Chris Rigg, Chief Financial Officer and Acting Chief Executive Officer of Quantum Pharma LON:QP., commented: “The core specials business is performing well and launches from the Niche Pharmaceuticals pipeline are being brought to market largely in line with plan. The early indications are that sales of Glycopyrronium Bromide Oral Solution delivered under the core strategy of unlicensed to licensed and ‘cease and desist’ notifications are encouraging.
Following my appointment as Acting CEO in early August, we instigated and completed a review of a number of key areas of the business.
We found that the core specials business remains strong and cash generative and the potential still exists to deliver significant growth from our strong Niche Pharmaceuticals pipeline, including an exciting pipeline of unlicensed to licensed products where market data continues to support its potential sales value. We believe that a simplified business, primarily focused on specials and the Group’s unlicensed to licensed growth platform offers the best opportunity for value creation.
Initial data from recent product launches indicates that generic, generic plus and medical device products are proving more challenging to take to market, leading us to conclude that more conservative sales assumptions are required for those types of products. We have also taken a decision to commence consultation on the closure of our underperforming and loss making NuPharm business.
Although we continue to expect to deliver strong growth in the second half of the year and beyond, given the recent performance of products other than unlicensed to licensed products and the conclusions of the business review, the Board now expects performance will be materially below market expectations. The Board is confident in the growth potential of the business from this revised base with its renewed focus on our key strategic objectives.”
Quantum Pharma Plc (AIM: QP.), the service-led niche pharmaceutical developer, manufacturer and supplier to the health and care sectors, has today published its half year results for the six months to 31 July 2016 (‘H1-FY17’ or the ‘period’). Comparative data relates to the six months to 31 July 2015 (‘H1-FY16’) unless indicated otherwise.
Financial Highlights
|
(£ in millions except where stated) |
H1-FY17 |
H1-FY16 |
|
Revenue |
42.8 |
34.3 |
|
Gross profit |
13.3 |
13.1 |
|
Adjusted EBITDA1 |
4.2 |
5.5 |
|
Operating profit |
1.2 |
3.2 |
|
Profit before tax |
0.8 |
2.8 |
|
Adjusted profit before tax1 |
2.6 |
4.5 |
|
Basic EPS |
0.8 pence |
2.0 pence |
|
Adjusted EPS1 |
2.2 pence |
3.2 pence |
|
Development expenditure |
2.3 |
3.0 |
|
Net debt |
23.8 |
24.2 |
1 Excludes share based payments, one-off costs, acquisition costs and deferred consideration (treated as remuneration) for acquisitions.
· Revenue grew across all three divisions; with the strongest advance coming from Medication Adherence (£5.9 million increase), which made a small contribution to gross profit.
· On a like-for-like basis the Group is trading in line with performance for H1-FY16, having increased the cost base of Colonis by £1.2 million for market delivery related costs in the period as recent launches enter the market. In addition Nupharm, acquired in July 2015, has suffered losses of around £0.5 million and utilised £0.7 million of provision for rectification works in the period.
· Development expenditure decreased as a result of the cost benefit of Lamda’s in-house development capability and a more focused and cost controlled development programme.
· Net debt position was well managed across H1-FY17.
· Strong working capital management across the period has enabled positive operational cash flows.
Business Highlights:
· The core Specials division performed well during the period.
· New five-year contract extension signed with AAH Pharmaceuticals Limited (“AAH”), the UK’s leading pharmaceutical wholesaler, which also benefits from the supply to an additional 281 Sainsbury’s in-store pharmacies acquired by Lloyds Pharmacy.
· Niche Pharmaceuticals division launched five products, including expansion of the Vitamin D range with colecalciferol and ergocalciferol capsules, and two further products in the Mucodis® range of medical devices.
· Launch timings largely in line with management expectations and products are now moving into the market access and sales delivery phase.
· Appointment of Chris Rigg as CFO in March 2016.
Post Period End Highlights:
· Launch of Glycopyrronium Bromide Oral Solution 1mg/5ml for the treatment of peptic ulcers, an important unlicensed-to-licensed product for the Group.
· Appointment of Chris Rigg as acting CEO in August 2016.
Business Review
· Following his appointment as acting CEO, Chris Rigg initiated a review of key areas of the business.
· This review has now been concluded, and its findings are as follows:
o The core specials business remains strong and cash generative.
o Market data continues to support the value of the Group’s unlicensed to licensed pipeline.
o A simplified business, primarily focused on specials and the Group’s unlicensed to licensed growth platform, offers the best opportunity for value creation.
o Generic, generic plus and medical device products are proving more challenging to take to market and more conservative sales assumptions are required for those products.
o Decision taken to commence consultation on closure of the underperforming and loss making NuPharm business.
o Further opportunities exist to reduce the Group’s cost base.
o A lower level of net debt would help to support the further growth of the refocused business.
