United Kingdom

MIDAS SHARE TIPS: High-tech drugs firm Diaceutics really hits the spot

Pharmaceutical companies used to spend most of their time creating drugs that were supposed to work for everyone.

Now they are increasingly focused on so-called precision medicine, tailored to groups of patients with specific genetic profiles.

The global market is already worth more than £50billion a year according to consultants, and this figure is expected to more than double over the next five years.

Diaceutics is a Belfast-based medical technology business that tries to plug the gap between the companies that make new drugs and the labs that test patients' response to them

The drugs tend to be much more effective than conventional therapies and are used in particular for cancer, as well as debilitating conditions such as multiple sclerosis and rheumatoid arthritis.

But doctors need to know whether patients they are treating will be receptive to these drugs. That can be a difficult and time-consuming process. Laboratories need to run special tests, taking samples from patients to see whether they will respond to specific drugs.

As precision medicine is an expanding field, however, there can be a yawning gap between the companies that make these new drugs and the labs that test patients' response to them.

This means that extremely sick patients can wait for months or even years before receiving the treatment they need, a delay that may mean the difference between life and death.

Diaceutics, a Belfast-based medical technology business, was set up to try to plug this gap. Founded in 2005, when precision medicine was in its infancy, Diaceutics joined the junior AIM market last year – only the fourth business based in Northern Ireland to list on the London Stock Exchange.

The shares have done well since the flotation in March 2019, but at £1.52, they have considerably more potential for growth.

Diaceutics is the brainchild of Peter Keeling, who has spent more than 30 years in the drugs industry, including 11 years with the Wellcome Foundation.

Starting out with a handful of staff and an idea, Keeling has developed Diaceutics into a global business with 140 employees.

The company works with most of the world's top drug firms, including household names such as GSK, AstraZeneca and Roche. It has also developed relationships with more than 2,500 laboratories round the globe. As a result, Keeling has built an extensive database about what individual labs can and cannot do and how patients respond to particular tests.

The information has a crucial role to play in ensuring that patients receive better treatment faster. Drug firms can find out which laboratories are unable to do certain tests. Diaceutics then helps those labs to become more proficient.

The group also advises drug firms on how best to tell doctors and patients about the latest tests and where they are available.

Later this year, Keeling hopes to put all this data on a single platform for pharmaceutical firms and laboratories. This will be a huge step for Diaceutics and the drugs trade, accelerating testing and helping patients on the road to recovery.

Diaceutics' turnover has been growing steadily and brokers expect sales of £16million for this calendar year, rising to almost £20million in 2021. The group is profitable, too, with profits of £800,000 forecast for 2020, rising to £1.4million next year.

Midas verdict: Precision medicine is one of the most exciting new trends in the drugs market. But rigorous tests are needed to make sure that patients can reap the benefits. Diaceutics helps to make that happen. At £1.52, the shares are well worth supporting.

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