Axis-Shield 2006 Pre-Close Trading Update
Dundee, Scotland, 5 January 2007: Axis-Shield (LSE:ASD, OSE:ASD), the international in vitro diagnostics company, today releases a trading update for the year ended 31 December 2006, ahead of the Company’s close period preceding the Preliminary Results announcement, expected 8 March 2007.
Results for the period are in line with the Board’s revised expectations, showing a continuing increase in operating profitability, under IFRS reporting rules. Reported revenues are expected to show growth of approximately 4% over 2005, despite no significant contribution yet from Afinion™, our recently launched award-winning new compact point-of-care system. Operating profitability has continued to increase despite the effects of unlicensed homocysteine sales in the USA and costs associated with the prosecution of this patent infringement.
In our Laboratory Division, as previously announced, homocysteine sales have continued to be affected by non-licensed competition but we have been encouraged by recent developments as we seek to resolve this situation. Instrumentation Laboratory, a major company involved in coagulation testing, launched an Axis-Shield homocysteine assay on its main platforms in November and, at the end of that month, an important and widely publicised review paper appeared in the British Medical Journal, reiterating the need to lower elevated homocysteine blood levels to reduce risk of cardiovascular disease. We have also now launched the first three AxSYM® xtra products as planned, and we look forward to seeing significant revenue contribution from this programme, particularly from the second half of 2007 onwards. Currently the range encompasses kits to measure Active-B12 (HoloTC), a more efficient method for the detection of vitamin B12 deficiency (which recently received US regulatory clearance), anti-CCP for early detection of rheumatoid arthritis, and D-dimer for detection of deep vein thrombosis and pulmonary embolism. We also expect to show good 2006 revenue increases from our AxSYM® assay for testosterone and our kit for sirolimus (which monitors blood levels of this anti-rejection drug) on Abbott’s IMx® platform, and solid contributions from AxSYM® BNP and Thyroid products, together with our anti-CCP ELISA test.
In the Point-of-Care Division, we have launched Afinion™ in Europe and also in the USA where Abbott (together with its physicians’ office distribution partner, Physician Sales and Service, or PSS) has started commercialisation of the platform and the first assay for HbA1c (for monitoring diabetes treatment). We are continuing to expand our production capacity for this product and we expect our larger production line for Afinion™ cartridges to come on stream in the second half of 2007, to meet the expected demand from the increased installed base of Afinion™ instruments. Demand for our long-established NycoCard™ range continues, with increased HbA1c revenues and solid sales of our CRP kit, which remains our highest revenue generator. Sales of Density Gradient Media, used extensively in biological purification, also increased significantly over 2005. Our 2006 results will include a provision for some restructuring in our PoC Division as we continue to tailor our operation to reflect resource requirements to maximise our Afinion™ revenues.
Our Distribution Businesses all performed well, with increased revenues for Medinor, Axis-Shield UK and Plasmatec, compared with the previous year.
Gross margins are likely to show the improvement seen at the half year, largely due to a more advantageous product mix. We continue to exercise tight control on general overheads but we will invest in improving our sales, marketing and production infrastructure to fully exploit the commercial opportunities afforded by the Afinion™ and AxSYM® xtra projects and this will be reflected by increased overheads in 2007. Cash in the bank at the end of 2006 was approximately £10.4 million. During the second half of 2006 both our Oslo and Dundee manufacturing sites were subjected to US FDA inspection and although these visits necessitated a significant staffing commitment, they were both successfully managed with minimal disruption.
Nigel Keen, Axis-Shield Chairman, commented: “Despite a challenging year for Axis-Shield in which we faced continued unlicensed competition in the homocysteine market, the Company expects to record continued and increased operating profits for 2006. We now look forward to significant market penetration for Afinion™, just recently made available in the USA, and roll-out of further markers under the AxSYM® xtra programme with Abbott, together with new tests on its flagship ARCHITECT® system. In view of this strong pipeline the Board believes the company will deliver strong revenue growth in the coming years, creating increased shareholder value.”
A conference call for analysts will be held at 9.30am UK time today. Please call Mo Noonan on 020 7269 7116 for details.
Notes to Editors
Axis-Shield is an international in vitro diagnostics company, headquartered in Dundee with R&D and manufacturing bases in Dundee and Oslo. The Group specialises in the development, manufacture and marketing of innovative proprietary diagnostics kits in areas of clinical need, including cardiovascular and neurological diseases, rheumatoid arthritis, alcohol abuse and diabetes. It has a special focus on effective testing at the point of care, for improved patient management. News releases and company information are available at www.axis-shield.com.
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