DDL acquisition, just what the doctor ordered!
A pan-European marketing platform and a dynamic product portfolio to boot.
Who could ask for anything more? With good support from investors (York
Pharma raised £13.5m in three separate financing rounds) the company is now
poised for a significant increase in cashflow from DDL over the next 2-3 years.
That should reduce the need for further financings other than for additional
acquisitions. Period-end cash stood at £4.7m with a further fund raising taking
place after the period end, taking the cash position to over £6m.
Usual delays in product development and approvals
The MHRA is taking its time on AbasolTM which is par for the course. Some
delays have also been incurred on Sabarep and Vampex driven by the
complexity of developing a formulation to optimise the targeting of these drugs.
AbasolTM partnership talks for the US are advancing apace
York has not wasted any time in its development of nail and pessary
formulations nor in its discussions with potential marketing partners. However,
we expect the company to await MHRA approval before jumping into bed
with any of the suitors.
New forecasts but delays dent valuation
Operating costs in 2007 were substantially below our forecast, mainly
a reflection of programme delays and a ferociously cost-conscious CFO.
Nonetheless the delays also prompt a modest reduction in our valuation.
Our enthusiasm remains undimmed. We expect the new entity to ramp up
revenues even ahead of AbasolTM approval.
Bottom line numbers adjusted down circa 10%
With operating costs under control, some programme delays, a significant
increase in shares outstanding and the acquisition of a cash generating
business, our core valuation previously at £3.93 takes a haircut down to £3.68.
Investors should look to 2008 for the big happenings
More than ever we believe that AbasolTM could get the nod and with a ready
made pan-Europe marketing platform, growing product revenues, advanced PII
trials for Sabarep and Vampex and a putative AbasolTM deal with a significant
pharma partner, the outlook is robust.
