Sienna Cancer Diagnostics Limited (ASX:SDX) CEO Matthew Hoskin talks FY17 results, sales from the company's new in vitro diagnostic (IVD) tests, partnerships and strategy.
Jessica Amir: Hi. I’m Jessica Amir for the Finance News Network. Joining me from Sienna Cancer Diagnostics (ASX:SDX) is CEO Matthew Hoskin. Matthew, welcome back.
Matthew Hoskin: Thanks, Jessica.
Jessica Amir: Sienna Cancer Diagnostics produces in vitro diagnostic tests to detect cancer. Can you tell us more?
Matthew Hoskin: Sienna has the first IVD test to detect hTERT, which is a component of an important cancer-related biomarker called telomerase. So telomerase has the potential to be of use in a wide number of cancer types, but the first application that Sienna has developed is in the application as an adjunct to urine cytology in the area of bladder cancer. So, although urine cytology is the standard non-invasive test that patients will undertake when they’re being investigated for bladder cancer, that particular test is far from perfect, and Sienna hopes that the addition of its test will really become the standard of care going forward.
Jessica Amir: Now to your FY17 results, can you tell us some of the highlights?
Matthew Hoskin: The 2017 financial year was really the jump-off point for Sienna as a commercial entity. We saw our product revenues grow around 25% to AU$800,000. That was a really pleasing result, but it really is just the start of our commercialisation journey.
Operationally, 2017 financial year was a transformational point for Sienna, because we really moved from being a development organisation to the commercialisation of our IVD product, and this was really made possible by a couple of key regulatory milestones, being IVD registration in both the USA and also in the EU, and the securing of key supply and distribution agreements, most notably in the USA, which is the single largest market in the world for products of our kind.
So then from a corporate perspective, much of the second half of the year was spent in preparation for the company becoming a listed company. That work saw Sienna deliver on an important strategic corporate goal, which was the IPO, the Initial Public Offering, and the listing on the Australian Securities Exchange.
Jessica Amir: Turning back to financials, what drove those strong results?
Matthew Hoskin: We’ve had some product revenues for the last couple of years, but it was really only with the registration of our product as an IVD that opened the door to the US pathology market, and the signing of the distribution agreement with StatLab Medical Products, who are the medical distribution partner that we have, to take that product to the US market.
Jessica Amir: Moving on to sales, can you tell us about the process to drive the sales with the IVD?
Matthew Hoskin: The single biggest market for our test is in the US. In that region, we’ve partnered with StatLab Medical Products to provide the sales, marketing and support in that region. We really believe StatLab will be a perfect partner for us. They have the size and the reach to get out to all of the customers within that region. They are also of an ideal size, where the Sienna test actually represents a significant growth opportunity for them. And furthermore, the test is right in their area of strategic growth, which is in the advanced staining area of the business.
For StatLab to win new business and generate sales, they need to take a very systematic approach. So they need to identify sites where there's a significant number of urine cytology tests being done. They need to educate the pathologists and the staff at those labs about the new test that they are offering. They then need to take the product in, provide a demonstration, help to optimise the test in the lab, review slides with the pathologist, and then eventually get to the point where they’ll be negotiating a price and then helping to really convert that customer over to being a routine clinical user. So there’s quite a complex process that they need to go through, but we’re confident that StatLab are the right partner to really execute that strategy well.
Jessica Amir: Well, that sounds pretty good, Matthew, So, what’s the plan for the other regions?
Matthew Hoskin: So, in the European Union, we already have registration in place. So it’s just a matter of finding the right distribution partners for those countries and then getting a supply and distribution agreement in place with them. Outside the EU, that same work needs to be done to find distribution partners, but there is the added step of having to actually get regulatory registration in those countries. So we’ll actually look to those distribution partners to help us to get those regulatory filings in those countries.
Jessica Amir: So, now to FY18, what are you targeting for sales?
Matthew Hoskin: While it's still too early for us to provide a specific revenue forecast, we are expecting growth in our IVD product sales, and that will come primarily from the USA, with some incremental growth coming from those additional countries.
Jessica Amir: Changing pace now to your product development plans, what can you tell us?
Matthew Hoskin: The product development’s really focused in two areas. In the medium term, it’s about finding additional applications for the existing telomerase-based product. So that involves the R&D team developing those staining protocols and then working with external labs to generate the data that will be required for us to move into those additional applications. Secondly, though, we’re also looking to in-license or acquire additional technologies to bring into the Sienna pipeline for more long-term growth, and that will come from academic institutions that have biomarker discoveries that Sienna can help to commercialise and do a similar job like we’ve done with the telomerase product.
Jessica Amir: Last question now, Matthew, before we let you go: where would you like to see the company 12 months from now?
Matthew Hoskin: I’d really like to see growth -- coming, again, primarily from the United States, but also seeing growth coming from additional countries that we’ve added distribution partners. I’d also like to see progress made towards those additional cancer applications. Ultimately, the goal over the next couple of years is to see the revenue grow to the point where they overtake the costs in the company and we move into cash flow positivity without needing to go back to the market and raise more capital. And I’d really like to see the revenue over the next 12 months really make a contribution towards that goal.
Jessica Amir: Wonderful. Well, good luck for FY18. Matthew Hoskin, thank you so much for the update.
Matthew Hoskin: Thanks for having me, Jessica.