Proteome Sciences ($PRM), a protein biomarker CRO, offered just two biomarker tests a year ago. Now the U.K. outfit sells 50. The number should double by the end of this year, and profitability is likely in 2014. Yet despite that anticipated growth, analysts at Edison Investment Research thinks the 40-employee company's relatively small size may make it harder to lure Big Pharma clients.
"The business model around biomarker contract research is new, and there may be some resistance from pharmaceutical companies, initially, to this model," Edison writes in its April 3 report. That could pose a bit of a challenge for Proteome, the firm argues, because the newness of the service in the drug industry may lead to "some large pharmaceutical companies" being "initially cautious about outsourcing to a small specialist company."
Outsourcing-Pharma points out, however, that Proteome Sciences does have deals inked with other CROs such as Parexel and Icon ($ICLR). And the company's CRO protein biomarker clients range from Eisai ($ESALF) to Takeda Pharmaceutical ($TKPHF) and Johnson & Johnson ($JNJ), the Edison report notes, adding that the company's growing reputation "should enable it to win more pilot contracts and subsequently convert them into major collaborators."
There is a willingness to try smaller CROs in the drug discovery space, according to the Outsourcing-Pharma story. The article cites executives such as Charles River Laboratories CEO James Foster who see large pharmaceutical companies as willing to outsource to small, emerging CROs if the quality and financial stability is there.
To that end, Edison credits Proteome Sciences as making its case for large pharmaceutical partners by conducting a diverse, successful product launch over the last year. Kudos also come to the company for shepherding future protein biomarker products through its pipeline in key areas, including Alzheimer's disease, stroke and cancer. The analyst believes that Proteome Sciences will boost its revenue 239% in fiscal 2012 to $5 million, and another 109% to $10.6 million in 2013, based on the company's own guidance. With that track record, the company should become profitable by 2014, Edison says, and also cash-flow positive.