July 26, 2011 -- Source BioScience plc (LSE: SBS, “Source BioScience”; the “Company”), the international diagnostics and genetic analysis business serving the healthcare and research markets, announces its pre-close trading update ahead of the results for the six months ended 30 June 2011.
Revenue across the Company has increased by more than 10% compared with the same period last year, with LifeSciences growing by over 30%, boosted by the impact of the acquired imaGenes business. After non-recurring and restructuring costs of approximately £0.4 million associated with the planned integration of imaGenes, the Company expects to report an operating loss for the period of approximately £0.2 million. Operating profit, after adjusting for the non-recurring and restructuring costs will be in excess of £0.1 million (2010: £17,000 profit). This is in line with management expectations. Following a review of the acquisition, annualised cost savings of approximately £0.5 million have been identified and the Company will begin to benefit from these during the second half of the year.
As highlighted above, a primary focus for the first half of 2011 has been the integration of the imaGenes business acquired at the end of 2010. This process has progressed to plan with non-recurring and restructuring costs of approximately £0.4 million incurred as expected in delivering the integrated business. The programme of planned investment in the Berlin operation has progressed well, including the installation and commissioning of the Company’s second HiSeq2000TM high throughput sequencing platform.
The launch of the new LifeSciences website during 2010 was an important first step in supporting and promoting growth in the life sciences market, and this is now delivering tangible benefits and commercial advantage. The Company’s online portfolio of products now extends to a unique offering of over 20 million DNA clones and 100,000 antibodies. Each of these products is provided with comprehensive scientific and technical support, both online and via our technical helpdesk. Our e-commerce solution was further enhanced in June with the launch of GenomeCube®, a proprietary search engine and bioinformatics tool enabling researchers to access the world’s largest clone and antibody portfolio. GenomeCube® represents a significant investment by the Company, with over £1.0 million committed to the platform since its inception. These initiatives, and the consolidation of the existing imaGenes website, has resulted in web traffic increasing by over 100% compared with the period immediately prior to launch.
SpeedREADTM, the fastest data delivery service for DNA sequencing with a turnaround time for sequencing data in under 3 hours, was launched at the start of the year. Uptake by customers was strong, with over 95% selecting automated data delivery. On this foundation, our Overnight Service was launched in June, enabling customers to drop-off samples at the end of their working day and receive their results before 9am the following morning. We have seen an extremely favourable response to this initiative to date, with much positive feedback received from customers. As other companies have reported, there is evidence of more cautious spending amongst academic researchers in the UK and the rest of Europe, most likely due to uncertainty around government plans for publicly funded research expenditure. We do not believe this has impacted our sales growth to date nor will do in the near future. We are very competitive with our service and product offering, and maintain a strong pipeline of projects which we expect to mitigate any uncertainty in the short term.
The Healthcare business has delivered a robust performance during the first half of the year, and revenues are in line with those achieved during 2010 and are in line with management expectations. As anticipated, we are seeing a shift in demand away from the more traditional histopathology-based diagnostic services towards gene-based diagnostic testing and this area of the business is growing strongly. As the volume of testing increases for molecular diagnostics, we will be able to drive further operational efficiencies into our laboratories, as we have been able to with our traditional histopathology business.
An important milestone was the recently announced decision by the NHS Cancer Screening Programme to approve the use of the BD FocalPointTM “No Further Review” automated imaging technology for cervical screening in the UK. This is the only automated cervical screening technology which has been approved. The “No Further Review” technology can analyse and identify up to 25% of screening samples that can be reported as “all clear”, requiring no human examination. With over 3.6 million tests being undertaken across England and Wales during 2009/10, this represents a significant reduction in laboratory workload. The NHS expects to be in a position to begin the roll out of this technology into the screening programme towards the end of this calendar year, therefore we anticipate generating revenue from this opportunity during 2012. Full adoption of this technology by our existing customers could increase the annual revenue from our cytology activities by up to 25 %.
The integration of the acquired business has largely been completed and as part of that process, annualised cost savings in excess of £0.5 million have been identified, which will benefit the Company in the second half of the year. In addition a significant restructuring of the commercial team has been undertaken and, as noted above, a number of initiatives launched that are already delivering commercial advantage. The solid first half performance, and initiatives underway, underpins confidence in the maintained improvement in the financial performance of the Company for the full year.
The Company plans to report its half year results for the six months ended 30 June 2011 on 23rd August 2011. There will be an analyst meeting held at 11.30am on that day at College Hill’s offices. Please contact College Hill for further details.
For further information, please contact:
Source BioScience plc
Dr Nick Ash, CEO
Tel: +44 (0)115 973 9010
Email: enquiries@sourcebioscience.com
www.sourcebioscience.com
For investor and media enquiries:
Singer Capital Markets Limited (Financial Advisor and Broker)
Shaun Dobson/Claes Spang
Tel: +44 (0)203 205 7500
www.singercm.com
College Hill (PR Agency to Source BioScience)
Melanie Toyne Sewell/ Dimithri Wignarajah
Tel: +44 (0)207 457 2020
Email: sourcebioscience@collegehill.com
About Source BioScience:
Source BioScience plc (LSE: SBS) is an international diagnostics and genetic analysis business serving the healthcare and research markets. Its Healthcare operations provide screening and reference laboratory 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. The PharmaBiotech division 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. Further information about Source BioScience can be found at www.sourcebioscience.com
