Often, in the world of pharmaceuticals, positive pipeline announcements can hide a multitude of financial woes. Vectura (VEC) chose the day of its half-year results to announce the acceleration of its VR410 dry powder inhaler development programme. But investors were unimpressed, sending shares down 13 per cent on the day it reported widening operating losses due to higher amortisation charges linked to the acquired Skyepharma intangible assets.
The outlook for the second half wasn't much to shout about, either. A drop in the rate of sales growth of inhaler Flutiform – which contributed £35.4m to Vectura’s top line in the first half – means the drug’s manufacturer, Mundipharma, has decided to de-stock. Full-year supply and device revenue is therefore expected to be flat, despite a 67 per cent growth in the first half compared with the six months to September 2016.
This also means that the 26 per cent increase in recurring revenues to £71m – from royalties, supply and device sales – is unlikely to be replicated in the second half. In the reported numbers, that strong growth sparked a near three-fold increase in adjusted cash profits from recurring revenues to £11.1m.
Broker N+1 Singer is due to update its full-year expectations but is currently forecasting a pre-tax loss of £71.1m giving a loss per share of 6.5p (2016: £30.7m and 3.7p).
| VECTURA (VEC) | ||||
| ORD PRICE: | 90p | MARKET VALUE: | £ 611m | |
| TOUCH: | 89.9-90p | 12-MONTH HIGH: | 167p | LOW: 89p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 95.9p* | NET CASH: | £90.5m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016** | 73.9 | -22.4 | -3.2 | nil |
| 2017 | 78.8 | -44.5 | -5.6 | nil |
| % change | +7 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £576m, or 84.7p a share | ||||
| **Six months to 30 Sep | ||||
