GroPep sales up, tips new CEO next week

Adelaide biotech GroPep has blamed the Sydney operations it took over when it acquired Biotech Australia earlier this year for most of the $6.89m loss it sustained in the 2001-02 financial year.

But sales of the company's reagents and cell culture products rose 22.5 per cent over the period, and chairman Richard England said GroPep expected to announce the identity of its new CEO within the week.

In February, after buying Biotech Australia, GroPep was forecasting a record profit of $1.9m for the year. But the forecast was revised to a $4m loss two months later and long-time managing director Dr John Ballard was dismissed as the shine disappeared from the new acquisition.

In June, Dr Chris Goddard took over as chief operating officer and announced a comprehensive review of the company's operations, including selling the former Biotech Australia's Sydney manufacturing plant, growing the reagents and cell culture businesses, and focusing its drug development activity on higher-value projects. More than 30 staff were laid off at the Sydney facility.

Yesterday, Goddard said GroPep's total costs and expenditure in 2001-02 had leapt 77 per cent to $17.01m and its annual revenue had increased by 5 per cent to $10.11m. He said $4.81m of the company's loss was attributable to the scotched Sydney operations, which had brought with them $1.01m in administration and overhead costs since February.

"The haemorrhage from the contract manufacturing business has been stopped by closure of the Roseville site and consolidation of that business unit in Adelaide," Goddard said in a statement.

Costs associated with the closure of the site and consolidation of the Adelaide operations was $2.97m, including a $1.97m write-down of plant and equipment, and $975,000 in redundancy payouts. Other major costs for the year included write-down associated with spin-off companies TGR Biosciences and PrimeGro, and $35,000 for intellectual property insurance.

"Together with the changes already made, and continued growth from the cell culture business, we expect the company to turn around dramatically," England said in a statement. "We look forward to the future full of confidence."

At the time of writing, GroPep's shares were trading at 57c.