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Clinigen Group PLC: THE INVESTMENT CASE

Clinigen unveils latest deal alongside strong set of interims

The company's results reveal a company in rude health - and one still on the acquisition trial.
Clinigen unveils latest deal alongside strong set of interims
INVESTMENT OVERVIEW: CLIN The Big Picture
Clinigen seems to have found the formula for financial success.

The ambitious specialty pharma group Clinigen (LON:CLIN) revealed the positive financial impact of recent acquisitions and tie-ups as it unveiled its interim results.

In a separate announcement, it said it had bulked up its medicine cabinet with the acquisition of a product called Totect, which is used in cancer care.

The terms of the deal with American firm Biocodex were not disclosed, although Clinigen said it is making an upfront payment along with further instalments over the next 12 months.

Totect, which is also known as dexrazoxane, reverses the toxic effects of anthracycline, which is used in chemotherapy. It is used to repair damage where the cancer drug accidentally leaks outside the vein and into the surrounding tissue.

GLOBAL FOOTPRINT

The acquisition, together with Clinigen’s purchase of Savene in 2014, gives the company “a complete global footprint” in this specialist area of medicine.

David Moran, managing director of Clinigen’s speciality pharmaceuticals business, said Totect was “a natural target for us as we continue to focus on acquiring niche, hospital-only therapies”.

Separately, the group unveiled its first-half results, which showed a more than doubling of revenues to £157.1mln and a 74% rise in operating profits to £23.5mln.

Clinigen’s cash balance grew by 96% compared with a year earlier to £22.1mln, while the interim dividend will be boosted by 18% to 1.3p a share.

The results statement revealed the company is starting to feel the benefits from its £225mln purchase of Idis, a specialist in the ethical supply on unlicensed medicines, and Link Healthcare, which has become part of Clinigen’s managed access division.

Its global footprint will expand further thanks to a global alliance with NASDAQ-listed Cumberland Pharmaceuticals.

INTEGRATION

Today’s results release showed all the commercial and most of the operational integration is complete at Idis.

The firm also told investors that a “revitalisation” of its newer products had driven the strong performance of its speciality pharma division.

The company is positioned for a “good” second half, it added.

"We have made significant progress towards meeting our strategic objectives as a result of the acquisitions of Idis in April and Link Healthcare in October last year, and our alliance with US Specialty Pharmaceuticals company, Cumberland Pharmaceuticals,” said chief executive Peter George.

"We are firmly established as the global market leader in the management and supply of unlicensed and clinical trial medicines. We now have the platform to realise considerable organic growth opportunities across a number of markets."

THE COMPANY

Clinigen is essentially four different companies under one roof, although there are synergies between the component parts.

Clinical trial services essentially does what it says on the tin – it supplies drugs for clinical trials.

There is an ethical dimension to Clinigen in that it provides managed access and global access programmes for drugs, so it might find and distribute medicines for compassionate use.

Global access allows a medicine not yet commercially available, or is experiencing temporary supply problems, to be distributed to those in need.

Finally, Clinigen has a niche drugs arm for products that don’t fit into the portfolio of mainstream pharmaceutical companies. This business provided the strongest growth in the first half.

FROM THE BOSS

Shaun Chilton, deputy chief executive, speaking to Proactive’s Charlotte Kan:

On acquisitions and growth...

“We are looking to add to the portfolio. But once we have acquired a product we revitalise that product. We bring it back to growth.”

One results...

“It would be churlish not to be pleased [with the first half results], but not over-confident.

Outlook...

“We are definitely looking for a strong performance in the second-half. The first-half has positioned us for good growth.”

WHAT THE BROKERS SAY

Peel Hunt – price target 1,00p

“Clinigen has been through a transformation over the last 12 months and is well set to develop its global footprint. Unsurprisingly during a period of substantial change the rate of organic growth has slowed. However, there are clear signs of a stronger performance in H2 (both organic and timing) and the rate of new business wins is encouraging. Clinigen is well positioned to deliver strong growth and is on an attractive rating of 15.5x PE to June 2017E.”

Numis – price target 916p

“We see Totect driving modest upgrades (c.2% at the EBITDA level from FY2017, rising to c.3% by FY2020), driving our DCF-derived target price to 916p.”

Stifel - price target 800p

"Clinigen continues to drive earnings from both organic growth and sensible acquisitions, as highlighted by the acquisition of Totect that consolidates its dexrazoxane franchise."

THE SHARE PRICE 

Up 17% in the past year, the stock is currently changing hands for 638p, up 3p on the day,

 

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Clinigen Group PLC Timeline

Newswire
November 11 2016
Newswire
October 25 2016
Article
October 18 2016
Article
September 28 2016

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