YProTech is a leading UK based Chemistry Services Contract Research Organisation (CRO) servicing pharmaceuticals, biotechnology and applied chemistry sectors
YProTech Ltd (“YPT” or “the Company”) is a specialist High Value Chemistry Services Company formed in 2011 aimed primarily at the Life Science sector. Having outgrown its previous premises, the Company relocated to Alderley Park, Cheshire from Leeds in the summer of 2015.
The core of the Company’s business relates to the provision of chemistry technical services to Pharmaceutical, Biotechnology and Agrochemical R&D companies – YPT’s Tech Services business.
The Company is increasingly differentiating these services through identifying higher value niche areas and the next phase of development includes:
- Installation of a high potency (“hi-po”) facility required to handle and manufacture new highly-toxic anti-cancer drugs;
- Long term strategic partnerships with virtual and small drug discovery companies.
Demand for high potency chemicals is being driven by the growth in the development of Antibody Drug Conjugates (ADCs) and toxic chemotherapy drugs for use in the treatment of cancer. Specialist facilities are required for the handling and manufacture of high potency chemicals and a price premium is associated with providing such services.
The new capability will allow YPT to offer:
- Full Time Equivalent (“FTE”) chemistry services for the synthesis of research toxins and payloads;
- Contract research services for the synthesis of high potency compounds; and
- High potency and related products e.g. standard toxins, payloads and associated linkers.
The installation and commissioning of the facility has been carried out over the last 6 months and the Company expects it to be operational from July 2016 with revenue generation anticipated by September 2016.
In mid-2015, YPT unfortunately lost the business (4 FTEs) of a core customer, due to their successful fund-raise and subsequent recruitment of their own in-house chemistry capability. The company reduced costs in response, and embarked on a new customer sales drive.
New relationships have been established with two UK based virtual drug discovery companies to provide multiple chemistry FTE contracts. Initial proposals were shared in Q1 2016 and first projects started early Q2 2016 with long-term business to follow, subject to successful execution.
Following initial commercial discussions in 2015, YPT has secured qualified vendor status as a supplier of chemistry services to AstraZeneca and its specialist subsidiaries operating in the hi-po area.
Following a difficult 2016 with the loss of the Company’s major customer, the Board has agreed a realistic sales budget of £750k for the year ending May 2017, which is deliverable from the current asset base and will result in approximately £134k of EBITDA with further profitable growth in the following years. The sales line has been rebuilt over the past 3 months which has enabled monthly break-even performance during this period.
YPT currently offers chemistry synthesis services to the pharma, biotech and agritech sectors with a focus on small and virtual companies whose business model is to outsource their technical requirements to specialist providers such as YPT. The Company offers a bespoke, flexible and responsive service to their customers to ensure that they are viewed as an extension of their customers’ organisation.
With the Company’s current chemistry laboratories, office, conference space and supported open access analytical services provided by the BioHub at Alderley Park, they offer their customers the facilities, resources and experience associated with larger and more expensive CROs.
High Potency Facility and Offering High Potency Chemistry Services and Products
YPT is aiming to respond to an opportunity to offer high potency chemistry services in the face of the growth of cytotoxic drugs, predominantly Antibody Drug Conjugates (“ADCs”) for the oncology market.
It presents the opportunity to offer services at a significantly higher commercial rate. However, this requires specialist facilities in order to safely handle and manufacture cytotoxic chemicals. This will differentiate YPT from other competitors once the facility is up and running within the next few months.
Establishing this facility requires a significant investment of capital, however the specialised nature of the facility allows for higher charges and higher rates for contract research or FTE work, leading to a quicker return on investment.
These high potency chemistry services are complemented by, and sit alongside, YPT’s existing laboratory chemistry services. The ability to use YPT’s chemistry expertise and capabilities to bring the supporting synthesis for the high potency products and services increases the potential margin and helps to secure the Company’s supply chain.
The Company’s hi-po laboratory is nearing completion with operations expected to commence during the summer. The Company are currently quoting for the first contracts that could be secured once the facility is on line.
A partner company, ADC Biotechnology Limited, has agreed to enter in to a collaboration which will secure the first revenue for YPT from the facility.
Chemistry Services Strategic Partnerships
YPT have a ready-established customer pipeline and business offering services to a number of pharma, biotech, and agritech companies. They seek to further align their chemistry services with virtual and SME companies in longer-term strategies. These partnerships, and the subsequent benefits in chemical synthesis, will ultimately differentiate YPT from larger competitors such as Signature Discovery, Evotec, and Galapagos. In addition, the size of the company lends itself to a closer and more responsive relationship with customers.
Management believe that this positions the Company as an attractive partner with the following key characteristics:
- Lower cost base for customers compared to larger drug discovery CROs in UK or Europe;
- Greater security of IP in the UK versus subcontracting such services to companies in Asia who may be able to offer cheaper services. This has been raised as a driver in customer discussions;
- Higher quality chemistry services offered in UK thus increasing the value proposition. Being UK based also offers significant cultural, communication and logistical advantages;
- Opportunity for YPT to develop closer and strategic partnerships with other drug discovery CROs (some of which are also based at Alderley Park such as Cyprotex (ADME, tox) and Apconix (ion channels) amongst others.