Consolidation contributes to Agenix half-year profit

Agenix Limited (ASX: AGH) has announced a 435 per cent increase in after-tax profit to $1.7 million for the six months to December 31, 2001.

The company said that the interim result was in partly a direct benefit of company consolidation.

"Last year we shut down our Perth office to focus all our operations in Brisbane," said chief financial officer Jeff Carter.

Carter said that the company's principal product was Thromboview, a platform technology for diagnosis and later as a therapeutic for thrombosis. Agenix said it was on track for Thromboview's commercialisation.

The company has two main subsidiaries: Agen Biomedical, which provides human and veterinary diagnostics, and Milton Pharmaceuticals, which focuses on infant and pharmaceutical-related product lines. Jamaka, a third subsidiary, brings in a smaller revenue from a licensing agreement for a molecular tool.

Group sales were $18.8 million in the six-month period, marking a 66 per cent increase on the same period last year. The company forecasts a double-digit growth this year and sales are expected to exceed $35 million and corresponding profit increase of 20 per cent.

According to a company statement, key events contributing to the interim profit included a launch of the Milton product line extensions for the Infacare range of infant products as well as additional licensing agreements for Agen's thrombosis diagnostic kit. An agreement to have direct access to the Japanese market for Agen's vet diagnostic also increased sales.

Andrew Goodsall, healthcare analyst at Burdett Buckeridge Young, said Agenix had made a good profit. "But in real dollars it's from a low base," he said. "It reflects the growth of Milton pharmaceuticals and baby care products which means they have access to more cash to spend on the principal project, Thromboview."

Goodsall said that the profitable expansion of the Milton product line meant the company would have "solid commercials skills" to develop Thromboview and take it to market.

"It's a positive for the company because they are getting their business into a more stable situation," he said.

"The market is comfortable with companies that generate their own earnings and put it into their own research, rather than going to venture capitalists or coming back to the market for money."

Earlier this month, Agenix was "given a speeding ticket", Goodsall said. On February 15, the company's share price increased 26 per cent from 43c to 54c in one day, and was questioned by the ASX.

Carter said the price increase was a result of market anticipation of Agenix's results, combined with extensive media coverage of blood clots over that period.

"Day traders are jumping on board, but we're looking for longer term shareholders," Carter said.

Carter said that few other biotechs with a market capitalisation less than $100 million had similar cash flow or earnings.

"On our existing earnings we are a good buy with nothing being paid for blue sky," he said.

"The key thing is to get on the radar scope for institutional investment. I can confidently say we will get to $100 million [in market capitalisation] towards the end of the year and our share price to 65c."