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Instem says R&D productivity at "all-time high"

Last updated: 13:04 19 Sep 2016 BST, First published: 13:04 24 Aug 2016 BST

Kevin Spacey holding a blood sample
The software enables its clients to reduce R&D cycles.
Instem Plc (LON:INS) provides the software to log clinical trials, delivering a centralised platform for data collection, management and analysis for healthcare research and development.
The software is designed to increase client productivity by automating study-related processes, and with global R&D productivity at an all-time high across the sector, such software couldn’t be more in-demand.
The software enables its clients to reduce R&D cycles, ensure regulatory compliance and provides a greater confidence in the safety of product portfolio.
 

Global client base

Instem currently has more than 500 clients across the globe. It reports a 98% client retention rate, which it says is a “true measure of our success”.
Back in March the group landed US$800,000-worth of new contracts with two existing clients. The group said the contract were with two of the top 25 global pharmaceutical companies.
Pre-clinical is by far Instem's largest area of activity, generating around 90% of its revenues.
A recent slowdown in the early-phase clinical market was offset by a “very active” pre-clinical market.
 

Acquisitions and expansion

Earlier this year, the group acquired regulatory information specialist Samarind as part of its expansion into adjacent market areas.
The Deeside-based business generated £1.2mln in sales the year to March 31 and operating profit of £400,000. It had a cash balance of £680,000 when announced in May.
Samarind helps to achieve and maintain compliance for pharmaceutical, biotech and medical device products.
The Samarind RIM software and services provide the security, flexibility and ease of use that regulatory affairs teams need to achieve regulatory and commercial requirements.
Deployed on-site or accessed on-line to manage the acquisition and maintenance of product licences.
Speaking to Proactive, chief executive Phil Reason said the deal “really fits in with the portfolio of solutions that we have been talking about wanting to add into Instem”.

First half results

A new US standard for clinical data requirements also helped first half revenues rise by more than a fifth. 
SEND - or Standard for the Exchange of Non-clinical Data – comes in to force this December and Instem picked up six contracts specifically for the new protocol in the half year to June.
Turnover rose by 21% £9.1mln, while underlying earnings [EBITDA] were 34% higher at £1.2mln (£0.9mln).
Higher finance charges meant pre-tax profits dropped to £128,000 (£274,000). 
Reason said: “The encouraging market dynamics in early drug development, including the new regulatory requirements driven by SEND, have supported year-on-year revenue and profit growth in the first half of 2016.” 

More deals 

Instem also recently agreed a multi-year, multi-million dollar contract with its largest customer, Charles River Laboratories.
After its merger with WIL Research, Instem now has a single agreement with Charles River that means all its current licences remain intact and the deal is expected to help underpin future growth.
It has an extended support and maintenance contract until December 2022 and it will implement two “sizeable” projects for its Provantis and submit products.
In September, Instem also acquired Notocord for €4.2mln.
It has a platform used by top scientists for new drug development research within discovery, safety pharmacology and toxicology studies. 

Strong share price progress

Instem floated at 175p per share, reaching highs around 230p in the first few months. 
Shares reached a nadir at the end of 2012 at 120p. Since then there has been a gradual recovery.  
Instem is currently close to an all-time high at around 277p per share.
House broker N+1 said it saw fair value at a price between 323-341p.  
“The core pre-clinical market remains supportive and momentum continues to build around the SEND initiative, where Instem has maintained its market leading position.”
 
-- update for interim results --

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