Celsis shapes up as limbo star: The Investment Column

Celsis International is one of the quoted vehicles of entrepreneur Chris Evans. Unlike Chiroscience, one of his other companies, Celsis is not really a biotechnology company, as its microbial testing equipment is less hi-tech and much closer to market. But its limbo status between the high-growth biotech and the more solid health-care sectors may work to its advantage. Preliminary figures unveiled yesterday showed the company racked up losses of pounds 5.99m in the year to March, against pounds 5.26m the year before.

Sales have, however, nearly quadrupled to pounds 5.15m as sales of its reagent test kits soared more than five-fold to over 1 million units. Charging pounds 1.30 a go, these tests, based on a bioluminescent enzyme copied from fireflies, are now being used to test Colgate Palmolive's toothpaste across the world and are also being supplied to the likes of Body Shop and Tropicana.

A year ago it added a partnership agreement with Lever Industrial, part of Unilever. The resulting system for monitoring the food and drink industry is now in production and ready to attack a market put at $350m by Celsis. It is also working on a digital test kit that will speed up testing for the much lower levels of microbial contamination tolerated in industries and electronics.

But the company is more excited about the six-year collaboration deal unveiled yesterday with Millipore, a US multinational involved in research and quality control in industries ranging from food and drinks to healthcare. Under the agreement, Millipore has paid pounds 1.2m down and will contribute pounds 600,000 a year for the next two years to cover development of products and is subscribing pounds 660,000 for an equity stake at 123p a share. Celsis will also pick up royalties on sales of existing and jointly developed products sold through Millipore.

This sort of deal lies at the heart of Celsis, which is as much a marketing operation as anything else. The group has had its fair share of management problems, with the chief executive being axed less than a year after the flotation at 100p a share in July 1993. Mr Evans sold a 4.5 per cent stake in February, but retains around 16 per cent. If expectations of profits next year materialise, Celsis should prove a lower-risk way to cash in on the biotechnology boom than many others.