Drug approval edges ProStrakan towards profitability for first time

Published on Saturday 15 August 2009 19:26

SCOTTISH drugs company ProStrakan is expected to declare this week that it is just a few months from breaking into the black for the first time.

The Borders-based firm, which is one of the Scottish pharmaceuticals sector's biggest prospects, is due to report a sharp increase in first half revenue on Thursday, driven by early sales in the United States and increasing income across its portfolio.

Analysts expect chief executive Wilson Totten to tell the City that the company will meet expectations and hit profitability in the first half of 2010.

Totten, who has run ProStrakan since 2004, is targeting monthly break even before the end of 2009.

Despite this, losses in the early months of this year mean ProStrakan, which is headquartered in Galashiels, is still expected to post a loss of more than 14 million for 2009, down from a 25.2m loss in 2008.

The company has had a strong run of drug approvals over the last year, most recently in June with the early approval to sell Abstral, a breakthrough cancer pain treatment, in France.

Launched in the UK and Germany in January, by mid-May the Abstral was selling 7,200 tablets a week "and displaying continuing growth".

The group has also been boosted by early sales in the US, where it launched its first product, Sancuso, at the start of November.

Sancuso is a patch designed to alleviate the nausea associated with chemotherapy.

By May, the company was selling 850 patches a week.

ProStrakan said at the start of March that total sales were 40 per cent ahead of the same time in 2008. Analysts have become increasingly bullish in their ratings on the shares.

Last month Numis analyst Jonathan Kwok initiated coverage of the company with a 180p target price, more than double the level shares were trading at when he released the note, predicting that the next 18 months would be transformational.

Kwok said the company's growth was better than any of the 20 international peers he was comparing it to.

"If the market doesn't take notice, trade buyers will," he told clients.

Shares have already reacted. After hitting a recent low of 56p in March, shares bounced back and hit an all time high of 129p last week.