ProStrakan begins making drug patch without approval

Published on Thursday 21 August 2008 21:41

PROSTRAKAN has spent more than $2 million (£1m) manufacturing a patch designed to alleviate nausea for chemotherapy patients, despite it still not being cleared for launch in the United States.

Announcing its interim results yesterday, the Galashiels-based pharmaceutical company confirmed that it was still to be given approval for the patch, Sancuso, but was pushing ahead with plans anyway.

The US Food and Drug Administration (FDA) had been expected initially to make a decision on the treatment in May. However, the organisation, which has been hit by resourcing issues, has written to Pro-Strakan warning that, although there are no technical reasons for the delay, it cannot say when it will make a decision on the drug patch.

Sancuso is critical to Pro-Strakan's march towards profitability, forecast for 2010. FDA approval will trigger a deal under which US company NovaQuest will fund a nationwide sales team for three years in return for royalties.

Analysts have said the patch could one day generate more than $100 million (53m) in annual sales, more than Pro-Strakan's forecast turnover for the whole of 2008.

Chief executive Wilson Totten said that while he would prefer immediate approval, the delays were becoming less frustrating and he was increasingly confident of the outcome.

"Our confidence in the eventual outcome increases on a daily or a weekly basis," he added.

Totten said that the group was pushing ahead with all of its plans for the US, from manufacturing Sancuso to hiring staff. "We're focused on uptake of the treatment and, perversely, the delays have been useful in many ways because we've had a lot of time to focus and prepare for the launch, which should hopefully make it more successful," Totten said.

Mark Webster, who is heading ProStrakan's US business, said that a downturn in the US economy was benefiting the company's expansion plans. The firm is recruiting 67 sales staff and has received more than 1,700 applications.

ProStrakan shares rose 2.5p to 91.5p yesterday, after it reported a 26 per cent rise in sales in the six months to 30 June, ahead of market expectations.

The company's operating loss, excluding a one-off impairment, fell 13 per cent to 7.6m.

ProStrakan was hit by a one-off impairment charge of 2.2m as it wrote down the value of its stake in Galapagos, which it acquired when it sold its French drug development company to the Belgian company. The Scots company sold its holding in Galapagos in July for 5.8m (4.6m).

ProStrakan's biggest selling product, Adcal D3, a calcium and vitamin D supplement, rose 17 per cent, during the period.

Meanwhile, ProStrakan also received European Union approval for Abstral, a treatment for break-through cancer pain, which it expects to launch throughout Europe during the second half of 2008.

Charles Stanley analyst Franc Gregori increased his target price on ProStrakan to 112p yesterday, a move which he said reflected confidence on the progress for Sancuso.

BACKGROUND

AIMING only at a niche market, Sancuso is rated by analysts as the leading potential "star" treatment in ProStrakan's portfolio.

A so-called transdermal patch, Sancuso is designed to be applied to the skin a day prior to commencing chemotherapy, and lasts up to five days.

Nausea is a common side-effect for chemotherapy patients, with most current treatments taken orally, unsuitable for those who struggle to swallow pills.

Analysts have said the drug could eventually provide the company with annual sales of more than $100 million (53m) in the US, more than its current total annual turnover.

Although its approval has been delayed by more than three months, ProStrakan is still confident because of the steps it is currently taking that it can launch the drug by the end of this year.