Cyprotex predicts bright future despite profit drop

CYPROTEX, the Macclesfield-based company which tests drugs for large pharma groups, saw its pre-tax profits drop 67 per cent in the first half of the year to £50,481 (2009: £156,597) on largely flat sales of £2.48m (£2.45m).

However, the company argued that its performance had been “robust” given its slow start to the year, which it blamed on a number of factors including the global economy, inclement weather and travel issues associated with volcanic ash.

The company’s chief financial officer, John Dootson, told TheBusinessDesk.com that the combination of the slowdown and the bad weather in January, which kept many of its chemists away from its laboratories, meant that the company started the year with “our worst month of trading in four years”.

In total, Cyprotex estimates that its poor start to the year meant that it lost around £500,000 in revenues. However, Dootson argued that in the later part of the period it had performed well to ensure that it remained both  profitable and cash-generative, and that following the period covered by these figure the firm had experienced record trading in July.

Cyprotex also said that its “transformational” acquisition of Boston-based contract research organisation Apredica for £2.68m, which was agreed last week, stood it in good stead for the future.

“While our competitors have released disappointing results in the comparative period, we have remained profitable,” said chairman, Steve Harris.

He added that the Apredica acquisition gave Cyprotex an operational base in the US, which is the largest market for its services, as well as “immediate entry and credibility in the in-vitro toxicology market”. He added that the market represents “the highest opportunity sector of pre-clinical research today”. 

Chief executive Dr Anthony Baxter said that the company had sized up several targets in the US but the company had “long had our sights” on Apredica as the most appropriate fit.

“They openly admitted that they’d copied our business plan and that they’d expected us to come knocking ,” he said.

He added that Apredica’s acquisition of the toxicology assets and intellectual property of Pittsburgh-based Callumen days before its own deal went through proved to be an added bonus.

Although the terms of that deal were subject to confidentiality agreements, Baxter said: “We were thrilled to have got what we did for the price that we’ve paid.”

He said that Apredica’s management’s decision to take the bulk of the £2.68m purchase price in Cyprotex shares also showed the faith that its management had in the strength of the combined venture, which arms the firm with a “suitcase of lots of products to sell” to each other’s combined customer bases.