Although magnetic resonance imaging (MRI) technology is most commonly associated with the healthcare industry – and is used to create detailed images of the organs and tissues in the body – companies such as Nanalysis Scientific (TSXV:NSCI) are broadening the horizons of MRI capabilities.
With its headquarters in Calgary, Nanalysis is a company that develops and manufactures compact MRI and nuclear magnetic resonance (NMR) devices for clinical, laboratory and industrial markets.
Of particular note, these portable devices do not need liquid helium or other cryogens and can be used across different industries such as medical, pharma, biotech, mining and oil and gas as well as government and university research labs around the world.
In an interview with The Market Online, Nanalysis Scientific CEO Sean Krakiwsky explained the company has broadened the scope of its products and services to reach a wide range of markets, and he added that the pharmaceutical market remains its largest industry vertical.
In other words, Nanalysis Scientific presents itself as a distinct play that services a variety of sectors, giving investors exposure to industries they might not otherwise have.
As the company continues to ramp up its efforts, The Market Onlinetakes a closer look at Nanalysis and its product offerings, what it has in store for the future, and what makes it a sound investment opportunity.
A dive into Nanalysis
Established in 2009, Nanalysis Scientific’s business model is what it calls, “MRI and NMR for industry,” as the company develops and manufactures portable NMR spectrometers or analyzers for laboratory and industrial markets.
In a nutshell, thanks to its technology, Nanalysis can help analysts identify and understand items that are integral for industrial and commercial purposes. This includes being able to detect if something is branded correctly, such as whether extra virgin olive oil is authentic or if it’s an inferior imitation product that has been diluted with soy oil.
The company’s technology can also determine whether fish supplements have problematic components or if pills taken off the streets are illegal narcotics that have been modified.
“Big Pharma, food [companies] petrochemicals, advanced materials, [and] a lot of universities use our portable MRI machines to determine exactly what molecules are in a substance of interest, such as a new drug being designed by companies like Pfizer or Eli Lilly,” Krakiwsky told The Market Online. “The portable magnetic resonance machines can also detect how much THC is in cannabis oil, or how much lithium is in a lithium brine pool.”
All of this is to say that Nanalysis Scientific’s technology is shaping the way pharmaceutical companies develop drugs and helping industrial chemists determine whether a chemical reaction is legitimate.
Notably, the company’s flagship products are the 60 megahertz and 100-megahertz portable magnetic resonance machines, of which Krakiwsky said Nanalysis has sold more than 1,200.
The 60 MHz Benchtop product is the company’s flagship all-in-one compact benchtop magnetic resonance spectrometer, which can be transported anywhere and makes hands-on access easy. The platform comes with an easy-to-use interface controlled by a touchscreen, keyboard and mouse, or external computer with data that can be acquired easily by the user.
Source: Nanalysis Scientific
Meanwhile, the 100 MHz product improves productivity with rapid and accurate results. The product is also the top high-field NMR console on the market and allows its users to access more information with better peak dispersion and resolution.
Source: Nanalysis Scientific
From a geographical perspective, Krakiwsky explained that Nanalysis’ most important market is currently the United States, which is where the company has its largest presence. Nanalysis also sells directly in certain parts of Europe and has plans to expand its direct sales presence into other international markets such as Japan, India and even Indonesia where it currently sells via a network of local dealers.
The Nanalysis competitive advantage
Krakiwsky told The Market Online that the company’s core technology platform is where the company really shines.
Case in point, what sets these products apart, unlike most other MRI machines, is the size. If you’ve ever had an MRI scan done, you know that most MRI machines require a large, dedicated room. Nanalysis machines are only a fraction of the size and are portable.
Despite their smaller sizes, however, the company’s machines are powerhouses in their own right. Because of this, the machines are easily marketable to universities, labs and smaller-scale companies.
“[Nanalysis’ advantage] is that [it] has been the most successful at miniaturizing this technology,” Krakiwsky told The Market Online, adding that only one or two other companies have been able to scale down the size of the technology. “Nobody else in the world has been able to succeed the way we have.”
Krakiwsky explained that all the technology the company has developed is patent-protected, and Nanalysis Scientific also does all its proprietary manufacturing to protect its intellectual property.
As of February, the company has more than 10 patents granted and/or pending in the United States. Patents protect innovations in the field of technology and give the owner exclusive rights to its property so others cannot make, use, offer for sale, sell or import into the United States the invention claimed.
Q4 and full year 2023 financial results
In late April, the company revealed its Q4 and full year 2023 financial results. During Q4 2023, Nanalysis Scientific showed continued revenue growth quarter-over-quarter fueled in part by the expansion of the Airport Security Project.
“Our security services segment completed taking over all basic services on the company’s Airport Security Project early in 2024, and this project will continue its expansion and roll-out, building towards full revenue run rate through the year. Additionally, in 2023 we had significant up-front training costs which contracted our margins. In 2024, we expect that to be significantly reduced and look for security services margins to improve throughout the year,” Krakiwsky said in a statement.
The company also achieved a new quarterly revenue record of $9.8 million driven in part by the continued expansion of security services related to Nanalysis’ airport maintenance project.
Nanalysis also completed in January the phase-in period related to its airport security maintenance project resulting in its security services business performing maintenance of passenger screening imaging and detection equipment across all of Canada and beginning a scale up phase to increase revenue to its expected run rate.
The future for Nanalysis Scientific
As Nanalysis looks to potentially expand into other markets, investors can watch for several catalysts and milestones as 2024 carries on and eventually moves into 2025.
Krakiwsky said investors can expect partnership announcements from the company as well as ones related to regulatory changes for how its main flagship products will drive pharmaceutical companies into adopting this new technology.
“[There will also be] continued growth on [the company’s] services side of our business,” he said.
The most important thing in 2024, however, will be Nanalysis Scientific achieving profitability, which has not always been the case for the company.
The management team
Sean Krakiwsky, CEO
Krakiwsky is the founder of Nanalysis Scientific, which is his third tech startup in a 20-year period. Over the course of those two decades, he raised more than $75 million in equity funding.
Krakiwsky previously founded and built Acceleware (TSXV:AXE), a company that provides software solutions to harness the parallel processing capabilities of multi-core GPUs/CPUs for the electronic design and oil and gas industries.
Krakiwsky has Master of Science and Bachelor of Science degrees in electrical engineering from the University of Calgary. He was drafted by the NHL’s Los Angeles Kings in 1986 and played in their farm system for two years before going back to school in 1990.
Randall McRae, CFO
In addition to being an entrepreneur, Randall McRae has more than 15 years of experience with public and private companies and professional service firms. In 2007, McRae received his Bachelor of Commerce degree in accounting from the University of Calgary and received his chartered accountant designation in 2010.
McRae later completed the CPA Canada in-depth taxation program and was recognized as one of the top nine students nationally in his class. Prior to his role with Nanalysis Scientific, McRae was a senior manager in a large accounting firm. He also previously co-founded a technology-focused professional services firm and held a senior role in a publicly traded oilfield services company.
Julien Muller, CTO
Julien Muller has more than 16 years of experience in the NMR/MRI technology market. After obtaining a diploma in electronic and system engineering from INSA Strasbourg, he started with RS2D in 2004, studying and designing RS2D’s first NMR spectrometer solution.
From there, Muller designed a custom MRI product using a superconducting cryogen-free magnet and high-field NMR console. In 2018, Muller released the fourth generation of NMR/MRI spectrometer, providing the latest FPGA technology to the whole magnetic resonance product profile.
The investment corner
At the time of this writing, Nanalysis Scientific Corp. has a market cap of C$50.27 million and 111.72 million shares outstanding. Year-to-date, shares of the company are up 9.76 per cent to $0.45 as of market close on April 23.
Trading on the TSX Venture Exchange, Nanalysis is a small-cap tech company with technology that will transform the pharmaceutical and industrial industries, among others.
With a number of milestones to look forward to this year as Nanalysis gears up to lock down partnerships and expand its presence, the company might just be the right fit for your investment portfolio.
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