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London, 10 January 2013 Sinclair IS Pharma plc (AIM:SPH.L) ("Sinclair IS" or the "Group"), the international specialty pharma company, announces a trading update for the six months ended 31 December 2012 ahead of its interim results which will be announced on 12 February 2013.
• Revenues for the first half expected to be approximately £23.0 million, +4% like-for like ("LFL")
• Continued strong growth of International operations, +18% LFL
• Sculptra/New-Fill and Succeev sales recently commenced
• New debt facility recently secured to provide additional capital of £9.0 million for future business development opportunities
Revenues for the six months ended 31 December 2012 were approximately £23.0 million, compared to £23.4 million for the same period last year, which is in‐line with the Board's expectations. Revenues are marginally lower than last year due to the prior period including £2.5 million of revenues generated on products which have been subsequently disposed and the weakness of the euro which has declined by 9% against sterling compared to the same period last year. Approximately 70% of Group revenues are generated in euros.
Like‐for‐like ('LFL') revenues (excluding product acquisitions and disposals, licence fees and currency fluctuations) increased by 4% over the period. Country operations revenue declined by 4% on a LFL basis in the period but this was offset by another strong performance in International operations where LFL revenues grew by 18%.
International growth was driven by revenues in Asia increasing by +72% LFL in the period as Invida (now Menarini Asia) continued to grow sales of Papulex and Atopiclair, and launched our Kelo-stretch product for stretchmarks under the Glyderm trademark. Kelo-cote silicone gel also performed strongly, in particular in China and South Korea.
Country operations performance were affected by Variquel, which suffered from adverse ordering patterns, increased competition in certain key markets, and switching to alternative presentations, resulting in its revenues falling 36%, and generic competition for Cryogesic resulted in its revenues declining by 51%. The price reductions experienced on Cryogesic have also resulted in an exceptional non-cash impairment charge of £2.5 million against the value of this brand in the period.
Excluding these two non-core products, overall LFL growth for the period was +12%, and Country operations +7%, reflecting the benefit of the sales and marketing investment being targeted at the Group's core dermatology portfolio. Kelo-cote, a key growth driver for the Group, was particularly strong (+30% LFL) and as expected, has now become our leading brand. Papulex(+34% LFL), Bio-Taches(+36% LFL), and Aloclair(+56% LFL) also grew strongly in the period compared with the same period last year.
The Board expects adjusted EBITDA for the period to exceed the profit of £0.7 million reported in the six months to 31 December 2011 as the benefits of operating leverage continue to improve margins, and are confident in the outlook for the full year.
The distribution agreement with Valeant for Sculptra and Succeev signed in September 2012 was the most important event in the period. Work on the integration of these products into the Sinclair IS infrastructure is now complete and sales of these products through Sinclair IS started this month.
We have recently extended the distribution for Variquel into MENA during the period through a ten year agreement with Albaytmedical covering 11 countries across the Middle East, including Algeria, Morocco, Egypt and Saudi Arabia; and also into Taiwan with Centapharm. These deals will increase the geographic reach of Variquel helping to offset the impact of increased competition in Europe, with first revenues anticipated later in 2013.
The deal with Biocodex announced in December 2012 for Russia, Benelux, Turkey and Morocco adds a further strategic partner for our dermatology portfolio in several target markets and we expect to announce further distribution deals in our target markets during the second half.
New debt facility
The Group has also agreed a new £23.6 million credit facility with Clydesdale Bank plc. The new facility consists of a £22.6 million loan and £1.0 million revolving credit facility which is being used to refinance existing debt and provide additional capital of £9.0 million to support future business development opportunities. The new facility is for a four year term running to 31 December 2016 and removes a number of operational restrictions put in place at the time of the merger with IS Pharma plc in 2011. As a result of this refinancing, a non-cash charge of £0.4 million relating to unamortised costs of the old facility will be expensed as finance costs in the period ended 31 December 2012.
Chris Spooner, CEO, commented "I am pleased with the strong performance of our key dermatology brands in the first half. We have continued to deliver on our strategy to focus on fewer, bigger brands and build strong strategic partnerships. I am particularly encouraged by the continued strong growth in the International business, highlighting the importance of our emerging markets strategy. The performance of our dermatology portfolio in Europe was pleasing despite the setback on two non-core products. We expect LFL revenue growth to accelerate again in the second half and we remain confident in the full year outlook."
For further information please contact:
Sinclair IS Pharma plc Tel: +44 (0) 20 7467 6920
Peel Hunt LLP Tel: +44 (0) 20 7418 8900
Notes to Editors:
About Sinclair IS Pharma plc - www.sinclairispharma.com
Sinclair IS Pharma is an international specialty pharmaceutical company focused on treatments in dermatology, wound care, oncology support and critical care through advanced surface technology and innovative delivery systems. The Company has a growing sales and marketing operation with a direct sales presence in the top five European markets and an extensive marketing partner network across selected developed and emerging markets.
"Safe Harbor" Statement under the US Private Securities Litigation Reform Act of 1995: Some or all of the statements in this document that relate to future plans, expectations, events, performances and the like are forward‐looking statements, as defined in the US Private Securities Litigation Reform Act of 1995. Actual results of events could differ materially from those described in the forward‐looking statements due to a variety of factors.
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