Source BioScience Interim Management Statement
Highlights:
- Revenue increased 19% year on year underpinned by strong growth in diagnostics and life sciences; overall performance in line with expectations for the year to date
- Installation of second Illumina HiSeq 2000™ next generation sequencing platform in the new Berlin facility
- New DNA sequencing service launched from the recently acquired facility in Berlin
- European Union Framework 7 grant awarded to imaGenes to study genetic causes of dementia in children; worth in excess of £200k
- SpeedREAD™ rapid data delivery service for DNA sequencing launched, providing the world’s fastest turn around for sequencing data in under 3 hours
- Approval for direct connection to NHS internal IT network; competitive advantage by removing a barrier to outsourcing work
- Strong financial position with £3.3 million of cash at the end of March 2011 (31 December 2010: £4.2 million) to underpin investment and acquisition plans
Business performance
Unless otherwise stated, the financial information referenced below refers to the three months ended 31 March 2011, and the corresponding period last year, this being the latest practicable date to which financial information has been prepared.
The Group has maintained a strong start to the financial year and revenue for the first quarter is up 19% compared with the same period last year.
Overall performance for the year to date is in line with expectations, representing a continuation of the strong growth and business performance achieved last year.
Healthcare
The Healthcare operations, that provide screening and diagnostics services to the NHS, have delivered a strong quarter, with diagnostic testing in particular showing strong growth. The increasing demand for companion diagnostic testing, to parallel the growing demand for targeted therapeutics, has seen revenues in this area increase by more than 30% compared with the same period last year.
We have continued our development programme for diagnostic testing and screening services for applications where there is a clinical requirement but unmet demand. Source BioScience now offers a comprehensive suite of human papillomavirus (‘HPV’) tests as some types of HPV can increase the risk of developing cervical cancer. HPV testing is not yet routinely available on the NHS as part of the cervical cancer screening programme although we expect this situation to change and, from September this year, HPV testing will start to be integrated into the screening programme. In previous updates, we have referred to a number of IT initiatives and solutions that have been introduced that facilitate faster access to test results, generating real operational and clinical benefits for both the hospital and the patient as diagnoses can be received, reviewed and acted upon more quickly. Most recent progress made is the approval of Source BioScience as a service recipient allowing direct connection to the N3 network, the NHS national IT network which links hospitals, medical centres and GPs in England and Scotland, thereby enabling Source BioScience to offer a fully integrated service to the NHS. Source BioScience is the first company of its kind to be granted this connection. We will now be able to share patient information and data more quickly, communicating with hospitals via their own internal ‘LIMS’ system, negating the need for extra administration, reducing the chance of error and therefore benefiting clinicians and patients alike. This provides Source BioScience with a real competitive advantage over other potential service providers.
LifeSciences and PharmaBiotech
Source BioScience has forged a leading position in Europe for the provision of DNA sequencing services, encompassing both conventional and next generation sequencing technologies.
Integration of the imaGenes acquisition is progressing well and to plan. Our second Illumina HiSeq 2000™ next generation sequencing platform has already been installed and commissioned in our Berlin facility. This platform is currently engaged both on projects that have been secured locally in Germany in addition to projects that have been secured in the UK. The enhanced service portfolio will provide greater flexibility and encourage the development of new applications to meet individual customer requirements in life science research as well as clinical diagnostics, in the UK and across Europe. In addition, we have installed conventional sequencing technology in the facility and launched our DNA sequencing service into the Berlin market. We expect the Berlin market for this service to be similar to that from our existing Oxford and Cambridge operations. The volumes and revenues will increase over the course of the year as the sales and marketing activity gain traction.
These additional investments demonstrate the Company’s commitment to be the market leader in Europe for the provision of expert, high quality laboratory services to the life science research and healthcare sectors.
As a result of the imaGenes acquisition, we have now created a unique portfolio of products for life science research, comprising over 20 million DNA and RNA clones and more than 90,000 antibodies. Our customers worldwide now have access to the largest resource of its kind. We have also improved the e-commerce platform to make the sales process more accessible. Traffic through the website continues to grow and both the number of unique visits and number of orders placed through the website are up by 20% in this quarter compared with the quarter following launch in September 2010. Further significant enhancements are in development and are planned for launch around the half year. In providing services to pharma and biotech companies, Source BioScience is well placed to benefit from the restructuring and outsourcing trends occurring within the sector. We are seeing increased interest from these companies who are looking more closely at the genetics of disease in order to develop new therapies. The promotion of our genomic capability to companies requiring molecular analysis as part of their pre-clinical research and development programmes, as well as emerging pharmacogenomic analysis, is steadily gaining ground as a long term growth area.
Financial position
Source BioScience continues to maintain strong cash resources and cash balances at the end of March were £3.3 million with some debt acquired with imaGenes of £0.4 million. There have been no other significant changes in the financial position of the Company over the period since the publication of the Annual Report and Accounts for the year ended 31 December 2010.
Commenting on the period and outlook, Dr Nick Ash, CEO of Source BioScience, said:
“We have had a robust start to the financial year, with all divisions performing strongly, in line with expectations. A major contributor to this is our leading position in the UK and Continental Europe in providing next generation, ultrafast sequencing services. We are meeting increasing demand by investing in the best sequencing technology available, and our skills and expertise continue to attract new customers from the pharmaceutical and academic research sectors. Another significant boost to our business is the approval by the NHS for Source BioScience to have access to its own N3 network. This provides us with a major competitive advantage over other participants in the screening and diagnostics market.
“As noted in our previous statements, growth through acquisition represents an important component of the long term business strategy of the Board. We will progress those opportunities which the Board believe will enhance our business, generate growth and increase shareholder value.”
For further information:
Source BioScience plc
Nick Ash
Chief Executive Officer
Tel: +44 (0) 115 973 9010
www.sourcebioscience.com
For investor and media enquiries:
Singer Capital Markets Limited (Financial Advisor and Broker)
Shaun Dobson/Claes Spång
Tel: +44 (0) 203 205 7500
www.singercm.com
College Hill (PR Agency)
Melanie Toyne-Sewell/Dimithri Wignarajah
Tel: +44 (0) 207 457 2020
sourcebioscience@collegehill.com
About Source BioScience:
Source BioScience plc is an international diagnostics and genetic analysis business serving the healthcare and research markets.
The Healthcare operations provide screening and diagnostic testing for cancer and other diseases and additional predictive testing for treatment optimisation for clinicians and patients. The LifeSciences division provides core laboratory research support from conceptualisation to implementation, calling upon a wide range of cutting edge technology platforms including an online catalogue of biomolecular tools. This incorporates next generation sequencing, conventional sequencing, microarray analysis and whole genome amplification in addition to a comprehensive library of genomic reagents and clones including cDNA and RNAi, as well as facilitating rapid access to high quality antibodies, cell cultures, diagnostic assays for cancer and other genetic testing, and related research tools. PharmaBiotech offers support for early stage therapeutic development, offering a 'one-stop shop' from tissue pathology, immunohistochemistry, sophisticated image analysis, biomarker determination and assay development to pharmacogenomics including genotyping and gene expression analysis.
The Group has its headquarters in Nottingham, UK where it operates state of the art reference laboratory facilities, with additional UK laboratory facilities in London, Cambridge and Oxford and European facilities in Berlin and Dublin. Source BioScience is CPA, GLP and GCP accredited and is licensed by the UK Human Tissue Authority.
Further information about Source BioScience can be found at www.sourcebioscience.com.