Not a great deal of news flow was expected from GW Pharmaceuticals (GWP) this year as the key cancer pain clinical trials for the company's Sativex cannabis-derived medicine in the US aren't due until 2014. However, in the event, a sizeable fund-raising via a new listing on the NASDAQ, along with legal disputes between GW's European partner Almirall and Germany's cash-strapped health insurance funds made for a livelier-than-predicted half year.
GW Pharma's US development is wholly funded by Japanese company Otsuka, which means the bulk of the £18.2m cash raised from the Nasdaq listing will go towards the company's own research programme. GW hopes to develop similar so-called cannabinoid compounds into medicines for Type 2 diabetes - GWP42004 is currently about to start a phase II clinical trial - and for ulcerative colitis where GWP42003 is at the phase IIa development stage.
This extra investment means research & development spending this year will be 10-20 per cent higher than the £8.1m GW spent in 2012. Meanwhile, the impact on revenues from the Sativex pricing dispute in Germany, which relates to the level of reimbursement insurance companies are prepared to fund, is estimated at £700,000 and GW will book the charge this year.
Broker Peel Hunt forecasts a current year pre-tax loss of £8.4m, narrowing to a loss of £6.5m in 2014, and has a target price of 128p a share.
GW PHARMA (GWP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 49.5p | MARKET VALUE: | £87m | |
| TOUCH: | 48-51.5p | 12-MONTH HIGH: | 93p | LOW: 39.5p |
| DIVIDEND YIELD: | nil | PE RATIO: | 11 | |
| NET ASSET VALUE: | 16p* | NET CASH:^ | £27.9m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 11.0 | -4.10 | -2.40 | nil |
| 2013 | 12.9 | -4.65 | 0.10 | nil |
| % change | +17 | - | - | |
*Includes intangible assets of £5.21m, or 3p a share ^Excludes £18.2m raised in a placing post period-end | ||||
