www.epistem.co.uk
Epistem is a biotechnology company commercialising adult stem cells in the areas of oncology and gastrointestinal diseases as well as cosmeceutical applications. Epistem develops innovative therapeutics and diagnostic biomarkers and provides contract research services to drug development companies. The Group's expertise is focused on the regulation of adult stem cells located in epithelial tissue, which includes the gastrointestinal tract, skin, hair follicles, breast and prostate. Epistem does not conduct research in the areas of embryonic stem cells or stem cell transplantation.
Edison Investment comments on Epistem interims
Edison Investment Research said that Epistem’s interim results last week show that it is maintaining its position in the competitive contract research and biomarker business. According to Edison, Epistem is profitable and it is supported by the prospect of future royalties and milestones from the Novartis deal, which ends in February 2011.
The research house noted that the company’s major two-year Novartis deal is well underway and it is progressing strongly. Through the Novartis collaboration, Epistem received £2.8m upfront in March 2009, and it is to receive a further £1.2m per year in direct R&D costs. Edison noted that Epistem achieved a 90% increase in revenues relating to the collaboration compared to H109.
As the deal passes its first anniversary, Edison indicated that a renewal of the Novartis collaboration may prove to be influential for Epistem.
Additionally Edison identified Epistem’s Biomarker business as a potential growth area. The researcher noted that the number of new tests used in inflammatory bowel disease may be growing, and a US government contract remains important. According to Edison the division is stable overall with a loyal customer base.
Edison said the Biomarker business remains a major potential growth area for Epistem, with potential sales estimated in the £2-3m range by 2012-13. However the research house also said that whilst it is still too early to tell after 18 months, there is no obvious sales momentum. According to Edison, a major clinical trial contract would transform the business and would subsequently lead to other customers.
Epistem has indicated its desire to acquire a revenue earning, profitable, high-growth diagnostics business although a transforming one-off transaction has proved difficult, Edison said. Alternatively a series of smaller transactions would be more complex to execute and integrate, but may offer better returns, the researcher added.
