York Pharma (YRK.L) - trading update: revenues anticipated to be ahead of expectations YRK.L
Comment by Objective Capital , Apr 09, 2008 Questions?
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York Pharma have issued a trading statement following the end of the first half on 31st March. In the statement the company indicates that revenues, which include the recently acquired Derm Development (DDL), are anticipated to be ahead of expectations and driven notably by Zindaclin -a clindamycin-based mild to moderate acne topical drug. It goes on to say that the benefits of selling these drugs through York's sales network are beginning to become evident.
York will be issuing its interims on May 28th.
Objective's view:
We are encouraged by the trading statement and believe that it could mark a turning point for the recently beleaguered share price performance. In our recently published update, we estimated that DDL revenues would reach around £7million in 2008 and grow to close to £20 million by 2013. We will look to the formal interim statement on May 28th for confirmation of those estimates.
York's shareholders have suffered a painful descent in the share price from the 148.5p high established last June. We estimate that about one-third of that fall is in line with the weakness over that period in the Small Cap market generally and the Pharma/ Biotech sector in particularly. Clearly much is a reflection of a general diminishing of the risk appetite of investors.
However the underperformance at York has been most marked since early November 2007, around the time of the update on the DDL acquisition. It may be that uncertainty over the strategic fit of DDL and the lack of hard news on Abasol have weighed most heavily on investors’ minds. If so then this trading statement should help to resolve the first of those. As for Abasol, we continue to believe that it will eventually emerge with a positive nod from the MHRA. We look forward to the May 28th meeting when a combination of good news from the development portfolio and the meeting of product revenue milestones could converge to inspire investors to take a fresh look at York Pharma.
