential to leverage these assets through a rich set of technology enabled services will ensure that we remain a key player in a rapidly developing new era for life sciences R&D. It is hugely exciting and rewarding to be intimately involved in this work and we look forward to sharing further progress as additional clients deploy our current and expanding Centrus in silico solutions."

About Instem

Instem is a leading provider of IT solutions & services to the life sciences market delivering compelling solutions for Study Management, Regulatory Submissions, Clinical Trial Acceleration, and Informatics-based Insight Generation.

Instem solutions are in use by over 700 customers worldwide, including all of the largest 25 pharmaceutical companies, enabling clients to bring life enhancing products to market faster. Instem's portfolio of software solutions increases client productivity by automating study-related processes while offering the unique ability to generate new knowledge through the extraction and harmonisation of actionable scientific information.

Instem products and services address aspects of the entire drug development value chain, from discovery through to market launch. Management estimate that over 50% of all drugs on the market have been through some part of Instem's platform during their development.

To learn more about Instem solutions and its mission, please visit www.instem.com

About eTRANSAFE

The "Enhancing TRANslational SAFEty Assessment through Integrative Knowledge Management (eTRANSAFE)" project develops an integrative data infrastructure and innovative computational methods and tools that aim to drastically improve the feasibility and reliability of translational safety assessment during the drug development process. This infrastructure will be underpinned by development of open standards and robust policies widely accepted by stakeholders, including regulatory agencies and international organisations.

The eTRANSAFE is a 5.5-year project, started on 1st September of 2017, funded by the Innovative Medicines Initiative 2 Joint Undertaking (IMI 2) together with the pharmaceutical industry, that aims to develop an advanced data integration infrastructure together with innovative computational methods to improve the security in drug development process.

This announcement contains inside information for the purposes of the retained UK version of the EU Market Abuse Regulation (EU) 596/2014 ("UK MAR").