A tightening market for contract research due to a slowdown in overall research & development (R&D) spending by the big pharmaceutical companies, coupled with investment in rolling out its Genedrive diagnostic product, tipped Epistem (EHP) into full-year losses. However, the company's product launches in personalised medicine, and expansion into new geographic areas through new two commercial partnerships, have scope to deliver sustainable revenues in the medium-term.
The pressure was most visible in contract research where tough competition and flat-lining R&D spending meant revenues declined 3 per cent to £2.9m sending operating profits down a fifth to £0.78m. This was in stark contrast to the company's personalised medicines segment, a specialist in developing biomarkers for chronic diseases. Partnerships with Sanofi-Aventis (SAN) in oncology and GSK (GSK) in fibrosis helped to more than double divisional turnover from £1.1m to £2.7m, including a £0.4m contribution from the roll-out of Genedrive which is now partnered with Becton Dickinson and with Xcelris for tuberculosis testing in India; management estimates that both partnerships can deliver annual revenues of between $20m-$30m (£12.5m-£18.7m) within three to five years.
House broker Peel Hunt forecasts current year pre-tax profits of £0.3m and EPS of 3.1p, rising to £1.1m and 12.5p the year after.
EPISTEM (EHP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 542p | MARKET VALUE: | £48.2m | |
| TOUCH: | 535-550p | 12-MONTH HIGH: | 567p | LOW: 347p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 100p* | NET CASH: | £4.7m | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 2.07 | -1.13 | -17.0 | nil |
| 2009 | 3.97 | -0.67 | 1.1 | nil |
| 2010 | 5.74 | 0.35 | 3.8 | nil |
| 2011 | 5.75 | 0.35 | 4.9 | nil |
| 2012 | 5.56 | -0.72 | -2.9 | nil |
| % change | -3 | - | - | - |
*Includes intangible assets of £2.18m, or 24p a share | ||||
