Instem this morning released an in-line trading statement for the 2017 year. The group is seeing traction across a number of fronts, including a recovery in the Clinical business, with two Alphadas orders in the period. The company has also today announced a material SEND contract win with a top-5 global non-clinical CRO. We make no changes to estimates for 2018 and beyond, but look forward to seeing further detail on progress at the time of results in March.
The company is expecting to report 2017 results in line with market expectations. The only figure quoted is for net cash, at £3.1m, which was comfortably ahead of our expectations of £2.8m.
The group has highlighted that all areas of the business made a positive contribution. The RNS notes in particular that Samarind (acquired May 2016) is enjoying good levels of order intake and is performing in line with expectations. Importantly, Alphadas (the early phase clinical product) has also seen a strong end to the year, signing two deals worth in total $1.25m – this contrasts with the division’s recent past which saw market pressures leading to lengthening sales cycles. It is clearly a positive to see this strength in performance across so many areas of the business.
The group confirms that it has successfully implemented the cost-saving programme anticipated during mid-2017, with an annualised £1.5m costs removed. For the roughly six months since its implementation, this programme has shown a saving of some £0.75m – and the full £1.5m benefit should flow into 2018 results.
In a separate RNS, Instem has announced a material outsource win, for SEND dataset creation, with a top five global non-clinical CRO. Worth £1.7m over the first two years of what could become a long-term outsource relationship, the deal will see Instem build a dedicated team (in the UK, US and India) to create and review all SEND datasets on behalf of the client. The company believes this to be the largest SEND contract ever let to date.
The in-line performance for 2017 suggests a strong end to the year, and 2018 is clearly off to a very positive start with such a major SEND win. The group is demonstrating financial delivery, ongoing prudence around the cost base, and most importantly, some very positive signs from a number of the group’s businesses, across multiple end markets. We look forward to hearing more at the time of full-year results due in late March.