GroPep posts $1m profit

GroPep (ASX:GRO) has posted a AUD$1 million profit for the 2003-2004 financial year, achieving its aim of returning to profitability after its disastrous 2002 acquisition of Sydney company Biotech Australia.

The profit is a substantial improvement over last year's loss of $2.5 million, and reflects a 22 per cent increase in revenues to $13 million including products sales of $8.7 million.

Chairman Richard England said the turnaround was due to continued strong performance and implementation of the company's strategic plan in March 2003. "In last year's annual report, we said the implementation of the strategic plan would restore the financial health of the Company during 2003-04. We are pleased to report that this has been achieved," he said.

The company has a healthy cash position, with $10.9 million in the bank at the end of the financial year, up from $4.6 million last year.

According to CEO Bob Finder, the company plans to complete the first stage of expanding its Thebarton manufacturing facility during the 2004-2005 financial year, and will seek a TGA manufacturing licence for active pharmaceutical ingredient manufacturing. The company also expects to complete pre-clinical development for its recurrent miscarriage treatment and continue pre-clinical and partnering activities for other projects.

Milestone II of the company's malaria vaccine initiative program -- the manufacturing of two antigens for use in developing a clinical formulation for Phase I trials for which the company got an upfront payment of $3.8 million -- is also underway and should be completed during the year.

The company also announced the appointment of Dr John Flack, former executive director and director of R&D at Amrad and more recently director of the CRC for Cellular Growth Factors, as a non-executive director. Flack will replace long-time GroPep director Dr Paul Donnelly, who will retire after the AGM later this year.

Key events in 2003-2004:

• Commencement of a $3 million expansion and upgrade of the Thebarton manufacturing facility to support the rapidly growing Cell Culture business.
• Successful completion of Milestone I of the malaria vaccine initiative and commencement of the second project milestone, for which a $3.8 million upfront payment was received.
• Licensing aspects of the whey growth factor extract (WGFE) technology to the Netherlands-based company Campina for use in non-pharmaceutical oral products, and simultaneously settling a long-running patent dispute with Campina.
• The European Patent Office granted GroPep a patent for improved products and manufacturing processes for the WGFE technology.
• Discontinuing development of a potential topical treatment for chronic venous leg ulcers after a Phase II clinical trial on a drug candidate demonstrated it was ineffective.
• Receiving the final payment of $3.6 million for the sale of the former Biotech Australia site in Roseville, NSW.