The drugs approval pathway is a long and arduous one. So a service that provides high-quality, accelerated programmes to pharmaceutical companies undertaking such trials is, in theory, an exciting concept. However, for hVivo (HVO) - which specialises in developing respiratory products - the reality is not quite so sunny. To contend with dramatically dwindling demand from big pharma clients, the group has shifted its focus towards early-stage products born out of its own equity investments, which has helped prop up revenue.
One of these equity investments, PrEP Biopharm, contributed £5.2m to overall revenue in the reported period, thanks to the completion of an early-stage trial of its first novel flu product, PrEP-001. Completion of this so-called 'proof of concept' study means that the product can now be progressed to the human stage of trials and management thinks that its "considerable expertise" in this field will help speed up the product's entry to the market. However, the new revenue mix has come at a cost to margins, which fell from 30 per cent to 9.4 per cent. As a result, gross profit fell 11 per cent to £0.8m.
The company's work so far has been largely data-driven as opposed to capital-intensive trials and studies, which helped keep research and development (R&D) expenses to just £3m. However this is expected to ramp up as the group initiates human trials of PrEP-001 and its two new drugs from its second equity investment, Imutex.
HVIVO (HVO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 178p | MARKET VALUE: | £139m | |
| TOUCH: | 175-180p | 12-MONTH HIGH / LOW: | 307p | 167p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 69p | NET CASH: | £34m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 2.89 | -12.0 | -14.4 | nil |
| 2016 | 8.61 | -11.8 | -12.4 | nil |
| % change | +198 | - | - | - |
Ex-div: na Payment: na | ||||
