Instem on track to meet target after FDA boosts outlook

12th Jan 2015 14:47

Strong order intake has seen IT supplier Instem begin 2015 with its largest ever opening sales backlog.The firm, which supplies IT applications to drug developers, said it expects to meet full year's expectations for 2014 after a "very encouraging" final quarter.House broker Singer N+1 said this implied revenues in the region of £13.0m, with adjusted earnings before interest, tax, depreciation and amortisation of £1.8m and earnings per share of 8.0p. Analysts expect the balance sheet to have returned to a net cash position given the usual working capital cycle when cash collections are made as annual contracts renew.Last month Instem received a big boost as the US regulator, the Food and Drug Administration (FDA), announced definitive guidance last month that it will finally make the electronic submission of study data mandatory, known as SEND.As a result, the group said it expected to see an even bigger demand for its Centrus-Submit product, which converts data from any source system into SEND files and allows all parties, including regulators, to share and analyze study data."Instem experienced strong demand for its offerings during the fourth quarter of the year and, in addition, its Centrus-Submit solution should now attract increasing opportunities as the deadlines for SEND compliance approach," said group chief executive Phil Reason."We have opened 2015 with our largest ever opening backlog and this, combined with our high contract renewal rate, gives us confidence for the coming year."Singer's analysts noted that, despite the record opening backlog ahead, prudence guided them to leave forecasts unchanged for now, "but we are increasingly confident that the sensitivity is to the upside".Instem shares were up 8.21% to 145.00p at 14:54 on Monday.