Big things expected of EpiStem's Genedrive device

11th Oct 2011 08:44

Epistem, the biotechnology company specialising in diagnostic aids for the treatment of cancer and gastrointestinal diseases, continued on its steady growth path last year.Revenue in the year to June 30th edged up to £5.75m from £5.74m the year before, while profit on ordinary activities before taxation improved to £0.36m from £0.35m, despite one of Epistem's three main divisions - Novel Therapies - having a bit of a fallow period.A tax rebate meant that the post-tax picture was a lot healthier looking, with the profit after tax rising to £0.39m from £0.29m last year, resulting in diluted earnings per share advancing to 4.3p from 3.3p.Contract Research Services, which provides specialised pre-clinical efficacy testing, primarily for drug development companies, delivered a 19% year-on-year growth in revenue to £3.0m from £2.5m the year before. The Personalised Medicine division, which provides rapid diagnostic devices that use a single hair follicle sample, saw its revenue grow 39% to £1.1m from £0.8m last year.The revenue stream in the Novel Therapies division - the unit that is focused on developing innovative therapeutics to late pre-clinical stage development, is "a bit more lumpy, with long negotiation periods," chief executive Matthew Walls told Sharecast.Sales in this unit dipped to £1.6m from £2.4m in the preceding year, as funding from one of its partners, Novartis, came to an end."We're happy with the progress [this division] made," Walls assured Sharecast. "You'll be getting more information on progress in this area later on this financial year," he pledged.So far as the investment analysts are concerned, though, it is the company's new Genedrive diagnostic device, a gizmo "bigger than an iPod but smaller than an iPad", according to Walls, which could prove a real boon to medical practitioners in parts of the world where a trip to the local doctor is not really a viable option.Dr. Paul Cuddon, an investment analyst at broker Peel Hunt, said: "For us the key driver is Genedrive, which affords rapid, near-patient molecular diagnosis across a broad range of medical areas." "We also note a renewed focus on internal drug development with partnering discussions ongoing," he added.Peel Hunt rates the shares a 'buy' and has a price target of 515p, based on a discounted cash flow analysis. "We see a commercial deal for Genedrive or a renewed drug development alliance as the key drivers for the shares over the next 6-12 months," Dr. Cuddon concluded.As for Walls, he would not be drawn on what deals might or might not be coming down the pike. "We're all about delivery, rather than selling the dream. We try not to get carried away with all the hype, but we are confident that this coming year is going to be a strong one," he said.--jh