Sales and US news give ProStrakan a shot in the arm

Published on Tuesday 8 January 2008 20:44

PROSTRAKAN, the Scottish specialist drug company, hit a near-three-month market high yesterday after it reassured investors about strong sales growth and progress in the US.

The Borders-based firm said total revenue rose 18 per cent on 2006, which analysts said translated to about 45 million, while gross margins also improved.

Sales were driven by new pan-European launches including Tostran, a testosterone replacement therapy for ageing men.

Chief executive Wilson Totten stressed that 2008 was "critical" to ProStrakan, with a raft of product launches and entry into the US – expected to become the company's largest single market.

Sancuso, an anti-nausea patch for chemotherapy patients, is currently being reviewed by the US Food & Drug Administration, with ProStrakan hopeful of launching the treatment in the second half of the year.

Totten said there had been "significant progress" in the development of the US operation, with offices secured and a small number of staff recruited. By the end of the year, ProStrakan expects to have close to 100 staff in the US, including a sales force of about 75.

Analysts welcomed the figures, with the sales number coming in at the higher end of expectations.

ProStrakan is expected to make a pre-tax loss of more than 15m in 2008, before breaking even the following year and reporting a decent profit in 2010.

The Galashiels-based company said at the end of 2007 it had cash of 24m, while it had an arranged debt facility that would allow it to draw down up to another 30m. Analysts said this should comfortably get the business through to profitability.

Last March, ProStrakan shunned a fundraising because of its weak share price, arranging a 50m debt facility administered by Morgan Stanley.

Totten said last night bankers had indicated that the deal, while still well above the London interbank offer rate (Libor), was far cheaper than would be available were it to be negotiated today.

"As part of our prudent approach we took the view that we needed to be self-sufficient and not reliant on the capital markets," Totten said.

"There was no way we could have predicted what was going to happen in the equity markets or the debt markets … But as it has turned out, I'm very glad we've done it this way."

Shares in ProStrakan rose 3.7 per cent yesterday to 70.75p, their highest level in almost three months.