Press Release 21 March 2013
(“Cyprotex” or the “Company” or the “Group”)
Final results for the year ended 31 December 2012
Continued Revenue Growth and Investment in Core Technology
Cyprotex PLC (AIM: CRX), the preclinical ADME-Tox services company, today reports its final results for the year ended 31 December 2012.
^ excluding share-based payment charge
• 156 new customers with a 19% increase in revenue generated from existing and new strategic clients.
• Dr Clive Dilworth appointed as Chief Scientific Officer to lead the scientific direction of the Company.
• Launch of CellCiphr® Premier, a new proprietary service which combines in vitro and in silico technologies in the prediction of toxicology.
• Collaborative 18 month research agreement signed with Pfizer to evaluate and further develop several of Cyprotex’s proprietary offerings in the area of predictive toxicology.
• Strategic alliance formed with Sirius Analytical Instruments Ltd, leaders in physicochemical profiling, to offer Sirius services to Cyprotex clients.
• First commercial licensing agreement with Sigma® Life Science to provide cell-based services using their transporter knockout cell lines.
• Joint service offering announced with InSphero AG using their proprietary 3D microtissue model.
• Continued reduction in reliance on top 5 customers accounting for 30% of revenue in 2012 compared to 35% two years ago.
• £1 million upgrade of the analytical platform including the purchase of four Waters XEVO triple quadrupole mass spectrometers and additional robotic Tecan handling equipment at the Macclesfield site.
Steve Harris, Chairman of Cyprotex PLC, said:
“Our policy of investment across the business allows us to sustain growth and drive the Company forward. As we embrace cutting-edge analytical equipment and robotics to support our rapidly expanding menu of mainstream ADME assays, develop innovative tests in both ADME and Tox areas, and enhance our employee development, we strive to provide our customers with a highly tailored personalised service.”
“We are confident that this investment, together with the continuing diversification of our customer base to include companies both in and outside of the pharmaceutical industry, has prepared Cyprotex for a period of substantial growth and profitability, ultimately creating value to our shareholders.”
For further information:
Cyprotex PLC Tel: +44 (0) 1625 505 100
Dr Anthony Baxter, Chief Executive Officer
John Dootson, Chief Financial Officer
Mark Warburton, Chief Operating Officer and Legal Counsel
Notes to Editors:
Cyprotex is the world’s largest contract research organisation (CRO) specialising in ADME-Tox, which is the analysis of the Absorption, Distribution, Metabolism, Excretion, and Toxicity properties of potential drugs, cosmetics, and agrochemicals. It is the only company in the world with in-house capabilities for both in vitro (test tube) and in silico (computer modelling) ADME-Tox. Cyprotex was founded in 1999 and listed on the AIM in 2002. It has laboratories in Macclesfield, Cheshire, UK (near Manchester), and Watertown, Massachusetts, USA (near Boston), making it one of only three ADME Tox CROs with international operations.
Chairman and Chief Executive Officer’s Report
Substantial growth reported from areas of core competence
Cyprotex saw continued strong revenue growth for the business in 2012. Despite a reduction in revenues from toxicology offerings, the base business in high throughput ADME assays saw substantial growth, especially from the Macclesfield site (22% increase over 2011). Revenues derived from our new internal R&D driven services also substantially increased, validating our strategy of growing the business from both existing assays and the development of new assays in response to customer need.
Geographically, US revenues are 40% (2011: 44%) and we anticipate further growth in 2013. Whilst revenues from Europe remain strong, we also note a burgeoning increase in business from the Rest of the World.
We believe the R&D investment made in both ADME and Tox assays and operational changes made over the past four years are beginning to bear fruit. The business is poised for growth in 2013 and beyond, from what is a now a stable and technically advanced business.
We have noted that our competition in the ADME-Tox field have reported mixed success in their businesses with several smaller companies becoming insolvent or being acquired by larger players and the very large CRO's reporting losses, particularly in pre-clinical toxicology. Against this competitive back drop, we believe that Cyprotex’s 2012 performance is highly creditable.
We have continued to diversify our customer base, further reducing our reliance on any one or two single customers. In 2012, our largest customer afforded 11.3% of our revenues (2011: 13.0%). We have also seen further diversification of our customer base, particularly in toxicology, with new business coming from the tobacco and aerospace industries as well as expansion into cosmetics and agrochemicals.
Cyprotex has grown to 75 staff, and as part of the development of the management function and succession planning for the business, - we have overseen a considerable restructuring of the team. The following promotions have been announced. Dr Clive Dilworth to Chief Scientific Officer, Dr Laura Hinton to Director of Scientific Operations UK, Mr Jon Gilbert to Executive Director US Operations, Dr Bodo Spori to Executive Director of Sales. Operational changes have been made to incorporate the recruitment of four more scientists in the UK laboratories. Dr Katya Tsaioun stepped down from her role as CSO, as planned and we are grateful for the considerable efforts she has made to integrate the Apredica business into the wider Cyprotex company.
The retrenchment of the larger pharmaceutical companies onto fewer sites researching fewer therapeutic disease areas that we have seen in recent years has continued into 2012. The consequences of such reorganisations have meant that there have been fewer opportunities for strategic outsourcing, particularly in drug discovery programs and in ADME Tox screening. As this begins to settle, we are starting to see more opportunities for strategic contracts and in recent months, we have been more successful than ever before in bidding for and securing larger ADME screening contracts.
Our toxicology services offering which performed so well in 2011 suffered a setback in 2012 as a large US Government contract was delayed. The inability to recognise this revenue in a large part explained our half year financial performance which recorded an operating loss of £189,000 on a turnover of £3,719,000. As in previous years, the second half of the year was stronger than the first half and we recorded several sizable contract wins. Revenues in October topped £1 million for the first time in the Group's history and demonstrated the potential of the business.
Cyprotex has invested in capital expenditure heavily in 2012, most notably in the complete upgrade of our mass spectrometer analytical platform. With the acquisition of four new Waters Xevo triple quadrupole mass spectrometer instruments, we believe Cyprotex’s analytical capabilities are second to none in companies of our type and space. We have also acquired a new robotic screening platform at a cost of £110,000 to augment our existing BasePlate high throughput screening platform.
Cyprotex’s investment in R&D continues to provide new, state of the art, ADME-Tox assays for our customers. Their direction and advice in which assays would be of interest has proved invaluable in launching such successful new assays, including:
• CellCiphr® Premier - an updated, improved and more accurate version of our high content toxicology prediction service.
• Transporter knockout cell-based assays – utilise Sigma® Life Sciences transporter knockout cell lines for identifying transporter based drug interactions.
• 3D microtissue assays – offer a more physiologically relevant in vitro model which utilises InSphero AG’s proprietary hanging drop technology.
• PXR and AhR nuclear receptor activation - provides an early stage screening approach for enzyme induction
• Lysosomal trapping – identifies drugs which accumulate in cells resulting in potential toxicity
Of particular note, is the paid research collaboration with Pfizer to develop CellCiphr® by incorporating elements of our proprietary Cloe® PK prediction algorithms to vastly improve prediction rates for potentially toxic therapeutics.
We have also continued our strategy of developing a 'Federated' approach to widening our service offerings by partnering with organisations who are at the forefront of their respective fields. In addition to our existing partnering agreement with Sygnature Discovery, we have signed partnership arrangements in 2012 with Sirius Analytical to offer high throughput physical chemistry data and with InSphero AG to co-market and provide services related to their proprietary 3D InsightTM liver microtissue technologies.
Despite not being able to recognise a substantial amount of revenue from a delayed US contract, we have been able to grow our group revenues by over 5% to £8.33 million - a record turnover for the business. We are also pleased to record a fifth consecutive year of profitability (recovering from a loss at the half year); positive cash flows from operations and with operating profits of £0.33 million (2011 £0.67 million).
The balance sheet remains strong with net assets of £7.0 million (2011: £6.8 million), with £0.9 million held as cash (2011: £1.1 million).
The Group has invested over £0.44 million in R & D (2011: £0.58 million). Specifically, a further £93,000 (2011: £172,000) was invested in the continuing development of CellCiphr technologies which were acquired at the time of the Apredica acquisition in August 2010. Consequently, in September 2012, Cyprotex was able to launch the CellCiphr® Premier assay which incorporates our predictive technologies within our proprietary High Content Toxicology Screening portfolio.
As noted last year, the Group continued to invest in capital equipment spending £1.1 million (2011: £0.31 million) with the majority on four Waters Xevo TQ mass spectrometers and a new Tecan based robotic screening platform, utilising three to five year leasing facilities to assist funding this capital program at funding rates of 70% or 90%. Cyprotex’s analytical platform is now state of the art and comparable to the best the industry has to offer. We will continue to invest in specific new analytical equipment in 2013 to widen our service offering capabilities, with a further two Xevo TQ mass spectrometers at a cost of £388,200 on order at year end, with delivery and commissioning due in Q1 2013.
When non-cash items and acquisition costs are deducted, the underlying EBITDA recorded for the year was pleasing at £0.97 million (£1.31 million in the previous year and £0.77 million in 2010). This is a key indicator of the groups continuing ability to generate cash from its core operation.
Following an expansion of our scientific lab based team in Macclesfield required to cope with the increase in business on the UK site, our total head count at the date of this report is now 75.
Outlook and Summary
Our policy of investment across the business allows us to sustain growth and drive the Company forward. As we embrace cutting-edge analytical equipment and robotics to support our rapidly expanding menu of mainstream ADME assays, develop innovative tests in both ADME and Tox areas, and enhance our employee development, we strive to provide our customers with a highly tailored personalised service.
We are confident that this investment, together with the continuing diversification of our customer base to include companies both in and outside of the pharmaceutical industry, has prepared Cyprotex for a period of substantial growth and profitability, ultimately creating value to our shareholders.
Dr Anthony D Baxter
Chief Executive Officer
21 March 2013