Caution and contract delays amongst Epistem's (EHP) pharmaceutical customers, combined with investment spend, explains the half-year loss at the personalised medicine and diagnostics group. Still, the development of its Genedrive diagnostics product holds promise - that will soon generate its first milestone payment, of $1m (£0.66m) from partner Beckton Dickinson, and is on track to gain regulatory approval in India in July for a tuberculosis test.
Management reckons that Genedrive can provide a more accurate test result, and far more quickly, than the current comparative tests - 45 minutes compared with four weeks. By end-2012, it should be generating its first, modest, revenues, but sales should pick up quickly next year. Moreover, Beckton Dickinson - which holds global rights outside of India - will pay further milestones over the next six to 12 months. Following the tuberculosis product, there are plans for malaria and hepatitis C assays. Epistem's preclinical services and biomarkers operations, meanwhile, remain relatively low-risk cash generators that are helping to fund development. Pre-clinical sales shrank to £1.3m from £1.4m a year earlier as pharmaceutical clients became more cautious about research & development spending. But the biomarkers unit continued to make progress, thanks to deals with GlaxoSmithKline and Sanofi-Aventis.
Broker Peel Hunt expects full-year pre-tax profit £0.3m, giving EPS of 2.7p (2012: 2.9p loss per share), jumping to 12.6p in 2014 and then 24p in 2015.
EPISTEM (EHP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 550p | MARKET VALUE: | £53.4m | |
| TOUCH: | 545-555p | 12-MONTH HIGH: | 573p | LOW: 400p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 133p* | NET CASH: | £7.3m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 3.06 | -0.54 | -4.80 | nil |
| 2012 | 3.05 | -0.33 | -2.60 | nil |
| % change | - | - | - | - |
Ex-div: Payment: *Includes intangible assets of £2.6m, or 27p per share | ||||
