Molecular diagnostics devices maker genedrive PLC (LON:GDR) said feedback from the studies of its hepatitis C virus (HCV) identification kit remains encouraging.
Reporting its profit & loss numbers for the second half of 2018, the medtech company said it continued to make progress with its HCV assay (test) during the period and also recognised its first commercial sales of the assay kits.
Trading in the first half of the company's fiscal year was in line with management's expectations, with revenue and other income climbing to £1.49mln from £1.29mln in the second half of 2017.
An increase in research and developments costs to £2.50mln from £2.22mln the year before was more than offset by an exceptional gain on the settlement of deferred consideration of £635,000, leading to a narrowing of the pre-tax loss at £1.43mln versus a loss the year before of £2.25mln.
The company ended the year with cash of £5.8mln, up from £3.5mln at the end of June, following a successful £6mln fund-raising in the second half of the year.
The coffers are set to be boosted in the second half of the fiscal year by the second (previously announced) order from the Department of Defense (DoD) and the company is confident of securing more orders from the DoD in the future.
On the downside, the company has previously conceded that progress in gaining country registrations for the Genedrive HCV-ID kit has taken longer than originally expected, which will have a short-term impact on revenues for the current fiscal year, with new sales for this assay expected to give a boost to revenues from the next fiscal year onwards.
Even so, the company expects to deliver year-on-year growth of around 25% in revenues in the current fiscal year, or maybe more if it secures further orders.
"Data from in-country HCV clinical studies remains very positive and corresponding to our expectation,” revealed David Budd, the chief executive of genedrive.
“While the speed of registration and evaluation processes for HCV was slower in the period than we expected and has had an impact on the timing of revenues, we are engaged and focussed on several country-level opportunities regarding HCV testing programmes which are significant,” he added.
“Our biohazard identification programme with the US DoD transitioned to the commercial phase, and the uptake of orders is a positive sign, given the volumes and value attached to these complex assays," he concluded.
2019 revenue expectations reset
In a note to clients, analysts at ‘house’ broker Peel Hunt commented: “Although, the HCV registrations are progressing, initial traction took a little longer than expected – as alluded to in the Jan trading update – and may have an impact on FY19 revenue contribution from HCV sales.”
They added: “Though partially offset by the stronger than expected DoD sales ($0.9m and $0.5m orders) and with upside potential on these continued orders, we will now take this opportunity to reset our FY19 revenue expectations to the c25% yoy growth (FY18 of £1.9m diagnostic revenue) that the company guide as a minimum for FY19.
“This suggests c£2.4m FY19 diagnostic revenues, excluding any further traction with DoD or additional uptake of HCV.”
The analysts said they will reinstate their numbers and recommendation, which have been ‘under review’, in due course.
In afternoon trading, shares in Genedrive held steady at 23.50p.
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