Why Vernalis can make up for its slow start stateside

The launch of Tuzistra - Vernalis's first 'home grown' drug - propelled marketing and sales expenditure to £20.4m, which explains the dent in the bottom line. Tuzistra's first year on the shelves was modest and revenue of £1.1m undershot expectations. But chief executive Ian Garland reassures that the commercial platform is now considerably more mature. More efficient stocking, as well as the provision of sample doses and incentives to physicians have helped ramp up prescriptions and early sales figures from the current 'flu season are well ahead of the comparable period last year. Management also plans to lower Tuzistra's price for non-insured users. Although this is likely to reduce income per prescription in the short term, Mr Garland hopes this "investment" will help improve the total number of sales.

Since the period end Vernalis has launched its second product - a once daily antibiotic known as Moxatag, which was acquired in October 2015. But marketing efforts have been restricted as the group only has 24 months worth of stock after Moxatag's supplier went bust. The process of safely signing up a new supplier is a lengthy one and, until the company has a regular supply of drugs, sales of Moxatag are being restricted to a small number of key regions.

Royalty income from partnered drug frovatriptan fell 41 per cent in the period to pull down group revenue, but this product is no longer of great importance. The true value of the company now lies in Vernalis's own drugs; Tuzistra, Moxatag and the two new 'flu products CCP-07 and CCP-08 which have both been filed, with approval expected before the start of next year's 'flu season.

Broker Canaccord Genuity expects pre-tax losses of £40.9m in the year to June 2017, leading to a loss per share of 7.6p, compared with losses of £26m and 5.6p in FY2016.