The acquisition of the US rights to Moxatag, a once-a-day antibiotic, has given pharmaceutical group Vernalis (VER) the potential to launch another product in 2016. The group's first drug Tuzistra - the only slow-release flu product in the US - realised its first net revenues in the period, amounting to £0.6m. These were slightly below previous expectations, due to a mild start to the cold and 'flu season.
For the Aim-listed company, growth has unsurprisingly come at a cost. The heavy investment in infrastructure as the group rolls out Tuzistra has seen sales and marketing spending in the period accelerate to £10.8m, which hit the bottom line. But the group's cash position remains strong, despite the £8.3m increase in underlying cash burn compared with the same period last year.
Vernalis also earns royalty payments from the sale of a migraine drug, frovatriptan, by third-party distributors, which saw a 6 per cent decrease due to currency headwinds and a reduction in prices. The bulk of the group's revenue comes from research projects undertaken in collaboration with other pharmaceutical companies, which stayed flat at £3.8m.
Broker Panmure Gordon expects full year adjusted pre-tax losses of £29.6m, giving a loss per share of 6.4p, compared with losses of £8.2m and 1.4p in 2015.
VERNALIS (VER) | ||||
|---|---|---|---|---|
| ORD PRICE: | 49p | MARKET VALUE: | £219m | |
| TOUCH: | 49-52p | 12-MONTH HIGH: | 87p | LOW: 45p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 16p* | NET CASH: | £54m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 5.70 | 0.29 | 0.4 | nil |
| 2015 | 6.12 | -8.07 | -1.7 | nil |
| % change | +7 | -2,883 | -525 | - |
Ex-div: na Payment: na *Includes intangible assets of £16.6m, or 4p a share | ||||
