Akoya Bioscience: Investing In A Spatial Bioscience Company (NASDAQ:AKYA)

Historians credit Zacharias Janssen, a Dutch eyeglass maker, for discovering the microscope. The year was 1590 when the discoverer was a mere teenager, so historians think that his father, Hans Janssen, a spectacle maker, probably contributed to young Mr. Janssen’s discovery. This discovery opened the first use of such an instrument, and it has been a significant contributor to medical science. The ability to look and see what is happening inside a human body, where there have been enhancements of Janssen’s discovery, has seen many instruments and systems being developed by scientists.

Today when one person or a group is looking for ways to resolve issues, they often say—“Let’s put it under the microscope.” With this adage in mind, what I would like to do with this article is to introduce to my readers a company that has taken this foundational microscope and created a system that allows scientists to see the individual cells in a human body and apply what they have seen to assist in making decisions for developing new drugs or surgical procedures. The company is Akoya Biosciences (NASDAQ:AKYA). Akoya promotes itself as— Akoya Bioscience: The Spatial Biology Company.

I will share my rudimentary explanation of what Akoya brings to bioscience endeavors. Keep in mind that anyone looking at Akoya as an investment opportunity should consider what I write about the company as being only a foundational starting point for their in-depth due diligence on the company. My criterion for investing is based on my criteria therefore, each investor should use their criteria for any due diligence they must or need to conduct.

Spatial: Relating to or occupying space. In other words, spatial describes how objects fit together in space. And the word space is not limited to outer space. In the case of Akoya, it allows scientists to see how human cells function inside the space of the human body. For those wanting to understand better what this means to the bioscience work that is being done, I would recommend that you obtain a copy of Akoya’s white paper: How Spatial Phenotyping Can Uncover Novel Insights in Tissue Biology. This paper is designed for interested bioscience companies wanting to know more about what they bring to their laboratory and scientist. If you are reluctant to fill out the brief form, you might call the company for a copy. A layperson in bioscience technology can benefit significantly from the information Akoya shares.

Background History for Akoya:

The history of this company can be traced back to 2015 when there was a strong pedigree lineage for those involved in creating what today is known as Akoya Bioscience. The following information is taken from their website:

Akoya Biosciences was founded in 2015 to commercialize the CODEX System to enable ultra-high multiplexing for biomarker discovery.

The Phenoptics™ technology was originally conceived and developed by Cambridge Research & Instrumentation, acquired by Caliper in 2010, and subsequently acquired by PerkinElmer in 2011. The Phenoptics™ technology was promptly adopted as the industry standard for multiplexed tissue analysis for translational and clinical research.

The partnership between PerkinElmer and Telegraph Hill Partners, announced in November of 2018, created the current Akoya Biosciences through the sale of Phenoptics by PerkinElmer and its incorporation into Akoya. This combined portfolio of complementary CODEX and Phenoptics technologies will continue to fuel ground-breaking advancements in cancer immunology, immunotherapy and a wide range of pathology research.

Revenue Growth Trends for Akoya:

For this article, I will show the revenue trend to reflect a new product that is changing significantly and how biosciences labs can enhance their methods of designing and creating new therapies, mainly for cancer. It is not profitable at this stage, but it is rapidly moving in that direction. To obtain profit, the first thing critical for this objective is having revenues steadily flowing into the coffer and revenues are growing.

• 2019–$42,236,000- Total Revenue
• 2020–$42,443,000 -Total Revenue (Minimal Growth Due to Covid Closing Many Labs)
• 2021–$54,917,000 -Total Revenue with 29% YOY Growth
• 2022- $74,000,000 -Based on preliminary unaudited revenue (1/08/2023) 34% growth YOY

To open 2023 with a significant announcement, on January 6, 2023, in a joint press release, Akoya and Agilent(A) revealed they had formed a partnership where Agilent would provide one of their products where it would be combined with Akoya’s product. They would merge Agilent’s Dako Omnis (autostaining instrument) and Akoya’s PhenoImager® HT. This combined product would provide the bioscience partners using a product that would create singular assays in an end-to-end commercial workflow, including reagents, staining, imaging, and analysis.

Under a separate Value-Added Reseller agreement, Akoya Biosciences will distribute and resell Dako Omnis as a part of the end-to-end multiplex solution. Agilent’s customer base will give Akoya entry into potential customers from around the world where medical research is being done.

Agilent is the perfect partner for Akoya as they have a huge investment in products used in bioscience laboratories where medical research is being done worldwide. Here are a few basic facts about Agilent’s operations:

• Market Cap: $55.0 billion
• Net Revenues FY2022: $6.85 billion
• Employees: Approximately 18,000
• Customers: Located in 110 countries around the world.

The Obvious Question!

With Agilent already being a highly successful company based on their products being sold to research laboratories, could they offer to purchase Akoya in the future at a nice premium to the current price of their shares? If you have a history of reading my articles you should know I have a standard answer for such a question.

Don’t buy shares in a company solely based on the potential of them being bought by another company. Make your decision to buy a particular stock based on the current merits of the company and how it will become a great company with the stock increasing from the price at where you initially bought it. In the case of Agilent, just consider how they see merit in what Akoya has, as their products are a market changer when combined with their products. I’m anxiously waiting to see when the integration has taken place and we will see how the market perceives the product that should make their work more accessible and productive.

Caveats:

There is no doubt that Akoya is finding great interest in its marketplace, as shown by the growth of revenues and product placements. However, it should be noted that in their 3rd-Q-SEC filings, they stated:

• $82 million of cash, cash equivalents, and marketable securities as of September 30, 2022.

IMO, $82 million, and the portion that is cash, is meager for what is needed for future marketing efforts. In their SEC annual reporting that should occur soon, it will be interesting to see the year’s cash burn. I think readers should build into their decision about Akoya being an investment opportunity, Akoya will probably be making a secondary offering of their stock.

In 2022, investors probably know that biotech stocks, nearly across the board, underwent a massive sell-off of their shares. In the case of Akoya, they have seen a 52-week range of $8.02 to $16.57 for their stock. The good news is that Akoya’s stock has bounced over 30% from its lowest price during this period. YTD, biotechs have overall gained in the market, with Akoya seeing about a 12% gain in the share pricing.

With the preliminary data for the 4th Q, 2022, we know that product revenues grew nicely, and we know the numbers for the product placement. We know that Agilent and Akoya will integrate an Agilent product into the Akoya mainline product. Therefore, for those seriously looking to buy the Akoya product, we should think that they will now prefer to get the combined product because of the added features it will offer. Having no idea how long it will take for the integration and production of the final product, I think we could see at least the 1-Q of 2023 being impacted. I believe the integration should not go over a long period —6 or more months. But I think the benefit is worth the wait as we should see an increase in revenues more than we have seen in the history of Akoya.

Good luck with your future investing efforts! Please note that I’m not an investment advisor. Use my articles merely as a starting point for doing your own personal due diligence. And when investing in biotech/medical stocks, always know that extra due diligence is required—the graveyards for failures in such stocks are nearly complete.