Asterand shares soar on major contract win

Asterand (LSE: ATD) shares soared after it revealed a major new contract for its tissue supply business.

The five-year deal is worth up to US$24.3 million, with an initial US$5.4 million expected over the first 17 months.

The company will supply biospecimens to the US National Cancer Institute (NCI), as part of its prestigious cancer research project - The Cancer Genome Atlas (TCGA).

“The TCGA will revolutionize the molecular understanding of cancer ... We feel privileged to play a role in enabling the NCI to advance this critical research,” Asterand chief executive Martyn Coombs said.

The Cancer Genome Atlas applies genome analysis technologies to explore the spectrum of ‘genomic changes’ in human cancer.

“This project emphasizes the significant impact of well characterized and high quality human specimens on modern biomedical research.”

This morning, investors embraced the news on London’s AIM market. Asterand was among the ‘top risers’ as it gained around 22% to 13.75p per share.

Back in August Coombs told Proactive Investors that the second half was expected be a lot better than the first, and this substantial deal goes some way to evidence his point.

The latest contract is something of a ‘game-changer’ for Asterand, whose primary human tissue business has been squeezed by slower spending by the world's big pharmaceuticals companies in the economic downturn.

In Augusts’ interims for the first half of 2010 the company reported US$1.5 million loss, based on revenues of US$8.7 million.

Before that, at the turn of the year, Asterand summed up the evolving customer behaviour in the Biotech research sector, saying larger orders were being broken down into smaller units over time. Subsequently approximately £0.7 million of 2009’s orders were carried over into 2010, impacting the FY09 results.

Asterand’s share price was somewhat subdued in the early part of 2010 and it reached a 12-month low at 9.2p per share, on the 9th September.

Since then it has rapidly gained traction as the recently acquired BioSeek business got more appreciation among investors.

The BioSeek acquisition was Asterand's first step in its "buy and build" strategy, which intends to consolidate leadership in the global human tissue and human tissue based services market.

Asterand completed the deal in February 2010, for up to US$14 million in cash and shares.

BioSeek’s primary asset is the BioMAP biological compound profiling and drug discovery platform.

BioMap is used to model and predict the effects of drug candidates before they are tested on live subjects.

It uses complex human primary cell cultures to replicate intricate cell and pathway interactions observed ‘in vivo’ (in-the-living), to provide meaningful ‘in-vitro’ (within-the-glass) biological data which directly relates to human pharmacology and toxicology.

Since February BioSeek has secured five new collaboration deals, with the most recent contract being signed last week.  On 23 September, BioSeek announced a two-year deal to help Cellzome predict human responses to its new drugs for inflammatory diseases.

Cellzome will use BioSeek’s BioMAP platform to asses its new generation of drugs, which utilise ‘small molecules’ to treat disease such as rheumatoid arthritis.
BioSeek’s strong progress under Asterand’s ownership has not gone unnoticed among analysts.

“BioSeek, continues to outperformed our expectations”, said Vadim Alexandre, analyst at Daniel Stewart & Co.

Alexandre highlighted that the BioSeek collaboration agreements have potential to add possible future performance payments.

“Asterand can now potentially receive significant milestone payments under collaborations with its partners.”