Epistem leaps on R&D deal with Novartis

Manchester, UK-based Epistem, a biotechnology and research services company, says it has signed an R&D collaboration with Swiss drug major  Novartis to identify new drug targets and therapeutics across a variety  of disease areas. The deal combines Epistem's stem-cell expertise and  drug discovery program, with Novartis' insights into disease pathways  and bioinformatics.

News of the accord pushed the UK firm's share price up 20% to a record  high of 288 pence, giving it a market capitalization of about GBP21.0  million ($29.4 million). In-house broker Piper Jaffray said that the  cashflow input should be enough to finance all of Epistem's internal  R&D, thus making the company profitable this year.

For its fiscal year to June 2008, Epistem reported an increased loss  of GBP1.2 million, dipping into its cash reserves which fell to GBP2.1  million (Marketletter October 20, 2008). Analysts at Edison Investment  Research commented that the new deal provides substantial upside if  Novartis progresses products to the clinic.