10/12/2007
After a robust first half, with two acquisitions completed, diagnostic kits maker IDH confirms it is inching closer to some big deals.
Chief executive Roger Duggan says the addition of Biocode Hycel, a Belgian kit maker bought from its frustrated VC backers for £16.5m, ‘will change the company’. He explains that its state-of-the-art technology for automating diagnostic tests, dubbed 3X3, allows IDH ‘to go for much bigger contracts in much bigger markets’.
At the moment, a typical manual assay contract for IDH equates to five to ten kits a month. If it can tap into the large reference clinics, the order sizes would leap to around 50 to 100 automated tests a month. Duggan aims to automate the company’s own range of niche ‘bone and skeletal’ tests by the third quarter of next year and then those of potential new partners to create a broad ‘menu’.
He says the 3X3 equipment is pretty much ready and ‘needs no further substantial funds’. Deals in the automated space are already coming through, and with a one-off contract with a major European pharma company completed for delivery, that could see some 80,000 tests per year for five years. Duggan hopes soon to announce two European tie-ups and has beefed up the US sales force to start ‘chipping away’ there.
The core part of the business is going great guns regardless, with organic growth and partial contributions from Biocode and another (a smaller kit maker in Denmark) lifting sales 49% to £6.8m and pre-tax profits 81% to £1.3 million in the six months to September.
The shares, recommended by Growth Company Investor two years ago at 100p, fell 10p on the day to 226.5p, at which level they represent very good value. Buy.
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| Market cap: | £54.5m |
| PE Forecast: | 23.2 |
| Share price: | 227.5p |
| AIM | £48.64m |
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