Keeping pace? Medpace anticipates growth, continues investment
The contract research organization (CRO) reported a net service revenue of $94.6m in the second quarter, which is an increase of 2.1% from $92.6m for the previous period.
The Cincinnati, OH-headquartered company also reported net new business awards totaling $105.4m in the second quarter, a decline of 5.7% from the previous period.
On the company’s earnings call last week, August Troendle, Medpace president and CEO, explained that the company is continuing to have “great success in recruiting and developing outstanding individuals” and have continued to invest “heavily” in human resources “ahead of anticipated growth.”
“I think we anticipate and are working toward revenue growth,” he said.
Also on the call, Jesse Geiger, Medpace chief financial officer said, “We remain focused on serving our core market of small- and mid-sized biopharma customers,” and that the company sees “further opportunities and continued growth” in this market segment.
In this market, the company explained oncology remains its largest therapeutic area and was the primary driver of year-to-date revenue growth, “but from an award perspective, [it was] pretty balanced,” explained Geiger.
Medpace’s Central, Bioanalytical, and Core Laboratories provide various services across the globe.
According to Geiger, the company’s lab performance is in line with its total company performance. “We are continuing to make some investments in the laboratory more in the capital expenditure area,” he said.
The lab’s capital expenditure in the second quarter was about 1.75% of revenue, though this number is expected to increase in the second half as the company continues to invest in equipment to expand its testing platform, “as well as expanding our logistics area to handle kits and supplies here,” Geiger added.
Specifically, capital expenditure is expected to reach approximately 6% to 7% of second half revenue.
“We’ve talked in the past about the testing that we offer for the laboratory historically being very focused on cardiovascular and metabolic and we are continuing to expand the test menu really with an eye towards pairing with some of the other therapeutic areas,” Geiger said.
The call also touched on Medpace’s acquisition of NephroGenex, which the company acquired out of bankruptcy in May 2017 – and as Geiger said, was more “opportunistic than strategic.”
Medpace previously collaborated with the company on a Phase III study of a diabetic kidney disease treatment in 2014 after being purchased by the UK-based private equity firm Cinven.
NephroGenex develops drugs to treat kidney disease, with a first indication in diabetic nephropathy. The company’s PYRIDORIN (pyridoxamine dihydrochloride) is a late stage compound to treat diabetic patients.
According to Geiger, Medpace has engaged a partner that was previously involved with NephroGenex’s assets. The companies are pursuing a development strategy, which will require minimal capital from Medpace: “it’s not a significant drag on resources and it's not a strategy focus of ours,” Geiger added.