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IS Pharma is in good shape

Created:
11 November 2008
Written by:
Nigel Bolitho

It is about time that small company investors took a close (but selective) look at UK minnow drug companies. After being out of favour for many years, some now offer better prospects and more certain cash flows than many other companies facing the uncertainties of recession. Consider, for example, the merits of IS Pharma (formerly Maelor), which has new management and has developed its own products and is now buying late-stage drugs as well.

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Currently, it has a portfolio of six in-house drugs with the main three at the moment being: plasma substitute Volplex used in more than 100 UK hospitals, a fast-acting freeze spray range Cryogesic and Mysoline. These latter two manage epilepsy and "essential tremor", a condition where hands, legs and the neck shake for no apparent reason and can be mis-diagnosed as Parkinson’s disease. In addition to these products, IS Pharma acquired critical care drug Haemopressin in April 2008 for an initial cash consideration of £9.25m, financed by an over-subscribed placing. Haemopressin treats late stage liver disease and varicose veins in the food pipe. The latest results include a $1.25m payment on appointment of a US distributor for Haemopressin.

Researcher Edison expects full-year sales to rise from £7.03m to £11.48m, and profits to nearly double to £2.29m. Broker Nobel reckons that EU sales alone of Haemopressin will account for nearly half IS Pharma’s sales during the next five years.

IS PHARMA (ISPH)
ORD PRICE: 70.5p MARKET VALUE: £21.7m
TOUCH: 68-73p 12-MONTH HIGH: 99.75p LOW: 50p
DIVIDEND YIELD: NIL PE RATIO: 5
NET ASSET VALUE:  77p NET DEBT: 68%

Half-year to 30 Sept Turnover (£m) Pre-tax profit (£m) Earnings per share (p) Net div per share (p)
2007 3.09 0.66 3.4 nil
2008 5.81 1.48 6.6 nil
% change +88 +125 +94 -

Aim: Pharmaceuticals

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IC Update

Buy

It’s time for investors to bone-up on their medical terms. Lean times have weeded out many UK micro-pharmas to leave a core of excellent prospects. IS Pharma is one of them. Buy.

Last IC Recommendation: Buy, 78p, 17 June 2008

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