22 Mar 2011 07:00
22 March 2011
Source BioScience plc ("Source BioScience" or "the Company" or "the Group") Preliminary results for the year ended 31 December 2010
Profitable and cash generative with good opportunities for future growth across all divisions
The Board of Source BioScience plc , the international diagnostic and genetic analysis business serving the healthcare and research markets announces its unaudited preliminary results for the year ended 31 December 2010 prepared under International Financial Reporting Standards (`IFRS').
Financial highlights
* Revenue increased by 6% to £13.5 million (2009: £12.7 million) * Adjusted* EBITDA increased by 22% to £1.3 million (2009: £1.0 million) * Adjusted* operating profit from continuing operations of £0.2 million (2009: nil) * Adjusted* profit before tax from continuing operations of £0.2 million (2009: £0.2 million) * The newly acquired imaGenes contributed £0.2 million of revenue and £25,000 profit * Cash generated from operating activities of £0.9 million (2009: £0.9 million) * Cash balance at 31 December 2010 of £4.2 million
Adjusted* results are after eliminating the transaction costs incurred on the acquisition of imaGenes, which are now required to be expensed through the Income Statement under revised IFRS 3.
Operational highlights
* Acquisition of imaGenes GmbH, a Berlin based genomics, proteomics and bioinformatics leader for £1.8 million cash. Combined with Source BioScience, it creates one of Europe's strongest and most comprehensive businesses for genetic services and products * Award by Cervical Screening Wales of cervical cancer screening agreement worth up to £5 million over 5 years * Installation of the first Illumina HiSeq2000 next generation sequencing platform in a commercial lab in the UK - significantly boosts sequencing capability and sales potential with customers * Won highly prestigious international competitive bid to provide DNA sequencing to Research Councils UK - expected to generate revenue of at least £0.5 million per annum * DNA sequencing services laboratory opened in Dublin - the first lab of its kind in Ireland * Agreements signed with Astra Zeneca to provide genetic testing for lung cancer and with another leading global pharmaceutical company to provide companion diagnostic testing in stomach cancer * Launch of LifeSciences website combining over 90,000 antibodies, 20 million clones and other resources in a single on-line platform
Post period events
* New DNA sequencing service launched from the newly acquired facility in Berlin * SpeedREAD rapid data delivery service for DNA sequencing launched, providing the world's fastest turnaround times for sequencing data in under 3 hours * Investment in the second Illumina HiSeq 2000 next generation sequencing platform; now installed in our new Berlin facility
Laurie Turnbull, Chairman of Source BioScience, said:
"Over the year we have made positive changes across the Group that are already generating new business and revenue growth, for example the acquisition of imaGenes, our investment in new technologies and improvements to our e-commerce platform. As a result revenue and operating profit, before the impact of the transaction costs of the acquisition, have increased compared with last year and, overall, we are in a strong financial position. This is against a background of a demanding economic environment and highlights the strength and resilience inherent in our business model. There remain significant growth opportunities across the Group and we expect to benefit from the continued growth of the markets for our diagnostic and genetic services and products."
- Ends - For further information,Source BioScience plcNick AshChief Executive OfficerTel: +44 (0) 115 973 9010www.sourcebioscience.com
For investor and media enquiries:
Singer Capital Markets Limited (Financial Advisor and Broker)Shaun Dobson/Claes Sp¥ngTel: +44 (0) 203 205 7500www.singercm.comCollege Hill (PR Agency)Melanie Toyne-Sewell/Dimithri WignarajahTel: +44 (0) 207 457 2020sourcebioscience@collegehill.com
Cautionary statement
This Business Review contains certain forward-looking statements with respect to the financial condition, results, operations and businesses of Source BioScience plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Nothing in this Business Review should be construed as a profit forecast.
Chairman's StatementIntroduction
Over the past four years, the Board has implemented a strategy to turn around the Company's financial performance and deliver on specific objectives to shareholders; primarily to generate cash and deliver profitability. We are pleased to report that Source BioScience has become increasingly profitable and cash generative during 2010 and we are building a vibrant and sustainable business for the long term.
Summary results
Revenue increased by 6% to £13.5 million (2009: £12.7 million) as a result of all operating divisions, Healthcare, Life Sciences and PharmaBiotech, performing strongly and increasing the operating profits achieved.
The cost base of the Group remained tightly controlled, with overheads (excluding transaction costs) reduced to 42% of revenue (2009: 44%).
Adjusted operating profit from continuing operations (after adjusting for transaction costs arising on the imaGenes acquisition now required to be expensed under revised IFRS 3) improved by £0.2 million to £0.2 million (2009: £20,000). Profit after tax for the year was £0.1 million (2009: £0.3 million) after acquisition costs and discontinued operations.
Cash generated from operations was £0.9 million (2009: £0.9 million). Net cash outflow was £2.8 million (2009: £0.6 million outflow) after investment in acquisitions and capital expenditure totalling £3.7 million. The Group's cash balance at 31 December 2010 was £4.2 million (2009: £7.0 million).
These results were in line with management expectations and we expect further growth in revenues in 2011.
Divisional performance
Each of the Group's three operating divisions performed well during 2010 and all divisions returned improved operating profits.
Healthcare
The Healthcare division comprises our diagnostic and screening activities including cytology (cell analysis), histopathology (tissue analysis) and diagnostic testing services for chronic diseases such as cancer. In 2010 we achieved revenues of £6.9 million, comparable with last year (2009: £6.9 million) and divisional profit from continuing operations increased to £2.0 million (2009: £1.9 million). This business continues to be highly cash generative as a result of our mature cytology business that provides the systems vital to the preparation and analysis of cervical smear samples, as part of the national cervical cancer screening programme. We hold 47% of this market in England and Wales, and we are leading the way in the efforts to introduce automation to the screening process, working closely with the NHS. Longer term, we believe the growth areas for this division are in the molecular (genetic) and companion diagnostic testing services. There is an increasing trend in the healthcare industry, particularly the NHS, to outsource its diagnostic testing. Also, with the sophistication of modern targeted medicines, there is an increased demand for companion diagnostics - testing patients to match which drugs will be most effective for them. With our expertise in both these areas, we are well placed to exploit the opportunities.
LifeSciences
In LifeSciences, we sell ultra-fast sequencing services and products to academic research groups either as a standalone service or via our national network of laboratories where we are embedded within the academic centres. We have also created, and provided on-line access to, the largest portfolio of cloned DNA, RNA and antibody products sold by a single provider in Europe. In this division, we saw double digit growth in revenues of 14% to £5.6 million (2009: £4.9 million) and operating profit up by 47% to £0.7 million (2009: £0.5 million).
A key event in the year was the acquisition of imaGenes GmbH in Berlin for £1.8 million in cash. This has proved a truly synergistic acquisition, creating one of Europe's strongest and most comprehensive businesses for genetic services and products, as well as significantly adding to our portfolio of genomic and antibody products. To support sales for this division, we have launched a new website and e-commerce platform which provide enhanced functionality to customers and bring the Group's complete portfolio of services and products together on a single site.
To meet the demand we see for our next generation sequencing technologies and expected growth in activity, we have made extensive investment in cutting edge technology platforms and infrastructure. As part of this investment we have trebled our capacity with the launch of our new Illumina HiSeq 2000 high throughput sequencing service and invested in a further two Genome Analyzer IIx platforms.
As a result of our national network of laboratories, we have also been able to launch SpeedREAD, the world's fastest DNA sequencing service. All these efforts and investment are to enable us to generate increased sales from our current customer base and cross-sell to imaGenes customers across Europe. There will be further investment in new platforms in 2011.
PharmaBiotech
The PharmaBiotech division is the smallest division in the Group, but it has significant potential for growth in the long term. It offers reference laboratory testing services and clinical trials support to the pharma and biotech industry to help with the discovery and development of new therapies. The division delivered another improved performance during 2010 with revenue of £1.0 million, an increase of 15% on last year (2009: £0.9 million), and the division reported a profit of £0.3 million, up 28% on last year (2009: £0.2 million). We are seeing increased interest for our enhanced pathology to genomics offering from a broad range of large pharma and biotech customers. We are also expecting to benefit from the significant changes in the pharma industry as it undergoes restructuring programmes requiring outsource partners and more cost effective and efficient ways to develop new drugs.
Staff
The staff across the Group have responded positively and dynamically to the changes in the business and are enjoying the opportunities presented to them as a result of the growth of the business. I would like to thank them for their hard work and dedication in another year of significant improvement in the performance of the business.
Business model and strategy
The focus of the Group remains on the provision of diagnostics and genetic analysis services and products to healthcare, life science research and pharma biotech communities. The commercial and operational structure of the Group has been configured to reflect this. The commonality of technology platforms and expertise across the Group is key to driving the organic growth of the business and enables significant operational gearing without introducing financial or operational inefficiencies from duplication of platforms and processes. This presents a "joined up" business built on common technology platforms, laboratory processes and intellectual capital.
Opportunities for growth are apparent across all three divisions, as summarised above and described in more detail in the business review below, and are augmented by our ability to realise our unique potential that exists where the expertise in each of our divisions interact and complement each other.
We believe we have a very strong business model. The Board's strategy for growth is to further enhance the service and product offering across the Healthcare, PharmaBiotech and LifeSciences divisions, enabling greater market penetration and in turn, increased profits. We aim to achieve this through both organic growth from our existing operations and carefully selected acquisitions when the opportunities arise.
Laurie TurnbullChairman22 March 2011Business Review (abbreviated)Overview
Source BioScience plc is an international diagnostic and genetic analysis company serving the healthcare, pharma biotech and life science research sectors. The Group is split into three divisions - Healthcare, LifeSciences and PharmaBiotech - and the business activities and performance during 2010, and expectations for 2011 for each division are described below.
Healthcare
The Healthcare division comprises our cancer screening and diagnostic activities including cytology, histopathology, and companion diagnostic testing services for the detection and classification of cancer and other diseases.
The Healthcare division generated revenue of £6.9 million, comparable with last year (2009: £6.9 million), and divisional profit from continuing operations increased to £2.0 million (2009: £1.9 million).
Cytology
Our Cytology (cell analysis) operation distributes and supports the SurePath liquid based cytology (`LBC') system and FocalPoint automated cytology imaging platform in the UK. These systems are vital in the preparation and analysis of cervical smear samples as part of the national cervical cancer screening programme. SurePath is one of only two systems approved by the National Institute for Health and Clinical Excellence (`NICE') for use in England and Wales.
Our LBC business holds a dominant position in the UK cervical cancer screening sector, with a significant market share of 47% in England and Wales. We provide the NHS cervical cancer screening programme with the laboratory equipment, reagents and clinic testing kits to support around 1.6 million cervical cancer tests every year.
Cytology continues to be a real success story for Source BioScience. After the exceptional demand seen for our products during 2009, we are pleased to report the same levels of sales during 2010. A number of the other initiatives we instigated during the year were also realised and Cytology marginally outperformed the previous year in profitability.
One of these areas was the programme for the renewal of LBC supply agreements with the NHS which is now underway. In June, the Group renewed a contract worth up to £5.0 million over five years with Cervical Screening Wales (`CSW') with whom we have a long standing relationship.
With around 3.4 million cytology slides screened manually for cervical cancer every year in England and Wales, cytology lends itself to increased automation, and for the long term growth of our business we see this as a significant opportunity.
The wide spread introduction of automated technology has been dependent on the outcome of a long running MAVERIC clinical trial being undertaken by the Health Technology Assessment (`HTA'). The HTA found that the "no further review" (`NFR') capability of the FocalPoint automated imaging platform performed well in correctly identifying samples that contained abnormal cervical cells. NFR could reduce the element of manual screening by up to 25% thereby saving the NHS significant time and money.
We will continue work with the NHS, HTA and the National Screening Committee to support the introduction of automated cytology imaging and NFR into the screening programme.
Diagnostics
Our Diagnostics operations provide expert histopathology (tissue analysis), molecular diagnostics (genetic analysis) and companion diagnostic testing services to public and private healthcare providers. These services are considered an essential element of clinical services, making a contribution to the effective detection, diagnosis, treatment and management of disease, especially chronic diseases such as cancer.
In Diagnostics, we operate in a highly competitive market and compete for business against other service based organisations often, as in the case of large customers such as the NHS, against core facilities from within the customer itself.
During the year our portfolio of diagnostic tests targeted at the diagnosis and treatment of cancer has been enhanced and we are working with a number of global pharmaceutical companies to provide gene-based companion diagnostic testing services for a range of cancer therapies. We continue to leverage our experience and credibility as a provider of expert, quality laboratory services as the foundation for the increased penetration of our molecular and companion diagnostic services into the NHS.
Companion diagnostics testing provides information about how a patient might respond to a particular drug therapy and in assessing a patient's likely benefit from that therapy. This is an important growth area for us.
During the year we saw increasing demand for our services, in particular, the K-RAS gene test. This test is currently used mainly in relation to patients with colorectal cancer since the mutation status of the K-RAS gene indicates whether a patient may respond to drugs such as Merck's Erbitux or not. We also signed two new agreements with global pharma companies; one with Astra Zeneca to provide companion diagnostic testing for lung cancer and the second with an unnamed company for stomach cancer patients. Source BioScience is the only commercial reference centre in the UK to provide this testing for stomach cancer.
Essential to both parts of our Healthcare business is to ensure we have the necessary accreditations in place from the appropriate regulatory authorities. Our laboratories are Clinical Pathology Accreditation (`CPA') accredited for an extensive range of diagnostic and genetic testing services. During the year we were again asked to undertake a number of new "duty of care" reviews which demonstrates the faith NHS Trusts have in our CPA accredited histopathology reporting service. Our reputation as an independent, fully-accredited high quality service provider is instrumental in securing this type of work.
Healthcare is a profitable and highly cash generative division, with multiple opportunities for expansion with the introduction of automated imaging for cervical cancer screening and the growth in molecular testing and companion diagnostics.
LifeSciences
LifeSciences provides ultra-fast sequencing services and other genetic analyses to academic research groups. In addition, this division has a comprehensive portfolio of cloned DNA and RNA products, and antibodies which is being commercialised through our newly launched e-commerce platform.
The division performed strongly with revenue increasing by 14% to £5.6 million (2009: £4.9 million) and operating profit up by 47% to £0.7 million (2009: £0.5 million). The newly acquired imaGenes contributed £0.2 million revenue and £ 25,000 profit.
imaGenes acquisition
The key event for this division in 2010 was the acquisition in November of imaGenes GmbH (`imaGenes') of Berlin to create one of Europe's strongest and most comprehensive businesses for genetic services and products. Source BioScience acquired imaGenes for a consideration of £1.8 million cash. The rationale for the acquisition focused on imaGenes' excellent reputation for bioinformatic services and data analysis and its fit with our stated objective of continued expansion through both targeted acquisitions and development of the existing business.
The integration of the imaGenes business is progressing very well and according to plan. Conventional sequencing technology has been installed and in March 2011 we announced the launch of our new DNA sequencing service from the newly acquired Berlin facility. The harmonisation of the clone product portfolio has also been completed and Source BioScience can now offer customers worldwide access to over 20 million DNA and RNA clone products and 90,000 antibodies - the largest resource of its kind available from a single provider. The launch of the LifeSciences website and e-commerce platform back in August was a critical step in enabling us to maximise the benefits of the enlarged product portfolio that the acquisition of imaGenes was to deliver. This new website delivers enhanced functionality to customers and brings the Group's complete portfolio of services and products together on a single site.
Analysis of traffic since the launch of the site indicates that activity on the website is already up over 10% and that the number of orders placed through the website has increased by over 20%. There has also been very positive feedback from customers about the content, functionality and ease of use of the new site.
Contract services
We are seeing the continued success of our model to embed our services within academic centres and provide them with core genomic services.
Throughout the year we offered our "local" conventional sequencing service from four UK laboratories in Cambridge, Oxford, London and Nottingham. At the start of the year, we opened our fifth sequencing laboratory in Dublin, which is enabling the entry into the vibrant Irish life science research market. Subsequent to the year end, in March 2011 we opened another conventional sequencing laboratory in our recently acquired facilities in Berlin. The Berlin facility establishes a local presence in the German life sciences market and extends the Company's geographical reach for cross-selling opportunities throughout Europe. This is the first step in our strategy to roll out the Source BioScience services and products to these new markets.
The global market for outsourced next generation sequencing is expected to be worth more than £100 million by the end of 2011 and has grown exponentially since these new technologies have been available. Although we only launched our service to provide access to high quality commercial next generation sequencing just two years ago, revenue in 2010 exceeded £1.0 million.
Our next generation DNA sequencing service is based on the Illumina Genome Analyzer IIx platform and HiSeq 2000 high throughput platforms. We were the first UK provider with an Illumina HiSeq 2000 which was installed and commissioned in the second half of the year, and we remain the only commercial provider in the UK to have Illumina CSPro certification. In response to the immediate demand for our Illumina sequencing service, we have invested in a further two GAIIx platforms, trebling our capacity and significantly enhancing our sequencing service.
In addition to this expansion of our sequencing capability, in February 2011 we launched SpeedREAD, the world's fastest DNA sequencing service. This service provides rapid sequencing data delivery to customers within as little as three hours of sample receipt, 24 hours a day, seven days a week.
Further investment in this technology is planned and the Group's second HiSeq 2000 next generation sequencing platform has been delivered and installed in the new Berlin facility and will be commissioned over the coming weeks.
PharmaBiotech
The PharmaBiotech division offers pharmaceutical and biotechnology companies reference laboratory testing services to aid drug discovery and development in conjunction with clinical trials support.
PharmaBiotech is the smallest division but has great prospects for growth. During 2010 it delivered another improved performance with revenue of £1.0 million, an increase of 15% on last year (2009: £0.9 million), and the division reported a profit of £0.3 million, up 28% on last year (2009: £0.2 million).
We have been attracting increased interest from a broader spectrum of pharma biotech customers for our enhanced histopathology to genomics offering. This has been particularly evident from a number of top tier global pharma companies. The attraction of Source BioScience is our ability to undertake a wide range of diagnostic testing on a single biological sample in a centralised reference centre which represents an enhanced `one-stop shop' service including tissue pathology and genetic analysis. Tissue samples provided by patients are extremely precious materials. The ability of Source BioScience to undertake an extensive range of diagnostic and genetic testing from a single site, and maximise the information obtained, is seen as a significant benefit by pharma companies.
A number of new initiatives have commenced with pharmaceutical companies in support of research and development and ongoing clinical trials. Our input has been across a broad range of our services as pharma companies place greater emphasis on cost effectiveness and efficiency in R&D and the design and implementation of clinical trials, both in the early and late stages of the process.
Similar to the Healthcare division, appropriate laboratory accreditations are key to generating growth, especially where services are provided in support of regulatory studies and clinical trials. We maintained our Good Laboratory Practice (`GLP') and Good Clinical Practice (`GCP') status and Human Tissue Authority License throughout the year.
Financial review
Financial performance
Group revenue increased by 6% to £13.5 million (2009: £12.7 million). Owing to the operational gearing inherent in a laboratory services business, coupled with close management of the cost base, gross margins have remained broadly consistent at 43% (2009: 44%).
Normal administrative expenses were £4.0 million (2009: £3.9 million) and represent 30% of revenue, broadly consistent with prior year (2009: 31%). This consistency results from the focus on cost control that the Board and senior management have maintained throughout the year. After adjusting for the imaGenes transaction costs, total administrative expenses for the year were £ 4.2 million (2009: £4.1 million) representing 31% of revenue (2009: 32%).
Operating profit for the year from continuing operations was £11,000 (2009: £ 20,000). After adjusting for the imaGenes transactions costs, operating profit from continuing operations was £170,000. This continued year on year improvement in the continuing operations is a testament to the high quality of service provided by our staff, balanced with the close focus on cost management and increased efficiency.
After net finance income and taxation, profit before discontinued operations for 2010 was £0.1 million (2009: £0.2 million). This was in line with management expectations after accounting for transaction costs of £0.2 million on the acquisition of imaGenes.
During the year, the Company made the decision to dispose of its investment in Number One Health Group Limited, of which it owns 40%. The benefits that the Company had sought to realise from this investment did not materialise to the appropriate extent, consequently, the investment has been fully written down. During the year, provisions that were established on the disposal of the Dubai operations in 2006 were released as all obligations have been settled. The net effect is a loss from discontinued operations of £15,000 (2009: £43,000 profit).
After recognising all of the above, including discontinued activities and acquisition transaction costs, profit attributable to the equity holders of the Company was £0.1 million (2009: £0.3 million)
Included in the Consolidated Statement of Comprehensive Income are non-cash items, including depreciation and amortisation, totalling £1.1 million (2009: £ 1.0 million). After accounting for these, net finance income, taxation and adjusting for acquisition transaction costs, adjusted EBITDA from continuing operations were £1.3 million (2009: £1.0 million).
Financial position
At 31 December 2010 the Group had net assets of £15.4 million (31 December 2009: £15.2 million).
Non-current assets increased by a net £2.2 million to £12.2 million at 31 December 2010 (31 December 2009: £10.0 million). The significant components of this increase are £1.7 million of goodwill arising on the acquisition of imaGenes, £0.8 million of assets acquired with imaGenes and £0.3 million invested in the laboratory management information system and LifeSciences website and e-commerce platform.
Net current assets reduced by £1.6 million to £3.8 million (31 December 2009: £ 5.4 million). The main drivers of this change were the acquisition of imaGenes of £1.7 million and capital expenditure of £1.1 million. Within current liabilities, trade and other payables have decreased by £0.5 million which represents the investment in next generation sequencing.
The Group has historically been funded primarily through equity although debt has been raised as and when appropriate for the needs of the business. As at 31 December 2010 the Group had aggregate bank debt of £0.4 million (2009: £ negligible) which was acquired with imaGenes. This bank debt is the balance of that raised by imaGenes in 2007 to fund the working capital of that business when they commenced trading.
Cash flows and liquidity
The Group generated cash from operating activities of £0.9 million (2009: £0.9 million).
After investment in acquisitions, capital expenditure and other non-trading items, net cash outflow was £2.8 million (2009: £0.6 million outflow). Initial consideration for imaGenes was £1.7 million and the final tranche of deferred consideration for Autogen Bioclear was £0.8 million. In aggregate we invested £ 1.1 million in our laboratory infrastructure including £0.7 million for next generation sequencing technology and £0.3 million on the laboratory information management system and e-commerce platform.
Net interest received was just £40,000 (2009: £176,000) on an average balance of over £5.0 million. The decrease in interest was partly due to reduced funds on deposit but mainly because of negligible rates of interest on deposits in conjunction with the timing of maturity of those deposits.
The Group's cash balance was £4.2 million as at 31 December 2010 (31 December 2009: £7.0 million) and bank borrowings were £0.4 million (2009: negligible), which were acquired with imaGenes.
Outlook
We are seeing growth across all three divisions which is in line with the strategic plans put in place four years ago.
Healthcare
In Cytology, we hold a dominant position in England and Wales in support of the cervical cancer screening programme. This is a mature market which is highly cash generative and the barriers to entry are significant. We intend to grow this business through developments in automation, where we are one of only two companies leading the way.
In Diagnostics, we are planning to take advantage of the increasing demand by the healthcare industry for outsourced services. Currently, the NHS spends in the region of £2 billion per annum on pathology. It is entering a period of considerable change and we believe this presents significant opportunities for our outsourcing model.
The global market for cancer diagnostics is estimated to be in excess of £4 billion. Our unique expertise in this field means that we are well placed to capitalise on the increasing demand for genetic testing and companion diagnostic testing for cancer and other diseases. Our strategy is to expand the range of tests we provide and also to extend the penetration of our genetic testing offering into the NHS. This is particularly relevant where demand is increasing for targeted therapies as a means to improve treatment success and reduce costs. Accordingly there is increasing demand for companion diagnostics to identify which patients are likely to respond to certain drugs and which are not. The K-RAS test highlighted above is just one example of a number of such a companion diagnostic tests we provide.
LifeSciences
We have forged a leading position in Europe for the provision of next generation DNA sequencing services and products. This is another large and growing market.
Our four UK laboratories and two new facilities in Ireland and Germany are all in international centres of research; therefore, we are ideally placed to meet the growing demand for ultra-fast sequencing analysis. We have been pleased with the immediate response to the launch of our HiSeq 2000 technology and expect this demand to continue to grow. With access to next generation sequencing becoming easier and cheaper, we also expect research groups to need help with the analysis of the vast amounts of data generated. Again, we intend to meet this demand with our enhanced bioinformatics expertise.
In addition to sequencing and bioinformatics, we have created a unique portfolio of products for life science research, comprising over 20 million clones and more than 90,000 antibodies, in addition to other cell biology products and research tools. With the launch of our improved e-commerce platform we have made the sales process more user friendly to current customers to generate increased sales. We believe there are also significant opportunities to cross-sell the Source BioScience clones, antibodies and other products through the imaGenes distribution channels to their existing customers, and vice versa, to provide a more comprehensive offering to our expanded customer base.
Overall, we plan to increase penetration of the European life science research and healthcare markets, in order to accelerate our growth. The imaGenes team bring significant depth of experience and knowledge to the Group and we are leveraging their links with academic centres and research institutions across Europe.
PharmaBiotech
The offering to pharma and biotech combines the skills and expertise we have in our Healthcare and LifeSciences divisions and delivers our services from accredited laboratories that are fully compliant with global regulatory requirements for clinical trials.
We anticipate increasing demand for our pharmacogenomic services, which identify the genetic differences between groups of patients and groups of diseases. We are exploring opportunities with a number of pharmaceutical companies to determine the genetics of diseases such as diabetes and cardiovascular disease. These are disease areas that are complementary to our expertise in oncology. We are also expecting to benefit from the significant changes within the pharma industry with many companies undergoing restructuring programmes and requiring outsource partners. We are ideally placed and we expect demand for our expertise in this area to increase in this important, rapidly expanding sector.
Conclusion
The Group's strategy is to grow its Healthcare, LifeSciences and PharmaBiotech businesses through organic growth from existing operations combined with selected appropriate investment and acquisitions to broaden the Group's portfolio of products and services, expanding our core expertise into complementary areas.
Over the medium to long term, the Board remains confident that the opportunities for growth are strong and we expect the markets for our services and products to grow significantly. We are exploring new markets and will continue to exploit the cross-selling opportunities we now have from our broad customer base, enhanced portfolio and extended geographical reach. In order to match the demand for our services and products, we continue to equip the Group with the breadth and depth of service offering, technology platforms, expertise and products to deliver controlled growth and value to shareholders.
Dr Nick AshChief Executive Officer22 March 2011Consolidated Statement of Comprehensive IncomeFor the year ended 31 December 2010 Year Year ended ended 31 December 31 December 2010 2009 Continuing operations Note £'000 £'000 Revenue 13,487 12,735 Cost of sales (7,666) (7,109) Gross profit 5,821 5,626 Selling and distribution expenses (1,231) (1,321) Research and development (220) (189) Administrative expenses: - normal (4,024) (3,892) - amortisation of intangibles arising from (176) (204)acquisitions - acquisition costs (159) - Administrative expenses (4,359) (4,096) Operating profit from continuing operations 11 20 Finance income 72 147 Finance costs (9) (2) Profit before tax from continuing 74 165operations Taxation 34 59 Profit after tax but before (loss)/profit 108 224from discontinued operations Discontinued operations (Loss)/profit from discontinued operations (15) 43 Profit attributable to equity holders of 93 267the Company Total comprehensive income attributable to 93 267equity holders of the Company Earnings per share: Basic profit per ordinary share 4 0.05p 0.13p Diluted profit per ordinary share 4 0.04p 0.13p
There are no other items of comprehensive income.
Consolidated Statement of Changes in Shareholders' Equity For the year ended 31 December 2010
Attributable to equity holders of the Parent Company Share Translation Merger Special Profit Total capital reserve and other reserve and loss equity reserves reserve Group £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 January 4,075 - 2,408 10,788 (2,431) 14,8402009 Profit for the year - - - - 267 267 Total comprehensive - - - - 267 267income for the year Transactions with owners, recorded directly in equity Employee share option scheme: - value of services - - - - 92 92provided Balance at 31 December 4,075 - 2,408 10,788 (2,072) 15,1992009 Balance at 1 January 4,075 - 2,408 10,788 (2,072) 15,1992010 Currency translation - (1) - - - (1)adjustments Net expense recognised - (1) - - - (1)directly in equity Profit for the year - - - - 93 93 Total comprehensive - - - - 93 92income for the year Transactions with owners, recorded directly in equity Employee share option scheme: - value of services - - - - 77 77provided Balance at 31 December 4,075 (1) 2,408 10,788 (1,902) 15,3682010 Consolidated Statement of Financial PositionAs at 31 December 2010 As at As at 31 December 31 December 2010 2009 £'000 £'000 Non-current assets Goodwill 8,345 6,617 Other intangible assets 992 638 Investment in associate - 223 Property, plant and equipment 2,818 2,492 12,155 9,970 Current assets Inventories 716 509 Trade and other receivables 2,527 2,633 Cash and cash equivalents 4,170 7,014 7,413 10,156 Current liabilities Trade and other payables 3,522 4,033 Financial liabilities - borrowings 130 3 Deferred consideration - 750 3,652 4,786 Net current assets 3,761 5,370 Total assets less current liabilities 15,916 15,340 Non-current liabilities Financial liabilities - borrowings 302 1 Deferred consideration 77 - Deferred tax 169 140 548 141 Net assets 15,368 15,199 Equity Issued share capital 4,075 4,075 Special reserve 10,788 10,788 Other reserves 2,407 2,408 Profit and loss reserve (1,902) (2,072) Total equity 15,368 15,199Consolidated Statement of Cash FlowsFor the year ended 31 December 2010 Year Year ended ended 31 December 31 December 2010 2009 £'000 £'000 Cash flows from operating activities Profit for the year 93 267 Adjustments for: Depreciation of tangible fixed assets 792 685 Recognition of grant income (13) (13) Amortisation of capitalised development costs 40 29 Amortisation of other intangibles 177 206 Impairment of assets held for sale 223 - Profit on sale of property, plant and equipment (39) (14) Profit on sale of discontinued operation (224) - Share of associate's result - (43) Interest payable 9 2 Interest receivable (72) (147) Share based payments - value of employee service 77 92 Increase in inventories (119) (31) Decrease/(increase) in trade and other receivables 502 (331) (Decrease)/increase in trade and other payables (520) 206 Cash generated from operations 926 908 Interest paid (9) (2) Tax received on behalf of acquired subsidiaries - 40 Tax paid on behalf of acquired subsidiaries - (29) Net cash generated from operating activities 917 917 Cash flows from investing activities Acquisition of subsidiaries (2,449) (1,080) Cash acquired with subsidiaries (111) - Receipts from associate - 127 Purchases of property, plant and equipment (872) (713) Proceeds from sale of property, plant and equipment 10 31 Purchases of intangible assets (265) (61) Interest received 49 178 Net cash used in investing activities (3,638) (1,518) Cash flows from financing activities Repayment of borrowings (107) - Finance lease principal repayments (4) (32) Net cash used in financing activities (111) (32) Net decrease in cash and cash equivalents (2,832) (633) Cash and cash equivalents at beginning of year 7,014 7,647 Exchange losses on cash and cash equivalents (12) - Cash and cash equivalents at end of year 4,170 7,014
Notes to the Consolidated Preliminary Financial Statements For the year ended 31 December 2010
Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards (`IFRS') adopted for use in the EU (`Adopted IFRS') in accordance with EU law (IAS Regulation EC 1606/2002).
The financial information contained in this announcement of preliminary financial statements does not constitute the Company's statutory financial statements for the years ended 31 December 2010 or 2009. Neither the Directors of the Company, nor our auditor, have as yet approved the statutory financial statements for the financial year ended 31 December 2010. These financial statements are therefore unaudited. The financial information for 2009 is derived from the statutory financial statements for 2009 which have been delivered to the Registrar of Companies. The auditor has reported on the 2009 accounts and that report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The statutory financial statements for 2010 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course.
In 2010, the Group has adopted Revised IFRS 3 Business Combinations (including Amendments to IFRS 3 in Improvements to IFRS 2009) and amendments to IAS 27 Consolidated and Separate Financial Statements. The acquisition of ImaGenes GmbH (see note 3) has been accounted for in accordance with the requirements of Revised IFRS 3. There was no retrospective impact.
No other revisions to Adopted IFRS that became applicable in 2010 have a significant impact on the Group's financial statements.
2. Operating segments
Information about reporting segments
At 31 December 2010 the Group's trading operations were organised into three main operating divisions:
* Healthcare * PharmaBiotech * LifeSciences
During the year there were immaterial sales between business segments (2009: immaterial) and, where these do occur, they are at arm's length pricing.
Unallocated costs represent corporate expenses and common operating costs. Segment assets include intangible assets including goodwill, plant and equipment, stocks and debtors. Unallocated assets include property, central debtors and prepayments and operating cash. Segment liabilities comprise operating liabilities and exclude borrowings. Segment capital expenditure comprises additions to plant and equipment and capitalised development costs.
Year ended 31 December 2010
Healthcare Pharma Life Unallocated Group Biotech Sciences Continuing operations £'000 £'000 £'000 £'000 £'000 Revenue 6,866 1,025 5,596 - 13,487 Segment result 2,011 277 727 (3,004) 11 Finance income 72 72 Finance costs (9) (9) (Loss)/profit before tax (2,941) 74 Taxation 34 34 Profit/(loss) for the 2,011 277 727 (2,907) 108year from continuing operations Discontinued operations Segment result (15) (15) Loss before tax (15) (15) Loss for the year from (15) (15)discontinued operations Profit/(loss) for the 1,996 277 727 (2,907) 93year Segment assets 2,300 193 11,500 - 13,993 Unallocated assets - property, plant and 675 675equipment - debtors and prepayments 730 730 - cash and cash 4,170 4,170equivalents Total assets 2,300 193 11,500 5,575 19,568 Segment liabilities 809 42 1,084 - 1,935 Unallocated liabilities - creditors and accruals 2,265 2,265 Total liabilities 809 42 1,084 2,265 4,200 Other segment items Capital expenditure - tangible assets 66 - 571 337 974 - intangible assets 177 - 88 - 265 Depreciation 229 4 335 224 792 Amortisation of 22 5 190 - 217intangible assets Other non-cash expenses - share option scheme - - - 77 77Year ended 31 December 2009 Healthcare Pharma Life Unallocated Group Biotech Sciences Continuing operations £'000 £'000 £'000 £'000 £'000 Revenue 6,934 892 4,909 - 12,735 Segment result 1,894 216 495 (2,585) 20 Finance income 147 147 Finance costs (2) (2) (Loss)/profit before tax (2,440) 165 Taxation 59 59 Profit/(loss) for the 1,894 216 495 (2,381) 224year from continuing operations Discontinued operations Segment result 43 43 Profit before tax 43 43 Profit for the year from 43 43discontinued operations Profit/(loss) for the 1,937 216 495 (2,381) 267year Segment assets 2,580 299 8,770 - 11,649 Unallocated assets - property, plant and 497 497equipment - debtors and prepayments 736 736 - cash and cash 7,014 7,014equivalents - discontinued operations 230 230 Total assets 2,580 299 8,770 8,477 20,126 Segment liabilities 799 61 1,979 - 2,839 Unallocated liabilities - creditors and accruals 1,864 1,864 - discontinued operations 224 224 Total liabilities 799 61 1,979 2,088 4,927 Other segment items Capital expenditure - tangible assets 426 - 854 79 1,359 - intangible assets 61 - - - 61 Depreciation 247 12 286 140 685 Amortisation of - 21 214 - 235intangible assets Other non-cash expenses - share option scheme - - - 92 923. Acquisition of subsidiary
On 30 November 2010 Source BioScience plc completed the acquisition of the entire ordinary share capital of imaGenes GmbH for total consideration of £1.8 million, excluding transaction costs of £0.2 million. The principal activities of imaGenes are the distribution of a portfolio of genomic clone products and libraries in addition to genotyping, proteomics, next generation sequencing and bioinformatics.
The acquired business contributed revenue of £0.2 million and net profit of £ 25,000 to the Group for the period from 1 December to 31 December 2010. The net profit is after charging £10,000 of amortisation resulting from the fair value uplift to intangible assets acquired with the business. If the acquisition had occurred on 1 January 2010, Group revenue would have been £2.2 million higher and the net profit would have decreased by £254,000 on a pro forma basis. These amounts have been calculated by adjusting the results of the subsidiary to reflect the additional amortisation that would have been charged assuming the fair value adjustments to intangible assets required by IFRS had applied from 1 January 2010.
The book and fair values of the assets and liabilities acquired were asfollows: Fair value Acquiree's carrying amount £'000 £'000 Tangible assets - property, plant and equipment 407 407 Intangible assets - biological resources and software 114 114
Intangible assets - customer database and relationships 245 -
Inventories 88 88 Other current assets 373 373 Current financial liabilities (210) (210) Other current liabilities (407) (407) Non-current financial liabilities (440) (440) Deferred tax (66) - Value of net assets acquired 104 (75) Goodwill arising on acquisition 1,672 1,851 Consideration 1,776 1,776 Consideration is made up as follows: Initial cash consideration 1,699 Deferred consideration 77 1,776
The goodwill represents future economic benefits arising from assets that are not capable of being identified individually nor recognised as separate assets. This will include acquirer specific synergies that arise in the post acquisition period such as cross selling opportunities and the enhancement of technologies and processes between existing and acquired sites; the technical skills and customer support provided by the business and attributable to the workforce and access to imaGenes' service and product portfolio.
Deferred consideration is payable on 14 June 2012 based on a completion accounts mechanism. This represents the best estimate at the date of acquisition of the present value of the consideration payable.
4. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity shareholders of the Parent Company by the weighted average number of shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity shareholders by the weighted average number of ordinary shares outstanding during the year adjusted for the effects of dilutive options.
The calculation of basic earnings per share for the year was based on the profit attributable to ordinary shareholders of £93,000 (2009: £267,000) on 203,765,232 ordinary shares (2009: 203,765,232 ordinary shares) being the weighted average number of ordinary shares in issue.
The calculation of diluted earnings per share for the year is based on the profit attributable to ordinary shareholders of £93,000 (2009: £267,000) and on the weighted average number of ordinary shares in issue, adjusted for 6,620,959 dilutive options (2009: 3,119,110), of 210,386,191 (2009: 206,884,342).
IAS 33 Earnings per share requires presentation of diluted earnings per share when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. Assuming that option holders will not exercise out of the money options, no adjustment has been made to the diluted earnings per share for out of the money share options.
Reconciliation of the earnings and weighted average number of shares used in the calculations are set out below:
Year Year ended ended 31 December 31 December 2010 2009 Earnings (£'000) 93 267 Basic EPS Weighted average number of shares 203,765,232 203,765,232 Earnings per share 0.05p 0.13p Diluted EPS Weighted average number of shares 203,765,232 203,765,232 Dilutive options adjustment 6,620,959 3,119,110 Weighted average number of shares 210,386,191 206,884,342adjusted for dilutive options Diluted earnings per share 0.04p 0.13pAbout Source BioScience:
Source BioScience plc is an international diagnostic and genetic analysis business serving the healthcare and research markets.
The Healthcare operations provide screening and diagnostic testing for cancer and other diseases and additional predictive testing for treatment optimisation for clinicians and patients. PharmaBiotech offers support for early stage therapeutic development, offering a 'one-stop shop' from tissue pathology, immunohistochemistry, sophisticated image analysis, biomarker determination and assay development to pharmacogenomics including genotyping and gene expression analysis. The LifeSciences division provides core laboratory research support from conceptualisation to implementation, calling upon a wide range of cutting edge technology platforms including an online catalogue of biomolecular tools. This incorporates next generation sequencing, conventional sequencing, microarray analysis and whole genome amplification in addition to a comprehensive library of genomic reagents and clones including cDNA and RNAi, as well as facilitating rapid access to high quality antibodies, cell cultures, diagnostic assays for cancer and other genetic testing, and related research tools.
The Group has its headquarters in Nottingham, UK where it operates state of the art reference laboratory facilities, with additional UK laboratory facilities in London, Cambridge and Oxford and European facilities in Berlin and Dublin. Source BioScience is CPA, GLP and GCP accredited and is licensed by the UK Human Tissue Authority.
Further information about Source BioScience can be found at www.sourcebioscience.com.
Glossary
The following terms are used in this document:
Antibodies Antibodies are proteins that are found in blood or other bodily fluids; they are used by the immune system to identify and neutralise foreign objects, such as bacteria and viruses. Antibodies are also used as highly specific probes for detecting proteins of interest in tissues. A wide range of antibodies with a large variety of cellular targets is available to research scientists through distributors such as Source BioScience. Bioinformatics The application of information technology, and computer science, to the field of molecular biology. Common activities in bioinformatics include mapping and analysing DNA and protein sequences, aligning different DNA sequences to compare them and handling and analysing huge data sets generated by the latest sequencing technologies. Biomarkers Biomarkers often refer to substances found in blood, urine or tissue, changes in which may be used to indicate presence of disease or response to treatment. More generally the term biomarker refers to any molecule that can be used to monitor a particular cellular process and may be a protein, DNA or RNA molecule.
Capillary Electrophoresis DNA sequences are determined using a chemical DNA Sequencing
reaction that results in an array of products that
(also known as Sanger terminate in a different fluorescent coloured dye, sequencing or
which vary in size by one nucleotide. The products
conventional sequencing) are separated, like the rungs of a ladder, by passing
them through a capillary with an electric current and determining the order in which they emerge. This method was used for the large DNA sequencing projects of the last 15 years and remains the only way of inexpensively analysing large numbers of small sets of samples (see also Next Generation DNA Sequencing - below). CYP2D6 Breast cancer patients with certain genetic variations in the CYP2D6 gene may be slow metabolisers of the drug tamoxifen to its active metabolite endoxifen. In this case changes to the treatment regime may be indicated because the efficacy of the drug is reduced. Circulating Tumour Cells The identification of small numbers of cancer cells (`CTC') circulating in the blood has been shown to be of potential prognostic significance in breast cancer, colorectal or prostate cancer, and useful for monitoring response to drug therapy. Clinical Pathology CPA is the accreditation body for clinical pathology Accreditation services. Accreditation involves audit of the ability(`CPA') of a laboratory to provide a service of high and consistent quality by declaring a defined standard of practice, which is performed by the CPA accreditation body. Companion Diagnostic A test based on a biomarker (which might be a protein, DNA or RNA molecule), the presence or absence of which is associated with the likely efficacy of a drug or other treatment. Companion diagnostics are useful in stratifying patients into groups which are known to respond in a particular way to a drug. A good example of such a test from the Source BioScience breast cancer portfolio is the HER2 test, which assesses levels of the HER2 protein, expression of which is correlated with response to Herceptin.. DNA and cDNA DNA (Deoxyribo Nucleic Acid) is a large, complex molecule which, by virtue of a unique sequence of building blocks, contains all the genetic information required to create a cell or organism. cDNA (complementary DNA) can be made from all the genes in a genome, from a single gene, or from part of a gene. cDNA is DNA that has been synthesised artificially using an RNA template (see below) from the gene(s) selected. Duty of Care Review An audit of a specific pathologist's practice. Pathology departments have a duty of care to patients whose treatment or clinical management may need to be changed in the light of revised opinions arising from a review of a pathologist's or team's work. Where good practice is suspected to have broken down it may be necessary to arrange a systematic review of cases to fulfil a department's duty of care to their patients. Source BioScience offers a full duty of care review service to pathology departments that need specialist second opinion in these circumstances. FocalPoint (`FP') An automated imaging system for screening SurePath liquid based cytology slides. It uses complex algorithms to interpret the images of each slide and decide the 10 `fields of view' most likely to have any abnormal cells. It can archive up to 25% as "no further review" (`NFR') which then do not need to be manually screened. Fluorescence In Situ In situ hybridisation (`ISH') is a powerful Hybridisation technique, not unlike immunohistochemistry (below), (`FISH') for visualising the presence of specific sequences of DNA or RNA in tissue sections. The technique uses short synthetic sequences of DNA or RNA which will bind, or hybridise, to the tissue with high specificity for the DNA or RNA of interest. Fluorescent `tags' are attached to these synthetic sequences, allowing them to be visualised with a special microscope, even when present at very low levels (FISH). Genomics Genomics is the study of an organism's entire genome, where the genome of an organism is its whole hereditary information and is encoded in the DNA (see above) and RNA (see below). This includes both the genes and the non-coding sequences of the DNA.
Genomic clone libraries A clone library is a collection of clones containing
complementary DNA (`cDNA') (see above) and is often intended to represent the genes that are expressed within a given cell or tissue type at a given period. Genomic products and In this instance, DNA or RNA extracted and purified reagents from a range of species and provided in a variety of forms for research purposes.
Genotyping and sequencing DNA sequencing is the process of precisely ordering
the building blocks, or nucleotides, of an organism's DNA. The method can be used to determine short sequences of DNA or, in larger experiments, to sequence the entire genome of an organism. Genotyping, in turn, is the process whereby DNA is characterised and then compared to reference data or, if large numbers of samples are genotyped, the data can be examined for patterns which might lead to discoveries of the fundamental causes of inherited diseases. Genotyping is commonly performed by PCR (below) or DNA sequencing. Good Clinical Practice Good Clinical Practice is an international ethical (`GCP') and scientific quality standard for designing, conducting, recording and reporting clinical trials that involve the participation of human subjects. Compliance with this standard provides public assurance that the rights, safety and well-being of trial subjects are protected, consistent with principles that have their origin in the Declaration of Helsinki. Compliance with the principles of GCP is assured via monitoring by a governmental agency, the Medicines and Healthcare products Regulatory Agency (`MHRA'). Good Laboratory Practice Good Laboratory Practice is a set of principles that (`GLP') provides a framework within which laboratory studies are planned, performed, monitored, recorded, reported and archived. These studies are undertaken to generate data by which the hazards and risks to users can be assessed for pharmaceuticals (only preclinical studies). GLP helps assure regulatory authorities that data submitted is a true reflection of the results obtained during the study and can therefore be relied upon when making risk/safety assessments. Compliance with the principles of GLP is assured via monitoring by the Medicines and Healthcare products Regulatory Agency (`MHRA'). HER2 Human Epidermal Growth Factor Receptor 2 is a protein whose over-expression within a breast tumour sample may indicate a patient is suitable for treatment with Herceptin. A test for such over-expression is carried out on all new breast cancer patients. Histopathology The study of changes in tissues and cells as a consequence of some disease or toxic processes. Immunohistochemistry Immunohistochemistry is a technique for visualising (`IHC') proteins and other molecules in thin sections of tissue. This technique uses antibodies raised in other species against the protein of interest as a tool, and exploits their exquisite sensitivity and specificity for binding to that protein. K-RAS K-RAS is a gene that produces an important cell signalling protein responsible for cell growth. The presence of a mutated form of the K-RAS gene in colorectal cancer may indicate that a patient is unsuitable for new anti-EGFR drugs such as Erbitux and Vectibix. Liquid based cytology Liquid based cytology is a process for collecting and(`LBC') processing cytology samples from epithelial tissues such as the cervix. It produces a cleaner preparation of cells, without the other materials which frequently contaminate the sample such as blood or mucus. Microarray Microarrays are a microscopic series of nucleic acid spots of known sequence which are deposited in a regular array typically onto glass slide. A DNA or RNA probe can then be hybridised to the slide which results in a DNA or RNA fingerprint of the sample in the probe enabling you to determine the sample nucleic acid sequence. Next Generation DNA Next Generation DNA Sequencing refers generically to Sequencing (`NGS'), a set of recent technologies, in our case Illumina Illumina GAIIx and GAIIx and Illumina HiSeq 2000, in which extremely large numbers of short sequences can be determined inIllumina HiSeq 2000 a single experiment; for example the Illumina HiSeq 2000 selected by Source BioScience can sequence two human genomes in approximately one week.
No further review (`NFR') A unique feature of the FocalPoint automated cytology
imaging platform that can identify up to 25% of cytology slides where there are no abnormal cells present. These slides do not require further manual review, thereby improving the turnaround time and efficiency in the laboratory operations, saving time and cost for the NHS. Proteomics Proteomics is the study of specific amino acids, proteins or the entire proteome (a complete translated genome, see above) of an organism. Proteomic techniques include, for example, surveying complex biological samples for protein content, or determining the level of specific proteins in tissues using techniques like immunohistochemistry (IHC, see above) RNA RNA (RiboNucleic Acid) is a molecule similar to DNA, but is an intermediate product between the DNA of the gene, and the ultimate protein product of that gene. The level of expression of a gene can be gauged by the amount of RNA synthesised from that gene, a process usually measured by quantitative real-time polymerase chain reaction (`Q-PCR'). RNA expression analysis RNA expression analysis measures the activity of a large number of genes simultaneously, generating a global picture of cellular function. The expression analyses, or profiles, can distinguish between cells that are actively dividing, for example, or show how the cells react to a particular treatment.
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