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A strong H1 trading update and significant strategic progress should support a further re-rating of the shares. The increased focus and simplification of the model is delivering tangible improvements and confidence is increasing in the value and deliverability of the new product development pipeline. After putting through underlying upgrades in June, we leave our forecasts unchanged for now, but see scope for further upside with continued strong execution.
Quantum Pharma
Following the strategic review of the Medication Adherence division announced with the finals on 3 May, the group has sold Biodose Services, the largest business within this division. Quantum will now be focussed entirely on the higher margin Specials and Niche Pharma divisions which increases the group’s quality of earnings, continues its move under the new management team towards a simpler, leaner business strategy and positions Quantum as a pure pharma group. We strip the Biodose Services modest contribution from our numbers, but this is largely offset for FY18 & FY19 by an upgrade to the Niche division as a result of today’s positive trading commentary. Going forward we think the recent re-rating of the company, which is moving steadily from turnaround to growth, should continue, assuming further positive underlying momentum at the update scheduled for 9 August.
The focussed and simplified approach implemented by the new management team last year is beginning to pay off. Results are in line with expectations and the outlook is supportive of our (unchanged) estimates. The core Specials business remains stable and cash generative and profitability in Niche Pharma has been transformed. The business is now moving on strongly and recent challenges have been consigned to history. The current share price does not reflect the substantial growth prospects of the business and we see scope for a substantial re-rating on further successful execution.
Quantum Pharma plc, the service-led niche pharmaceutical developer and supplier to the health and care sectors, has reported its Preliminary financial results for the 12 months to January 31, 2017. Net sales grew by 28% to £88.8m while adjusted EBITDA was in-line with expectations at £10.1m, down from £12.5m in FY16. During the year management took a number of decisive actions to focus and simplify the business, and the company is now on a much stronger operational and financial footing as it moves forward. The actions resulted in the prioritisation of the product development portfolio within the Niche Division and the closure of the loss-making NuPharm. The core Specials division continues to generate the majority of Group adjusted EBITDA and its strength in the UK unlicensed market was underscored again by renewed exclusive supply contracts with 3 of the 4 main wholesale and pharmacy chains. Our profit forecasts for FY2018 and FY2019 remain unchanged. Quantum is valued at around a 40% discount to peers at 7.4x EV/EBITDA (9.8x PE) in the year to Jan 31st, 2018.
Quantum Pharma plc, the service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has released a pre-close trading update this morning. The Board has indicated that adjusted EBITDA for the financial year (to Jan 31st) is expected to be in-line with market expectations (we forecast £10.1m) and that net debt will be approximately £13.5m following the successful fund raising in November last year. Following management’s strategic review of the Group it has re-directed efforts within the key divisions to focus and strengthen operations. Trading at NuPharm has ceased as planned and the unlicensed-to-licensed (UL2L) portfolio has been prioritized enhancing the opportunity to be first-to-market. We are confident that the changes made have set the company on the right path for the longer term. Based on our unchanged forecasts Quantum is valued at 9.4x EV/EBITDA for FY2017 (year just completed) falling to 8.2x for the coming year.
An in line trading update should reassure that Quantum’s new management team is delivering on its promises. EBITDA is expected to be in line with expectations and, pleasingly, Net Debt is expected to be ~£1m lower, reflecting the focus on cash management. All the UL2L products in the pipeline are now in active development and work has begun on broadening the group’s commercial network to help monetise the generic products already developed. We make no change to our forecasts and look forward to further positive newsflow at the prelims in early May.
Quantum Pharma plc, the service-led niche pharmaceutical developer and supplier to the health and care sectors, has reported its Interim financial results for the 6 months to July 31, 2016. Net sales grew by 24.9% to £42.8m while adjusted EBITDA was £4.2m, down from £5.5m in H1-FY16. The Specials and Medication Adherence (MA) divisions traded well in the period and Niche Pharma delivered a number of new product licences and launches. The core Specials division remains the focus of group cash generation and its strength was again demonstrated with a new 5-year contract extension signed with AAH. The Board has also presented the findings of a structural review and has announced that Quantum plans to commence consultation to close NuPharm (acquired in July 2015), a business which has failed to perform despite extensive efforts to address both known and newly uncovered operational issues not capable of adequate remedy. This closure, and re-prioritisation of the Niche Pharma pipeline towards better performing core unlicensed-to-licensed products, has led Quantum to advise that its profits will not meet current market expectations. As a result, our profit forecasts have been reduced as detailed below. Based on our new forecasts Quantum is valued at a 23% discount to peers at 11.5x EV/EBITDA (PE 11.7x, 45% discount) in the year to Jan 31st, 2017.
Quantum Pharma plc, the service-led niche pharmaceutical developer and supplier to the health and care sectors, has reported its Interim financial results for the 6 months to July 31, 2016. Net sales grew by 24.9% to £42.8m while adjusted EBITDA was £4.2m, down from £5.5m in H1-FY16. The Specials and Medication Adherence (MA) divisions traded well in the period and Niche Pharma delivered a number of new product licences and launches. The core Specials division remains the focus of group cash generation and its strength was again demonstrated with a new 5-year contract extension signed with AAH. The Board has also presented the findings of a structural review and has announced that Quantum plans to commence consultation to close NuPharm (acquired in July 2015), a business which has failed to perform despite extensive efforts to address both known and newly uncovered operational issues not capable of adequate remedy. This closure, and re-prioritisation of the Niche Pharma pipeline towards better performing core unlicensed-to-licensed products, has led Quantum to advise that its profits will not meet current market expectations. As a result, our profit forecasts have been reduced as detailed below. Based on our new forecasts Quantum is valued at a 51% discount to peers at 7.4x EV/EBITDA (PE 6.2x, 71% discount) in the year to Jan 31st, 2017.
Quantum Pharma plc, the service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has released a pre-close trading update this morning. The Board has indicated that trading in the first six months of its financial year (to July 31) was in-line with management expectations and the company is well-positioned for the full year. As a reminder, Quantum typically records stronger sales in H2 and the current financial year should be no exception, particularly as recent product launches and anticipated new product registrations take effect.
Quantum Pharma plc, the service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has announced today that Colonis, part of the Niche Pharmaceuticals division, has launched the first licensed glycopyrronium bromide 1mg/5ml oral solution. This is the first licensed version of this product to be made available in the UK and its launch is being driven by ‘cease and desist’ notices to suppliers and manufacturers of equivalent unlicensed products. We are encouraged by this launch as this is the first ‘homegrown’ Niche Pharma registered product which has been licensed since the company made operational changes to address delays in obtaining regulatory approvals.
Quantum Pharma plc, the service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has announced today that Colonis, part of the Niche Pharmaceuticals division, has launched the 5th product in the Mucodis® range, the Mucodis® VaginaI Cream. This product is designed to treat vaginitis or vulvovaginitis, significant side-effects in women undergoing radiation and/or chemotherapy for tumours in the lower abdominal or pelvic region.
Quantum Pharma plc, the service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has announced today that Colonis, part of its Niche Pharmaceuticals division, has launched the 4th product in the Mucodis® range, the Mucodis® RectaI Gel. This product is designed to help prevent and treat rectaI mucositis, a common side-effect in cancer patients undergoing chemotherapy and radiation therapy.
Quantum Pharma plc, the service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has provided an update this morning ahead of its AGM later today in Newcastle indicating that trading is in-line with the Board’s expectations. Additionally, we have been informed of the resignation of CEO, Andrew Scaife, who has been with the company for over 7 years and is leaving for family reasons.
Quantum Pharma plc, the service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has announced today that its Niche Pharmaceuticals operating division has launched another product in its Mucodis® range, the Mucodis® Dermal Spray. This prescription product is designed to help prevent and treat radiation-induced dermatitis, a common sideeffect in patients undergoing radiation therapy.
Quantum Pharma plc, the service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has announced today that Biodose Connect® has received Class I medical device status from the MHRA (meaning it now has CE Mark authorisation). Biodose Connect® remotely monitors the use of Quantum’s Biodose trays (each of which holds 28 individually sealed medicine pods) and will assist patients, their carers and clinicians to ensure that medications are being taken as prescribed.
The launch of Biodose Connect, Quantum’s innovative medication adherence product, is another positive step forward and could, in time, be a significant value driver for the group. We make no changes to our forecasts at this stage pending the results of the soft commercial launch, but see upside potential in the medium term.
Quantum Pharma plc, the service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, this morning reported its final results for the year to Jan 31, 2016, its first full year as an AIM-listed company. Net sales grew by 13% to £70m and adjusted EBITDA reached £12.7m, up from £61.7m and £12.2m, respectively. The strong trading in the Specials and Medication Adherence divisions during the year was overshadowed by delays in the Niche Pharmaceuticals division, however we believe the structural and operational changes made in the Niche division will see stronger performance in the current year. Quantum is well positioned to bring further licensed products to market this year in addition to the recent additions, with 20 regulatory submissions currently being reviewed. Based on our forecasts, at the current price we consider Quantum to be attractively valued at 7.1x EV/EBITDA (PE 8.1x) in the year to Jan 31st, 2017.
Quantum’s prelims are in line with our expectations and should go some way to reassure that the Group is on the right track. The core Specials business is trading well and there is increasing evidence the pipeline of Niche Pharmaceuticals products is beginning to deliver. We make no material changes to our forecasts, which should reassure, and look forward to further positive newsflow in the coming months. The shares continue to look heavily oversold, standing on a Jan-17 P/E of just 9.4x. Increased confidence in the outlook should lead to a substantial re-rating in due course and these results should help kick start that process.
Quantum Pharma plc, the service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has announced today that its Niche Pharmaceuticals division has received approval for the commercial launch of its 50,000 IU ergocalciferol (vitamin D2) capsules. Ergocalciferol is a natural vitamin D derived from non-animal sources and is commonly used in the USA for oral vitamin D supplementation. This product completes Quantum’s vitamin D portfolio which now totals seven licensed products including both branded and generic low and high dose versions.
The long awaited launch of Ergocalciferol 50,000 IU capsules completes Quantum’s Vitamin D range, meaning the company can offer four different strengths of licensed products addressing both treatment for acute deficiency and maintenance regimes. It is also another unlicensed to licensed development, demonstrating the pipeline is beginning to deliver. The shares have begun to rally in recent days, but still represent good value on under 10x P/E. Next expected news is the prelims on 10th May, when we will revisit our forecasts in detail.
Quantum Pharma plc, the service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has announced today that its Niche Pharmaceuticals division has received 4 new marketing authorisations for its vitamin D3 product range. These new licences cover 800 IU and 1,000 IU strengths of Aviticol as both branded and generic versions of vitamin D3. Quantum’s Aviticol range of branded prescription vitamin D3 supplements now includes doses from 800 IU up to 20,000 IU per capsule. We believe the lower dose versions in the vitamin D range will form an important product category for maintenance therapy after the initial high-dose treatment for the correction of deficiency has been concluded.
Positive news from Quantum as it has received MHRA approval to launch two new strengths of its licensed Vitamin D product, adding to the existing range which addresses a significant £85m market opportunity in the UK. This also includes the first Unlicensed-to-Licensed development of its type and, importantly, shows the pipeline is beginning to deliver. No changes to our forecasts at this stage, but another positive step. The shares remain good value on <9x P/E to Jan-17, more than pricing in any perceived forecast risk.
Quantum Pharma plc, the service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has announced today that its Specials division has agreed a new 5-year contract extension with AAH Pharmaceuticals, the UK’s leading wholesaler and distributor of pharmaceutical and healthcare products and services to pharmacies, hospitals and dispensing doctors. Quantum and AAH have worked together successfully since 2008 and we believe this extension is significant because it recognises the continuing strength and value of the specials product range and supply service offered by Quantum Pharmaceutical, the largest business unit within Quantum’s Specials division.
News that the exclusive contract with AAH has been extended for a further five years is excellent news, securing a substantial customer for the core Specials business and providing a strategically important route to market for all three of the Group’s divisions. We make no changes to our estimates at this stage. The shares haven been under pressure again recently and now trade on a 9.2x our Jan-17 EPS forecast, yielding 3.0%. Whilst we understand investors remain wary following the setback in the Niche Pharma division, this seems anomalous given the substantial growth opportunities that lie ahead. We also note in passing recent director buying, including by new CFO Chris Rigg.
Quantum Pharma plc, the growing service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has announced today that its Niche Pharmaceuticals operating division, has launched the second product in its Mucodis® range, the Mucodis® mouthwash which is designed for the prevention of oral mucositis in cancer patients as they begin their radiation or chemotherapy treatments. This launch follows the Mucodis® Oromucosal Spray launched in November last year. The Mucodis® brand covers a range of products targeted at the prevention and management of some of the side effects of cancer treatments. The company has been granted an exclusive licence to distribute these products in the UK for 5 years with an option to extend beyond this period.
Quantum Pharma plc, the growing service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, released a trading update this morning highlighting the delays which have occurred for new product approvals and launches in the Niche Pharma division (Colonis). Following an operational and commercial review by the new Managing Director of Niche Pharmaceuticals supported by external consultants, the potential size of the market opportunity has been confirmed for the 70 products in the pipeline. However, the operational review suggests that the timetable of regulatory approvals and product launches has shifted approximately 12 months into the future. As a result, our adjusted EBITDA forecasts for the current year have been revised down to £12.7m (from £14m) and more materially in subsequent years. Recent share price movements suggest the market had been anticipating this news, however the current price looks to be an attractive level at 8.4x EV/EBITDA (PE 9.7x) in the year to Jan 31st, 2017 based on our revised forecasts.
The news that the delays to product approvals have persisted is disappointing, but not entirely surprising. It is encouraging that management has taken prompt action to identify and rectify the root causes and that its has externally verified the scale of the opportunity but, nevertheless, the group is now ~12 months behind on its growth plan in Niche Pharma. We have therefore reduced our estimates, resulting in material downgrades to our FY17 & FY18 forecasts. Perhaps in anticipation of this news, the shares have fallen heavily in recent weeks and, on our revised estimates, trade on an FY17 P/E of 11.2x and an EV/EBITDA of 9.0x. With the scale of the opportunity unchanged, we think this fall looks overdone.
Quantum Pharma plc, the growing service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, announced this morning that its wholly-owned subsidiary, Lamda, has signed three further out-licensing deals in Germany for two generic-plus dossiers and one generic dossier. Upfront fees of €280k are expected prior to Jan 31st 2016 for these licensing agreements (related to signing and regulatory submissions) with around €100k due later in 2016 or early 2017. Including the German licensing agreement for Aviticol, these out-licensing deals bring the total to 6 signed agreements in the current year.
Quantum Pharma plc, the growing service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, has announced today that its Niche Pharmaceuticals operating division, has launched the first product from its new Mucodis® range, the Mucodis® Oromucosal Spray. The Mucodis® brand will cover a range of products, initially comprising up to 7 patented medical devices targeted at the management of the some of the side effects of cancer treatments. The company has been granted an exclusive licence to distribute these products in the UK for 5 years with an option to extend beyond this period.
Quantum has launched the first in a range of products to treat the side effects of cancer therapy. These particular products, branded Mucodis, have been in-licensed, but complement some of Quantum’s in-house developments. We expect momentum to continue to build with further product launches through the rest of this year and next and we make no change to our forecasts at this stage.
Quantum Pharma plc is a growing service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors. This morning it released its Interim Results for the 6 months to July 31st showing strong top-line growth (22% y.o.y.) with record H1 performances in a number of its businesses. Management has reiterated its confidence in the business and the outlook for the remainder of the current financial year (to Jan 31st). In H1 Quantum acquired two companies, Lamda and NuPharm, broadening its in-house capabilities, significantly extending its pipeline of niche pharmaceutical products, and increasing its network of potential European partners. To enable improved operational focus and drive synergies both within each division and across the group, the company has organised its operating businesses into three divisions: Specials, Niche Pharmaceuticals (NPh), and Medication Adherence (MAd). Management remains confident of delivering a raft of registered products by the end of the current financial year through its NPh division. The division now has over 70 niche products in the development pipeline, 20 of which have been submitted for regulatory assessments. Despite our frustration with delays, management expects to have a total of 10 regulated products in the market by the end of January including 4 devices which are already CE Marked (not MHRA dependent). Quantum growth is on track and we anticipate a strong H2 driven by launches of the new products in the NPh division and continuing excellent growth in the other divisions.
Quantum had a busy first half, completing two strategic acquisitions and increasing the size of its licensed drug pipeline substantially. Delays have however persisted in getting these products approved by the MHRA. We have prudently adjusted our forecasts to reflect this (FY16 EPS -10%, FY17 -6%) but continue to believe the medium erm growth prospects are very strong. Sentiment could shift quickly once newsflow on product launches is received.
Quantum Pharma plc, the growing service-led niche pharmaceutical manufacturer, developer and supplier to the health and care sectors, announced this morning that its wholly-owned subsidiary, Lamda, has signed two out-licensing deals in Europe.
Quantum Pharma plc, the growing service-led supplier, manufacturer and developer of niche pharmaceutical and healthcare products, has announce this morning that it has signed an exclusive licensing agreement with Futura Medical. Under the agreement, Quantum will manufacture and supply MED2002, Futura’s late-stage development product for erectile dysfunction, as an unlicensed medicine (special) in the UK.
Quantum and Futura Medical (CORP) have announced that Quantum will supply MED2002, Futura’s topical gel for the treatment of erectile dysfunction, into the UK market as an unlicensed Special.
Quantum Pharma plc, the growing service-led supplier, manufacturer and developer of niche pharmaceutical and healthcare products, has announced this morning that Colonis, its wholly-owned subsidiary, has signed an out- licensing agreement with a German pharmaceutical company covering the German rights to its high-dose vitamin D3 product (20,000IU colecalciferol capsule, marketed in the UK as Aviticol®). This is the first out-licensing agreement which Quantum has entered into and underscores the potential for this and other products in the Colonis portfolio to add value to the company’s product registration activities.
Quantum Pharma is a service-led niche pharmaceutical company, supplying patient specific medication to the UK market. The proposition has been broadened from the market leading Specials business both organically and by acquisition. Quantum now provides a range of products and services across retail pharmacy, hospital pharmacy, care homes and home care settings and, following the acquisition of Colonis at IPO in December, is developing its own range of licensed pharmaceuticals addressing a £60m+ revenue opportunity.
Quantum Pharma plc, the growing service-led supplier, manufacturer and developer of niche pharmaceutical and healthcare products, has announced this morning that its Biodose Services division has won its first large-scale NHS homecare contract. The 18-month contract, with the Yorkshire and Humber NHS Pharmaceutical Purchasing Consortium (YHPPC), was awarded after a competitive tender process. It is expected that Biodose Services will begin initial deliveries in Q4 2015 and that it will have reached full capacity under the contract within 6 months.
Quantum Pharma plc, the growing service-led supplier, manufacturer and developer of niche pharmaceutical and healthcare products, released a pre-close trading statement this morning indicating that trading is in-line with market expectations for the full year to Jan 31, 2016. We forecast revenue for the full year of £76.3m leading to adjusted EBITDA of £14.0m and basic EPS of 7.9p (adjusted) putting QP. on EV/EBITDA and PE multiples of 14.8X and 18.8x, respectively.
Quantum has had a busy H1, completing two strategic acquisitions and increasing the size of its licensed drug pipeline substantially. Trading is reported to be in line with expectations for the full year, with record performances from a number of business units. Some small delays have been experienced in launching new licensed products, but we understand it is still a case of when, not if, these products will hit the market and are not overly concerned at this stage. As such, the investment case is intact.
QUANTUM PHARMA PLC (QP/ LN) In line trading after a busy H1 | REDDE PLC (REDD LN) Acquisition of FMG, additional earnings to drive yield | VERNALIS (VER LN) Investment in NCE development pipeline completed
QP/ 21W 0NR1
Quantum Pharma plc, a service-led supplier and developer of niche pharmaceutical and other healthcare products, announced this morning that it has acquired 100% of the share capital of the NuPharm Group based in Deeside, North Wales. In addition to its expertise in formulation development, NuPharm is an outsourced manufacturer of niche licensed pharmaceutical products, batch-made specials and also manufactures products for clinical trials. NuPharm holds MHRA licences for Specials Manufacturing, Full Manufacturing (of licensed products), and the manufacturing of Investigational Medicinal Products (IMP) for clinical trials. The consideration for the acquisition, which completes QP’s UK-based manufacturing infrastructure, is £9.34m in cash on completion and up to a maximum of £4m payable over 2 years if certain performance hurdles are reached. NuPharm generated revenues in 2014 of £3.85m and adjusted EBITDA of £1.09m. Alongside this acquisition Quantum has also put in place a new banking facility with RBS and Lloyds Bank comprising a term loan of £25m and a revolving credit facility of £10m (replacing the existing £15m term loan). Both the acquisition of NuPharm and the new banking facility represent further strategic developments for Quantum as the Board positions the company to more effectively manage its anticipated growth.
Quantum’s acquisition of UK-based CDMO NuPharm fills a gap in capability and furthers the group’s ambitions to be a fully integrated niche pharmaceutical company. Whilst some investment is required in the short term, the deal should be earnings enhancing from FY17 onwards. Strategically, it looks a very good fit. We stay positive on Quantum and see it as one of the most exciting growth stocks in our coverage list.
Quantum Pharma plc, is a market leader in the UK in manufacturing, developing and supplying niche pharmaceutical and healthcare products and services. This morning Quantum reported its final results for the year to January 31, 2015 (with c.7 weeks as a listed company) with record net sales of £61.7m (+15%) and underlying EBITDA of £12.2m (+34%), upgraded in February from our original IPO forecast of £11.8m, showing excellent performance across its operational units despite the considerable distractions and long efforts associated with the IPO and Admission to AIM in December 2014. We are encouraged by these results and the substantial transformations in the company, along with the recent acquisition of Lamda, and we believe Quantum is firmly established on a strong growth trajectory. On the basis of our forecasts which now extend to FY2018 (Jan 31, 2018) our fair value estimate for the company has increased from 160p to 180p.
