Management said it was a 'step-change' in financial performance for the FTSE 250 company
Companies: SkyePharmaVectura Group Plc
N+1 Singer acts as broker and adviser to Skyepharma. We have withdrawn our forecasts in line with rules of The Panel on Takeovers and Mergers during the offer period (Skyepharma and Vectura Group announced a recommended merger on 16th March 2016). This note reproduces the RNS released at 2:56pm on 7th June 2016.
N+1 Singer acts as broker and adviser to Skyepharma. We have withdrawn our forecasts in line with rules of The Panel on Takeovers and Mergers during the offer period (Skyepharma and Vectura Group announced a recommended merger on 16th March 2016). This note reproduces the RNS released at 7am on the 18th May 2016. Skyepharma provided an update ahead of its Annual General Meeting.
Below we reproduce the RNS released at 7am on 30th March 2016
Skyepharma reported 2015 results and a proposed merger with Vectura on 16th March. The enlarged group would have significant expertise across three inhalation delivery platforms (pMDI, DPI and nebulisers). The proposed terms of the deal offers Skyepharma shareholders 2.7977 Vectura shares per Skyepharma share, currently valuing Skyepharma at c.£470.8m. Skyepharma’s shareholders will own 41.75% of the enlarged group before any of the partial cash alternative (up to £70m) is paid. Skyepharma reported a 46% increase in 2015 EBIT to £31.5m.
Stocks in the life sciences industry have struggled to regain their sparkle following the autumn 2015 sell off triggered by Hilary Clinton’s comments on drug pricing with the NASDAQ Biotechnology Index down some 22% since the beginning of the year. Indeed both sides of the presidential race have now targeted pharmaceutical companies with Donald Trump campaigning for price negotiations between drug manufacturers and Medicare
Companies: BMRN SRPT MTFB ORPH INS BLU SAR AMGN SCLP ONC PLI GWPRF OPTI MCRB SKP VRP OXB HCM VEC
Vectura and Skyepharma (SKP) have announced they have reached a merger agreement; under the terms of the deal SKP shareholders will be entitled to receive 2.7977 new Vectura shares for every SKP share, valuing the company at £441.3m or 410.15p per share. Our last published valuation (A shining start to 2016) of SKP is 422p/share. The rationale for the merger is to combine the complementary inhalation businesses and create an industry-leading respiratory speciality business to accelerate growth in the global inhaled market and provide shareholders of the enlarged company with a broader product and development portfolio. Based on the closing share price on 15 March, the newly enlarged group would have had a proforma market capitalisation of £1,014.3m.
Pacira remains positive on the prospects for EXPAREL®, with the FDA challenges firmly behind it and 2015 sales slightly ahead of our expectations. We remain bullish on EXPAREL®’s long term growth potential with launches for oral and veterinary surgery anticipated later in 2016 as well as Pacira working on additional indications, including nerve block and chronic pain. We continue to expect Skyepharma to receive an $8m milestone from Pacira in 2016 for net sales reaching $250m over four consecutive quarters. We remain upbeat on Skyepharma’s highly attractive product offering.
Grainger (GRI LN) GRIP fund makes £57m London PRS acquisition | Skyepharma (SKP LN) Very attractive opportunity
Companies: Grainger Plc SkyePharma
We feel Skyepharma’s share price performance yesterday was unjustified given the recent strong news flow and future prospects. Skyepharma continues to make excellent progress in multiple areas of the business. The recent recognition of a €10m flutiform® sales milestone highlights the continued strong sales growth of the product whilst work continues in parallel to add additional indications and geographies. The development products SKP-2075 (asthma COPD crossover syndrome) and SKP-2076 (asthma triple therapy) could also potentially add significant value to the group’s respiratory franchise. In our note on the respiratory sector, ‘A very attractive subsector in a year of change’ published 28 January, we highlight the unmet need in respiratory disease and believe the subsector offers rich investment opportunities. We continue to believe that Skyepharma has further strong growth potential.
ACCESSO TECHNOLOGY GRP PLC (ACSO LN) FY 2015 results comfortably in line | BCA MARKETPLACE PLC (BCA LN) Bullish EPS outlook driven by volumes, gearing and buyer finance | CARCLO (CAR LN) Trading in line | SKYEPHARMA PLC (SKP LN) GSK Q4 2015 results highlight Ellipta® sales ahead of expectations
Companies: ACSO BCA CAR SKP
GSK’s Q4 2015 results highlighted significantly improved performance from the products incorporating Skyepharma’s dry powder inhalation formulation technologies. The Ellipta® range (Breo®/Relvar®, Anoro® and Incruse®) continued to post growth with combined sales in Q4 increasing 53% from Q3, generating full year sales of £350m (ahead of our £335m estimate). We expect the positive momentum to continue going forward although we make no changes to our forecasts at this stage. We believe Skyepharma has a highly attractive offering and remain positive on its outlook.
Skyepharma continues to make excellent progress in multiple areas of the business. The recent recognition of a €10m flutiform® sales milestone highlights the continued strong sales growth of the product whilst work continues in parallel to add additional indications and geographies. The development products SKP-2075 and SKP-2076 could also potentially add significant value to the group’s respiratory franchise. We continue to believe that Skyepharma has further strong growth potential.
Today's news that Mundipharma has been appointed partner for flutiform® in Mexico, Central and South America expands on its partnership already in place with Skyepharma for the product. The relationship has proven to be very successful to date with flutiform® continuing to generate substantial growth, as highlighted by the recent recognition of a €10m sales milestone. The transfer of the exclusive rights from Sanofi to Mundipharma in this region has been undertaken on the same terms as established between Sanofi and Skyepharma in 2011. We are very encouraged by the news and look forward to additional developments of flutiform® in Latin America. We remain extremely positive on Skyepharma's outlook.
Cranswick (CWK LN) | Euromoney Institutional Investor (ERM LN) | Grainger (GRI LN) | ITE Group (ITE LN) | Renishaw (RSW LN) | Respiratory Sector | Skyepharma (SKP LN) | Ten Alps (TAL LN)
Companies: CWK ERM GRI HYVE RSW SKP SNG SKP ZIN VRP VEC
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Full-year results were 4% above expectations, with revenues and adjusted pre-tax profit rising 21% and 27%, respectively, boosted in part by acquisitions in FY 2018 and 2019 but also from COVID-19 related buying, particularly Cache surface disinfection products. We raise FY 2021 adjusted pre-tax profit by 3% to £7.2m and introduce FY 2022 forecasts, which point to c.11% EPS growth. FY 2021 growth is held back by the stated c.£0.75m commitment to developing a fuller pipeline of products to take to the FDA/EPA and Canada Health. We view this as a strong endorsement of the progress that has been made to date. We also lift our target price to 500p on the back of a small FY 2021 upgrade and outlook for growth in 2022, supported by renewed commitment and resourcing for North American regulatory approvals.
Companies: Tristel Plc
Venture Life aims to become a global leader in the self-care branded product market, where there are a number of structural growth drivers. It has a unique and scalable platform to develop, manufacture and distribute products, including its own brands and international customers’ brands. What is already a high margin business is poised to deliver a compelling mixture of top line growth with significant operating leverage. Performance in H1 (EBITDA +347%) highlights the potency of VLG’s model. Acquisitions can also leverage the platform to drive growth, and management has a very strong track record here. On top of this exciting growth play, there is also a chance that its Dentyl dual-action mouthwash could have applications to slow/reduce CV19 transmission, adding to the upside potential.
Companies: Venture Life Group Plc
Synairgen has raised £80m to fund a Phase III trial for SNG001 in COVID-19 disease, which is due to commence in Q4 2020 and will be run globally by Parexel, with results expected in Q2 2021, and scale up manufacturing. This follows a successful pre-IND meeting with the FDA, which provided the guidance to commence such a study. Assuming that this trial replicates the results seen in the 100-patient Phase II trial, we would expect Emergency Use Approval (EUA) to follow shortly thereafter. Meanwhile, the Managed Access Programme (MAP) in the UK and Europe, run by Clinigen, could generate early commercial revenues. We have made adjustments to forecasts to reflect these costs and raise our SOTP rNPV target price to 420p, which could rise further should stockpiling orders be received.
Companies: Synairgen plc
IXICO has provided a trading update for the fiscal year to 30 September 2020, expecting revenues of £9.5m, up 26% and ahead of our current £9.1m estimate. EBITDA is expected to be at least in line with our £1.1m forecast. This represents the fourth consecutive year of +25% revenue growth and a period over which EBITDA has progressed from -£2.1m (FY16A) to +£1.1m. FY21E revenues and beyond are underpinned by an order book which has increased by c£5.8m over the year supported by new contracts booked of over £15m, approximately twice the amount booked in FY19A. We believe IXICO is a strong position to deliver ongoing growth and we maintain our Buy recommendation.
Companies: IXICO Plc
SkinBioTherapeutics is making strong progress towards the first commercialisation and associated revenues from its skin microbiome technology platform. The company has partnered its two lead programmes and is in discussions to partner its third commercial channel. We believe SkinBioTherapeutics could report its first revenues during FY22E and given the company's relatively low cost base, could achieve operating breakeven in the near-term. To support its progress to commercialising its products, the company has announced it has conditionally raised £4m (gross) via an equity raise. We maintain our Buy recommendation.
Companies: SkinBioTherapeutics Plc
LiDCO reported interims to 31 July 20, which contained few surprises following the 24 August trading update, although the revenue mix was slightly different to the anticipated figure (stronger UK offsetting ROW) and included an exceptional profit of £0.2m. With a qualified US pipeline of HUP contracts worth c.$5m in recurring annual revenues, the company has indicated that it intends to cautiously expand its sales & marketing presence in the US using the current cash balances (£3.1m). We upgrade FY 2021 forecasts to reflect H2 outlook comments, raising revenues by 3% to £10m and adjusted pre-tax profit by £0.2m to £0.6m. We leave our target price at 12p, however, until we have greater visibility over FY 2022, at which level the stock would trade on 2.7x FY 2021 EV/Sales.
Companies: LiDCO Group Plc
Hemogenyx Pharmaceuticals (HEMO.L): Presentation at American Society of Hematology meeting | IXICO plc (IXI.L): FY20 Trading update | Shield Therapeutics (STX.L): Patent dispute update
Companies: HEMO IXI STX
As part of its drive to develop a portfolio of pipeline development projects addressing diseases of economic importance in pigs and poultry, ECO has announced it has entered into two novel vaccine development and exclusive global licensing deals with The Pirbright Institute and The Vaccine Group. Both address PRRS virus, which is one of the most economically damaging diseases to the global pig industry, costing it over $2bn annually in the US and Europe. The projects will both enter 18 month discovery and proof of concept phases, at the end of which they will enter full development if successful. No change to forecasts, but further evidence the ECO is building a potentially highly valuable portfolio of products around the core Aivlosin franchise.
Companies: ECO Animal Health Group plc
After an exceptionally strong Q1 as LiDCO responded to fulfil Covid-19 related demand, business has returned to more normal levels. This is a strong achievement in its own right given the sharp falls in elective surgical procedures globally and is testament to the increasingly robust recurring revenue model afforded by the HUP SaaS model. The HUP installed base increased by 14% to 327 monitors at the end of the period, generating ARR in the UK & US of £2.3m. Market conditions remain somewhat mixed and the short term outlook has been clouded by the advent of the second wave of the pandemic. Nevertheless, management is confident of delivering higher YoY sales in H2, meaning we push through further upgrades this morning, now expecting £10.1m of revenues and £1.8m EBITDA for FY21. Trading on just 1.7x EV/Sales, post-upgrades, the shares continue to trade at a significant discount to peers and to recent transactions in the space.
Aided by a strong improvement in trading in the core business and ongoing demand for the Primestore MTM device, EKF has indicated it is on track for a record monthly performance in October. In addition, Primestore MTM has recently been successfully evaluated by Public Health England in a peer-reviewed comparative study, which concluded it was the only commercially available sample collection device where no residual virus was detectable out of 23 tested. We believe this may bode well for wider UK market adoption in future. Having upgraded several times already this year, we make no further changes to our estimates, but continue to see sensitivity to the upside.
Companies: EKF Diagnostics Holdings plc
Novacyt (NCYT.L): R&D update
Companies: Novacyt SAS
Whilst headline H1 revenue growth of 23% is eye-catching, for us the most comforting factor is the robust performance of the underlying business in the most challenging of circumstances. Sales of the Primestore MTM sample collection device contributed £6.5m, meaning the core business was -8% in the period, well ahead of internal expectations. Highlights include strong performances from BhB, DiaSpect Tm and the Clinical Chemistry portfolio, all of which grew revenues in the period. Whilst there were challenges in certain geographies, this is a very creditable performance and testament to the strength and defensiveness of the core business. We make no further change to our forecasts at this stage, having upgraded regularly in recent months. Given we have only included firm orders for Primestore up until the end of this month, we remain confident further upgrades are likely for the rest of this year and into next. In the meantime, latent growth potential in the core business is building with, inter alia, Chinese approval of Quo-Test, strong momentum with DiaSpect Tm, the Trellus health investment and a variety of contract manufacturing orders in the Central Lab/Life Sciences segment adding to the medium term growth outlook. Given the continuing scope for upgrades, we continue to see upside potential in the shares – EKF remains one of our Best Ideas for 2020 (up 66% YTD).
Synairgen reported interim results to 30 June in which the adjusted net loss was £3.9m with period-end cash of £10.9m. A fuller analysis and disclosure of the Phase II trial of inhaled interferon (SNG001) in hospitalised COVID-19 patients confirms the earlier optimism we had at the time of its first headline disclosure in July. The announcement that Clinigen is to launch a Managed Access Program (MAP) in the UK and Europe for SNG001 is a significant step enabling treatment of hospitalised COVID-19 patients under certain circumstances ahead of regulatory approval. With plans to scale manufacturing to c.100,000 treatment courses per month in 2021, Synairgen is clear in its ambitions. Based on pricing points for Rebif and Avonex and Gilead’s remdesivir, future supplies suggest significant potential revenues in 2021. We leave forecasts unchanged for the time being until we have greater visibility over the uptake of the MAP as well as the regulatory path. We reiterate our price target of 360p.
ANGLE plc (AGL.L): Acceptance of FDA submission | Feedback plc (FDBK.L*): Partnership agreement | Open Orphan (ORPH.L): Human Challenge Study Model contract with UK Government
Companies: AGL FDBK ORPH
SDI is acquiring Applied Thermal Control (ATC), a manufacturer and supplier of chillers, coolers and heat exchangers used within the scientific instrument support market and based in the UK. ATC is a growing, profitable business with c.30% of sales exported, mainly to the US. The maximum consideration is £1.2m, representing prospective EV/Sales and EV/EBIT of 0.8x and 4.0x, respectively. The acquisition is being funded by a mixture of shares (£200k to the vendor), cash (£550k, assuming the earn out is met) as well as a new five-year term loan of £450k. We expect the acquisition to be 6% accretive to adjusted EPS (excluding acquisition costs) in FY 2018 and 8% in FY 2019. We are raising our target price by 7% to 32p, which places SDI on a FY 2018 P/E of 16.5x, falling to 14.4x in FY 2019, and FY 2018 EV/EBITDA of 10.1x, falling to 8.9x in FY 2019.
Companies: SDI Group plc