Synexus 'confident' despite profit drop

The company, whose core activity is patient recruitment for later stage clinical trials, recorded an 8 per cent increase in sales to £10.3m (€15.2m) for the year ended 31 March 2007, compared to £9.5m in 2006. However, the firm's operating profit dived from £1.5m to £328,000 this year - a 79 per cent decrease. The main drivers for this decline were higher operating costs which reached £10m this year, a 25 per cent jump from the previous year, which the company saw as a reflection of the increased capacity in business and the cost of acquisitions. The company also pinpointed an "unusually large number of contracts whose start dates had been delayed by clients",​ as a major cause for its woes. Nine out of 20 projects have been delayed during the first three months of 2007, the company said earlier this year. Synexus said it had warned in January that the delays would reduce prospects for the financial year as a whole. Chairman Mike Redmond, who announced his retirement after six years with Synexus, said the results announced last week are in line with the firm's expectations at that time. "It is important to note that only one of the studies that were the subject of delays has been lost; some have now started, although others continue to be delayed beyond our control by sponsors,"​ said Redmond. "Existing signed contracts and bids under negotiation give the Board confidence that its expectations for the current financial year will be met." ​ He added that his company's strategy since joining AIM in 2005 has been to replicate its UK capability to recruit large numbers of patients into later stage clinical trials in a number of countries that it sees as increasingly important to its clients' clinical programmes. Synexus' chief executive Michael Fort said the previous 12 months represent a "pivotal"​ year for the company where its focus on expansion saw it establishing a presence in Eastern Europe with acquisitions in Poland, Hungary and Bulgaria and earlier this year the firm bought a business in Pretoria, South Africa. It also has a partnership in India, which allows the company to offer its clients services in six countries, said Fort. Fort added that last year Synexus completed the recruitment of almost 3,000 patients to a single study for "a major pharmaceutical client", which it claims is the largest number of patients ever recruited by one contract research organisation (CRO) to a late stage clinical trial. He described the clinical trials market as a growing area despite increasing difficulties regarding patient recruitment and retention, and tougher safety regulations in the post Vioxx era. The patient recruitment market is indeed more and more challenging for pharma companies and CROs alike, said Fort, but Synexus seems to maintain a strong position as the company recently signed its fourth master services agreement with a leading pharma firm. Fort added that Synexus has contracted orders worth £11.8m and a bid pipeline worth £27m. Looking forward, he said that while the company's primary focus for the coming year is to concentrate on its existing network of sites, it will continue to look for more acquisition opportunities in the future.