hVIVO PLC (LON:HVO) bosses are confident that the drug development services provider will turn a profit next year as it starts to see the benefits of recent changes.
The company, which carries out ‘challenge’ trials on behalf of drugmakers, said its pipeline of opportunities for 2020 is already “looking exceptionally strong”.
The bullish outlook comes after a year of change at hVIVO, during which the old management was replaced.
The new management team, headed up by executive chairman Trevor Phillips, moved immediately to cut costs and focus the group’s priority on building a pipeline of revenue-generating challenge studies.
That focus on challenge studies paid off straight away, with revenue climbing 10.5% to £13.6mln in 2018, versus £12.3mln a year earlier.
Loss before tax widened to £18.9mln (2017: £14.8mln), although once various one-off costs were excluded, adjusted pre-tax losses reduced by more than a quarter to £9.6mln (2017: £13.2mln).
In line with the new strategy, R&D costs fell 21% to £4.8mln (2017: £6.1mln).
At the end of the period, hVIVO had £13.4mln of cash in the bank (2017: £20.3mln).
“There have been multiple challenges to overcome with regard to our business operations during this transition,” said executive chairman Phillips.
“While the changes instituted across the business in 2018 and into 2019 will result in some cost savings being recognised in both years, the effect will be fully realised from 2020.”
Phillips added that the company’s contracted backlog for 2019 is “showing a substantial increase on 2018” and is set to improve even further in 2020, the year in which he is targeting profitability.
Shares opened 6% higher to 30p on Thursday morning, before quickly giving up those gains.