Vernalis shares plunge 15 percent despite strong drug sales

Shares in pharmaceutical firm Vernalis (LON:VER) sunk over 15 percent on Tuesday after disclosing an £11 million loss for the six months to December.

Revenue was £5.6 million, down from £6.1 million in 2015, which was marginally offset by a slight increase in revenue in the US market.

Operating costs also rose in the six months to December at £21.7 million, almost three million higher than 2015’s £19.0 million after money was spent on significant expansion of Vernalis’ US commercial sales team.

The loss for the period was £11 million, higher than 2015’s figure of £10.2 million. However the company strove to remind investors that the company’s balance sheet remains strong, with £74.2 million of cash resources and no debt at 31 December 2016

The company benefitted from validation of their Tuzistra drug, with prescriptions increasing almost six-fold to 11,586 for the six month period after increased insurance coverage and wider pharmacy stocking.

Ian Garland, the group’s Chief Executive Officer, commented:

“Midway through the 2016/17 cough cold season we have seen Tuzistra XR prescriptions continue to grow steadily. We believe the emergence of high performing sales representatives in all regions across the US validates the market potential for Tuzistra. We are, however, still in the early stages of the launch and our focus for the second half of the season is to drive sales-force effectiveness and so further increase the proportion of high performing sales territories. With continued prescription growth expected, the annualised run-rate at the end of June 2017 should provide a more meaningful predictor of sales performance for future years.

“We expect to achieve a number of milestones from the remainder of the cough cold franchise in 2017, including potential approvals by FDA of CCP-07 and CCP-08. We also continue to seek other opportunities to leverage our US commercial infrastructure and remain very excited about the growth potential of the business.”

However, the strong performance of Tuzistra wasn’t enough to offset the weaker figures for the six months. Shares in Vernalis are currently trading down 15.65 percent at 27.62 (1247GMT).