It is rare to see any sign of weakness from specialist pharma group Clinigen (CLIN), so investors were spooked by news that adjusted gross profits in the clinical trials division fell 34 per cent in the first half of the 2018 financial year. Fortunately, chief executive Shaun Chilton has dealt with the issue. By “changing the leadership of that business”, he is confident that it will perform much better in the second half. Clinical trials services – which currently only contributes 10 per cent of gross profits – has exciting potential due to a rise in outsourcing from big pharma companies.
The rest of Clinigen remains in good shape. Newly acquired Quantum Pharma made its first contribution, particularly noticeable in the unlicensed medicines division, where cyclical weakness was offset by the first two months of sales from Quantum, which sent adjusted gross profits up 3 per cent to £26.3m.
But the stand-out was the dominant commercial medicines business, where adjusted gross profits rose 38 per cent to £31m. Here, Clinigen specialises in expanding the potential of underperforming medicines, and all five of the group’s core products delivered in the period. Going forward, the division could benefit from Quantum’s pipeline of 50 new drugs.
Broker Numis has forecast adjusted cash profits and EPS of £75m and 45p, respectively, in the year to June 2018 (from £65m and 41p in 2017).
| CLINIGEN (CLIN) | ||||
| ORD PRICE: | 1,061p | MARKET VALUE: | £1.30bn | |
| TOUCH: | 1,059-1,064p | 12-MONTH HIGH / LOW: | 1,187p | 753p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 95 | |
| NET ASSET VALUE: | 277p* | NET DEBT: | 42% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 131 | 4.2 | 2.3 | 1.60 |
| 2017 | 168 | 15.8 | 10.2 | 1.76 |
| % change | +28 | +276 | +343 | +10 |
| Ex-div: | 22 Mar | |||
| Payment: | 12 Apr | |||
| *Includes intangible assets of £506m, or 413p a share | ||||
