www.asterand.com
Asterand plc is the leading global supplier of high quality, well characterized human tissue and human tissue-based research services to drug discovery scientists. Our mission is to provide human tissues and services to accelerate the identification and validation of drug targets and enhance the selection of drug candidates with an increased likelihood of clinical success.
Asterand's Coombs says NCI supply contract will make a 'material difference' to business
Asterand's (LON:ADT) human tissue supply contract with America’s National Cancer Institute will make a “material difference” to the business, chief executive Martyn Coombs said.
The deal, to provide bio-specimens to the NCI as part of the prestigious Cancer Genome Atlas, is worth an initial U$5 million and up to US$24 million over five years.
It vindicates the decision to chase new sources of business following the downturn in spending in the contract research market.
“Last autumn we saw the pharma market go into a pause in spending,” Coombs said
“We couldn’t sit on our hands. So we made the decision to build up other sources of revenue, in diagnostics and in government.
“It has taken a while to retool the business and appeal to these different markets.
“I am very proud we have achieved this. We now have a far more de-risked and diversified business.
“This will stand us in very good stead next year as we believe the pharma market will begin to come back - and now we have the other sources of revenue as well.
“Another thing we should say is clearly with our sort of business, a lot of our costs are fixed.
“What we are doing now is putting additional revenue through the same machine.
“You can imagine what will happen to the business when you start adding a contract like this, which is not far shy of 20 per cent of revenues this year. It makes a very material difference.”
Coombs has already described the tie-up as a “game changer”.
Victoria Blanc, vice-president of government affairs at Asterand, said: “(It is) a launching pad to the next level of business and Asterand has a real opportunity to build a meaningful company.”
She told a conference call with City analysts: “Our government contract strategy is paying off. Our capabilities are being recognised by the National Cancer Institute.
“We are the largest contractor through the tissue network of the cancer genome atlas.....We see multiple prospects for future government contracts.”
Prior the NCI deal, Asterand’s customer base was big pharma, which used its human tissue research services.
However a series of mergers and cost cutting initiatives put the brakes on outsourcing of this kind.
Coombs said in August that the market is unlikely to pick up until early 2011.
Daniel Stewart, the firm’s broker, is predicting the company will make a full-year loss of £900,000 on revenues of £13m. In 2011, however, it forecasts a significant growth in revenues to £17m, with profits of £900,000.
Analyst Vadim Alexandre said: “Not only is this contract expected to push Asterand back into profitability but it also further demonstrates the group’s success at expanding its work with government institutions.”
