Microsaic is a curious gem

I believe I’ve a found another beaten down stock with great potential, which could easily multi-bag. It’s name is Microsaic Systems (AIM: MSYS) and it makes miniaturised chip-based mass spectrometers.

The beauty is that it’s priced to go bust but managed to persuade some of the smartest small cap investors to invest in a £5m fundraise in January. Gervais Williams of Miton fame now has taken a holding of 7.9% and Intuitive Investments Group (AIM: IIG), headed up by the legendary med-tech investor David Evans has taken a 4.1% stake.

David Newton’s Helium (ISPartners ) holds 9.7% and has been reducing but I don’t think it is likely to sell further, indeed according to an RNS issued on 9 March, Helium has assured the company there are no imminent plans for a further reduction in its sales. (See the full list of holders above 3%)

So why have 3 of the smartest small cap investors taken a stake in this tiny dog of a share?

Well, there is an opportunity that the masses haven’t cottoned onto yet.

Microsaic has some very interesting technology as it specialises in mass spectrometry. Confused? I can sympathise: ‘What the hell is that?’ was my reaction when I first came across the term ‘mass spectrometry’. That may be part of the reason many private investors have ignored it.

Allow me to explain… Mass spectrometers are designed to improve the efficiency of chemical and biological workflows. Specific applications of mass spectrometry include drug testing and discovery, food contamination detection, pesticide residue analysis, isotope ratio determination, protein identification, and carbon dating.

A recent agreement with DeepVerge enables Microsaic’s contamination detection equipment and services to be sold by DeepVerge’s sales network, as well as its marketing and distribution channels in the laboratory, chemical, biochemical, biofuel and biodegradable plastic and waste-water treatment industries.

Still, the development that really has me excited is the collaboration with DeepVerge  to accelerate the development of the MicrotoxBT breathalyser. This ground-breaking device combines miniaturised mass spectrometry with DeepVerge’s AI data analytics to detect spike proteins of the COVID-19 virus, SARS-CoV-2, on a person’s breath. Resulting in fast, reliable, and efficient test results of the population at the point-of-need.

According to Microsaic, this platform has the potential to quickly enable GP clinics to refer serious conditions, by using biomarker binding agents capable of detecting up to 40 diseases on the human breath, including:

  • Cancer
  • Neurodegenerative conditions
  • Respiratory illnesses
  • Metabolic conditions

While I’m always wary of hype from companies, I don’t think this development falls into that category. The investment by IIG, and David Evans personally, also gives it a lot of credibility. After all, Evans has previously invested in multiple multi-baggers in the medical devices market, including: EKF Diagnostics, Genedrive and Omega Diagnostics.

I’ve taken a small position in this stock and will continue to conduct further research. It’s certainly worthy of further investigation as any significant traction should see it multi-bag from here.

Indeed, its new chairman, Gerard Brandon — who just happens to be CEO of DeepVerge — appears to be helping to engineer a transformation in the company’s fortunes.

Brandon has certainly shown that he can walk the walk as well as talk it. He was chief executive of Alltracel, a wound-care company that was sold for US$55 million in 2008. More recently, he appears to be doing great things with DeepVerge.

At the time of writing Microsaic is 0.25p a share!

The writer holds stock in Microsaic Systems

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