Look at any major European pharma group and you'd think respiratory drugs were still big business, but the latest numbers from Aim-listed hVivo (HVO) suggest otherwise. The company runs controlled clinical trials for third parties that are developing new respiratory drugs, and uses human volunteers to produce 'live' samples used in research. At the time of full-year results in April, the group blamed the 2014 Ebola outbreak for the sharp downturn in demand for their services, as pharma developers shifted their focus to viral diseases. Six months on, the picture isn't looking much brighter.
Lower-than-expected revenues reflected reduced demand for influenza studies. Gross margins sagged only slightly; instead a surge in research and development costs to £7.4m (from £3.1m this time last year) explains the escalating losses. Bosses at hVivo said the tail-off in client work - and subsequent spare capacity - had given the company the chance to develop more of its own disease models. Encouragingly, they believe client activity levels are recovering, with unit bookings for the second half mirroring levels seen in early 2014.
Analysts at Numis expect losses of £20.5m for the full year, which equates to negative EPS of -22.8p (2014: losses of £22.7m and -31.3p).
| hVIVO (HVO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 280p | MARKET VALUE: | £193m | |
| TOUCH: | 280-290p | 12-MONTH HIGH: | 345p | LOW: 231p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 75p | NET CASH: | £24.5m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 15.0 | -5.4 | -6.3 | na |
| 2015 | 2.9 | -12.0 | -14.4 | na |
| % change | -81 | - | - | - |
Ex-div: na Payment: na | ||||
