Martlet Part Two (of three) - Part of NSCI
The 51, no 46 Holdings.... what's underwater.... and what's sunken treasure?
Dear reader
Today we will deep dive into the 2nd part of Martlet. I began to wax lyrical on a holding disclosed in June 2024 called BioMed X and then checked the Martlet web site….. and it isn’t there today. What? The list of names has changed in the past 3 weeks! These 14 were previously listed as Martlet holdings but have now disappeared from their web site. Very odd!
Perhaps these are companies under consideration by Martlet, rather than live investments - I just don’t know.
One of the non-investment mystery companies - BioMed X
BioMed X is a large and independent research institute headquartered in Heidelberg, Germany, with new offices in Connecticut too as well a worldwide network of partner locations. BioMed X interface between academia and industry, performing subcontracted biomedical research and drug discovery & development in the fields of oncology, immunology, neuroscience, platform technologies, and artificial intelligence.
The >70 researchers with >60 PHDs, >70 published papers work with J&J, Pfizer, Merck, Sanofi and many other Tier 1 names in oncology, neuroscience, immunology and platform technologies. They boast a strong track record of 14 completed projects.
There are no financials I can find but 70 people doing contractual work at an estimated £150k per person per year is a £10.5m turnover business with an estimated £2m-£3m net profit.
The US expansion is presumably on the back of Tier 1 names needing both a European and US presence as well as contracts that make this expansion necessary and attractive. One could suppose at least a doubling of activity in the new office so a £20m turnover with £5m net profit.
One could also suppose at some point one of the Tier 1 players is using these to the point where a buy out makes sense. Obtaining a pool of skilled resources is valuable.
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Meanwhile Martlet has 8 new holdings that weren’t listed 3 weeks ago! So Martlet has a revised portfolio of 46 holdings!!! Here are the 8 new ones which didn’t appear then.
We ended on “Nu Quantum” last time: so today we will cover from NunaBio to Rovco (you’ll see why later, read on reader, read on!)
#21 Nunabio
Based out of Newcastle, this is a contract DNA producer. You tell them which sequencing device you used (Oxford Nanopore etc), what purity level you require and how fast and these get made. Applications are for MRNA, viral vectors and personalised medicine.
Not only do you get the sample. The work is fully documented and a package of data and specifications can be assembled to allow scale up manufacture to start smoothly.
The last (2022) financials show very little activity, although the web site suggests more is happening since.
#22 Octaipipe
AI learning with edge computing. Plenty of buzz words but let’s try to describe what they do using one of their case studies. One of the problems with AI/ML is the transfer of data back to some sort of central database (where the AI resides). Let’s say I’m a pump manufacturer and you are my customer. You might not want me to be monitoring your use of your pump. How would I deliver improvements to your pump via AI if you don’t allow me your data and that data privacy prevents it?
The answer is to use AI learning with edge computing. For the AI to exist at the asset (the pump) at the edge (rather than a central server). This prevents data concerns - but also cuts down on the amount of transmission of data required too, so theoretically is time saving.
In today’s brave new world Octaipipe’s technology could be very valuable. The AI at the edge can talk to other pumps without disclosing sensitive data but can collaborate and improve each others’ pumping capabilities and co-ordination.
#23 Oxford Space
Oxford Space make antennas and have a growing order book of over £10m in 2024. They employ 75 people and are growing fast. The number of their products which are in use and actually operating in space has grown from 7 in 2022 to 12 in 2023.
OSS has a partnership with Nasdaq-listed Viasat. Viasat are a $2bn market cap. The details are sketchy but this is for a military satellite product used by US and UK ground troops, and prospects appear to be substantial.
#24 Paragraf
Paragraf is the first company in the world to mass produce graphene-based advanced semiconductors using standard semiconductor processes.
It has 58 patents and £65m raised (including £20m earlier this year - possibly at an uplifted value).
Its markets include Electric Vehicles, Agritech, Health, Cryogenics and automation.
Each of these markets could provide remarkable levels of growth.
#25 Patient Source
This is an “ERP” (or EPR in their vernacular) SaaS system covering patients, theatres, referrals, notes, invoicing, reporting, proscribing, episodes in a modular system and is used by James Paget Ambulatory and the NHS at Royal Hospital of Neuroscience (RHN). The web site looks very impressive. I imagine these are very long sales cycles where the decision to move to something like Patient Source requires lots of err patience. But also a leap of faith - as the NHS customer itself says.
The accounts to 31/7/23 show no assets and are small business exempt so apart from an apparent £0.6m loss for the year it’s quite hard to assess this.
#26 Pencil Bioscience
This is a 1 pager web site and the accounts show a £0.9m loss for the year and assets of £5.2m. Not much appears to be happening here.
#27 Pervasid
This on the other hand - the most accurate RFID in the world. So much so, that the CEO Dr Sithamparanathan received an OBE in the 2024 new year honours list.
You might have heard horror stories about the pair of scissors left inside the person, after the surgeon forgot to remove them. This kind of mistake costs the NHS billions, says the PervasID website. Those costs are probably compensation as well as further surgery because any foreign object will usually fester and cause sepsis. Scissor-laden patients must be happy about such cutting edge technology too.
The compliance also applies to compliance around aviation where retrieving tools is crucial. Pervasid can tell Black & Decker within 8 seconds that all 873 Black & Decker tools are accounted for inside the black cabinet pictured below.
But also retail relating to stock taking as well as theft. The systems comes with APIs to integrate with Warehouse Management and Retail Management software, and appears to have an exciting future.
#28 PharmEnable
How to target the untargetable.
That is the work here. With the help of AI the aim is to discover small molecules with antibody-like properties.
There are two programs which are early stage but these are ambitious targets worth in the many billions if they can reach a solution.
#29 Plastometrex
This is a material science company where customers include Leonardo, Babcock Renishaw and NASA
Profilometry-based Indentation Plastometry (PIP) is a method for obtaining a material’s stress-strain curve from an indent profile by using accelerated inverse finite element analysis. The Indentation Plastometer from Plastometrex is designed to seamlessly carry out testing for compliance and performance testing.
#30 Plumis
Fire sprinklers but imagine a sprinkler which uses AI algorithms and heat sensors to direct a fine water mist directly at a fire. Imagine how much water damage is avoided versus the traditional approach to deluge the area - and water damage must just be expected. It’s an intriguing idea and one that has won it a Time Magazine Best Inventions Award in 2023 as well as an Edison Award in 2024.
The commercialisation now begins and the US market is now being targeted. There are 7 UK installers and 1 US according to their web site.
In my mind this is a bit like the Quooker hot water taps. Bit of a luxury and expense, probably, but if you want the best then this is it. Quokker went from a one-person business in 2007 to a £100m turnover business (in 2023) so over 16 years. But did Quooker have VC investment from Martlet I ask thee?
#31 Porotech
Augmented reality (AR) is growing in popularity, and these are award winning epitaxy technologies for AR. Epitaxy are the little LED cells that make up a screen. However the financials (as at 29/2/24) show little cash and a large P&L loss for the year to 29/02/24. An imminent fundraise here?
#32 Psyomics
Psyomic’s Censeo product is a SaaS platform for Mental Health Assessment reporting, for triaging and assessing mental health more efficiently.
It had a fundraising round in mid 2022 and judging by its company house records a further raise earlier this year. They secured their first NHS contract in 2022.
The product is compliant with clinical safety regulations, compliant with medical licencing, cybersecurity and NHS digital ready.
No co-incidence then, that last month Psyomics raised £4m in follow on funding.
#33 Qkine
A cell and gene therapy products manufacturer, these sell little vials of protein for thousands of dollars per millilitre. So it’s picks and shovels on bioscience.
According to its accounts to 31/3/24 it lost £1m and net assets of £3.4m.
#34 Rovco
Finally Rovco. Working with O&G for north sea decommissioning (plenty of that with Milliband’s stance on no new oil), as well as offshore wind it provides autonomous surveying of hydrographic using ROVs (Remote operated vehicles).
In the last accounts (to December 2022) turnover increased 70% to £13.7m but plenty has happened since.
It has recently been awarded the Outer Dowsing contract - the largest UK offshore wind farms at 1.5GW, working with Total and Macquarie - mapping the seabed and the subseabed to identify hazards for turbines and cables. Also environmental surveys to minimise impact on wildlife (the metaphorical Bats and Newts).
It also has won a US contract with Orsted and others in Asia.
This had led to a doubling (100 to 200) people increase at Rovco, the opening of a US and Asia office following a £30.6m funding round.
Brian Allen, CEO of Rovco, commented: “This is a thrilling chapter in Rovco’s journey. Over the next 3-6 months, we anticipate making several groundbreaking announcements that will redefine our industry. This latest fundraising round is expected to be our penultimate step before taking the company public in a few years.
25th July 2024 update - Rovco has been awarded the site characterisation operations for Green Volt, a floating offshore wind farm, located 80 km east of Peterhead in Scotland. Scheduled to be fully operational in 2029, Green Volt will become one of the world’s largest offshore floating windfarms consisting of up to 35 floating turbines generating up to 1.5 TWh a year.
Conclusion
Rovco, Psyomics, Pervasid, Paragraf and Oxford Space I’ve assesssed as “A” prospects.
Of these Rovco stands out by head and shoulders and an IPO in 2025 or 2026 would not surprise me.
But the others are not far behind. They all appear to have reached technical achievement and commercialisation is occurring. Arguably PervasID is less further along with commercialisation but appears to have strong marketing.
For the “B” assessments, SaaS products like PatientSource or fire protection products like Plumis appear “built” but now need to progress to commercial success so appear to be earlier stage.
The point of this exercise is to try to work out whether NSCI can earn any 10%-20% on gains to valuation, over and above the AuM fees charged to manage investor’s risk capital under Martlet.
The answer appears to be yes, there’s certainly potential. Actually there are several opportunities for such earnings within the 35 thus far covered, although this will happen over time - not jam today.
In Martlet Part 1 we counted £108.5m of NAV today we see a further £99.6m of NAV. But RovCo and Pysomics raised £34m post period.
The Martlet investment is only £23.3m but these investments are part of a wider £242.1m of net assets at these holdings with 11 more holdings to analyse in Part 3.
We may end up with 46 companies with circa £0.3bn of high-tech assets and ideas. That is just a little bit exciting.
Remember the net assets themselves are not relevant; it’s the ability of Martlet’s investments to be revalued is. The scale of the 46 companies was not apparent to me; so this exercise has been useful.
Regards
The Oak Bloke
Disclaimers:
This is not advice
Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as "blue chip".
Post Scriptum - PDS update added £1m
PS: I also want to point out to NSCI holders that PDS is now up 33% at $4.09 from its recent lows sub $3 (NSCI’s holding in PDS was worth just £2.4m in my article “Year End 2023”) and we have exceeded the double top of $4.00 in May. This holding is worth £3.4m to NSCI today.
Is that extra £1m of LISTED company valuation reflected in NSCI’s share price? No. The opposite. The NSCI share has retreated from 76p to 72p.
