RE: The numbers just don't make sense23 Feb 2017 15:36
My guess is that revenue is largely from stocking by pharmacies. Tuzistra is almost certainly sold in American pint or quart bottles and then dispensed to doctors' patients in much smaller quantities. This would mean that there is no simple relationship between prescriptions written and revenue to Vernalis. Things are further complicated by coupons handed out by medical insurers. I have no clue as to the workings of these, but as they work to lower the end cost to the patient, someone must pay for them.
Whatever the truth is, the results are extremely worrying to me. 100 salesmen must be expensive in relation to revenue of only £800,000 ... and 100 is not many to cover half that number of states. Additional products are not due to arrive thick and fast. Even Moxatag, purchased and ready to go, has hit supply problems due to the Irish manufacturer going belly-up. I reckon Vernalis has under-estimated the task of breaking into this market. Will the cash pile of £70m be enough? Might it not be better spent on the kinds of research that Vernalis has shown itself to be good at?
The timing of the announcement of the milestone payment from Corvus just days before the interim results was well judged to deflect from the very bad cough/cold results.
Mr Garland's oft repeated words of excitement about the transition to a commercial pharmaceutical company have worn thin for this investor. So thin that I am reminded of the Emperor's new clothes!
My investment in Vernalis is part of my pension fund. Do I get out now? ... or do I hope that a couple of the big institutional investors take action to steady the ship? I guess that one of them has shored up the share price by steadily increasing its stake. Will it now use its strength to make changes before it is too late?