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Real-Time news about Genetix Grp (London Stock Exchange): 0 recent articles
|darlocst: Article from FT - April 4th. Long but well worth a read.
Mark Reid has a homely way to describe what his company does: "Think of companies that make the kit to produce beer. We are doing a similar job to them."
But the "beer" referred to by the chief executive of Genetix is a concoction of proteins and other genetic fragments that offer the potential to form new molecules useful to pharmaceutical companies.
Genetix, based in New Milton, Hampshire, is one of a few companies in the world making the complicated machines that help in development and production of new pharmaceutical products based on biotechnology.
Biotech companies use Genetix equipment to analyse samples and assess whether their properties make them suitable drugs. Genetix also makes small quantities of the substances for testing or as a prelude to full-scale production.
For a manufacturing company with a strong technology bias, it may seem surprising that Genetix's 51- year-old founder is a former accountant, who taught himself chemistry in the 1980s after developing an urge to join the sector.
Indeed, nearly all other businesses in this field were founded by scientists rather than accountants, but Mr Reid does not see this as a handicap: "I have taught myself what I need to know, and can leave all the really technical matters to other people," he says. His lack of scientific background appears to have done him no harm: his 59 per cent stake in Genetix is now worth £33m.
After an initial foray into the basic industry of plastics moulding, Mr Reid founded Genetix in 1991. This is still a fledgling industry and steering a way through the many changes in the sector has required both dogged perseverence and an ability to change tack when required.
The business of biotech instrumentation and the chemicals used with the machines enjoys total global sales of about $2bn (£1bn) a year. Genetix's competitors in this field are mainly from the US, and include big makers of scientific instruments such as Thermo Fisher, Bio-Rad Laboratories and PerkinElmer as well as more specialised biotech groups such as Applied Biosystems and Affymetrix.
The development of such equipment was triggered by rapid advances in the past 20 or so years in gene-based techniques for fighting disease. "We are in the dawn of a new era of medicine in which a range of new treatments based on proteins and similar materials is becoming possible," says Mr Reid.
But keeping abreast of industry trends not to mention coping with the vagaries of government funding, particularly in the US has not been easy. A number of Mr Reid's smaller competitors have either gone under or been swallowed up by bigger groups, making him a rare UK-based survivor in the sector.
The US-based Genomic Solutions and the UK's Biorobotics, two small businesses making similar products to Genetix, have both in recent years passed into the hands of big companies, and are now both owned by Harvard Bioscience.
In the late 1990s, government cash was pouring into the race to decode the human genome, prompting the industry to focus on the search for the structure of DNA. But now there is more emphasis on cell biology and practical ways to "harvest" proteins and similar materials that could be useful in therapy and diagnosis.
So while Genetix started out by producing machines geared mainly to uncovering the structure of DNA samples, the company has since changed tack.
Its latest families of machines which sell for up to £200,000 include equipment that analyses samples of cells, to check on their propensity to manufacture certain types of proteins that could become useful medicines, while also monitoring the rate at which they create such molecules.
"We are getting some encouraging feedback from customers [in the pharmaceutical industry] that the machines are doing a useful job," says Mr Reid.
Another positive sign for the company is that roughly half the expected sales in 2007 of about £27m are likely to come from products and specialist software introduced over the past year with particular contributions from the new "cell sample" machines plus software.
Of special relevance to this last point is Genetix's £13.6m purchase last year of Applied Imaging, a California-based company specialising in the imaging software that is increasingly required in biotech-based instruments.
Underlining the importance of the US to the biotech field, some 60 per cent of the company's revenues in 2007 is likely to come from North America, which is where it has 50 of its 165-strong staff, with most of the rest located in the New Milton headquarters just outside Bournemouth.
Research and development is important to Genetix: some 40 per cent of its staff work in this field (including software) and only 20 in manufacturing all of whom work at the New Milton site.
The company's share price reflects the shifts in the industry. After floating in 2000 at a share price of £1.50 this quickly rose to £2.50 only to slump to 25p in 2003 on the back of a fall in fortunes in the entire biotech sector, which was linked partly to a run of poor results from some leading biotech companies.
After a better run of profits, however, Genetix's share price has rebounded to 80p. Last year, in recording pre-tax profits of £3.2m on sales of £15.5m, the company registered a pre-tax profit margin of 20 per cent.
Having lasted the distance so far, Mr Reid names Renishaw as the company he would most like Genetix to emulate. This highly successful medium-sized UK-based business in measuring instruments, with annual sales of £173m, was set up in 1973 by Sir David McMurtry, who remains in charge as chairman and chief executive.
"If I could create something like Renishaw, it would be fantastic," says Mr Reid.
A timely injection of learning
After starting out as an accountant with KPMG, Mark Reid decided there could be more to working life than spreadsheets and company audits. He decided to try manufacturing and in 1985 bought Plastic Injection, a Dorset-based moulding business that is now part of Jarden, a US company.
"But I soon found out that making injection moulded plastic parts wasn't an easy business," Mr Reid says. "I had to do something different from all the competitors, or face severe problems."
He achieved that partly thanks to a friend who was a chemistry lecturer at Southampton University. By sitting at the back of the friend's lecture room without enrolling on a course the ex-accountant absorbed some useful know-how about polymer chemistry. He learned enough to work out how to position Plastic Injection into an "upmarket" area of the plastics business in which it worked with novel and tough but mouldable plastics to form components used, for instance, in oil and gas pipelines.
Another breakthrough came after some chance contacts in the late 1980s with scientists at the Imperial Cancer Research Fund in London, who asked Mr Reid to produce plastic components for a new family of genetic machines they wanted to develop as part of the effort to sequence the human genome.
"We worked out how to make the parts and they (the scientists) were happy," Mr Reid says. "Then they asked us if we could make the whole machine .̴1;. . I thought we could have a go."
He found a group of engineers who could do the technical work and started the biotechnology instrumentation company Genetix in 1991. Its first premises were the spare bedroom of David Norton, a former colleague who was a co-founder Genetix but left soon after to leave Mr Reid running it on its own.
Genetix's first product, called the Qbot, worked out the significance of tiny samples of genetic fragments and was useful in analysing DNA samples. Based on the ICRF's designs, it sold for £60,000.|
|finmac: This company looks a good buy after the drop in share price on the recent profits warning. If you look at the fundementals they have plenty of cash and potential. Worth having a good lookat to get in at the right price.It is also well up today on the Nasdaq.
|joe soap: Very interesting opinions here, however as was mentioned earlier, this is in the mean time a momentum play and a strong one at that. With the markets racing ahead as they are, in anticipation of the US re-rating it's stance on economic policy to "neutral", and Bush probably leading the way into the White House (as I mentioned 3 days ago), my guess is that immediate fundamentals will not count as strongly in the very short term. Long-term they're vital of course, but in the mean time the company is profitable, and in this kind of market that's a big plus. In spite of the continuing share price rise, the p/e is still acceptable. Remember this, that we're in the market to make money out of share price movements, not to love each share we invest in. That's the focus, and for now the demand for a profitable biotech company in what is expected to be an enormous market in only a very few short years, outstrips supply.|
Genetix Grp share price data is direct from the London Stock Exchange