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8:01 am, November 20, 2009
Cyprotex shares sink after revenues go flat
Cyprotex (AIM: CRX), the Macclesfield-based drug discovery company, disappointed the market today when it revealed that its revenues will not grow this year.
In a trading update, chief executive Tony Baxter admitted the performance was disappointing and blamed it on challenging conditions in the market for contract research organisation (CRO) services.
Cyprotex shares slipped 15 per cent to 3.5p in early trading after it said revenues this year were “expected to be in line with 2008”. In the first half, revenues were up 9 per cent to £2.45m and profits nearly tripled to £157,000 from £56,000.
The company said the last quarter, normally its strongest, had seen lower than expected demand from its largest customer. It said it still had a “strong long-term relationship” with the unnamed customer, believed to be AstraZeneca.
Baxter said: "Although we are disappointed not to have delivered stronger growth this year we believe that this is a resilient performance given the backdrop of challenging market conditions for the CRO sector.
"The new services introduced during the year are delivering additional revenues and our ongoing investment programme reflects our continued confidence in the future prospects for Cyprotex."
Cyprotex said it had increased the number of strategic customers from three to five and said that new business enquiries during the quarter had been more buoyant. In August it said the new deals had reduced its dependence on its largest single customer to 20 per cent of turnover from 29 per cent previously.
The company said it was still generating cash and had £1.98m in the bank at the end of October compared with £1.72m halfway through the year.
Six new assays have generated over £400,000 of additional revenue, with more expected in 2010. The company plans to invest £300,000 in new laboratories in the first half of next year.
Big Pharma companies use Cyprotex's predictive software to test what will happen to drugs inside the body, providing crucial information to help them bring new products to market.
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