Vernalis (VER) isn't the first UK pharmaceutical company to enter the US market full throttle and encounter considerable challenges. But the group's investors have been unforgiving in light of more disappointing news from cough and cold treatment Tuzistra. Although prescriptions increased sixfold to 11,586 in the six months to December 2016, revenues of £0.8m missed anlaysts' expectations and shares fell by as much as 15 per cent on results day.
But chief executive Ian Garland says the situation "has improved dramatically" thanks to substantial investment in the group's sales and marketing forces - although that has sent operating costs up 14 per cent to £21.7m. Today more than 9,000 pharmacies stock Tuzistra (up from 7,000 at the period end) and the medicine is now covered by one of the biggest insurers in the US. But it's still early days and these developments have yet to show up in top-line numbers.
Outside of Tuzistra, other news was mixed. Lower royalty income from frovatriptan contributed to the overall drop in group revenue during in the period, but the new drugs pipeline seems to be progressing well. Two new cough and cold products should launch in time for the next 'flu season, while the group also received a $3m (£2.4m) milestone payment after its co-developed oncology drug completed the first stage of a clinical study.
Broker Cantor Fitzgerald expects a loss per share of 6.8p for the year to June 2017 (from a loss of 3.8p in FY2016).
VERNALIS (VER) | ||||
|---|---|---|---|---|
| ORD PRICE: | 29p | MARKET VALUE: | £154m | |
| TOUCH: | 28.8-29p | 12-MONTHHIGH: | 65p | LOW: 29p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 17.6p* | NET CASH: | £74.2m** | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 6.1 | -8.1 | -1.7 | nil |
| 2016 | 5.6 | -12.2 | -2.1 | nil |
| % change | -9 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £21.9m, or 4p a share **Includes £61.7m of held-to-maturity financial assets | ||||
