US drug approval provides a second boost for ProStrakan

DRUG developer ProStrakan has received a second shot in the arm in as many weeks after the Galashiels-based firm gained its long-awaited regulatory approval to sell a key product in the US.

• Peter Allen welcomed the news of US approval for cancer pain drug Abstral

The boost came as the firm yesterday revealed that it believes annual turnover will have reached the 100 million mark for the first time when it reports its full-year results on 17 March.

ProStrakan expects Abstral, which relieves the pain suffered by patients who are undergoing cancer treatment, to be on sale before the end of the month.

The market for similar products in the US is worth $550m (350m) and the company has about a 24 per cent share of the market in European countries where it already sells the drug.

Acting chief executive Peter Allen said that, while the US market differed from those in Europe, the company did have a "window of opportunity" in which to establish the American sales of the drug.

"Our product is the first of its kind to be covered by the US Food and Drug Administration's (FDA] risk evaluation and mitigation strategy (Rems]," Allen explained.

"The two market leaders in this field in the US don't have Rems approval yet so we have an opportunity over the next few months to establish Abstral."

The approval follows FDA backing at the end of December for the company's testosterone cream, Fortesta, to treat hypergonadism.

ProStrakan was rocked last year after revealing that US approval for Abstral had been delayed and that as much as 5m could be wiped off its bottom line after one of its contractors had to close down its factory for 12 weeks and halt production of anti-sickness medicine Sancuso.

The double-blow led to chief executive Dr Wilson Totten "falling on his sword" and chairman Allen being installed as the company's acting boss.

Allen said that production of Sancuso had resumed in the US last week and that the first shipments to customers would resume next week.

He added that the company had used the break in production to train its sales force to sell Abstral as well."We've not made things easy for ourselves and we do face a challenege in restoring sales of Sancuso but we have no fears over securing sales," Allen said.

Shares jumped 11.4 per cent to close last night at 115.25p.

Allen said the search for a new chief executive would begin in earnest once the company had finished considering takeover approaches for the whole business and some of its assets.

It emerged in November that Dutch drugs firm Norgine had built a 12.6 per cent stake in ProStrakan, which Allen said had since been extended to 13 per cent.

Analysts speculated that Norgine could be one of the possible suitors for ProStrakan, none of which have been named.

At Friday's AGM, shareholders voted to endorse the board's plans to refinance its 50m debts.

Allen added: "Refinancing our loans for the next three years has lifted a large cloud."

Shawn Manning, an analyst at Singer Capital Markets, said: "US Abstral approval and a positive 2010 trading statement add reassurance to a fundamentally strong story.

"Together with approval of Fortesta, and shareholder approval of a 50m refinancing, ProStrakan looks increasingly strong."