Synectics Regulatory News (SNX)

7 Nov 2005 07:00

Synexus Clinical Research PLC 06 November 2005 Synexus Clinical Research plc ('Synexus', 'the Company' or 'the Group') Admission to Trading on the Alternative Investment Market Key Points • Synexus, which provides clinical trials services for the global pharmaceutical industry, is delighted to announce that its ordinary shares commence trading on AIM today. • Synexus has raised £3.5 million (gross) via a Placing of 5,384,615 new Ordinary Shares at 65p per share. A further 2,538,462 Ordinary Shares were placed on behalf of existing investors. Brewin Dolphin Securities is the Company's Nominated Adviser and Broker. • Operating through its own network of 12 investigator sites throughout the UK, Synexus sources patients, screens them for suitability, manages them through the trial and collects data before reporting back to its clients. • The Group's model offers higher data quality and a higher 'value for money' solution than the traditional method of using a disparate population of NHS sites. • Synexus has a broad, blue chip customer base including GlaxoSmithKline, AstraZeneca and Novartis. • Synexus operates within the primary care segment of the UK market with a strong track record for chronic or recurrent indications and disease prevention studies. This segment of the market has an estimated value of £150 million per annum. • In addition to focusing on continued organic expansion, the Directors are intending to take advantage of a number of international opportunities to exploit the growing market for clinical trials and patient recruitment in India, Poland, Russia and other emerging markets. • The new funds raised will be used to meet the expenses of the Placing, to eliminate debt and to provide additional working capital. Michael Redmond, chairman, comments: 'I am delighted with our move to AIM. We believe that Synexus has strong growth potential, both in the UK and overseas. Within the domestic market we are seeing a trend towards higher volume, extended clinical trials which are particularly suited to our business. Overseas, the large pharmaceutical companies are encouraging us to establish our model in emerging countries where patients have little or no history of medication and can therefore yield higher quality data. We have already identified several specific opportunities which we are currently pursuing.' Press enquiries Synexus Clinical Research plc Tel: +44 (0)1257 230 723 Michael Redmond, Chairman Michael Fort, Chief Executive Biddicks - Financial Public Relations Tel: +44 (0)20 7448 1000 Zoe Biddick Brewin Dolphin Securities Tel: +44 (0)845 270 8600 Mark Brady/Sarah Kent PLACING STATISTICS Issue Price 65 p Number of Ordinary Shares being placed 7,923,077 Percentage of enlarged issued Ordinary Share capital being placed 36.4% Number of Ordinary Shares in issue following Admission 21,748,251 Gross proceeds of the Placing receivable by the Company £3.5 million Net proceeds of the Placing receivable by the Company £2.85 million Market capitalisation on Admission at the Issue Price £14.1 million OVERVIEW OF THE BUSINESS Synexus focuses on the recruitment of patients for later stage clinical trials, principally Phase II and Phase III. Synexus contracts either directly with the pharmaceutical company or with a CRO involved in the particular drug's development. In Phase II clinical trials, the study drug or treatment is given to around 100-300 healthy volunteers to see if it is effective and to evaluate its safety. In Phase III trials, the study drug or treatment is given to a large group of people to confirm its effectiveness, monitor side effects, compare it to commonly used treatments and collect information that will allow the drug or treatment to be used safely. Synexus operates through its own network of 12 investigator sites across the UK. Each site functions with the Group's own employees, enabling it to implement quality controls on the trials whilst also removing reliance upon the assistance of 'partners' in providing a service to clients. The Synexus approach helps pharmaceutical companies to introduce new drugs into the market in a more timely and cost efficient manner with reduced administrative burden. Synexus has developed a track record in conducting clinical trials particularly in chronic or recurrent indications and disease prevention studies. The Group's growth to date has arisen principally organically and from an expansion in the rapeutic areas covered. At the date of this document, the Group has 20 active contracts representing an expected total turnover of approximately £16.5 million over the remaining life of those contracts. In addition to focusing on continued organic expansion, the Directors are intending to take advantage of a number of international opportunities that have been identified which will expand both the level of services offered and allow the Group to exploit the growing opportunities for clinical trials and patient recruitment in India, Poland, Russia and other emerging clinical trials markets. THE CLINICAL TRIALS MARKET Market size and dynamics Crucially for pharmaceutical companies, the patent life for a new compound begins before any drugs trials are held and a compound will typically be patented approximately 10 to 12 years before regulatory approval is given. Consequently the trial and approval process absorbs approximately half of the life of the patent and reduces the potential revenue earning period of the compound. It is therefore vitally important for the pharmaceutical companies that the trials are concluded as quickly as possible to enable maximisation of revenue and profit. Over 40% of the global research and development spend by pharmaceutical companies in bringing a new drug to the market is tied to the recruitment of patients for the four trial phases in which new medicines are tested on humans for safety and efficacy. Of this, the primary care segment of the UK market in which Synexus currently operates is estimated at a value of around £150 million per annum. This market is highly fragmented, as outlined below in the section on Synexus' competitive position. Synexus represents one of the major operators in this sector. As regulatory requirements continue to drive up the numbers of patients required on clinical trials, pharmaceutical companies are increasingly seeking access to large patient pools in addition to those in Western Europe and the US and, because of the number of patients involved, also in lower cost countries. For example, the CEO of GlaxoSmithKline was recently quoted as saying that one third of the company's clinical trials now take place in lowcost countries and that it aims to hit 50% within two years. The principal benefit to global pharmaceutical companies of shifting patient recruitment into emerging economies is the prevalence of 'treatment naive' patients with little or no history of medication. The advantage of such patients to a clinical trial include the following: • Patients are often eager to become involved in a clinical trial as it represents for them the only means of gaining access to new medicines; • patients are less likely to be excluded from undertaking a trial due to their current prescribed medication, as is often the case in the UK; • the results of the trial are less likely to be influenced by a patient's previous medication history; and • there is a reduced need for a 'wash out' period prior to a patient joining a study to allow time for current medication to be eliminated from the body. The second key benefit of moving clinical trials into emerging economies is that the cost per patient recruited to clinical trials is significantly lower, giving the pharmaceutical companies the opportunity to realise large cost savings in bringing drugs to the market. Synexus' competitive position In the UK, Synexus' primary competition is from those NHS GPs and hospital consultants who operate as part-time investigators. There are only a small number of commercial organisations in the UK which manage patients on clinical trials. These companies, for example Minerva Medical and Profiad, which are both subsidiaries of Quintiles, provide clients with a network of GPs rather than owning the investigator sites. As Synexus has its own investigators it is able to offer clients a dedicated service, implement quality controls on the trials and also remove reliance upon third parties. As outlined above, the clinical trials market is expanding increasingly into India, Poland, Russia and other emerging clinical trial markets. Synexus is actively looking at these markets and is responding to demand from global pharmaceutical clients to replicate the successful UK model with its standard operating procedures, quality controls and patient recruitment methodologies. Synexus has recently signed a partnering arrangement with the Indian Clinical Research Institute in Mumbai for the recruitment of patients to clinical trials. STRATEGIC OBJECTIVES AND ACQUISITION OPPORTUNITIES The Directors' principal objective is to expand the Group through organic growth and by selective acquisitions, concentrating on Synexus' core activity of patient recruitment for later stage clinical trials. As outlined above, the clinical trials market is moving increasingly into India, Poland, Russia and other emerging clinical trial markets. Synexus is actively looking at these markets and is responding to demand from global pharmaceutical clients to replicate the successful UK model with its standard operating procedures, quality controls and patient recruitment methodologies. A number of international opportunities have been identified which will expand both the level of services offered and allow the Group to exploit the growing opportunities for clinical trials and patient recruitment in eastern countries particularly India, Poland, Russia and Ukraine. The Group has recently signed a partnership agreement with the Indian Clinical Research Institute in Mumbai for the recruitment of patients to clinical trials. This venture effectively operates as a franchise under the Synexus recruitment model, with Synexus controlling the costing, billing, quality control and introduction of work. This centre is expected to open in December 2005 with the first patient being recruited in the first quarter of 2006. In addition, the Directors are currently in discussions with a number of companies regarding the possibility of Synexus acquiring those businesses for share consideration. Specifically, discussions are underway with a UK-based company which operates patient management centres in Russia and Ukraine and with the owners of an existing patient management centre in Poland. The Directors believe that these acquisitions will enhance the Group's business by broadening its service offering and will be achievable on terms which will enhance shareholder value for Synexus. BOARD AND MANAGEMENT The Board comprises the following directors: Michael Redmond (aged 61) - Executive Chairman Michael Redmond is currently non-executive chairman of Dechra Pharmaceuticals plc and was, until recently, chairman of Microscience Holdings plc and Arakis Ltd. He has been chairman of Synexus since April 2001. Michael has had numerous directorships in recent years in the biotech and healthcare arena, following a career in the pharmaceutical industry. Michael joined Glaxo Group in 1967 and held various product management and marketing positions, before joining Schering-Plough in 1974. Several country assignments followed, culminating in European regional vice president based in Switzerland. In 1991, Michael returned to UK to join Fisons plc, initially as European director of the pharmaceutical division, and was appointed to the main board as managing director pharmaceutical division in February 1993. Following the acquisition and integration of Fisons by RPR in 1996, Michael has held a portfolio of non-executive director and chairman roles in companies in UK, Germany and Canada. Michael Fort (aged 46) - Chief Executive Michael joined Synexus in 2001 as commercial director following the investment by Aberdeen Murray Johnstone Private Equity. Prior to Synexus he was a director of Trinity Pharmaceuticals Limited, a pharmaceutical sales and marketing company which was subject to an MBO and subsequently sold to Chiesi Pharmaceutici Spa in 1999. He qualified as an accountant in 1985 whilst employed by the RTZ Group PLC and was subsequently a regional finance director within the Thorn EMI Group. He is former executive chairman and currently non-executive director of Zi Medical PLC and is a non-executive director of Compass Finance Group PLC. He is a fellow of the Chartered Institute of Management Accountants. Dr Ian Smith (aged 57) - Medical Director Ian Smith, the founder of Synexus, is a physician, registered since 1974 with the General Medical Council. He spent the early part of his medical career in NHS General Practice operating for the later part as part-time clinical investigator. He established the first dedicated patient recruitment centre in the UK in 1992 from which the current Synexus business has developed. Ian is an honorary research fellow of the department of nuclear medicine at Guys Hospital, London and an honorary research fellow of the department of clinical chemistry at the University of Liverpool. Chris Neilson (aged 51) - Finance Director Chris Neilson joined the board of Synexus in September 2005. Chris previously spent eight years at Inter Link Foods PLC where, as finance director and business development director, he saw the company through an AIM flotation, a successful integration of 9 acquisitions in the UK and Europe and a growth in turnover from £5.9 million to £98.1 million. Prior to joining Inter Link Foods PLC, Chris spent 12 years at Grant Thornton as a prominent member of its corporate recovery team. Ian Miscampbell (aged 43) - Non-executive Director Ian has more than 15 years' experience in senior financial positions and is currently serving as chief financial officer of Oxford Immunotec Limited. Ian has experience within the life sciences sector having served on the boards of Microscience Holdings plc, KS Biomedix Holdings plc and Reneuron Limited. Before entering the life sciences sector he served as finance director in medium sized entities in the textiles and food sectors, having previously qualified as a chartered accountant with KPMG. This information is provided by RNS The company news service from the London Stock Exchange