LONDON (Alliance News) - Vernalis PLC shares fell on Thursday after it said its loss was wider in the first half of its current financial year after it ramped up its spending on marketing as it launched its cough and cold relief product, Tuzistra XR, in the US.
Vernalis shares were trading down 12% to 52.0 pence per share on Thursday morning.
The development stage pharmaceutical company said its pretax loss in the six months to the end of 2015 amounted to GBP8.1 million after the company began sale and marketing activities, making it swing from the GBP293,000 profit reported the year before.
Revenue experienced a slight lift in the interim period to GBP6.1 million from GBP5.7 million, but the GBP10.8 million of sales and marketing costs in the first half of the current financial year forced its loss wider. Vernalis did not spend any funds on marketing and sales in the previous period.
Those sales and marketing costs arose following the launch of Tuzistra XR last September.
Research and development costs in the year fell to GBP5.6 million from GBP7.1 million, but that was mainly because some of the costs booked in as sales and marketing expenses were previously booked as research and development costs prior to the commercial launch of Tuzistra XR.
Tuzistra XR, a common cold and cough medicine, generated GBP600,000 of net revenue in the period following the initial deliveries to wholesalers late in 2015. Royalty income from Frovatriptan, which relates to migraine headaches, fell to GBP1.6 million from GBP1.7 million due to falls in prices and thanks to foreign exchange rates.
The outlook for Frovatriptan looks bleak, as the patent covering the product expired in December 2015, meaning "generic entries are expected to significantly impact future royalty income," said Vernalis.
Other revenue in the period was derived from research collaborations and other collaboration income.
The company remains debt free and reported a cash balance of GBP54.0 million at the end of the year.
"We have made significant progress in the last six months in establishing our US sales and marketing infrastructure and transforming the business into a commercial speciality pharmaceutical company," said the company.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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