New entrants to the small company section of the London stock market have been few and far between this year. So it’s safe to say that any business that has managed to get City support behind it has a bit of quality about it.
That certainly seems to be the case with Microsaic Systems (AIM:MSYS), which sneaked onto the market last month, raising £4m through a placing at 32p. The shares are now at 42p, valuing the business at £16m.
Investor hopes are pinned upon an innovative new product that, in the words of chief executive and co-founder Alan Finlay, could revolutionise the business of mass spectrometry.
So what exactly is mass spectrometry?
The ‘gold standard’ in lab technology
Mass spectrometry is a key technique used in research laboratories. It allows scientists to determine the elemental composition and chemical structure of molecules and other compounds. And it’s a market that is growing faster than ever. A recent report by research firm BioInformatics has said that this $3bn+ global industry is growing at over 8% per year.
Two-thirds of this is tied to government, healthcare, and regulation-driven demand, such as drug development, diagnostics, food and environmental safety testing.
The technique has been around for over 100 years, since the foundations were laid by two scientists at Cavendish Laboratories in Cambridge, Joseph Thomson and Francis Aston. At first a largely academic pursuit, practical applications emerged in the 1940s. Mass spectrometry began to be used for nuclear isotope enrichment and the analysis of the components of petroleum.
As the number of industrial uses grew, mass spectrometers became commonplace not only in the field of physics, but also geology, chemistry and physiology.
The world’s first commercial instrument was marketed in 1948 by Vickers of Manchester. But its uses were limited by mass and resolution. Since then, advances such as gas chromatography and ionisation have increased the efficacy of mass spectrometry, allowing for the analysis of multiple biological entities, including formerly intractable high molecular weight molecules.
Today, mass spectrometry is widely accepted as the ‘gold-standard’ for identifying chemicals and is being used in an ever growing number of applications, notably protein identification and characterisation, peptide sequencing, small molecule analysis, biomarker identification and quantitative proteomics.
But though essential, mass spectrometry machines are not cheap. That’s where Microsaic has spotted its opportunity: slashing the price that funding-pressed scientists have to pay for their gear…
This remarkable machine runs on the power of a light bulb
Microsaic was spun out of Imperial College in 2001. Finlay says that when he started his career, a mass spectrometer would have largely filled a good-sized room. This scale and associated cost has largely confined the machines to the laboratory and large scale applications.
But Microsaic has come up with a much smaller device.
Its solutions are based upon the micro electrical mechanical systems developed by the Optical and Semiconductor devices group at Imperial College. By miniaturising the workings of a mass spectrometer onto a chip using semi-conductor techniques, Microsaic has produced a machine that can sit on a desk top or be taken out into the field.
Crucially, they use very little power – no more than a light bulb according to Finlay. This means that they could be powered by their own battery, or plugged into the battery of a vehicle.
Microsaic is the only company of its kind
Finlay believes that Microsaic is the first and only company to have successfully miniaturised mass spectrometry. It launched its first product, the Microsaic 3500MiD, in January. 36 patents have been granted to Microsaic, which is now working on the next generation of machines, providing even greater sensitivity in the detection of very low concentrations of chemicals, and of complex samples.
Crucially, though, in an industry dominated by big name firms such as Agilent Technologies, Applied Biosystems and Thermo Finnigan, Microsaic is not necessarily fighting to displace competitors. These and other instrument suppliers are continually aiming for higher mass accuracy, increased mass resolution and cleaner separation of samples from background noise.
Buyers want instruments with higher throughput, reliability and ease of use but, according to the outlook of the Spectroscopy Magazine and Instrument Business Outlook, they are also looking for compact equipment and lower purchase costs. This suggests that Microsaic should be able to find a ready market for its 3500MiD and future iterations.
So Microsaic looks like a promising newcomer to AIM, where it joins other high-quality scientific instrument makers such as AVACTA and SDI.
The application of science to business principles is something that we are quite good at in this country. Our industrial parks are full of small business working earnestly to turn academic work into commercial success stories.
I shall be keeping my eye on Microsaic to see if it can drum up some real commercial orders for what looks like an excellent and timely product.
• This article was first published in Tom Bulford’s twice-weekly small-cap investment email
The Penny Sleuth.