The ongoing problems in BTG’s (BTG) early-stage interventional medicine business have landed investors with a conundrum: do the struggles of PneumRx (an experimental lung disease treatment) and Varithena (a novel therapy for varicose veins) have any bearing on the long-term investment case or are recent share price weaknesses an opening for new investors?
On the one hand, PneumRx and Varithena contribute just 2 per cent of the top line. The bulk of the revenue (and indeed revenue growth) comes from the other interventional medicine products in oncology and vascular, where revenues are expected to grow between 13 per cent and 15 per cent in the 2019 financial year. Panmure Gordon’s confidence for the wider business has prompted pre-tax profit forecasts of £188m in the year to March 2020, although ongoing costs will restrict pre-tax profit and EPS to £139m and 29.3p, respectively, in FY2019.
But then it is also fair to be wary of management’s apparent lack of awareness for the early-stage products. Because PneumRx is in an earlier stage of development than previously expected, the group was booked a £151m impairment in these numbers which forced it into a £103m operating loss position. Meanwhile, Varithena prescriptions are still negligible even though the product has finally been assigned the correct insurance codes.
| BTG (BTG) | ||||
| ORD PRICE: | 603p | MARKET VALUE: | £2.33bn | |
| TOUCH: | 602.5-603p | 12-MONTH HIGH: | 784p | LOW: 540p |
| DIVIDEND YIELD: | nil | PE RATIO: | 155 | |
| NET ASSET VALUE: | 237p* | NET CASH: | £210m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 291 | 33.3 | 6.8 | nil |
| 2015 | 368 | 26.7 | 9.1 | nil |
| 2016 | 448 | 57.5 | 15.8 | nil |
| 2017 | 571 | 31.6 | 8.7 | nil |
| 2018 | 621 | -70.6 | 3.9 | nil |
| % change | +9 | - | -55 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £687m, or 178p a share | ||||
