logo-loader

Clinigen pushing the pedal to the metal

Published: 12:30 29 Jul 2015 BST

clinigen_good
The company revitalises drugs

Clinigen's (LON:CLIN) recent full year results showed a company pressing on the accelerator pedal, with buckets of further growth potential.

Shares in the firm, which promises to deliver the right drug at the right time, are already  up over 30% in the year to date, to stand at around 698p and house broker Peel Hunt is targeting 1,000p.

The group's acquisition strategy is starting to pay off and its 225mln April acquisition of Surrey-based Idis, puts it in a different league, meaning it is now the leader in the exclusive managed access market (of drugs) which is valued at between a whopping US$500 and US$600mln.

For those unfamiliar with Clinigen, the drugs and pharma services specialist, it runs four separate businesses, each of which saw good revenue and profit growth in the year to June 30, 2015.

The 'managed access' side, via the merger of Idis and Clinigen, saw an increase of drug deliveries, while the clinical trials business (CTS), again which combines an Idis business, saw revenue growth of over 30% driven by the USA. A third Global access was Idis' business and delivered solid growth with a margin of over 20%.

But the specialty  pharma (SP) business is still at the bedrock of the group. It acquires and "revitalises" niche medicines and still accounted for more than half of overall group profits in the year gone.

And speaking to Proactive, Shaun Chilton, newly promoted deputy chief executive, said SP was still focused on increasing its portfolio to ten products from the current five in the next three to four years.

"We think we are on track," he  said, adding that the group was much less dependent on lead anti-viral product Foscavir than previously, and that the other four products were starting to contribute to profitability, with further growth on offer.

"We have a good number of products in the pipeline that we are evaluating," he added.

A key highlight in last week's results was the already successful integration of Idis and  that parts of its business were already contributing to the top and bottom line.

Chilton explained that was particularly true of the managed access and clinical trials divisons, while Peel Hunt analyst Charles Hall noted that £2.5mln of anticipated cost synergies from the Idis acquisition were being delivered and, significantly, "continued to look conservative".

Despite the Idis purchase, leading to the company having around £80mln of debt on its balance sheet, Chilton is confident that will be significantly reduced in the short to medium term.

"We are comfortable with the level of debt we are carrying because with the businesses being so cash generative (managed access and clinical trials), that debt will come down over the next 12 to 24 months," he said.

Last year, the group's underlying earnings (EBITDA) rose at least 20% to not less than £32.2mln (2014: £26.8mln), while revenue was lifted  45% to not less than £183.6mln compared to £126.6mln in 2014.

Overall, the group's full year gross profit increased by more than 30%.

Analyst Hall said he expected earnings growth of more than 20% over the next three years, with the potential for incremental growth through acquisition.

Shares trade on a price-earnings multiple of 19.6 times to June 2016 estimates and fall to 16.4 times on 2017 estimates, he noted, which significantly, he said "looks conservative given the rate of growth and scale of opportunity".

Broker Peel Hunt forecasts sales to rise to £369.7mln in full year 2016, with adjusted pre-tax profit at £49.2mln.

"We expect to see strong growth in the short term as the full benefits from the acquisition of Idis are delivered, and we believe the company to have excellent long term potential as it builds its global footprint and utilises its balance sheet and cash flow to make further acquisitions," it said.

Clinigen shares are today up 1.97% to 698.5p.

Accesso's landmark deal with SEVEN marks strategic growth in the Saudi Market

Accesso Technology Group PLC (AIM:ACSO, OTC:LOQPF) chief executive Steve Brown joins Proactive's Stephen Gunnion with details of a significant partnership with Saudi Entertainment Ventures (SEVEN). Brown noted the collaboration highlights accesso's strategy to grow its global footprint,...

21 minutes ago