The 'P' in PE ratio stands for price but in the case of EpiStem it should stand for potential. The company’s main source of income to date has come from a steady contract research business where the US Government has recently agreed to extend a five-year contract to conduct the topical issue of the effects of radiation sickness and novel treatments for it. The value of that annual contract has been increased from $600,000 a year to around $1m.
But the two exciting bits of EpiStem are its contracts with giant pharma and a cheap hand-held disease diagnosticator. A deal with drug giant Novartis to use body tissues to test cell regenerative medicines has ended, but may well be extended. In its place has come an agreement with Sanofi-Aventis to use EpiStem’s biomarkers (such as hair follicles) to assess the effects of cancer drugs.
EpiStem’s potential biggest money earner is a near iPad-size palm-held electronic device called Genedrive. The company claims it can diagnose diseases from swabs and urine samples within 30 minutes. If correct this could dramatically cut the number of patients referred by doctors to hospital for tests. Genedrive has not cost EpiStem a lot to develop, but development costs probably mean full-year pre-tax profits won’t be much more than last year’s figure of £350,000.
EPISTEM (EHP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 372.5p | MARKET VALUE: | £29.6m | |
| TOUCH: | 365-380p | 12-MONTH HIGH: | 435p | LOW: 327.5p |
| DIVIDEND YIELD: | nil | PE RATIO: | 79 | |
| NET ASSET VALUE: | 74p* | NET CASH: | £4.31m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£000) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 2.76 | 5 | 0.0 | nil |
| 2010 | 2.98 | 102 | 0.9 | nil |
| % change | +8 | - | - | - |
Aim: Life sciences *Including intangibles of £388,000, or 5p a share | ||||
