logo-loader

Ergomed update underlines the potential of the company's PrimeVigilance unit

Published: 22:04 25 Jan 2018 AEDT

spreadsheet and calculator
The latest update from the firm showed the numbers are definitely stacking up revenues matching forecasts

PrimeVigilance was the stand-out performer for Ergomed Plc (LON:ERGO) in 2017, according to a leading healthcare analyst.

The verdict of Numis’s Stefan Hamill followed an upbeat end-of-year update from the group, which provides pharma services as well as helping develop drugs.

WATCH: Ergomed Plc adds to co-development pipeline with Allergy Therapeutics deal

According to Hamill, Ergomed’s drugs safety unit alone is worth as much as the whole business, which is currently valued at £84mln.

“In a sector where such growth is increasingly expensive for the more established mid-cap names we see Ergomed as a strong contender to become such a stock in the future,” Hamill said.

He reckons the shares, up 5.7% at 194p on Thursday, are worth 300p each, which would give the group a market capitalisation of £128mln.

Revenues in line with forecast

Earlier Ergomed said its services business posted total sales of £47mln for the period to December 31, up 21%, while net service revenues were ahead 35% at £39mln.

It won £54mln of new service contracts in 2017, up 29%, while the order backlog, a key indicator of future work, was £88mln.

“We enter 2018 in a position of strength, building on another year of strong top-line growth and continued execution on strategy,” said Ergomed chief executive Stephen Stamp.

According to broker Numis, the numbers were in line with forecasts.

It is predicting the company will post underlying earnings of £3.7mln for the year just gone, rising to £6.7mln in 2018.

Acquisition helped

Ergomed’s performance was boosted by the £5mln acquisition of PSR last September, which increased its interactions developers of orphan drugs.

Top line growth was driven primarily by the stellar contribution by the drug safety and medical information services (DS&MI) arm. The operation now represents approximately 57% of Ergomed’s total service revenues and its growth continues to outpace a fast-expanding market.

It is making a “drive for global leadership in this attractive market”, said CEO Stamp.

Hybrid model

Ergomed is a hybrid: a pharma services firm that also takes a stake in drugs during the development process.

That means as well as a profitable services business, it also has exposure to a number of new treatments making their way through clinical trials.

Ergomed has four partnership deals in the portfolio - with  Asarina, CEL-SCI, Ferrer and Modus.

Ergomed Plc adds to co-development pipeline with Allergy Therapeutics deal

Andrew Mackie, chief business officer at Ergomed Plc (LON:ERGO), caught up with Proactive to discuss their co-development agreement with Allergy Therapeutics plc (LON:AGY). Under the terms of the collaboration, Ergomed will take the treatments for dust mite, tree pollen and grass pollen...

on 14/12/17