CMD showcases expertise and strategy

Benchmark (BMK) helps deliver improved healthcare products and services to the Animal Health and Aquaculture industry. Rising demand from clients for its products and services to manage sustainability practice in worldwide production and supply chains underlines BMK’s opportunity for significant organic and external growth. The company held a well-attended Capital Markets Day (CMD) on 27 March, which highlighted its strategic targets for fulfilling its growth potential spanning Advanced Nutri...

Vernalis - Operational initiatives in place, execution is key

Tuzistra XR prescriptions (Rx) grew threefold to ~35k in FY16/17 (2nd year on the market) vs ~12k in FY15/16. Investment into addressing the barriers to higher Tuzistra XR prescribing is translating into higher Rx rates, although this has not been matched by revenue growth due to higher inventory stocking in the same period last year. In H217 FDA issued partner Tris with two complete response letters to Vernalis’s CCP-07 and CCP-08 NDAs and we now model launch during the 2018/19 cough cold sea...

Tuzistra XR steady growth in Rx run rate

Vernalis has provided a year-end trading and operational update ahead of its FY17 results due to be announced on 12 September. Total revenues are expected to be ahead of current market expectations, largely due to higher than anticipated R&D-related milestones. This and tighter cost control means that operating loss for the full year is expected to be lower than consensus estimates. In terms of prescription (Rx) growth, Tuzistra XR continued its steady growth in volumes y-o-y; reported net reven...

FDA issues CCP-07 complete response letter

FDA has issued a complete response letter (CRL) to Vernalis’ CCP-07 NDA following its 20 April PDUFA date, outlining questions that need to be addressed in an NDA resubmission for potential FDA approval. Given limited disclosure regarding possible timelines for dealing with these questions and the probable class of resubmission, we conservatively push back our CCP-07 approval assumption by one year, delaying launch into the 2018/19 cough cold season. However, we acknowledge that there are scenar...

Positive Tuzistra trends

Investment into addressing barriers to higher Tuzistra XR prescribing is starting to translate into higher prescription (Rx) rates. Mid-way through the second season post launch, both Rx and sales are showing positive trends and gathering momentum, although we lower our near-term Tuzistra XR net sales forecasts. Ongoing focus on improved salesforce effectiveness, which will provide a solid foundation for CCP-07 and CCP-08 launches, means the post-season update should better inform the future pot...

Advancing towards a commercial portfolio

FDA acceptance of the CCP-08 NDA (setting a 4 August 2017 PDUFA date) advances Vernalis towards its goal of building a speciality US franchise of extended release (ER) prescription-only (Rx) cough cold products. Potential 2017 approval of CCP-08 and CCP-07 (PDUFA date 20 April 2017) would enable launch into the 2017/18 cough cold season. Last reported cash of £78.6m (unaudited at end October) supports ongoing investment in operational initiatives to enhance Tuzistra XR sales growth this season a...

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Investing in the commercial platform

Vernalis marked its transition into a commercial-stage speciality pharma company with the September 2015 US launch of Tuzistra XR, the first product from its extended release (ER) prescription only (Rx) cough cold pipeline. First year (FY16) Tuzistra XR net sales were £1.1m. The £38.9m (net) raised in May provides sufficient funds to invest in operational initiatives (pharmacy stocking, patient access) to support stronger sales growth into the 2016/17 cough cold season and beyond. Successful exe...

Update: Cash cushion for cough cold growth

The issue of 80m new shares at 50p/share has raised £40m (gross), which enables Vernalis to focus on executing its operational plan and removes uncertainty over whether it is sufficiently funded through to sustainable profitability in FY19 (on our new forecasts). Near-term investment into the commercial cough cold platform will underpin future sales growth. Ongoing initiatives to improve physician awareness, stocking and formulary coverage should increase Tuzistra’s XR market share in the lon...

Flash note: Securing cash to sustainability

Vernalis intends to raise £40m (gross) through the issue of 80m new shares at 50p per share. This equity raise will remove any uncertainty over whether Vernalis’s cash position is sufficient to take it through to sustainable profitability in FY18 (on our current forecasts). New funds will be used to boost existing working capital required for a conservative Tuzistra XR roll-out, upcoming Moxatag re-launch and future launches of the remaining four US cough cold programmes in development with T...

Update: Establishing a firm foundation

Vernalis reported a modest £0.6m in Tuzistra XR sales over the first four months post-launch due to the mild cough cold season. The US launch of this prescription-only (Rx), extended release (ER) cough cold medicine is the first step in Vernalis’s transition into a commercial-stage speciality pharma company, targeting a $3.5bn market opportunity. The emphasis for year one of Tuzistra XR commercialisation is operational: establishing the platform for future sales growth. However, financial per...

Outlook: A player in the US prescription cough cold market

Vernalis is poised to complete the transition towards becoming a self-sustaining speciality pharma company, based on its five extended release cough cold products targeted at high-value prescribers. First out of the blocks is Tuzistra XR, launched in September. We forecast £5.8m cough cold sales in FY16 rising to £27.3m in FY17. Our DCF valuation is £439m.

Update: Tuzistra XR; US commercial potential unveiled

Vernalis is preparing for commercial launch of Tuzistra XR, its extended-release, codeine-based cough cold treatment following FDA approval in April. The product has greater commercial potential than previously anticipated with an addressable market of up to £1.8bn and is the only approved codeine-based, long-release liquid treatment. We forecast maiden cough cold sales in FY16 leading to profitability in FY18. We increase our valuation from £323m to £406m.

Update: Preparing for first approval

Vernalis represents a reduced risk late-stage pharmaceutical play, with the near-term prospect of approval in April of Tuzistra XR, an extended release formulation of an existing cough cold prescription product. The pipeline of four other products offers longer-term value potential, covering up to 80% of the c US$2bn US branded cough cold market. Vernalis is engaged in commercial and logistic preparations as the Tuzistra XR approval date approaches. We have increased our valuation from £270m to...

Update: Aligning timings

Vernalis’s preparations for the potential Q315 launch of Tuzistra XR, its first extended release (ER) cough cold product for the US prescription-only market, are well underway. Tuzistra XR has a 30 April 2015 PDUFA date. In addition to ongoing staged investment into establishing the US commercial infrastructure, the company is changing its accounting reference date and financial year end (from 31 December to 30 June) to be better aligned with the inherent seasonality of the US cough cold marke...

Institutional Comment: Daily comment

Institutional Comment: Daily comment

Outlook: Cough cold portfolio gathers momentum

The Tuzistra XR FDA filing is an important step towards Vernalis’s goal of profitable sustainability. Potential approval (assuming NDA acceptance in mid-September) and launch within the next 12 months, into the 2015/16 winter cough cold season, suggest first US cough cold revenues are possible in H215. The four other US cough cold prescription-only extended release products should also achieve development and regulatory milestones in the intervening period. These milestones will be the focus o...