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GW Pharma (GW) has done what most biotech companies struggle to do - report a profit. The performance was achieved thanks to rising sales of its core cannabis-based product Savitex as well as the benefit of milestone income.
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Having achieved positive results in its Phase III study in MS spasticity earlier this year GW filed a submission for approval in the UK and Spain. The results should be out in the first half of 2010 and, assuming a successful outcome, GW is in line to receive milestone payments of a combined £12.5m from its partners Bayer and Almirall of Spain. GW currently has 25,000 patient years worth of stock so is geared up for the launch and has scope to further expand capacity. Research and development spend funded by GW fell a third in the period to £6.8m and should be roughly maintained next year.
Patient recruitment is now complete for a cancer pain trial in the US with results due in the spring of 2010, if successful a FDA submission will follow. The trials are being funded by its Japan based partner Otsuka. GW is also planning further trials of its drugs for use in Type 2 diabetes.
Singer Capital Markets expects pre-tax profits in 2010 of £5.8m and EPS of 5p.
GW PHARMACEUTICALS (GWP) |
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|---|---|---|---|---|
| ORD PRICE: | 95p | MARKET VALUE: | £123m | |
| TOUCH: | 93-97p | 12-MONTH HIGH: | 106p | LOW: 26p |
| DIVIDEND YIELD: | nil | PE RATIO: | 79 | |
| NET ASSET VALUE: | 5p* | NET CASH: | £20.6m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 3.1 | -9.2 | -6.7 | nil |
| 2006 | 2.0 | -15.3 | -11.2 | nil |
| 2007 | 5.7 | -12.6 | -8.8 | nil |
| 2008 | 11.8 | -10.2 | -6.8 | nil |
| 2009 | 24.1 | 1.2 | 1.2 | nil |
| % change | +104 | - | - | - |
*Includes intangible assets of £5.2m, or 4p a share |
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GW is on track to achieve its aim of shifting from a biotech to a commercial stage pharmaceutical group. The shares are one to watch and could get a boost once Savitex gains regulatory approval in the UK and Spain. Fairly priced.
Last IC view: Fairly priced, 85p, 20 May 2009.
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