Vernalis rock solid despite heavy losses
The drain on its finances from failed activities across the Atlantic is evident in significant losses announced by Vernalis plc for the six months to December 31.
The loss after exceptional items was £37.6 million – compared to £11m in the same period of the previous year: £21.2m of that was an exceptional charge incurred in relation to the performance of the US commercial business and the subsequent announcement to close the US operations, resulting in the write down of the cough cold (Tuzistra® XR, CCP-07 and CCP-08) and Moxatag® assets.
Vernalis, whose research operations are based at Granta Park near Cambridge, principally blamed unrealised foreign exchange movements on cash resources for a £5m increase in the interim loss before exceptional items to £16.3m.
With the company effectively open to bidders, CEO Ian Garland stressed that cash resources were healthy – £46m at December 31 – and that the group had no debt.
“The board deeply regret having to implement the wide-reaching restructuring recently announced but given the Tuzistra® XR performance and slower than hoped for progress with the cough cold pipeline, it is no longer viable to sustain our US commercial operations or continue to pursue our current strategy,” he said.
“The decision to close the US commercial business will significantly reduce the ongoing cash burn of the group after the closure costs have been incurred.
“Whilst there is a need to exit or renegotiate contracts on reasonable terms, the directors have a reasonable expectation that the group will have adequate financial resources to continue in operation for the foreseeable future.
“Alongside the closure of the US commercial operations, our focus in the next few months will be on exploring alternative ways in which to realise value for shareholders, including potentially the sale of the company as a whole.
“The board has set a target date for concluding this activity of September 30 and we will provide updates to the market where possible.”
• PHOTOGRAPH SHOWS: Ian Garland