Editing Instem plc: $12m five-year agreement with Leading Contract Research Organisation

02 September 2022

$12m five-year agreement with Leading Contract Research Organisation

Further growing SaaS revenues with long-term client

Instem plc (AIM: INS), a leading provider of IT solutions to the global life sciences market, announces a five-year agreement, worth over $12 million, with a leading global contract research organisation ("CRO" or "Client") to support over 2,000 users worldwide in their clinical trial analysis.

The Client, which has been a clinical trial analysis customer since 2016, is adopting Instem's new Aspire™ software solution, being developed by the Group's Clinical Trial Acceleration business unit, formed in 2021 following the acquisition of d-Wise Technologies, Inc. ("d-Wise"). This contract demonstrates the execution of the Company's SaaS strategy and the value of its inorganic growth strategy through the d-Wise acquisition, further expanding Instem's global coverage and end-to-end solutions.

The initial five-year agreement includes a one-time implementation project worth approximately $3 million, revenue to be recognised during 2022 and 2023, with recurring software-as-a-service ("SaaS") subscription revenues worth at least $2.25 million annually over 4 years, with revenue forecast to be recognised from late quarter three 2023. Additional Amazon Web Services Cloud fees charged to the client will be variable based on actual usage.  Aspire related SaaS revenue will provide increased visibility and higher margin returns for the Company compared to previous, custom statistical computing environment ("SCE") implementations. For this client specifically, annual recurring revenue is expected to be approximately $1m more than currently received to host their custom SCE.

The Aspire solution is a significant advancement in the Client's digital transformation, providing cloud-native capabilities that will enable scalability, elasticity, and resiliency. The Client will benefit from a suite of leading, modern analysis tools and efficiencies through new workflow features. This will accelerate both the CRO's delivery of clinical trial results to their clients and their clients' delivery of life-saving medicines to patients.

The contract is the largest ever received by Instem and will help to underpin management expectations for the current and future years.

Phil Reason, Instem Chief Executive, commented: " This agreement marks a key juncture in our long-standing relationship with the Client, and we are very excited to support them as they adopt their next generation solutions. Using Aspire, they will see significant advancements in their current capabilities and overall robustness.

"This agreement underlines the advantages of our long-term acquisition strategy in broadening our market reach, technological capabilities and client list while providing opportunities to introduce compelling new SaaS solutions that advance our mission to help to radically reduce the cost and time of drug development."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Which is the main investment that this update relates to? [[Main investment::Instem plc]]