After years of setbacks in trying to get its cannabis-based medicine, Sativex, through the European regulatory system, GW Pharmaceuticals (GWP) finally got the product approved in major medicines markets such as Germany. However, sales have been slow to take off amid uncertainty over how significant the multiple sclerosis muscle stiffness market actually is and, without any milestone payments expected next year, management seems resigned to posting a loss in 2013.
Without major launches in new territories, Sativex sales fell in line with previous guidance to £2.5m, down from £4.4m in 2011. This was also partly the result of a one-off destocking effect seen during the year, which should reverse as inventories reduce. Other parts of the business performed better. GW generated additional income from research & development revenues, for example, which rose from £16m to £19.5m as the company completed more work for development partner Otsuka's cancer pain trials in the US. That was partly offset by a 21 per cent rise in GW's own-funded research spending to £8.1m.
The cancer pain trials are really the ones to watch as they represent a huge market for GW if approval for Sativex in this indication can be obtained. Patients have to be recruited into the phase III trials next year and the regulatory timetable is dependent on how quickly this can be done.
Broker Peel forecasts a current-year pre-tax loss of £7.3m and a loss per share of 4.7p.
GW PHARMA (GWP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 64p | MARKET VALUE: | £86.5m | |
| TOUCH: | 63-65p | 12-MONTH HIGH: | 99p | LOW: 60p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 34 | |
| NET ASSET VALUE: | 16p* | NET CASH: | £29.3m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 11.8 | -10.20 | -6.8 | nil |
| 2009 | 24.1 | 1.20 | 1.2 | nil |
| 2010 | 30.7 | 4.60 | 3.6 | nil |
| 2011 | 29.6 | 2.53 | 2.1 | nil |
| 2012 | 33.1 | 1.24 | 1.9 | nil |
| % change | +12 | -51 | -10 | - |
*Includes intangible assets of £5.21m, or 4p a share | ||||
