Full-year numbers from Circassia (CIR) are typical of a development phase biotech. Revenues of £23.1m compared with £42.3m of underlying research and development expenses and £44.3m of sales and administrative costs, delivering an underlying operating loss of £71.5m.
But these numbers refer to the old Circassia. More recently, the group has undergone a seismic reshuffle as it was forced to pull out of its high potential (and high risk) allergy franchise. Writing down the goodwill of this division added a £76m one-off non-cash charge in 2016. What's left is a respiratory portfolio and an impressive US commercial platform, which the group will use to sell two asthma drugs belonging to AstraZeneca (AZN). One of those drugs, Tudorza, is already approved stateside, and broker Numis thinks that a pick-up in its sales will be a key catalyst for a recovery in the share price in 2017.
Without the near £20m annual investment in the allergy franchise, Circassia looks a significantly derisked company. Development costs will continue to be exorbitant in 2017 due to the investment in Duaklir, the second drug in the group's AZN partnership, but as the drug is already approved outside the US, the risks of failure are low, and Circassia's balance sheet is strong.
CIRCASSIA (CIR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 100.3p | MARKET VALUE: | £333m | |
| TOUCH: | 100-100.5p | 12-MONTHHIGH: | 279p | LOW: 80p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 85p* | NET CASH: | £117m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012** | nil | -18.6 | -1.4 | nil |
| 2013** | nil | -23.9 | -1.3 | nil |
| 2014 | nil | -44.0 | -0.2 | nil |
| 2015 | 10.8 | -62.8 | -0.2 | nil |
| 2016 | 23.1 | -145 | -0.5 | nil |
| % change | +114 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £177m, or 53p a share **Pre-IPO figures | ||||
