Ergomed Plc (LON:ERGO) posted another year of strong top-line growth and said 2018 is shaping up to be another bumper 12 months.
The pharma services and drug development company posted total sales of £47mln for the period to December 31, up 21%, while net service revenues were ahead 35% at £39mln.
It won £54mln of new service contracts in 2017, up 29%, while the order backlog, a key indicator of future work, was £88mln.
“We enter 2018 in a position of strength, building on another year of strong top-line growth and continued execution on strategy,” said Ergomed chief executive Stephen Stamp.
Acquisition helped
The business’ performance was boosted by the £5mln acquisition of PSR last September, which increased its interactions developers of orphan drugs.
Top line growth was driven primarily by the stellar contribution by the drug safety and medical information services (DS&MI) arm. The operation now represents approximately 57% of Ergomed’s total service revenues and its growth continues to outpace a fast-expanding market.
It is making a “drive for global leadership in this attractive market”, said CEO Stamp.
Hybrid model
Ergomed is a hybrid: a pharma services firm that also takes a stake in drugs during the development process.
That means as well as a profitable services business, it also has exposure to a number of new treatments making their way through clinical trials.
Ergomed has four partnership deals in the portfolio - with Asarina, CEL-SCI, Ferrer and Modus.
Share price
The shares rose 5.6% in morning trade to 193.9p. Broker Numis said the numbers were in line with expectations; it is expecting Egromed to post underlying earnings (EBITDA) of £3.7mln for 2017, rising to £6.7mln this year.
It said the ‘hidden gem’ of the company’s portfolio is PrimeVigilance, which is a specialist in the field of pharmacovigilance, or drug safety.
“We can more than justify the entire value of Ergomed…with this division alone. In a sector where such growth is increasingly expensive for the more established mid-cap names we see Ergomed as a strong contender to become such a stock in the future,” said Numis analyst Stefan Hamill.
He reckons the stock is worth 300p.