UN­DER THE BONNET

We re­veal how the £219m com­pany’s col­lab­o­ra­tion with the NHS could ben­e­fit both par­ties

Shares - - CONTENTS - By Lisa-Marie Janes Re­porter

Sen­syne Health mar­ries health­care with AI

Small cap Sen­syne Health (SENS:AIM) op­er­ates in the fast-grow­ing spe­cial­ist area com­bin­ing health­care and ar­ti­fi­cial in­tel­li­gence.

It is also a story with an eth­i­cal bent as the model should help de­liver in­come to the NHS.

Sen­syne Health, which joined AIM in Au­gust 2018 rais­ing £60m, analy­ses anony­mous data from the NHS to help im­prove med­i­cal prac­tice and care us­ing ar­ti­fi­cial in­tel­li­gence al­go­rithms de­vel­oped by Ox­ford Univer­sity.

The com­pany is keen to in­crease its ca­pac­ity to cu­rate and an­a­lyse sig­nif­i­cant datasets, prompt­ing a re­cent agree­ment with ac­count­ing firm EY.

The deal will al­low Sen­syne Health to boost ca­pac­ity, in­crease its scale more rapidly and de­velop a frame­work for the eth­i­cal use of pa­tient med­i­cal data.

HOW DOES SEN­SYNE HEALTH GEN­ER­ATE SALES?

Sen­syne Health gen­er­ates sales by us­ing data that is made anony­mous by the NHS through a pre-agreed tool with anal­y­sis of the data also pre-ap­proved by the rel­e­vant NHS trust.

This data is pro­cessed by the com­pany be­fore be­ing sold to phar­ma­ceu­ti­cal firms to un­der­pin med­i­cal re­search and to im­prove clin­i­cal tri­als.

Thanks to the model used by Sen­syne, the NHS re­tains own­er­ship of the data and pa­tient con­fi­den­tial­ity re­mains un­com­pro­mised.

Clin­i­cal trial fail­ures, par­tic­u­larly at the Phase III stage, can have a sig­nif­i­cantly neg­a­tive im­pact on phar­ma­ceu­ti­cal busi­nesses so any­thing that im­proves the chances of suc­cess should be a com­pelling propo­si­tion.

Clients con­tact Sen­syne Health with ques­tions and re­quests for spe­cific in­for­ma­tion that can be an­swered us­ing the high-qual­ity data from the NHS.

A re­quest for in­for­ma­tion is ex­pen­sive, cost­ing be­tween £100,000 and £150,000, with anal­y­sis gen­er­ally tak­ing a few weeks with the help of com­puter sci­en­tists.

HOW DOES THE NHS PART­NER­SHIP WORK?

Sen­syne Health cur­rently has ac­cess to NHS pa­tient data from Ox­ford Univer­sity Hospi­tal, South War­wick­shire, and Chelsea and West­min­ster Foun­da­tion Trusts.

Each trust will re­ceive £5m worth of shares in Sen­syne when a part­ner­ship is formed, plus a roy­alty on any prod­ucts de­vel­oped us­ing its data.

The NHS trusts col­lec­tively hold a 10% stake in Sen­syne Health, en­cour­ag­ing ben­e­fi­cial col­lab­o­ra­tion be­tween both par­ties. The stake in NHS hands is likely to in­crease when more trust part­ner­ships are agreed.

BEN­E­FITS OF CU­RAT­ING DATA

Sen­syne Health has a range of dig­i­tal health prod­ucts that

can gen­er­ate and cu­rate data, such as GDm-Health, a sys­tem that can be used to mon­i­tor ges­ta­tional di­a­betes.

Chief ex­ec­u­tive of­fi­cer Paul Drayson says GDm-Health has al­lowed Sen­syne Health to cre­ate a data­base on di­a­betes in preg­nancy, help­ing to im­prove man­age­ment of the con­di­tion.

LI­CENS­ING EX­CIT­ING DIS­COV­ER­IES WITH LIT­TLE RISK

A com­pany can get anal­y­sis on pa­tient data on a spe­cific con­di­tion be­fore a clin­i­cal trial starts through Sen­syne Health to help with the de­sign and find out what pa­tients were treated with.

Re­search con­ducted by Sen­syne Health can lead to the cre­ation of new in­tel­lec­tual prop­erty that can be li­censed to phar­ma­ceu­ti­cal com­pa­nies for up­front and mile­stone pay­ments, as well as roy­al­ties.

The com­pany has no UK-listed com­peti­tors, with the clos­est ri­val be­ing Deep­Mind Health. This is a sub­sidiary of Deep­Mind Tech­nolo­gies, owned by Google par­ent com­pany Al­pha­bet.

Deep­Mind Health uses NHS data via part­ner­ships to de­velop tech­nolo­gies for im­prove­ments, although it has not been an easy time for the busi­ness.

Google re­cently came un­der fire over its de­ci­sion to move Deep­Mind Health into Google Health. Crit­ics say this breaks a pledge with the NHS that data will never be con­nected to Google ac­counts or ser­vices.

Peel Hunt an­a­lyst Miles Dixon says the de­ci­sion may cre­ate chal­lenges for NHS part­ner­ships, par­tic­u­larly af­ter Lon­don’s Royal Free Hospi­tal pre­vi­ously failed to com­ply with UK data pro­tec­tion laws when work­ing with Deep­Mind.

WHAT ARE THE RISKS?

Sen­syne Health has bold plans to dou­ble the num­ber of NHS trust part­ner­ships to six over the next two years.

The com­pany is not prof­itable but does gen­er­ate rev­enue, with sales ex­pected to rise from £0.1m to £0.6m in the year to 31 De­cem­ber 2019 ac­cord­ing to the fore­casts avail­able from house bro­ker Peel Hunt.

In 2020, sales are fore­cast to rise to £2.3m be­fore jump­ing more than five-fold to £12.5m in 2021, although the busi­ness is still ex­pected to be loss-mak­ing at that point.

One of the dif­fi­cul­ties for Sen­syne Health is find­ing the right peo­ple in a com­pet­i­tive field and this is where a big chunk of the IPO pro­ceeds is be­ing spent.

Drayson says Sen­syne Health’s big­gest ex­pense is its peo­ple, not its ar­ti­fi­cial in­tel­li­gence plat­form. He wants to re­cruit more staff, par­tic­u­larly com­puter sci­en­tists to an­a­lyse the data, from 40 to 80 by the end of 2018.

An­other key risk is that Sen­syne Health may be un­able to seal new NHS part­ner­ships at the pace it hopes.

WHAT IS THE PO­TEN­TIAL?

Data an­a­lyt­ics in ar­ti­fi­cial in­tel­li­gence could be lu­cra­tive with a po­ten­tial peak mar­ket worth ap­prox­i­mately $60bn ac­cord­ing to the McKin­sey Global In­sti­tute.

Dixon notes some sig­nif­i­cant trans­ac­tions in this space ‘Google paid over £400m for the Lon­don-based start-up Deep­Mind in 2014 and Roche re­cently com­pleted a $1.9bn ac­qui­si­tion of Flat­iron Health,’ he says.

How­ever with the com­pany not likely to be prof­itable for some time, in­vestors are go­ing to have to be pa­tient and likely ac­cept volatil­ity in the share price along the way.

Source: Peel Hunt, Sen­syne Health

HOW THE COM­PANY LOOKS TO CON­NECT LIFE SCIENCES AND HEALTH­CARE

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