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ASX Announcement INSTITUTE OF DRUG TECHNOLOGY AUSTRALIA LIMITED ANNUAL MEETING: FRIDAY 29 OCTOBER 2004 CHAIRMAN AND MANAGING DIRECTOR'S REPORT It is my great pleasure to welcome shareholders to our Annual General Meeting for the year ended 30 June 2004. I especially welcome new shareholders both to this meeting and to our premises. For the year ended 30 June 2004, IDT has reported revenue of $25.5 million and profit after tax of $4.3 million. A fully franked dividend of 4.0 cents per share was paid on 22 October 2004 bringing the total dividend for the year to 7 cents per share, an increase over the previous period of 16% and corresponding to a total dividend payout ratio for the year of 70%. The company continues to provide expert services and products for the local and international biotechnology and pharmaceutical industries, and during the year under review, several significant new projects have been announced and commenced. As shareholders are aware, the company operates broadly in two areas of activity. The first is our fee for service drug development work and the second is our commercial drug manufacturing, and the new projects announced will deliver strong growth for the company in both areas of our business over the next two to three years. Our manufacturing activities have taken a new direction over the past year. While we continue to supply active pharmaceutical ingredients (APIs) to clients in Australia and overseas, we have embarked on a strategy of providing secondary manufacturing services for finished products that require high levels of containment. Drugs that require containment are typically highly potent agents that must be handled in specially designed facilities that protect the operator, the environment and the drug substance. IDT has established an excellent international reputation for its work in primary manufacturing of APIs, especially cytotoxic anticancer drugs which are typical of the class of drugs that requires the use of these containment facilities. The company presently has half a dozen APIs approved by the FDA for sale in the US. Our new strategy involves the manufacture of various finished dosage forms requiring containment facilities and the first project in this area of secondary manufacturing was announced at the end of last year. This project is, to an extent, a cooperative venture between IDT and our US based client. IDT is providing the containment facilities and all the manufacturing expertise and our client is providing the specialised manufacturing equipment. Building of the containment facility was completed earlier this
year, followed by installation of the necessary pharmaceutical manufacturing
equipment. The facility has been subjected to a process of rigorous
validation, and development batches of the finished pharmaceutical
dosage form have been manufactured to the complete satisfaction
of our client. Validation of the actual production process is now
underway and our client expects to file for approval with the US
FDA before the end of 2004. On that basis, we expect FDA pre approval
inspection of our facility to take place in the new year and for
approval to be given by the middle of 2005. Of course, we are in
the hands of our client and the regulator so far as meeting these
timing objectives is concerned. In July this year, we announced an important new project with Pfizer Inc in the US. This project is a substantial fee for service project involving the scale up of the manufacturing process for a new drug candidate and the development and manufacture of a variety of finished dosage forms for clinical trial studies. Development work on the project has commenced and design work for installation of new product specific facilities is well advanced. Under the arrangement with Pfizer, a substantial component of the capital cost for installation of new plant and equipment will be funded by Pfizer and construction of new facilities and installation of new equipment has already commenced. We expect the new facilities to be operating during the second half of 2005. Also in July we announced that IDT had reached agreement with a US based listed specialty pharmaceuticals company for the development and eventual supply of a number of specialised finished products. In this project, IDT will be investing over $3 million to create a unique high containment secondary manufacturing facility. This will enable us to offer services for companies who require access to formulation development and manufacturing expertise for products that need to be handled under high containment conditions. This project is designed to deliver further fee for service revenue during the product development phase with the objective within the next three years of transferring to a production model of revenue. In the highly specialised area of clinical trials management, IDT through its Adelaide-based CMAX operation has developed an enviable record of achievement and growth. Over the past twelve months this business has continued to grow, attracting important contracts both from Australian based biotechnology and pharmaceutical companies, and increasingly from overseas clients, especially from the US and UK. IDT is currently investigating opportunities to expand this business to enable a wider range of studies to be carried out. Again I thank the Board, our management team and staff for their commitment and service to the company over the past year. We are able to attract important contracts to the company because of the exceptional record of achievement we have developed over the years in working with our broad range of clients. The Board, on behalf of shareholders, is prepared to invest in new opportunities as they arise and as a consequence we are able to offer both new and existing clients state of the art facilities combined with outstanding scientific talent to provide world class drug development and manufacturing capabilities. The Board is confident that following the past three years of steady profit results, the company will return to a profile of strong growth over the next two to three years as new projects begin to contribute positively to the company's performance. Dr Graeme L Blackman -------------------------------------------------------------------------------- Please note: For best results printing the announcements, we suggest you select landscape as your print option rather then portrait.
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