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Investment Column: Wait to see how Cobra's future unwinds

Wednesday 02 June 2004 19:00 EDT
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Cobra bio-manufacturing does not make widgets. It makes DNA, genetically modified viruses, cells and proteins which, one day, hopefully, will form the basis of revolutionary biotech medicines. These are highly complex products and require highly skilled science, which Cobra has.

Cobra bio-manufacturing does not make widgets. It makes DNA, genetically modified viruses, cells and proteins which, one day, hopefully, will form the basis of revolutionary biotech medicines. These are highly complex products and require highly skilled science, which Cobra has.

Unfortunately, Cobra has found itself in the wrong scientific area, with its main area of expertise in supplying material for DNA-based vaccines, whose development has proved less fruitful than once promised. With biotech companies perenially strapped for cash, Cobra saw its small number of clients ditch these development programmes. Sales in the first half of its financial year halved and the company fell into the red.

Cobra has just opened a new factory in Oxford and it hopes to fill all its excess capacity with a new marketing push in the US, having switched its focus to protein and virus manufacture. It is up against some much bigger competitors and is yet to establish a reputation in these areas, so it is an uphill struggle.

The company has proved an over-optimistic forecaster in the recent past and investors should wait before they can see it really is on course to break even once more next year.

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